HT-2022-000304 - [2025] EWHC 1601 (TCC)

In light of its relevance to the arguments about re-litigation of the compromised ASI Application, it is necessary to set out in more detail the events which took place upon bringing the ASI Application, up to and following the Consent Order.

Prior to filing the ASI Application, Pogust Goodhead (‘PG’), on behalf of the MCs, wrote to Slaughter and May (‘SM’), representing BHP, on 15 June 2024. The letter asserted that, ‘the plain and obvious purpose of the wide-ranging interim relief sought in the IBRAM Claim is to disrupt, if not halt entirely, our Municipality Clients’ participation in the Proceedings and the exercise of their rights of access to justice in the English courts… That being so, there is a clear prima facie inference to be drawn in our view that your clients, as the primary beneficiaries of the interim relief being sought from the STF, must have been instrumental in the commencement of the IBRAM Claim.’ The letter went on to note that Mattos Filho, a firm instructed by BHP as Brazilian co-counsel to Slaughter and May in the Main Proceedings had conduct of the IBRAM Claim. It also pointed out that some of the documents appended to the IBRAM Claim had not been in the public domain and could only have been made available to IBRAM by BHP. It then asserted, ‘It is equally obvious that it has been brought in order to pressure the Municipalities into accepting the offer that BHP… have made as part of the repactuation negotiations in Brazil’. The letter then set out a series of questions seeking, in different ways, an explanation of the extent to which BHP was involved in the bringing of the IBRAM Claim.

BHP’s initial response was by letter dated 20 June 2024. SM did not directly answer PG’s questions but at the heart of such answer as was given was the following statement at paragraph 3(e): ‘Our clients do not have a representative on the Executive Board or the Administrative Board or the Legal Committee of IBRAM. For the avoidance of doubt, our clients have not participated in IBRAM’s decision to initiate the IBRAM claim, nor has BHP Brasil’.

Thereafter, the MCs obtained minutes of an IBRAM Board meeting dated 23 May 2024. In these, it was stated that ‘The Institutional Relations Advisor, Renata Santana, informed that BHP asked IBRAM to file an ADPF with the [STF] to challenge the possibility of Brazilian municipalities litigating abroad, in cases occurring in Brazil, mainly in the case of the Fundão dam collapse. There are at least 50 affected municipalities that are trying to file lawsuits with the Law Firm P&G’.

The ASI Application was launched on 24 June 2024. Two days later, PG wrote seeking various undertakings pending determination of the ASI Application, and additionally seeking an explanation for the apparent contradiction between the answers, such as they were, in SM’s letter of 20 June 2024 and the 23 May 2024 Minutes. It sought a response by 28 June 2024. Meanwhile, the ASI Application was listed to be heard at the PTR before O’Farrell J, on 22 July 2024.

On 10 July 2024, Vale submitted its responsive evidence to the ASI Application, through the witness statement of Alexandre D’Ambrosio. This evidence included the following passage in a section dealing with the decision to bring the IBRAM Claim:

On 13 July 2024, nearly three weeks after PG’s requests, SM wrote providing some further information. First, it was admitted that, contrary to the terms of the letter (albeit consistent, it was said, with the understanding of SM and BHP at the date of the letter), BHP Brasil did in fact have a representative on the Legal Committee of IBRAM. In relation to the second sentence of paragraph 3(e) of the 20 June 2024 letter, SM said that this was ‘intended to convey that neither BHP nor BHP Brasil have a representative on the Executive Board or the Administrative Board of IBRAM, being bodies BHP understands made the decision for IBRAM to initiate the IBRAM Claim, nor did they attend any meetings of those bodies during which the IBRAM Claim was discussed and/or in which the decision to bring a claim was made’.

In the absence of evidence as to the state of knowledge of either those at SM or those individuals providing instructions to SM, it is plainly necessary to use cautious language when characterising this response and paragraph 3(e) to which it referred. Putting it at its lowest, in circumstances where BHP had in fact asked IBRAM to bring the IBRAM Claim, and agreed to fully fund it, the statement that ‘[BHP] have not participated in IBRAM’s decision to initiate the IBRAM claim, nor has BHP Brasil’, in fact conveyed, read by the reasonable recipient in light of the questions this statement was responding to, a misleading impression. Indeed, even if strictly true when construed as SM suggested had been intended, it fell short of communicating the whole truth, and was plainly aimed at distancing BHP from the IBRAM Claim.

