Municipio de Mariana and Others V BHP Group and Another

Claim No.
HT-2022-000304
IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
IN THE MATTER OF THE FUNDÃO DAM DISASTER

BETWEEN:
MUNICÍPIO DE MARIANA
and the Claimants identified in the Schedules to the Claim Forms
Claimants
-and-
(1) BHP GROUP (UK) LTD (formerly BHP BILLITON PLC

and thereafter BHP GROUP PLC)
(2) BHP GROUP LTD
Defendants
CLAIMANTS’ OPENING NOTE FOR THE FIRST STAGE TRIAL

COMMENCING ON 21 OCTOBER 2024
References to the Trial Bundle are in the form {Bundle A to M/Tab/Page}.
References to the PCMB are in the form {Bundle PA to PO/Tab/Page}.
References to the Authorities Bundle are in the form {Bundle J/Tab/Page}.

Table of Contents
PART I. INTRODUCTION .................................................................................................................................... 6
A) Overview ......................................................................................................................................................... 6
B) The Claimants’ Claims .................................................................................................................................. 8
C) BHP’s Defences ............................................................................................................................................... 8
D) Procedural Context ........................................................................................................................................ 9
E) Material Before the Court ........................................................................................................................... 10
F) Background to the Evidence ........................................................................................................................ 12
G) Adverse Inferences ....................................................................................................................................... 17

1) Legal Principles .................................................................................................................................... 17
2) Application to Facts .............................................................................................................................. 18
PART II. PARTIES ............................................................................................................................................... 19
A) The Claimants ............................................................................................................................................... 19
B) The Defendants ............................................................................................................................................. 20
C) Vale ................................................................................................................................................................ 21
D) Samarco ......................................................................................................................................................... 21
PART III. THE DAM ............................................................................................................................................ 23
A) Iron Ore Mining ........................................................................................................................................... 23
B) The original design, the Piping Incident, and the fundamental design change which followed ............ 36
C) The Overflow Channel ................................................................................................................................. 44
D) Further problems with the galleries and the creation of the Setback at the left abutment .................... 48
E) Filling the Setback ........................................................................................................................................ 55
F) The August 2014 Cracking and Upwelling Incidents ................................................................................ 58
G) Further Incidents.......................................................................................................................................... 60
PART IV. SUMMARY OF THE CLAIMANTS’ CASE .................................................................................... 65
PART V. INTRODUCTION TO BRAZILIAN LAW ........................................................................................ 67
A) Basic Legal Framework ............................................................................................................................... 67
PART VI. THE STRICT LIABILITY CASE ..................................................................................................... 71
A) Strict Liability under the Environmental Law .......................................................................................... 71
2
1) Introduction .......................................................................................................................................... 71
2) The main points of dispute between the experts as to the elements of liability ..................................... 73
i) Polluting activity ................................................................................................................................... 76
ii) Responsibility for the polluting activity................................................................................................ 77
iii) Causation of damage ............................................................................................................................. 91
3) Consequences of liability under the Environmental Law...................................................................... 92
4) Conclusion ............................................................................................................................................ 96
B) Strict Liability under Article 927, sole paragraph, of the Civil Code ...................................................... 97
1) Introduction .......................................................................................................................................... 97
2) Main points of dispute between the experts as to the elements of liability under Article 927, sole
paragraph ........................................................................................................................................................... 97
i) Risky activity ........................................................................................................................................ 99
ii) Responsibility for the risky activity ...................................................................................................... 99
iii) Causation of damage ........................................................................................................................... 100
3) Consequences of liability under Article 927, sole paragraph, of the Civil Code ................................ 100
4) Conclusion .......................................................................................................................................... 100
C) BHP’s liability as a Polluter....................................................................................................................... 101

1) Introduction ........................................................................................................................................ 101
2) Samarco’s activity............................................................................................................................... 102
3) BHP’s responsibility for Samarco’s activity ....................................................................................... 103
i) BHP’s ownership of Samarco ............................................................................................................. 103
ii) BHP’s control over Samarco .............................................................................................................. 103
iii) BHP’s control over and direct participation in Samarco’s Growth Projects, increases in tailings storage
capacity and the disposal of Vale’s tailings.................................................................................................. 134
iv) BHP’s control over and direct participation in the management and audit of a risk of a failure of
Samarco’s dams............................................................................................................................................ 151
v) BHP’s control over and direct participation in health and safety matters ........................................... 159
vi) BHP’s control over and direct participation in dividends strategy ..................................................... 164
vii) BHP’s control over and direct participation in Samarco’s funding .................................................... 167
viii) BHP’s control over and direct participation in the post-Collapse response ........................................ 171
ix) BHP’s conduct created and/or contributed to the risk inherent in Samarco’s activity, including the risk
of a Collapse ................................................................................................................................................. 175
x) BHP benefitted from Samarco’s activity ............................................................................................ 175
xi) BHP funded Samarco’s activity .......................................................................................................... 178
4) Samarco’s activity caused the Collapse.............................................................................................. 180
5) Conclusion .......................................................................................................................................... 180
PART VII. THE FAULT-BASED CASE........................................................................................................... 182
A) Legal principles .......................................................................................................................................... 183

1) Article 186 of the Civil Code .............................................................................................................. 183
i) Voluntary act or omission ................................................................................................................... 183
ii) Fault .................................................................................................................................................... 187
iii) Causation ............................................................................................................................................ 188
iv) Joint Liability ...................................................................................................................................... 189
2) Articles 116 and 117 of the Corporate Law ........................................................................................ 189
i) Definition of controlling shareholder .................................................................................................. 191
ii) Duties on controlling shareholders ..................................................................................................... 192
iii) Liability for breach of the duties under Article 116 sole paragraph.................................................... 197
iv) Liability for abuse of power under Article 117 of the Corporate Law................................................ 198
v) Standing to bring a claim for breach of Article 116 of the Corporate Law......................................... 199
3
B) Application to facts..................................................................................................................................... 200
1) Duties .................................................................................................................................................. 200
i) Creation of risk ................................................................................................................................... 201
ii) Assumption of responsibility .............................................................................................................. 201
iii) Controlling shareholder of Samarco ................................................................................................... 205
iv) Article 225 of the Constitution ........................................................................................................... 207
2) Illicit acts ............................................................................................................................................ 207
i) Continuing to increase production without ensuring the Dam was safe ............................................. 208
ii) BHP’s negligence in approving Vale’s use of the Dam ...................................................................... 211
iii) BHP’s failure to ensure that applicable standards were followed ....................................................... 214
iv) BHP’s negligence with respect to the ITRB ....................................................................................... 215
v) BHP’s negligence with respect to risk management ........................................................................... 217
vi) BHP’s negligence with respect to audits............................................................................................. 225
vii) BHP’s negligence with respect to the Prístino Report ........................................................................ 228
viii) BHP’s inappropriate reliance on the licences granted for the Dam .................................................... 230
3) Abuse of power ................................................................................................................................... 240
i) Summary ............................................................................................................................................. 242
4) Causation ............................................................................................................................................ 243
PART VIII. ATTRIBUTION .............................................................................................................................. 245
A) Introduction ................................................................................................................................................ 245

1) Liability for corporate acts under Brazilian law ................................................................................ 246
2) Corporate organs................................................................................................................................ 247
B) Agency ......................................................................................................................................................... 248

1) Members of the Samarco Board ......................................................................................................... 251
2) Attribution of knowledge ..................................................................................................................... 253
PART IX. DISREGARD ..................................................................................................................................... 253
PART X. PRESCRIPTION................................................................................................................................. 255
A) Introduction ................................................................................................................................................ 255
B) Collective and Individual Redress ............................................................................................................ 256
C) Brazilian Criminal Complaint/Civil Code Art 200.................................................................................. 257

1) Application to the Facts ...................................................................................................................... 259
D) CPAs ............................................................................................................................................................ 261

E) Consumer Defence Code ............................................................................................................................ 264
F) Municipalities and Utilities/Isonomy ........................................................................................................ 266
G) The Term of Commitment ......................................................................................................................... 267
H) Claims not Subject to Prescription ........................................................................................................... 268
I) Other factors affecting the running of Prescription ................................................................................ 270
J) Procedural vs Substantive Requirements................................................................................................. 272
4
PART XI. WAIVERS .......................................................................................................................................... 274
A) Introduction ................................................................................................................................................ 274
B) Background ................................................................................................................................................. 275

1) TTAC, Renova and PIM ...................................................................................................................... 275
2) Novel System ....................................................................................................................................... 277
3) Litigation relating to the Renova schemes .......................................................................................... 278
4) Mariana CPA and individually negotiated agreements ...................................................................... 280
C) Legal principles .......................................................................................................................................... 281

1) Principles of interpretation ................................................................................................................. 281
2) Adhesion Contracts ............................................................................................................................. 285
3) Ratification ......................................................................................................................................... 286
D) Application to the Sample Set ................................................................................................................... 287

1) PIM and Novel System agreements are adhesion contracts ............................................................... 288
2) Clauses that are invalid by reason of Articles 46 and/or 51 of the CDC ............................................ 290
3) Interpretation of waiver provisions if valid ........................................................................................ 292
PART XII. STANDING OF THE MUNICIPALITIES .................................................................................... 295
A) Introduction ................................................................................................................................................ 295

1) Legal Principles .................................................................................................................................. 297
PART XIII. CONCLUSION ............................................................................................................................... 299
5
PART I. INTRODUCTION
A) Overview1
1. On 5 November 2015, the Fundão Tailings Dam near Belo Horizonte (“the Dam”) failed
and collapsed, releasing around 40 million cubic metres of accumulated mining waste to
surge into the nearby watercourses. 19 people lost their lives, plus an unborn child of one
of the survivors. The village of Bento Rodrigues was destroyed and tremendous damage
inflicted to the communal infrastructure and individual properties of surrounding
communities. Water supplies were polluted; countless fish died and vast areas of protected
habitat were damaged. The entire course of the River Doce to the Atlantic Ocean was
affected.
2. BHP was quick to acknowledge its responsibility for this terrible environmental catastrophe
and to declare its commitment to putting things right. BHP’s then CEO, Andrew
Mackenzie, was unequivocal: “In BHP Billiton, we recognise that we have a responsibility
to support Samarco and the local authorities in the response effort […] Do let me be very
clear: we are 100% committed to doing everything we can do to support Samarco as it
works to rebuild the communities and restore the environment, in a way that I think would
be acceptable to reasonable men and women.”2
3. In the period of almost nine years since the Collapse it has become clear that there is a
chasm between what BHP regards as “acceptable” and the compensation to which the
Claimants consider themselves legally and morally entitled. Indeed, the profound
shortcomings of the domestic reparation schemes in Brazil were addressed by the Court of
Appeal when ruling in 2022 that the Claimants’ claims could properly proceed in England.3
Negotiations in Brazil for the provision of an enhanced package of measures4 (the so-called
“Repactuation Process”) implicitly recognise that a great deal more remains to be done.5
At the time of writing, however, those negotiations have yet to reach any conclusion.
4. Far from recognising its “responsibility” as Mr Mackenzie had said it would do, BHP has
instead devoted very substantial resources to placing obstacles in the way of the Claimants’
1
The following abbreviations are used: the Claimants’ Re-Re-Re-Amended Master Particulars of Claim (“POC”),
the Defendants’ Re-Re-Re-Amended Defence (“Defence”), the Claimants’ Re-Re-Re-Amended Reply
(“Reply”), the Defendants’ Re-Re-Amended Rejoinder (“Rejoinder”), the Joint Statement (“JS”), and
Responses to Requests for Further Information (“RRFI”).
For all quotations, emphasis is added unless otherwise stated.
2
{F14/101/2-3}.
3
[2022] EWCA Civ 951 at {H2/4/101}. See in particular §§57-74 {H2/4/20-25}, §§87-92 {H2/4/28-29}.
4
See e.g., {F16/498.26.11/1-4}.
5
[2022] EWCA Civ 951 at §§37-38 {H2/4/15}.
6
English claims, first at the jurisdictional phase and now as to the substance. Thus, for
example:
4.1. BHP contend (on spurious grounds)6 that the municipality Claimants – whose
financial losses are the greatest – are unable even to advance their claims here;
4.2. in a further effort to derail the municipalities’ claims,7 BHP procured and agreed to
fund a fresh claim before the Brazilian Supreme Constitutional Court (the “STF”),
ostensibly to represent the interests of the Brazilian mining industry (through the
Brazilian Mining Institute (“IBRAM”) but in reality seeking (i) a determination
from the STF on issues already before this Court, and (ii) an injunction from the
STF prohibiting all communications between the municipality Claimants and their
lawyers (or any lawyers) in relation to these proceedings. The municipality
Claimants are considering contempt proceedings against the Defendants for their
attempts to interfere with the administration of justice by this Court.
4.3. BHP staunchly denies any liability to any of the Claimants on any of their causes of
action, notwithstanding that the Claimants’ primary claim is based upon the strict
liability which Brazilian environmental law imposes upon businesses who are
responsible for an activity that causes environmental damage;
4.4. BHP refuses even to accept that the knowledge and conduct of its own senior
executives should be attributed to it: when acting as directors of Samarco those BHP
executives are said to have been acting exclusively for Samarco and not in any sense
on behalf of BHP.8
5. This is not BHP facing up to its responsibilities but cynically and doggedly trying to avoid
them. Although that is BHP’s choice, it cannot properly now claim to be a company “doing
the right thing” by the victims of the disaster. In particular, it is not open to BHP to point
to the supposed adequacy of Brazilian routes of redress after having fought and lost on
those points in its unsuccessful jurisdiction challenge.
6. The Claimants emphasise also that they are not seeking to be overcompensated in respect
of any of their losses, nor otherwise to obtain any sort of windfall by choosing to proceed
in England. If liability is established as a result of this First Stage trial, questions of
causation and quantum of the Claimants’ losses can be fully tested at the Second Stage
6
See further at Part XII below.
7
As well as to pressurise the municipalities into accepting an offer made in the Repactuation negotiations: see
{PO/2149/3}.
8
Defence, §203B(2)(c)-(d) {A1/2/112-113}.
7
(“Stage 2”) trial, and the Claimants have always accepted that credit should be given for
any actual receipts to date. BHP’s vigorous opposition to such issues being worked out in
England appears to the Claimants to be explicable only on the basis that BHP believes it
can escape much more cheaply in Brazil. BHP’s legal costs may be large in absolute terms
but they are almost negligible compared to the tens of billions sought from it in damages.
B) The Claimants’ Claims
7. The Claimants bring their claims against BHP under Brazilian law, which it is common
ground is the law applicable. A more detailed explanation of the relevant provisions appears
in Part VI and Part VII below but it is sufficient at this stage to observe that the Claimants
principally rely on:
7.1. a strict liability case under specific provisions of the Brazilian environmental law
“micro-system” and/or the general provisions of the Civil Code; and/or
7.2. a fault-based case premised on BHP’s liability for negligence and/or an abuse of its
controlling power.
8. The essence of the strict liability case under the environmental law is simply that with the
damage caused by the Collapse having been caused by an activity for which BHP is
responsible, BHP is liable to pay compensation for the Claimants’ losses resulting from the
Collapse.
9. The fault-based case addresses the knowledge and conduct of BHP including in causing or
allowing the Dam to continue to be raised despite the increasing risk of failure of which
BHP was or ought to have been aware.
C) BHP’s Defences
10. A central theme of BHP’s factual response to both the strict liability and the fault-based
case is to assert the supposed separation between BHP and Samarco. BHP repeatedly
emphasises Samarco’s status as a “Non-Operated Joint Venture” or “NOJV”, denoting the
fact that Samarco was a separate legal entity with its own board of directors and
management. BHP thereby seeks to distance itself from its Brazilian JV vehicle. Thus, BHP
seeks to characterise the polluting “activity” as the activity for which Samarco is
exclusively responsible. Hence, BHP denies that it was “responsible” for the activity, either
directly or indirectly, within the meaning of the environmental law provisions on which the
Claimants rely.
8
11. Similarly, in relation to the fault-based case, BHP seeks to characterise itself as a mere
shareholder, exercising oversight (including through the conduct of audits at Samarco
level) but without ever interfering, participating or controlling or having any meaningful
role in relation to risk management at Samarco. BHP also denies that it knew or ought to
have known that continuing to raise the Dam was unsafe.
12. The Claimants reject BHP’s characterisation of the facts and contend that BHP in practice
exercised far greater control and influence over Samarco than it is now prepared to accept,
including through the appointment of senior BHP executives to Samarco’s Board of
Directors (“the Samarco Board”) and BHP’s promotion and approval of a major
expansion project at Samarco (the P4P Project) that led to a significant increase in the
volume of tailings stored behind the Dam and ultimately the Collapse. But in any event,
neither the strict liability case nor the fault-based case depends upon equating Samarco to
BHP: even whilst entirely respecting the separate corporate personalities of BHP and
Samarco, the ingredients of BHP’s liability to the Claimants are still made out.
13. As well as denying liability, BHP relies also on a number of affirmative defences:
13.1. that the municipality Claimants lack standing and/or capacity and/or are not entitled
to bring their claims;
13.2. that all of the Claimants’ claims are time-barred; and/or
13.3. that some of the Claimants have entered into waivers in Brazil which preclude their
claims.
14. These are addressed in the relevant sections below.
D) Procedural Context
15. This is the First Stage trial (or “Stage 1”), with Stage 2 (scheduled to begin in October
2026) to address causation and loss. There is an Agreed List of Issues of the matters to be
considered in this phase.
16. The original English claim dates back to 2018 and has needed to navigate a protracted
jurisdictional dispute. This included the additional wrinkle arising out of both the first
instance Judge and a single Lord Justice on paper having refused PTA.9 However, except
for the limited points already made about the Court of Appeal’s rationale for allowing the
English claim to proceed (see above at §§3 and 5), the Claimants do not expect it to be
9
{H2/3/2} at §1.
9
necessary to revisit the arguments or rulings from the jurisdiction phase. The material is
available on Opus, however, in case any such reference is necessary.
17. Following the eventual rejection of BHP’s jurisdiction challenge, the procedural pace has
been brisk. The burden on the parties, and indeed the Court, was further increased by BHP’s
decision to join its co-venturer Vale as a Part 20 Defendant. On the date that Vale was due
to produce its witness evidence and final tranche of disclosure, BHP and Vale settled but
not before multiple rounds of pleadings to deal with Vale’s introduction of new arguments
and BHP’s “mirroring” of those arguments. The Claimants continue to suspect that BHP
brought Vale into the proceedings as a tactical move to drive up costs on the Claimants’
side and defer a trial.
18. An additional distraction was the need for the Claimants to issue an urgent anti-suit
injunction to restrain BHP from taking steps in Brazil (via a mining industry body IBRAM)
which were plainly designed to obstruct the pursuit of a substantial part of the English
litigation. BHP rightly capitulated in response to that application, offered undertakings in
lieu of the orders sought and agreed to pay part of the Claimants’ costs. The episode reflects
poorly on BHP.
E) Material Before the Court
19. The Court will be asked to decide the Stage 1 issues based on the common ground between
the parties and by resolving the points of dispute by reference to the following:
19.1. The written and oral evidence of BHP’s seven factual witnesses. Of the seven, only
Jorge Max Wetzig Abdale is still employed by BHP. The only witness who sat on
BHP’s GMC is the ex-CFO Peter Beaven. The Court will also hear from Christopher
Campbell, Chris Corless, Matthew Damian Gillespie, Peter Lynch and Natie Victor.
19.2. Hearsay evidence. There have been various depositions in both the Brazilian
criminal proceedings and also in support of these proceedings, as ordered by US
Courts on the application of the Claimants under 28 USC §1782 (“1782
depositions”). The parties have each identified the parts of those depositions which
they wish to rely upon as hearsay evidence under the Civil Evidence Act 1995 and
CPR Part 33.10 The usefulness of certain 1782 depositions has been rather
10
{G1/1/1-10}; {G1/2/1-1}; {G1/3/1-5}; {G1/4/1-4}.
10
diminished by the wholesale assertion by certain of BHP’s former executives of a
purported privilege against self-incrimination.
19.3. Contemporaneous documentary evidence. The parties have each made nominations
for the chronological run of documents in Folder F of Opus. The vast bulk of the
material comprises internal BHP documents, including email communications,
meeting minutes, “Group Level Documents” describing protocols and procedures,
risk registers, strategy presentations and employee contracts and appraisals. There
are also outward facing documents such as annual financial statements and investor
presentations.
19.4. The “Panel Report”. In August 2016 a panel of independent experts jointly
commissioned by Vale and BHP reported on the cause or causes of the Collapse.
Although Vale in its capacity as Part 20 Defendant had challenged the report’s
conclusions, with BHP contingently adopting those challenges, BHP has now
reverted to its earlier acceptance of the Panel’s conclusions. Although the Panel
Report itself was always intended to be a public document, BHP has asserted
privilege over the underlying preparatory work supervised by Cleary Gottlieb Steen
& Hamilton (“Cleary”) on the basis that the dominant purpose of the material
produced during the Panel’s investigation was to protect BHP from litigation.11
19.5. Expert evidence. There is expert evidence in three disciplines: Brazilian law;
geotechnical issues; and licensing, of which the Brazilian law evidence is by far the
most important. As to these various experts:
(1) For Brazilian Law, the Claimants rely on the evidence of Ingo Sarlet
(Environmental Law, Standing of Municipalities); Nelson Rosenvald (Civil
Liability, Limitation, Waivers) and Viviane Muller Prado (Corporate). The
Defendants rely on the evidence of Édis Milaré (Environmental Law), Gustavo
Tepedino (Limitation, Waivers, Standing of Municipalities) and Marcelo
Fernando Trindade (Corporate).
(2) The respective geotechnical experts are Antonio Gens for the Claimants and
Allen Marr for the Defendants.
(3) There is a Joint Statement on licensing issues produced by Walter Senise and
Talden Farias (and also Terence Trennepohl for Vale), and joint answers
provided by Walter Senise and Talden Farias to clarificatory questions put to
11
See the Court’s ruling at {H2/13.2/1}.
11
them by the parties on their Joint Statement. The parties do not presently
anticipate that oral evidence will be required in respect of Licensing; however,
a placeholder has been included in the timetable for any evidence the Court
should wish to hear.
F) Background to the Evidence
20. While the Claimants have worked diligently to prepare for this First Stage trial, the
Claimants have been materially disadvantaged by BHP’s approach to factual evidence.
21. With respect to disclosure, the Claimants naturally recognise that there is always an
iterative aspect to the process, that documents can sometimes be overlooked or mistakes
otherwise made and that, by the time the case reaches trial, the Court will generally treat
prior disputes over disclosure as water under the bridge. All that being said, the Claimants
do submit that in this case, BHP’s approach to disclosure suggests a disclination to make
relevant evidence available to the Claimants and the Court:
21.1. BHP took an inexplicably restrictive approach to the selection of custodians at a

time when the Claimants had limited visibility of the inner workings of the BHP
Group.12 BHP identified no custodians at all from entire Group functions at BHP
(such as Group Project Management (or “GPM”) – despite the prominence of the
P4P Project in the pleadings13) now seen to be relevant to BHP’s exercise of control
over Samarco and failed in their initial custodian proposals to even include Messrs
Corless and Wetzig who are now witnesses (and were ultimately Court ordered
custodians).
21.2. Although BHP was ordered to produce their disclosure across three tranches
between September 2023 and November 2023, the vast majority of documents were
only in fact produced between 27 November 2023 and March 2024.14 Striking
omissions have emerged throughout the disclosure process, including the revelation
in January 2024 that BHP had failed to notice that a set of 234,669 documents
responsive to the parties’ agreed search terms were omitted from their review pool.15
12
{PO/257/5-6}.
13
For example, Rene Mendoza (Project Manager, GPM) visited Samarco between ten and 30 times to review
various projects, including P4P, and was even at Samarco conducting an Independent Peer Review (“IPR”)
the week prior to the Collapse: Transcript from the 1782 deposition of Rene Mendoza held 28 August
(“Mendoza”) 188:16-22 {F17/26/48}; 191-192:9 {F17/26/49}.
14
Ainsworth 3, §10 {PE49/3/4}.
15
Ainsworth 3, §11 {PE49/3/4}.
12
On 3 June 2024, the Defendants identified three more data repositories16 which
resulted in c. 1,000 additional audit documents being produced to the Claimants less
than a month before the deadline for this Opening Note.17
21.3. Although the Claimants were assisted by independently obtaining access to and
disclosing a substantial volume of documents from the file of the Ponte Nova Court
in Brazil (where the criminal proceedings are being heard), a great deal of that same
material (including c. 120,000 emails from six Samarco custodians seized in a police
raid on Samarco following the Collapse) was in BHP’s control and ought to have
been produced by BHP.18
21.4. It has been necessary for the Claimants to bring several successful applications to
this Court for further disclosure19 and even when purporting to comply with Orders,
BHP has taken an inexcusably narrow approach (with Vale’s disclosure containing
documents in BHP’s control which were disclosed only by Vale and not BHP20). A
large number of post-Collapse documents were inappropriately withheld or redacted
on the basis of irrelevance and/or confidentiality, including documents which BHP
has itself nominated for inclusion in the trial bundle.21
22. With respect to factual witnesses, BHP sought to delay Stage 1 by some 14 months (from
April 2024 to June 2025) on the basis that key individuals would not be available to act as
witnesses due to ongoing criminal proceedings against them in Brazil as a result of the
Collapse.22 Eight of the 22 individuals who were charged were current or former BHP
employees and/or contractors: James Jon (Jimmy) Wilson, Antonino (Tony) Ottaviano,
Margaret Beck, Jeffery Zweig, Marcus Randolph, Sérgio Consoli Fernandes, Guilherme
Ferreira, André Cardoso, and Wagner Milagres Alves.23
23. The Defendants’ position was that the individuals facing criminal charges in Brazil are “the
most likely individuals to have any information most relevant to the issues in these
16
{PO/2067/1}.
17
{PO/2302/1}; {PO/2757/3-4}; {PO/2849/1}.
18
Ainsworth 1, §§63-64 {PE42/2/17}. The Defendants admit that BHP Brasil has a contractual right to make
document requests of Samarco pursuant to 16.6 of the SSA {PO/291/2}, §9.
19
The Defendants were encouraged to produce internal management account documents in June 2023, §33
{H2/7/6-8}; the Defendants were ordered to produce Model C disclosure of employment documents, 1SAP
documents, and Group Level Documents in May 2024 {PJ/90/5}; the Defendants were ordered to produce
post-Collapse disclosure in July 2024 {PJ/113/4}.
20
Ainsworth 4, §15 {PE64/6/5}. See also {F1/121} disclosed only by Vale, which is responsive to DRD issue 3.
21
{PO/2903/1-2}.
22
Michael 17, §119 {PE30/2/39}.
23
{I3/13T/2-6}.
13
proceedings and for key time periods.”24 The witnesses selected by BHP do not have the
same proximity to the issues. For example, there are no witnesses from BHP GPM (heavily
involved in project approvals at Samarco25) or Group Treasury (heavily involved in
Samarco’s dividend and funding strategies26). With respect to key post-Collapse issues, the
Court will hear Mr Beaven speculate about what was meant by Jacques (Jac) Nasser and
Mr Mackenzie in high-profile public statements rather than hear from the statement makers
directly.27
24. Mr Campbell is the only witness (i) from the Strategy and Development team within the
BHP Iron Ore Customer Sector Group (or “CSG”) (which had primary oversight of the
Samarco JV),28 and (ii) who sat on the Samarco Board.29 Mr Campbell’s evidence is that
he was only on the Samarco Board from December 2010 until December 2011.30 Even
though they have faced no criminal charges to seek to justify their non-appearance, the
Court will not hear evidence from the following Samarco Board members:
24.1. Ian Ashby, President, Iron Ore (2005-2012);31 Samarco Board effective member
from 2007-2012;32
24.2. John Slaven, Chief Development Officer, Iron Ore (2006-2010);33 Samarco Board
alternate member from 2006-2010;34
24.3. Sebastião Ribeiro, Iron Ore Brazil’s President and Chief Operating Officer (1984-
2009);35 Samarco Board member until 2009;36
24.4. Rogério Nogueira, Business Development Director (2008-2009), Vice President,

