Judges to rule if case can proceed against BHP in 2015 dam collapse

July 22, 2020

British judges will rule if more than 200,000 Brazilians citizens will be able sue BHP Group in British courts over the 2015 collapse of the Fundão Dam, which killed 19 people and caused lasting environmental damage.

At an eight-day hearing starting Wednesday in Manchester, U.K., judges will rule on whether British courts have jurisdiction over the case. If it goes ahead, it would be the biggest class action in U.K. history with the local groups seeking a total of 5 billion pounds ($6.33 billion).

The citizens contend that BHP bears ultimate responsibility for the collapse of the Fundão Dam while BHP has argued that the Manchester case duplicates legal proceedings in Brazil and shouldn’t be allowed to go ahead.

Bloomberg reported that this is the latest in a series of group claims brought in the U.K. against British companies for the actions of their foreign units in developing countries. Melbourne-based BHP’s shares are listed in both the U.K. and Australia.

In a landmark ruling last year, the U.K. Supreme Court allowed Zambian villagers to sue mining company Vedanta Resources Plc in Britiain over pollution caused by a mine, opening the door to similar claims.

“BHP’s overarching position remains that the proceedings do not belong in the U.K.,” BHP said in a statement.

The Fundão Dam was used to store iron ore tailings, a toxic waste produced during the processing of mined mineral. Its collapse destroyed entire villages, polluted rivers and devastated natural habitats.

The joint venture, Samarco, allegedly ignored safety warnings as it increased iron ore production and tailings storage at the dam, PGMBM said in court filings ahead of the hearing. BHP representatives had been informed of serious structural failings in a report two years earlier, the claimants said.

BHP said it is committed to supporting ongoing remediation and compensation through the Renova Foundation, an out-of-court compensation scheme, to which the company made a provision of $1.7 billion.

The Renova Foundation had announced it was suspending payments to thousands of victims it alleged had provided false information, but a Brazilian judge ordered the Foundation to resume aid last week.

Thousands of individual claims against Samarco are ongoing in Brazil.

An appeal is currently pending against the dismissal of a class action filed in New York on behalf of Samarco bondholders, while a separate class action by BHP investors has been filed in Australia, according to company filings. Brazilian prosecutors are also continuing to challenge the dismissal of some criminal charges in the case, BHP said in a February statement.

Other cases linked to large-scale environmental damage have taken decades to be processed in the Brazilian courts, and the claimants are hoping to obtain quicker results in the U.K. The current proceedings in the British courts don’t target Vale.

Work to reopen the joint venture in Brazil has been slowed, in part because of measures to respond to Covid-19, BHP said in a separate statement this week.

 

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