Case Note: Município de Mariana & Ors v BHP Group plc, BHP Billiton plc and BHP Group Ltd

Introduction

1.     This note considers the judgment of Turner J in the Technology and Construction Court of 10 November 2020 in the case of Município de Mariana & Ors v BHP Group plc, BHP Billiton plc and BHP Group Ltd. In that judgment, Turner J struck out a claim by a very large group of claimants for compensation for damage caused by the 2015 collapse of the Fundão Dam in South Eastern Brazil, in which over 40 million cubic metres of tailings washed into the Doce River with massive human, environmental, and economic cost. This note presents the factual background of the case and sets out the most relevant features of the judgment for the practice of mass tort litigation in the multinational context.

2.     This is the most important mass tort claim brought in England and Wales following the landmark Supreme Court decision in Vedanta Resources PLC and Another v Lungowe and Others [2019] UKSC 20. In that case, the UK Supreme Court accepted jurisdiction to hear a claim against a parent company for the actions of its foreign subsidiary—even though England would not have been considered the proper forum for the litigation, had only the local (Zambian) court system been equipped to deal with the matter (see paras [87]-[97] per Lord Briggs). 

3.     In the present case, the claim was struck out as an abuse of process, indicating the limits of the English courts’ willingness to adjudicate torts committed abroad within multinational groups connected to the jurisdiction (usually through a parent company). The case is significant for Turner J’s approach to abuse of process, in particular, and this note will focus on that aspect of the decision. However, Turner J also made obiter comments on the remaining grounds (“out of deference to the industry of the legal teams and lest, on appeal, my findings on the question of abuse should be overturned”: para [146]), and the case is significant for the light it sheds on the relation between abuse of process and the alternative grounds, particularly the Recast Brussels Regulation and common law forum non conveniens.

Extraordinary scale and nature of the proceedings

4.     The claim appears to be the largest group claim ever in England and Wales. There are over 200,000 individual claimants, (ii) over 500 micro and small businesses, (iii) 13 larger businesses, (iv) 145 members of an indigenous community, (v) 25 municipalities in Brazil, (vi) 15 churches and (vii) five utility companies. The defendants are companies in the multinational BHP group, including BHP Group Plc (a UK registered corporation) and BHP Group Limited (an Australian registered corporation) with joint listing and joint management. The owner and operator of the Dam, Samarco Mineração SA, is a Brazilian mining company in a non-operated equal joint venture between Vale SA and BHP Billiton Brasilia LTDA, a member of the BHP group ultimately owned by the Australian corporation (see paras [19]-[23]).

5.     Turner J expressed consternation at the volume of court materials generated, including trial bundles running over 30,000 pages and skeleton arguments of around 200 pages on each side. This was explained, but not wholly justified, by (i) the huge number of claimants, (ii) the disparate nature of the claims brought, (iii) the significant differences between Brazilian and English procedural law, and (iv) the complex history of proceedings in Brazil and uncertainty about their future direction (para [6]). Those features also set the stage for consideration of the substance of the judgment—the appropriateness of bringing this claim in the English courts.

6.     The claim was brought in England notwithstanding advanced and continuing proceedings in Brazil (see paras [24]-[43]), including a sizeable (approximately £3 billion) compensation fund established in 2015 to compensate victims of the disaster, and another fund of approximately £17.25 billion that is being negotiated, albeit with substantial delays. Importantly, neither the operational scheme nor the proposed, larger scheme covers loss suffered by municipalities, large businesses, utility companies, or churches. However, none of the 58 claimants excluded from those schemes were prevented from bringing an ordinary claim in the Brazilian courts, and several had in fact done so (para [39]). Implicitly, the claim in England rested on the inefficacy of the Brazilian legal system—a striking feature of the case, considering that many of these 58 are in fact Brazilian public authorities themselves. 