Business Development, Brazil and Americas (2009-2012); Samarco Board member
from 2010-2012.37
24
Michael 17, §121 {PE30/2/40-41}.
25
e.g., Alan Paddon, Senior Manager Projects, GPM (2012-2017); Rene Mendoza, Manager Projects, GPM
(2011-2017) {F9/169/3}.
26
See §§331-341 of this Opening Note.
27
Beaven 2, §9 {B1/8/3-4}.
28
Campbell, §10 {B1/2/3}.
29
Campbell, §1 {B1/2/1}; see Samarco Board minutes dated 8 December 2010 {F2/351.2/1}; 6 April 2011
{F6/345/1-8}; 10 August 2011 {F2/379/1-9} and 8 December 2011 {F3/234/1-8}.
30
Campbell, §14 {B1/2/4}.
31
Defence, §106(3)(b) {A1/2/54}.
32
POC, §§75.1-75.5 {A1/1/37-39}.
33
{F15/437}.
34
POC, §§75.1-75.3 {A1/1/37-38}.
35
{F1/191/1}.
36
POC, §75.1 {A1/1/38}.
37
POC, §§75.3-75.5 {A1/1/38-39}.
14
25. Nor will the Court hear evidence from (i) important BHP personnel who attended Samarco
Board, Committee and/or Subcommittee meetings from 2012 onwards, including Uvashni
Raman (Vice President Finance, Iron Ore from 2011-2013) who attended the 106th Samarco
Board meeting in 2012;38 Sheila Hood (Manager, Business Development, Iron Ore from
2014 to the date of Collapse) who managed Mr Fernandes and attended the 120th and 121st
Samarco Board meetings in 2015;39 Vanessa Torres (Head of Group Investments and Value
Management) who attended the 115th, 117th, 120th and 121st Samarco Board meetings
between 2014 and 2015;40 Chloe Lennox (Group Treasury), who attended Samarco
Treasury Subcommittee meetings in 2012 and 2013,41 and Evilmar Fonseca (Operations
Manager, Iron Ore Brazil) who attended Samarco Operations Committee meetings in
2012;42 or (ii) individuals who did not attend Samarco Board meetings but were
nonetheless involved with Samarco, such as Brett Swayn (Vice President HSEC, Iron Ore,
2012-2016) who conducted a safety inspection at Samarco in 2013.43
26. The inescapable conclusion is that BHP’s curated witness list seeks to avoid cross-
examination of individuals with first-hand knowledge of swathes of the Claimants’ pleaded
case.
27. The Claimants attempted to fill some of the evidential gaps by applying pursuant to section
1782 of Title 28 of the United States Code to depose former BHP executives based in the
United States (“§1782 applications”).44 To date, the Claimants have obtained §1782
evidence from the following deponents:
27.1. Margaret Beck, who was Vice President Finance, Iron Ore from 2013-2016 and an
alternate member of the Samarco Board from May 2014 to March 2016;45
27.2. Marcus Randolph, who was Chief Executive Ferrous and Coal and Group
Management Committee (“GMC”) member from 2007-2013 and an effective
member of the Samarco Board from 2007 to April 2013; 46
38
{F6/482/1-7}.
39
{F14/267/1}; {F13/454/1}.
40
{F14/465/1}; {F14/455/1}; {F14/267/1}; {F13/454/1}.
41
{F14/204.0.2/19}.
42
POC, §§186-187 {A1/1/81-82}, §194 {A1/1/82-83}.
43
{F6/281/1}.
44
A federal statute which permits litigants outside of the US to apply to an American court to obtain evidence
for use in a foreign proceeding.
45
POC, §§75.8-75.9 {A1/1/40}.
46
POC, §47.1{A1/1/25}; §§75.1-75.6 {A1/137-139}; Defence, §301(3) {A1/2/188}.
15
27.3. Rene Mendoza, who was a Project Manager with Group Project Management from
2011-2017;47 and
27.4. Sondra Sultemeier, who was Senior Manager and then Head of Tax Advisory
(Group Tax), Americas from February 2011 to September 2018.48
28. There are outstanding §1782 applications to depose Jacques Nasser, Chairman of BHP’s
Board of Directors (2014-2017),49 Tom DeGiorgio, Vice President Tax Americas (October
2010-April 2015), and Garner Dotson, Vice President Assurance, Americas (May 2009-
November 2015).50 The latter two deponents have consented to giving testimony, but the
Federal Courts have not yet granted the §1782 orders. A §1782 application to depose
Wagner Milagres Alves who was BHP’s Acting Manager of Mining Operations from 2003-
2012 and then Samarco’s Manager of Processing Engineering (2012-2014) and General
Manager of Mining Operations (2014 until the date of the Collapse)51 has been granted,
but Mr Alves has not yet been located for service.
29. Thus far at least, the utility of these 1782 depositions has been limited by the fact that,
through US counsel (funded by BHP, pursuant to joint defence agreements52), Ms Beck
and Mr Randolph invoked their privilege against self-incrimination. Ms Beck declined to
answer 127 questions and Mr Randolph declined to answer over 90 questions on this
basis.53
30. During the course of Mr Randolph’s 1782 deposition, it also came to light that BHP and
Mr Randolph have had no communications regarding these Proceedings,54 a state of affairs
which the Claimants find hard to reconcile with the evidence provided by BHP in Mr
Michael’s 17th Witness Statement:
“My firm has made enquiries of the Brazilian Criminal Defendants (through their legal
representatives) in February 2023 as to whether any of them would be prepared to
provide evidence in these proceedings. The unanimous response (including that of Mr
Randolph) has been that while the Brazilian Criminal Proceedings are ongoing […]
none of them would be prepared to provide evidence in these proceedings.”55
47
{F7/452.0.1}; {F5/17.4/1}.
48
Sultemeier 19:15-20:1 {F17/56/6}.
49
POC, §92.10.1 {A1/1/47}.
50
{F11/464/1}.
51
POC, §130 {A1/1/59}.
52
{PO/1312/1-2} at §§2, 7.
53
Transcript from 1782 deposition of Margaret Beck held 28 June 2024 (“Beck”) {F17/22/1-91}; Transcript from
deposition of Marcus Randolph held 8 August 2024 (“Randolph”) {F17/88/1-75}.
54
Randolph 18:23-25:13 {F17/88/6-7}.
55
§120 {PE30/2/41}. PG has challenged SM on the apparent inconsistency and SM have reaffirmed the
truthfulness of Michael 17. Pogust Goodhead, 12 September 2024 {F17/24/1-4}; Slaughter and May, 16
September 2024 {F17/25/1-2}.
16
31. It has also emerged that BHP refused to make contact with Mr Randolph directly with
respect to key documents referred to by Mr Randolph in a post-Collapse email.56 That was
despite the Court’s explicit encouragement and expectation that BHP should do.57
Moreover, BHP, having suggested in open Court that the Claimants could ask questions of
Mr Randolph themselves at his 1782 deposition, when such questions were asked, Mr
Randolph (acting on legal advice being paid for by BHP and with BHP’s own lawyers also
present) asserted privilege.58
32. Despite these assorted challenges, there is ample evidence to make good the Claimants’
causes of action.
G) Adverse Inferences
1) Legal Principles
33. The approach to the drawing of inferences from the absence of a witness was summarised
by Lord Leggatt in Royal Mail Group Ltd v Efobi:59
“So far as possible, tribunals should be free to draw, or to decline to draw, inferences
from the facts of the case before them using their common sense without the need to
consult law books when doing so. Whether any positive significance should be attached
to the fact that a person has not given evidence depends entirely on the context and
particular circumstances. Relevant considerations will naturally include such matters as
whether the witness was available to give evidence, what relevant evidence it is
reasonable to expect that the witness would have been able to give, what other relevant
evidence there was bearing on the point(s) on which the witness could potentially have
given relevant evidence, and the significance of those points in the context of the case
as a whole. All these matters are inter-related and how these and any other relevant
considerations should be assessed cannot be encapsulated in a set of legal rules.”
34. Insofar as key individuals are absent from BHP’s list of witnesses, it is the Efobi approach
which the Court must apply.
35. As a matter of logic and principle, a similarly common sense approach to the drawing of
inferences should apply also where a witness has asserted a right to silence.60 Thanki, The
Law of Privilege (3rd edition) explains at §§8.17-8.18 that “a civil court is free to draw
what inferences it sees fit” from the refusal of a witness to answer on the grounds of self-
incrimination. There is English Court of Appeal authority in a contempt of court context
56
§6 {PO/1993/2}; Slaughter and May, 16 September 2024 {F17/25/1-2}.
57
April CMC transcript, 87:21-88:15 {PG/9/23}; Pogust Goodhead, 12 September 2024 {F17/24/1-4}.
58
April CMC transcript, 89:1-6 {PG/9/24}; Randolph 51:8-56:12 {F17/88/14-15}.
59
[2021] UKSC 33 at [41] {J1/19/1-12}.
60
The Claimants accept that adverse inferences cannot properly be drawn from reliance on legal professional
privilege. The privilege against self-incrimination is intrinsically different, however.
17
which also supports the drawing of such inferences.61 US authority is unequivocal (and it
should be stressed that it is a US legal right which deponents in the US have purported to
exercise, apparently on the advice of their US lawyers paid for by BHP): adverse inferences
can be drawn against a corporate defendant based on the invocation by a former employee
of the Fifth Amendment privilege against self-incrimination.62 Moreover, the Protective
Orders made by the US Courts in respect of these 1782 depositions have the same goal as
the privilege in preventing prejudice to the individuals in Brazilian criminal proceedings.
Protective measures of this sort have been described as providing “the maximum degree of
protection” consistent with the Claimants’ “entitlement to fair and efficient litigation” of
their claims.63
36. Certainly, the Claimants see no principled reason why the refusal of ex-BHP executives to
answer questions for fear of incriminating themselves as individuals ought not to be
capable of giving rise to adverse inferences against the corporate defendant BHP in a
separate civil claim. Nor is there any legal principle which compels the Court to shut its
eyes to the fact that BHP appears to have funded and encouraged this wall of omerta. This
is particularly so in circumstances where (i) the relevant executives have the benefit of
Protective Orders made by the US Courts and substantially reproduced in this Court, (ii) if
required, additional confidentiality orders and measures would have been capable of being
deployed in these proceedings so as to protect the relevant executives from the risk of
criminal prosecution, and (iii) those executives would plainly have had relevant evidence
to give at this trial.
2) Application to Facts
37. As to key witnesses who might reasonably have been expected to be called by BHP (and
whose absence cannot be explained by reference to Brazilian criminal charges), the
Claimants rely at this stage upon the absence of the individuals referred to at paragraphs
22-25. The Claimants accept that those charged with criminal offences would have had a
reluctance to tender themselves for cross-examination in London.64
61
Inplayer Ltd (formerly Invideous Ltd) v Thorogood [2014] EWCA Civ 1511 {J1/13/1-19}, considered (along
with the first instances authorities which have followed it) in Tonstate Group Ltd & Ors v Wojakovski [2023]
EWHC 3119 (Ch) {J1/24/1-7}.
62
Rad Services v Aetna Cas & Sur Co 808 F.2D 271 (3d Cir. 1986) {J1/4/1-11}; Coquina v Investments v TD Bank,
760 F.3d 1300 (11th Cir. 2014) {J1/12/1-19}; LiButti v United States 107 F.3d 110, 113 (2d Cir.1997) {J1/6/1-
16}.
63
Madanes v Madanes 186 F.R.D 279, 289 (S.D.N.Y, 1999) {J1/8/1-14}.
64
The Claimants note that Mr Randolph’s charges were dismissed and not appealed and are therefore res judicata:
Declaration of Daniel Castilho dated 23 February 2024, §§9 {F16/498.26.6/30}; Declaration of Renato FM.
Franco dated 18 March 2024, §§14-16 {F16/498.26.7/3-37}.
18
38. As to adverse inferences from the invocation of a privilege against self-incrimination by
Ms Beck and Mr Randolph, their 1782 depositions were almost farcical, all the more so
given that there was already an elaborate regime of Protective Orders to prevent wider
dissemination or collateral use of their testimony. Since it must be assumed that their rights
to silence were being properly asserted, this Court must proceed on the basis that, had their
answers been given honestly, then those answers might have revealed their involvement in
criminal conduct. Indeed, the premise and purpose of Protective Orders was so that their
answers could and would not be used in Brazil. Yet, on the very questions which were of
most interest to the Claimants and the English Court, they simply refused, on advice, to
answer at all.
39. The Claimants invite the Court to draw two adverse inferences in particular:
39.1. BHP exercised a substantially greater degree of control over Samarco than BHP has
been willing to admit in these proceedings; and
39.2. BHP knew that there were shortcomings in Samarco’s management of risk.
40. The wholesale assertion of privilege in response to all questions even slightly related to
those topics is otherwise inexplicable.
PART II. PARTIES

A) The Claimants
41. As set out at Section A of the POC,65 the Claimants comprise a (very large number of)
individuals, businesses, faith-based institutions, municipalities, utility companies and
indigenous and Quilombola victims of the Collapse. It will not be until the Stage 2 trial that
the Court will address the types of loss suffered by these distinct groups. For the purpose
of the Stage 1 trial, the Brazilian law liability issues are almost entirely generic. For the
most part, no relevant distinction therefore needs to be drawn between the different groups
of Claimants.
42. The only contexts in which the different categories of Claimants fall to be considered for
Stage 1 purposes are in the context of the following Brazilian law issues:
42.1. the standing of the municipalities, which is obviously a point specific to that group;
65
POC, §§12-35 {A1/1/15-20}.
19
42.2. a limitation point specific to the municipalities, as to whether the principle of
“isonomy” gives them the benefit of a 5-year limitation period;
42.3. a further limitation point in relation to the municipalities and indigenous and
Quilombola Claimants, who contend that some or all of their claims are not subject
to limitation.
43. Indeed, it is precisely because the focus of the Stage 1 trial is on generic Brazilian law
issues that the Claimants have not produced witness evidence or sought to advance any
case about the situation of individual Claimants or classes of Claimants. This generic nature
of the Stage 1 trial necessarily also limits how far the Court can realistically go in dealing
with waiver defences (see Part XI below). Whether and to what extent BHP can enforce a
purported waiver of claims by a given Claimant cannot ultimately be decided in a vacuum
and without consideration of that Claimant’s individual circumstances. Moreover, the
Defendants do not even purport to identify all those Claimants against whom waivers are
relied upon.66
B) The Defendants
44. The BHP Group from 2001 to 2022 operated a Dual Listed Company structure, with listings
in the UK and Australia and a parent company in each of those jurisdictions. Although BHP
complains that the Claimants have pleaded a substantial claim without distinguishing
between the respective roles of BHP UK and BHP Australia, there was never anything in
that complaint in circumstances where the Group functioned as a single economic entity
under the name “BHP Billiton” or “BHPB” (during the relevant period) and the separation
between BHP UK and BHP Australia was only ever a quirk of the listing arrangements.
Although the Claimants accept that it was formally BHP Australia who held the indirect
equity interest in Samarco, the profits flowing up from Samarco were nevertheless shared
with BHP UK pursuant to the Sharing Agreement between the twin topcos. Moreover, it is
not in dispute that the DLC structure was subject to unified executive management, with a
common CEO, board of directors of the two topcos comprising the same individuals and a
single GMC composed of the senior management of the DLC structure; further, still,
directors and employees within the Group were all bound by a single BHP Code of
66
Defence, §42 {A1/2/21}.
20
Conduct67 to uphold the values in the BHP Charter regardless of the precise Group entity
who engaged them.
45. BHP’s complaint is also particularly arid given that from 2022, the DLC arrangements were
abandoned and BHP was unified into BHP Australia, with that Australian company
acquiring all of the shares in BHP UK. Insofar as there may ever have been any relevant
distinction between the respective liabilities of BHP UK and BHP Australia, all of BHP
UK’s liabilities have now been subsumed into BHP Australia.
C) Vale
46. Although no longer a Part 20 Defendant in these proceedings, it is nevertheless important

