The largest group litigation in English legal history
On 9 November 2020, Manchester’s Technology and Construction Court (Business and Property Courts Liverpool Sitting) passed judgment in what would arguably be the most prominent group litigation in English legal history.
In Municipio de Mariana v BHP Group plc and BHP Group Ltd  EWHC 2930 (TCC), a claim following the worst environmental disaster in Brazil’s history was brought by 202,600 claimants, consisting of (i) 201,897 individuals; (ii) around 517 small or micro-sized businesses; (iii) 13 larger businesses; (iv) 145 members of the indigenous Krenak community; (v) 25 Municipalities comprising administrative divisions of the Brazilian states covering the geographical areas in which 96% of the claimants live; (vi) 15 churches; and (vii) five utility companies.
As an introduction to the judgment, The Hon. Mr Justice Turner, explained the disaster as follows:
- “On 5 November 2015, the Fundão dam in south eastern Brazil collapsed and over 40 million cubic metres of iron ore mine tailings were released into the Doce River. The consequences were catastrophic.
- The polluting waste eventually found its way to the Atlantic Ocean over 400 miles away. It destroyed, damaged or contaminated everything in its path. Nineteen people died. Hundreds of thousands suffered loss. Entire villages were obliterated.”
In a claim of this magnitude and with international law elements, one expects vast amounts of documentary evidence, not only due to the number of claimants but also the fundamental contrasts between the Brazilian civil procedural law and the English Civil Procedure Rules. So much so that Mr Justice Turner made the following preliminary observations, inter alia:
“…The trial bundles comprise 2,085 items set out in 30,015 pages which have been ‘distilled’ into no fewer than five core bundles. There are nine further bundles containing 127 authorities. The defendants’ skeleton argument was 187 pages long and was the product of the collective endeavours of three leading and four junior counsel. The claimants, not to be outdone, deployed a skeleton argument which was 211 pages long and, by the end of the hearing, had been supplemented incrementally by no fewer than 22 appendices, the steady flow of which gave rise to a growing frisson of resentment on the part of the defendants. Submissions lasted for eight full days and have been recorded in a transcript which is about 1,200 pages in length.”
Why were proceedings brought in England as opposed to Brazil?
Proceeding were brought in both countries. Several public bodies, including the Brazilian Federal Government, brought proceedings in Brazil within four weeks of the dam collapse.
Mr Justice Turner’s judgment refers to the fact that over 70 group litigation claims have been lodged in Brazil to date, two of which have significant importance given their financial value. The first in the region of 20 billion Brazilian reals and the second 155 billion Brazilian reals. In other words, 3.7 billion pounds sterling and 29.2 billion pounds sterling, respectively.
While proceedings are ongoing in Brazil, the defendants signed up to an arrangement involving the creation of a foundation to compensate the victims of the disaster and mitigate its environmental consequences (the “Fundação Renova”).
Perhaps the intricate relationship between the defendants provides sufficient explanation as to why proceedings were also commenced in England. The owner and operator of the dam is Samarco Mineração SA (“Samarco”), a Brazilian mining company. However, Samarco is a joint venture between Vale SA (“Vale”) and BHP Billiton Brasil LTDA (“BHP Brasil”), both Brazilian companies.
As Brazilian environmental legislation provides for categories of direct and indirect polluters, Samarco, as owner and operator of the dam, and Vale, which was responsible for storing its waste behind the dam, are both alleged to have been “direct polluters”. Also, BHP Brasil is suspected of having been an “indirect polluter”. Curiously, claims in England against those companies were formally discontinued by the claimants.
The remaining defendants in the English proceedings are BHP Group Plc (“BHP Plc”), a company incorporated in England, and BHP Group Limited (“BHP Ltd”), incorporated in Australia (but linked with BHP Plc in a dual listed company arrangement which provides for a unified management structure). BHP Ltd is the ultimate owner of BHP Brasil.
