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

Hearing dates: 29 th and 30 th March 2023, 20 th April 2023

Approved Judgment

This judgment was handed down remotely at 10.30am on Friday 12 th May 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

This matter is before the court for the first case management conference. The proceedings concern claims by the claimants against the first and second defendants, (“BHP”), for compensation arising out of the Fundão Dam disaster in Brazil.

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 the Part 20 defendant, a Brazilian entity (“Vale”) and BHP Brasil Ltda (“BHP Brasil”). The first and second defendants operated together as a single economic entity under a dual listed company structure and the second defendant is the ultimate parent company of BHP Brasil.

The matter was last before the court at a directions hearing in December 2022, at which the court issued group litigation directions and fixed a first stage trial to determine threshold liability issues to commence on 9 April 2024 with an estimate of 9 weeks, including 1 week of judicial reading.

Since the last hearing:

i) a further claim form (HT-2023-000058) has been issued, increasing the total number of claimants to more than 720,000;

ii) the claimants have served a Master Schedule, setting out details of the claimants and the capacity in which they bring their claims;

iii) further pleadings have been served by the parties;

iv) Vale has issued an application challenging jurisdiction, which application has been listed for an expedited hearing on 12 and 13 July 2023;

v) the parties have engaged in detailed discussions regarding the list of issues for the first stage trial, date, estimate and timetable to trial, disclosure and other matters in preparation for the CMC.

The agenda items before the court are:

i) the scope of the issues to be determined at the first stage trial;

ii) timetable for the first stage trial in respect of threshold liability issues, including any revision to the date and/or time estimate of the first stage trial;

iii) Master Schedule directions;

iv) costs sharing and funding disclosure application / security for costs;

v) litigation friend application.

Issues for first stage trial

There is a substantial amount of agreement between the claimants and the defendants as to the threshold liability issues that should be determined at the first stage trial as set out in the draft list of issues and summarised below:

i) Issue 1 – strict liability as polluters: are BHP strictly liable as “polluters” in respect of damage caused by the collapse pursuant to Articles 3(IV) and 14 of the Environmental Law?

ii) Issue 2 – fault-based liability: are BHP liable based on fault in respect of damage caused by the collapse, pursuant to Articles 186, 927, 932 and 942 of the Civil Code and/or Article 225 of the Constitution and/or Article 116 of the Corporate Law?

iii) Issue 3 – liability as controlling shareholders: are BHP liable as controlling shareholders of Samarco in respect of damage caused by the collapse, pursuant to Article 116 and/or 117 of the Corporate Law and/or Article 927 of the Civil Code?

iv) Issues 4–5 – limitation: are the date(s) on which the claims in these proceedings were commenced determined in accordance with English Law or Brazilian law; if Brazilian law, on what date(s) were the claims commenced?

v) Issues 6–12 – limitation: are any of the identified categories of claim subject to prescription under Brazilian law; what are the relevant periods of prescription; and has there been any interruption of prescription pursuant to Article 204 of the Civil Code?

vi) Issue 14 – standing: do the municipalities have standing to and/or are they entitled to and/or do they have capacity to bring their claims in these proceedings?

The issues remaining in dispute are:

i) whether issues of causation should be excluded from the first stage trial to avoid the need for geotechnical expert evidence;

ii) whether additional limitation issues should be included (Issue 13);

iii) whether any settlement issues should be included (Issue 15);

iv) whether the list of issues should include references to issues as between BHP and Vale in the Part 20 proceedings.

Causation

In the draft list of issues before the court at the start of the CMC on 29 March 2023, the following issues of causation were included:

i) Sub-issues in respect of Issue 1 (strict liability as polluters):

1(b)(v) If a causal connection is required, was there a sufficient causal connection between the acts and/or omissions of BHP and the Collapse?

1(c)(i) Does the conduct of BHP amount to an activity carried out by them that caused the Collapse?

1(c)(iii) …did an omission of BHP in breach of any such duty cause the Collapse?

ii) Sub-issue in respect of Issue 2 (fault-based liability):

2(f) Did BHP's conduct, or one or more aspects of such conduct, cause the Collapse under the relevant test of causation?

iii) Sub-issue in respect of Issue 3 (liability as controlling shareholders):

3(h) Did any breach by BHP of their duties and/or responsibilities under Article 116 … cause the Collapse under the relevant test of causation?

The agreed cross-references to the pleadings against each question show that the questions reflect the issues that arise on the pleaded case of the claimants and the defendants.

The revised proposed list of issues drafted by the claimants for the resumed CMC hearing on 20 April 2023 deletes the above questions regarding causation of the collapse, in order to reduce the scope of the first stage hearing and avoid the need for geotechnical expert evidence.

Mr Choo-Choy KC, leading counsel for the claimants, submits that, notwithstanding references to the causes of the collapse in the Re-Amended Particulars of Claim (“RAMPOC”), questions of causation are logically irrelevant to the liability issues which the claimants propose should be determined at the first stage trial, namely, whether the defendants owed duties to act (or not to act) in a particular way and, if so, whether they were in breach of those duties. Therefore, questions of duty and breach, particularly any strict liability of the defendants as polluters, can be determined by the court without findings as to the causes of the collapse. Even if the court were required to consider the causes of the collapse as part of the first stage trial, that would not require geotechnical expert evidence because there is no real dispute as to the causes of the collapse of the dam, as opposed to the precise mechanisms of the collapse, addressed in the Panel Report. Although causation is denied (see paragraph 297 of the Amended Defence), it is pleaded at paragraph 23 of the Amended Defence that the defendants currently have no reason to dispute the conclusions of the Panel Report. Despite the pleaded reservation of their position, the defendants have not pleaded any positive case on causation so as to identify it as an issue in the proceedings.

The defendants object to the removal of the questions of causation from the first stage trial on the grounds that they are essential elements to the issues of liability and, in any event, geotechnical expert evidence would still be required on the revised issues as drafted.

Ms Fatima KC, leading counsel for the defendants, submits that prior to the CMC, the parties had largely agreed the list of issues, including liability issues in respect of each of the three causes of action pleaded by the claimants, which included the causes of the collapse. To exclude causation from the first stage trial would hinder real progress in the proceedings, necessitate a second liability stage trial, which would be wasteful, inefficient and unfair, and would extend the overall timeframe for resolving this litigation. Even on the revised list of issues proposed by the claimants, it is clear that allegations regarding the causes of the collapse fall to be determined, and thus require geotechnical expert evidence, as can be seen by cross-references to the relevant parts of the RAMPOC and Reply against the remaining liability questions. Further, aside from causation, other identified issues, such as risks associated with the design and construction of the dam, the nature and effect of design modifications, and the defendants' knowledge of and involvement in the events leading to the collapse, require geotechnical evidence. Therefore, the claimants' revised proposal would not result in their stated aim of obviating the need for geotechnical expert evidence from the scope of the first stage trial.

In my judgment, the scope of the first stage trial should include the issues of causation as initially agreed...