to record the role of Vale, BHP’s joint venture partner and, as recorded by the Court of
Appeal,68 also one of the world’s largest mining concerns. Whereas BHP’s interest in
Samarco was held through its wholly-owned subsidiaries, Vale held its shareholding
directly. On the Claimants’ analysis, however, this is a distinction without a difference so
far as liability issues are concerned. Had the Claimants also sued Vale then it would have
been jointly and severally liable alongside BHP. This of course was exactly the premise of
BHP’s Part 20 Claim, albeit now discontinued.
47. As with BHP, the importance attached by Vale to Samarco can be seen by its appointment
of senior executives to the Samarco Board. For most of the relevant period, Vale’s head of
Iron Ore was José Carlos Martins who sat on the Samarco Board and chaired it in alternate
years. The evidence shows that he had a notably friendly working relationship with his
BHP counterpart (up to 2013), Mr Randolph.69
D) Samarco
48. Originally founded in 1973, Samarco has been a 50:50 joint venture between BHP and Vale
since 2000. BHP initially acquired its Samarco stake in 1984 through its purchase of Utah
Marcona Corp. In 2000 Vale then acquired S.A. Mineração de Trinidade (“SAMITRI”).
49. Samarco’s primary business is the production of iron ore pellets, from ore mined at the
Germano pit. BHP repeatedly acknowledged (indeed trumpeted) Samarco’s status as a
“world-class” pellet producer and its strategic importance within the BHP portfolio.70 The
67
See e.g., {F15/480/5}. The Code was frequently re-issued.
68
See e.g., §4 {H2/4/6}.
69
See e.g., dining privately in advance of most if not all of the Samarco board meetings, including on at least one
occasion at Mr Martins’ house {F2/64/1}; {F2/72/1}.
70
See e.g., {F1/98/1}; {F9/222/12}.
21
bringing onstream of Samarco’s fourth pellet production plant (or “the P4P Project”) is an
important part of the background to the Collapse of the Dam, since it was the increased
production that led to the need for greater storage capacity and, by consequence, the
elevation of the Dam prior to the Collapse.
50. The Claimants anticipate that a large part of the factual section of the trial will focus upon
how Samarco functioned and BHP’s role in relation to it. It is common ground that Samarco
was a distinct legal entity, incorporated in Brazil under Brazilian law and with its own
boards (the Samarco Board and an Executive Board) and management structure, separate
from the Boards and management of its two Shareholders, Vale and BHP. Because their
holdings in Samarco were equal, neither Vale nor BHP had a majority of voting rights.
There was nevertheless a deadlock provision in the event of disputes over projects to
expand Samarco’s business by which (subject to satisfaction of certain conditions) the
expansion would be approved. All of this is conveniently set out in a 2008 summary.71
51. Plainly, no company can function otherwise than through natural persons. Determining
how Samarco actually functioned therefore requires an analysis of the relevant individuals,
their reporting lines, and how in practice BHP representatives were able to exert control
and influence at the level of its part-owned JV vehicle. This is addressed below and in
Appendix VII and will naturally be one of the themes of cross-examination of BHP’s
witnesses.
52. The single most important means by which BHP exercised control and influence and sought
to ensure that Samarco acted in accordance with BHP’s interests was through the exercise
of its rights of appointment to the Samarco Board. Indeed, in one of the few questions he
was permitted to answer during his 1782 deposition, Mr Randolph, formerly Chief
Executive, Ferrous & Coal and one of BHP’s most senior executives, candidly admitted
that the reason he sat on the Samarco Board was to further BHP’s interests.72 A proper
characterisation of the role of BHP’s representatives on the Samarco Board and Samarco
Committees is important to the “capacity” issue (addressed further below at §§203-221 and
568-574). That dispute is in essence whether, as BHP assert, the knowledge and conduct of
BHP representatives can be isolated at Samarco level. The Claimants say that the proper
71
{F1/102/1-4}, an attachment to {F1/101/1-2}. As to the actual SSA, see {F15/20/1-125} and the amendments at
{F5/286/1-125}, {F15/287/1-2}, {F15/288/1-3} and {F15/289/1-2}.
72
Randolph 11: 5-12 {F17/88/4}.
22
analysis is that such representatives acted in a dual capacity, acting simultaneously on
behalf of both Samarco and BHP.
PART III. THE DAM
53. This section provides a high-level overview of the evolution of the Dam. It seeks to assist
the Court to navigate the factual information, images and diagrams included in the Panel
Report’s Appendices and Attachments.73 This section also draws on Section 3.3 of Gens
1,74 which identifies certain factual or contextual points. This section does not venture into
any geotechnical debate.
A) Iron Ore Mining
54. As part of the industrial iron ore mining process, “concentrators” (sometimes called
“beneficiation plants”) process raw iron ore (sometimes called “run of mine” ore or
“ROM”) to remove impurities and reach a desired iron ore content in the resulting
“concentrate”.75 Concentrate is itself an iron ore product and/or can be subsequently
processed further as feedstock to make iron ore pellets. The beneficiation process includes
crushing and concentration, through a process of grinding, re-grinding, desliming,
flotation, and thickening – the precise details may differ between different concentrators.76
Iron ore tailings are the leftovers from the concentration process and are stored behind
tailings dams.
55. Samarco’s Germano-Alegria mining complex was located in the so-called “Iron
Quadrangle” in the state of Minas Gerais.77 Samarco’s main product was iron ore pellets
for the global steel market, which were produced from concentrate in so-called pellet
plants. The concentrate was transported from the mine to a private port in Pinta Ubu,
Anchieta, Espirito Santo - through pipelines some 400km long – to where Samarco’s pellet
plants were located. Samarco therefore had a fully integrated mining operation consisting
of mines, associated logistics and processing facilities, and the port.78
56. The Dam, and its elder sibling the Germano dam, were the tallest tailings dams ever built
in Brazil.79 By 2005, the existing tailings storage facilities at Samarco’s Germano operation
73
The numbering convention within the Panel Report is summarised at {D8/2/3}.
74
Gens 1, §126-155 {D2/1/50-57}.
75
{F2/109T/5}.
76
{F2/109T/23}; {F7/19/101}.
77
Samarco then had two open pit mines, North Alegria and South Alegria, in addition to its Germano mine which
it had considered to be exhausted in 1991: {F7/19/101}; {F7/19/16}.
78
{F7/19/16}.
79
Gens 1, §131 {D2/1/45-46}.
23
– including the Germano dam – neared capacity. A new (third) pellet plant and second
concentrator would increase production of tailings further still and require the construction
of a new tailings dam.80 The adjacent Fundão valley was chosen to be the site of the Dam.
Construction of the Dike 1 Starter Dam, with its requisite drains and galleries, was
completed in October 2008.81 By 5 November 2015, the Dam was approximately 110
metres tall from the base at approximately El. 79282 to crest at approximately El 902m –
the height of a 30-storey building.83
57. To understand the wider location, Figure 1 is a Google Earth image from the Panel Report.
It identifies an assortment of dams and dikes in and around the Germano mine. In addition
to Dikes 1 and 2 of the Dam (which are explained further below), one sees the Grota da
Vale - which led to the Fábrica Nova “Waste Pile” and, behind that, Vale’s Fábrica Nova
Mine. The evidence sometimes identifies the Fábrica Nova Nova Waste Pile as the Vale
Sterile Pile, or the Portuguese acronym “PDE” for “Pilha de Estéril União”).84 The
distinction between “waste” and “tailings” is that “waste” usually refers to the waste rock
from open cast mining.85
Figure 186
80
{D8/1/17}.
81
{D8/1/19}.
82
{D7/61T/11}.
83
{D8/1/13}.
84
Gens 1, §§153-155 {D2/1/56}.
85
Gens 1, §154 {D2/1/56}.
86
{D8/1/6}.
24
58. The appearance of the Dam before it collapsed can be seen in Figure 2 below (taken from
a presentation to the Samarco Board on 5 August 2015).87 Although the image looks
upstream at the face of the Dam, descriptions of “left” and “right” correspond to the
perspective of a viewer facing downstream. It shows that part of the Dam was displaced
further upstream, curving around a valley (the “Grota da Vale”) on the right-hand side. The
Grota da Vale received seepage and surface runoff from the Fábrica Nova Waste Pile; and
the Grota da Vale drained into the left abutment area of Fundão.88 The setback area (“the
Setback”) is therefore at the left abutment. The yellow boxes indicate elevation levels (i.e.
metres above sea-level). The Setback is where failure of the Dam started on 5 November
2015.
Figure 289
59. Figure 3 below offers another viewpoint. This comes from a presentation to Samarco’s
Performance Management Committee dated 29 October 2015. The view depicted is from
87
{F12/390/59}.
88
{D8/6/7}.
89
{F12/390/59}.
25
above the Grota da Vale area, looking across the Dam to the reservoirs of tailings it held
back.
Figure 390
60. The Dam’s location within the Fundão tailings system is seen in Figure 4 below, shown to
BHP’s Iron Ore Executive Committee in January 2014. It shows the Germano and Fundão
dams, the direction of “sand” deposits (in red) and “slimes” deposits (in yellow – including
from “Vale’s Plant” – a reference to Vale’s Alegria neighbouring mine). It also shows the
overall flow within the Dam, and from the Dam to Santarém – a water dam downstream –
is also indicated (in green). The relevance of this is that, if the Dam collapsed, the tailings
would soon hit a large volume of water.
90
{F13/452T/48}.
26
Figure 491
61. The town of Bento Rodrigues was 4.8km further downstream from the Santarém dam; and
9.5km downstream from the Dam. In January 2014, BHP’s Jeffery Zweig briefed his Iron
Ore Executive Committee colleagues that a dam breach would reach the community in less
than 10 minutes.92
Figure 593
91
{F9/30/13}.
92
{F9/30/10}.
93
{F8/488.5/5}.
27
62. The Dam was built using the “upstream” method and designed with the intention to apply
a “drained stack” concept. As to this terminology:
62.1. The “upstream” method has been widely used for the construction of tailings dams
in Brazil, especially due to its relatively low costs.94 It involves raising a structure
in successive increments (known as “benches”) built progressively upstream
partially on top of each other. Benches can be represented cross-sectionally as
follows:
.
Figure 695
62.2. The “drained stack” concept was coined by the original designer of the Dam, Dr
Joaquim Pimenta de Ávila. The idea was to reduce the risk of instability inherent in
the upstream method96 by depositing separately the two different types of tailings:
“sands” (larger, coarser and, therefore, relatively free draining and with satisfactory
resistance after drainage) were to be deposited in larger quantities behind one Dike
(“Dike 1”); and “slimes” (finer, clay-like and, therefore, relatively impermeable and
with lower resistance) were to be deposited in smaller quantities behind a second
Dike (“Dike 2”) much further upstream, away from the structural portion of Dike
1.97
62.3. Dike 1 was to begin with a “starter dam” up to El. 830m, which would be underlain
by a high-capacity base drain of gravel and rock. This would connect to another
drain on the starter dam’s upstream face (and other drainage features) and thereby
minimise saturation in the sandy deposits behind it – resulting in the “drained
stack”.98
94
{G4/2/230}; {G3/3.T/2}.
95
Gens 1, §76 {D2/1/30}.
96
See {G4/2/48}; Dr Pimenta de Ávila explains that “the upstream sandy tailings dam is a dam where the water
has to be constantly controlled, because otherwise risk situations start to appear”: {G3/8.T/4}; {G4/2/58}; “dam
raised upstream must have percolation control so that a breach does not occur” {G3/16.T/5}.
97
Gens 1, §136 {D2/1/46}, and Gens 1, §141 {D2/1/50}.
98
{D8/1/17}.
28
62.4. Dike 2 was to begin with a “starter dam” up to El. 850, and above this level the
slimes would be retained by sandy tailings that were placed behind Dike 1 as it was
raised through the upstream method. Accordingly, the retention of the slimes would
require sands deposited behind Dike 1 to remain at a higher elevation than the
slimes.99
62.5. To preserve the free-draining characteristics of the sands in the structural portion of
Dike 1, a 200 metre “beach” was required. This would hold-back water-borne
slimes from encroaching on the structural part of the Dike 1 embankment.100
Figure 7101
Figure 8102
99
Gens 1, §§141-142 {D2/1/50}.
100
{D8/1/2}.
101
{D8/1/18}.
102
{D8/44/9}. (The Claimants have added yellow highlighting to the original image to clearly indicate the boundary
of the 200m beach width).
29
63. The stability of such a structure – with benches raised progressively upstream over sand
tailings – obviously depends on the stability of the sands beneath and the structural portion
of the embankment. In August 2010, for example, a report commissioned by Samarco noted
that construction “by the upstream method … has a poor track record internationally with
several examples of problems and failures all over the world. Due to the high risk
associated with this construction technique, it is becoming increasingly difficult to justify
such projects nowadays […] especially when the consequences of potential failure are so
high”.103
64. Sandy tailings would be “spigotted” behind Dike 1 using multiple outlets like hoses spaced
along a pipeline. An example of spigotting in process is shown below, taken from a report
on the Dam in April 2011.
Figure 9104
65. The peak of Dike 2 was to be at El. 850. Above that, the retention of slimes would require
sands deposited between Dike 1 and Dike 2 to remain at a higher elevation than slimes.105
This was a matter of reservoir geometry and the surrounding topography. The Dikes were
strategically positioned to receive tailings in the proportion 70% sands (behind Dike 1) and
30% slimes (behind Dike 2).106 The location of Dike 1 relative to Dike 2 was already shown
in Figure 8 above. A simpler illustration is shown in Figure 10 below.
103
{D7/31/4}.
104
{D7/41/26}.
105
{D8/1/17}.
106
{D8/1/17}.
30
Figure 10107
66. Figure 11 below charts the average crest elevations over time, as Dike 1 rose upstream
over time. This shows three main things:
66.1. First, it shows the average elevation of the top of the central section (in blue);
66.2. Secondly, it shows (in orange) the point when the Setback was created at the left
abutment (in October 2012) and the rise of that crest over time; and
66.3. Thirdly, it identifies (in green) the creation of a different setback at the right
abutment (in July 2015) and the rise of that crest over time.
107
{D8/1/17}.
31
Figure 11108
67. The height of the Dam rose in order to store more tailings from the ongoing and increasing
production. Figure 12 below records annual tailings production deposited into the Fundão
tailings storage facility. It records the production of both sands and slimes, with a separate
entry for slimes that originated from a nearby Vale mine which Samarco stored in the Dam.
Figure 12109
108
{D8/6/18}.
109
{D8/6/67}.
32
68. The Dam suffered numerous incidents over the years. Figure 13 below is a table which
appears repeatedly in the Panel Report. It identifies the approximate dates of different
incidents, whether the incident occurred at an abutment, the approximate elevation where
the incident occurred, and a categorisation of the type of incident.
Figure 13110
69. In addition to listing these incidents in a table, the Panel Report superimposes the location
of each incident onto an aerial image of the Dam as at 27 October 2015. This is shown in
Figure 14 below.
110
{D8/6/75}.
33
Figure 14111
70. The Panel Report includes a “Fact Sheet” on each incident. These include selected
photographs and a short description of attempted remedial steps: see Panel Report pages
B.B8-3 to B.B8-19.112 The Panel Report also includes charts illustrating (i) monthly
incremental tailings production over time by weight over time; and (ii) cumulative tailings
production by weight over time. These are reproduced below. The dashed lines flag when
incidents occurred. From this, it can be appreciated at a glance that the rate of incidents at
the Dam increased as the height of the dam was extended: of the 14 events identified here,
eight occurred in 2014 and 2015.
111
{D8/14/4}.
112
{D8/14/5-21}.
34
Figure 15113
71. Figure 15 above records a marked increase in tailings production (sands and slimes) in
early 2014.114 This marks the moment when the P4P Project came onstream, which
included a third concentrator.
Figure 16115
113
{D8/6/70}.
114
See {G4/2/38}; {G3/6.T/4}: Germano Lopes stating that “in terms of iron pellet production, this increase was
around 30%”. See also {G4/2/36}; {G3/1.T/3-4}.
115
{D8/6/71}.
35
72. Before turning to some of the incidents and/or changes to the Dam, the issue of “beach
width” is worth explaining. The Panel Report records that, whereas a 200-metre beach was
required to prevent water-borne slimes from being deposited near the dam crest where they
would impede drainage, this requirement (contained in the dam’s operating manuals)
oftentimes was not met. In fact, water encroached to as little as 60 metres of the Dike 1
crest. This allowed slimes to settle out in areas where they were not supposed to be.116 The
Panel Report presents data from various sources to illustrate the beach width over time. It
shows that the beach width was inconsistent with the 200-metre design requirement only
rarely met. See Figure 17 below.
Figure 17117
B) The original design, the Piping Incident, and the fundamental design change which
followed
73. When construction of the Dam started in 2008, the original design envisaged for Dike 1
was what Gens 1 describes as a “diagonal offset”.118 This design would have consisted of
a first part of Dike 1 rising upstream, before switching to a different diagonal alignment
(still part of Dike 1) - to avoid the Grota da Vale. Gens-1 adds a dashed red circle to Dr
Pimenta de Ávila’s original design (as produced in the Panel Report), to identify the Grota
da Vale entrance:
116
{D8/1/2-3}.
117
{D8/6/28}.
118
{D2/1/137}.
36
Figure 18119
74. The original design premise for Dike 1 included a “Principal Foundation Drain” (or “Main
Underdrain”) and an “Auxiliary Foundation Drain” - both running through the base
(shown in purple) of Dike 1. Whereas the Main Underdrain would extend upstream from
the right abutment, the Auxiliary Foundation Drain would extend upstream from the left
abutment. The essential purpose of these drains (and there were some additional drains as
well) was to collect water percolating through tailings in the reservoirs upstream and to
allow that water to exit the Fundão tailings storage system.
75. Another feature of the original design for the Dam was the creation of two so-called
“galleries” (actually 2-metre diameter concrete pipers) to evacuate water from the tailings.
It was envisaged that they would become buried beneath tailings over time, but with surface
inlets (called “tulips”) through which tailings could drain down an incline before exiting
Dike 1.
75.1. A “principal” or “Main Gallery” was to help to drain slimes from behind Dike 2,
eventually exiting at Dike 1’s right abutment; while
75.2. a “Secondary Gallery” was to help to drain sands from behind Dike 1, eventually
exiting at Dike 1’s left abutment.
76. The routes of the Main Gallery and Secondary Gallery are shown in Figure 19 below. This
image was not dated by the Panel. To be clear, it does not depict the Main Underdrain or
Auxiliary Foundation Drain.
119
{D2/1/139}.
37
Figure 19120
77. Samarco started to place sandy tailings behind Dike 1 in January 2009.121 Shortly after the
commencement of “full-scale discharge”, large seepage flows appeared through the
downstream slope of Dike 1, above the Main Underdrain, on 13 April 2009. 122 This is
shown in Figure 20 below.
Figure 20123
120
{D8/1/19}.
121
Gens 1, §156 {D2/1/57}.
122
{D8/1/19-20}.
123
{D8/14/5}.
38
78. Such an emergence of water through the Dam’s body indicated that the Main Underdrain
was not working properly owing to serious construction flaws, and the fact that a portion
of the drain’s outlet had never been completed.124 An emergency action plan was
implemented. Among other things, the reservoir behind Dike 1 was lowered. A rockfill
stability berm was also built over the affected slope.125 After investigations, the Main
Underdrain and Auxiliary Foundation Drain were decommissioned by plugging - on the
upstream side of Dike 1.126 This took place in late 2009.127 As explained below, a different
internal drainage system was subsequently developed with the construction of a new
drainage blanket at El. 826m.
79. In parallel to the above developments, the filling of Dike 2 with slimes had begun earlier
than anticipated. This made its slimes higher, rather than lower, than the projected sands
behind Dike 1.128 The balance between sands and slimes was out of kilter. The response,
from November 2009, was to build a new Dike, called “Dike 1A”, between Dike 1 and
Dike 2, with a crest elevation of El. 825m behind which slimes could be stored.129 In fact,
once Dike 1A was completed, slimes were pumped over Dike 2 to create a new slimes
reservoir behind Dike 1A, in the area originally intended for sands. The result is shown in
Figure 21 below.
Figure 21130
124
Gens 1, §160 {D2/1/58}; POC, §109 {A1/1/52}.
125
{D8/1/20}; the Panel Report identifies that the stability berm was built between January to July 2010 {D8/7/41}.
126
{D8/14/5}.
127
{D8/14/5}; POC, §109 {A1/1/52}.
128
{D8/1/20}.
129
{D8/7/10}; Gens 1, §168 {D2/1/63-64}.
130
{D8/6/42}; {D8/7/10}.
39
80. It will be observed from Figure 21 above that the Dike 1A axis ran along a similar
alignment to the “diagonal offset” design described above. The difference was that (i)
slimes were stored behind Dike 1A; and (ii) Dike 1A was at a lower elevation. The Panel
Report notes that Dike 1A was operative from April 2010 to January 2011, with slimes
deposited behind it between El. 813-824m.131
81. Figure 21 above also identifies that sand tailings were to be deposited between Dike 1 and
Dike 1A. This started in around December 2009 and continued for a large part of 2010.132
This resulted in a departure from the “drained stack” concept envisaged by Dr Pimenta de
Ávila’s original design.
82. With the Main Underdrain and Auxiliary Underdrain inoperative, a new drainage system
was needed for Dike 1. The design chosen was to add a “blanket drain”. This is a layer of
pervious material placed over other material on a slope to facilitate drainage on the surface
of the tailings.133 This replicated the “drained stack” for tailings deposited over the blanket
drain, albeit the tailings had been deposited below it were no longer free-draining given
that the base drains were now blocked.134
83. The new blanket drain was built at El. 826m, that is just below (and upstream) of the Dike
1 starter dam crest. The design of the “El. 826 Blanket Drain” or “First Blanket Drain”
is shown in Figure 22 below (Figure 2-7 from the Panel Report). To augment the capacity
to discharge seepage flows collected by the blanket drain, 27 slotted tubes called
“kananets” (shown as red lines below) were included to take water to a specially built
channel.135 Figure 22 below (Figure 2-8 from the Panel Report) illustrates that the blanket
drain would become covered by tailings during dam raises.
131
{D8/6/45}.
132
Gens 1, §168 {D2/1/64}.
133
{D8/1/21}.
134
{D8/1/22}.
135
{D8/41/4}.
40
Figure 22136
84. The El. 826 Blanket Drain was built between June and November 2010.137 Figure 2-8 from
the Panel Report (Figure 22 above) shows that sands below the El. 826 Blanket Drain
would remain saturated. Figure 23 below is a picture from early November 2010, in which
the Kananet pipes can be seen with the coarse material (to facilitate drainage) stretching to
the left, out of shot. This picture is taken looking towards the Grota da Vale, with the
Fábrica Nova Waste pile seen in the background.
136
{D8/1/21}.
137
{D8/7/22}.
41
Figure 23138
85. It was therefore November 2010 before the measures intended to address the April 2009
Piping Incident were completed.139 In the meantime, however, problems emerged with the
Main Gallery.
86. In July 2010, a vortex or sinkhole had appeared in the tailings reservoir above part of the
Main Gallery. This meant that tailings and water were entering the Main Gallery. Figure
24 below taken from Gens 1.
Figure 24140
138
{D8/7/22}.
139
{D8/1/20}.
140
{D2/1/66}.
42
87. Inspections revealed cracking and structural damage to the Main Gallery. This is shown in
Figure 25 below (again taken from Gens 1).
Figure 25141
88. In January 2011, a program of “jet grouting” was launched to try to repair the Main
Gallery.142 Jet grouting involves pumping a mixture of concrete and water into the tailings
above the gallery, at high pressure, to seek to strengthen them.143 This involved a jet
grouting platform on the surface, and to keep sands from inundating the jet grouting
platform, another Dike (“New Dike 1A”) was built upstream from the existing Dike 1A
(now “Old Dike 1A”). Figure 26 below is dated 11 February 2011 and depicts many of the
developments described so far, including:
88.1. the Main Gallery and Secondary Gallery (black dashed lines);
88.2. the Principal Foundation Drain and Auxiliary Foundation Drain (green dashed
lines);
88.3. Old Dike 1A (black dashed line);
88.4. the El. 826 Blanket Drain; and
88.5. the location of New Dike 1A (upstream and to the west of Old Dike 1A).
141
{D2/1/66}.
142
{D8/1/23}.
143
Gens 1, §173 {D2/1/66-67}.
43
Figure 26144
C) The Overflow Channel
89. A further feature of the Fundão Dam tailings system depicted in Figure 26 above is the
“Overflow Channel”. This was the north of an island, which would become progressively
submerged as the tailings rose around it. The Overflow Channel connected the Dike 2
slimes reservoir to the Dike 1 reservoir.
90. The Overflow Channel was constructed from January 2011 to July 2012.145 It was closed
in August 2012, but not before slimes were deposited into the Dike 1 reservoir between El.
824 and El. 850m (the planned elevation as the crest of Dike 2).146
91. The Overflow Channel opened again from July to December 2013, with slimes again
deposited into the Dike 1 reservoir between El. 863 and El. 870.147
92. Figure 27 below is a photograph from a report dated 13 April 2011 prepared by Robertson
Geoconsultants commissioned by Samarco, showing the slimes flow being discharged
144
{D8/1/7}.
145
{D8/7/39}.
146
{D8/1/52}. In fact, the crest of Dike 2 was later positioned at El. 852 after a first emergency raising at the
beginning of 2011; then a project followed to raise it to El. 857m which was executed by February 2012:
{D7/61T/13}.
147
{D8/6/45-46}.
44
from Dike 2 behind Dike 1. The report noted that slimes storage capacity was limited to
Dike 1 and would “remain dependent on this vulnerable structure” until alternatives were
commissioned.148
Figure 27149
93. Figure 28 below is a satellite image dated 25 May 2011. It shows the Overflow Channel
and the direction of slimes heading towards the Secondary Gallery intake point (to be
drained there). It also shows the location of the Main Gallery jet grouting platform and the
location of New Dike 1A which, as described above, was used to keep sands away from
the jet grouting platform.
148
{D7/41/17}. Robertson recommended that a buttress structure (described as “FBD” in his report) be built against
the entire face of Dyke 1, but this was never implemented.
149
{D7/41/27}.
45
Figure 28150
94. The Panel Report explains that the Overflow Channel made beach management more
difficult. This depended on adjusting the amount of sandy tailings spigotted into the Dike
1 reservoir so as to hold back the slimes.151 In November 2010, a tailings dam expert, Dr
Andrew Robertson, expressed concerns about the Overflow Channel and its implications
for the stability of future dam raises of the Dam: “the slime zone will be adjacent to the
‘sandy tailings beach’ as it advances in the upstream direction … the resulting geometry
may not generate adequate safety factors regarding the risk of instability.”152
95. In September 2011, Dr Pimenta de Ávila prepared a new dam design (the “September
2011 re-design”). This was needed because the deposition of slimes in the reservoir behind
Dike 1 (in particular behind Dike 1A) were not part of the original design; and would affect
the stability of future dam raises.153 The September 2011 re-design abandoned the diagonal
offset in favour of a single continuous raising, which would mean filling the Grota da Vale
area including to the point of contact with the Fábrica Nova Waste pile. Additional
associated new drainage was needed in that whole area as a result. Figure 29 below is a
simplistic plan view of the September 2011 re-design. It shows the newly suggested raise,
150
Gens 1, §178 {D2/1/68}.
151
{D8/1/22}.
152
{D7/38T/11}. See also Gens 1, page 138 {D2/1/138}.
153
Gens 1, §§391-392 {D2/1/139}.
46
in a single plane, eventually encroaching into the Grota da Vale. The purpose of the
September 2011 re-design was to ensure that the face of the Dam was kept further
downstream than would otherwise have been the case, away from slimes behind Dike 1A.
Figure 29154
96. Figure 30 below is a satellite image dated 2 October 2011, on which the Panel Report
labelled the Overflow Channel and slimes in the Dike 1 reservoir.
Figure 30155
154
Gens 1, §392 (D2/1/140}; (image taken from Dr Pimenta de Avila’s September 2011 re-design) {D7/48/6}.
155
{D8/1/52}.
47
D) Further problems with the galleries and the creation of the Setback at the left
abutment
97. Problems also started to develop with the Secondary Gallery. Structural analyses
determined that the Secondary Gallery could not support tailings higher than El. 845m,
which was some 10 metres lower than tailings had already reached above the Secondary
Gallery at that time.156 Therefore, to accommodate tailings storage requirements in this
period, beginning in October 2012, the dam alignment at the left abutment was shifted back
from its former location, creating a plateau in front of the Grota da Vale area.157 See Figure
31 below.
Figure 31158
98. The Setback was created when the plateau was at approximately El. 855m.159 Initially it
was approximately 80 metres upstream from the original embankment. This is shown in
Figure 32 below, which is taken from SETEC Report 994/2016.
156
{D8/1/23}.
157
{D8/1/56}.
158
{D8/1/56}.
159
{D8/1/57}.
48
Figure 32160
99. On 25 November 2012, a sinkhole appeared upstream from the Setback crest. Figure 33
below shows the sinkhole, both as it appeared on 25 November 2012, and as at 14
December 2012.
Figure 33161
100. In response to the sinkhole, the axis of the Setback was pushed further upstream by a further
70 metres in December 2012. The Setback was now displaced 150 metres upstream;162 and
efforts to repair the Secondary Gallery were abandoned. Instead, plans were made to plug
both galleries by filling them with concrete.163 Filling the Secondary Gallery with concrete
was completed on 22 August 2013.164 After this point, it was not necessary to maintain the
160
{F15/331T/86}.
161
{D8/14/8}.
162
Gens 1, §513 {D2/1/181}.
163
{D8/1/23}.
164
{D8/1/23}.
49
Setback alignment.165 However, as explained further below, the Setback was still in place
when the Dam collapsed in November 2015.
Figure 34166
101. The problems and ultimate plugging of the Main and Secondary galleries led to the
construction of a replacement system of “spillways”, in order to decant water from the Dike
1 reservoir. These were pipes (this time made of High Density Polyethylene (HDPE) rather
than concrete) each of 1.2 metres in diameter, which would be buried by tailings but with
vertical rising intakes:
101.1. First, an “Auxiliary Spillway” was constructed between July 2012 and January
2013. It comprised two HDPE pipes and started operating in February 2013.167
165
See {G4/2/70}; {G3/25.T/4} (Dr Pimenta de Ávila stating that “he does not agree technically with the
allegation that the construction of a new blanket drain would prevent the removal of the setback, because the
drain could be built at a higher level, allowing the setback to be removed safely”; {G4/2/87} explaining that
“in August 2013 the gallery was already concreted, then [...] the reasons for maintaining the setback had
already ceased to exist”). See also {G4/2/51}; {G3/12.T/4}; {G4/2/221-222}; {G2/9.T/39-40}.
166
{F15/331T/90}.
167
{D8/6/10}; {D8/7/36}.
50
101.2. Second, a “4th Spillway” was constructed from June 2013 onwards, as it had
become apparent that the capacity of the Auxiliary Spillway was insufficient. It
comprised three HDPE pipes and started operating in November 2014.168
102. The locations of the Auxiliary Spillway and 4th Spillway are shown in Figure 35 below as
at 27 October 2015. This also shows a much larger “Overflow Channel”, but in practice the
reservoirs behind Dikes 1 and 2 had merged by then. The locations of the inoperative Main
and Secondary Galleries are also shown as dashed lines.
Figure 35169
103. The plugging of the Secondary Gallery rendered inoperative one of the main drainage
structures for the Dike 1 reservoir. The response was to seek to redirect the reservoir flow
back across the Dike 1 reservoir towards the Auxiliary Spillway (and later the 4th Spillway).
The Panel Report describes this “intra-basin decant” which involved the construction (in
June 2013) of an excavated channel in the (ever-shrinking) island170 – as shown in the
centre of Figure 35 above. Some images of the “Auxiliary Spillway Island Canal” are
shown in Figure 36 below.
168
{D8/6/10}; {D8/7/37}.
169
{D8/7/6}.
170
{D8/6/10}.
51
Figure 36171
104. The Panel Report presents a sequence of images of the decant structures over time.
105. Figure 37 is dated 25 May 2011. This shows the Overflow Channel (open) with a flow
towards the Secondary Gallery intake. It also shows flow from the Grota Da Vale being
directed upstream towards the Secondary Gallery intake.
171
{D8/7/40}.
52
Figure 37172
106. Figure 38 is dated 21 January 2012. This shows the Overflow Channel (open), again with
a flow towards the Secondary Gallery intake. It also shows the location of the Secondary
Gallery jet grouting platform (when repairs were being attempted there). There is also an
inset image showing water to be drained from the Grota da Vale area.
Figure 38173
172
{D8/8/17}.
173
{D8/8/18}.
53
107. Figure 39 is dated 30 June 2013. This shows the Overflow Channel (then open), the
Auxiliary Spillway Island Canal (also open), and the 4th Spillway under construction, with
the intended flow of slimes at that time.
Figure 39174
108. While dam raising continued, seepages had appeared at the left abutment as early as 26
June 2012 at El. 845m, before the Setback was created.175 In 2013, seepage, saturation and
cracking continued to appear at several locations at the left abutment:
108.1. in March 2013 (at El. 855m – seepage at the left abutment and ponding of surface
water);176
108.2. in June 2013 (at El. 855m – seepage at the left abutment);177
108.3. in November 2013 at (El. 860m - accompanied by a slumping of the slope);178 and
108.4. in December 2013 (upwelling at Setback at El. 860m with cracks on the crest).179
174
{D8/8/20}.
175
{D8/14/7}.
176
{D8/14/9}.
177
{D8/14/10-11}.
178
{D8/1/23-24}.
179
{D8/14/14-15}.
54
109. Of these 2013 incidents, Figure 40 below shows, by way of example, the March 2013
seepage. Areas of ponded water, including in the Grota da Vale area (in the top right of the
picture) are seen. Figure 41 also shows (i) the two stages of the Setback (from the bottom
to the top of the picture), and (ii) the location sinkhole which had appeared upstream from
the first stage.
Figure 40180
110. The episodes of seepage and cracking in 2013 showed that the El. 826 Blanket Drain was
insufficient and that additional drains would be needed at the left abutment. 181 But the Dam
kept rising and, by the end of 2013, the crest of the Setback had risen to El. 877m: 22
metres above the plateau.182
E) Filling the Setback
111. Starting in August 2013, the first compacted fill was placed onto the plateau to start to
rebuild the Setback portion and return the Dam to its intended alignment. But dam raising
continued at the same time.183 Between January to March 2014, Samarco started to fill in
the Setback using tailings mechanically transported by trucks. Tailings started to be spread
180
{D8/14/9}.
181
{D8/1/25}.
182
{D8/1/57}.
183
{D8/1/57}.
55
over the area of the Setback, water sprinkled on the top, then compacted using a tractor.
But this came to be recognised as an expensive process.184 It is depicted in Figure 41, taken
from one of Samarco’s weekly reports.
Figure 41185
112. The weekly reports from this time also record that a lake had formed in the Grota da Vale
area, with Samarco pumping water to lower it. This is depicted in Figure 42, taken from
another of Samarco’s weekly reports.
184
{D2/3.1T/280}: section 3.1, noting that “disposal via lorry transport with spreading and compaction entails
higher costs”; {D7/101T/6}: stating it is “understood that spigotting would not be a safe solution, but the use of
cyclone underflow would bring the benefits of economy and stability sought in this work”. For examples of the
works at that time, see {F7/439.1T/5}; {F7/448.1/9}. See also {G4/2/70}; {G3/25.T/4} stating that “the cost of
quickly eliminating the setback with the transport of material by trucks would be in the order of 40 million reais
[...] [and] that the alternative adopted by SAMARCO, using the cycloning method, would cost less than 10% of
this amount”; {G4/2/61-62}; {G3/17.T/2}; {G4/2/113}.
185
{F7/439.1T/5}.
56
Figure 42186
113. These events coincided with plans for a new project for the future raise of the dam to El.
940m (“Project 940”), which would need yet more drainage features.187 At the left
abutment, these would need to be integrated with the drainage system entering from the
Grota da Vale and the Fábrica Nova waste pile.188 The resulting plan, which the Panel
considered to be a “complex and elaborate” drainage system, is shown in Figure 43 below.
Figure 43189
186
{F7/448.1T/14}.
187
{D8/1/25}.
188
{D8/1/25}.
189
{D8/1/25}.
57
114. On 7 August 2014, Samarco’s Performance Management Committee considered plans to
fill the Setback using underflow from a “cycloning” operation.190 The slides from that
meeting depict the planned result:
Figure 44191
F) The August 2014 Cracking and Upwelling Incidents
115. The Dam continued to rise without satisfactory drainage being put in place and, in August
2014, the Setback slope showed what the Panel termed “serious signs of distress”.192 On
27 August 2014, a series of cracks appeared on the upstream beach, the crest, and the slope
of the Setback. Saturation was also observed at the toe of the El. 865m bench of the
Setback.193 This was more extensive than previous incidents.194 Figure 45 below is taken
from the Panel Report.
190
A cyclone is a machine that separates out coarser tailings from finer tailings and water, with the coarser tailings
called “underflow”. See also {F8/492/40}, recording that volumes required were: Area A = 0,744Mm3; Area
B = 1,408Mm2; Total (i.e. A + B) = 2,152Mm3.
191
{F15/312/111}.
192
{D8/1/57}.
193
The body of the Panel Report refers simply to the “toe” and the “toe of the slope” {D8/1/26-27}. But the
Incident History clarifies that this particular image refers to the toe of the El. 865m bench {D8/14/17}.
194
Panel Report, page 14 {D8/1/26}. See also {G4/2/65-66}; {G3/25.T/3} (Dr Pimenta de Ávila stating that he
”was called by SAMARCO to inspect a crack in the FUNDÃO Dyke setback, which the [he] interpreted as a
beginning of rupture”) {G4/2/45}; {G3/8.T/2}.
58
Figure 45195
116. There were three further indicators, arising at the same time as the August 2014 Cracking
Incident, which the Panel described as consistent with the El. 826 Blanket Drain reaching
maximum capacity:
116.1. flow from the El. 826m Blanket Drain stopped increasing, dropped briefly, partially
recovered, then remained unchanged;
116.2. flows from the Main Underdrain on the downstream slope of Dike 1, which had
been diminishing, suddenly started to increase;
116.3. “artesian flow” (i.e. water flowing upwards) appeared at the toe of Dike 1.196
117. In response to the August 2014 Incident, a reinforcement berm was built against the slope
of the Setback. This is shown in Figure 46 (in plan) and Figure 47 (a photo showing the
berm).
195
{D8/14/17}.
196
{D8/1/43}.
59
Figure 46197
Figure 47198
G) Further Incidents
118. Progress nevertheless continued towards completion of Project 940. The first stage of the
new “complex and elaborate” drainage system was an additional rockfill “blanket drain”
on the plateau of the Setback, then at El. 860m (the “El. 860 Blanket Drain” or “Second
Blanket Drain”). The construction of the El. 860 Drainage Blanket was a challenging
project with an aggressive schedule which required 300,000m3 of sand representing some
17,000 truck journeys.199 Construction of this started in November 2014 and concluded in
August 2015, after which some infilling of the Setback resumed.200
197
{D8/1/27}.
198
{D8/7/42}.
199
{F10/132.2/1}.
200
{D8/1/57}.
60
119. The next stages would have been to connect the Second Blanket Drain to other drains
coming from the Grota da Vale area.201 Figure 48 below contains some construction
photographs from November 2014, and August 2015. They show progress with the
construction of the Second Blanket Drain on the plateau of the Setback, with sand tailings
starting to be placed on top of the El. 860m Blanket Drain in August 2014.
Figure 48202
120. All this work meant that the Setback remained in place while the Dam kept rising. During
2015, the incidents continued:
120.1. on 30 January 2015, seepage was observed at the right abutment;203
120.2. between at least 27 February and 24 April 2015, saturation could be seen above and
below the Second Blanket Drain (then under construction);204
120.3. in May 2015, saturation at the left abutment at El. 820m was observed;205 and
120.4. in July 2015, saturation at the left abutment at El. 820m was observed again.206
201
{D8/7/29}.
202
{D8/7/29}.
203
{D8/14/18}.
204
{D8/14/19}.
205
{D8/14/20}.
206
{D8/14/21}.
61
121. Issues with the Setback area of the Dam were further complicated by the drainage and
water from the Grota da Vale area. Figure 49 below, which shows the position as at 29
December 2014, provides some insight to the complex situation in the area.207
Figure 49208
122. By October 2015, surface drainage and pipes had been constructed to take water from the
Grota da Vale area across the plateau and alongside the Setback. The Panel Report identifies
that ponded water was “consistently noted” at the toe to the El. 860 Blanket Drain.209 See
Figure 50 below for an overhead view, and Figure 51 for some photos of the area and
ponded water.
207
See {D7/73T/72}: (noting that the higher water level in the regional of the Vale Sterile Pile was associated with
a damned lake which had formed inside the Dam); {D7/125T/15}, {D7/125T/30}: (stating that the lake was
drainage in order to start tailings disposal activities in the region and return the axis to its design position).
208
{D8/8/22}.
209
{D8/14/22}.
62
Figure 50210
Figure 51211
123. By this time, that is October 2015, there was “intense activity” at the left abutment. The
dam crest was being raised to El. 900m, and preparations were being made to place sand
(via “cycloning”) on the El. 875m bench of the Setback, while at the same time the
reinforcing berm at the Setback was being extended by raising the El. 875m and El. 895m
benches. The net result was that the Setback crest rose by 2.9 metres in October 2015, the
210
{D8/8/23}.
211
{D8/11/38}.
63
second fastest monthly raise in the Dam’s history.212 The Panel Report includes a selection
of photographs from Samarco weekly reports, which capture some of the work being done.
Some of these are shown in Figure 52 below.
Figure 52213
124. By 5 November 2015, the Setback area of the Dam had reached, in the Panel’s words, a
“precarious state of stability”.214 On that date, the Dam collapsed.
212
{D8/1/27}.
213
{D8/11/44}.
214
{D8/1/3}.
64
Figure 53215
PART IV. SUMMARY OF THE CLAIMANTS’ CASE
125. The Claimants’ primary strict liability case is based upon Articles 3, IV and 14, §1 of the
Law 6.938/1981 (“the Environmental Law”), the underlying principles of which are
summarised at Sarlet 1, §§39-56.216 Article 14, §1 of the Environmental Law provides that
“the polluter is obliged, regardless of fault, to compensate or redress the damage caused
to the environment and to third parties affected by its activity” and the term “polluter” is
defined in Article 3, IV, of the Environmental Law as “a natural or legal person, whether
public or private, responsible, directly or indirectly, for an activity causative of
environmental degradation”. The Claimants contend that BHP was (both directly and
indirectly) responsible for the activity causative of environmental degradation within the
meaning of Article 3, IV, of the Environmental Law, such that it is strictly liable for the
Collapse and resulting damage to the Claimants under Article 14, §1, of the Environmental
Law.
126. The Claimants’ secondary strict liability case is based upon Article 927, sole paragraph, of
Law 10.406/2002 (“the Civil Code”), the underlying principles of which are summarised
at Rosenvald 1, §§360-371.217 Article 927, sole paragraph, provides that “There will be an
215
{F15/331/134}.
216
Sarlet 1, §§39-56 {C4/1T/24-31}; POC, §§269-281 {A1/1/114-123}.
217
Rosenvald 1, §§360-371 {C3/1T/140-143}; POC, §282A {A1/1/129}.
65
obligation to redress the damage, regardless of fault, in the cases specified by law, or where
the activity usually developed by the author of the damage involves, by its nature, risk to
the rights of others.” The Claimants contend that BHP was the (or, at least, an) author of
the damage within the meaning of Article 927, sole paragraph, of the Civil Code, such that
it is strictly liable for the Collapse under that article.
127. The Claimants’ primary fault-based liability case is based upon Article 186 of the Civil
Code alone, including by reference (though not limited) to the authorities which underpin
liability by breach of duty arising from the creation and/or contribution to risk and/or an
assumption of responsibility, the underlying principles of which are summarised at
Rosenvald 1, §§327-339, 347-359.218 The Claimants contend that BHP (through its organs
and representatives) caused the Collapse by their commissive, negligent, conduct,
including conduct which created or contributed to the risk of the Collapse; alternatively,
BHP assumed responsibility for the risks arising from Samarco’s activities, which
subjected it to a duty to prevent any damage caused thereby, the negligent breach of which
caused the Collapse. On either basis, liability arises under Articles 186 and 927 (head
paragraph) of the Civil Code.219
128. The Claimants’ secondary fault-based liability case is based upon Article 186 of the Civil
Code in conjunction with Article 225 of the Brazilian Federal Constitution of 1988 (“the
Constitution”) and/or Article 116 of Law 6.404/1976 (“the Corporate Law”),220 the
underlying principles of which are summarised at Rosenvald 1, §§327-332,221 341-359,222
Sarlet 1, §40(c) ,223 Sarlet 2, §63,224 Muller Prado 1, §§26-29.225 The Claimants contend
that BHP owed duties to protect and preserve the environment under Articles 225 (head
paragraph) and 225, §2 of the Constitution and/or owed duties to the members of the
community in which Samarco operated under Article 116 of the Corporate Law,226 the
negligent breach of which (by BHP’s representatives and/or organs) caused the Collapse,
218
Rosenvald 1, §§327-339 {C3/1T/133-136}; Rosenvald 1, §§347-359 {C3/1T/137-139}; POC, §282 (esp.
§§282.1(ii) and 282.2-282.10) {A1/1/123-129}; Reply, §123A {A1/3/95}.
219
POC, §§282.1-282.10 {A1/1/124-129}.
220
POC, §282.1(i) {A1/1/124}, §§284-286 {A1/1/130-131}; Reply, §126 {A1/1/94}, §132D {A1/3/97}
{A1/3/103}.
221
Rosenvald 1, §§327-332 {C3/1T/133-134}.
222
Rosenvald 1, §§341-359 {C3/1T/136-139}.
223
Sarlet 1, §40(c) {C4/1T/25-26}.
224
Sarlet 2, §63 {C15/1T/25-26}.
225
Muller Prado 1, §§26-29 {C2/1T/22-23}.
226
POC, §282.1(i) {A1/1/124}; Reply, §126{A1/3/94}, §132D {A1/3/97} {A1/3/103}.
66
giving rise to BHP’s liability under Articles 186 and 927 (head paragraph) of the Civil
Code.227
129. The Claimants’ tertiary fault-based liability case is based upon Articles 116 and 117 of the
Corporate Law, the underlying principles of which are summarised at Muller Prado 1,
§§1-25, 30-46.228 The Claimants contend that BHP abused its power as a controlling
shareholder by reason of (i) the circumstances in which it permitted the Dam to be
repeatedly increased in height despite clear warning signs about the risks of its failure
and/or (ii) its abusive breach of the duties it owed under Article 116 of the Corporate Law
to the members of the community in which Samarco operated, thereby incurring liability
under Article 117 of the Corporate Law.229
PART V. INTRODUCTION TO BRAZILIAN LAW

A) Basic Legal Framework
130. It is common ground that Brazilian law is applicable to the Claimants’ causes of action
(save for issues of agency and attribution,230 on which see §§548-576). The Court will be
familiar with the approach to be adopted when deciding contested issues of foreign law. A
convenient summary of the applicable principles can be found in Perry and another v
Lopag Trust Reg and others,231 with emphasis on the first of these: “the task of the trial
judge when there are disputed questions of foreign law is to determine what the highest
relevant court in the foreign legal system would decide if the point were to come to it” (see
also Jalla v Shell International Trading and Shipping Co Ltd232). The significance of this
principle is that it highlights the particular importance of the case law from the highest
appellate courts of Brazil (as described below).
131. The parties have adduced expert evidence from Brazilian law experts on (i) liability under
the Environmental law: Professors Sarlet (Claimants) and Milaré (BHP); (ii) civil liability,
limitation and waivers: Professors Rosenvald (Claimants) and Tepedino (BHP); (iii)
controlling shareholder liability: Professors Muller Prado (Claimants) and Trindade (BHP)
and (iv) standing of Municipalities: Professors Sarlet (Claimants) and Tepedino (BHP). The
227
POC, §§282.1-282.9 {A1/1/124-129}, §286 {A1/1/131}, §283 {A1/1/130}, §288 {A1/1/132}; Reply, §§122-
132 {A1/3/94-100}.
228
Muller Prado 1, §§1-25 {C2/1T/16-22}; Muller Prado 1, §§30-46 {C2/1T/23-27}; POC, §§284-288 {A1/1/130-
132}.
229
POC, §§284-288 {A1/1/130-132}; Reply, §§132C0 {A1/3/102}, 132D-133C {A1/3/103-108}.
230
Claimants’ RRFI 26 April 2024, §§3.1-3.2 {A3/7/4-6}; Defence, §203A(4)(a)(i) {A1/2/105}, §203A(4)(ab)(i)
{A1/2/107}, §203B(2)(b) {A1/2/112}.
231
[2023] 1 W.L.R. 349 at [11]-[16] {J1/21/6-7}.
232
[2023] EWHC 424 (TCC) at [296]-[297]) {J1/20/46}.
67
trial bundle also contains the Brazilian law evidence previously filed by BHP and Vale in
the Part 20 proceedings, because the above-mentioned Brazilian law experts have from
time to time in their reports referred to the Part 20 expert evidence. For the avoidance of
doubt, however, in light of the discontinuance of the Part 20 claim, none of the Part 20
expert evidence is strictly admissible as evidence in the main claim or indeed capable of
cross-examination since the Part 20 experts are not being called to give evidence; it has
been included in the trial bundle merely for the purpose of ensuring that cross-references
to it in the Brazilian law reports filed for the purposes of the main claim can be tracked
through (if necessary).
132. There is no dispute between the parties as to the fundamentals of the Brazilian legal system.
In particular, the following points are broadly common ground:
132.1. The primary source of Brazilian law is positive (i.e. written) law.233 This includes
the Constitution234 and the infra-constitutional legislation upon which the Claimants
base their claims, namely, the Environmental Law,235 the Civil Code236 and the
Corporate Law.237 Positive law is to be interpreted and applied having regard to case
law,238 which is only strictly binding in limited circumstances239 (for example, a
judgment of a Repetitive Appeal is only binding in cases arising out of the same
subject matter240). The persuasive value of a non-binding judgment will depend
upon several factors241 including the quality of its reasoning242 and the hierarchy of
the court.243
132.2. The Constitution is hierarchically supreme.244 This means that legislation must
always be interpreted and applied compatibly with the Constitution’s rules and
principles.245 According to the four applicable interpretation methods, legislation
must be interpreted having regard to (i) the literal meaning of the language used by
the legislator (“the literal interpretation”), (ii) the circumstances which justified
233
Sarlet 1, §57 {C4/1T/31-32}; Milaré 1, §21 {C5/1T/10-11}; Tepedino 1, §13 {C7/1T/12-13}.
234
Sarlet 1, §58 {C4/1T/32-33}; Milaré 1, §21 {C5/1T/10-11}; Tepedino 1, §13 {C7/1T/12-13}.
235
Sarlet 1, §62 {C4/1T/34}; Milaré 1, §21.3 {C5/1T/10-11}.
236
Rosenvald 1, §23 {C3/1T/18-19}; Tepedino 1, §13 {C7/1T/12-13}.
237
Muller Prado 1, §53 {C2/1T/30}; Tepedino 1, §37 {C7/1T/24}.
238
Sarlet 1, §79 {C4/1T/42-43}; Milaré 1, §22 {C5/1T/11}, §35 {C5/1T/16}; Tepedino 1, §46 {C7/1T/29}.
239
Sarlet 1, §95 {C4/1T/48}; Sarlet 2, §17 {C15/1T/7-8}; Tepedino 1, §59 {C7/1T/37}.
240
Sarlet 1, §99 {C4/1T/50}; Tepedino 1, §59 {C7/1T/37}.
241
Sarlet 1, §95 {C4/1T/48}; Sarlet 2, §17 {C15/1T/7-8}; Tepedino 1, §66 {C7/1T/40-41}.
242
243
Sarlet 1, §99 {C4/1T/50}; Muller Prado 1, §76 {C2/1T/36}; Rosenvald 1, §40 {C3/1T/24}; Tepedino 1, §62
{C7/1T/38-39}.
244
Sarlet 1, §58 {C4/1T/32-33}; Rosenvald 1, §19 {C3/1T/18}, §22 {C3/1T/18}; Milaré 1, §§21-21.1 {C5/1T/10};
Tepedino 1, §14 {C7/1T/13}.
245
Sarlet 1, §123 {C4/1T/58}; Muller Prado 1, §53 {C2/1T/30}; Tepedino 1, §14 {C7/1T/13}.
68
the introduction of the relevant law (“the historical interpretation”), (iii) the
legislator’s intended purposes and objectives (“the teleological interpretation”)
and (iv) other laws within the legal system (or “the systematic interpretation”).246
Apparent gaps in the law are to be filled by drawing upon analogy, custom and
general principles of law, in accordance with Article 4 of the Law of Introduction to
the Norms of Brazilian Law (“LINDB”).247
132.3. Various theories248 have been adopted by the Brazilian Courts to assist in the
interpretation and application of the law, including theories of risk and theories of
causation.249
132.4. The legal system consists of general and special law. The Civil Code is an example
of the former250 and the Environmental Law251 and Corporate Law252 are examples
of the latter. In the case of a conflict between general and special law, special law
prevails.253 Where there is no conflict, provisions of the general regime continue to
apply where the special regime is silent.254
132.5. The STF is the highest court of record for the interpretation and application of the
Constitution. Beyond this, the system is divided into courts of general and special
jurisdiction. The Superior Court of Justice (“STJ”) is the Superior Court of general
jurisdiction with final authority over the interpretation and application of federal
legislation. Beneath it, there are Federal and State Courts. The Federal Courts have
jurisdiction over matters involving the Federal public administration, its agencies
and international organisations; appeals from first instance Federal Courts are to the
appropriate Regional Federal Court (“TRF”). The State Courts have jurisdiction
over all other matters and appeals from first instance State Courts are to the
246
Sarlet 1, §103 {C4/1T/51}; Muller Prado 1, §86 {C2/1T/39-40}; Rosenvald 1, §52 {C3/1T/27-28}; Tepedino
1, §29 {C7/1T/20-21}.
247
Sarlet 1, §§112-116 {C4/1T/54-56}; Rosenvald 1, §56 {C3/1T/29-30}; Milaré 1, §24 {C5/1T/11}; Tepedino 1,
§§30-37 {C7/1T/21-24}.
248
Legal theories seek to explain in theoretical terms how a particular matter of law should be answered. They
usually originate in legal doctrine before being adopted by the courts: see Sarlet 1, §35 {C4/1T/23}.
249
Sarlet 1, §§112-116 {C4/1T/54-56}; Rosenvald 1, §56 {C3/1T/29-30}; Milaré 1, §24 {C5/1T/11}; Tepedino 1,
§§30-37 {C7/1T/21-24}.
250
Sarlet 1, §128 {C4/1T/61-62}; Muller Prado 1, §§64-65 {C2/1T/33}; Muller Prado 2, §147 {C2/1T/62};
Tepedino 2, §§36-37 {C18/1T/24}.
251
252
Muller Prado 1, §62 {C2/1T/33}, §64 {C2/1T/32-33}; Muller Prado 2, §147 {C2/1T/62}; Tepedino 1, §37
{C7/1T/24}; Tepedino 2, §40 {C7/1T/20-21}.
253
Sarlet 1, §129 {C4/1T/62}; Sarlet 2, §18 {C15/1T/8}, §73 {C15/1T/31}; Milaré 1, §32 {C5/1T/13}, §34
{C5/1T/14}; Milaré 2, §23 {C17/1T/10}; Tepedino 1, §40 {C7/1T/27}; Tepedino 2, §35 {C18/1T/18}, §39
{C18/1T/18}, §161 {C18/1T/65}.
254
Sarlet 2, §18 {C15/1T/8}; Muller Prado 2, §§148-149 {C2/1T/64}, Milaré 1, §§32-33 {C5/1T/13}; Milaré 2,
§23 {C17/1T/10}; Tepedino 2, §37 {C18/1T/24}.
69
appropriate State Appellate Court (“TJ”). Appeals from the TJ and the TRF are
generally determined by the STJ, with the exception of appeals relating to
constitutional matters which are heard by the STF.255
132.6. The Brazilian Securities and Exchange Commission (“CVM”) is a specialist

