A class action by 202,600 claimants arising from the collapse of the Fundão dam in Brazil was struck out as abuse of process.
By Sophie Lamb QC, Oliver Middleton, and Tom Watret
In Município De Mariana & Ors v. BHP Group Plc & Anor (Rev 1), the largest group action in English legal history (by number of claimants) was struck out as an abuse of process by Turner J in the High Court. The case is the latest in a series brought by groups of overseas claimants against the UK-listed parent company of a large multinational in respect of alleged misconduct by a subsidiary in a foreign jurisdiction. The uptick in these large international class actions is likely to continue given the ever-increasing focus on environmental, social, and governance (ESG) fundamentals.
The Court’s decision in this case illustrates some of the important practical implications of attempting class action litigation of this scale and complexity, and highlights the importance of taking prompt remediation steps at a local level following major incidents. Where that includes establishing comprehensive compensation schemes, the decision makes clear that the English courts will be reluctant to allow litigation to proceed in England if such action would cut across the local remediation scheme, particularly if the claimants are entitled to and may already have obtained compensation through a local scheme or local litigation.
In November 2015, the Fundão dam in Brazil collapsed, with catastrophic consequences. The polluting effects of the collapse “destroyed, damaged or contaminated everything in its path”, obliterated entire villages, killed 19 people, and affected hundreds of thousands of others.
A total of 202,600 individual, corporate, and institutional claimants (together, the Claimants) brought a claim in England for around £5 billion in damages against BHP Group plc (BHP plc) and BHP Group Limited (BHP Ltd) (together, the Defendants), which were the ultimate beneficial owners of part of the dam operator, Samarco Mineração SA (Samarco), a joint vehicle. Importantly, before the English proceedings were issued, more than 70 separate group actions had already been initiated in Brazil, including one which, as part of its settlement, had resulted in the creation of a local foundation (the Renova Foundation) intended to remediate the environmental consequences of the dam’s collapse and to compensate affected individuals and/or businesses. Additionally, the owners of Samarco had established 42 remediation programs across 40 municipalities in the affected territories designed to ensure access to information, and to encourage dialogue with stakeholders. Nearly half of the Claimants in the English proceedings had already received monetary compensation from the Renova Foundation by the time of the judgment.
Notwithstanding the multiplicity of actions already on foot in Brazil and the progress of the Renova Foundation, the Claimants sought to advance cases in England against the parent company and an Australian subsidiary of the BHP group. The Claimants argued that there were substantial legal, practical, and procedural impediments in obtaining redress against any potential defendant in Brazil, and particular obstacles to obtaining redress there against the BHP entities.
The Defendants strongly refuted those claims and applied to the court for orders that (i) the claims against the parent be stayed under Article 34 of the Recast Brussels Regulation given the related proceedings in Brazil; (ii) the claims against the Australian subsidiary be stayed on forum non conveniens grounds; and/or (iii) the claims against both defendants be struck out or stayed as an abuse of process, or for the claims to be stayed on case management grounds, arguing the claims against the parent were wasteful and duplicative of the proceedings and/or judgments in Brazil and the work of the Renova Foundation.
Turner J concluded that all of the claims should be struck out. Nonetheless, Turner J also dealt with the other arguments advanced by the Defendants, in case his findings on abuse of process were to be overturned.
Abuse of Process
Turner J began by observing that the Claimants had no intention to sue the BHP entities in Brazil, where the proceedings had been brought against different defendants. In that context, the Court stated that an important consideration in the assessment of abusiveness was that suing a particular defendant may bring no benefit to the Claimants, but would result in the oppression of that defendant, and/or would take a disproportionate toll on the court’s resources. In such circumstances, the court is entitled to intervene.
Turner J noted that if the English proceedings were to proceed, closely related group claims would be moving in parallel in England and Brazil, with many of the same Claimants seeking identical remedies. The Court made particular reference to 34 sets of proceedings in Brazil and the large number of individual proceedings together with a class action referred to by the parties as “the 155bn CPA”. Advancing the same case in both England and Brazil would self-evidently lead to: (i) wasted time, (ii) wasted costs, and (iii) the risk of inconsistent findings.
Many of the Claimants had already obtained some form of redress in Brazil and so were precluded from seeking similar compensation in the English proceedings. Awarding remedies in England would also significantly risk duplicating the work already being undertaken by the Renova Foundation, and would create irreconcilable methods of claim resolution.
