BHP Group Ltd. is liable to compensate hundreds of thousands of victims of a devastating dam collapse in Brazil, a London judge ruled moving closer to a potential multi-billion dollar payout a decade after the disaster.
About 620,000 Brazilians are seeking more than £36 billion ($47.4 billion) through British courts for the collapse of Fundão Dam at an iron ore joint venture between Vale SA and BHP a decade ago. The metals producers signed a $30 billion settlement on the disaster with Brazil in October last year.
“The risk of collapse of the dam was foreseeable” and “BHP were negligent, imprudent and lacking in skill,” Judge Finola O’Farrell said in the Friday ruling. “BHP are strictly liable as polluters in respect of damage caused by the collapse,” under the environmental law but are not liable under corporate law.
BHP said it planned to appeal Friday’s ruling. The setback comes as it’s embroiled in a protracted price dispute with China and Vale is facing a similar challenge in the Netherlands. Shares in BHP fell as much as 3.3% in London before paring some losses.
“BHP confirms that the English High Court has found BHP liable under Brazilian law for the 2015 Fundão dam failure,” it said in a statement. “Any assessment of damages will be determined in future second and third stage trials expected to complete in 2028 or 2029.”
As a result of the decision, BHP said it’ll will update its existing provision to reflect this claim.
The 2015 collapse unleashed a torrent of mine waste that destroyed entire villages, polluted hundreds of kilometers of river and killed 19 people in the Minas Gerais and Espirito Santo states.
About 240,000 people part of the UK lawsuit were already paid compensation in Brazil, according to BHP. “We believe this will significantly reduce the size and value of claims,” Brandon Craig, BHP’s president of minerals in the Americas.
During the trial that started over a year ago at London’s High Court, lawyers for BHP argued that the firm can’t be held responsible as the Samarco Mineracao venture is an independent entity and BHP didn’t know the dam was compromised. The firm complied with all local rules, they said.
“Against the obvious signs of contractive, saturated tailings and numerous incidents of seepage and cracking, it was imprudent to continue to raise the dam,” the judge said. A stability study would have avoided the decision to increase the height of the dam “and the collapse could have been averted.”
The ruling confirms that the dam collapse was caused by BHP’s negligence and imprudence, claimant law firm Pogust Goodhead said in a statement.
The judgment “sends an unmistakable message to multinational companies around the world. You cannot disregard your duty of care and walk away from the devastation you caused,” Alicia Alinia, Pogust Goodhead’s chief executive officer, said.
The case has meandered through the English courts for about seven years, with different judges taking opposing views about whether the case could go ahead. Ultimately, appeal judges in 2022 paved the way for a full trial.
Pogust Goodhead received hundreds of million dollars from hedge fund Gramercy in a litigation funding deal to fight cases including the one against BHP. The law firm has since been embroiled in a controversy that led to the ouster of its former head Thomas Goodhead.
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