administrative body with authority to sanction breaches of the Corporate Law by
publicly held companies.256 Appeals from the CVM decisions are decided by the
Brazilian National Financial System Appeal Council (“CRSFN”). The CRSFN’s
and CVM’s decisions on the correct interpretation of the Corporate Law are not
binding, but they are highly persuasive.257
133. There is also a measure of common ground between the parties as to the basic Brazilian
legal framework which underpins the Claimants’ causes of action. In particular:
133.1. There are two relevant strict liability regimes: (i) Article 14, §1, and 3, IV, of the
Environmental Law contain a special regime for strict liability in cases of
environmental damage and (ii) Article 927, sole paragraph, of the Civil Code
contains a general regime for strict liability in relation to risky activities.258 Under
both strict liability regimes, there is no requirement to prove fault (i.e. negligence)
on the part of the defendant.259
133.2. There are also (at least) three relevant bases for fault-based liability: (i) Articles 186
and 927, head paragraph, of the Civil Code (operating on their own)260, (ii) Article
116 of the Corporate Law (operating in conjunction with Articles 186 and 927, head
paragraph), and (iii) Article 117 of the Corporate Law (operating on its own or in
conjunction with Article 116).261 Articles 186 and 927, head paragraph, of the Civil
Code contain a general fault-based regime262 for conduct amounting to negligence,
imprudence or lack of skill263; and Articles 116 and 117 of the Corporate Law
contain special fault-based regimes264 in respect of violation of a controlling
shareholder’s duty of loyalty to members of the community in which the controlled
255
Sarlet 1, §§79-87 {C4/1T/42-43}; Tepedino 1, §§47-51 {C7/1T/29-33}.
256
Muller Prado 1, §§77-78 {C2/1T/36-37}; Trindade 1, §§44-45 {C8/1T/13-14}.
257
Muller Prado 1, §§81-84 {C2/1T/37-38}; Trindade 1, §45 {C8/1T/13-14}.
258
Sarlet 1, §§203-205 {C4/1T/94-95}; Milaré 2, §24 {C17/1T/10}; Tepedino 2, §39 {C18/1T/20}, §50
{C18/1T/24}.
259
Civil JS, Issue 15 {C1/2T/9}; Environmental JS, Issue 2 {C1/5T/2-3}.
260
Civil JS, Issue 5 {C1/2T/2}.
261
Corporate JS, Issue 26(f) {C1/6T/14-15}.
262
Muller Prado 1, §26 {C2/1T/22}, §61 {C2/1T/32}, §§212-213 {C2/1T/88}; Rosenvald 1, §62 {C3/1T/33};
Muller Prado 2, §145 {C14/1T/43}, §243 {C14/1T/66}; Rosenvald 2, §§85-87 {C3/1T/85-87}; Tepedino 1,
§94 {C7/1T/49}; Tepedino 2, §42 {C18/1T/21-22}.
263
Rosenvald 1, §78 {C3/1T/38}; Tepedino 1, §91 {C7/1T/48}.
264
Muller Prado 1, §62 {C2/1T/32-33}; Muller Prado 2, §147 {C14/1T/43}; Tepedino 2, §40 {C18/1T/20-21}.
70
company operates (Article 116) and a controlling shareholder’s abusive exercise of
their controlling power (Article 117).265
134. There are various additional points of agreement between the experts on discrete elements
of the Claimants’ causes of action. Where pertinent, they are highlighted in the Claimants’
detailed exposition of the Brazilian law principles of strict and fault-based liability below.
135. The Claimants explain the principles applicable to (i) strict liability under the
Environmental Law; (ii) strict liability under Article 927, sole paragraph, of the Civil Code;
and (iii) fault-based liability at Parts VI and VII below. Waivers, limitation and standing of
Municipalities are addressed at Parts X, XI and XII below.
PART VI. THE STRICT LIABILITY CASE
136. The Claimants’ primary case is that BHP is strictly liable for the damage caused by the
Collapse of the Dam under Articles 3, IV, and Article 14, §1, of the Environmental Law,
which establishes strict liability for damage caused by a polluting activity for which a
person is directly or indirectly responsible (“the environmental regime”). The Claimants
also advance an alternative strict liability case based on Article 927 (sole paragraph) of the
Civil Code, which establishes strict liability for damage caused by inherently risky
activities (“the general strict liability regime”), however it appears to be common ground
that the environmental regime applies in this case, so as to displace the general strict
regime. Nevertheless, the legal principles behind both regimes (some of which are related)
are addressed in turn below, before an application of these principles to BHP. The factual
matters relied upon by the Claimants comprise the factual matters relevant to BHP’s
liability under either or both regimes.
A) Strict Liability under the Environmental Law
1) Introduction
137. As explained in the expert evidence,266 in the 1960s and 1970s environmental protection in
Brazil was fragmented and weak, resulting in uncontrolled industrial polluting activity and
severe and widespread environmental damage. It was in response to this that the
Environmental Law was enacted in 1981 to create a wholly new and autonomous regime
of environmental protection which adopted the “Polluter Pays” principle, with the purpose
of requiring the polluter, rather than society, to pay for the socio-environmental costs of its
265
Muller Prado 1, §15 {C2/1T/19}, §40 {C2/1T/26}, §190 {C2/1T/80-81}; Trindade 2, §10 {C19/1T/4}.
266
See the summary at Sarlet 1, §40 {C4/1T/25-27}; a more detailed exposition of the historical development of
Brazilian environmental law is at Sarlet §§131-220 {C4/1T/63-104}.
71
activity by internalising them in the production process.267 A key feature of this new regime
was the imposition (by Article 14, §1) of strict liability on “polluters” (as defined in Article
3, IV) for damage caused by an activity for which they are “responsible”.
138. The Environmental Law was subsequently reinforced in 1988 by Article 225 of the
Constitution, which enshrined the duties of both the State and the community to protect the
environment and the fundamental right of everyone to environmental protection.268 The
Constitution also incorporated the Polluter Pays principle and various other environmental
principles into the system of constitutional protection; for that reason, it has been
internationally recognised as the “Green Constitution”.269 Moreover, over subsequent
years, the Brazilian environmental protection regime has been further reinforced, in a
variety of different ways, by further legislation270 and by a series of decisions of the STJ
and STF.271
139. There is some debate in the expert evidence as to the extent to which the environmental
regime is to be considered a separate “legal microsystem” governed by its own rules and
principles, and as to its relationship with the general principles of civil liability under the
Civil Code.272 However, it is not in dispute that Articles 3, IV and 14, §1 of the
Environmental Law form part of a special regime of strict liability for an activity which
causes environmental damage and that the general strict liability regime for inherently risky
activities established by Article 927, sole paragraph, of the Civil Code only applies when
the special regime does not.273 It follows that insofar as the Court finds that this is a case
of environmental damage – which is also not in dispute – the environmental regime applies
to the exclusion of the general strict liability regime.
140. This does not mean that the principles underlying the general strict liability regime are
wholly irrelevant to the interpretation of Articles 3, IV and 14, §1 of the Environmental
Law, since (even though the enactment of Article 927, sole paragraph, of the Civil Code
post-dated the Environmental Law by more than 20 years) the underlying theoretical bases
of the two regimes are linked by risk theory.274
267
Sarlet 1, §40 {C4/1T/25-27}; Milare 1, §38{C5/1T/14}.
268
Sarlet 1, §40.c {C4/1T/25-26}, §§151-197 {C4/1T/71-93}.
269
Sarlet 1, §151 {C4/1T/71-72}.
270
Sarlet 1, §§198-205 {C4/1T/93-95}.
271
Sarlet 1, §40.f {C4/1T/26-27}, 206-220 {C4/1T/96-104}.
272
Sarlet 1, §§125-129 {C4/1T/59-62}; Milare 2, §§21-26 {C17/1T/8-12}.
273
Sarlet 1, §§203-205 {C4/1T/94-95}, §258 {C4/1T/121-122}; Tepedino 2, §39 {C18/1T/20}, §94 {C18/1T/39},
§161 {C18/1T/65}.
274
See Justice Sanseverino’s explanation of this in Bioenergy, set out below.
72
141. However, the environmental regime has a very special status because it is reinforced by the
application of rules and principles of environmental law, as recently reaffirmed by the STJ
in Capibaribe (STJ, February 2024):
“More than special, environmental civil liability is very special, as it is governed by its
own peculiar principles, based, among others, on the polluter pays principle, the Full
redress principle, the principle of the propter rem nature of environmental obligations
and the principle of in dubio pro natura. This very special legal regime is reinforced by
the general concern for dissuasion, which, in addition to restoration in natura, ecological
compensation for losses of biota and compensation for the remaining damage, including
moral damage, also focuses on educating and preventing future aggression by other
people”.275
142. The environmental regime should be understood in precisely these terms, viz. as a
“reinforced” strict liability regime with a firm constitutional foundation pursuant to Article
225 of the Constitution, the special features of which include:276
142.1. An avowedly (in the words of the STJ) “extremely broad” notion of a polluter which
includes “all and any” person (of public or private law) that is “responsible, directly
or indirectly” for a polluting activity; all of whom are “treated equally” for the
purposes of liability.277
142.2. A panoply of constitutional and infra-constitutional principles which have been

recognised by the STF and STJ in order to give effect to the fundamental right to an
ecologically balanced environment provided for in Article 225, head paragraph, of
the Constitution, and in the light of which the regime should be interpreted.278
142.3. The adoption of the Full Risk Theory,279 according to which those responsible for
an activity are treated as liable for the full extent of the damage caused by the
activity, even if the direct and immediate cause of the damage was not the act or
omission of the responsible party, or was an act of God, or force majeure, or other
unforeseeable event, or action of a third party, or the victim’s own fault.280
2) The main points of dispute between the experts as to the elements of liability
143. There is a sharp divergence of views between the experts as to what has to be shown to
establish a defendant’s strict liability under the Environmental Law. A summary of
Professor Sarlet’s position can be found at Sarlet 1, §§39-56; Professor Milaré’s competing
275
Sarlet 1, §127 {C4/1T/60-61}; {C4/3.3T/1301}.
276
Sarlet 1, §207 {C4/1T/96}.
277
Jacupiranga Park (STJ, 2009), {C4/3.1T/294}; Sarlet 1, §210 {C4/1T/97}.
278
Sarlet 1, §§171-197 {C4/1T/80-93}.
279
Sarlet 1, §§217-219 {C4/1T/101-104}; Milaré 1, §40 {C5/1T/15}; POC, §266.2 {A1/1/110-111}.
280
Sarlet 1, §218 {C4/1T/103-104}, §259 {C4/1T/122}, §369 {C4/1T/175}; Milaré 1, §40 {C5/1T/15}.
73
summary can be found at Milaré 1, §§17-18. In addressing the differences between them,
it is convenient to begin with the language of the relevant provisions.
144. “Polluters” are defined in Article 3, IV, as follows:
“Polluters means a natural or legal person, whether public or private, responsible,

directly or indirectly, for an activity causative of environmental degradation”.
145. Article 14, §1, of the Environmental Law then provides, insofar as material:
“Without prejudice to the imposition of penalties provided in this article, the polluters
are obliged, regardless of the existence of fault, to indemnify or repair the damages
caused to the environment and to third parties, affected by their activity”.
146. Reading the two provisions together, the reference in Article 14 §1 to “their [i.e. the
polluters’] activity” clearly refers to the activity referred to in Article 3, IV, i.e. the “activity
causative of environmental degradation” for which the polluters are “responsible, directly
or indirectly”.
147. It follows that the combined effect of the language of Articles 3, IV and 14, §1 of the
Environmental Law is that there are three basic elements which give rise to liability under
those provisions:
147.1. an activity causative of environmental degradation (“a polluting activity”),
147.2. for which a person is responsible, directly or indirectly,
147.3. which causes damage to the environment and/or third parties.
148. The issues arising between the experts in relation to these three basic elements can be
summarised as follows:
148.1. The polluting activity: There is no dispute that, for the purpose of characterising a
person as a polluter under Article 3, IV, of the Environmental Law, there must be a
polluting activity.281 There is a dispute as to whether the correct meaning of an
“activity” is limited to “actions or omissions” or whether it is intended to connote a
combination of actions, omissions and legal relationships directed towards a
productive end (see §§150-152 below), but the real nature of the dispute between
the parties is less about the meaning of the term “activity” as such, and more about
the criteria by which Brazilian law determines whether or not to treat a person as
281
Sarlet 1, §235 {C4/1T/108}; Milaré 1, §17.2.2 {C5/1T/7}.
74
responsible, either directly or indirectly, for the polluting activity:282 see the next
point.
148.2. Responsibility for the activity: There is no dispute that it must be demonstrated that
the defendant was directly or indirectly responsible for the polluting activity.283 The
main contested issue concerns how this test is to be applied, and in particular, what
forms of conduct are capable of giving rise to an imputation of responsibility and
whether, for this purpose, it is necessary to establish that not only the polluting
activity, but also the specific conduct of the defendant, was a naturalistic (i.e.
factual) cause of the environmental damage:
(1) According to the evidence of Professor Sarlet, there is a single broad test of
responsibility which applies to all those directly or indirectly responsible.284
Responsibility may be established, in Professor Sarlet’s view, not merely by a
factual causal link between the conduct of the defendant and the damage, but
also by a “normative” causal link between the defendant and the damage-
causing activity, which justifies the imputation of responsibility for the activity
to the defendant.285 There is no a priori limit to the forms of conduct that may
give rise to an imputation of responsibility in this way, however such forms of
conduct typically include control, risk-creation, participation and involvement,
funding and benefit in relation to the activity,286 all of which are to be weighed
on a case-by-case basis.287
(2) According to the evidence of Professor Milaré, however, a person can only be
responsible for a polluting activity where their own conduct is a factual cause
of the environmental damage.288 Based on this premise, Professor Milaré
argues that there are two different bases of responsibility under Article 3, IV,
of the Environmental Law: that of the “direct polluter” and that of the “indirect
polluter”.289 The only conduct capable of giving rise to responsibility as a
“direct polluter” is that of operating the polluting activity.290 The only conduct
282
Sarlet 1, §§241-246 {C4/1T/110-113}; Milaré 2, §85 {C17/1T/34-36}.
283
Sarlet 1, §§236-237 {C4/1T/109}; Milaré 1, §17.2.1 {C5/1T/7}, §§45-46 {C5/1T/15-16}, §129 {C5/1T/47-
48}.
284
Sarlet 1, §281 {C4/1T/136}; Sarlet 2, §§25(c)-(d)-26 {C15/1T/11}.
285
Sarlet 1, §47 {C4/1T/28-29}, §§268-280 {C4/1T/125-136}, §404 {C4/1T/ 191}.
286
Sarlet 1, §§47-49 {C4/1T/28-30}.
287
Sarlet 1, §237 {C4/1T/109}; Sarlet 2, §26 {C15/1T/11}.
288
Milaré 1, §96 {C5/1T/35}, §102 {C5/1T/37}; Milaré 2, §§8.2-8.3.3 {C17/1T/4}, §151 {C17/1T/68}, §157
{C17/1T/69-70}.
289
Milaré 1, §17.2.1 {C5/1T/7}, §129 {C5/1T/47-48}; Milaré 2, §§8.2-8.3.3 {C17/1T/4}.
290
Milaré 1, §17.2.1 {C5/1T/7}, §129 {C5/1T/47-48}; Milaré 2, §8.3.1 {C17/1T/4}.
75
capable of giving rise to responsibility as an “indirect polluter” is an omission
to perform a specific statutory or contractual duty of safety with respect to the
activity which is a direct and immediate cause of the damage.291
148.3. Causation of damage to the environment and/or third parties: There is no dispute
that liability under Article 14, §1, of the Environmental Law will only arise where
the polluting activity has caused damage to the environment and/or third parties.292
The first dispute about causation is the one identified above, namely whether it is
necessary to establish that the defendant’s own conduct, as well as the polluting
activity, was a factual cause of the damage. However, there is a further dispute about
the relevant test of factual causation. Professor Milaré considers that the relevant
test derives from the application of Article 403 of the Civil Code,293 which provides
for a test of “direct and immediate” causation.294 However, Professor Sarlet
considers that the relevant test of causation is a simple but-for test which derives
from the terms of the Environmental Law itself; he considers that there is no room
(or need) for the application of Article 403, a literal interpretation of which would
be inconsistent with the application of the Full Risk Theory.295
149. It will be apparent from the above that the main issues between the experts, which concern
the significance of conduct as opposed to activity, factual causation as opposed to
normative causation, and the appropriate test of factual causation, are closely interrelated.
Introductory submissions on each of them are set out below.
i) Polluting activity
150. According to Professor Sarlet, the term “activity” is intended to capture a combination of
acts, omissions and legal relationships performed and/or established in a concatenated
manner towards an economic296 – i.e. a productive, but not necessarily profit-making –
end.297 Although Professor Milaré limits the definition of “an activity” to actions or
omissions,298 he accepts that the Polluter Pays principle underpins the environmental
291
Milaré 1, §17.2.1 {C5/1T/7}, §129 {C5/1T/47-48}; Milaré 2, §8.3.2 {C17/1T/4}.
292
Sarlet 1, §230 {C4/1T/107}; Milaré 1, §130 {C5/1T/48}.
293
Article 403: “Even where non-performance results from the debtor’s wrongful conduct, losses and damages
only include effective losses […] that are the direct and immediate effect of non-performance […]”.
294
Milaré 1, §§95-104 {C5/1T/35-37}. As to what is meant by “direct and immediate” causation in the context of
Article 403 of the Civil Code, see §§173-175 below.
295
Sarlet 2, §§72-74 {C15/1T/30-31}.
296
Sarlet 1, §§241-243 {C4/1T/110-112}, §246 {C4/1T/113}.
297
Sarlet 1, §243 {C4/1T/111-112}; Milaré 1, §38 {C5/1T/14}. A comparison may be drawn in this regard with
the definition of “activity” in section 2(1) of The Environmental Damage (Prevention and Remediation)
(England) Regulations 2015, which defines “activity” as “any economic activity, whether public or private and
whether or not carried out for profit”.
298
Milaré 2, §85 {C17/1T/34-36}.
76
regime and that the intention of the regime is to internalise the socio-environmental costs
of “productive activity”.299 Respectfully, therefore, Professor Milaré cannot sensibly argue
with Professor Sarlet’s view that the term “activity” connotes a productive activity.
151. By the term “activity” rather than “action or omission”, the draftsman clearly intended to
distinguish strict liability from the fault-based liability regime enshrined in Article 186 of
the Civil Code,300 which is premised upon the attribution of liability for damage caused by
a negligent “action or omission”.301
152. Brazilian Courts and legislation have repeatedly categorised mining activity, which it is
common ground, includes the processing and storing of tailings,302 as one which
necessarily poses an inherent risk to both the environment and third parties.303 Indeed, the
risk which mining activity poses to the environment was regarded as so extreme that the
Constitution made express provision in Article 225, §3, for a duty to redress the damage
caused by the exploitation of mineral resources.304
ii) Responsibility for the polluting activity
153. Article 3, IV, of the Environmental Law is to be interpreted using the principles of
interpretation of Brazilian law which apply as a matter of common ground, namely:
153.1. the literal interpretation;
153.2. the historical interpretation;
153.3. the teleological interpretation; and
153.4. the systematic interpretation.
154. The Court’s “first duty” is to give effect to the language used by the legislator.305 Article 3,
IV, of the Environmental Law provides that a polluter is a “a natural or legal person,
whether public or private, responsible, directly or indirectly, for an activity causative of
environmental degradation”. As set out by Professor Sarlet, on a literal interpretation of
these terms, three key points can be made:
299
Milaré 1, §38 {C5/1T/14}.
300
Unsurprisingly, it is common ground between the experts that Brazilian law recognises a conceptual distinction
between strict and fault-based liability. See Rosenvald 1, §63 {C3/1T/33}, §132 {C3/1T/58}, §§235-241
{C3/1T/98-100}, §368 {C3/1T/142}; Tepedino 1, §230 {C7/1T/91}.
301
Sarlet 1, §§240-241 {C4/1T/110-111}; Rosenvald 1, §§206-207 {C3/1T/89}.
302
Civil JS, Issue 5(f), page 7 {C1/2T/7}.
303
POC, §§282A.3 {A1/1/129}; Rosenvald 1, §§218-221 {C3/1T/93-94}; Sarlet 1, §159 {C4/1T/75}, §170
{C4/1T/79}, §254 {C4/1T/119}, §411 {C4/1T/192-193}, §423 {C4/1T/195-196}.
304
Sarlet 1, §256 {C4/1T/121}.
305
Sarlet 1, §104 {C4/1T/51}, §235 {C4/1T/108}.
77
154.1. The only connection which is required to be established with regard to the defendant
is that they are “responsible” for the polluting activity.306 On the language of Article
3, IV, the only connection of factual causation which is required to be established is
between the activity and the environmental degradation (Point 1).307
154.2. On the language of Article 3, IV, there is no a priori limit to the forms of conduct
that may give rise to a finding of responsibility. As a matter of ordinary language, a
person may be responsible, directly or indirectly, for a variety of different reasons
(Point 2).308 As Professor Sarlet acknowledges, the assessment of responsibility
does involve an assessment of the nature of the causal connection between the
defendant (and its conduct) and the damage-causing activity, but the purpose of that
causal inquiry is (as described by Professor Sarlet) normative in nature, in the sense
that it is concerned with determining whether the defendant should be treated as
responsible (whether directly or indirectly) for the activity that has caused the
environmental damage, rather than with the naturalistic question of whether the
activity has caused the environmental damage.309
154.3. On the language of Article 3, IV, there is no distinction between the liability of the
natural or legal person, the public or private person, or the directly or indirectly
responsible. All such persons are to be treated in the same way – i.e., as having the
status of a polluter and therefore being subject to the obligations of indemnification
and repair provided for in Article 14, §1 (Point 3).310
155. As Professor Sarlet also explains, all three points are reinforced when checked against the
three other agreed methods of interpretation (which are to some extent overlapping in their
aims):311
155.1. The historical interpretation requires the Court to consider the circumstances which
justified the enactment of the Environmental Law, which were unchecked pollution
which led to widespread and severe environmental damage within Brazil,
epitomised in the tragedy of Cubatão, Brazil’s so-called “Valley of Death”.312
306
Sarlet 1, §236 {C4/1T/109}.
307
Sarlet 1, §238 {C4/1T/109-110}.
308
Sarlet 1, §237 {C4/1T/109}.
309
Sarlet 1, §§236-237 {C4/1T/109}.
310
Sarlet 1, §§281-282 {C4/1T/136-137}.
311
For an exposition of the four interpretation methods, see Sarlet 1, §§103-111 {C4/1T/51-54}.
312
Sarlet 1, §§133-134 {C4/1T/64-65}.
78
155.2. The teleological interpretation requires the Court to consider the purpose and
objectives of the Environmental Law, which were, undisputedly,313 to mark a
revolution in environmental protection; by, in particular, incorporating the Polluter
Pays principle, i.e. the principle that the polluter, and not society, should pay for the
environmental and social costs caused by their productive activity.314 This purpose
would be unlikely to be achieved if to establish liability, it was necessary to show
(contrary to the language of Article 3, IV) that specific acts and omission of the
defendant had been the direct and immediate cause of the damage, as opposed to
merely the activity for which they were responsible.
155.3. The systematic interpretation requires the Court to consider all relevant sources of
law,315 which include Article 225 of the Constitution, and its associated
principles,316 as well as the case law relating to the environmental regime.
Moreover, the underlying theoretical basis of the environmental regime (which it
shares with the general strict liability regime) involves the attribution of liability
based not on specific conduct but by reference to an imputation of responsibility for
a risky activity: see §163 and Part VI, B. below.
156. Professor Milaré’s contention (based on the provisions of Article 403 of the Civil Code)
that, to establish responsibility under Article 3, IV, it is a requirement to demonstrate a
“direct and immediate” causal connection between the defendant’s conduct and the damage
caused is plainly inconsistent with the literal interpretation not least because Article 3, IV,
defines a polluter as a person who is directly “or indirectly” responsible for the polluting
activity.
157. It is also inconsistent with the case law, which has repeatedly affirmed that responsibility
may be imputed by reason of a variety of different forms of conduct none of which is
necessarily the direct and immediate cause of damage, including but not limited to, control
over the activity, direct participation and/or involvement in the activity, creation of the risk
of the activity, benefit from the activity and/or funding the activity.317 By contrast, there is
not a single authority from the STJ which has established that the forms of conduct capable
of giving rise to an imputation of responsibility are limited in the manner that Professor
Milaré suggests; on the contrary, the STJ case law demonstrates that conduct on the part of
313
Milaré 1, §27 {C5/1T/12}.
314
Sarlet 1, §144 {C4/1T/69}; {C4/3.3T/1438}.
315
Sarlet 1, §§106-107 {C4/1T/52-53}.
316
It is common ground that all legislation must be interpreted compatibly with the Constitution’s rules and
principles, see §132.2 above.
317
POC, §270 {A1/1/114}; Sarlet 1, §49 {C4/1T/29-30}; Rosenvald 1, §227 {C3/1T/96}.
79
the defendant that is not the direct and immediate cause of damage, but is sufficiently (even
if indirectly) connected to the damage-causing activity provides a proper basis for treating
the defendant as responsible and therefore liable as a polluter.
158. The leading authority on the correct approach to the imputation of responsibility under the
Environmental Law is Justice Herman Benjamin’s famous dictum in Mangroves (STJ,
October 2007).318 In support of his finding that the defendants to a claim under Article 14,
§1, of the Environmental Law were strictly liable not only for their commissive conduct in
filling a mangrove swamp, but also their omission to inform the authorities of the damage
caused to it by third parties, Justice Herman Benjamin held:
“For the purpose of determining the causal link of the environmental damage, those
who do, those who do not do when they should do, those who let them do, those who
don't mind them doing, those who finance them doing, and those who benefit when
others do, are all treated equally”.319
159. It will be noted that in this frequently cited and applied passage, Justice Benjamin refers to
“the causal link of the environmental damage”. He does not in terms elucidate the nature
of the “causal link” which must be established, however the answer to that question is clear
from the examples which he gives of how the causal link is established. In particular, in
equating for this purpose “those who do” with “those who let them do”, “those who don’t
mind them doing”, “those who finance them doing” and “those who benefit when others
do”, Justice Benjamin was explicitly including within the ambit of responsibility those
persons who do not actually carry out the polluting activity. This is consistent only with
what Professor Sarlet refers to as “normative causation”, i.e. that those who are responsible
for the relevant activity are to be treated as having caused the damage resulting from it,
whether or not a factual causal link between their specific conduct and the damage (let
alone a “direct and immediate” factual causal link) is established.
160. By setting out a non-exhaustive list of forms of conduct – commissive and omissive, direct
and indirect – all of which are equally capable of giving rise to an imputation of
responsibility, the dictum reflects the definition of a single concept of “polluter” in Article
3, IV of the Environmental Law, under which the natural or legal person, the public or
private person and the directly or indirectly responsible are fundamentally “all treated
equally”.320
318
On the authority of Justice Herman Benjamin, who is now President of the STJ, see Sarlet 1, §212 and footnote
145 {C4/1T/98}. For a summary of the facts of Mangroves, see Sarlet 1, §272 {C4/1T/130}.
319
{C4/3.1T/294}; POC, §280A {A1/1/119-123}.
320
Sarlet 1, §282 {C4/1T/137}.
80
161. The status of Mangroves as a landmark judgment on the proper approach to the imputation
of responsibility is universally acknowledged in the case law321 and legal scholarship,322
including in multiple cases and academic texts relied upon by Professor Milaré.323 As a
further illustration of its importance, Justice Herman Benjamin’s dictum is cited in the
Oxford Handbook of Comparative Environmental Law as authority for the STJ’s
contribution “to a revolution in the standard for showing causation in a claim of strict
liability for environmental damage” to the effect that, “traditional notions of causation will
not be applied in a manner that exempts actors that pollute from environmental laws”.324
Here, “causation” is to be understood in the broad sense described above to mean
normative causation325 which is equivalent in meaning to legal responsibility.326
162. As Professor Sarlet explains, Justice Herman Benjamin’s multifactorial approach to the
imputation of responsibility in Mangroves is exemplary of the approach taken to the
imputation of responsibility in all strict liability regimes, having regard to their grounding
in risk theory.327 (To be clear, Professor Sarlet does not claim that the case law actually uses
the term “multifactorial” or that that is a legal term of art under Brazilian law; rather, that
is his way of describing the process whereby Brazilian courts have regard to a variety of
factors (each of which, depending upon the particular facts of the case, may have a stronger
or weaker link with the polluting activity) when determining whether or not to treat a
defendant as being directly or indirectly responsible for the polluting activity and hence a
polluter).328
163. The underlying theoretical reason why strict liability regimes, including the environmental
regime, is centred around the risks arising from particular activities is explained in another
321
Jacupiranga (STJ, March 2009) {C4/3.1T/313}; TAG (TJSP, May 2014) {C4/3.2T/620}; Clay (STJ, August
2015) {C4/3.2T/796}; Vicuña (STJ, October 2017) {C4/3.2T/875}; BHP/Vale (TJMG, May 2019)
{C4/3.2T/975}; Raízen (TJSP, December 2014) {C15/3T/46}; BHP/Vale (TJMG, September 2016)
{C15/3T/79}.
322
Mirra, A. Environmental civil liability and STJ case law. In Revista de Direito Ambiental. Vol. 89, 2018
{C15/3T/75}.
323
Sarlet 2, §34(a) {C15/1T/14-15}, §§66-69 {C15/1T/27-28}; Vicuña (STJ, October 2017) {C5/5T/64};
Jacupiranga (STJ, March 2009) {C5/5T/165}; Farias and Bim, The Indirect Polluter and Civil Environmental
Liability for Precedent Damages, Veredas do Direito, Belo Horizonte, Vol. 14, No. 28, April 2017 {
C5/5T/541}; Sampaio da Cruz Guedes and Pereira, The role of the causal link in defining the concept of indirect
polluter. In MILARE, E. (Coord.). 40 years of the National Environmental Policy Law: reminiscences, reality
and perspectives. Belo Horizonte, São Paulo: D’Plácido, 2021 {C5/5T/608}; Guedes G. S. and Pereira, R. S.
Civil liability of the indirect polluter and National Environmental Policy, Civilistica.com., Rio de Janeiro, Vol.
11, No. 3, 2022 {C5/5T/630}.
324
Lees, E.; Vinuales, J. (eds). The Oxford Handbook of Comparative Environmental Law, Oxford: Oxford
University Press, 2019, page 103 {I3/84/7}.
325
Sarlet 1, §§270 {C4/1T/129}, 277 {C4/1T/132-133}.
326
Sarlet 1, §274 {C4/1T/131-132}.
327
Sarlet 1, §278 {C4/1T/133-135}. See also Rosenvald 1, §165 {C3/1T/76-77}, §§168-181 {C3/1T/77-81},
§§191-192 {C3/1T/84}.
328
Sarlet 1, §237 {C4/1T/109}, §§274-278 {C4/1T/131-135}.
81
well-known judgment, namely that of Justice Sanseverino in Bioenergy (STJ, June 2014),
as follows:
“As the freedom of capitalist initiative, which is necessary for economic progress,
contained a large dose of risk inherent to the activity itself, the owner of the enterprise,
who aimed at their own profits, should be liable for the risk of their activity (ubi
emolumentum, ibi ônus).
Therefore, civil liability, in some specific cases, started to be considered strict. The
damage suffered by the victim, as a factor of social unbalance, became more significant,
and the presence of fault in the generating fact of the obligation to indemnify became
unnecessary.
Strict liability is therefore based on the concept of social risk, which is implied in certain
activities, such as the industry, the means of public transportation, and power sources.
Therefore, strict liability, based on the risk theory, is an imputation attributed by law
to certain people to reimburse the damage caused by activities carried out in their
interest and under their control, without proceeding with any questioning
regarding the subjective element of the conduct of the agent or their
representatives. Thus, the causal link between the damage suffered by the victim
and the situation of risk created by the agent is sufficient.
The obligation to compensate is strictly imputed to whomever knows and dominates

the source of the risk, and shall, based on social interest, be liable for the harmful
consequences of their activity regardless of fault.
[…]
Different modalities of risk embraced by our legislation may be identified.
In risk-benefit, the strict liability is based on the fact that the responsible agent gets the
benefits and must also bear the charges (“ubi emolumentum, ibi ônus”).
In professional risk, the harmful event is the result of an activity or occupation carried
out by the responsible agent.
In the created risk, similarly to the previous one, the strict liability is attributed to the
one who creates a situation of hazard through their activity or occupation.
In practice, there is no significant difference between such modalities of the risk theory,
as the agent may try to rule out its civil liability by means of proving some cause of
break of the causal link, such as the victim’s exclusive fault, exclusive third-party fact
and force majeure.
The modality that presents the most striking peculiarities is exactly the Full Risk
Theory, which matters at the moment.
It constitutes an extreme form of risk theory in which the causal link is strengthened so
as not to be disrupted by the implementation of the causes that would normally affect it
(e.g., victim’s exclusive fault; sole fact of a third party, force majeure).
82
Such modality is exceptional, as it can be used as a basis for those legal cases in which
the risk caused by the economic activity is also extreme, as it occurs with nuclear
damage
[…]
The same occurs as environmental damage (Federal Constitution/88, article 225,

