In one of the largest class actions in history, victims of the MG Dam collapse are seeking compensation in the UK. The ruling could set a precedent for holding companies involved in environmental tragedies accountable Nine years after the collapse of the Fundão Dam, in Mariana, Minas Gerais, this Monday (10/21) will begin a new chapter in what is considered one of the most large. environmental tragedies in Brazil’s recent history. A trial will begin in the UK to seek compensation from Brazilians affected by ore spills from the dam.
The trial, which is expected to last until March 2025, aims to hold the Anglo-Australian mining company BHP Billiton responsible for what happened. In addition to the Brazilian Vale, BHP is an equal shareholder of Samarco, the company that controlled the dam at the time of the collapse on 5 November 2015.
The case, pending in British courts since 2018, was brought by 620,000 people, 46 municipalities and 1,500 affected companies in Brazil, who are seeking R$230 billion in compensation, in one of the largest class actions in history. Among the applicants there are also religious institutions, indigenous communities and quilombolas.
The trial takes place in parallel with the attempt to renegotiate a reparation agreement signed between the companies and the Brazilian government, as well as in the midst of a dispute over the payment of legal fees by the municipalities of the Brazilian cities participating in the action in the United States. Kingdom.
What’s at stake
According to the law firm Pogust Goodhead, which represents victims in the United Kingdom, this would be the largest class action in the history of British justice and one of the largest environmental lawsuits in the world, in terms of number of plaintiffs and amount of compensation.
Also at stake is the possibility of setting a global precedent for holding large corporations accountable for environmental damage caused in other countries. This could have an impact on the repair of other environmental disasters that have occurred in Brazil and whose cases are also defended internationally by the same office.
Pogust Goodhead is active in cases involving the collapse of the Brumadinho dam, Minas Gerais, in the subsidence of the neighborhoods of Maceió, Alagoas, in an action against Vale for the Mariana case in the Netherlands, as well as actions related to pollution from toxic waste in Barcarena and Abaetetuba, and in the sinking of the Haidar ship, the latter two in Pará.
“[O caso Mariana] serves to remind shareholders that while globalization has been beneficial to businesses, it has also expanded the ability to take on responsibilities internationally,” says Ana Carolina Salomão, partner and investment director at Pogust Goodhead.
Because the case is ongoing in the UK
The Fundão Dam collapsed on November 5, 2015, releasing 44.5 million cubic meters of toxic sludge into the environment, the equivalent of 13 Olympic swimming pools.
The damage continued in the following days, when another 13 million cubic meters continued to leak. In total, the waste traveled 675 kilometers, reaching the Doce River, flowing into the Atlantic Ocean and reaching Espírito Santo and southern Bahia. Nineteen people died.
In 2016, Samarco, Vale and BHP signed a TTAC (Transaction and Conduct Adjustment Term) with the Union and the governments of Minas Gerais and Espírito Santo and created the Renova Foundation, to repair the damage caused by the breakup.
The entity, however, has already been challenged in court more than once, due to its inefficiency in carrying out such repairs, with delays in carrying out the reconstruction of the destroyed communities and in paying compensation. In 2021, the Public Prosecutor of Minas Gerais (MPMG) even called for the extinction of Renova.
In 2017, a Brazilian lawyer representing around 6,000 fishermen took the case to Welsh lawyer Tom Goodhead. Since BHP owned shares on the British Stock Exchange, it decided to take legal action in the United Kingdom. “What happened was a systemic failure. The main reason for this was the failure of BHP, Vale, the Brazilian government and judicial institutions to ensure fair and adequate compensation to victims,” says Goodhead.
The legal action in the UK, which began in 2018, was initially rejected, but in July 2022 the English court agreed to hear the case. “BHP sent us a letter last week saying that 200,000 people affected by the case had received compensation, but the majority had only received a few hundred pounds,” Goodhead adds.
In a statement, BHP said the Fundão Dam collapse was a tragedy and that it “is working collectively with Brazilian authorities and others to seek solutions to finalize the entire compensation and rehabilitation process that would keep the funds in Brazil for the Brazilian populations”. the affected people and environment, including affected traditional and indigenous communities.”
