Nippon Steel & Sumitomo Metal could ask a Brazilian court to choose a new chief executive for its jointly owned steelmaker, Usinas Siderúrgicas de Minas Gerais SA, if a shareholder meeting fails to produce a better solution, a source with direct knowledge of the situation said on Friday.

Nippon Steel has sued fellow controlling shareholder Ternium over the management of Usiminas, as the Brazilian steelmaker is known.

Nippon in May opposed a decision by Usiminas' board to appoint Sergio Leite as CEO, saying the move violated their shareholders agreement.

The Minas Gerais state court scheduled a meeting for Monday between Usiminas shareholders to try to reach an agreement on the company's management and avoid further litigation.

The source, who requested anonymity because of legal restrictions on speaking publicly about the matter, said Nippon would not accept any proposal to retain Leite as CEO, and would prefer the court to name a replacement.

Usiminas Chairman Elias Brito, when told of Nippon Steel's possible move, responded by defending the legality of Leite's appointment.

"It would be unprecedented in Brazil that a court be asked to name the new chief executive of a public company," he said in an email.