head paragraph and paragraph 3, and Brazilian Environmental Law, article 14,
paragraph 1), in view of the growing concern of the society with the environment.”329
164. Thus, the imputation of strict liability is to be guided by reference to the different modalities
of risk theory which have been developed in the case law.330 Under the created risk theory,
responsibility is attributed to the persons who create the situation of danger,331 albeit, they
need not do so by their own hands.332 Under the risk-benefit theory, responsibility is
attributed to the persons who benefit from the activity,333 in accordance with the equitable
maxim, he who reaps the benefits, must also bear the burdens.334 These theories are all
underpinned by the risk theory lato sensu, according to which, responsibility is attributed
to the persons in whose interest, and under whose control, the activity is carried out, who
know and dominate the source of the risk.335
165. As Bioenergy establishes, and as is indeed common ground, it is the Full Risk Theory that
applies under the environmental regime.336 According to another important judgment of the
STJ which established Repetitive Topic 707, the Full Risk Theory establishes that liability
attaches to “the one who exploits the economic activity” (Cataguases (STJ, August
2014)).337 The clearest case of an “exploiter” of an economic activity is a person who
simultaneously controls and benefits from it.338 This is a corollary of the Polluter Pays
principle,339 which, it is also agreed, applies.340 In dictating that the socio-environmental
costs of productive activity should be internalised,341 the Polluter Pays principle directs the
329
Bioenergy (STJ, June 2014) {C4/3.2T/608-610} (partly quoted at Sarlet 1, §217 {C4/1T/101-103}; Rosenvald
1, §190 {C3/1T/84}).
330
Sarlet 1, §217 {C4/1T/101-103}; Rosenvald 1, §190 {C3/1T/84}.
331
332
Rosenvald 2, §120 {C16/1T/51-52}.
333
334
Sarlet 1, §326 {C4/1T/156}; Rosenvald 1, §168 {C3/1T/77}.
335
{C4/3.2T/608-609}; Sarlet 1, §§252-253 {C4/1T/117-119}; Rosenvald 1, §192 {C3/1T/84-85}.
336
Milaré 1, §40 {C5/1T/15}.
337
Sarlet 1, §248 {C4/1T/114-115}.
338
Sarlet 1, §270 {C4/1T/129}.
339
Sarlet 1, §287 {C4/1T/139}, §403 {C4/1T/191}.
340
Milaré 1, §38 {C5/1T/14}; POC, §266.1 {A1/1/113}.
341
Sarlet 1, §§173-174 {C4/1T/80-82}; Milaré 1, §38 {C5/1T/14}.
83
imputation of responsibility to those best-placed to internalise the polluting activity’s
negative externalities, i.e. those who both profit from and control the polluting activity.342
166. A third authority to which particular attention should be drawn, especially in the light of
the importance attached to it by Professor Milaré, is Vicuña (STJ, October 2017). In that
case, a ship carrying methanol exploded in a harbour, resulting in environmental damage.
A claim was brought by a fisherwoman against the purchasers of the methanol, who had
not been responsible for arranging the shipping. Similar such claims were made by other
fishermen/women with the result that the appeals were dealt with by the Second Section of
the STJ (comprising a panel of ten Justices) under the Repetitive Appeals procedure. The
STJ held that the purchasers were not liable, and its decision is relied on by Professor
Milaré as establishing that, in the case of alleged indirect polluters (i.e., defendants alleged
to be indirectly responsible under Article, 3, IV) responsibility cannot be imputed under
Article 3, IV in the absence of a direct and immediate causal connection between the
conduct of the defendant and the damage suffered.343
167. In fact, however, the decision establishes no such principle. On the contrary, the STJ
expressly endorsed the approach of Justice Benjamin in Mangroves, rejecting the claim on
the basis that, on the facts, the purchasers did not fall within any of the categories described
by Justice Benjamin in that case.344 Moreover, Reporting Justice Cueva (with whom all the
other Justices agreed) identified various scenarios in which the purchasers would have been
treated as responsible because the necessary causal link would have been satisfied.345 These
included a scenario where the risk of accidents in maritime transport was intrinsic to the
purchasers’ activity (which the STJ held on the facts it was not), as well as a scenario where
the purchasers had arranged for the transportation of the cargo (on the facts, this had been
arranged by the sellers). None of these scenarios of liability were based on the notion that
the purchasers’ conduct would have been the direct and immediate cause of the explosion
of the vessel (which was under the control of the ship owner and/or the port terminal
company); rather, they can only be understood as an application of what Professor Sarlet
refers to as “normative causation”, i.e. as causal considerations going to why it would have
been justified in the posited scenarios to treat the purchasers as responsible for the polluting
activity (namely, the activity of maritime transportation of goods on the facts of Vicuña).
342
Sarlet 1, §262 {C4/1T/123}, §287 {C4/1T/139}, §329 {C4/1T/157}.
343
Milaré 2, §§49-75 {C17/1T/22-29}.
344
{C4/3.2T/875}.
345
{C4/3.2T/875}.
84
168. The Brazilian Courts’ approach to the imputation of responsibility under Article 3, IV is
illustrated in a series of further authorities which are analysed in detail at Sarlet 1, §§288-
350.346 For ease of reference, a summary of the most material of these can be found at
Appendix VI to this Opening Note. (It should be noted that some of the cases have
determined the responsibility of the defendant as a preliminary issue in response to a
defence of passive illegitimacy or lack of standing to be sued.347 A defence of passive
illegitimacy is raised where a defendant alleges that he was not legally responsible for the
damage claimed.348 In this regard, it is analogous to an application for strike out or
summary judgment on the basis that the defendant owed no duty to the claimant. Contrary
to what appears to be suggested by Professor Milaré,349 these cases, are, therefore, of
substantial relevance to the Court’s determination of the question of legal responsibility
which is in issue).
169. Having regard to the cases included in Appendix VI, the following propositions can be
stated:
169.1. Various forms of conduct have been recognised in the case law as capable of giving
rise to an imputation of responsibility for the purposes of the definition of a polluter
under Article 3, IV. They include ownership (TAG, Coal), control (TAG, Latina
Derailment, Chemical Weeding, Raízen), participation and involvement (TAG,
Latina Derailment), the creation of risk (Brazuca, Clay), benefit (TAG, Liberian
Ship, Brazuca, Fiat) and funding (TAG) with respect to the polluting activity.350
Responsibility is an inherently evaluative concept.351 As such, these forms of
conduct are to be weighed, independently or in combination with other forms of
conduct, on a case-by-case basis.352
169.2. A controlling shareholder is at least presumptively responsible for the activity of

their controlled company (TAG, Raízen, Latina Derailment, Chemical Weeding) for
the simple reason that they are its true manager.353 Within the person of the
controlling shareholder there is a congregation of several indicia of responsibility
346
{C4/1T/139-167}.
347
Milaré 2, §110.2 {C17/1T/50}, §111.1 {C17/1T/51}, §114.1 {C17/1T/54}.
348
Article 338 of the Civil Procedure Code provides, “Art. 338. If the defendant claims in their defence that they
are an illegitimate party or that they are not responsible for the damage invoked, the judge shall give the
plaintiff 15 (fifteen) days to amend the petition to replace the defendant”. The terms “illegitimate party” and
“not responsible for the damage claimed” are conjunctive {I1/16/53}.
349
Milaré 2, §110.2 {C17/1T/50}.
350
351
Sarlet 1, §236 {C4/1T/109}.
352
Sarlet 1, §237 {C4/1T/109}.
353
Muller Prado 1, §22 {C2/1T/21}, §105 {C2/1T/47-48}, §107 {C2/1T/48}.
85
which work in combination with one another, including control, benefit, financing
and participation and involvement.354 Where these indicia are proven to be present
on the evidence, this will be decisive (e.g. TAG).355 Indeed, by providing in Article
116 of the Corporate Law for a duty on the part of the controlling shareholder to
ensure that the controlled company fulfils its social function, the legislator has itself
recognised that with controlling power comes responsibility for the controlled
company’s activity (Chemical Weeding).356
169.3. Participation and involvement in the risky activity gives rise to a strong justification
for the imputation of responsibility.357 On Professor Milaré’s own analysis,
participation and involvement in the risky activity may be sufficient to justify the
imputation of responsibility as a person who is directly responsible for the polluting
activity.358 Even post facto participation and involvement in response to the damage
caused by the polluting activity may give rise to an inference of ex ante
responsibility for the polluting activity (Latina Derailment, BHP Brasil). In other
words, the post facto conduct may be of one piece with the ex ante conduct, all
pointing to a consistent pattern of responsibility for the polluting activity.
169.4. A defendant does not need to have created the risk by their own hands (Clay).359 Its
contribution to and/or continuance of a risky activity is equally as probative of
responsibility as the creation of risk (Clay).360 Indeed, a defendant who
commissions a project can properly be said to be more directly responsible for the
activity than the contractor (Cubatão) or sub-subsidiary (TAG) to whom the actual
performance of the activity has been delegated – although, for the purposes of
Article 3, IV, both the defendant and the performer of the activity would be equally
treated as a polluter.361
169.5. Benefit is to be interpreted broadly and includes future (TAG) and indirect (Fiat)
benefits.362
354
Sarlet 1, §305 {C4/1T/146}.
355
Sarlet 1, §309 {C4/1T/149}.
356
Sarlet 1, §304 {C4/1T/146}, §310 {C4/1T/149}; Muller Prado 1, §§107-108 {C2/1T/48-50}.
357
Sarlet 1, §344 {C4/1T/164}.
358
Milaré 2, §93 {C17/1T/39}, §§110.4-110.5 {C17/1T/50-51} (when giving his interpretation of the STJ’s
judgment in TAG).
359
Sarlet 1, §339 {C4/1T/162}; Rosenvald 2, §120(b) {C16/1T/52}.
360
Sarlet 1, §339 {C4/1T/162}.
361
Sarlet 1, §339 {C4/1T/162}.
362
Sarlet 1, §334 {C4/1T/159}, §336 {C4/1T/160}.
86
169.6. While the directly and indirectly responsible are treated equally (each being a
“polluter”) under Article 3, IV, of the Environmental Law,363 as a matter of common
sense, the greater the forms of conduct and/or the more closely connected they are
to the polluting activity (and hence to the damage that the activity has caused), the
stronger the inference of responsibility will be.
169.7. Responsibility is an issue of substance and not form.364 Thus, where a person
procures that an activity for which they are, in substance, responsible, be performed
by another, they remain responsible for it, regardless of whether the activity is
formally performed by a contractor (Cubatão, Liberian Ship), a subcontractor
(Fiat), a direct subsidiary (Clay), or an indirect subsidiary (TAG).365 This is a
proposition which Professor Milaré would appear to accept, given his analysis that
a person can operate an activity through another.366
169.8. While the precise limits of responsibility (in particular, indirect responsibility) under
the environmental regime are not settled, the most that can be said is that a person
will not be regarded as responsible by reason of their status alone367 (Vicuña,
Braskem) unless that status necessarily carries with it proof of the presence of a
relevant form of conduct that has a sufficiently reasonable connection (and, in that
broad and normative sense, a sufficient (direct or indirect) causal nexus) with the
polluting activity, as in (for instance) the case of a controlling shareholder that has
actually exercised its power over the controlled company that carried out the
polluting activity (see §§403-412 below).368
169.9. The Brazilian Courts have repeatedly held that BHP Brasil is responsible for the
activity from which the damage caused by the Collapse resulted under Articles 3,
IV, and 14, §1 of the Environmental Law and/or Article 927, sole paragraph, of the
Civil Code.369
363
Sarlet 1, §§281-284 {C4/1T/136}.
364
It is for this reason that, as Professor Sarlet explains, the fact that an activity has been structured in a particular
way cannot exempt the person who is, in substance, responsible, for the activity, from liability, see Sarlet 1,
§§351-354 {C4/1T/167-170}.
365
Sarlet 1, §§351-354 {C4/1T/167-170}.
366
Milaré 2, §108.3 {C17/1T/48}, §108.4 {C17/1T/49}, §109.3 {C17/1T/49}, §§110.4-110.5 {C17/1T/50-51}.
See also Sarlet 2, §52 {C15/1T/22-23}.
367
Save for the well-established “propter rem” line of authorities in which responsibility is imputed by reason of
a person’s status as an owner or possessor of a property which causes environmental degradation, see STJ
Precedent 623: {C5/5T/696}.
368
In other words, the mere existence of controlling rights and powers may be unlikely on its own to give rise to
responsibility for polluting activity carried out by the controlled company, but the actual exercise of those
rights and powers over the controlled company would be more likely to justify a finding of responsibility.
369
Sarlet 2, fn 1 {C15/1T/5}.
87
170. The effect of the case law as summarised above is fully consistent with the multifactorial
approach to the proper interpretation of legal responsibility described by Professor Sarlet
in his evidence.370 Whilst, as earlier noted and acknowledged by Professor Sarlet,371 the
case law often approaches the issue of responsibility for the polluting activity in terms of
the “causal link” between the defendant’s conduct and the damage, in circumstances where
the damage results from the polluting activity, the relevant causal link is (as demonstrated
by Mangroves and Vicuña) to be understood as including normative as well as purely
factual causation elements. Accordingly, the inquiry into the causal link between the
defendant’s conduct and the damage is in substance an inquiry into whether there is a
sufficient connection between the defendant’s conduct and the damage-causing activity for
the purpose of imputing or attributing responsibility for the activity to the defendant and
thereby treating the defendant as a polluter.
171. By contrast, there is little or no support for Professor Milaré’s analysis in either the terms
of the legislation or the case law:
171.1. There is no support in either the terms of the legislation or the authorities (properly
interpreted)372 for the radically different tests of liability proposed by Professor
Milaré for “direct polluters” and “indirect polluters”373. The notion that it is even
possible to draw such a distinction is belied by the authorities,374 which demonstrate
that the legislator had the opposite intention in mind, viz., to draw no distinction
between the natural or legal person, the public or private person, or the directly or
indirectly responsible, for the purposes of identifying a “polluter” under the
Environmental Law375 (see Mangroves, TAG, Chemical Weeding, Raízen and
Cubatão at Appendix VI). Professor Milaré accepts this proposition with regard to
the “public or private” description in Article 3, IV, of the Environmental Law,376
and yet, such acceptance is irreconcilable with the radical distinction which he says
simultaneously exists between the person “responsible, directly and indirectly”.377
Whilst the term “indirect polluter” has from time to time been used in the case law,
it has simply been used to refer to a person who is “indirectly responsible” for the
polluting activity and therefore still a polluter for the purposes of the Environmental
370
Sarlet 1, §277 {C4/1T/132-133}.
371
In more detail Sarlet 1, §§209-212 {C4/1T/97-98} and §§268-277 {C4/1T/125-133}.
372
Save for Braskem, which was decided per incuriam, see Appendix VII.
373
Sarlet 1, §282 {C4/1T/137}; Sarlet 2, §25(c) {C15/1T/11}.
374
Sarlet 2, §25(d) {C15/1T/11}.
375
Sarlet 1, §§282-284 {C4/1T/137-138}.
376
Milaré 1, §158.4 {C5/1T/55-56}.
377
Sarlet 2, §25(b) {C15/1T/10}.
88
Law, rather than to distinguish it from a “direct polluter” as a separate legal category
to whom different rules and principles apply.
171.2. There is no support in either the terms of the legislation or the authorities for limiting
the forms of conduct capable of giving rise to an imputation of responsibility to the
operation of the activity and the omission to perform a “specific” statutory or
contractual duty of safety (i.e. a specific duty of safety existing independently of
Articles 3, IV and 14).378 As to the legislation, the definition in Article 3, IV, is of a
single legal category of “polluter” “[f]or the purposes set forth in [the
Environmental] Law” and the obligation to pay compensation under Article 14 §1
is imposed upon “the polluter” without distinction between a direct polluter or an
indirect polluter. Further, Professor Milaré’s analysis is belied by the authorities, in
particular the STJ case law, on which he relies: see e.g. the analysis of Bioenergy
(at Appendix VI, §9)379 and Vicuña (at Appendix VI, §§15-17).380 In the latter
regard, Professor Milaré’s suggestion that his analysis of the requirements for an
indirect polluter is supported by the STJ’s reasoning in the Vicuña is based on a
selective (and misleading) interpretation of that reasoning; properly understood, the
STJ’s reasoning as a whole in fact contradicts his narrow approach to who may be
treated as indirectly responsible for the polluting activity. As for his reliance on the
decision of the Federal Regional Court of the 5th Region in Braskem, which itself
relied on an “idea” proposed by some academic scholars, as noted by Professor
Sarlet that decision (or idea) is not substantiated by any STJ case law and is
fundamentally inconsistent with the leading STJ precedents on the nature of the
causal link that is sufficient to ground responsibility and liability as a polluter.381
172. Further and in any event, even supposing (arguendo) that an omission to perform a specific
statutory or contractual duty of safety were required for the purposes of establishing
indirect responsibility under Article 3, IV, of the Environmental Law, subject to the
qualifications made at §390 below, three such duties are applicable in this case:
172.1. Article 225 (head paragraph) of the Constitution, which “prescribes the specific
obligation to maintain environmental quality, not only for the Public Power, but,
to an equal extent, also for private subjects and for the entire community”
(Capibaribe, STJ, February 2024)382. As to this, Professor Milaré’s principal
378
Sarlet 2, §25(c) {C15/1T/11}.
379
Compare Milaré 1, §57 {C5/1T/20} with Sarlet 2, §51 {C15/1T/22}, §83 {C15/1T/34}.
380
Compare Milaré 1, §56.2.3 {C5/1T/20}, §§66-68 {C5/1T/23-24}, with Sarlet 2, §34 {C15/1T/14-16}.
381
Sarlet 2, §§36-37 {C15/1T/16-18}.
382
{C4/3.3T/1300}.
89
objection to the application of Article 225 (head paragraph) as a source of the safety
duty breach of which he contends to be an essential prerequisite for a finding of
liability as an indirect polluter, is that it lacks specificity of subject and content.
However, as the STJ’s recent judgment in Capibaribe makes plain, that objection is
unfounded.383 Moreover, it is difficult to understand why the fact that there may be
more specific or additional duties imposed by other laws should mean that the
expressly intended effect of Article 225 (head paragraph), as a positive
constitutional duty to protect the environment which binds all private persons,
should be ignored for the purposes of Professor Milaré’s notion of an indirect
polluter.384
172.2. Article 225, §2 of the Constitution, which provides, “Those who exploit mineral
resources shall be required to restore the degraded environment, in accordance with
the technical solutions demanded by the competent public agency, as provided by
law.” Professor Milaré’s objection to Article 225, §2 of the Constitution as a source
of a safety duty is that it only applies to persons who hold mining rights and
associated licenses.385 That, however, is to conflate the mining regime with the
environmental regime.386 Under the environmental regime, whether the defendant
was the direct holder of the licence is irrelevant.387 The relevant question is whether,
in substance, the defendant benefited from mineral resources or made productive
use of them to obtain an economic result.388 According to the TJMG (in the context
of a decision about the application of the Consumer Defence Code), BHP Brasil and
Vale are “exploiters” of the mining activity that caused the Collapse. This shows
that Brazilian courts approach the question of who is the exploiter of a mining
activity by reference to the economic substance of the matter and do not confine
themselves to the narrow question of who is the licence holder.389
172.3. Article 116, sole paragraph, of the Corporate Law, which provides that a controlling
shareholder has duties to the community in which the controlled company operates.
383
Milaré 2, §29.1 {C17/1T/14}, §29.3 {C17/1T/14-15}.
384
Rosenvald 2, §79 {C16/1T/38}.
385
Milaré 1, §§167-168 {C5/1T/60-61}, §171 {C5/1T/62}.
386
Sarlet 2, §80 {C15/1T/33}.
387
Sarlet 2, §87 {C15/1T/36}.
388
Sarlet 1, §161 {C4/1T/75-76}.
389
“The collapse of the Fundao dam, in Mariana/MG, configures a failure in the provision of services by the
exploiters of the mining activity, whose damages went beyond the limits of their operations, striking the
environment and society in general, so as to engage the application of art. 17 of the CDC”, TJMG,
1.0000.23.108474-0/001, (22 September 2023): Sarlet 2, §81 {C15/1T/33}. See the translator’s note to Sarlet
2, §81, which explains that “exploradores da atividade minerária” was mistranslated as “mining companies”
when its literal translation is, in fact, “exploiters of mining activity”.
90
This has been expressly relied upon under the environmental regime as a basis for
establishing the responsibility of a controlling shareholder under Article 3, IV, of
the Environmental Law (see Chemical Weeding).390 The dispute as to whether this
duty is sufficiently specific and/or actionable is addressed at §§413-419 below.
iii) Causation of damage
173. Although Article 3, IV, of the Environmental Law merely requires responsibility for an
activity causative of environmental degradation for the purposes of characterising a person
as a polluter, it is common ground that a claim under Article 14, §1, of the Environmental
Law requires proof of damage caused by the polluting activity.391 It is also common ground
that the relevant damage includes both pure environmental damage (i.e. the breach of
diffuse rights) and damage to third parties.392 Not all environmental degradation will
necessarily result in damage;393 but all environmental damage is a form of environmental
degradation.394
174. It is also common ground that the test of factual causation under Article 14 §1 requires that
the relevant fact must have been a but-for cause of the damage.395 Under the environmental
regime, that causal test derives from the terms of the Environmental Law itself.396 If, absent
the polluting activity, environmental damage would not have occurred, as a matter of
ordinary language, the polluter is liable to indemnify or repair the “damages caused” to the
environment and third parties under Article 14, §1, of the Environmental Law. Thus, under
the environmental regime, the applicable test is whether, absent the polluting activity, the
damage would have happened anyway.397
175. It follows that, contrary to Professor Milaré’s view,398 there is no need for the application
of Article 403 of the Civil Code to the environmental regime because there is no gap in the
Environmental Law which is required to be filled.399 And even if there was, there is a clear
conflict between Article 403 of the Civil Code and the environmental regime that would
preclude the unqualified application of Article 403 in any event. This is because a
requirement of “direct and immediate” causation is incompatible on its face with (i) the
390
See also Muller Prado 1, §§223-224 {C2/1T/92-93}.
391
Sarlet 1, §230 {C4/1T/107}; Milaré 1, §130 {C5/1T/48}; POC, §270 {A1/1/114}, §281 {A1/1/123}, §282A
{A1/1/129}.
392
Sarlet 1, §230 {C4/1T/107}; Milaré 1, §128 {C5/1T/47}.
393
Sarlet 1, §230 {C4/1T/107}.
394
Milaré 1, §52 {C5/1T/18}.
395
Sarlet 2, §72(a) {C15/1T/30}; Milaré 1, §102 {C5/1T/37}, §129 {C5/1T/47-48}, §§133-134 {C5/1T/49}.
396
Sarlet 2, §72(b) {C15/1T/30-31}.
397
Sarlet 2, §72(a) {C15/1T/30}; POC, §295 {A1/1/134}.
398
Milaré 1, §99 {C5/1T/36}.
399
Sarlet 2, §74 {C15/1T/31}.
91
Full Risk Theory, according to which a defendant is liable for damage arising from his
activity even if his own conduct has not been the direct and immediate cause of the damage
and even if the immediate cause of the damage was an intervening circumstance such as
an act of God or the unforeseeable act of a third party, and (ii) the explicit statement in
Article 3, IV, that even those “indirectly responsible” for the polluting activity are
considered a polluter and consequently liable as such under Article 14 §1.400 Accordingly,
even if Article 403 were considered applicable in principle under the environmental regime,
its operation must necessarily be treated as being subject to the established rules and
principles of the environmental regime, including (i) the principles of causation associated
with the Full Risk Theory (which applies to polluters who are either directly or indirectly
responsible for the polluting activity), and (ii) that damage that is only indirectly caused by
the defendant may nevertheless satisfy the necessary causal link and be subject to the
obligation of indemnity and repair under Article 14 §1 because persons that are indirectly
responsible for the polluting activity are also polluters as defined.
3) Consequences of liability under the Environmental Law
176. The consequences of liability under Article 14, §1, of the Environmental Law are twofold.
First, it is common ground that where there are multiple polluters within the meaning of
Article 3, IV of the Environmental Law, they will all be jointly and severally liable for the
damage caused.401 While there is no incompatibility between Article 942 of the Civil Code
(which provides “the property of the person responsible for the offense or violation of
another’s right is liable for redress of the damage caused; if more than one person has
committed the offence, all of them shall be jointly and severally liable for the redress”) and
the environmental regime that would preclude the former’s application,402 the dominant
approach of the Brazilian Courts has been to base joint and several liability upon the terms
of Articles 3, IV, and 14 §1, of the Environmental Law alone,403 and in particular, on the
equal treatment given therein to the directly and indirectly responsible,404 see: TAG,
Chemical Weeding, Raízen and Cubatão at Appendix VI, §§22-23, §12, §11 and §2
respectively. But in so far as the Environmental Law does not specifically provide for the
400
Sarlet 2, §72 {C15/1T/30-31}.
401
Sarlet 1, §417 {C4/1T/194}; Milaré 1, §161 {C5/1T/59}. See also POC, §270 (last sentence) {A1/1/114}, as
admitted in Defence §287A {A1/2/183-184}.
402
Sarlet 2, §87 {C15/1T/36}.
403
Sarlet 1, §284 {C4/1T/137-138}; Sarlet 2, §87 {C15/1T/36}.
404
Sarlet 1, §§284(a)-(b) {C4/1T/137}; POC, §281 {A1/1/123}.
92
joint and several liability of co-polluters, it is common ground that such joint and several
liability must arise at least pursuant to the terms of Article 942 of the Civil Code.405
177. Second, although it is common ground that co-polluters, whether directly or indirectly
responsible for the activity, incur joint and several liability in respect of the same damage,
there is an issue between the experts as to the circumstances in which enforcement of such
liability is primary or subsidiary, and the practical consequences of this.406
178. Professor Sarlet’s evidence is that liability is primary in all cases, without exception.407
That is also true of enforcement, save in cases which fall under STJ Precedent 652, which
provides, “The Public Administration’s liability for damage to the environment arising from
a failure to fulfil its duty of supervision is joint and several, but is enforceable on a
subsidiary basis”.408 In other words, the exception relates to enforcement rather than the
existence of the liability, and the subsidiary nature of the enforcement arises in the case of
the State’s joint and several liability with other polluters where (and only where) that
liability arises by virtue of the State’s failure to perform its duty of supervision in relation
to the protection of the environment.
179. Contrary to the express terms of STJ Precedent 652 and the reasoning for it as contained in
the leading decision of the STJ in Jacupiranga,409 Professor Milaré argues that STJ
Precedent 652 “should be applied” to private persons. This, he says, follows from the
principles of isonomy and legal certainty as well as the equal treatment given to the private
and the public person in Article 3, IV, of the Environmental Law.410 By way of purported
legal authority for this proposition, Professor Milaré also relies upon an earlier decision in
Coal (STJ, May 2007), in which the STJ held that the natural person managing partners of
various mining companies411 were jointly and severally liable with those mining companies
under Article 14 §1 of the Environmental Law as co-polluters, but subject to subsidiary
enforcement.412
180. On proper analysis, Professor Milaré’s arguments can be seen to be flawed:
405
Milaré 1, §§138-150 {C5/1T/50-52}; Sarlet 2, §86 {C15/1T/36}.
406
Compare Sarlet 1, §§379-386 {C4/1T/179-183} with Milaré 1, §§156-160 {C5/1T/55-59}.
407
Sarlet 1, §380 {C4/1T/180}.
408
Sarlet 1, §367 {C4/1T/174}, §380 {C4/1T/180}; Milaré 1, §159.8 {C5/1T/59}.
409
See the formal publication of the precedent, enclosing the Jacupiranga decision as encapsulating the key
reasoning underlying the precedent {I2/3T}.
410
Milaré 1, §158.4 {C5/1T/55-56}.
411
On the application of Article 1.024 of the Civil Code, see Muller Prado 1, §§503-504 {C2/1T/192-193}.
412
See the analysis in Sarlet 1, §384 {C4/1T/182-183}; Sarlet 2, §§43-44 {C15/1T/20-21}.
93
180.1. STJ Precedent 652 has never been applied to private persons by any Brazilian
court.413 The scope of this precedent is clear on its face.414 It applies to the liability
of the State for environmental damage arising from a failure to perform its duties
of environmental control and supervision.415 On Professor Tepedino’s own analysis,
to whose evidence on the sources of Brazilian law Professor Milaré defers,416
precedents are only to be applied “to cases in which the circumstances that justified
their creation are repeated”.417 Thus, STJ Precedent 652 cannot be applied outside
of an omission by a state or public authority to fulfil its duty of environmental
supervision.
180.2. By restricting the application of STJ Precedent 652 to its terms, there is no violation
of the principle of isonomy. The principle of isonomy, enshrined in Article 5, head
paragraph, of the Constitution, provides that “[a]ll persons are equal before the
law”, but it does not follow from equality before the law that the special rationale
(as to which, see the last sub-paragraph below) for the rule of subsidiary
enforcement only in the case of the State’s liability as a polluter where it has failed
in its overall duty of supervision must be deemed to apply to private persons as
well.418 There is, similarly, no violation of the equal treatment of public and private
law persons under either Article 3, IV, or Article 14 §1, of the Environmental Law
because all such persons, in so far as they are co-polluters, incur liability to the
victims.419 Further still, public persons who are liable for environmental damage for
any other reason than a failure to perform their public law duty of environmental
supervision are liable on the same terms as private persons as STJ Precedent 652 is
solely concerned with the subsidiary enforcement of public authorities’ liability for
environmental damage caused by a violation of their supervisory duty.420
180.3. The finding in Coal (which preceded the STJ’s seminal decision in Jacupiranga –
on which STJ Precedent 652 was based – on the joint and several liability of the
State for violation of its duty of supervision) that enforcement was subsidiary
against the natural person managing partners of the mining companies was based
on Article 1.024 of the Civil Code, which does not apply to shareholders which are
413
Sarlet 1, §§380-381 {C4/1T/180}; Reply, §119A {A1/3/83}.
414
Sarlet 1, §380 {C4/1T/180}.
415
Sarlet 1, §368 {C4/1T/174-175}.
416
Milaré 1, §20 {C5/1T/10}.
417
Tepedino 1, fn 93 {C7/1T/39-40}.
418
Sarlet 2, §41 {C15/1T/19}, §§92-96 {C15/1T/37-39}.
419
Sarlet 1, §380 {C4/1T/180}.
420
Sarlet 2, §96 {C15/1T/38-39}.
94
limited liability companies.421 Professor Milaré does not suggest otherwise.422
Furthermore, the reasoning in Coal must necessarily be read subject to the
subsequent and more detailed reasoning in Jacupiranga which fully explains the
rationale for the unique treatment reserved for the State, as regards enforcement
against it, where the basis of its liability is its failure to perform its general duty of
supervision in respect of the protection of the environment. Further still, as is self-
evident from the cases cited in Appendix VI which deal with the joint and several
liability of co-polluters, this particular aspect of the findings in Coal (that the
principle of subsidiary enforcement also applies to private law parties) has not been
followed in the subsequent case law of the STJ, nor is it consistent with the general
case law of the STJ addressing the liability of private law polluters.423
180.4. Last but not least, the STJ’s stated public policy justifications for STJ Precedent
652, as expounded in detail in the opinion of Reporting Justice Herman Benjamin
in Jacupiranga424 – to safeguard the State’s resources and avoid the costs of
pollution ultimately being borne by society at large (as represented by the State),
and thereby avoid a double burden being thrust upon society and instead ensure that
the person who profits from the activity which the State failed to supervise
internalises its negative externalities – have no application whatsoever to private
persons.425
181. Further and in any event, even supposing (arguendo) that STJ Precedent 652 were
applicable to private persons, this would still mean that a judgment of (i.e. declaring) joint
and several liability could and should be rendered against the indirectly responsible party,
but that it would only be enforceable subsidiarily, i.e. in the event that the directly
responsible party had insufficient assets to pay the judgment debt. In the context of the
present trial, therefore, which is a trial as to threshold issues of liability, it is difficult to
see the relevance of Professor Milaré’s attempt to stretch the application of STJ Precedent
652 beyond its terms.
421
Muller Prado 1, §§502-506 {C2/1T/192-193}.
422
Milaré 1, §158.6 {C5/1T/56}.
423
Sarlet 1, §384 {C4/1T/182-183}, §421 {C4/1T/195}. Professor Milaré’s observation (at Milaré 2, §179.1
{C17/1T/78-79}) that Reporting Justice Herman Benjamin in Jacupiranga had referred in glowing terms to the
Reporting Justice’s reasoning in Coal omits to note that the approval related specifically to the State’s
entitlement (as a jointly and severally liable party) to seek full reimbursement of sums that it had already
expended from the mining companies that were directly responsible for the pollution. The approval had nothing
to do with the extension of the rule of subsidiary enforcement to private law entities.
424
See especially sections 4.1, 4.2 and 5 of the Reporting Justice’s Opinion in Jacupiranga: {C4/3.1T/309-320}.
425
Sarlet 1, §§382-383 (quoting from the Reporting Justice’s Opinion in Jacupiranga) {C4/1T/181-182}.
95
4) Conclusion
182. Having regard to the above exposition of Brazilian law evidence, the following points can
be made:
182.1. The combined effect of Article 3, IV and Article 14, §1, of the Environmental Law
is that liability is imposed for environmental damage and damage to third parties
caused by a polluting activity for which a person (a polluter) is directly or indirectly
responsible.
182.2. It must be established with regard to the defendant that they are either directly or
indirectly responsible for the polluting activity. There is no a priori limit to the
forms of conduct (whether commissive or omissive in nature) that may give rise to
an imputation of responsibility, but they include (without limitation) ownership of
and/or control over the activity, direct participation and/or involvement in the
activity, creation of or contribution to the risk of the activity, benefit from the
activity and/or funding of the activity.
182.3. In so far as the case law characterises the above factors as being part of an inquiry
into the “causal link” between the defendant and the damage, the relevant concept
of causation includes what Professor Sarlet refers to as “normative” causation and
not merely factual causation. The purpose of the inquiry is to establish whether the
defendant can properly be treated as responsible (whether directly or indirectly) for
the activity that has caused the environmental damage and hence as a polluter under
Articles 3, IV, and 14 §1, of the Environmental Law.
182.4. There must in any event be a factual causal link between the activity and the damage
in respect of which compensation is being claimed against a polluter under Article
14 §1, and pursuant to the Full Risk Theory, that causal link is established by proof
that the activity was a but-for cause of the environmental damage ignoring the
causal effect of any force majeure, act of God, third party acts, the victim’s own
fault or other unforeseeable event (notwithstanding that any such act or event may
be the direct and immediate cause of the damage).
182.5. The directly and indirectly responsible are all treated equally as co-polluters and are
jointly, severally, and primarily liable to the victims for the whole damage. Where
the State is (indirectly) responsible as a polluter by reason of a breach of its
supervisory duty of protection towards the environment, it incurs joint and several
liability with other polluters, but enforcement of any judgment of liability against it
is subject to prior enforcement against the private law polluters responsible for the
96
same damage; however, this rule of subsidiary execution does not operate to
postpone enforcement of the joint and several liability of private law polluters.
B) Strict Liability under Article 927, sole paragraph, of the Civil Code
1) Introduction
183. Prior to the enactment of Article 927, sole paragraph, of the Civil Code (which was
introduced as part of the revision of the Civil Code in 2002 and therefore post-dated the
coming into force of the Environmental Law in 1981), there was no provision of Brazilian
law which provided for a general regime of strict liability in relation to risky activities, but
only a number of special cases in which strict liability was imposed, of which Article 14
§1 of Environmental Law was one. Article 927, sole paragraph, preserved the special strict
liability regimes (the so-called “cases specified by law”) which existed before the
enactment of the Civil Code,426 whilst introducing for the first time a general regime of
strict liability of residual application “where the activity usually developed by the author of
the damage involves, by its nature, risk to the rights of others”.
184. Since, as mentioned at §§132.4 and 136 above, it is common ground that this general strict
liability regime only applies where a special regime does not, and further, it is not disputed
that this is a case of environmental damage to which the Environmental Law applies, it
appears highly unlikely that the Court will in fact be required to reach conclusions on this
basis of liability. For completeness, it is nevertheless dealt with relatively shortly below.
2) Main points of dispute between the experts as to the elements of liability under
Article 927, sole paragraph
185. Professor Rosenvald’s summary of the principles applicable to strict liability under Article
927, sole paragraph, of the Civil Code can be found at Rosenvald 1, §§360-371. Professor
Tepedino’s corresponding summary of the applicable principles is at Tepedino 1, pp.106-
114. As with strict liability under the Environmental Law, in identifying the main points of
dispute it is convenient to start with the language of the article.
186. Article 927, sole paragraph, of the Civil Code provides:
“There will be an obligation to redress the damage, regardless of fault, in the cases
specified by law, or where the activity usually developed by the author of the damage
involves, by its nature, risk to the rights of others.”
426
There are also other specific cases of strict liability provided for in the Civil Code itself. See e.g., Articles 734,
735 and 931.
97
187. On a combined reading of Issues 15, 15(a) and 15(b) of the Civil Law Joint Statement, it
is common ground that liability under the general civil law presupposes the presence of
three basic elements: (i) an inherently risky activity, (ii) for which a person is properly
treated as responsible, (iii) which causes damage. These elements, and the issues arising
under them, can be conveniently summarised as follows:
(1) The risky activity: There is no dispute that liability arises from damage caused by
an inherently risky activity.427
(2) Responsibility for the activity: There is no dispute that the “author of the damage”
is the person that can properly be said to be “responsible” for the activity.428 As in
the case of the environmental regime, the most contested issue concerns what forms
of conduct are capable of giving rise to an imputation of responsibility and whether,
for this purpose, it is necessary to establish that not only that the activity, but also
the specific conduct of the defendant, was a but-for cause of the damage:
(1) According to Professor Rosenvald, provided that the risky activity caused the
damage, it is not necessary to establish that the defendant’s conduct was a cause
of the damage429 because the only fact that is required to be established with
regard to the defendant is that they are responsible for the risky activity.430 The
forms of conduct that may give rise to an imputation of responsibility are to be
determined by reference to the risk theory as applied in the case law, and
broadly include risk-creation, benefit and control; and the result of the
application of the risk theory is that the author of the damage is generally the
person “who undertakes, directs, organises, introduces or controls the risky
activity, or who is in a position to avoid or mitigate the risk efficiently […] [and]
is not limited to the person who directly and effectively carries out the risky
activity”.431
(2) According to Professor Tepedino, a person can only be responsible for a risky
activity where their conduct is a but-for cause of the damage.432 From this
427
Rosenvald 1, §366 {C3/1T/142}; Tepedino 1, §§234, 236 {C7/1T/91-92}; Rosenvald 2, §164 {C16/1T/67}.
428
Civil Law JS 15(b) (Tepedino) {C1/2T/10}; Rosenvald 1, §360(b) {C3/1T/140}, §§361-364 {C3/1T/141}.
429
Rosenvald 2, §§119-122 {C16/1T/51-53}.
430
Rosenvald 1, §368 {C3/1T/142}; Rosenvald 2, §118 {C16/1T/51}, §123 {C16/1T/53}, §128 {C16/1T/56-57}.
431
Rosenvald 1, §184 {C3/1T/82}, §227 {C3/1T/96}, §§361-364 {C3/1T/141}.
432
Milaré 1, §96 {C5/1T/35}, 102 {C5/1T/37}; Milaré 2, §§8.2-8.3.3 {C17/1T/4}, §151 {C17/1T/68}, §157
{C17/1T/69-70}.
98
premise, he argues that the only form of conduct capable of giving rise to an
imputation of responsibility is the operation of the activity.433
(3) Causation of damage: There is no dispute that Article 403 of the Civil Code
applies434 and provides for a test of at least necessary causation. There is a
dispute about whether there is also a requirement to demonstrate that the
activity was an adequate cause of the damage.435
i) Risky activity
188. It is common ground that a risky activity is one which carries an inherent risk to the rights
of others.436 As outlined at §152 above, mining activity, which includes the storage of
tailings, clearly satisfies this test and the contrary has not been argued by BHP.437
ii) Responsibility for the risky activity
189. Although Article 927, sole paragraph, of the Civil Code does not use the language of
responsibility, it is common ground that the expression “the author of the damage”
connotes someone who is responsible for the risky activity.438
190. The terms “usually developed by the author of the damage” are intended to limit the
application of Article 927, sole paragraph, of the Civil Code to damage caused by risks
which inherently arise in the course of an activity’s usual development rather than by the
manner in which the activity is performed.439 Although Professor Tepedino relies on this
language in his Report440 and Supplemental Report441 to support the argument that the
author of the damage is only the person who actually develops or operates the activity, he
does not make any such qualification of his definition of the author of the damage as the
“[t]he person responsible for the risky activity” in the Civil Law Joint Statement.442
433
Tepedino 1, §§239-242 {C7/1T/93-94}, §245 {C7/1T/94}, §247; Tepedino 2, §54 {C18/1T/25}.
434
Civil JS, Issue 5(g), page 7 {C1/2T/7-8}.
435
Civil JS, Issue 15 (Tepedino) {C1/2T/9}; Rosenvald 1, §§352-354 {C3/1T/138}; Rosenvald 2, §§104-105
{C16/1T/45-46}; Tepedino 1, §§214-215 {C7/1T/86-87}, §230 {C7/1T/91}, §240 {C7/1T/93}; Tepedino 2,
§54 {C18/1T/25}, §164 {C18/1T/66}, §176 {C18/1T/73}.
436
Rosenvald 1, §366 {C3/1T/142}; Tepedino 1, §234 {C7/1T/91}, §236 {C7/1T/91-92}; Rosenvald 2, §164
{C16/1T/67}.
437
Defence, §325B(3) {A1/2/211} merely pleads a non-admission of the Claimants’ allegation at POC, §282A.3
{A1/1/129} that the activity of mining (generally) and storing iron ore tailings behind the Dam (more
particularly) inherently involved a risk of damage to others for the purposes of Article 927, sole paragraph.
438
Civil JS, Issue 15(b) (Tepedino) {C1/2T/10}; Rosenvald 1, §361 {C3/1T/141}, §382 {C3/1T/144-145};
Tepedino 1, §240 {C7/1T/93}, §247 {C7/1T/95}.
439
Rosenvald 1, §360(b) {C3/1T/140}.
440
Tepedino 1, §239 {C7/1T/93}, §252 {C7/1T/97}.
441
Tepedino 2, §54 {C18/1T/25}.
442
Civil Law JS, Issue 15(b) (Tepedino) {C1/2T/10}.
99
191. Professor Tepedino’s restrictive confinement of the notion of “author of the damage” to the
actual operator of the activity in his evidence is belied by his own scholarship, which
confirms the relevance of the various modalities of the risk theory to the application of
Article 927, sole paragraph, of the Civil Code;443 and the authorities on which he relies,
which demonstrate that risk creation and benefit are forms of conduct which are capable of
giving rise to an imputation of responsibility under the general strict liability regime
independently of actual performance of the activity.444
iii) Causation of damage
192. Under Article 927, sole paragraph, of the Civil Code, it is common ground that Article 403
of the Civil Code applies in terms of the causal link required between the risky activity and
the damage.445 It appears common ground that Article 403 provides for a test of, as a
minimum, necessary causation.446 Beyond this, the determination of whether a particular
fact is a necessary cause may involve a value judgement about its sufficiency or adequacy
to produce the relevant damage.447 On Professor Tepedino’s analysis, this determination
would appear to be inherent in the question of whether the relevant fact is a necessary
cause.448 On Professor Rosenvald’s analysis, this requirement is express.449 In the final
analysis, as Professor Rosenvald states, the substance of the relevant test of causation is
whether the damage is the “natural and ordinary” and in that sense, “necessary”,
consequence of the activity.450
3) Consequences of liability under Article 927, sole paragraph, of the Civil Code
193. It is common ground that joint and several liability in the context of Article 927 sole
paragraph arises by application of Article 942 of the Civil Code.451 Thus, where there are
multiple authors of the damage, they will be jointly and severally liable for the damage
caused.452
4) Conclusion
443
Rosenvald 2, §127 {C16/1T/56},{C16/3T/218}, {C16/3T/212-213}.
444
Rosenvald 2, §126(a)-(b) {C16/1T/54-55}, {C7/4.4/1924}, {C7/4.7/3181}.
445
Civil JS, Issue 5(g), page 7 {C1/2T/7}.
446
Civil JS, Issue 15, (Tepedino), page 9 {C1/2T/9}; Rosenvald 1, §148(a) {C3/1T/68}, §153 {C3/1T/71}, §350
{C3/1T/138}; Rosenvald 2, §§104-105 {C16/1T/45-46}; Tepedino 1, §214 {C7/1T/86-87}, §230 {C7/1T/91},
§240 {C7/1T/93}, §254 {C7/1T/97}; Tepedino 2, §54 {C18/1T/25}, §164 {C18/1T/66}, §176 {C18/1T/73}.
447
Rosenvald 1, §142(b) {C3/1T/63}.
448
See Tepedino 1, §205 {C7/1T/82-83}.
449
Rosenvald 1, §142(d) {C3/1T/63}, §354 {C3/1T/138}, §369 {C3/1T/142}.
450
Rosenvald 1, §352 {C3/1T/138}; Rosenvald 2, §104 {C16/1T/45-46}.
451
Civil JS, Issue 23 {C1/2T/13-14}; POC, §282C {A1/1/130}.
452
Civil Law JS, 15(b) (Rosenvald), page 10 {C1/2T/10}; Tepedino 1, §247 {C7/1T/95}.
100
194. Having regard to the above exposition of Brazilian law evidence, the following can be
stated:
194.1. Liability is imposed under Article 927, sole paragraph, of the Civil Code for damage
caused by an inherently risky activity for which a person is responsible.
194.2. The forms of conduct that may give rise to an imputation of responsibility are not
limited to actual performance of the risky activity, but extend to directing,
organising, introducing or controlling, or being in a position to avoid or mitigate the
risk inherent in, the activity.
194.3. The causal link is established by proof that the activity was a natural and ordinary
cause of the damage.
194.4. All authors of the damage are jointly, severally and primarily liable.
C) BHP’s liability as a Polluter
1) Introduction
195. All of the forms of conduct which justify the imputation of responsibility to BHP for
Samarco’s activity under the Environmental Law are overwhelmingly present, interrelated,
and mutually reinforcing in this case. In brief summary, and as further developed below:
195.1. BHP and Vale controlled Samarco both in law and in fact. This cannot seriously be
disputed in light of the statements to this effect in BHP’s and Samarco’s own
documents; the design of Samarco’s Corporate Governance Structure which
guaranteed BHP’s and Vale’s ability to control Samarco; and the overwhelming
evidence that BHP in fact exercised control over myriad aspects of Samarco’s
activity, including Samarco’s strategy, production, the risk of a failure of Samarco’s
dams (including the Dam), health and safety, funding arrangements, the payment of
dividends and financial benefits and its post-Collapse response. Given that BHP
Brasil was, on BHP’s own documents, merely a holding company set up for the
purposes of investment in Samarco, this control was exercised at all times by
representatives of BHP (in particular, the management of BHP’s Iron Ore CSG, with
assistance from various BHP Group functions) and in the interests of BHP.
195.2. While BHP seeks to categorise Samarco as an “NOJV”, the effect of BHP and Vale’s
control over Samarco was that it operated as a vehicle whose raison d’être was to
give effect to BHP’s and Vale’s interests. Indeed, as BHP recognised after the
Collapse, the nomenclature of “NOJV” which BHP applied to Samarco was not
101
intended to reflect the fact that Samarco was independent of BHP’s control, but that
BHP’s control over Samarco was shared with its joint venture partner, Vale. That is
why, as Mr Mackenzie (BHP’s CEO) expressly recognised after the Collapse, BHP
was able to act, and did indeed act, “through” Samarco.453
195.3. From its position as controlling shareholder, BHP directly participated and was
involved in Samarco’s activity in ways which were multifarious, extensive and
connected to both the creation of the Dam and the direct causes of the Collapse. In
particular, the P3P Project, the P4P Project and Project 940, as well as the disposal
of Vale’s tailings behind the Dam, were all the product of decisions made by BHP
(with Vale’s agreement), the implementation and execution of which BHP
controlled and directly participated in, including, in certain respects, by funding
and/or facilitating the funding of such projects.
195.4. BHP controlled and directly participated in Samarco’s activity for the simple reason
that Samarco was an asset in which it had substantially invested and from which it
derived substantial financial and commercial benefits. Against that backdrop, the
extent of BHP’s control over, and participation in, Samarco’s activity is readily
understandable: BHP controlled Samarco and directly participated in Samarco’s
activity so as to ensure that its strategic imperative of maximising the returns on its
investment was given as full effect as possible.
196. As explained above, the more extensive the forms of conduct and the more closely
connected they are to the polluting activity and resulting damage, the stronger the inference
of responsibility for the activity (and resulting damage). The Claimants’ case is that the
above forms of conduct are so extensive, so multifarious, and so directly connected to the
causes of the Collapse, that the only available conclusion is that BHP is directly responsible
for Samarco’s activity.
2) Samarco’s activity
197. It is not disputed that Samarco’s activity caused the environmental damage, and that,
accordingly, Samarco’s activity was the polluting activity. It is also not disputed that
Samarco’s activity of mining and the storage of tailings is inherently risky.454 As Samarco
explained in its Bond Offering in 2012: “Our mining operations are subject to risks and
453
{F14/101/4}; {F16/498.0.2/2}; {F14/106.1/4}.
454
POC, §55 {A1/1/32}, §277 {A1/1/117}; Defence, §87 {A1/2/43}, §306(2) {A1/2/190}. Defence, §325B(3)
{A1/2/211} merely pleads a non-admission of the Claimants’ allegation at POC, §282A.3 {A1/1/129} that the
activity of mining (generally) and storing iron ore tailings behind the Dam (more particularly) inherently
involved a risk of damage to others for the purposes of Article 927 (sole paragraph).
102
hazards inherent to the mining industry”.455 Similarly, Mr Beaven explains that “the risk of
a failure of a large tailings dam will almost always be a “material risk”” with a rating of
“6 or 7” out of 7 (with 7 being the highest risk) because of the potential consequences if
that risk was to occur.456
3) BHP’s responsibility for Samarco’s activity
i) BHP’s ownership of Samarco
198. BHP Australia owns a 50% indirect interest in Samarco through its indirectly held
subsidiary, BHP Brasil.457 This interest was held via the subsidiaries depicted at Appendix
IV to the POC and Appendix IV to the Defence.458 The other 50% interest is held by Vale.459
ii) BHP’s control over Samarco