The company also said the action in the UK “duplicates and undermines efforts already underway in Brazil.” Finally, BHP stressed that it is not involved in any settlement negotiations in the United Kingdom and that it will continue to deny the claims made in the trial.
The Renova Foundation says it has already allocated R$38 billion in emergency financial aid, compensation, environmental repairs and infrastructure. “Of this total amount, R$14.86 billion was paid in compensation and R$2.96 billion in emergency financial assistance, for a total of R$17.82 billion in 446.5 thousand agreements “, reads a note from the entity. The Foundation also states that 86.89% of the properties in Novo Bento Rodrigues and Paracatu have been built and 211 have been handed over to families. The data dates back to August this year.
Currently, the Brazilian government is negotiating a new compensation agreement, which provides compensation of R$100 billion, of which R$30 billion comes from obligations to be respected by mining companies.
According to the office that defends victims, the new agreement will not affect the trial in the United Kingdom. “There is skepticism from our clients. Even if this settlement is reached, there will still be claimants defended by us who will not be recognized as affected,” Goodhead adds.
How the process will work
The trial will begin on Monday, but will last until March 2025. There are 12 weeks of activity, divided between testimony, presentation of evidence, testimony from representatives and former BHP employees, presentation of lawyers and experts.
The first week will begin with opening statements from both sides. BHP witnesses will be interviewed from October 28. At this stage it is expected to clarify the level of control the Anglo-Australian mining company had over the dam, its safety processes and the actions taken after the accident.
In mid-November the court will hear experts in civil, corporate and environmental law. It is expected that at this stage the legitimacy of Brazilian municipalities to bring a reparation action outside the country will be discussed. There will also be another statement from a former finance director of the mining company. Specialists in geotechnical issues will also be heard, before the final phase, which should take place between 24 February and 5 March.
The victims’ defense claims that BHP participates in Samarco’s board of directors and committees, as well as having ownership and control of its assets. The claimants rely on factual evidence that BHP acted negligently. “Among other things, in Samarco’s audits and risk management, in Vale’s approval of the dam’s use and in continuing to increase Samarco’s production without ensuring that the dam was safe,” says Tom Ainsworth, partner of Pogust Goodhead.
It is expected that the sentence will not be pronounced until mid-2025, but this does not mean that compensation will be paid immediately. If the British court finds BHP liable, a new trial to determine the payment amount will take place in October 2026. In a statement, BHP says that “if the case proceeds, we do not expect any compensation to be awarded until at least 2028-2030.”
In addition to this proceeding in the UK, there is another ongoing in the Netherlands, in which the defendants are Vale and a Dutch subsidiary of Samarco. BHP will not be judged in this action. Vale was included in the British case, but agreed to be removed from the trial. If convicted, however, he will split the payment with BHP.
Who are the Brazilians calling for justice in the UK
Initially, the office representing victims in the UK estimated that there would be 700,000 plaintiffs in the case, but after examining the duplicate names, the final number of Brazilian victims who can be compensated after trial in British justice is 620,000.
Among them there are 23 thousand indigenous people of the Krenak, Tupiniquim, Pataxó and Guarani peoples; residents of the Bento Rodrigues district, businesses, religious institutions and municipalities. Individuals are seeking physical and psychological harm, increased cost of living, loss or reduction of income, as well as disruption of basic services and moral damages. Companies also complain of loss of business opportunities and closures.
Traditionalist peoples say that their traditions have changed, like the Krenak, who no longer perform rituals on the Doce river, considered sacred to them. While the municipalities claim to have suffered collective patrimonial, environmental, reputational and moral damage.
Last Monday, Minister Flávio Dino, of the Federal Supreme Court (STF), banned municipalities from paying legal costs related to actions tried abroad. The injunction was issued after the Brazilian Mining Institute (Ibram), a body representing the country’s largest mining companies, contested the possibility of companies being set up outside Brazil.
The minister said the tariffs are considered high compared to the value that public authorities will get. According to Pogust Goodhead, 20% of the amount municipalities will receive in taxes is charged. “This case has been under trial for six years and we believe we have spent over £250m from litigation funders. Furthermore, this is high-risk litigation,” says Goodhead. According to him, for traditional communities no commission is charged, for companies it varies from 20 to 30% (depending on the type of organization), and for individuals 30% of the amount to be received is charged.
Source: Terra
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