Largest 'white elephant' in history of group actions

03 December 2020. Published by Simon Hart, Partner, Head of Banking & Financial Markets Disputes

BHP successfully applies to strike out 200,000 claims as an abuse of process. Had the judge not struck the claims out, he would have stayed proceedings on jurisdictional grounds under Article 34 and the doctrine of forum non conveniens. (1)

In November 2015, the Fundao Dam in south-eastern Brazil collapsed. Over 40 million cubic metres of iron ore mine tailings escaped into the Doce River, with catastrophic environmental consequences. The pollutant travelled to the Atlantic Ocean, 400 miles away, destroying or contaminating everything in its path. Nineteen people died and entire villages were obliterated. Individuals, corporates and institutions from Brazil brought one of the largest group litigation proceedings ever brought in England. They contended that the defendants were liable to compensate them for losses sustained as a result of the collapse. The defendants denied liability and persuaded the court that the case against them should not be allowed to proceed.

Abuse of process

The judge's findings in relation to abuse of process are fact-specific. Overall, he held that "the claimants' tactical decision to progress closely related damages claims in the Brazilian and English jurisdictions simultaneously is an initiative the consequences of which, if unchecked, would foist upon the English courts the largest white elephant in the history of group actions". The claimants did not suggest any "workable procedural mechanism for resolving the claims" and should not be allowed to "outsource" this to the court. The Court did not accept that the claimants could not access redress in Brazil and it would be "manifestly unfair to the defendants to be required to engage in massively expensive and protracted litigation devoid of any realistic promise of substantive advantage to the claimants".  The judge struck out the proceedings on this basis.

Jurisdictional grounds
Alternatively, the judge would have stayed the proceedings on jurisdictional grounds. His findings in relation to Article 34 and forum non conveniens are less fact-specific so apply more widely.

Article 34

Article 34 gives the court discretion to stay proceedings where an identical or related action is pending in a non-member state court, but only if the non-member state action was first in time and if other conditions (such as the judgment being capable of recognition and enforcement in the member state) are satisfied. BHP Group plc is domiciled in England so could argue that Article 34 applied. The judge found that:

  • The Brazilian proceedings were "considerably more advanced" than in England, with the court and legal teams already "immersed in the facts of the matter";
  • The Brazilian and English proceedings were related to a "very close" degree and there was a real risk of irreconcilable decisions between them; and
  • It would be "the very antithesis of the proper administration of justice" to let the claims proceed in parallel.

The judge stated that had he not struck out the claims against BHP Group plc, he would have stayed the claims against it under Article 34.

Forum non conveniens
This common law doctrine allows the court to dismiss a civil action, even though the forum is proper and the court has jurisdiction, where an appropriate and more convenient forum exists and the action can be tried there. BHP Group Ltd is domiciled in Australia. Whilst not being able to rely upon Article 34, it was able to rely on the doctrine. The claimants argued that it would be "inappropriate" to consider a "hypothetical application" of the doctrine but the judge disagreed. He found that:

  •  It was "cumulatively significant" that the tort took place in Brazil, the governing law would be Brazilian law and the English court would be less accessible for the majority of the parties and witnesses; 
  • It was not true that "substantial justice" could not be done in Brazil; and
  • The claimants' evidence fell "far short" of establishing that impecuniosity would be a major factor in stifling legitimate claims. There was no cogent evidence to support this finding.

The judge indicated that if he had not struck out the claim against BHP Group Limited, he would have stayed the claim against it under the doctrine of forum non conveniens.

The judgment reaffirms that the leading test for establishing forum non conveniens is still Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460. The court was not satisfied that part one of the test was met: England was not the "natural" forum for the dispute. Despite evidence from the claimants that the Brazilian courts could take more than a decade to reach a judgment and that the compensation offered would fall far short of the damage which occurred, the judge found that this was not "cogent" evidence that they would not obtain justice in the foreign jurisdiction and part two of the test was not satisfied.  Whilst the significant nature of the proceedings would have raised the profile of England as a forum for group litigation, it was not ultimately a case which fell within the generous parameters which currently exist for the Court to have accepted jurisdiction. Municipio de Mariana must continue their fight in Brazil.

(1) Municipio de Mariana v BHP Group plc and BHP Group Ltd [2020] EWHC 2930 (TCC)


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