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: 12 th and 13 th July 2023

Approved Judgment

This judgment was handed down remotely at 10.30am on Monday 7 th August 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives

The matter before the court concerns two applications by the Part 20 defendant (“Vale”) challenging the court's jurisdiction in respect of two Part 20 claims that the defendants (“BHP”) have brought against Vale.

Vale's case is that there is no serious issue to be tried in respect of the Part 20 claims:

i) Brazilian law does not recognise the right to contribution unless and until BHP are found liable to the claimants and make a payment to them; BHP have not made any payment and therefore they do not currently have a right to a contribution from Vale;

ii) the claims were time-barred before the Part 20 claims were issued;

iii) some of the claims have been extinguished as a result of settlement agreements containing releases in favour of Vale, or judgments issued in favour of Vale in Brazil.

Further, Vale submits that this jurisdiction is not the appropriate forum for the Part 20 claims:

i) Brazil is the natural forum in that the claims are made under Brazilian law, brought against a Brazilian company, in relation to losses sustained in Brazil by Brazilian claimants, due to the collapse of a dam in Brazil, owned and operated by a Brazilian joint venture with two Brazilian shareholders almost a decade ago; Vale is amenable to being sued in Brazil or in an arbitration seated in Brazil if required;

ii) Vale is party to litigation in Brazil concerning the same events and losses (and at least some of the same claimants) where Vale's alleged liability in respect of losses caused by the collapse of the dam will be determined; if this court accepts jurisdiction over the Part 20 claims there is an unavoidable risk of irreconcilable decisions in light of the ongoing Brazilian proceedings;

iii) there is no factor that demonstrates that BHP cannot obtain justice in the natural forum; BHP overstate the extent of the overlap with the English proceedings and the court cannot assume that the Part 20 claims are capable of being determined in England together with the claimants' claims against BHP.

BHP oppose the applications. Their position is that there is a serious issue to be tried as to whether, if BHP are liable to the claimants, Vale is jointly and severally liable on the same or similar grounds and therefore liable to contribute to any damages payable:

i) the claims and the additional claims are governed by Brazilian law, the Brazilian law issues involved are unsuitable for summary determination and BHP's expert evidence is clear and credible, demonstrating that BHP have a good claim; at the very least, it shows that there is a serious issue to be tried as to whether BHP are entitled to the relief they seek;

ii) limitation as a defence to the Part 20 claims is also a defence in the claims against BHP and included in the agreed list of issues for trial;

iii) similarly, Vale's assertion that some of the claims have been compromised shows the overlapping issues between BHP's defence to the claims and Vale's potential defence to the additional claims.

BHP submit that this jurisdiction is the appropriate forum to hear the additional claims:

i) the additional claims almost mirror the legal and factual issues that arise in the main claims, many of which will be considered at the forthcoming threshold liability trial; BHP have pleaded that Vale is liable to the claimants on the same basis as BHP; therefore, on any view there will be very significant factual and legal overlap between the claims regardless of whether Vale relies on identical defences to BHP;

ii) it is in the interests of justice, proportionality and efficiency to have the issues raised by the claims and the additional claims tried together in a single forum; now that the English court has finally determined that the claims will proceed here, the only available single forum for trial of these issues is England.

Background

On 5 November 2015 Brazil suffered its worst ever environmental disaster when the Fundão Dam in South East Brazil collapsed, releasing around 40 million cubic metres of tailings from iron ore mining. The collapse and flood killed 19 people, destroyed entire villages, and had a widespread impact on numerous individuals and communities, not just locally but as a result of the damage to the River Doce system over its entire course to the sea some 400 miles away. The Brazilian public prosecutor has estimated the cost of remediation and compensation at a minimum of R$155 billion, about £25 billion at today's exchange rates.

The area affected by the dam collapse fell 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 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 and BHP Brasil Ltda (“BHP Brasil”). The BHP 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.

Following the disaster, there were criminal proceedings against various defendants in the Brazilian courts. There were also civil proceedings at federal and state level, comprising individual claims and class actions (“CPAs”), including CPAs referred to as “the ADIC CPA”, “the 20bn CPA” and “the 155bn CPA”.

On 17 November 2015 the ADIC CPA was filed against Samarco by the Association for the Defence of Collective Interests (“ADIC”) in the Federal Court, alleging violation of diffuse, collective and homogenous individual rights of all those impacted by the collapse in the States of Minas Gerais and Espírito Santo.

On 30 November 2015, the 20bn CPA was filed against Samarco, Vale and BHP Brasil by the Federal Government, the states of Minas Gerais and Espírito Santo, and nine government entities. The 20bn CPA sought orders that the named defendants should present plans to address the environmental and economic consequences of the dam collapse, take measures to ensure that the specific matters in those plans were dealt with, and fund the implementation of those plans through a private foundation in a minimum amount of R$20 billion, the then estimated quantum of damage caused by the disaster.

On 2 March 2016, the parties to the 20bn CPA agreed to settle the proceedings, without any admission of fault or liability, by entering into a transaction and conduct adjustment term (“the TTAC”), an agreement governed by Brazilian law. Under the TTAC, the Brazilian defendant companies, including Vale, agreed to provide full redress to all persons, sole traders, communities and the environment in the areas affected by the collapse of the dam, through 42 programmes.

On 5 July 2016 a Brazilian private foundation, Fundação Renova (“Renova”), was established by Samarco, Vale and BHP Brasil as the vehicle through which they would carry out the programmes of remediation and compensation. The programmes implemented by Renova include the ‘Novel System’, a judicially supervised compensation scheme

In May 2016, the Federal Public Prosecutor filed the 155bn CPA against Samarco, Vale, BHP Brasil, the Federal Government and others, challenging the sufficiency of the relief provided for in the TTAC and demanding better relief for the victims of the collapse, estimating the damage caused at a minimum of R$155 billion.

On 25 June 2018, the parties reached an interim settlement agreement in the form of the Governance and Conduct Adjustment Agreement (“GTAC”). The GTAC was signed by all parties to the 20bn CPA and the 155bn CPA. It provided a framework by which the parties would undertake negotiations towards a final settlement of the 155bn CPA. Pending such final settlement, the 155bn CPA proceedings were stayed. There is a dispute as to whether the stay remains formally in place, as the Federal Court continues to resolve any disputes that arise regarding the interpretation and effect of the TTAC, GTAC and reparation programmes through the Priority Axes. However, it is accepted by all parties to the GTAC that no decision on the merits of the original claims brought in the proceedings will be rendered before a final settlement has been achieved. The current status of the proceedings is that there is an ongoing mediation in respect of the renegotiation of the GTAC and TTAC.

Proceedings

On 2 and 5 November 2018, the claimants issued proceedings against the first defendant in this jurisdiction and on 3 May 2019, a further claim form was issued against both BHP defendants. On 24 February 2023 a new claim form was issued against BHP, increasing the total number of claimants to approximately 732,000. There are...