Introduction
199. BHP is the world’s largest mining company460 engaged in the discovery, acquisition,
development and marketing of natural resources,461 through its Customer Sector Groups
renamed “Businesses” after 2013 (hereinafter referred to for convenience as “CSGs”).462
The “jewel in the Crown”463 of BHP’s CSGs was Iron Ore. BHP Iron Ore comprised two
assets, one of which was Samarco.464 Notwithstanding that BHP only owned a 50% share,
Samarco was a very important asset for Iron Ore.465 It was one of BHP’s “8 largest
Assets”466 and part of BHP’s “core portfolio”.467 Its significance to BHP’s operations was
described by Mr Wilson (President of Iron Ore and a member of the GMC from May 2013
to February 2016) in the following terms in October 2014:
“Slide 8: Samarco – a world class pellet operation
[…]
455
{F14/299/28}.
456
Beaven 1, §68 {B1/1/22-23}. Tailings dams were consistently identified as a material risk in GMC reports, see
e.g., {F4/250.2/9}; {F5/315/8}.
457
POC, §84 {A1/1/43}, §274 {A1/1/116}; {A1/1/116}; Defence, §19 {A1/2/9}, §115 {A1/2/61-62}, §298(2)
{A1/2/186}.
458
The only difference between the BHP Group Structure Chart depicted in the POC {A1/1/171} and the Defence
{A1/2/235} relates to the Claimants’ characterisation of the relationship between BHP UK and BHP Australia.
459
POC, §59 {A1/1/33}; Defence, §91(3) {A1/2/44}.
460
{F16/498.26.1/2}; {F8/270.2/2}.
461
POC, §271 {A1/1/114-115}; Defence, §288 {A1/2/184-185}.
462
POC, §44.1 {A1/1/24}; Defence, §301(2) {A1/2/188}.
463
{F8/270.2/1}.
464
{F9/216/9}.
465
{F1/155.1/2}.
466
{F6/114.2/34}.
467
{F9/282/8}.
103
Our other long-life, high-margin Iron Ore asset is the Samarco pellet plant operation in
Brazil.
The 50:50 Joint Venture with Vale is a fully integrated, low cost supplier of iron ore
pellets, marketed globally. It has a large, long-life resource base located in the QF region
of Brazil, providing valuable geographic and product diversity for the Group.
Samarco is a strong cash generator, having delivered Underlying EBIT of 4.3 billion
dollars at a margin of 51% over the last 5 years.”468
200. Samarco’s value to BHP was manifold.469 As “the highest margin IO business in the
world”,470 and the second largest iron ore producer in the world,471 Samarco was not only
a source of “[a] high and stable cashflow steam [sic.]”472 in the form of “aggressive”
dividends which generally amounted to all of Samarco’s “free cash flow”,473 but was also
the vehicle through which BHP carried out “our [i.e. BHP’s] operations in Brazil”474 and
established both a foothold in “the biggest iron ore seaborne supply country outside
Australia”475 and “diversification through product type, product market and operating
geography”.476 Moreover, Samarco held a “valuable portfolio of assets, tangible and
intangible, utilized and idle”,477 with “very large strategic value for BHPB (IO Growth in
Brazil)”478 which BHP intended to, and did indeed, “fully exploit”.479 Whereas BHP is at
pains to downplay the significance of Samarco’s contribution to its Iron Ore portfolio (vis-
à-vis its other asset, Western Australia Iron Ore),480 Samarco’s contribution to BHP’s
earnings before tax was greater than the entire contribution of certain other CSGs.481
201. In light of Samarco’s importance to BHP, it is no surprise that while its legal form was that
of a 50:50 “NOJV”, Samarco was an entity which BHP controlled, together with Vale. This
cannot seriously be disputed in light of the categorical statements in BHP and Samarco’s
documents to this effect, including in the Samarco Shareholders’ Agreement (“SSA”),
which describes “SAMITRI [later Vale] and BHP” as “controlling shareholders of
SAMARCO”;482 BHP’s Annual Reports, which define Samarco as a joint arrangement in
468
{F9/216/9}.
469
Reply, §120A {A1/3/85-87}.
470
{F10/457/3}.
471
{F1/123.0.2/1}.
472
{F11/84/2}.
473
{F12/234.2/21}.
474
{F3/151/32}; {F4/207/32}; {F6/419/33}; {F15/198/42}; {F13/301/44}; {F14/458.1/6}.
475
{F1/351/2}.
476
{F11/84/2}.
477
{F1/87/2}.
478
{F1/87/2}.
479
{F4/368/1}.
480
See e.g., Gillespie 1, §6 {B1/4/2-3}.
481
{F4/280/1}.
482
Amendment to the SSA dated 29 June 2000: {F15/286/35}.
104
which “two or more parties have joint control”;483 Samarco’s Bond Offering Memoranda
dated 2012484 and 2013485 which state, in no uncertain terms, “We are controlled by Vale
and BHP Billiton”; and BHP’s own documents, including a 22 July 2015 internal audit
briefing, which describes Samarco as a “Private company, controlled in equal parts by two
shareholders: Vale S.A and BHP Billiton”.486
202. As the absence of any reference to BHP Brasil in these statements would suggest, Samarco
was controlled by BHP; that is, BHP Australia, as the ultimate controlling company of BHP
Brasil,487 and BHP UK, with whom BHP Australia necessarily shared control under the
DLC structure.488 As to this, quite apart from BHP’s and Samarco’s own characterisations
as described above, ten additional points bear preliminary emphasis.
203. First, all BHP-affiliated individuals are BHP representatives regardless of formal employer
or location. It is not disputed that BHP (as a Dual Listed Company structure incorporating
both BHP UK and BHP Australia) operated on CSG or Business lines.489 Hence, all
individuals who worked within BHP’s Iron Ore CSG (“BHP Iron Ore” or “Iron Ore”)
were representatives of BHP, regardless of the legal entity with whom they had an
employment contract and/or the country in which they were located. This is further
underscored by the following matters.
204. All BHP “employees, directors and other officers, contractors and consultants” were
bound by the BHP Billiton Code of Business Conduct (which incorporated BHP’s Charter)
“regardless of location or role”490 for the simple reason that they were all representatives
of BHP and treated as such.491 That is why, (i) when Mr Randolph was asked in a 1782
deposition “who” Brazil based individuals, Messrs Nogueira and Ribeiro were, he simply
responded “They were BHP representatives in Brazil”,492 (ii) when Ms Beck was asked in
a 1782 deposition “what other BHP employees were […] on the Samarco Board” at the
time of her appointment, she responded, “Jeff Zweig, Jimmy Wilson, and I believe Sergio
483
BHP Annual Report, 2015 {F13/301/ 274}. BHP’s Annual Report, 2014 {F15/198/226}. See also BHP’s
Annual Report, 2013, which defines Samarco as a “jointly controlled entit[y]” {F6/419/243}, which it defines
as “a corporation, partnership or other entity in which each participant holds an interest” {F6/419/205}.
Similarly, BHP’s internal documents also state that Samarco is a “jointly controlled entity”: {F10/285.1/140},
{F3/127/70}.
484
{F14/299/47}.
485
{F7/19/48}.
486
{F12/316/7}. A BHP Corporate Governance Manual dated July 2016 also states “[Samarco] is […] controlled
in equal parts by two shareholders: Vale S.A. and BHP Billiton” {F14/444/4}.
487
Muller Prado 1, §320 {C2/1T/130}.
488
POC, §38 {A1/1/20}, §40 {A1/1/21}; Defence, §67(6) {A1/2/28}, §69 {A1/2/28}.
489
Campbell 1, §48 {B1/2/17}; Defence, §74(2) {A1/2/32-33}.
490
{F1/152/10}.
491
See e.g., {F16/403}; {F16/395}; {F16/107}.
492
Randolph 83:5-6 {F17/88/22}.
105
[Fernandes] was an alternate director”, without any qualification that such individuals
were only employees of the BHP legal entity that happened to be the counterparty to their
employment contract;493 (iii) when Ms Sultemeier was asked in a 1782 deposition which
legal entity she was employed by, she responded “I don’t remember”;494 and (iv) when Mr
Mendoza was asked in a 1782 deposition which legal entity he was employed by, he
responded “I don’t recall”.495
205. Indeed, such is the irrelevance of the particular counterparty with whom a BHP
representative is formally employed that even in these Proceedings, BHP has not been able
to correctly ascertain Ms Beck’s formal employer until 2 October 2024, two days before
this Opening Note was due to be filed when it disclosed evidence indicating that, contrary
to BHP’s previous understanding as pleaded in its Defence496 that Ms Beck was employed
by the Defendants, Ms Beck was in fact employed by other BHP entities.497 That is all the
more revealing when it is borne in mind that BHP has had over five years since Ms Beck
was pleaded in the Claimants’ POC to confirm the position. That is has not hitherto done
so speaks volumes.
206. The true position, viz. that all BHP affiliated individuals are representatives of BHP
irrespective of the entity with whom they are formerly employed and their place of work,
accords entirely with BHP’s own documents, which demonstrate that BHP’s Brazil-based
representatives were part of BHP Iron Ore’s headcount498 and “Brazil Iron Ore” or
“BRIO”499 or the “BRIO team”.500 It follows that, BHP’s Brazil-based representatives were
considered no less a part of BHP Iron Ore’s operations simply because they were based in
Brazil.
207. For that same reason, BHP Iron Ore’s most senior Brazil-based individuals were directly
managed by senior members of BHP Iron Ore based in Perth.501 According to BHP’s
documents, at all relevant times, Mr Ribeiro was managed by Mr Slaven,502 Mr Nogueira
was managed by Mr Slaven503 and then Mr Campbell,504 and Mr Fernandes was managed
493
Beck 129:21-130:2 {F17/22/33-34}.
494
Sultemeier 20:22-21:1 {F17/56/6}.
495
Mendoza 24:7-24 {F17/26/7}.
496
Defence, §203A(3)(a) {A1/2/104}.
497
Slaughter and May, 2 October 2024, enclosing Draft Re-Re-Re-Re-Amened Defence {PO/3064/1-2}.
498
{F1/147/1}.
499
{F10/477/2}; {F10/477/4}.
500
{F10/477/1}.
501
Lynch 1, §81 {B1/5/16}.
502
{F1/115/1}.
503
{F16/498.0.1.22/1}; {F16/498.0.1.24}.
504
{F16/498.0.1.20/1-2}; {F16/498.0.1.21/1-3}.
106
by Mr Zweig (who replaced Mr Campbell),505 and thereafter, Ms Hood.506 As an illustration
of the extent to which these Brazil-based individuals were actively managed from
Australia, Ms Hood (who had no formal role in Samarco at all) was particularly involved
in managing Mr Fernandes, including by preparing the outline of Mr Fernandes’
presentations to internal BHP meetings prior to the Samarco Board meeting (or “the BHP
pre-Board”),507 reviewing and commenting on pre-Board presentations which he had
prepared508 and preparing Mr Fernandes’ Key Performance Indicators (“KPIs”) (with input
from Ms Beck).509
208. The absence of any distinction drawn within BHP between its Australia and Brazil
operations is confirmed post-Collapse, when, as Mr Beaven accepts, a task force was flown
in from Australia to lead the response, spearheaded by BHP’s Chief Commercial Officer,
Dean Dalla Valle,510 who reported directly to Mr Mackenzie (BHP’s CEO).511 In that and
indeed many other respects, the post-Collapse position is identical to the pre-Collapse
position, viz., in the same way that BHP’s response to the Collapse was managed from the
highest levels within BHP, so too, Samarco was an integral part of BHP’s global Iron Ore
business and was treated as such, regardless of its location in Brazil or the intervening legal
entities within BHP’s corporate structure.
209. Second, Samarco was an asset managed from within the highest levels of BHP Iron Ore.
Consistent with the fact that Samarco was treated as being part of BHP’s global Iron Ore
business, Samarco was an asset which was managed from the highest levels within BHP
Iron Ore, and thus within BHP.512 Hence, the Samarco Board comprised at all times the
most senior individuals within BHP Iron Ore.
210. BHP Iron Ore’s most senior individual and GMC member was at all times an effective
member. That was, Mr Randolph, who during the course of his appointment was Chief
Executive of Ferrous and Coal (or “Group Exec”),513 followed by Mr Wilson, who during
the course of his appointment was President of Iron Ore (replacing Mr Ashby),514 and who
505
{F8/282/1}.
506
{F14/381/1-3}; {F12/215/1}.
507
{F12/333/2-3}.
508
{F12/424.2/1}.
509
{F12/184/1}.
510
Beaven 2, §16 {B1/8/6}.
511
Beaven 2, §16 {B1/8/6}.
512
See BHP CEO Andrew Mackenzie memo titled “CEO Elect Report” dated 10 March 2013 setting out that the
President of Iron Ore, Jimmy Wilson had the ‘Operating Accountabilities’ of WAIO and Samarco
{F5/234.0.1/3}.
513
POC, §92.2 {A1/1/45}; Defence, §77(1), {A1/2/35}, §123(3) {A1/2/64}.
514
Defence, §203A(4)(a)(ii)(4) {A1/2/106}.
107
became the most senior individual on the Samarco Board on 31 December 2013, when the
role of President became the most senior role within BHP Iron Ore.515
211. Before the President became the most senior individual within Iron Ore (see above), BHP
Iron Ore’s second most senior individual (until 2013), the President of Iron Ore, was an
effective member. That was Mr Ashby, who during the course of his appointment had the
title of “President Iron Ore”,516 followed by Mr Wilson, who, as above, became the most
senior individual within Iron Ore in May 2013.517
212. BHP Iron Ore’s most senior individual within Iron Ore Strategy & Development (formerly
Business Development) was an alternate member until 31 December 2013, when they
became an effective member. That was John Slaven, who during the course of his
appointment was Chief Development Officer (or “CDO”), BHP Iron Ore (until December
2010);518 followed by Mr Campbell, who during the course of his appointment was Vice
President, Strategy & Development, BHP Iron Ore (December 2010- to December
2011);519 followed by Mr Zweig, who during the course of his appointment was Vice
President, Strategy & Development, BHP Iron Ore;520 followed by Mr Ottaviano, who
during the course of his appointment was Vice President, Strategy, Development &
Planning, BHP Iron Ore, when Planning and Strategy Development merged.521
213. BHP Iron Ore’s most senior individual based in Brazil was an alternate member.522 That
was Mr Ribeiro, who during the course of his appointment was BHP’s President and Chief
Operating Officer of Iron Ore, Brazil;523 Mr Nogueira, who during the course of his
appointment was Head/Vice President, Iron Ore Business Development, Americas;524 and
Mr Fernandes who during the course of his appointment was the General Manager,
Business Development, Americas, Iron Ore.525
214. From April 2014,526 the most senior individual within Iron Ore Finance was a member,
namely Ms Beck, who was Vice President of Finance, BHP Iron Ore.527
515
POC, §92.3, {A1/1/45}, §272.2 {A1/1/115}; Defence, §77(1)-(2), {A1/2/35}; {F5/234.0.1/3}. See also
Appendix IX: Organograms (BHP Iron Ore 2012-2013).
516
Defence §203A(4)(a)(ii)(4) {A1/2/104}; Appendix VII.
517
[BHPUK-000005106_00001]
518
{F1/147/1}.
519
Campbell 1, §1 {B1/2/1}.
520
{F8/228/23}.
521
{F9/445/1}; Beck 131:21- 133:15 {F17/22/34}.
522
As regards Mr Ribeiro, see {F1/191/1}, as regards Mr Fernandes, see {F17/11/1}.
523
{F1/191/1}; Defence, §106(5) {A1/2/54}.
524
{F1/191/1}.
525
Defence, §106(9) {A1/2/55}.
526
{F14/465/1}.
527
Beck 28:24-29:1-4 {F17/22/8}.
108
215. Third, it was BHP Iron Ore that nominated Samarco Board, Committee and Subcommittee
Members. Consistently again, with BHP’s treatment of Samarco as an asset within BHP’s
global Iron Ore business, Samarco Board Members were selected for appointment from
within the upper echelons of BHP Iron Ore and by decision of the most senior BHP Iron
Ore executives; so much so, in fact, that Mr Randolph explained in a 1782 deposition that
his appointment to the Samarco Board “was assumed” to accompany his position as GMC
Member and Chief Executive of Ferrous and Coal528 “[b]ecause [Samarco] was part of the
iron ore business”.529 Likewise in a 1782 deposition, Ms Beck confirmed that Mr Wilson
offered her the appointment one or two months after she joined BHP’s Iron Ore division as
Vice President of Finance.530 These individuals’ selection for appointment was so
automatic, that when asked, Ms Beck did not think that any written offer of appointment
had been presented to her531 and Mr Randolph could not recall any formal discussion
having accompanied his appointment.532 This pattern of selection is confirmed by BHP’s
internal documents, and in particular, an email from Mr Slaven dated 26 March 2010, in
which he stated that the appointment accompanied senior BHP Iron Ore positions of
“Group Exec”,533 “CSG President”, “CDO”534 and “head of our Brazil operation”535 and
that “We” (meaning BHP Iron Ore) “make the decision [about who should be the BHP
appointee to the Samarco Board] internally”.536
216. Members of the Samarco Board Committees and Subcommittees were also informally
selected for appointment by senior individuals within BHP Iron Ore. This is made clear by
the following internal BHP emails:
216.1. In an email to Mr Nogueira, Mr Slaven stated, “In the meantime, it will be Marcus,
Ian, me and you as directors - you as chairperson of the operations committee and
Vale as chairman of finance. Will need to ensure that Flavio and Stewart are
528
Randolph 43:16-22-44:4 {F17/88/12}.
529
Randolph 44:1-7 {F17/88/12}.
530
Beck 123:16-20 {F17/22/32}. Similarly, Ms Beck stated that the reason why Mr Zweig stepped down from the
Samarco Board was because of a reorganisation within Iron Ore, after which his role merged with Mr
Ottaviano’s: Beck 131:21- 133:15 {F17/22/34}.
531
Beck 124:11-15 {F17/22/32}.
532
Randolph 44:1-6 {F17/88/12}.
533
Otherwise known as “Chief Executive”. This position was dissolved after May 2013: Defence, §77(1)
{A1/2/35}, §301(3) {A1/2/188}.
534
An acronym for “Chief Development Officer”.
535
POC, §92.2 {A1/1/45}.
536
{F2/42/1}. See also Mr Randolph’s statement to Samarco that “We are making some people changes in Iron
Ore; Chris Campbell will be joining the Board of Samarco replacing John Slaven as one of BHP Billiton's
directors” {F2/301/1}.
109
represented on that committee, but given you will be on the board, you will need to
be part of that too”.537
216.2. In response to an email from Stewart Hart (CFO, Iron Ore) that it would be
appropriate for him “to join future Finance Committee meetings”, Mr Slaven stated,
“I think you should join the Finance Committee”.538
216.3. In an email to Mr Hart, Mr Nogueira stated, “The new Iron Ore Controller should
replace Flávio in all these sub-committees [Treasury, Tax, Audit] […] The IO
controller should be our key representative together with Carlos Mota (Risks and
Controls) in the Audit sub-Committee”.539
216.4. In an email to Mr Ashby outlining P4P Governance, Mr Campbell stated, “The BHP
Billiton members on this SteerCom would be Rogerio Nogueira and Guilherme
Ferreira”.540
216.5. In an email to Ms Raman and Mr Campbell, Wortham proposed that he “or another
senior level Project role be designated as a core member of […] [the P4P]
Committee, along with PMS”.541 Thereafter, Wortham reported that he and [Mr
Campbell] had met and agreed that he should be added to the P4P Steering
Committee.542
216.6. In an email to Mr Hart, Mr Salek stated, “We were informed a few days ago about
the situation concerning Samarco breach of the Finance Committee directions and
the Shareholders Agreement (loan with Itau bank)” and requested to have a seat in
the Samarco Finance Committee going forward.543
217. The same pattern of selection was adopted for Working Groups within Samarco, which
were typically temporary ad-hoc forums to address particular projects.544 For example, in
emails between Messrs Wilson and Ottaviano, they discussed whether to dismiss Mr
Fernandes, but decided to give him a temporary reprieve such that he became a BHP
representative on an Operational Synergies Working Group with Vale because “we don’t
have anyone at short notice to materially protect our interests”. Mr Wilson remarked that
“[p]ragmatically, we must go with Sergio, but clearly we need to kick off recruitment to
537
{F1/211/1}.
538
{F2/171/1}.
539
{F2/172/2}.
540
{F3/107/3}.
541
{F3/118.1.1}.
542
{F3/119/1}.
543
{F1/131/2}.
544
See Appendix IX Organograms.
110
replace him, with the objective of having this done in 6 months. Until then, he is our
Man.”545
218. Fourth, BHP’s appointees at Samarco were at all times acting as representatives of BHP.
As Mr Randolph confirmed in a 1782 deposition in response to questions asked about his
role as a Samarco Board Member, that he (and by implication, all BHP Iron Ore
representatives on the Samarco Board) attended Samarco Board meetings as “a
representative of BHP”,546 and in the course of so doing, was “conducting BHP
business”,547 because it was “part of my job” as a Samarco Board Member to “protect
BHP’s interest”.548 The position could not be otherwise: Ms Beck and Mr Randolph each
confirmed that they never received compensation from Samarco for performing this role,549
and as such, they could only have been acting in the course of their role as representatives
of BHP Iron Ore (and hence BHP).550 This is further underscored by the following matters.
219. It was openly acknowledged within551 and outside BHP that the Samarco Board’s purpose
was to “represent” the interests of its Shareholders, i.e. BHP and Vale. As was expressly
recognised in an external review of Samarco’s Corporate Governance Model
commissioned by BHP and Vale in 2009 (“the Booz review”), the Samarco Board was not
“delinked” from its parent companies.552 That is for the simple reason, as was also
identified by the Booz review, that Samarco existed to “Represent the parent companies’
interests”.553 The very same point was made in a Samarco presentation dated 5 December
2014, which stated “Members appointed in the BD of the JV represent […] the interests of
the shareholders”.554 This follows from the terms of the SSA themselves, which entitle
each of the Shareholders to appoint 2 effective (voting) directors (so that the Board can
only operate if the Shareholders actually agree with each other, otherwise there would be a
deadlock) and further provide that the Shareholders can instruct their appointees to act in
accordance with any decisions agreed in advance by the Shareholders at a meeting prior to
545
{F11/338/1}.
546
Randolph 111:5-12 {F17/88/29}.
547
Randolph 110:1-12 {F17/88/29}.
548
Randolph 111:5-12 {F17/88/29}.
549
Beck 19:17-19 {F17/22/6}; Randolph 16:2-4 {F17/88/5}.
550
Similarly, Clause 4.13 of the SSA states “Members of the Board of Directors of Samarco shall not be
remunerated”: {F15/286/9} and Samarco’s Bond Offering Memorandum dated 31 October 2012 stated, “Our
directors do not receive any compensation from us”: {F14/299/149}.
551
“I’m reluctant to have ‘technical discussions” between Vale and Samarco without BHPB being equally
represented”: {F11/198/1}; It is not in dispute that BHPB is a “shorthand for BHP Billiton, not BHP Brasil”:
{B1/2/23}; Campbell 1, §63 {B1/2/23}.
552
“the board should also be able to collect information on their own, informally, since the JV management is not
delinked from its parent companies”: {F8/309/15}.
553
{F8/309/6}; POC, §§82.1.1-82.2.2 {A1/1/42}.
554
{F10/39/12}; {F10/39T/12}; POC, §82.1 {A1/1/42}; Defence, §113(2)(b) {A1/2/60}.
111
a meeting of the Samarco Board,555 and insofar as their decisions are not followed, to cause
their implementation.556 The very existence of this last mechanism is emblematic of the
plain and obvious intention that each Shareholder appointee on the Board was there to
represent the interests of their appointing Shareholder. Accordingly, decisions made by the
Samarco Board were necessarily – on the terms of the SSA – made on behalf of Samarco’s
Shareholders.
220. BHP representatives, including Ms Raman,557 Ms Hood, Ms Torres and Mr Gillespie

