English courts are up to the challenge: Court of Appeal allows the Fundão Dam mass claim to proceed

Published: 11/7/2022

In an important decision affecting mass litigation in England, in Município de Mariana v BHP Group (UK) Ltd [2022] EWCA Civ 951 the Court of Appeal has allowed appeals by the more than 200,000 (Brazilian) claimants against the striking out of their claims against BHP in England in relation to the collapse of the Fundão Dam in Brazil.

The Court of Appeal’s decision is striking for its clear statement of

  1. the English courts’ willingness and ability to grapple with the largest and most complex claims, including in relation to events taking place abroad; and also
  2. the importance the English courts and legal system (in contrast, perhaps, to some others) place upon the freedom of a party to decide what claim to bring, and against whom to bring it.

The Court of Appeal’s judgment covers a number of important topics (including when a stay will be granted on forum non conveniens grounds) and repays careful study. In what follows, however, we focus in the interests of brevity on the section of the judgment dealing with whether mass litigation can, as the High Court had decided in late 2020, be so "unmanageable" as to amount to an abuse of process, rendering it liable to be struck out.

Background

In November 2015, the Fundão Dam in Brazil collapsed. As is now well-known, this had devastating effects on those people, communities and businesses immediately affected, but also more widely, as tens of millions of tonnes of tailings from iron ore mining entered waterways and flowed out to sea. Estimates of the clean-up and compensation costs run into the tens of billions of pounds.

Efforts have been made over a number of years to recover compensation in Brazil from the mine’s owners (companies in the Vale and BHP groups) and many others, resulting in a very significant number of claims and other proceedings in the Brazilian courts, brought by a variety of parties, which are bewildering in the complexity of their potential effects and the manner in which they interrelate (and in some cases overlap). Those proceedings have in turn given rise to a multitude of judgments, appeals, stays and compromises, and continue on a number of fronts today. The mine’s owners have also established a foundation to attempt to remediate the damage, and to implement a scheme of redress for those affected. The progress of those claims and proceedings has therefore not been uniform or straightforward and, in some cases, not without controversy. Some of the decisions taken and outcomes reached might fairly be described as unprecedented in Brazilian law.

Against that background, in late 2018 and early 2019, more than 200,000 Brazilian claimants (a majority of whom were involved in the litigation in Brazil, or the redress scheme implemented there by the mine’s owners) commenced proceedings in the High Court in England against BHP’s English and Australian parent companies, alleging – in essence – that as a matter of Brazilian law, those companies are liable to compensate the claimants for harm suffered as a result of the dam’s collapse.

BHP applied to have those claims struck out, or stayed, on - broadly – jurisdictional grounds under EU law (still applicable at the time the claims were commenced), forum non conveniens grounds or, alternatively, on the basis that they were pointless, wasteful and duplicative of the proceedings and processes in Brazil, and as such were an abuse of process or should as a matter of case management be stayed. As noted above, in this discussion we focus on the abuse of process application.

The decision at first instance: "a house of cards in a wind tunnel"

In late 2020, the High Court agreed. The Judge’s primary concern was that the ongoing processes in Brazil – in which a majority of the claimants in England were involved – gave rise to an "acute" risk that decisions of the Brazilian and English courts would be irreconcilable, or would risk interfering with and impeding the progress of the other, such that the claims brought in England "would be not merely challenging but irredeemably unmanageable": the task facing any judge attempting to manage them would be "akin to trying to build a house of cards in a wind tunnel". The Judge at first instance therefore concluded that the claims amounted to an abuse of process.

The Judge went on to hold that, even if the claims were not "unmanageable", permitting them to proceed would have a "very significantly deleterious impact indeed upon the scarce resources of the English courts". He observed that the claimants’ "decision to progress closely related damages claims in the Brazilian and English jurisdictions simultaneously [was] an initiative the consequences of which, if unchecked, would foist upon the English courts the largest white elephant in the history of group actions", and accordingly struck out the claims.

Permission to appeal, eventually

The claimants’ application to the Judge for permission to appeal was denied. They renewed that application to a single Lord Justice of the Court of Appeal, who also denied it. However, the claimants ultimately had that further decision set aside, and permission to appeal granted (read our discussion of the Court of Appeal's decision).

The decision on appeal

The Court of Appeal overturned the decision of the Court below.

In a firm statement of the willingness and capability of the English courts to deal with claims however challenging and complex, the Court of Appeal held that the Judge’s finding that the claims – if permitted to proceed in England – would be "unmanageable", was unsupportable. The Court went on to hold (at paragraphs 184-187) that even if a claim was "unmanageable", that would not in itself make a claim which was properly arguable a misuse of the court’s processes, and hence an abuse. Nor could the fact that a claim would impose a very heavy burden on the English court. The Court of Appeal prayed in aid recent observations of the Supreme Court Mastercard v Merricks [2020] UKSC 5 in the context of collective proceedings (i.e., class actions), to the effect that the fact that determining a party’s claim might be "very difficult and expensive" could not "justif[y] the denial of practicable access to justice to a litigant or class of litigants who have a triable cause or action".

It was common ground, however, that a claim brought in England could be abusive if those proceedings were (clearly and obviously) pointless and wasteful. Having overturned the Judge’s decision (that the English claims would be pointless and wasteful, because they would be so "unmanageable" that nothing would be achieved), the Court of Appeal considered that question afresh. Referring to the extensive, and contested, factual and expert evidence as to the nature of the proceedings and processes in Brazil, the Court of Appeal held that it could not conclude that matters there were such that the claims in England would clearly and obviously be pointless or wasteful. That was particularly so where the claim in England was brought (most relevantly) against the English parent company of the Brazilian entity with an interest in the mine, and that parent company was not a defendant in proceedings in Brazil. See our previous discussion of the English courts’ willingness to entertain claims for the liability of parent companies for the acts or omissions of their subsidiaries abroad.

In doing so, the Court was at pains to emphasise the need for "particular caution" in striking out claims in England for being ‘pointless and wasteful’ where (as here): (i) the claim is brought in England as of right; (ii) no claim is advanced against the same defendants elsewhere; and (iii) the basis for liability asserted in England is factually distinct from that advanced in claims abroad. Again, in a striking statement of the English court’s approach – and the centrality of party autonomy to the way in which the English courts think about these questions – the Court observed (at paragraph 211):

“In principle, claimants are entitled to choose whom to sue. There may be diverse and legitimate reasons why a claimant may choose to sue a particular defendant or defendants and it is not part of the court’s function to interfere with that process. … A claimant’s unhindered right of access to justice in respect of properly arguable claims is a core constitutional right inherent in the rule of law … it will be a rare case in which the court can say that there is no legitimate advantage in pursuing a defendant merely because there exists a claim for the same loss against another person, and especially so when it is advanced on a different basis of liability.”

The Court of Appeal also held that the risk of irreconcilable judgments and other forum non conveniens factors should not have played any part in the Judge’s analysis of whether the claims amounted to an abuse of process. Those factors are relevant to the question of whether the courts of England are the appropriate forum. If that is established, then those same factors cannot be relied upon to find that, if the claim was brought in England, it would be abusive.

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