The Court of Appeal delivered its judgment in the keenly awaited Mariana v. BHP group litigation this summer, giving over 202,600 claimants permission to continue their group action claim against BHP in relation to the 2015 collapse of the Fundão Dam in Brazil. The claim was brought against BHP England and BHP Australia as the parent companies of BHP Brazil, which, together with Vale S.A., jointly owned the owner and operating company (Samarco Mineração S.A.) of the Fundão Dam.
The Court of Appeal’s judgment, which is available here, further opens the door for group actions against multinational corporations before the English courts, and demonstrates the court’s willingness to hear highly complex, vast, multi-jurisdictional group action claims. Importantly, the court also clarified a number of issues on when a claim may be struck out, or stayed, as a result of an abuse of process, which will no doubt be useful to those acting in current and future class actions.
On 5 November 2015, Brazil suffered its worst ever environmental disaster when the Fundão Dam collapsed, releasing around 40 million cubic metres of tailings from an iron ore mine, killing 19 people, with widespread, severe consequences for numerous communities and individuals. The Brazilian public prosecutor estimated the remediation and compensation cost at a minimum of £25 billion.
The claimants are all Brazilian and comprise (a) over 200,000 individuals; (b) 530 businesses; (c) 15 churches and faith based institutions; (d) 25 municipalities; and (e) five utility companies. In the English High Court action, the claimants brought proceedings against BHP Group UK and BHP Australia (the Defendants), seeking compensation for losses resulting from the collapse of the dam. In August 2019, the Defendants applied to strike out the claims on the following bases:
- BHP Australia applied to stay the claims pursuant to Civil Procedure Rule (CPR) 11(1) on the grounds that Brazil was clearly and distinctly the more appropriate and available forum.
- BHP England applied for a stay under article 34 of Brussels Recast on the grounds that parallel proceedings in Brazil would give rise to a risk of irreconcilable judgments.
- The claim was an abuse of process pursuant to CPR 3.4(2)(b).
- As an alternative to their application to strike out under CPR 3.4(2)(b), the Defendants applied for the claim to be stayed on case management grounds pursuant to CPR 3.1(2)(f).
In November 2020, at first instance, Mr Justice Turner determined all four applications in favour of the Defendants and struck out the claim for abuse of process on the basis that parallel proceedings are already afoot in Brazil, and that the vast claimant group involved would cause proceedings in England to be “irredeemably unmanageable”. The claimants subsequently appealed to the Court of Appeal.
Why is the Court of Appeal’s decision in the Mariana case so important?
The UK Supreme Court’s decisions in Lungowe v. Vedanta, and more recently Okpabi v. Royal Dutch Shell Plc, opened the door to the English courts accepting jurisdiction against English parent companies in claims relating to environmental damage caused outside of the jurisdiction by their overseas subsidiaries.
The background to Mariana represents a step further than Okpabi or Vedanta, as there are already proceedings taking place in Brazil, and a victim compensation fund has already been established. One of the key questions for the Court of Appeal was, therefore, whether further proceedings in England would constitute an abuse of process. If so, this could provide an obstacle to claimants in other actions where the court would have otherwise accepted jurisdiction pursuant to Vedanta.
The Court of Appeal decided that:
- The claims should not be struck out, nor were they clearly and obviously “pointless or wasteful”.
- There was a realistic prospect of the trial yielding a real and legitimate advantage for the claimants, which outweighed the disadvantages of the parties’ expense and court resources.
- The English proceedings could not be said to be oppressive, as the Defendants are not parties to the proceedings in Brazil (save for a few limited instances), and no one in the claimant group had sued them in Brazil. If complications did arise out of parallel proceedings, the court could impose a condition requiring claimants involved in both proceedings to elect where to continue their claims.
- The burden on the English courts was not disproportionate in circumstances where there are arguable claims for significant amounts.
- The potential remedies available in Brazil were not so obviously adequate that it was pointless or wasteful for the claimants to pursue their claims in England.
Other key points to take away
The Court of Appeal also provided important guidance on when a claim may be struck out (or stayed) as a result of an abuse of process. Although “unmanageability” did not form part of the Defendants’ underlying strike-out application, it was clear that the judge at first instance found the proceedings to be abusive foremost because of “irredeemable unmanageability”. The Court of Appeal, therefore, helpfully clarified the position on whether claims that are said to be unmanageable or pointless and wasteful in terms of the parties’ costs and the court’s resources constitute an abuse of process:
- Overall, the court will adopt the approach described by Lord Briggs in Mastercard v. Merricks and will seek to manage complexity in disclosure, process and quantification of loss to deliver practicable justice where the claimant has a triable cause of action.
- Just because a claim is said to be “unmanageable” does not automatically constitute an abuse of process. Further, the forum non conveniens factors, which were advanced under CPR 11(1), should not form part of the analysis as to whether there was an abuse of process.
- A properly arguable claim can, however, in principle be abusive if it is “clearly and obviously” pointless and wasteful. In this case, the judge at first instance erred in premising his decision that there was nothing to be gained by the claimants in the English courts on his (unjustified) view that the claims in England were “unmanageable”.
- Clear illustrations of case management options put forward by the claimants and a “well-structured, coherent and entirely digestible” particulars of claim which “clearly set out the facts relied upon, the causes of action and the relief obtained” contributed to the court’s assessment that the claim was not irredeemably unmanageable.
- When assessing whether a claim is pointless and wasteful (in the context of group actions), the court should not treat the claimants as a single, indivisible group, but, instead, should make that assessment against each claimant or group of claimants being considered individually.
- Where parallel proceedings are afoot, which may make an English claim unmanageable, it does not necessarily mean that the court process has been misused.