attended Samarco Board meetings, notwithstanding that they were not Samarco Board
Members. The reason they did so was because these were forums at which BHP’s interests
would be given effect. It is fanciful to suggest, as BHP appear to do, that they attended
these meetings in a personal capacity as “guests” of the Samarco Board.558 The only reason
why they had any reason to attend such meetings was on behalf of BHP in order to assist
in the making of decisions which were of import to the BHP Group in order to produce an
advantageous outcome for BHP.
221. The above applies mutatis mutandis to BHP’s representation on the Samarco Board
Committees and Subcommittees. Thus, Ms Sultemeier accepted in a 1782 deposition that
Samarco Subcommittees comprised “BHP representatives”;559 a point which is confirmed
by BHP’s own documents.560 As Ms Sultemeier convolutedly put it in response to a
question about Patricia Vieira’s participation in Subcommittee meetings, in the course of
their participation in Samarco Board Committees and Subcommittees, BHP representatives
would “not take a position that was contrary to the best interests of the company. And that
555
“In all matters to be decided by the Board of Directors of Samarco, the Shareholders shall follow the provisions
of this Shareholders Agreement and instruct the Board members who they have appointed to act according to
instructions agreed in advance by the Shareholders in accordance with Clause 3.7” (SSA, Clause 4.14):
{F15/286/10}; “Upon the request of SAMITRI or BHPB, the Shareholders shall hold a meeting before any
general shareholders' meeting or any meeting of the Board of Directors of SAMARCO, in SAMARCO's head
office, Belo Horizonte, to discuss and make any decisions regarding the matters on the agenda for such meeting
(a “Previous Meeting”)” (SSA, Clause 3.7): {F15/286/5}. Similarly, Clause 9.1.1 of the SSA provides
“Whenever a decision is not reached at a duly convened meeting of the Executive Boards or Boards of Directors
of SAMARCO, the matters shall be referred to the Shareholders”, and thus grants Shareholders the ultimate
decision-making authority: {F15/286/15}.
556
“In the event that any member of the Board of Directors of SAMARCO, for any reason, at a Board Meeting
does not observe the terms and conditions of this Shareholders’ Agreement, such meeting shall be immediately
adjourned and any Shareholder shall have the right to call a general shareholders’ meeting of SAMARCO, in
order to cause the implementation of the decisions previously agreed in this Shareholders’ Agreement or in
any specific voting agreement entered into pursuant to the provisions of this Shareholders Agreement,
including any voting agreement arising out of a Previous Meeting” (SSA, Clause 4.4): {F15/286/6}.
557
POC, §78 {A1/1/41}; Defence, §109 {A1/2/57}.
558
Defence, §111(7) {A1/2/59}, §166 {A1/2/86}.
559
Sultemeier 39:8-11 {F17/56/11}.
560
{F3/73/8}; {F2/302/5}; {F2/172.0.1}.
112
being BHP”.561 To put it another way, BHP representatives would always take a position at
Samarco Board Committee and Subcommittee meetings that was in BHP’s best interests.
222. BHP representatives did not merely represent BHP’s interests in the course of their
participation at the Samarco Board, Committee or Subcommittee Meetings. Rather, all of
BHP’s involvement in Samarco was driven by a pursuit for outcomes that were to BHP’s
benefit. That outcome, as explained by Mr Randolph in a 1782 deposition, was simple:
“Profitability and Value”,562 or more specifically, as Mr Randolph stated in a letter to Mr
Martins (his Vale counterpart), “Maximizing Samarco’s Value” and “using Samarco as a
growth vehicle”.563 Four particular examples of BHP’s use of Samarco to pursue its own
interests bear preliminary note:
222.1. BHP permitted Vale to dispose of tailings waste to Samarco’s financial detriment.
Vale disposed of its own tailings in the Dam.564 It did so at a rate which, on Mr
Gillespie’s evidence, was “was not even close to […] commercial” because it meant
that “Samarco was effectively subsidising Vale’s operations”.565 BHP knew this, and
while it considered that it could “force” Samarco to suspend the contract, it decided
to allow the arrangement to continue.566 That decision appears to have been made
because of the perceived strategic benefit to BHP of allowing the arrangement to
continue in circumstances where, amongst other things, “Future elevation of current
Samarco’s dams […] depend on Vale’s release of interferences”.567 Although BHP
sought to press for an amendment to the contract such that Samarco would be
compensated in the form of future volume compensation,568 it is to be inferred from
the absence of any evidence of such a contract that it was never in fact concluded.
The reason BHP continued to allow Vale to dispose of said tailings at an
uncommercial rate was because BHP’s exclusive concern was to pursue a strategy
which advanced its own wider commercial interests, regardless of whether that was
to Samarco’s financial detriment.
222.2. BHP convinced Vale that Samarco should adopt a tax regime to BHP’s benefit. In
January 2015, Ms Vieira reported to Ms Sultemeier that she had managed to
“convince Vale” that Samarco should adopt a new tax regime early “in order to
561
Sultemeier 46:21-23 {F17/56/13}.
562
Randolph 71:1 {F17/88/19}.
563
{F1/121/1}.
564
POC, §163 {A1/1/69}; Defence, §190(1) {A1/2/97}.
565
Gillespie 1, §57 {B1/4/20-21}.
566
{F3/316/4}.
567
{F3/316/4}.
568
{F3/316/4}.
113
avoid the taxation of […] excess dividends by shareholders”569 which would enable
BHP to avoid a tax expense on said dividends of c. USD $50 million, despite Vale
having previously expressed reservations about the “uncertainties” associated with
this approach.570 In response, Ms Sultemeier remarked that this was a “Great
outcome”,571 which, as she accepted in a 1782 deposition, meant that the outcome
was “good for BHP”.572
222.3. BHP was prepared to use the deadlock provision in the SSA to force the P4P Project
through. There were concerns within BHP that Vale would not approve the P4P
Project as quickly as BHP wanted it to (or perhaps at all). In anticipation of that
eventuality, BHP considered using the deadlock provision for expansions in Clause
9.3.2 of the SSA to force the project through unilaterally.573 Thus, when on 6
February 2011, Mr Randolph confirmed that “[w]e have our Board approval in
hand” (i.e. BHP Board approval), Mr Campbell alluded to the prospect that “if Vale
don’t approve it we may force Samarco to do the project anyway from cashflow”.574
When Vale’s Board had still not approved the project by 25 March 2011, Mr
Nogueira contemplated that if Vale’s approval was not forthcoming in April after
the Samarco Board had approved the project contingently upon Vale’s approval,
then BHP would use “the shareholder’s agreement prerogative”.575
222.4. BHP approved a “flawed” equity-based remuneration system to its “advantage”.

Through the Remuneration Committee, BHP (and Vale) developed an equity-based
compensation system for Samarco’s management which rewarded EBITDA growth
but did not account for the capital expenditure invested to achieve it. Mr Randolph
identified that there was a “flaw in the design” in that system but that it was “actually
in our favour” because “[g]iven the nature of the Samarco relationship (where Vale
is a direct competitor) it is to our advantage to continue to motivate growth.”576
223. The above examples illustrate what was recorded in an email exchange between Mr
Ottaviano and Ms Hood in April 2015 in the course of their preparation for a Samarco
Board meeting, namely, that the only relevant “so what” – i.e. the only interests which BHP
569
{F10/277.2/1}.
570
{F11/225.2/5}.
571
{F10/277.2/1}.
572
Sultemeier 75:13-76:13 {F17/56/20}.
573
{F15/286/16}.
574
{F2/446/1}; {F2/448.1.1/1}.
575
{F2/471/1}.
576
{F2/382/1}.
114
sought to advance – was the “so what” for “BHPB”577 (“BHPB” being, it is not disputed,
an acronym for “BHP Billiton”, i.e. BHP578). An integral element of that question was, as
outlined by Ms Hood, “what leverage does BHPBIO have”.579
224. Fifth, BHP appointees at Samarco were acting in the course of their employment for BHP.
Consistently with Mr Randolph’s deposition evidence that BHP representatives on the
Samarco Board performed that function because it was part of their position of employment
within BHP to do so, certain of the roles of BHP’s representatives on the Samarco Board
were specifically directed towards the management of Samarco,580 for example:
224.1. A Job Profile for BHP Iron Ore’s Chief Development Officer, based in Perth, lists
as a Core Accountability: “Manage BHPB's 50% interest in the Samarco joint
venture in Brazil through direct participation on the Board of Directors as well as
directing our local day-to-day representation on the key shareholder committees
including: Business Committee, Finance Committee and Technical Committee.”581
That role was held by Mr Slaven between 2006 and 2010.582 Consistently with that
job profile, Mr Slaven’s 2007-2008 KPIs included, “Maximize value of Samarco JV
participation.”583
224.2. BHP Iron Ore’s Chief Development Officer role appears to have been replaced by
the role of Vice President, Strategy & Development, BHP Iron Ore, hence why Mr
Campbell’s evidence is that he replaced Mr Slaven on the Samarco Board.584 It is
therefore to be inferred that Mr Campbell and thereafter, Mr Zweig, took on the
same responsibilities of Mr Slaven vis-à-vis Samarco. That is supported by Mr
Campbell’s KPIs, which included “effective monitoring and influencing of P4P”585
and “effective oversight of BHP Billiton interests in the project”.586 Similarly, Mr
Zweig had the following KPIs with regard to Samarco, “Brazil: Maintain H&S
performance (TRIFR targets for Samarco, BRIO 5% less than previous year)”587
577
“I would add that Sergio summarises the “so what” for BHPB and what he recommends our posture be for the
Board meeting”: {F12/319/1}.
578
Campbell 1, §63 {B1/2/23}.
579
“BHPBIO (i.e. long-term implications of Vale and Samarco jointly using tailings dams; what does Samarco
need? what does Vale want? what leverage does BHPBIO have?” {F12/319/2}.
580
A fuller account of the involvement of BHP representatives in Samarco can be found at Appendix VII:
Representatives Annex.
581
{F2/17.1/2}.
582
POC, §75.1.3 {A1/1/38}; Defence, §106(4) {A1/2/54}.
583
{F16/498.0.1.12/2}.
584
Campbell 1, §14 {B1/2/4-5}.
585
{F16/334/1}.
586
{F16/388/3}.
587
{F16/389/1}.
115
and “Complete Samarco Swap with Vale”.588 The unredacted material in Mr
Ottaviano’s KPIs does not make express reference to Samarco, but given that Ms
Beck confirmed in a 1782 deposition that Mr Ottaviano’s role merged with Mr
Zweig’s, it is to be inferred that when said merger occurred, Mr Ottaviano also held
the responsibilities formerly held by Messrs Slaven, Campbell and Zweig.589
224.3. Mr Ribeiro’s role was described by Mr Slaven on the announcement of his

retirement in March 2009 as follows, “he took over responsibility for all BHP
Billiton’s Aluminium and Iron Ore interests in Brazil. As our presence expanded,
Tiao focused on leading Iron Ore’s growth agenda for Brazil as President and COO
Iron Ore Brazil. In this role his key focus has been on managing our participation
in Samarco, our JV with Vale, overseeing the successful 3rd Pellet Plant expansion
to 22Mtpa and has our lead [sic.] our extensive business development agenda in the
region”.590 Consistently with that description, Mr Ribeiro’s KPIs included, “Full
BHPB/Samarco HSEC standards alignement [sic.] plan in execution”; “Complete
[P4P] Selection phase”; “Samarco: reorg. Board/Director governance […]
Negotiate scope with Vale, hire consultant, promote alignement [sic.] between
shareholders, guaranttee [sic.] implementation. As result, promote Samarco's
management posture from operational efficiency to value creation effectiveness”.591
224.4. Mr Nogueira took over the responsibilities of Mr Ribeiro when the latter retired
such that it was equally a part of his role to manage Samarco.592 Mr Nogueira’s role
was described by Mr Zweig on the announcement of his change of employment in
2012 as follows, “Rogerio […] has been in the position of General Manager -
Business Development Brazil & Americas overseeing both the Samarco Joint
Venture and broader business development activities in Brazil”.593 Consistent with
that description, Mr Nogueira’s KPIs included: “Improve understanding and better
influence Samarco’s Operation results”;594 “Push Samarco to present a more sound
Strategic plan – capable of supporting a sound decision of the P4P”;595 “Influence
588
{F16/389/2}.
589
Beck 133:17-21 {F17/22/34}.
590
{F1/191/1}.
591
{F1/115/1}.
592
{F1/191/1}.
593
{F3/404.0.0.1/1}.
594
{F1/339.2/1}.
595
{F1/339.2/1}.
116
the structure and quality of Samarco's long term planning”; “Progress Samarco P4P
from Definition to Execution […] Control implementation of P4P”.596
224.5. Mr Fernandes took over the responsibilities of Mr Nogueira when he changed

employment, such that it was equally a part of his role to manage Samarco.597
Consistently with those responsibilities, Mr Fernandes was variously described
within and outside BHP as the “Brazilian lead”;598 “[the] key man on the ground for
us in Brazil and discussions with Samaro [sic.] and Vale”;599 “our key on the ground
lead”;600 “our representative”;601 the person who “govern[s] Samarco on BHPB’s
behalf”;602 and “BHP Billiton Iron Ore Brazil’s CEO”.603 Mr Fernandes used his
role on the ground to exert control over all relevant aspects of Samarco’s operations
including capacity increases,604 costs reductions,605 productivity improvements,606
Samarco’s 5-year plan,607 the P4P project,608 tailings facilities’ controls,609 tailings’
management, tax, anti-corruption, safety risks, project management and planning.610
To that end, Mr Fernandes’ 2015 KPIs included the following objectives:
“Exert positive influence on Samarco’s operational and strategic agenda.
Improve BHPB’s understanding of Samarco’s operations (ie., improve

understanding of Samarco’s main value drives, opportunities and risks).
Make significant contributions to Samarco’s short and long-term

performance.
Monitor Samarco’s performance.
Guide Samarco’s management team to address key business issues and to

develop sound long-term plans”.611
596
{F16/498.0.1.21/1-2}.
597
{F3/404.0.0.1/1}.
598
{F11/366.1/1}.
599
{F13/295/1}.
600
{F17/8/1}.
601
{F11/332/1}.
602
{F5/368/2}.
603
{F7/6/10}.
604
{F14/381/2}.
605
{F8/282/2}; {F10/130/1}.
606
{F14/381/2}.
607
{F16/498.0.1.17/1}.
608
{F16/498.0.1.15/1}.
609
{F8/282/6}.
610
{F14/381/2}.
611
{F12/78/1}.
117
225. Ms Hood’s assessment of Mr Fernandes’ performance against this KPI in his Annual
Performance Review 2015 stated:
“Sergio, it is clear that you have a very good working relationship with Samarco
and that this helps you in achieving this KPI. I agree with your comments relating
to monitoring, but as discussed, it is critical to articulate the insights you have from
working with the Samarco team and how you use these insights to influence the
operational and strategic agenda”.612
226. Mr Fernandes’ 2016 KPIs included similar objectives, namely:
“• Safety — Work closely with Samarco's management team to ensure that effective
safety plans are developed and implemented and that HSEC targets are achieved
(Measures: demonstrate specific examples of positive influence; HSEC targets are met).
• Performance — Guide Samarco's management team to improve short and long-term

business performance, as measure by the KPIs and 5YP for Samarco (Measures:
demonstrate successful examples of positive influence Samarco KPIs are met).
• Governance-- Ensure the effectiveness of Samarco's Governance Process (Measures:

Feedback from key stakeholders).
• Provide sound advice to BHPBIO members of Samarco's Board on key decisions to

be made.
• Articulate key insights from interactions with Samarco's management team in order
to improve BHPB10's understanding of the Samarco business (ie culture, key
opportunities and risks)
• Maintain strong working relationships with key stakeholders at Samarco, BHPBIO

