Court of Appeal gives go ahead for Fundão Dam class action (Municipio de Mariana v BHP Group)

14 July 2022

In Município de Mariana v BHP Group UK Ltd¹, the Court of Appeal has given permission for some 200,000 Brazilian claimants to pursue their class action for damages caused by the collapse of the Fundão Dam in Brazil. The judgment represents a significant shift from the analysis of the High Court, where the claim was struck out/stayed as an abuse of process. It also signals the English courts' willingness to hear complex, multi-jurisdictional class actions. In particular, the Court of Appeal has provided clear guidance about the circumstances in which a claim may be struck out as an abuse of process. While at first instance, the High Court held that the parallel proceedings in Brazil and the sheer numbers of potential claimants (whose first language was Portuguese) rendered any English action "irredeemably unmanageable", the Court of Appeal found that conclusion to be unsustainable. Further, it held that even if a claim was 'unmanageable', that did not, of itself, make it an abuse of the court's process.

What are the practical implications of this case?

The Court of Appeal's guidance on when a claim may be struck out or stayed as an abuse of process will be helpful for all practitioners, and of particular relevance to those advising on class actions. Of note:

where a claim is 'properly advanced', the fact that it may be 'unmanageable' for the court does not make it an abuse of the court's process
forum non conveniens factors do not form part of the court's analysis on abuse of process
a 'properly arguable' claim may be abusive if it is clearly and obviously 'pointless and wasteful'
the 'manageability' of the litigation should not influence the court's assessment of whether a properly arguable claim is pointless or wasteful
in group litigation, the assessment of whether a claim is 'pointless and wasteful' must be made in relation to each individual claimant or group of claimants, not the claimants as an 'indivisible group'

The Court of Appeal also provided guidance in relation to best practice in class actions. It cited the 'clear illustrations of case management options' provided by the claimants' solicitors, and the 'well-structured, coherent and entirely digestible' Particulars of Claim as factors in its conclusion that the claim was not irredeemably unmanageable.

In relation to abuse of process, the Court of Appeal highlighted that even where complexities (such as complications arising out of parallel proceedings in another jurisdiction) make proceedings, for practical purposes, unmanageable, that does not mean the court process has been misused.

The court also cited the conclusions in Mastercard v Merricks [2020] UKSC 5, in the context of collective proceedings, that procedural difficulties in managing such claims do not justify the denial of 'practicable access to justice'.

What was the background?

The Fundão Dam near Mariana, in Brazil was owned and operated by Samarco Mineração SA. In 2015, the dam collapsed, triggering the release of mining waste which destroyed multiple villages, killed nineteen people, and eventually flowed into the Atlantic Ocean damaging everything in its path. Samarco Mineração SA was owned as a joint venture between mining giants Vale (headquartered in Brazil) and BHP (an Australian company). In 2018, dissatisfied with the redress available in Brazil, over 200,000 Brazilian claimants (the Município de Mariana) initiated proceedings in the UK, seeking compensation of £5 billion. The claim was brought against BHP Group PLC, a UK company (who owned BHP's 50% stake in Samarco Mineração SA) and BHP Group Limited, an Australian company.

At first instance, the High Court granted the Defendants' application to strike out/stay the claim against them as an abuse of process, holding that trying to manage the claim would be like 'trying to build a house of cards in a wind tunnel'.

The Court of Appeal denied permission to appeal the High Court judgment, but the claimants applied to reopen the refusal under the rarely used provision set out in CPR 52.30. In a 'monumental judgment', the Court of Appeal reopened the refusal to grant permission and went on to grant permission to appeal.

What did the court decide?

The Court of Appeal determined that the claims were not clearly and obviously pointless or wasteful, and should not be struck out. There was a realistic prospect of a trial providing a 'real and legitimate advantage' for the claimants, which outweighed the disadvantages for the parties in terms of expense and the wider public interest in the management of the courts' resources.

The court also held that the English proceedings were not oppressive. The defendants were not parties to any of the Brazilian proceedings (except in a few limited instances) and the claimants had not sued them in that jurisdiction. The burden placed on the English courts by the proceedings was not disproportionate given the claims asserted were arguable and for significant sums.

In reaching its decision the Court of Appeal emphasised that it was not discouraging the claimants from engaging with the opportunities for redress offered to them in Brazil. Rather, its conclusion was that the remedies available in that jurisdiction were not so obviously adequate that they rendered the English proceedings pointless or wasteful.

The court also dismissed the challenge by BHP Group Limited (the Australian company) on the grounds of forum non conveniens. It held the evidence did not establish that Brazil was clearly and distinctly a more appropriate forum for the case than England.

This article was first published on Lexis®PSL on 14 July 2022

¹ Re Fundão Dam Disaster; Município de Mariana (and the claimants identified in the schedules to the claim forms) v BHP Group UK Ltd (formerly BHP Group plc) and another company [2022] EWCA Civ 951