It follows that the central substantive question on liability in the English proceedings, as a matter of Brazilian law (as all parties conceded that this would have been the correct approach), was whether these two defendants are liable to the claimants, as direct or indirect polluters as a result of the collapse of the dam.
The proceedings in England
BHP Plc and BHP Ltd, the remaining defendants in the English proceedings, contended four points: (a) the claims should be struck out or stayed as an abuse of process of the court; (b) the claims against BHP plc (the UK entity) should be stayed by the application of Article 34 of the Recast Brussels Regulation; (c) the claims against BHP Ltd (the Australian entity) should be stayed because England is forum non-conveniens; and (d) alternatively, both claims should be stayed on case management grounds.
Upon adjudication of the issue on abuse of process, Mr Justice Turner noted that on the one hand litigants should not be denied the right to bring genuine cases before the courts. However, on the other hand, the court is entitled to take into consideration all circumstances of the case to include factors such as whether claimants have already taken the opportunity to bring claims in other proceedings as well as the likely impact upon the business of the courts themselves if the claims were permitted to go ahead in England, inter alia.
He also expressed his concerns around (i) the practicality of managing two group litigation cases moving forward in parallel in two different jurisdictions with many of the same claimants in each seeking remedies in both countries concurrently; (ii) the challenge of language – almost all of the claimants and many of the potential witnesses for both sides speak Portuguese as their first or only language, meaning that proceedings in England would be significantly lengthened and rendered more expensive by the need for extensive involvement of interpreters; (iii) the disadvantage of the English court in having to apply Brazilian law with which it had had no previous familiarity whereas the courts in Brazil are fully acquainted with and experienced in its scope and application; (iv) ensuring that judicial and court resources are appropriately and proportionately used; and (v) the peril of having inconsistent judgments in Brazil and in England.
By the end of 2019, no fewer than 27,000 claims had been adjudicated upon in the state of Minas Gerais, Brazil, in an average of 414 days; and Fundação Renova had already paid compensation to under half of the claimants. As a result, Mr Justice Turner was of the view that the Brazilian routes to compensation were effectively underway and that they afforded sufficient resolution mechanisms for the claimants (albeit lessons are being learnt in Brazil and improvements are being implemented).
Besides, Mr Justice Turner pointed out that the main reason why the claimants will not commence proceedings against BHP Plc and BHP Ltd in Brazil is that they would there face the additional hurdle of having to prove that they were liable as indirect polluters. However, this would be a pointless exercise when all the other means of redress were already in place in Brazil without challenge by the defendants in the Brazilian proceedings.
It follows that Mr Justice Turner decided that the claimants’ claims amount to an abuse of the process of the court (i.e. “a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process”). He further determined that the only proper procedural consequence in his view is that the claims should be struck out.
Whilst Mr Justice Turner thought it was unnecessary to consider, in the alternative, what approach he would have otherwise taken to the further points advanced by the defendants (points (b) – (d) above), he nevertheless, out of deference to the parties and in case, on appeal, his decision on the question of abuse should be overturned, went on to resolve the additional points in the alternative details of which are beyond the scope of this article.
The English legal system is a world jurisdiction of choice. The high calibre of the English judiciary, experienced in dealing with commercial disputes with international elements, with a renowned reputation for neutrality, independence, intellectual rigour and commercial awareness, is sufficiently flexible to allow for the adjudication of cases even when foreign law is applicable (as per the Mariana case above). Unsurprisingly, the victims of this catastrophic disaster felt it as a further resource in their plea for justice to seek recourse to the English court.
Whilst it is unfortunate for the claimants that their claim was struck out as an abuse of process, Mr Justice Turner’s in-depth considerations of the peculiar facts of this case provide further guidance to foreign litigants wishing to bring proceedings in England and Wales. Appropriate reference to the costs involved in the running of a two-pronged jurisdictional approach should not be underestimated – neither should be the timescale for the resolution of proceedings in this jurisdiction (considering that matters not struck out are likely to be, at the very least, stayed pending resolution by the foreign court and/or proceedings).
For advice and information, please contact Luiz Costa at email@example.com.
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