A law on the books cannot prevent American retaliation
Brazil drafted a law creating a council to block automatic application of US sanctions, inspired by EU and Canadian protections for firms facing extraterritorial penalties. The proposal requires Supreme Court, Congress, and civil society approval before foreign sanctions apply domestically, protecting Brazilian companies from Magnitsky-style measures.
- Brazil drafted a law creating a council to review foreign sanctions before they apply domestically
- The proposal was inspired by EU and Canadian protections against extraterritorial American laws
- The government paused the bill to avoid appearing hostile during potential Lula-Trump negotiations
- Justice Alexandre de Moraes is currently under Magnitsky sanctions from the United States
Brazil's government pauses legislation to shield companies from US sanctions like Magnitsky, citing diplomatic sensitivity around potential Lula-Trump talks and hopes to negotiate sanction reversals.
Brazil's government has quietly set aside a significant piece of legislation designed to shield the country's companies from American economic punishment—at least for now. The bill would have created a formal mechanism to block the automatic application of sanctions like the Magnitsky Act within Brazilian territory, requiring instead that any foreign penalty first pass through a council made up of judges, lawmakers, and civil society representatives before taking effect domestically.
The timing of this pause is deliberate. President Luiz Inácio Lula da Silva's administration has been in quiet talks with Brazil's Supreme Court and congressional leadership about the proposal, but those conversations have slowed considerably as the possibility of a direct meeting between Lula and Donald Trump has grown more concrete. Officials involved in the discussions acknowledge that pushing such legislation through Congress in the days after Trump praised his "excellent chemistry" with the Brazilian president would send the wrong signal—a gesture that could be read as confrontational rather than cooperative.
The draft law itself represents a serious attempt to establish institutional weight behind an argument that Supreme Court Justice Flávio Dino made in August: that foreign court orders and executive actions have no force in Brazil without explicit approval from the Brazilian Supreme Court. Rather than leaving this principle to judicial interpretation alone, the government wanted to enshrine it in legislation. The proposed council would include representatives from the Attorney General's office, the government's legal defense agency, Supreme Court justices, members of Congress, and civil society figures. In exceptional cases where a Brazilian company faced severe financial harm by refusing to comply with American demands, the council could authorize compliance with those demands—giving companies legal cover to explain to Washington why they had initially resisted.
The architects of this proposal looked to existing models abroad. The European Union has long maintained a special statute protecting European companies from extraterritorial American laws, a framework created in the 1990s specifically to allow European firms to do business with Iran and Cuba despite American sanctions. Canada has similar protections. Brazil's version would work much the same way: block automatic compliance, but create a pathway for companies to seek authorization when necessary.
Yet even officials who support the idea acknowledge its limitations. The United States can still respond to sanctions evasion by simply closing off access to American markets or imposing secondary penalties on countries that allow their companies to circumvent Washington's rules. A law on the books in Brasília cannot prevent that. The real question is whether it would give Brazilian companies enough legal and diplomatic cover to justify their resistance in the first place.
For now, the government has chosen to wait. Lula's team still hopes to use any upcoming conversation with Trump to negotiate the removal of existing sanctions—including the Magnitsky designation that was applied to Supreme Court Justice Alexandre de Moraes. In that context, introducing legislation that appears designed to undermine American sanctions authority would be counterproductive. The bill sits in a holding pattern, discussed in corridors but not yet formally introduced, a piece of unfinished business that may or may not move forward depending on how the diplomatic landscape shifts in the coming weeks.
Citações Notáveis
The possibility of a meeting between the two leaders slowed the project's progress— A government minister involved in the discussions
The government still hopes Lula can negotiate with Trump to revoke existing sanctions, including those applied to Supreme Court Justice Alexandre de Moraes— Government sources
A Conversa do Hearth Outra perspectiva sobre a história
Why would Brazil need a law like this at all? Doesn't the Supreme Court decision already protect companies?
The decision gives them legal cover in Brazil, but it doesn't protect them from American retaliation. A company that ignores a Magnitsky sanction might win in Brazilian court and still get cut off from US markets. A law would at least give them something to show Washington—proof that they tried to comply with their own government's rules.
So this council would basically be a permission slip?
More like a circuit breaker. It stops sanctions from automatically applying, but it also creates a formal process. That process itself becomes diplomatic cover. You can tell an American official: "We have a council, it reviewed your request, and here's why we decided what we decided."
But Trump could just punish Brazil anyway for not complying.
Exactly. That's the real problem. No law can stop that. The best it can do is make the refusal look deliberate and institutional rather than chaotic or defiant.
Why pause it now, then? Why not push it through before Trump takes office?
Because Lula thinks he might be able to negotiate directly with Trump to lift sanctions altogether. If you introduce a law that looks like you're preparing to defy him, you poison that conversation before it starts.
So this is a bet that diplomacy works better than legislation?
It's a bet that the threat of legislation—the fact that Brazil could do this—might be more useful than actually doing it. The law exists as a possibility. That possibility itself has leverage.