7.     On the whole, Turner J took notice of arguments raised concerning the efficacy of these schemes—and concerning the outlook for ordinary litigation in Brazil—but also considered the committed and effective efforts of the Brazilian judge overseeing the matter (see paras [123]-[133]). He concluded, however, that the claimants were unduly pessimistic about the capacity of the local justice system to provide “full redress”. The nature of the parallel proceedings, and the potential for irreconcilable judgments in particular, is the driving element of the judgment on all grounds. Beyond the reflexive impulse to hold Western corporations to account in England, this case highlights the kind of considerations that an English court must weigh, including the impact that such a litigation strategy would have on the capacity of the court in both countries to administer justice.

8.     The claim was defended with a “four-pronged” challenge, embracing (i) abuse of process (paras [47]-[145], (ii) Article 34 of the Recast Brussels Regulation (paras [147]-[234], (iii) forum non conveniens (paras [235]-[259] and (iv) case management grounds (para [260-264]). The case was decided on the first ground (paras [47]-[145]), and the judgment is primarily significant for its treatment of abuse. However, Turner J also made obiter comments on the Recast Regulation (paras [147]-[234]), forum non conveniens (paras [235]-[259]) and case management (paras [260]-264]), and the judgment sheds some light on how these legal doctrines hang together in the context of group litigation.

Abuse of process

9.     Turner J cited the classical authorities on abuse of process, emphasising the importance of access to justice for first-time claimants, and noting that the claimant’s choice of litigation strategy must be examined on a case by case basis to determine whether it constitutes an abuse of process according to its impact on the defendant and on the court itself (see paras [47]-56]. Turning to the group litigation context, the inherent jurisdiction to strike out for abuse must take account of the features of multi-party proceedings which put different strains on the resources of the court. Although AB v John Wyeth & Brother (No 4) [1994] PIQR P109 was decided before the CPR, there was “no basis upon which it could be argued that the present procedural regime would be expected to give rise to a narrower approach” to abuse applications, and indeed the overriding objective of CPR Part 1.1 also refers to the resources of the court  (para [65]).  

10.  In this case, the claimants’ choice to sue in England rested on the alleged difficulty of achieving full redress against any potential defendant in Brazil, and the alleged procedural difficulty of bringing claims against the UK and Australian registered defendants in Brazil. Turner J gave fairly short shrift to the latter, finding “no compelling reason to seek to sue these two defendants in Brazil rather than, or in addition to, the Brazilian defendants” (para [63]). The choice of defendant and forum, he said, was not an absolute right and must be balanced against the effect on the defendant and its toll on the court’s resources. The bulk of the judgment is concerned with the former.

11.  Turner J approached the abuse question by categorising bases of abuse under headings but “recognise[d] that the value of taxonomy lies mainly in convenience and presentation”; the court must take a holistic view (para [77]). The central, organising element of the analysis is the practicability of managing the claims in England in parallel with Brazilian proceedings (and the compensation schemes). The risk of irreconcilable judgments, collateral attack and cross-contaminations of issues loom large (paras [78]-[145]). Nevertheless, Turner J did provide a non-exhaustive list of considerations of particular relevance (para [76]):

(i)  The hallmark of an abuse of process is a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process;

(ii)  Although plainly a relevant factor, bad faith on the part of the party against whom the point is taken is neither a necessary nor sufficient condition for the finding of an abuse of process;

(iii)  Litigants should not be denied the right to bring a genuine subject of litigation before the court save upon a scrupulous examination of all the circumstances which leads the court to the conclusion that the claim should, nevertheless, be struck out;

(iv)  Cases in which a claimant has already taken (or forgone) the opportunity to bring her claim in other proceedings may, depending very much upon the facts, properly be categorised as giving rise to an abuse of court whether as a standalone consideration or when taken into account with other material factors;

(v)  The court is entitled (and indeed duty bound) to take into consideration the likely impact upon the business of the courts themselves in the event that the claims were permitted to go ahead;

(vi)  The court must take a two stage approach. Firstly, it must address the question of whether or not an abuse has been clearly proved. If it has not, then, subject to its residual, free-standing case management powers, that is an end of the matter. If it has, then it must thereafter exercise its discretion in determining what, if any, procedural consequences should follow. There may be some cases in which it is plain that striking out is the only appropriate response.

