Holding big corporations to account – lessons from BHP v Mariana

Guest post by Céline Barnwell, legal director, and Emma O Brien, associate, at Pogust Goodhead (formerly PGMBM)

Céline Barnwell

On 5 November 2015, the Fundão Dam in eastern Brazil burst, causing Brazil’s worst-ever environmental disaster. The dam stored iron ore tailings and was operated as a joint venture between two Brazilian companies, Vale SA and BHP Billiton Brasil Ltda, through a company called Samarco.

The dam collapse released around 40 million cubic metres of toxic waste into the River Doce, killing 19 people, impacting vast numbers of communities and causing massive environmental damage over hundreds of kilometres.

Despite nearly seven years having passed since this disaster, BHP has failed to compensate the victims of the dam collapse. Over 200,000 claimants are still seeking redress, which is why they are pursuing a case in the English courts.

In 2018, Pogust Goodhead decided to take on this case, after witnessing first-hand the lack of action in Brazil and being approached by persons suffering as a result of the disaster.

It is fair to say that, from a legal perspective, the case has had its ups and downs. In November 2020 Mr Justice Turner granted BHP’s application challenging the English court’s jurisdiction and struck out the proceedings on numerous grounds.

Among other things, he believed that allowing the case to be brought in the English courts was an abuse of process because there were ongoing proceedings in Brazil also dealing with the dam collapse.

In Turner J’s opinion, this created the potential for overlapping – and even conflicting – decisions in Brazil and England. He also identified other potential case management and procedural problems with the claim.

While the strike-out decision was a disappointment, we formed the view that an appeal would be successful because the reasoning adopted at first instance was fundamentally flawed in several respects.

On behalf of our clients, Pogust Goodhead made two appeals: first to Turner J and then directly to Lord Justice Coulson in the Court of Appeal. These were heard in January 2021 and March 2021 and were both unsuccessful, giving the case little hope of proceeding.

Emma O Brien

We then took the decision to apply to re-open the final appeal and overturn Coulson LJ’s refusal to allow permission to appeal, by way of the extraordinary application process under CPR 52.30.

The test is stringent, and the court will only re-open an appeal in exceptional circumstances, if it deems it necessary to do so in order to avoid real injustice and when there is no alternative remedy.

The decision to go ahead with this application was made, after careful consideration, because we believed something had gone seriously wrong with the process of the claimants’ application for permission to appeal and that Coulson LJ had not sufficiently grappled with the issues before him.

It was a bold application, but we and counsel felt it was the type of case the CPR 52.30 procedure was designed for.

In June 2021, the application was granted by the Court of Appeal. Although such as application is typically determined on paper, the Court of Appeal directed an exceptional three-judge panel to hear the application, presided over by the Master of the Rolls, Sir Geoffrey Vos, the Vice-President of the Court of Appeal (Civil Division), Lord Justice Underhill and Lady Justice Carr.

It was at this point that we began to believe that the English courts were beginning to see the injustice the claimants had suffered in the case, and the merits of bringing proceedings in this jurisdiction.

The Court of Appeal found that Coulson LJ had failed to grapple with the points raised in the original application. The judges granted the permission to appeal, stating that the claim had a real prospect of success. Furthermore, the court ruled that unmanageability was not a legal basis to strike out claims and the English courts could not abrogate their responsibility for hearing such claims simply because they are overly complex.

Last month, we crossed a further hurdle when the Court of Appeal unanimously allowed the appeal on all grounds, and dismissed the defendants’ strike-out application, granting jurisdiction to allow the case to proceed in the courts of England and Wales in respect of over 200,000 claimants.

The ruling confirmed our belief that justice can and will be done in the English courts, clearly demonstrating that cases of such magnitude and volume should not be struck out simply because they may be difficult to manage.

BHP is a multinational that generates huge profits in the regions where it operates, and it is only right that it is held directly accountable in England, where the group was headquartered at the time the action was commenced.

Nevertheless, at the time of writing, BHP is applying for permission to appeal the decision to the Supreme Court. We have, of course, objected to BHP’s application and are confident it will be dismissed.

The decision represents a significant step in cross-border group litigation in England, building on earlier decisions in Okpabi and Vedanta. It confirms that the English courts should and will adopt a robust defence of foundational principles of access to justice, and that in the group litigation context, each case must be assessed on its own merits.

Many hope that the decision sends a clear message to large multinational companies operating across the world, showing that they cannot avoid responsibility for the consequences of their operations and that they will be held to account when their activities have a negative impact on people’s lives.

Looking to the future, we hope cases such as these and others we take on will shift the balance of power away from big corporations into the hands of the people affected by their decisions, ensuring that tragedies like this never happen again.

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