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

Hearing date: 21 st December 2023

Approved Judgment

This judgment was handed down remotely at 10.30am on Thursday 11 January 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

THE HON Mrs Justice O'Farrell DBE

This hearing concerns the claimants' application dated 27 November 2023 for permission to make amendments to the Re-Amended Master Particulars of Claim (“RAMPOC”) and the Amended Reply.

There is some measure of agreement between the parties but in large part the application is opposed by the defendants and the part 20 defendant (“Vale”).

Background

The claims arise out of the collapse of the Fundão Dam in South East Brazil on 5 November 2015, releasing around 50 million cubic metres of tailings from iron ore mining and causing widespread destruction and environmental pollution.

The background to these proceedings is set out in earlier judgments by the Court of Appeal at [2022] EWCA Civ 951 and by this court at [2022] EWHC 330 (TCC), [2023] EWHC 1134 (TCC) and [2023] EWHC 2030 (TCC). It is not necessary to repeat it here and the following is limited to a brief overview of the claims.

On 2 and 5 November 2018, the claimants issued proceedings, seeking damages and other relief against the first defendant. On 3 May 2019, a further claim form was issued against both BHP defendants (collectively, “BHP”). On 24 February 2023 a new claim form was issued against BHP, increasing the total number of claimants to approximately 732,000. There are public statements from the claimants' solicitors estimating the value of the claims as £36 billion.

The claims, seeking compensation for loss and damage caused by the collapse of the dam, are brought jointly and severally against the BHP defendants. The claimants are all Brazilian and comprise (i) over 700,000 individuals; (ii) over 1,600 businesses; (iii) 78 churches and faith-based institutions; (iv) 46 municipalities; (v) 7 utility companies; and (vi) over 9,500 members of the indigenous and Quilombola communities.

The claims are advanced under Brazilian law and include the following pleaded allegations in the current version of the RAMPOC:

i) Articles 3(IV) and 14 of the Environmental Law and/or Articles 927 and 942 of the Civil Code impose strict liability on BHP for loss and damage caused by the environmental disaster by reason of their: (a) ownership and/or control of the entity responsible for the damage; (b) failure to supervise the activity giving rise to the damage; (c) funding the activity of others which led to the damage; and/or (d) benefiting from the activity of others which led to the damage.

ii) BHP are liable under Articles 186, 927, 932 and 942 of the Civil Code for the loss and damage suffered by the claimants 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 under Articles 116 and 117 of the Corporate Law, as controlling shareholders, for the loss and damage suffered by the claimants, by permitting activities involving a significant risk of substantial damage to the community.

The Amended Defence contains a denial of any liability on the part of BHP and includes the following defences to the claims:

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 positions and breached no legal duty.

iii) There is no liability under the Corporate Law. BHP were not controlling shareholders of Samarco and/or owed no controlling shareholder duties and/or did not breach any such duties by act or omission.

iv) 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.

v) BHP plead that all the claims are time-barred under Brazilian law.

vi) Certain claimants have accepted compensation, pursuant to settlement agreements with Renova, Samarco, BHP Brasil, Vale and/or through the Novel System compensation scheme, and the terms of the release or waiver clauses in such settlements preclude the claimants from pursuing the claims in these proceedings.

On 2 December 2022 BHP served a Part 20 claim against Vale, seeking declaratory relief and a contribution to any sums that BHP might be found liable to pay to the claimants. On 13 April 2023 BHP issued a new Part 20 claim against Vale in respect of any liability arising out of the new claim form issued by the claimants.

On 1 December 2023 Vale served its defence to the Part 20 claims, disputing all and any liability, including the following grounds of defence:

i) Any claims that the claimants might bring against Vale would be time-barred pursuant to Article 206(3)(V) of the Brazilian Civil Code and would have been time-barred when the first and second Part 20 claims were issued.

ii) Some claimants have commenced claims against Vale in local Brazilian courts seeking compensation for loss caused by the collapse; a number of such claims have been dismissed by final and conclusive judgments of Brazilian courts. Claims by any of those claimants against Vale in respect of the collapse are barred by cause of action estoppel and/or issue estoppel and/or constitute an abuse of process.

iii) Other claimants have accepted settlements, pursuant to settlement agreements concluded with Renova, Samarco, BHP Brasil and/or Vale. Claims by any of those claimants against Vale in respect of the collapse, and which fall within the scope of the relevant settlement agreements, are barred as a matter of Brazilian law and/or are an abuse of process.

iv) It is denied that Vale exercised de facto and/or de jure control over Samarco, or was aware at any material time prior to the collapse that the safety of the dam had been or was being compromised.

v) Any liability arising for loss and damage resulting from the collapse is to be satisfied, in the first instance, by Samarco and conditions for piercing the corporate veil so as to render Vale liable to the claimants, as Samarco's shareholder, are not satisfied.

vi) It is denied that Vale is or would be liable to the claimants as a polluter pursuant to Article 3(IV) and/or 14 of the Environmental Law.

vii) It is denied that Vale caused the collapse by any voluntary act and/or omission, negligence and/or imprudence within the meaning of Article 186 of the Civil Code.

viii) Vale was not at any material time a controlling shareholder of Samarco and, accordingly, it did not owe any duties or responsibilities under Articles 116 and/or 117 of the Corporate Law; further or alternatively, the requirements in respect of fault-based liability under Article 186 of the Civil Code are not satisfied.

ix) The main cause, or trigger, of the collapse was three earthquakes which occurred within four minutes of each other around 90 minutes before the collapse on 5 November 2015, which was unprecedented and would not have been considered a reasonable scenario when the dam was designed and/or at any stage prior to the earthquakes occurring.

x) The effect of the TTAC, which has been ratified by a Brazilian federal court, is that any liability in respect of the collapse as between Vale and BHP Brasil (and/or BHP) has been settled and any compensation will be funded by Renova and/or Samarco.

xi) Further, it is denied that BHP have any claim for a reimbursement under Article 283 of the Civil Code.

Following a CMC in March/April 2023, this court fixed a trial on threshold liability issues to be heard on 7 October 2024 with an estimate of 11 weeks, to include one week of judicial reading. The threshold liability issues include:

i) 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;

ii) whether BHP are 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) whether BHP are 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) various limitation issues, including whether environmental damage claims are subject to prescription, whether time runs from the date of knowledge of damage, and circumstances in which protests or service of proceedings gives rise to an interruption of the limitation period;

v) whether any of the claims (or categories of claim) are precluded by reason of settlement agreements entered...