12.  In reliance on Owusu v Jackson [2005] QB 801, the claimants submitted that the risk of irreconcilable judgments should be disregarded in relation to BHP Plc, as this factor fell to be considered under the Recast Regulation. It was generally accepted that it would be “impermissible to deploy an abuse of process argument in order to achieve through the back door that which the Recast Regulation bars through the front” (paras [80]-[81]). However, in Turner J’s judgment, where the risk of irreconcilable judgments is “just one of a number of factors relevant to the abuse jurisdiction”, it should not be ignored; the rule in Owusu could not be used to “wave through” an abusive claim. On all the evidence, the risk of inconsistent judgments was acute, and certain features of the case were “nothing short of alarming” (para [91]). Over three quarters of the claimants had received compensation and had not relinquished their right to bring a claim in Brazil; this would lead to an “unremitting cross-contamination of proceedings” and “utter chaos in the conduct of litigation in both jurisdictions”; the task facing the judge would be “akin to trying to build a house of cards in a wind tunnel” (paras [92]-[93]).

13.  This is where the judgment sheds light on the ambit of the abuse doctrine in the context of mass redress. In this case, the litigation strategy was irredeemable. The claimants had not given due weight to the impact of proceedings on the court, and had unrealistic expectations about the court’s ability to mitigate that impact through the deployment of “appropriate procedures to deal with the claims proportionately” (para 100]):

[101] … Little more was predicted than the need for the formation of a [Group Litigation Order] and the determination of a preliminary issue… Beyond that, I was airily assured that, particularly if I were to be appointed to be the managing judge, any difficulties would be readily surmountable. I was as flattered as I was unconvinced. Robust case management is a tool not a magic wand…

…

[103] It is simply not good enough in the context of group actions generally to seek to outsource all or most of the responsibility for devising a workable procedural mechanism for resolving claims to the court. …

…

[106] Management of the group would be allocated to a High Court Judge. The selection of lead cases would not be from a homogeneous group but from an immense pool of claimants with grossly disparate interests. To reflect this, the number of such lead cases would be likely to be far in excess of those selected in any [Group Litigation Order] to date. Repeated visits to the Court of Appeal generating further costs, delays and uncertainties would be almost inevitable. There has already been one such expensive and abortive initiative in this case which was launched even before I had handed down this substantive judgment. In the meantime, developments in Brazil over the time which it would be likely to take for any given appeal to reach the Court of Appeal would be liable to complicate matters still further with applications by the parties to rely on fresh evidence. The prospect of almost interminable transatlantic iteration is both stark and real.

14.  Challenges of language (para [105]), applicable law (para [113]), and evidence (para [114]) would further compound difficulties. Moreover, Turner J expressed doubt as to the perceived benefit of litigation in England at all, as (for example) damages would be calculated according to Brazilian law anyway (para [117]).

15.  Turner J turned to the factor of “full redress” next, reciting the concerns raised about the efficiency and efficacy of the Brazilian justice system. Here, Turner J identified two points of overarching significance; the problems faced in Brazil would not be alleviated by opening up a “second front in England”, and English proceedings would rather cause problems in Brazil (para [122]). By reference to all the evidence, the claimants were too pessimistic about Brazilian proceedings and too optimistic about the ability of English proceedings to mitigate the inevitable difficulties of such a complex matter (see points in paras [123]-[136]). Turner J also declined to “hive off” the claims of the 58 larger claimants excluded from the compensation schemes on largely similar grounds (para 137]).

16.  On the whole, notwithstanding the challenges facing claimants in Brazil, Turner J held that “their confidence that anything of value is to be achieved in England is illusory” (para 140]). Although the court retains a discretion to allow a claim despite a finding of abuse, there was no way in this case to exercise the discretion of the court other than by way of a strike out (para 145]).