Moreover, Turner J was damning of the fact that any of the Claimants that succeeded in the English proceedings were under an obligation to pay their solicitors a success fee of up to 30% of any damages awarded. He regarded the arrangement as unnecessarily causing the Claimants to forfeit a portion of financial compensation, especially since there are no cost consequences for engagement in the Renova Foundation scheme.
Turner J was unimpressed at the lack of concrete proposals he had received from the Claimants to address these difficulties, or to ensure that the claim could be dealt with appropriately, noting that “little more was predicted than the need for the formation of a GLO and the determination of a preliminary issue relating to the existence of the defendants’ alleged status as indirect polluters and the selection of lead cases”.
The judge was particularly vexed by the fact that almost all of the Claimants and relevant witnesses lived in Brazil and spoke Portuguese. The proposals that had been raised to address this issue, including flying an English judge to Brazil or witnesses giving evidence remotely from Brazil, were likely to be unworkable or impermissible under Brazilian law. The relevant documents were also in Portuguese and would require translation, resulting in further delays and costs.
Turner J said it was “simply not good enough” for the Claimants in group actions to seek to outsource all or most of the responsibility for devising a workable procedural mechanism to resolve claims to the court, concluding “[r]obust case management is a tool not a magic wand”. Overall, Turner J predicted that “the task facing the managing judge in England would … be akin to trying to build a house of cards in a wind tunnel” and would “foist upon the English courts the largest white elephant in the history of group actions”.
Article 34 Recast
In the alternative, Turner J would have stayed the claims against BHP plc under Article 34 of the Recast Brussels Regulation.
He considered the following elements in turn: (i) whether there was a related action; (ii) whether the matter was pending in Brazil; (iii) whether it was expedient to hear the actions together to avoid the risk of irreconcilable judgments resulting from separate proceedings; (iv) whether a Brazilian judgment would be capable of recognition and enforcement in Brazil; (v) whether a stay is necessary for the proper administration of justice; and (vi) whether the Court ought to exercise its discretion in favour of a stay.
Turner J considered that there would be a real risk of conflicting judgments given how closely related the proceedings were. Moreover, the Brazilian proceedings were significantly more advanced than the English proceedings, and the Brazilian courts and legal teams were significantly immersed in the facts of the matter. Turner J acknowledged the overriding discretion of the Court under Article 34 Recast, but concluded that he would have stayed the English proceedings in order to ensure the proper administration of justice.
Forum Non Conveniens
The judge also found that, in the alternative, the claims against BHP Ltd would have been stayed on the grounds of forum non conveniens, applying the two-stage test set out in Spiliada Maritime Corp v. Cansulex Ltd  AC 460.
As to the first stage, determining whether England was the proper place to bring the claim, Turner J noted that the tort took place in Brazil, the governing law would be that of Brazil, and all the Claimants and most of the witnesses were located there.
As to the second stage, determining whether or not justice could be substantially achieved in the Brazilian proceedings, Turner J was unpersuaded that a more prompt conclusion would be reached through proceedings in England than in Brazil. He also reiterated the point that a successful claimant would need to pay 30% of the damages award to their solicitors, which weighed against any argument that the Claimants would not achieve adequate redress in Brazil.
Case Management Stay
Turner J considered the factors he had taken into account when exercising the discretion to stay a case were the same as those he had already considered in relation to abuse of process, and that he would have granted a case management stay on the same grounds. For that reason, Turner J noted that if he had erred in his findings on the abuse of process, it is likely that the free-standing decision to impose a case management stay would also have been unsustainable.
For potential future claimants, the decision highlights the importance of presenting practical case management proposals for dealing with group actions of this size, scale, and complexity, to proactively assist the judge to develop proposals that will allow a court to manage the proceedings in a proportionate way.
The decision also reinforces the importance of taking prompt action locally to investigate the underlying grievance, and address any adverse impacts through a comprehensive remediation program involving all relevant stakeholders. Such actions are consistent with the ESG commitments being made by an increasing body of publicly traded companies and other commercial actors and lenders. In this case, those proactive steps played an important role in mitigating exposure to further ESG litigation in courts beyond the location of the incident.
Whilst the judgment was definitive and comprehensive, the Claimants are likely to appeal.
This post was prepared with the assistance of Manon Cote in the London office of Latham & Watkins.
  EWHC 2930 (TCC).
 See also Vedanta Resources v. Lungowe  UKSC 20; Okpabi v. Royal Dutch Shell and SPDC  EWCA Civ 191; AAA & Others v. Unilever PLC and Unilever Tea Kenya Limited  EWCA Civ 1532.
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