Município De Mariana and the Claimants identified in the Schedules to the Claim Forms v BHP Group (UK) Ltd (formerly BHP Billiton Plc and thereafter BHP Group Plc)

Reading dates: 7 th, 8 th, 9 th, 10 th, 11 th, 14 th, 15 th, 16 th, 17 th & 18 th October 2024

Hearing dates: 21 st, 22 nd, 23 rd, 24 th, 28 th, 29 th, 30 th, 31 st October 2024 5 th, 6 th, 7 th, 11 th, 12 th, 13 th, 14 th, 26 th, 27 th, 28 th, 29 th November 2024 2 nd, 3 rd, 4 th, 5 th, 9 th, 10 th, 11 th, 12 th, 16 th, 17 th, 18 th, 19 th December 2024 13 th, 14 th, 15 th, 16 th, 17 th, 20 th, 21 st, 22 nd, 23 rd, 24 th, 27 th, 28 th January 2025 5 th, 6 th, 7 th, 10 th, 11 th, 12 th, 13 th March 2025

Approved Judgment

Index

INTRODUCTION

At approximately 3.45pm on 5 November 2015, the Fundão Dam in Southeast Brazil collapsed, releasing in excess of 40 million cubic metres of liquified iron ore tailings in a flowslide. The dam collapse and ensuing flow of tailings killed 19 people. It caused extensive environmental and socio-economic damage. It destroyed the village of Bento Rodrigues, immediately downstream from the dam, and caused widespread devastation to the surrounding communities, waterways, land and infrastructure.

On collapse, the tailings spilled over the Santarém dam, immediately downstream of the Fundão Dam, into the community of Bento Rodrigues. Upon reaching the Doce River, the tailings flowed through the Doce River basin, a distance of more than 600km, crossing a number of municipalities in Minas Gerais and Espírito Santo. On 20 November 2015, the tailings reached the Atlantic Ocean on the coast of Espírito Santo.

The tailings polluted the River Doce system over its entire course to the sea, some 400 miles from the dam. The dam collapse has been described as Brazil's worst ever environmental disaster. The cost of remediation and compensation is estimated to exceed US$30 billion as per the Reparations Agreement.

The area affected by the dam collapse fell principally within two states, Minas Gerais, where the dam was situated, and Espírito Santo, in which the River Doce reaches the Atlantic Ocean. The local government authority with responsibility for the area which included the dam itself, and the nearby villages which were destroyed, is the municipality of Mariana, the leading claimant.

The dam was owned and operated by Samarco Mineração SA (“Samarco”), a Brazilian company jointly owned, in 50% shares pursuant to a joint venture agreement, by Vale S.A. (“Vale”) and BHP Brasil Ltd (“BHP Brasil”). The second defendant (“BHP Australia”) is the ultimate parent company of BHP Brasil. Between 2001 and 2022 the first defendant (“BHP UK”) and BHP Australia (referred to jointly as “BHP”) operated together as a single economic entity under a dual listed company structure, with listing in the UK and Australia. From 2022, all shares in BHP UK were acquired by BHP Australia.

There have been numerous proceedings initiated in Brazil and other jurisdictions around the world arising out of the collapse of the dam, some of which have been compromised, some of which are stayed and some of which are ongoing. There have also been a number of schemes set up to compensate those affected by the collapse of the dam. This litigation does not seek to replicate or supersede those legal proceedings or compensation schemes. The proceedings in this jurisdiction have been brought against BHP UK and BHP Australia (collectively referred to as “the BHP Group” or “BHP”) and are founded on the corporate listing of those associated companies of Samarco in the UK at the time of the collapse.

There are over 600,000 Claimants, who each seek compensation in respect of losses suffered as a result of the environmental damage, relying on the following claims under Brazilian law:

i) Articles 3(IV) and 14 of the Environmental Law and/or Article 927 of the Civil Code impose strict liability on BHP for loss and damage caused by the collapse of the dam by reason of their ownership and/or control of Samarco, the entity responsible for the damage; funding or other participation in the activity leading to the damage; and/or benefiting from the activity of others which led to the damage.

ii) BHP are liable for the loss and damage suffered by the Claimants under Article 186 of the Civil Code, by reason of their voluntary act or omission, negligence or imprudence in: (a) disregarding advice and warnings as to the risks of collapse and/or (b) failing to take satisfactory action to address such risks.

iii) BHP are liable for the loss and damage suffered by the Claimants under Articles 116 and 117 of the Corporate Law, for abuse of power as controlling shareholders, by permitting activities involving a significant risk of substantial damage to the community.

BHP deny liability on the following grounds:

i) BHP were not polluters within the meaning of Article 3(IV) of the Environmental Law so as to attract strict liability for the loss and damage caused by the dam collapse. They carried out no polluting activity, nor did they cause environmental degradation through any relevant omission.

ii) The allegations of fault-based liability are denied. BHP met the expected standard of conduct of parties in their position and breached no specific legal duty. It is denied that there was any causal link between any activity or omission on the part of BHP and the dam collapse and/or the Claimants' alleged losses.

iii) BHP did not owe any duties to third parties under the Corporate Law and/or did not breach any such duties by act or omission.

iv) BHP's position is that all, or many, of the claims are time-barred by prescription under Brazilian law.

v) BHP's position is that Claimants who have accepted compensation, pursuant to settlement agreements with Renova, Samarco, BHP Brasil, Vale and/or through the Novel System and the Reparations Agreement compensation schemes, are precluded from pursuing the claims in these proceedings by reason of the terms of the release and/or waiver provisions in such settlements.

vi) It is also said that the Municipality Claimants do not have capacity/standing to bring proceedings in this jurisdiction.

This First Stage Trial determines key liability issues as set out in the agreed list of issues and summarised below:

i) whether the structural instability of the dam, and therefore its risk of collapse, was foreseeable or only ascertainable with the benefit of hindsight;

ii) whether BHP are strictly liable as “polluters” in respect of damage caused by the collapse pursuant to Articles 3(IV) and 14 of the Environmental Law (alternatively pursuant to Article 927 (sole paragraph) of the Civil Code);

iii) whether BHP are liable by reason of fault in respect of damage caused by the collapse, pursuant to Article 186 of the Civil Code;

iv) whether BHP are liable as controlling shareholders of Samarco by reason of abuse of power in respect of damage caused by the collapse, pursuant to Articles 116 and/or 117 of the Corporate Law;

v) whether any of the claims are time-barred by prescription;

vi) whether any of the claims are precluded by reason of the waiver and/or release agreements;

vii) whether the Municipalities have standing and/or capacity to bring their claims in these proceedings.

THE FUNDÃO DAM

Design of the dam

The Fundão Dam formed part of the Samarco Germano-Alegria mining complex, located in the state of Minas Gerais, in the south-east of Brazil. Samarco's primary business is the production of iron ore pellets for the global steel market. The iron ore is mined at the Germano and Alegria pits. The raw iron ore is crushed and concentrated by a process of beneficiation, comprising grinding, re-grinding, desliming, flotation, and...