- in United Kingdom
- with readers working within the Property, Telecomms and Construction & Engineering industries
This is the first full trial judgment in a case that has considered whether related companies can be made liable for damage that occurs overseas on the watch of their joint ventures. The ruling means BHP has strict liability under Brazilian law for the damage caused when the Fundão dam collapsed in 2015.
Since the Court of Appeal decided in 2022 that the case should go ahead in England, international corporate groups have been awaiting this decision for guidance on how much responsibility they might bear when things go wrong overseas and group companies are involved. A number of other recent cases in the UK have involved the Supreme Court considering jurisdiction challenges in cases raising similar issues (read our previous article: Mass tort litigation in England for overseas environmental harm).
The answer in this case is inevitably fact-specific, and was decided under Brazilian law, but corporates will take note of comments that BHP had the power to appoint board members to Samarco and did in fact use its powers under Samarco's shareholders' agreement to control the company, including its short- and long-term strategies. It participated in Samarco's activities, monitoring and procuring management and implementation of projects. This allowed the court to conclude as a point of fact that BHP was exercising control in a legally relevant way. It will be interesting to see if a case applying English law would reach the same conclusion on liability.
While this case concerned a joint venture, corporate groups will be looking at how the judgment may read across to their own organisational structures. While respecting the separate legal personality of individual companies, the judgment demonstrates that a court can look to assess the reality of a situation. If a parent company has taken control, it may bear responsibility for the outcome.
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