Implications of the recent Municipio De Mariana v BHP Group High Court ruling

The recent landmark ruling in the High Court, Municipio De Mariana and others -v- BHP Group (UK) Limited and others [2025], represents a potentially significant shift in the appetite for English courts to hear group action claims involving foreign law, where the defendant is a UK based company that operates in overseas jurisdictions.

Background

On 5 November 2015, the Fundão dam in Brazil, owned by Samarco Mineração S.A. (Samarco), a joint venture between BHP Brasil and Brazilian mining company Vale S.A. (Vale), collapsed resulting in more than 40 million cubic metres of mining water being released into the Doce River, which as set out in the High Court judgment “caused extensive environmental and socio-economic damage”.

Proceedings were jointly and severally brought against BHP Group (UK) Limited and BHP Australia, which operated as a single economic entity. At the time of the dam’s collapse, BHP was listed on the London Stock Exchange, therefore the Court determined that “[t]he proceedings in this jurisdiction have been brought against BHP UK and BHP Australia (collectively referred to as “the BHP Group” or “BHP”) and are founded on the corporate listing of those associated companies of Samarco in the UK at the time of the collapse”. In short, BHP Australia’s business activities in the UK afforded the company ‘sufficient presence’ within the jurisdiction for the claim to be heard by the English courts. The law to be applied to the dispute was agreed by both parties to be Brazilian law, with the judgment noting that “[i]t is common ground that Brazilian Law is applicable to the claims brought by the Claimants in these proceedings, subject to discrete issues of agency and attribution (to which English and/or Australian law applies).” 

BHP denied all allegations in relation to water pollution, maintaining that it was neither a ‘direct’ nor ‘indirect polluter’ and thus could not be held liable for the environmental disaster. Additionally, BHP claimed that Brazilian municipalities did not have the capacity or standing to bring proceedings in England and Wales.

High Court ruling

We have sought to address the main elements considered by the Court, albeit this is not an exhaustive summary.

Strict liability

The claimants alleged that BHP’s strict liability as a “polluter” could be established under Brazil’s Environmental Law. The Court acknowledged that whilst the dam was not owned and operated by BHP but by Samarco (the joint venture company between subsidiary BHP Brasil and Vale S.A), it could be demonstrated that BHP exercised significant control over the activities of Samarco, with Mrs Justice O’Farrell determining that “in practice, the Iron Ore CSG/Business, Iron Ore Brazil and Samarco operated as part of a single BHP Group”.

In making this determination, the High Court considered Brazilian precedent when determining responsibility of a party for the activity resulting in environmental pollution, noted in the judgment to be a “multifactorial and evaluative approach”. This approach took into account factors such as “control and influence over the activity, participation and involvement in the activity, nature and extent of role in creating or contributing to the risk of the activity, financing of the activity, and benefit from the activity”.

The Court rejected BHP’s argument that it was not a ‘typical shareholder’ and thus did not have the requisite degree of direct control to make it liable. Mrs Justice O’Farrell referred to BHP’s “depth of involvement”  concerning the “detailed operation and management of Samarco” as evidenced by inter alia, monthly spreadsheets sent by the BHP Iron Ore Brazil Team to Samarco, covering key business and operational aspects such as “identifying deadlines for deliverables on topics such as costs, cash flow, planning, production, projects, risk and critical incidents”.

Fault-based liability

The Court also established BHP’s fault-based liability by reference to the Brazilian Civil Code, determining it was responsible for the overall management and relevant risk assessments related to the dam, which in turn resulted in a legal duty being imposed to prevent harm “caused by an act or omission that was negligent, imprudent or lacking in skill”.

Mrs Justice O’Farrell concluded that “the risk of collapse of the dam was foreseeable…it was imprudent to continue to raise the dam…in the absence of proper written analysis”. In her conclusion, Mrs Justice O’Farrell remarked that if BHP had undertaken a “stability analysis”, “it is inconceivable that a decision would have been taken to continue raising the height of the dam in those circumstances and the collapse could have been averted”. 

Settlement agreements 

The Court made no determination in relation to BHP’s claim that its pre-existing settlement agreements (amounting to over $30 billion), with Vale and the Brazilian government should result in the waiving of 200,000 claims, to avoid the UK proceedings constituting a ‘duplication exercise’. Instead, the Court opined on a number of ‘sample’ settlement agreements, noting these constituted “adhesion contracts” and that “any ambiguity or conflict must be resolved in the claimant’s favour”. BHP made clear via a press release that it intends to appeal the High Court’s decision.

Comment

Assessment of company management structures 

Companies should now consider the degree of parental oversight they may be found to exercise over their subsidiaries through a group structure, irrespective of whether that subsidiary is based in the parent company’s domestic territory, or a foreign jurisdiction.

Increased risk of litigation in the English courts

The potential costs savings for litigants by the court adopting a case management strategy splitting the trial into two stages; the first which dealt with liability and a second stage which will address the issue of damages, might encourage those seeking to bring similar claims, to do so in the English courts.

It is anticipated the ruling is one welcomed by litigation funders who increasingly look to England and Wales as a key jurisdiction for litigating large group claims (particularly those that are cross-border in nature). The decision also demonstrates that the courts in England and Wales are increasingly attractive for those pursuing ESG-related litigation.