English court deems mass litigation over Brazil dam collapse a 'white elephant'

Out-Law News | 19 Nov 2020 | 10:07 am | 2 min. read

The High Court of England and Wales has rejected an attempt by over 200,000 individuals, companies and other entities to claim damages for the 2015 collapse of a dam in Brazil, on the ground that there was no reason to bring the case in England in addition to elsewhere in the world.

The court said allowing the mass action to proceed in England alongside ongoing proceedings in Brazil “would lead to utter chaos in the conduct of litigation in both jurisdictions”. Mr Justice Turner added that: “The task facing the managing judge in England would, I predict, be akin to trying to build a house of cards in a wind tunnel.”

The case was brought by nearly 202,000 individuals, over 500 companies, 25 municipalities and 15 churches affected by the collapse of the Fundão dam in south-east Brazil in November 2015, which released over 40 million cubic metres of iron ore mine tailings into the Doce River causing huge damage and contamination.

The claimants argued that BHP Group Plc and its Australian arm were liable to compensate them for the losses they sustained. There is also ongoing litigation in Brazil, and some have already received some compensation in relation to their losses in that jurisdiction.

BHP, which was not involved directly in the disaster, is the ultimate parent company of BHP Billiton Brasil, which entered into a joint venture with metals and mining company Vale concerning operation of the dam. Samarco, the joint venture vehicle, and Vale are alleged to have been direct polluters in the collapse and BHP Brasil an indirect polluter.

In the English proceedings, BHP argued that the case should be struck out as an abuse of process, stayed on jurisdiction grounds or stayed on case management grounds.

The judge struck out the claims after finding there was abuse of process, but said if his finding of abuse was wrong, the claims should be stayed on jurisdictional grounds.

Dispute resolution expert Jameela Bond of Pinsent Masons, the law firm behind Out-Law, said the decision to strike out the case reaffirmed the importance of the overriding objective in the context of substantial group actions.

“Mr Justice Turner held that factors including the impact of parallel group action in Brazil and the uncertainties and inconsistencies likely to arise; the likely turnover rate of claimants in such a sizeable action; the disparate claims advanced (which would require, in his view, a number of lead cases likely to be far in excess of those selected in any group litigation order to date in the English court); the required application of Brazilian law; and the impact upon the limited resources of the English court would render the claims ‘unmanageable’ if allowed to proceed,” Bond said.

“Large corporate groups can face the risk of parallel proceedings arising out of the same issue or event in multiple jurisdictions. This decision provides some comfort that the English court will as part of its analysis carefully scrutinise the impact of a multiplicity of actions globally before allowing claims to proceed in this jurisdiction,” Bond said.

“This case also underlines the case management challenges which arise in these sorts of complex matters and the need for creative, strategic thinking about how that can be achieved effectively,” Bond said.