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01 December 2020
In Municipio de Mariana v BHP Group plc, BHP successfully applied to strike out 200,000 claims as an abuse of process.(1) Had the High Court judge not struck out the claims, he would have stayed the proceedings on jurisdictional grounds under Article 34 of the EU Recast Brussels Regulation and the doctrine of forum non conveniens.
In November 2015 the Fundao Dam in southeast Brazil collapsed. Over 40 million cubic metres of iron ore mine tailings escaped into the Doce River, with catastrophic environmental consequences. The pollutant travelled to the Atlantic Ocean, 400 miles away, destroying or contaminating everything in its path. Entire villages were obliterated and 19 people died. Individuals, corporates and institutions from Brazil initiated one of the largest group litigation proceedings ever brought in England. They contended that the defendants were liable to compensate them for losses sustained as a result of the collapse. The defendants denied liability and persuaded the court that the case against them should not be allowed to proceed.
The judge's findings in relation to abuse of process were fact specific. Overall, he held that:
the claimants' tactical decision to progress closely related damages claims in the Brazilian and English jurisdictions simultaneously is an initiative the consequences of which, if unchecked, would foist upon the English courts the largest white elephant in the history of group actions.
The judge went on to state that the claimants had not suggested any "workable procedural mechanism for resolving the claims" and should not be allowed to "outsource" this to the court. The court did not accept that the claimants could not access redress in Brazil and that it would be "manifestly unfair to the defendants to be required to engage in massively expensive and protracted litigation devoid of any realistic promise of substantive advantage to the claimants". The judge struck out the proceedings on this basis.
Alternatively, the judge would have stayed the proceedings on jurisdictional grounds. His findings in relation to Article 34 of the EU Recast Brussels Regulation and forum non conveniens were less fact specific so apply more widely.
Article 34 of the EU Recast Brussels Regulation gives the courts discretion to stay proceedings where an identical or related action is pending in a non-member state court, but only if the non-member state action was first in time and if other conditions (eg, the judgment being capable of recognition and enforcement in the member state) are satisfied. BHP Group plc is domiciled in England so could argue that Article 34 applied. The judge found that:
The judge stated that had he not struck out the claims against BHP Group plc, he would have stayed the claims against it under Article 34.
Forum non conveniens
This common law doctrine allows the court to dismiss a civil action, even though the forum is proper and the court has jurisdiction, where an appropriate and more convenient forum exists and the action can be tried there. BHP Group Ltd is domiciled in Australia. While the court was unable to rely upon Article 34, it was able to rely on this doctrine. The claimants argued that it would be "inappropriate" to consider a "hypothetical application" of the doctrine but the judge disagreed. He found that:
The judge indicated that had he not struck out the claim against BHP Group Ltd, he would have stayed the claim against it under the doctrine of forum non conveniens.
The judgment reaffirms that the leading test for establishing forum non conveniens is still Spiliada Maritime Corp v Cansulex Ltd ( AC 460). The court was not satisfied that part one of the test was met (ie, England was not the "natural" forum for the dispute). Despite evidence from the claimants that the Brazilian courts could take more than a decade to reach a judgment and that the compensation offered would fall short of the damage which had occurred, the judge found that this was not "cogent" evidence that they would not obtain justice in the foreign jurisdiction and thus part two of the test was not satisfied. While the significant nature of the proceedings would have raised the profile of England as a forum for group litigation, this was ultimately not a case which fell within the generous parameters under which the court can accept jurisdiction. Municipio de Mariana must continue its fight in Brazil.
For further information on this topic please contact Simon Hart or Molly Russell at RPC by telephone (+44 20 3060 6000) or email (email@example.com or firstname.lastname@example.org). The RPC website can be accessed at www.rpc.co.uk.
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