In the same letter, SM went on to inform PG at paragraph 5 that:

“(a)

Prior to the filing of the IBRAM Claim, BHP Brasil was asked by IBRAM to cover all costs associated with the IBRAM Claim and agreed with IBRAM that it would do so. IBRAM incurred costs on this basis.

(b)

BHP Brasil and IBRAM subsequently agreed to enter into a sponsorship agreement that would cover the costs of the IBRAM Claim and potentially

costs associated with other initiatives relating to the mining industry (the “Sponsorship Agreement”).

(c)

The Sponsorship Agreement provides for an initial amount of R$1,000,000, which can be increased to a total amount of R$6,000,000. Prior to the parties agreeing the Sponsorship Agreement, BHP Brasil was informed by IBRAM of the costs being agreed and incurred in relation to the IBRAM Claim and it was clear by the time of the Sponsorship Agreement that the costs in relation to the IBRAM Claim would exceed the initial amount of R$1,000,000 such that (in line with the agreement to cover the costs of the claim) the further amounts available under the Sponsorship Agreement would be required.

(d)

BHP understands that IBRAM has incurred costs of approximately R$4,100,000 in relation to the IBRAM Claim, and that BHP Brasil is contractually bound to pay those costs.

(e)

As such, the proposed Paragraph 1 Undertakings contain a carve-out permitting BHP Brasil to provide funding to IBRAM in accordance with BHP Brasil’s agreement to fund the costs of the IBRAM Claim. In this regard we note that BHP Brasil has not made any payments to IBRAM to date to fund the costs of the IBRAM Claim.

(f)

BHP will procure that BHP Brasil will use best endeavours to agree with IBRAM that the funding to be provided by BHP Brasil in respect of the costs of the IBRAM Claim will be capped at R$6,000,000 and that no further funds will be provided beyond those provided under the Sponsorship Agreement.”

In evidence served on behalf of BHP from Efstathios Michael on the same date, it was confirmed, in addition, that once an ADPF is filed, it could not be withdrawn.

The Sponsorship Agreement was not disclosed at this time, notwithstanding a number of requests, as referred to in the first affidavit of Mr Christoper Neill, a Partner of PG.

On 22 July 2024, the Consent Order was agreed, containing the undertakings and carve out set out above.

It is common ground that as at the date of the Consent Order, the MCs had not intimated the possibility of a contempt application in relation to BHP’s involvement with the IBRAM Claim.

Correspondence continued, some of which is referred to later in this judgment. PG continued to seek sight of the Sponsorship Agreement. On 20 August 2024, solicitors for BHP confirmed that BHP had complied with the undertaking and that BHP Brasil had requested that IBRAM does not take any further action to pursue the IBRAM Interim Relief Claim.

In the same letter, BHP’s solicitors provided the following information:

This agreement has been referred to in submissions as the ‘Oral Agreement’. Pursuant to this, the obligation to fund the IBRAM claim was, effectively, said by BHP to be unlimited.

On 23 August 2024, BHP then disclosed the Sponsorship Agreement. Clauses 1.1 and 2.1 set out the following:

Nowhere does the Sponsorship Agreement refer to the IBRAM Claim. If the specific purpose of the Sponsorship Agreement was to fund the IBRAM Claim, the document was, it may reasonably be inferred, drafted in such a way as to disguise that purpose.

Moreover, in light of the Oral Agreement, the Sponsorship Agreement did not encompass the totality of the obligations BHP says that it has in respect of the IBRAM Claim. Indeed, it is not obvious what practical purpose the Sponsorship Agreement was intended to serve in respect of funding the IBRAM Claim if the cap stated in it was effectively subjugated to the overarching Oral Agreement by which BHP committed to fund the entire proceedings to an unlimited extent. To the extent the Oral Agreement is as BHP contends, it also follows that, pursuant to the carve out within the Consent Order, BHP would be permitted to continue to fund the IBRAM Claim – which itself cannot be stopped - to an unlimited extent.

