Fundao Dam disaster: Letter before action
Class action practice Pogust Goodhead has accused the defendants in the Fundão Dam case of trying to “put an end” to the firm by settling claims directly with its clients.
Its solicitors, US firm Orrick, have sent a letter before action for a £1.3bn claim accusing BHP, Vale and Samarco of conspiracy by unlawful means and inducing breach of contract, and seeking enforcement of its solicitor’s equitable lien.
In the largest claim in English legal history, Pogust Goodhead is acting for around 613,800 individuals, businesses and others over the loss and damage suffered in Brazil’s worst ever environmental disaster. The total claim value is estimated to run into the tens of billions of pounds.
The initial phase of the trial, focusing on BHP’s liability, concluded in March. Judgment is awaited.
The firm has entered into a mix of conditional fee and damages-based agreements with the claimants – the former cap the deduction from damages for profit costs, disbursements and success fee at 30%, while the latter provide for a deduction of 20% of damages plus disbursements.
Pogust Goodhead is also acting, along with Dutch law firm LVDK, for 75,000 claimants in an action in the Netherlands against Vale and Samarco Iron.
The figure of £1.3bn reflects the compensation already offered in Brazil to individual and municipal claimants involved in the English proceedings, it said.
The letter, from the London office of US law firm Orrick, accused the defendants of communicating directly with claimants in Brazil to settle their claims in both proceedings.
“They have excluded Pogust Goodhead from the settlement process, and insisted on including waiver provisions in settlement agreements so that Fundão claimants can only receive compensation in Brazil if they discontinue their claims in the English and Dutch proceedings, or make discontinuance of those claims a precondition of receiving such compensation,” it said.
“In doing so, they have exerted intolerable pressure on the Fundão claimants to: (a) settle their claims at far below their true value by making improper use of the court and other processes in Brazil; (b) to prevent them from communicating with and taking advice from Pogust Goodhead, thereby obstructing due process in England and the Netherlands and, in what can only be an effort to put an end to the firm and its ability to continue to represent those of the Fundão claimants (sic); and (c) to prevent the settling Fundão claimants from paying the firm its fees.”
The terms of the retainers have already been breached, Orrick asserted. Those who have settled have not paid the fees due to Pogust Goodhead and did not seek any input from the firm before doing so.
The letter said the defendants knew that Pogust Goodhead’s ability to pursue these cases “depends on its ability to maintain liquidity”, either by recovering its fees following settlement or by obtaining third-party funding.
Pogust Goodhead chief executive Thomas Goodhead said: “BHP and Vale have engaged in a seven-year campaign of lawfare against my law firm and against my clients seeking to deny justice by any means possible.
“The companies have repeatedly broken the law engaging in unethical and unlawful practices showing no respect whatsoever for the English legal system. BHP and Vale’s board members and shareholders should be demanding the removal of all employees complicit in this conspiracy and insisting upon governance reforms to prevent such conduct from ever occurring again.”
Vale and Samarco declined to comment. We have approached BHP for comment.
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