The jurisdictional challenges: Recast Regulation and forum non conveniens

17.  Article 4 of the Recast Brussels Regulation provides the general rule that the proper jurisdiction in which to commence legal proceedings is the jurisdiction of the defendant’s domicile. In the case of BHP Group Plc, an English domiciled company, England is the proper forum under Article 4. BHP Group Ltd, on the other hand, is an Australian domiciled company. Article 6(1) of the Recast Regulation provides that the jurisdiction of the English courts over BHP Group Ltd is to be determined according to English law (para [152]). However, there are exceptions in the Recast Regulation, including Article 34. This gives the courts discretion to stay proceedings where an identical or related action is pending in a non-member state court where that action was first in time and certain other conditions are met. BHP Group Plc argued that Article 34 applied. Turner J criticised two first instance decisions on lis alibi pendens (Peter Ola Blomqvist v Zavarco PLC [2015] EWHC 1898 (Ch) and Jalla & Ors v Royal Dutch Shell Plc [2020] EWHC 459 (TCC), see paras [170]-[173]) and preferred the view in JSC Commercial Bank Privatbank v Kolomoisky [2019] EWCA Civ 1708 to that in Euroeco Fuels (Poland) Limited v Sczezin and Swinoujscie Seaports [2019] EWCA Civ 1932 on the relevance of “relatedness” under Article 28 the Recast Regulation (para [199]. On the balance of factors falling for consideration under Article 34 (listed in para [153]), however, Turner J held that he would be bound to stay the proceedings (had he not struck them out for abuse of process). In short, the Brazilian proceedings were considerably more advanced, with the court and legal teams already immersed in the facts of the matter; most importantly, the proceedings were closely related and there was, again, a real risk of irreconcilable decisions.

18.  The judgment contains some detailed discussion of the relevant authorities going to the expediency of hearing claims together to avoid the risk of irreconcilable judgments (para [166]-[200]), recognition and enforceability in England (paras [200]-[203]), the necessity of a stay for the proper administration of justice (paras [204]-[232]). One feature of this part of the judgment of particular importance is the judge’s conclusion that “the issue of ‘relatedness’ may properly be subsumed into that concerning the risk of irreconcilable judgments and thus requires no further or separate consideration” (para 163]). Another is his treatment of Owusu, which again demonstrates how abuse of process, the Recast Regulation, and forum non conveniens fit together. A defendant cannot circumvent Article 34 by “taking a forum non conveniens shortcut however cunningly disguised”, but the court is entitled to take into account “all the circumstances” and is not required to exclude circumstances from consideration just because they are theoretically relevant to a forum non conveniens argument (para [206]).

19.  Turning to the forum non conveniens ground, Turner J affirmed that the two-staged test in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 (as applied in the subsequent cases) remains the test in English law. The claimants effectively conceded that England was not the “natural” forum under the first limb of the test (paras [237]-[238]). An issue arose under the first limb as to the interaction of forum non conveniens with the Recast Regulation (Article 4); while BHP Group Plc falls under the Recast Regulation, BHP Group Ltd, the Australian registered company, does not, and it relied on the forum non conveniens ground. According to Article 4, a foreign defendant can become “tethered to the domiciled defendant” to avoid the risk of irreconcilable judgments (para [239]), and the question arose as to how that regime operates alongside or to the exclusion of forum non conveniens. Turner J cited Lord Briggs’ judgment in Vedanta Resources at length to the effect that the voluntary commitment of a defendant to submit to foreign proceedings would allow them to make forum non conveniens arguments; as both defendants here had submitted to jurisdiction in Brazil, “the force of any suggestion that there may be a risk of irreconcilable judgments against each defendant” was attenuated (para [240]-[241]).

