BHP facing $9.3bn claim over Brazil dam collapse
BHP is accused in the largest claim in UK legal history of being “woefully negligent” before a Brazil dam collapse.
BHP Group has vowed to fight a £5 billion ($9.3bn) UK court case over the Samarco tailings dam failure in Brazil in 2015, which argues the mining giant bears “strict liability” for damages inflicted on the 235,000 claimants, irrespective of whether it can be proved to have known of flaws in the dam wall.
The lawsuit repeats earlier claims, in the US and Brazilian courts, that BHP was aware of the risk the Fundão tailings dam was flawed from its first construction, and that BHP knew it was deteriorating in the lead up to 2015’s deadly collapse.
The full claim was filed in a Liverpool court on Tuesday, alleging that BHP knew, or should have known, of fundamental flaws in the design and operation of the tailings dam.
But it also argues Brazilian law does not require Samarco’s victims to prove BHP was negligent in failing to prevent the disaster, despite flaws in the Brazilian legal system that have so far prevented them winning justice through local courts.
“Major litigation relating to environmental disasters in Brazil is extremely slow-moving; cases have been known to last decades. In this case, it is now apparent that the victims have no prospect of receiving proper compensation through the Brazilian courts for the losses they have suffered within any reasonable timeframe, if ever,” the statement of claim says.
“Fortunately, Brazilian environmental law has a long reach, imposing strict liability for environmental damage and its wider consequences not only on those immediately responsible for the damage but also (amongst others) on those responsible by reason of their ultimate ownership and/or control of the entity immediately responsible.”
The suit argues that BHP — as half owner of Samarco, along with Brazil’s Vale — is guilty under the strict liability provisions of Brazilian law as a polluter, because it owned, funded, supervised and exercised control over the operations of Samarco, even though it did not directly own the mine.
The claim was filed by SPG Law on behalf of 235,000 Brazilian claimants, including the Catholic Church, local governments, power and water companies and an indigenous tribe the lawsuit claims is the last remnant of the people who were nearly wiped out when Brazil was first colonised by the Portuguese in the 16th century.
SPG Law partner Tom Goodhead said the claimants had complied 6.3 million pages of evidence documenting their loss and suffering.
“The Fundão dam near Belo Horizonte in eastern Brazil collapsed on 5 November 2015, causing a mudslide that killed 19 people, destroyed the nearby villages of Bento Rodrigues, Paracatu de Baixo and Gesteira and devastated the Rio Doce river basin, the second-largest river system in Brazil,” he said.
“Driven by concern for declining revenues amid the falling market price of iron ore, the company took risks, increased production and turned a blind eye to dangers that ultimately claimed lives and destroyed communities.”
The suit says that, while BHP has set up a compensation fund in response to pressure from Brazilian authorities, and separate suits in the US and Australia, many of the victims have received only modest compensation.
“However, most have still received nothing,” it says.
“In the meantime, the English and Australian public companies at the top of the BHP group structure, which bear ultimate responsibility for the disaster along with Vale, have until now largely been insulated from its consequences.”
BHP confirmed in a statement to the market yesterday that it had been served with notice of the suit.
“BHP intends to defend the claim,” it said.
BHP shares fell 12 cents to $37.18 yesterday.