Multinational mining company Vale has lost its attempt to block mining giant BHP from making it share potential liability for a dam collapse that led to Brazil’s worst environmental disaster.

Ruling in the High Court in London Mrs Justice O’Farrell found there is ‘significant overlap’ between the claims against BHP and the additional claims against Vale. She said England was the ‘only forum in which a single trial’ of the claims could ‘most suitably be tried of the interests of all parties and for the ends of justice’.

The first-stage trial over the dam collapse is due to heard next year.

In November 2015 the Fundão Dam, in Minas Gerais, Brazil, collapsed releasing some 40 million cubic metres of tailings from iron ore mining. The collapse and flood killed 19 people and destroyed entire villages. Some of the toxic waste swept into the River Doce, a main water supply, and reached the Atlantic – more than 400 miles away.

The High Court judgment said the Brazilian public prosecutor has estimated the cost of remediation and compensation at a minimum of R$155bn, around £25bn at today’s exchange rates.

Mrs Justice O'Farrell

Mrs Justice O'Farrell: 'Significant overlap’ between claims against BHP and additional claims against Vale

Source: Avalon

The dam was owned and operated by Samarco Mineração SA, a Brazilian company jointly owned by Vale and BHP Brasil Ltda. BHP is the ‘ultimate parent company’ of BHP Brasil.

There are 732,000 claimants in the group action who are seeking compensation over the collapse. BHP denies any liability.

In Município de Mariana & Ors v BHP Group (UK) Limited & Anor, the judge said there is a ‘serious issue to be tried on the merits against Vale’.

Considering jurisdiction, and whether England is the ‘appropriate forum’ for the trial, the judge said BHP’s claims against Vale ‘have the same foundation based on the 50:50 ownership of Samarco by BHP Brasil and Vale’.

She said it was ‘striking’ that Vale ‘had not identified any ongoing proceedings in Brazil that will determine liability’ over the dam collapse and ‘any entitlement to damages for a significant proportion of the 732,000 claimants’.

The judgment said: ‘Vale has not identified any ongoing proceedings in Brazil to which BHP could be made a party, thus avoiding a multiplicity of proceedings. If this court does not accept jurisdiction for the Part 20 claims, BHP will be forced to issue fresh proceedings against Vale in Brazil.

‘England is clearly the appropriate forum for the trial of the dispute between BHP and Vale. The existence of the proceedings brought by the claimants against BHP, and the significant overlap between those proceedings and the issues raised by BHP... give rise to a real and substantial connection to this jurisdiction.'

Dismissing the applications by Vale, the judge made a number of directions including that Vale would have three months to ‘prepare and file its defence’ by early November.

 

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