Landmark finding against BHP in favour of huge Brazilian claimant group highlights UK environmental litigation risk

Last year, we reported on the jurisdictional path that had become established for large groups of foreign nationals to bring actions in the UK against UK-registered entities in connection with damage and loss suffered overseas due allegedly to the entities’ overseas subsidiary operations.

One of the many cases in this space that we highlighted was a claim in the High Court in England against BHP by over 600,000 Brazilian claimants arising out of the collapse in 2015 of the Fundão Dam in Brazil. The collapse released millions of cubic metres of liquified iron ore tailings and significant injury and damage was caused downstream. At the time we highlighted it, the matter was at trial.  Earlier this month, the High Court delivered its judgment, holding BHP liable for the claimants’ loss.

The claim was brought against BHP Group (UK) Limited (“BHP UK”) and BHP Group Limited (“BHP Australia”). Between 2001 and 2022, BHP Australia and BHP UK operated together as a single economic entity under a dual listed company structure, with listing in the UK and Australia. One of them — BHP Australia — was the ultimate parent of BHP Brasil Ltd, which had a 50% joint venture interest in Samarco Mineração SA (“Samarco”), the Brazilian company which owned the dam.  

Although the claims were heard in the UK, Brazilian law applied. Both defendants were found liable under strict liability and fault-based liability provisions of Brazilian law.  

• Brazilian environmental law imposes strict liability on a polluter for damage caused to the environment and any third parties affected by the polluter’s activity. Although not the direct legal owner of the dam, by their control and operation of Samarco, the defendants were directly or indirectly responsible for the polluting activity, the storage of iron ore tailings. As a polluter, BHP was strictly liable for damage caused to the environment and to third parties by the collapse of the dam.
• As for fault-based liability, the defendants’ control of Samarco, their assumption of responsibility for risk assessment, management and control of the tailings dam, and their full participation in the tailings dam operations, gave rise to a legal duty to avoid harm caused by any act or omission that was negligent, imprudent or lacking in skill.  Shortly before the collapse, they knew, or should have known, that specific problems and warning signs had arisen. In those circumstances it was not reasonable to continue to raise the height of the dam. Doing so was a direct and immediate cause of collapse of the dam and gave rise to fault-based liability.

Damages will be decided at a separate hearing in 2026. The amount claimed is said to be up to £36 billion. The timings will, of course, be disrupted if the defendants get an appeal under way.  

Reflections

There will be more to say about this case in due course. For the moment, however, note that the decision firmly reinforces the trend first established in the Supreme Court decision in Vendanta Resources that companies listed/headquartered in the UK can be pursued in the English courts by foreign nationals for damages caused by foreign subsidiaries. It also shows the willingness of English courts to look beyond formal corporate structures and examine real-world influence and control with the judge holding that BHP “controlled and operated” Samarco, acted as a “directing mind,” and derived substantial commercial benefits. 

The judgment will encourage overseas claimants to look for UK entities against which to pursue claims concerning environmental damage and, given the substantial damages involved, will likely encourage litigation funders and claimant law firms to support them.

The judgment will also prompt a keen focus on ongoing claims which concern similar themes to the BHP judgment, such as the long-running Alame & ors. v Shell Plc which concerns a significant number of claims made by Nigerian local communities relating to pollution allegedly caused by Shell; and Limbu & others v Dyson Technology Limited & others, where claims are being brought by Malaysian workers in one of Dyson’s supply chains.

For UK-based multinationals, the revamped governance around environmental and social risks and opportunities that arises out of “ESG” needs to fully get to grips with the risks posed by overseas operations and supply chains and plot a course for these aspects that keeps those risks in check.