20.  The burden of making out the second limb of the forum non conveniens test falls on the claimant—i.e., the burden of establishing that, even though a prima facie more appropriate forum exists, there is some reason why the claim should be brought in England. Turner J concluded that the evidence fell “far short” of establishing that substantial justice could not be done in Brazil (para [247]), and none of the factors cited were adequate to convince him to exercise the court’s discretion to exercise jurisdiction despite the prima facie inappropriateness of England as a forum (para [251]). Turner J observed that most of the authorities concerned a single dispute among unitary parties, and the choice of forum in which to resolve it. In such cases, the court focusses on the likely impact on the claimant of being required to proceed in the foreign jurisdiction against the same defendant. This case, however, was in a different category: 

[249] I am not, however, convinced that such a narrow approach is justified in this case. After all, the second stage of Spiliada requires the court to consider “all the circumstances of the case”. In my view, such circumstances may include the availability of redress against other defendants. This, of course, is a feature of the case to which I have already had regard with respect to the abuse application. Usually, of course, as I have already acknowledged, claimants may choose the identity of those they wish to sue but this does not afford them procedural carte blanche in all circumstances. In the instant case, the claimants, all other things being equal, have no particular reason to prefer that compensation should be paid by these two defendants rather than any other company within the relevant corporate structure. … [I]n this context, the Court is entitled, in the exercise of its discretion under stage two of Spiliada, to take into account any option which a claimant may have to achieve comparable redress in respect of the same loss and damage against another defendant in the foreign jurisdiction.

21.  None of the considerations present in this case, such as delay (para [255]), compelled any other conclusion. Importantly, the availability or lack of litigation funding (such as legal aid) overseas was held not to provide any kind of trump, either (para [257]). On the whole, therefore, Turner J held that he would have granted a stay on forum non conveniens grounds if he had not struck out the claim as an abuse of process (para 259]).

Case management

22.  Turner J’s comments on case management are brief, and boil down to the proposition that, if an appeal were allowed on (i) striking out (or staying) the case as an abuse of process or (ii) in respect of his judgment on the Recast Regulation and forum non conveniens grounds, a case management stay would not stand on its own legs. 

Permission to appeal refused

23.  This first instance decision could set an important precedent in terms of litigation practice. The claimants’ application for permission to appeal was refused by Turner J in his judgment in Município de Mariana & Ors v BHP Group plc, BHP Billiton plc and BHP Group Ltd [2021] EWHC 146 in early 2021. While noting that there is some danger in the appearance of a first instance judge “marking his own homework” and that permission to appeal will likely be sought in the Court of Appeal (paras [16]-[17]) Turner J refused the application in no uncertain terms and lamented that the claimants’ grounds of appeal were “the very antithesis of the conciseness required by [Practice Direction PD52C]”, and that the “bloated draft grounds serve only to obfuscate rather than to illuminate what they may perceive to be the merits of their challenge” (paras [9], [11]). Turner J moved through the 15 grounds of appeal, finding them all without merit (paras [20]-[72]). The judge awarded costs against the claimants and declined the exercise his discretion to reduce the costs award, finding that the defendants had adopted a litigation strategy that was pragmatic and helpful and that it would be wrong to penalise them for it (paras [81]-[86]); the defendants were therefore to be awarded their costs in full, subject to detailed assessment. 

Conclusion

24.  The availability of courts in the West to adjudicate global environmental and human rights abuses within corporate groups is currently being tested in the English courts and more broadly. This case underlines the importance of local remediation as opposed to complex cross-border proceedings, and shows that while the English courts are not closed to such claims, claimants and their legal advisers need to consider and prepare their case carefully.

25.  In terms of legal doctrine, the primary significance of the case is the approach it sets out to the interaction of abuse of process and jurisdictional challenges under the Recast Regulation and common law doctrine of forum non conveniens. This is particularly important for actions against multinational defendants, which generally operate through corporate structures with entities registered in various jurisdictions and complex contractual arrangements in the jurisdiction where harm occurs. Again, the ultimate outcome of this case could be of considerable importance to the strategic and tactical planning of litigation, for example the sequence of applications made by parties in a corporate group. The case is also interesting for Turner J’s approach to abuse of process itself. While stressing the need to “take a step back” (see para [140] in the substantive judgment) and to keep the impact on the defendant and on the court at the centre of the consideration, the non-exhaustive list of considerations (set out above) and the clear emphasis on the proportionate use of court resources could set the tone for future collective redress claims.

Dr Jason Allen is a member of Blackstone Chambers' Academic Research Panel.

The first judgment can be found here. A case summary concerning the first judgment can be found here.

The second judgment can be found here.