Meanwhile, and notwithstanding BHP Brasil’s request that IBRAM does not take any further action to pursue the IBRAM Interim Relief Claim, IBRAM has in fact gone on to seek further interim relief in connection with the IBRAM Claim.

On 9 October 2024, IBRAM filed a petition, which sought: (i) the immediate suspension of any contracts between Brazilian Municipalities and any other entity in connection with any lawsuits in foreign jurisdictions, including suspension of the supply of information and payments under such contracts; (ii) that certain Brazilian Municipalities be compelled to apply to suspend any foreign proceedings pending the outcome of the IBRAM Claim, (iii) orders preventing them from bringing any new proceedings or claims, or performing new acts within existing claims, and (iv) that certain Brazilian Municipalities disclose all contracts with third parties in connection with foreign proceedings (the “October Petition”). This developed an argument that “success fee” contracts are illegal under Brazilian law.

On 12 October 2024, and on the basis of the success fee argument, Justice Dino ordered that the Municipalities: (i) disclose contracts with foreign law firms; and (ii) refrain from paying any fees to them, pending a decision on the merits of the IBRAM Claim (the “October STF Order”). The STF ratified that order on 5 November 2024. No other orders on the October Petition were made.

On 25 October 2024, the ‘Repactuation Agreement’ was signed in Brazil and ratified on 6 November 2024. This is a compensation scheme made between Samarco, Vale, BHP Brasil and the Renova Foundation (the “Brazilian Companies”), the governments of Minas Gerais and Espírito Santo, the Federal Government, and several Brazilian justice institutions. It renegotiated the settlement terms of prior agreements in relation to various Brazilian proceedings. The MCs were not parties to the Repactuation Agreement and were not involved in its negotiation.

If any MC which was eligible wished to apply for compensation under the Repactuation Agreement, this was made contingent upon signing an adherence agreement, which required the withdrawal and discontinuance from any proceedings relating to the Fundão Dam collapse, including the Main Proceedings within 5 days, and the waiver of any other claims. 31 of the 46 MCs have chosen not to adhere to the Repactuation Agreement.

On 22 February 2025, IBRAM filed a further petition for interim relief with the STF (the “February Petition”). IBRAM sought orders to: (i) stay the effectiveness of the contracts between the Brazilian Municipalities and their foreign lawyers; and (ii) suspend clauses in those contracts that authorise the collection of funds from the municipalities in the event of a settlement. BHP contend that, according to IBRAM, the February Petition was made because the municipalities’ contractual obligations to pay their foreign lawyers on entering into a settlement deterred them from signing up to the terms of the Repactuation Agreement which contains a clause prohibiting the use of compensation to pay lawyers. The MCs say that if the interim relief in the February Petition was (or is) granted, this would also leave the MCs without a retainer through which they could give instructions in the Main Proceedings.

As a result of these concerns, on 3 March 2025, 9 of the MCs sought and obtained from the High Court without notice relief against IBRAM comprising in particular: a mandatory injunction and declaratory relief, in respect of the February Petition, including an order requiring IBRAM to withdraw it. BHP was not a party to that application. The return date was listed for 15 April 2025. At that hearing, the parties agreed that the mandatory injunction should stay in place pending a full hearing, listed for November 2025. IBRAM (through Leading Counsel) at that time indicated that it did not intend to issue further petitions because the relief that Justice Dino had granted to date was sufficient.

On 5 March 2025, Justice Dino issued an order, or a statement, following the February Petition. The MCs and IBRAM do not agree the nature and legal effect of the communication, including whether it resolved the February Petition. Whilst it is not suggested by the MCs, at least in the context of this application, that BHP have been actively involved in the further petitions advanced by IBRAM, such that BHP are in breach of the Consent Order, it would seem to follow from the Oral Agreement that they have been funded (or at least underwritten) by BHP.