BHP’s (ASX: BHP) share price was -1.84% lower at the open following its note to the ASX today advising investors of plans to defend a potential $8.8bn UK class action - one of the largest in British legal history - in relation to the Samarco Dam failure in Brazil that occurred seven years ago.
Overturning a previous High Court decision to dismiss the application, The UK Court of Appeal's decision last week allows the appeal by 200,000-plus Brazilian litigants seeking compensation for individuals, municipalities, private businesses and other institutions in Brazil following the Samarco dam failure.
The collapse of the Fundao dam in 2015 – which released 39.2 million cubic meters of tailings waste into the Rio Doce Basin - resulted in 19 fatalities and left hundreds homeless.
As a result, Samarco, the joint venture between BHP and Vale was shuttered for five years.
While BHP contemplates whether to appeal the judgment to the UK Supreme Court, the mining giant also reminded investors that its subsidiary BHP Brasil remains committed to continue supporting the local remediation efforts in Brazil through the Renova Foundation.
"The judgment is not a decision in relation to the merits of the claims made in the group action,” BHP noted.
“It is concerned with the preliminary question of whether the group action can continue against BHP in the United Kingdom."
It’s understood litigants have turned to the English legal system due to slow and inadequate redress through the Brazilian courts.
BHP argues that the UK group action is an unnecessary duplication of matters already covered by the existing and ongoing work of the Renova Foundation which was established together with joint venture partner Vale to remediate damage and compensate affected individuals.
In short, BHP has already provided BLR9.8bn (GBP1.5bn) in compensation and direct financial aid in relation to the dam failure to over 376,000 people.
However, judges believed the court case should proceed because the remedies on offer in Brazil were “not so obviously adequate that it can be said to be pointless and wasteful to pursue proceedings” in England.
The ruling alluded to a realistic prospect of a trial yielding a real and legitimate advantage “for the claimants such as to outweigh the disadvantages for the parties in terms of expense and the wider public interest in terms of court resources.”
Meantime, between the Renova Foundation and Brazilian court settlements, BHP estimates that BRL30bn would have been spent on reparation and compensation by the end of this year.
Get the latest news and media direct to your inbox