and Vale”.613
(Appendix VII to this opening note contains a fuller account of the involvement of these
and other BHP representatives at Samarco).
227. Sixth, BHP and Vale made decisions outside of the Samarco Board meeting. The Samarco
Board meeting was in many cases a formality for the approval of decisions that had been
made in advance within BHP and as between BHP and Vale. This was a consequence of
BHP Iron Ore’s negotiation strategy with Vale, which sought to “engage Vale at a senior
level to explore potential win/win outcomes, rather than through a more indirect channel
(Samarco […]) or confrontational style” through the initiation of “discussion between
BHPB Group Executives and Vale Executive Directors regarding win/win options to realize
full value from Samarco”.614 As is further explained at §219 above, this also follows from
612
{F14/381/2}.
613
{F12/215/1}; to similar effect, see Mr Fernandes’ Annual Performance Review 2015 {F14/381}. For further
illustrations of Mr Fernandes’ role, see Appendix VII.
614
{F1/98/2}.
118
the terms of the SSA themselves, which provide that Samarco Board Members were
formally required to act in accordance with any instructions agreed in advance by the
Shareholders at a “Previous Meeting”,615 as well as from the practical reality that the Board
could only operate if BHP and Vale as the 50:50 Shareholders represented on the Board
agreed with each other. In this context, BHP’s pre-Board meetings, and private
meetings/correspondence between BHP and Vale were clearly regarded by BHP
representatives as important forums through which decisions would be made about BHP’s
participation in Samarco:
227.1. The BHP pre-Board was held the day before the Samarco Board meeting.616 At the
BHP pre-Board, BHP’s representatives on the Samarco Board would be briefed617
in order that decisions could be made at Samarco Board meetings which best
advanced BHP’s particular interests.618 In this regard, it is not disputed that BHP
representatives who were not Samarco Board Members also attended such pre-
Board meetings.619 BHP pre-Board meeting materials were also shared with several
such BHP representatives for input.620 The extensive involvement of such BHP
representatives in the pre-Board meeting and surrounding preparations serves to
demonstrate that decisions at Samarco Board meetings were intended to give effect
to BHP’s interests. This point is only reinforced when it is borne in mind that, as of
at least July 2015, Ms Hood oversaw pre-Board meeting preparation, despite never
herself being a Samarco Board Member or Samarco Board appointee of any kind621
and could, therefore, have only been acting as a representative of BHP.
227.2. At least Messrs Randolph and Martins would meet for dinner (typically) in advance
of a Samarco Board meeting at which they discussed issues pertaining to
Samarco.622 These meetings were considered to be so important that when Mr
Martins was too unwell to attend a Samarco Board meeting, he nevertheless
615
{F15/286/5}; {F15/286/10}.
616
See the agenda example at {F2/333/1}.
617
“The pre board, which is the session Sergio briefs BHPB’s board members, will happen on the day before”:
{F8/243.1/1}.
618
See e.g., the recommendations in Pre-Board presentations dated 21 July 2009: “Push Samarco to accelerate
the negotiations of tha (sic) Alegria concentrate contract” {F1/280/5}; “Develop a skilled internal team to
manage Samarco's dams” {F1/278/11} and “Do not force Samarco to suspend the contract given Samarco's
high level of dependence on Vale” {F3/316/4}.
619
Campbell 1, §20 {B1/2/7}. Such individuals included Ms Torres {F12/454.1/1}, Ms Hood {F12/454.1/1}, Mr
Victor {F12/169/2}, Ms Raman {F6/311.1/1}.
620
Such individuals included Messrs/Mses Oborn, Nag, Correa Grez {F12/452.1/1}, Arnold, Hove, Pegg,
Pulvenis, Stewart, Njong, Van Maanen {F12/169/2}, Lennox, Rowe {F2/273/1}.
{F4/74/1}, Gillespie {F8/55/1}.
621
{F12/333/1-3}.
622
{F1/286/1}. See also {F2/72/1}; {F3/233/1}.
119
managed to attend a dinner with Mr Randolph,623 and when a pre-Board dinner
between members of the Samarco Board was arranged, Mr Randolph asked for a
private dinner with Mr Martins instead.624 The full extent of what was in fact
discussed at these meetings is not known to the Claimants,625 but given that BHP
and Vale valued them even more highly than the Samarco Board meetings
themselves, it can be inferred that they were a forum at which BHP and Vale had
discussions and made decisions which were then formalised at the Samarco Board
meeting.
227.3. Messrs Randolph and Martins also wrote private letters to one another with a view
to seeking to reach agreement on matters relating to Samarco, including by way of
a proposal “to sell to Samarco the Mining leases we both hold that are logical
extensions of Samarco’s Mining area”.626 Mr Randolph closed this line of
correspondence by stating “I hope you recognize from my proposal above that BHP
Billiton remains absolutely committed to preserving its full participation and
economic interest in this important asset. We value our current partnership with
Vale in Samarco and feel confident that we can work together to maximize the full
value of Samarco”.627
228. Seventh, BHP consistently described Samarco as a joint venture in which it was a partner.
BHP’s Annual Reports dated 2010-2016 record that “We” i.e. BHP are a “joint venture
partner” with Vale.628 To similar effect, Samarco describes itself as a “joint venture owned
by BHP and Vale”, with no reference whatsoever to BHP Brasil.629 These statements reflect
the practical reality that BHP was, in substance, the joint venture partner behind the
Samarco operation. This pre-Collapse position is also reflected post-Collapse, in
statements, such as that of Mr Mackenzie in BHP’s Sustainability Report 2016, that “We
will work tirelessly with the mine operator, Samarco Mineração S.A., our joint venture
partner Vale, the community and the Brazilian authorities in the response effort”.630
623
{F1/286/1}.
624
{F2/190/1}.
625
When asked about the nature of the private meetings that took place between Messrs Randolph and Martins,
Mr Randolph’s counsel instructed him not to answer on the ground that doing so may incriminate him -
Randolph 106: 3-8, 13-19; 107:4-11, 17-25; 108: 1-25 {F17/88/28}; 110: 1-7, 14-23 {F17/88/29}.
626
{F1/121/1}; see also Mr Martins’ response {F1/155/1-2} and Mr Randolph’s further response {F1/158/1-2}.
627
{F1/158/2}.
628
{F2/205/41}; {F3/151/32}; {F4/207/33}; {F6/419/33}; {F15/198/42}; {F13/301/44}; {F14/458.1/8}; POC,
§54.3 {A1/1/32}.
629
{F16/498.26.9/1}.
630
{F14/458/3}.
120
229. Eighth, the Iron Ore CSG, the GMC and the BHP Board received reports about Samarco.
It is not disputed that: (i) “the Iron Ore CSG” received reports about Samarco’s
performance on various safety metrics, commercial information and the P4P Project;631 (ii)
the GMC received reports about Samarco’s performance on issues relating to safety,
volume, costs632 and the risk of dam failure;633 (iii) monthly Samarco review calls were
attended by BHP representatives who were not Samarco Board Members;634 (iv) members
of the Iron Ore CSG and other Group functions asked questions about Samarco;635 and (v)
it was expected that significant safety and asset integrity issues would be reported to the
President of Iron Ore, BHP Iron Ore’s Vice President of Strategy and Business
Development636 and/or the BHP Board.637 These reporting lines reflect wider practice by
BHP to exert influence over Samarco outside of the Samarco Board, Committees and
Subcommittees.638 The very reason why such formal and informal reporting lines existed
as between Samarco, Samarco Board, Committee and Subcommittee Members, the Iron
Ore CSG, the GMC and the BHP Board in relation to all such issues relating to Samarco is
because it was for the Iron Ore CSG, the GMC and the BHP Board to give the last word on
how Samarco and its risks were ultimately to be managed.639
230. Ninth, BHP was particularly interventionist in projects to increase production at Samarco.
In pursuit of its strategic imperative to “GROW CAPACITY” and “Implement the Samarco
growth programme”,640 BHP’s control over and participation in Samarco’s activity was
particularly direct and multifarious in relation to projects to grow production at Samarco
(or “Growth Projects”). The two projects of particular significance are the P3P Project
and the P4P Project, both of which are causally connected to the Collapse (the former
having caused the construction of the Dam, and both having caused its continued elevation
to store tailings). Both projects were categorised by BHP as Major Capital Projects due to
631
Campbell 1, §49 {B1/2/17}.
632
Beaven 1, §53 {B1/1/17}.
633
Beaven 1, §63 {B1/1/21}; Reply §§105A.1-105A.2 {A1/3/67}.
634
Campbell 1, §50 {B1/2/17}.
635
Campbell 1, §51 {B1/2/17-18}.
636
Campbell 1, §51 {B1/2/18}.
637
Beaven 1, §62 {B1/1/20-21}.
638
As regards Samarco’s projects, a 2011 Project Governance document explained, “In the case of projects,
BHPBIO (not the committee) has specific reporting frameworks / templates for the most important projects
covering financial and physical progress, HSEC etc. Guilherme Ferreira (project manager follows this (sic)
projects on a continuous basis with Samarco), including being regularly to the field to oversee project
implementation. This is an initiative from BHPBIO that we are trying to more and more introduce in the
Committees”: {F3/89/5}.
639
POC, §91 {A1/1/44-45}, §92.10 {A1/1/47}.
640
{F2/381/9}.
121
the investment commitment that was required by BHP in respect of them.641 In addition,
they each required and received BHP Board approval642 before they could be approved by
the Samarco Board; and as a precondition to such approval, they were both the subject of
a rigorous approvals process within BHP.643 For that reason, BHP directly and actively
participated in them from inception to approval, and then maintained involvement right
through the execution phase to completion. There is little documentary material on the
approval and implementation of the P3P Project because the disclosure period for the
purposes of these proceedings was agreed to be 1 January 2008 and the P3P Project was
incepted earlier than that. Nevertheless, it can be seen from the substantial material
available in respect of the later P4P Project that BHP’s participation in the P4P Project was
extensive and multifarious, for example, BHP (i) conducted “Independent Peer Reviews”
and “Execution Phase Reviews” which resulted in recommendations which BHP required
Samarco to implement;644 (ii) participated in “peer review meetings” at which BHP would
monitor Samarco’s completion of its recommendations;645 (iii) participated in P4P Update
Meetings at which BHP and Vale monitored the project’s progress and made
recommendations,646 (iv) exercised “direct”647 and “daily”648 oversight “in the field”649
through its “full time BHP Billiton Project Manager”,650 Mr Ferreira, and (v) “over[saw]
the project formally” through the P4P Steering Committee.651 As earlier noted, the approval
of P3P predates the disclosure period. However, given that P3P was also a Major Capital
641
The BHP Board approved an investment in P3P of USD $ 1.2 billion {F8/164/162} and capital expenditure of
USD $1,756,000,000 in respect of P4P {F2/415/11}. While BHP has not disclosed the relevant GLD in force
in 2005, there is evidence that the investment commitment for a Major Capital Project when P3P was approved
in 2005 was USD $100 million and when P4P was approved in 2011, it was USD $250 million: {F11/96.2/54}.
642
A CV for Jair Rangel, who was Operations Manager – Samarco Brazil, with BHP, between 2007-2008 states,
“Member of the Business Committee and Third Pellet Plant Project Steering Committee providing strategic
direction or [sic.] the development of the project. This included successfully completing 3rd Pellet Plant
Feasability Study and gaining BHP Bilton’s Board approval for this US$ 1.2 billion investment” {F8/164/162}.
The minutes of the BHP Board meeting dated 3 February 2011 state: “The Board […] resolved to delegate to
the Chief Executive Officer the approval of the requested capital expenditure of US$1,756,000,000 to progress
the Samarco Fourth Pellet Plant from Definition Phase to Execution Phase” {F2/415/11}.
643
GLD.031 required that Major Capital Projects be developed, refined and optimised through an “Identification
Phase”, “Selection Phase” and “Definition Phase” before being executed accordance with an approved
“Project Execution Plan” during the “Execution Phase”. Major Capital Projects were defined by investment
commitment {F16/86/1-35}.
644
As regards IPR recommendations, see {F1/466/4}. As regards EPR recommendations, see {F5/195.2/1-46}
which is a PowerPoint Presentation by BHP’s Group Project Management Team. According to the document’s
metadata, its title was “Samarco EPR Feedback – August 2012”. It is to be inferred that this was, therefore, a
presentation given to Samarco.
645
{F1/263/1}.
646
{F8/58/1-6}.
647
{F4/11/2}.
648
{F3/106/2}.
649
{F4/11/2}.
650
{F3/106/2}.
651
{F3/107/3}.
122
Project, there is every reason to assume that BHP’s participation in it was equally extensive,
which assumption is confirmed by the limited relevant documents which have been
disclosed (see §§260-262 below).
231. Tenth, BHP had ultimate oversight over, and responsibility for, Samarco’s risks, including
of its tailings dams. The very reason why reports were given to the GMC about “the
potential risk of dam failure at Samarco […] [which] assessed the controls in place”652 is
because these were risks which BHP’s GMC in general, and the Iron Ore CSG in particular,
were responsible for within BHP in relation to the assets that BHP was invested in. When
Mr Campbell states that he was “accountable to [the Iron Ore] Exco”653 in relation to
Samarco’s risks and when Mr Beaven states that Samarco was “Iron Ore’s
accountability”,654 they mean exactly that: the Iron Ore CSG, based in Perth,655 was
accountable for the risks of Samarco, including in relation to the potential risk of a dam
failure; and there is no meaningful distinction in this respect (nor has one been properly
explained) between the term “accountable” and “responsible”.
232. Against that backdrop, the notion that BHP Brasil had any independent role in the
management of Samarco is fanciful. That is particularly so in circumstances where, on the
Defendants’ own case and/or evidence, neither Messrs Nogueira, Fernandes and Fonseca
nor Mr Cardoso were ever employed by BHP Brasil656 and Raphael Pereira was only
employed by BHP Brasil after the Collapse.657 The reason for that is, again, evidenced by
BHP’s own documents, that BHP Brasil was nothing more than a holding company
“registered in Brasil for investment in Samarco” which was established to capitalise the
dividends received therefrom.658 At least as of 11 November 2011, BHP Brasil’s stated
purposes were “records & receives dividend payment from Samarco Mineracao SA,
transfers funds to BHP Finance London as loan, records interest income on dividends
received from BHP Billiton Finance […] incurs some expenses like Local Tax Payment (on
652
Beaven 1, §63 {B1/1/21}, §64 {B1/1/21-22}, §70 {B1/1/24}, §74 {B1/1/25}, §§77-78 {B1/1/26-27}.
653
Campbell 1, §55 {B1/2/19}.
654
Beaven 1, §77 {B1/1/26}.
655
Lynch 1, §81 {B1/5/16}.
656
Messrs Fernandes, Cardoso and Fonseca were employed by BHP Billiton Metais S.A: Defence, §212(1)
{A1/2/144}. Mr Nogueira was also employed by BHP Billiton Metais S.A: {F15/417/15}. No evidence of Mr
Ribeiro’s employment status has been disclosed. As of 2 January 2014, Ms Jacques and Mr Ferreira were
contracted to BHP Brasil {F15/474/4}, {F15/474T/18}.
657
The only employment contract which the Defendants have disclosed in relation to the individual whom they
allege was employed by BHP Brasil, namely Mr Pereira, is dated 1 April 2016 {F15/469/1}. The Claimants
infer from the Defendants’ failure to disclose Mr Pereira’s prior employment contracts that prior to 1 April
2016, Mr Pereira was employed by BHP Metais S.A. along with Messrs Cardoso and Fernandes: Defence, §
108(2)(c) {A1/2/56-57}.
658
{F16/510.0.4/6}. See also {F3/421.3/15}.
123
interest income), payment to statutory auditors in Brazil and consulting expenses of general
and business nature”.659
233. The consequence of BHP’s status as Samarco’s controlling shareholder is that it was a “de
facto” manager of Samarco’s activity.660 This nomenclature reflects the practical reality
that it was BHP qua controlling shareholder who both made the decisions and influenced
their implementation. For that reason, BHP is presumptively responsible for Samarco’s
activity. However, as set out further below, there is no need for such a presumption to
operate in this case because of the overwhelming evidence that BHP is in fact responsible
for Samarco’s activity, by reason of its control and influence over, direct participation in,
benefit from, and funding of Samarco’s activity, including in ways which caused the
Collapse and thereby (necessarily) created or contributed to the risk of a Collapse.
(b) Samarco’s Corporate Governance Structure
234. Samarco’s Corporate Governance Structure was designed to guarantee BHP and Vale’s
ability to control Samarco. That this was Samarco’s purpose was underscored in the Booz
review, which identified that (as reflected in the terms of the SSA and Samarco’s Bylaws)
Samarco “should be seen as a venture that acts on shareholders’ decisions, rather than one
that pursues its own business purpose”.661 That is an apt description of the Corporate
Governance Structure that was established pursuant to the SSA, which is only reinforced
by the way in which Samarco operated in practice.
The Samarco Board
235. The Samarco Board was the deliberative body established by the SSA to govern
Samarco.662 Through their representatives on the Samarco Board, BHP and Vale had the
power to approve and did approve inter alia, Samarco’s business plan,663 annual budget
and expansions664 pursuant to Clauses 3.7 and 5.4 of the SSA665 and Article 15 of
659
{F3/269/6}.
660
Muller Prado 1, §§105-108 {C2/1T/47-50}.
661
{F8/309/5}.
662
“The Board of Directors, a deliberative collegiate body, shall govern the Company” (Samarco Bylaws, Article
14, first paragraph): {F15/286/30}. See also, “SAMARCO shall be administered by a Board of Directors
elected by the Shareholders at a general shareholders' meeting and by an independent Executive Board elected
by the Board of Directors of SAMARCO” (SSA, Clause 4.2): {F15/286/6}.
663
Defined as “the business plan that encompasses, among other things, SAMARCO's business and organizational
strategies, operational phases, basic goals, projected capital expenditures, financing plans, market scope,
appointment of agents, strategic alliances and recruitment of key employees. It shall cover a period of five (5)
years and shall be reviewed and may be revised annually by the Board of Directors of SAMARCO in connection
with the preparation of the Budget”: {F15/286/2}.
664
Defined as “expansion of the existing mining operations to increase production by at least two (2) million wet
tons of iron ore products of SAMARCO”: {F15/286/2}.
665
{F15/286/13}.
124
Samarco’s Bylaws.666 Beyond this, the Samarco Board set Samarco’s general policies;
appointed and dismissed Samarco’s management and monitored its performance;667 set
“Strategic and general business directions”, “Control[led] the business results”,
“Guarantee[d] the management integrity” and “Direct[ed] and approve[ed] the company
policies (social and institutional responsibility).”668 Pursuant to the terms of the SSA, the
Samarco Board’s raison d’être was, as the Booz review identified and Samarco itself
understood, to “Represent the parent companies’ interests”.669
236. Through the Samarco Board (in addition to their separate internal approvals), BHP and
Vale made decisions which were directly connected to the Collapse, namely, the approval
of the P3P Project, the P4P Project and Project 940. These decisions are addressed in more
detail below. They were made in pursuit of a strategy which BHP and Vale too (as
Shareholders and ultimate controllers of the business), set, in particular, through the
Samarco Board’s approval of Samarco’s Business Plan, which defined Samarco’s business
and organisational strategies, operational phases, basic goals, projected capital
expenditures, financing plans, market scope, appointment of agents, strategic alliances and
recruitment of key employees over the course of a five-year period (“Five-Year Plan”).670
237. BHP’s involvement in Samarco’s Five-Year Plan went much further than merely exercising
the right of discussion and approval envisaged by the SSA.671 By way of illustration,
Samarco’s Five-Year Plan (2013-2018) had been created with such “great involvement”672
of BHP and Vale that when it was delivered in July 2012, BHP and Vale had critically
reviewed and adjusted it in no less than 12 shareholder critical review meetings, two
committee meetings and two subcommittee meetings over the course of May and July
2012.673 The Five-Year plan (2013-2018) was some 210 pages long and had one core
666
{F15/286/30-31}.
667
“It will be incumbent upon the Board of Directors: (i) to set the Company’s general policies; (ii) to elect and
dismiss, at any time, the members of the Executive Board of the Company, establishing their duties; (iii) to
monitor the performance of the Executive Board, review at any time the books and the documents of the Company
and request information on agreements entered into or to be entered into or on any other act […] (ix) to approve
the business plan and its revisions, alterations and amendments; (x) to approve of the annual budget and its
revisions, alterations and Amendments […] (xii) to approve an expansion; (xiii) to approve technical matters,
such as ore reserves, mine data, processing capacity and equipment functionality […]” (Samarco Bylaws, Article
15): {F15/286/30-31}.
668
{F8/160/7}.
669
{F8/309/6}; Samarco’s presentation to the Belo Horizonte Corporate Governance Institute in December 2014
{F10/39/12}.
670
Pursuant to Clause 2.1(iv) of the SSA, the Samarco Board had the power to “discuss and approve the Business
Plan”: {F15/286/4}.
671
As envisaged by Clause 2.1(iv) of the SSA {F15/286/4}.
672
{F15/292/67}.
673
{F15/292/67}. BHP also participated in a so-called “consolidation” meeting for the 5YP after the August 2012
Board Meeting, to consider the relationship between the 5YP and the 2013 Budget: {F4/367.1.1T/5}. See also
125
vision, “Double the company’s value and be recognized by employees, customers and
society as the best of its sector”,674 which was bolstered by six imperatives, five of which
centred upon value maximisation: “Maximize the company’s value”, “Reduce costs and
expenses”, “Increase cash generation”, “Increase revenues” and “Be recognised for its
generation of value for society”.675
238. Samarco’s Five-Year Plan was also part of the regular annual agenda for the Finance and
Strategy Committee676 and the subject of review by the Operations Committee.677
239. The Samarco Board’s strategy of maximising productivity while reducing costs (as pursued
through the Five-Year Plan) directly reflects BHP’s consistent, GMC-approved, strategy
for Samarco.678 As Mr Randolph explained in a 1782 deposition, that strategy was one of
“Profitability and Value”.679 In relation to Samarco specifically, BHP’s strategy was,
avowedly, “to continue to fully exploit Samarco’s mineral resource base […] and low cost
operations”.680
240. To that end, BHP representatives were incentivised to influence Samarco’s 5YP and budget
exercise. For example, Mr Cardoso’s FY2013 KPIs included “exert effective influence on
Samarco’s 5YP and budget exercises”681 and Mr Fernandes’ FY2016 KPIs included “Guide
Samarco’s management team to improve […] 5YP for Samarco (Measures: demonstrate
successful examples of positive influence; Samarco KPIs are met).”682
241. Consistent with this strategy of value maximisation, BHP’s and Vale’s right of approval
over not only Samarco’s Five-Year Plan, but also Samarco’s annual budget,683 enabled them
to directly control Samarco’s budget. For instance, at the Samarco Board Meeting on 5
{F5/382.1T/1} (referring to the forthcoming preliminary kick-off meeting for the 5YP process); {F5/426.1T/1}
(referring to BHP’s expectations with respect to Samarco’s “Water Plan” in the 5YP); {F6/4.3T/1-2} (referring
to “request of Guilherme (BHPB) for the separation of the disposal of sandy tailings and mud on slides 1 and 2
and adequacy of the location of the projects”). Similarly, in 2015, Samarco’s Five-Year Plan was “exhaustively
discussed internally and with Shareholder representatives” “[a]s per the fixed annual agenda”: {F12/388/10}.
674
{F4/24.2/11}.
675
{F4/24.2/1}.
676
{F6/120/21}.
677
{F9/100/17}; {F9/100/20-21}.
678
BHP Iron Ore set out their strategy for Samarco in strategy documents (including Five-Year Plans) which were
reviewed and approved by responsible GMC members in Directional and Delivery Appraisals {F4/421/5};
{F4/344/67-70}. See e.g., Presentation on Iron Ore’s FY2009 5 Year Plan which states “once GMC endorsement
of the [five year] plan is received, the plan will be cascaded into the Iron Ore business” and with respect to the
initiative of “exploit existing resources faster”, Mr Slaven is assigned an action of “Samarco – accelerate
evaluation and development of the 4th and 5th Pellet Plant”: {F1/29.1.1/11-100}.
679
Randolph 71:1 {F17/88/19}.
680
{F4/368/1}. See also {F11/67}.
681
{F16/143}.
682
{F15/505/1}.
683
Samarco Bylaws, Article 15(x) {F15/286/31}.
126
August 2015, the Samarco Board declined to approve the Five-Year Plan and requested a
“reviewed cost vision to face the current difficult times”,684 recommending that Samarco
should: “Try to do more now, rather than later. PMC should not be put in the Five Year
Plan, until the following items are addressed to the Board’s satisfaction: people, supply
and capital productivity as well as synergy benefits”.685 The Samarco Board minutes are
replete with equivalent examples of BHP and Vale directing that Samarco reduce costs and
improve the numbers,686 which only appear to have increased in their frequency and degree
as iron ore prices continued their downturn.
242. Samarco duly acted upon these directions. For example, at the Samarco Board Meeting on
19 September 2014, Samarco was directed to reduce costs and increase production in order
to pay dividends in the wake of an unexpected decrease in the iron ore price. That
instruction is not recorded in the official minutes, but an internal Samarco email dated 7
October 2014 records that:
“Last week, on 1 October (Wednesday), we held a meeting […] with the aim of
achieving a reduction in operating costs (OPEX) and capital investment (CAPEX) […]
This scenario was disclosed by Ricardo Vescovi in the feedback from the September
Board of Directors meeting and with the prospect of a Platts close to USD 70,687] in
order to maintain the company's legal obligations (payment of dividends and
indebtedness) we foresee the need to reduce our budget base by: (i) BRL 234 MM in
OPEX and (ii) BRL 374 MM in CAPEX.”688
The Samarco Board Committees and Subcommittees
243. The Samarco Board Committees and Subcommittees were bodies set up by BHP and Vale
through the Samarco Board “to advise” it on (amongst other things) “implementing the
Business Plan, [and] conducting operations”.689 The Samarco Board Committees typically
comprised “02 members from each shareholder (Vale and BHP Billiton)”690 and “03
684
{F13/454/4}; {F12/226.2}.
685
{F13/454/4}.
686
“Labour costs should be reduced to 415 million […] deepen the analysis to mitigate the historical increase in
contractors cost and present a plan with key initiatives to reduce such cost in the next Board meeting” (Samarco
Board Meeting, December 2013) {F7/224/6}; “Samarco should maximize, the opportunity not to increase
headcount while, growing volume” (Samarco Board Meeting, August 2014) {F14/465/3}; “The Board reinforced
that costs should be Samarco’s priority after Safety and requested Samarco management to present a plan to
improve the numbers in the next Board Meeting” (Samarco Board Meeting, December 2014) {F14/266/6}.
687
The Platts iron ore index is a benchmark assessment used to assess the physical price of physical iron ore of a
specific grade.
688
{F9/230T/1}. One of the reductions was R $4.9MM for “consulting, technical assistance and other contracted
services”. See also {F9/144}.
689
“The Shareholders agree that the Board of Directors of SAMARCO may create financial, operational, technical
and other advisory committees, as it considers appropriate, in order to advise the Board of Directors of
SAMARCO on implementing the Business Plan, conducting operations and carrying out the other actions
referred to in this Shareholders' Agreement” (SSA, Clause 2.2): {F15/286/4}.
690
{F2/302/3}.
127
[members] from Samarco”,691 and were chaired by Samarco Board Members.692 The
Samarco Board’s Subcommittees were established by the Samarco Board Committees and
also comprised representatives of BHP, Vale and Samarco.693
244. According to BHP’s documents, it was through the Samarco Board Committees and
Subcommittees that BHP was able to “[e]nsure effective JV performance (informally and
formally)”;694 “[e]nsure that Samarco’s operations are conducted in a safe and sustainable
way”;695 “exert positive influence on Samarco’s operational and strategic agenda”;696
“[m]ake significant contributions to Samarco’s short and long-term performance;”697
“guid[e] Samarco’s management team;”698 “give direction and guidance to Samarco.”699
The Samarco Board Committees and Subcommittees, were, therefore, an important
mechanism through which BHP was able to direct, guide and influence Samarco. As a
reflection of their value to BHP for this purpose, BHP was heavily invested in their
development. For example:
244.1. In April 2009, BHP designed a new governance model for Samarco following the
Booz review which was presented in an April 2009 pre-Board presentation. This
proposed “a reorganization of Samarco’s committees (including responsibilities,
sub-committees, meeting frequency and composition)”.700 Mr Nogueira then led
discussions with Vale and Samarco to finalise this model,701 following which it was
implemented “right away” by means of an email drafted by Mr Nogueira which was
then endorsed by Messrs Randolph and Martins for onward circulation.702 On the
same day, José Tadeu de Moraes (Samarco’s then CEO and a member of Samarco’s
Executive Board) circulated the very same April 2009 pre-Board presentation
prepared by BHP as a record of the new governance model, replacing BHP’s front
page with Samarco’s.703
244.2. Following a meeting of the Operations Committee in January 2009 at which it was
recommended that a Steering Committee be created for the P4P Project, Mr Ferreira
691
{F2/302/3}.
692
{F8/160/9}.
693
{F2/302/5}.
694
{F1/254.2/2}.
695
{F10/477/4}.
696
{F10/477/5}.
697
{F10/477/5}.
698
{F14/381/2}.
699
{F3/107/3}.
700
{F1/223/2}.
701
{F1/214.2}.
702
{F1/255/1}.
703
Compare {F1/223/1} with {F1/256.2/1}.
128
took the lead on coordinating its creation.704 In a June 2011 email exchange between
Messrs Campbell and Ashby about the proposed governance process for P4P and
the decision to establish a P4P Steering Committee as part of thereof, Mr Ashby
commented “the combined Steering Committee with Vale is a critical element that
we must make work”.705 That is an illustration of the perceived importance of the
P4P Steering Committee to BHP’s ability to manage the project along with Vale; it
is by extension, an illustration of the broader importance of the Samarco Board
Committees and Subcommittees to BHP’s ability to manage Samarco. It also shows
that, if BHP considered that a further Committee was needed to influence and
oversee Samarco, it could be, and was, created.
244.3. In July 2011, BHP performed a “health check” of Samarco’s governance structure
which identified improvements to be made, including to formalise the roles,
accountabilities and authorisation limits of the P4P Steering Committee; to widen
the role of the Finance & Strategy and Audit Subcommittees to provide a greater
focus on internal controls, audit, risk management; and to develop improved project
reporting frameworks to improve the effectiveness of the Operations Committee.706
244.4. In May 2014, in response to a request by Ben Arnold for Messrs Fernandes and
Cardoso to provide a progress update on the action point, “Brazil Iron Ore to
influence Samarco to include Breach of Anti Corruption standard or legislation as
part of Samarco's material risk (Jun-14)”,707 Mr Cardoso stated, “A new risk
subcommittee have been created in Samarco to discuss in details Samarco’s risks
and processes in that matter. […] We believe we will be able to have more concrete
inputs after some sessions of the subcommittee, but it is definitely a channel to
influence Samarco view on their risks in a good way.”708 In other words, Mr Cardoso
was involved in the creation of a Risk Subcommittee because it was perceived to be
a channel for BHP influence.
245. The Samarco Board Committees covered a range of different aspects relevant to Samarco’s
operations. As of April 2014, there were at least the following relevant Samarco Board
Committees and Subcommittees, which had the following objectives:
704
{F1/137T/1}.
705
{F3/106/1}.
706
{F3/92.2/3}.
707
{F8/115.1/1}.
708
{F8/115.1/1}.
129
245.1. the Finance and Strategy Committee, whose objective was to “Support Samarco’s
Board of Directors on the strategic, economic and financial subjects”;709
245.2. the Operations Committee, whose purpose was to “Support Samarco's Board of
Directors in all operations / technical subjects” including through, defining
Samarco’s operational improvement agenda, analysing and monitoring Samarco’s
operational performance, and making recommendations in respect of capital
projects;710
245.3. the Remuneration Committee, whose purpose was to “Support Samarco's Board of
Directors in defining compensation policies for top executives, CEO succession
planning and broader HR policies”;711
245.4. the P4P Steering Committee, whose purpose was to “support to the Board of
Directors and the Project Team in making strategic decisions not anticipated in the
Project planning”712 including through analysing and monitoring the physical and
financial progress of the project, work safety, environmental aspects, risk
management and internal controls713 as well as to review and approve changes in
the project scope, schedule, specification and/or budget (within authorisation
limits), pursuant to delegated decision-making powers that had been granted to it
under its Internal Rules;714
245.5. the Audit Committee, whose purpose was to monitor and evaluate internal controls,
policies and procedures relating to compliance, the code of conduct, anti-corruption
and anti-trust;715
245.6. the Risk Subcommittee, whose purpose was to perform a deeper analysis of
controls; 716 and
245.7. the Performance Management Subcommittee, whose purpose was to define the
operational improvement agenda, value drivers and targets and analyse and monitor
technical aspects of the budget proposal as well as operational performance
709
{F8/160/11}.
710
{F8/160/12}; {F8/287/38}.
711
{F8/160/13}.
712
{F3/439/1}.
713
{F8/160/14}.
714
{F3/439/1}.
715
{F8/160/8}; {F8/160/18}.
716
{F8/160/18}.
130
including health, safety, the environment and the community (“HSEC”), sales,
production, costs and inventories.717
(A more detailed account of the names and membership of the Samarco Board Committees
and Subcommittees which were active during the relevant period can be found in Appendix
IX: Organograms.)
Samarco’s Executive Board
246. Samarco’s Executive Board was comprised of persons appointed by the Samarco Board
(that is, by the BHP and Vale representatives on the Board).718 As the Booz review
identified, the Samarco’s Executive Board’s raison d’être was to “Act on boards [sic.]
decisions rather than on their own to further the JV […].”719 This follows from the terms
of the SSA themselves, which require the Executive Board to act in accordance with the
responsibilities, objectives and performance criteria established by the Samarco Board and
grant the Samarco Board powers to both dismiss Samarco’s management and acknowledge
their superior performance through incentives.720
247. BHP and Vale used their powers of dismissal on Mr Tadeu (Samarco’s CEO between 2003
and August 2011721). The reasons for Mr Tadeu’s dismissal were recorded in an external
review of Samarco’s management commissioned by BHP and Vale,722 which stated that
“Certain actions taken by [him] or under him with no proper oversight, reduced the trust
the shareholders have on him”.723 These actions included matters as seemingly benign as
poor communication to the Samarco Board about a downpayment that had been made on
the purchase of equipment and changes to the concept of an engineering project without
the consent of the Operational Committee.724
717
{F3/292/7}.
718
“SAMARCO shall be administered by […] an independent Executive Board elected by the Board of Directors of
SAMARCO” (SSA, Clause 4.2): {F15/286/6}. See also “The members of the Executive Board will be elected by
the Board of Directors” (Samarco Bylaws, Article 25): {F15/286/32}.
719
{F8/309/6}.
720
“SAMARCO's Executive Board will carry out its functions pursuant to premises, goals, and performance criteria
established by the Board of Directors of SAMARCO, to be periodically checked, by means of objective
performance standards, approved by the Board of Directors of SAMARCO, sufficient to allow for an adequate
evaluation of the Executive Officers' performance. Such performance standards shall include provisions for the
removal of Executive Officers as well as for the acknowledgment of superior performance by individual
Executive Officers through programs to be approved by the Shareholders, which may include bonuses, profit
sharing and other incentives plans” (SSA, Clause 4.18): {F15/286/10}.
721
{F6/323.1/1}; {B1/2/10}.
722
{F3/48.1/1}.
723
{F3/34/3}.
724
{F3/41/1}. Although the letter purported to have been drafted by Mr Martins, its substance derived from an email
written by Mr Nogueira: {F3/20T/1}.
131
248. BHP and Vale similarly used their powers to acknowledge superior performance. In fact,
the compensation of Samarco’s management was “design[ed] and approv[ed]” by BHP and
Vale725 pursuant to a remuneration policy which they also approved via the Remuneration
Committee.726 According to this policy, Samarco’s employees would receive a base salary,
variable remuneration based on annual performance (or “Short Term Incentives”) and
long term incentives based on time spent.727 The base salary of Samarco’s managers was
set by BHP and Vale728 and their variable remuneration was rigorously assessed729 by
reference to KPIs which were also submitted to BHP and Vale via the Remuneration
Committee for comment, adjustment and approval.730 While these KPIs were subject to
certain variations between 2010 and 2014, they were always heavily weighted towards
“rewarding EBITDA growth”.731 Indeed, EBITDA growth represented 40% of the CEO’s
performance assessment between 2011 and 2013, and 50% in 2014.732
249. By reason of said powers, there was a relationship of high dependency by Samarco’s
Executive Board on the Samarco Board that enabled BHP and Vale to exercise effective
control over the Samarco Executive Board in the performance of its management functions.
The inevitable consequence of this was described in the Booz review, viz. that Samarco’s
management acted on the Samarco Board’s (hence the BHP and Vale appointees’) decisions
and had no separate purpose of its own. That is similarly why, when asked in a 1782
deposition whether she could “recall any times ever where BHP and Vale both pushed
Samarco to do something and Samarco did not do it”, Ms Sultemeier responded, “No”.733
250. The control which BHP and Vale had the power to exercise over Samarco’s management
exposes the artificiality of the distinction which BHP attempts to draw between the making
725
According to Mr Randolph: “Comp, however, must be one of the issues the Shareholders design and approve”:
{F1/41/1}.
726
As to the Remuneration Policy, extracts of this plainly relevant document which was withheld by BHP on the
basis of irrelevance (see e.g., {F3/418.2/1}, {F3/419.2/1}) can be found in Samarco Board meeting report No.
106: {F3/370/101-103}. A Remuneration Policy was approved by the Remuneration Committee: {F5/10.2/1}. It
is to be inferred from the fact that the Remuneration Policy contained at {F3/370/101-103} was “to be approved
by RemCo”: {F3/370/98} that this is the policy that the Remuneration Committee approved.
727
{F3/370/101-103}.
728
See e.g., the proposal for Samarco’s executive compensation dated 17 January 2014, with variable compensation
and salaries “approved by both shareholders”: {F7/374.2.1}.
729
See e.g., {F2/8.1/1-3}.
730
2011 KPI structure: {F3/56/2}; 2012 KPI structure: {F4/382/1}; {F3/372/102}; 2013 KPI structure: {F5/15.1/31};
2014 KPI structure {F7/410/3}.
731
{F2/382}.
732
The KPIs and their respective weightings between 2011 and 2014 were as follows: 2011 – Safety (20%),
EBITDA (40%), Finance (15%) and Capital Projects (25%) {F3/56/2}; 2012 – Safety (20%), EBITDA (40%),
Finance (15%) and Capital Projects (25%) {F3/372/102}; 2013 – Safety (20%), EBITDA (40%), Finance (15%)
and Capital Projects (25%) {F5/15.1/31}; 2014 – Risk (20%), EBITDA (50%), Capital Projects (30%)
{F7/410/3}.
733
Sultemeier 82:8-23 {F17/56/22}.
132
of recommendations to Samarco’s management and the giving of instructions.734 No such
distinction exists as a matter of Brazilian law, as is made plain by its conspicuous absence
in Parts VI and VII, however, supposing (arguendo) that all BHP did was make
recommendations, it did so not in a show of deference to the independent judgement of
Samarco’s management, but in the firm expectation – in light of its powers of dismissal
and its proven willingness to exercise them – that its recommendations would be followed.
BHP and Vale’s role aside from the Samarco Board, its Committees and Subcommittees
251. Separately to their representation on the Samarco Board and the Samarco Board
Committees and Subcommittees, BHP and Vale independently played a role. As set out in
a Samarco Corporate Governance presentation dated 2014, “BHP Billiton” and “Vale[’s]”
attributions and responsibilities included: (i) “Manage the risks of the investment”; (ii)
“Return on capital employed (dividends and value generation)”; (iii) “Approve significant
changes in business model”; (iv) “Indicate the Board of Directors representatives”; and (v)
“Conduct assessments and audits”.735
Conclusion
252. The above four features of Samarco’s Corporate Governance Model guaranteed BHP’s and
Vale’s ability to exercise control over Samarco’s activity. Having exercised that control
over Samarco’s activity, BHP cannot now pray in aid Samarco’s formal status as an
“independent” joint venture (or separate corporate personality) so as to evade liability. As
a matter of Brazilian environmental law, substance triumphs over form: with power comes
responsibility.
253. Several of the forms of conduct which justify the imputation of responsibility to BHP for
Samarco’s activity were acts performed in the exercise of joint control, in relation to which
BHP and Vale are jointly and severally liable. However, the forms of control which BHP
unilaterally exercised over Samarco are equally relevant to BHP’s liability as a polluter,
particularly in circumstances where (insofar as there is a dispute about the circumstances
in which liability may attach to an individual member of a controlling group for the
purposes of demonstrating an abuse of power under Article 117 of the Corporate Law) there
is no legal requirement to establish that the control exercised by BHP for the purposes of
734
Campbell 1, §23 {B1/2/8}.
735
{F8/160/6}. Matters reserved for shareholder approval at a Shareholders’ Meeting include those set out in the
Bylaws at Articles 12, 13 {F15/286/28-30}, 32 and 34 {F15/286/34} (which are, in broad terms, financial or
transactional matters) as well as the appointment of individuals to the Samarco Board under Clause 4.2 of the
SSA {F15/286/6}.
133
imputing responsibility under Article 3, IV, of the Environmental Law satisfies the
requirements for liability under Article 117 of the Corporate Law.
254. From its position as controlling shareholder, BHP was able to control and directly
participate in Samarco’s activity in multifarious ways. In the following Section, the
Claimants introduce BHP’s control over, and direct participation in:
254.1. increases and/or planned increases in production through the “P3P”, “P4P”, “P5P”
and “PMC” Projects; increases in tailings’ storage capacity through Project 940; and
the disposal of Vale’s tailings behind the Dam (Section iii);
254.2. the risks of a dam failure at Samarco (Section iv);
254.3. matters of health and safety at Samarco (Section v);
254.4. the receipt of financial benefits from Samarco (Section vi);
254.5. the funding of Samarco (including the funding of P4P) (Section vii);
254.6. the post-Collapse aftermath (Section viii).
iii) BHP’s control over and direct participation in Samarco’s Growth Projects,
increases in tailings storage capacity and the disposal of Vale’s tailings
BHP’s control and participation in Growth Projects
Introduction
255. In line with BHP Iron Ore’s broader strategic imperative to “continue to leverage our long
life, low cost resource base to grow market share”736 and implement growth programmes
“rapidly and at competitive capital efficiencies”,737 BHP’s key focus for Samarco was to
“Deliver the Samarco growth program”.738 This involved “expand[ing] Samarco’s
production capacity, subject to achieving positive return on our investment, to meet the
growing demand for high-quality seaborne traded pellets.” 739
256. In the mid-2000s, Samarco’s growth programme focused on the P3P Project. This
involved the construction of (i) a second concentration plant, (ii) a second ore pipeline, and
(iii) a third pelletizing plant.740 The P3P Project was approved by BHP and Vale in October
736
{F1/139.2/2}.
737
{F1/139.2/8}.
738
{F2/381/8}. See also {F1/343/1}, tab “GC – Samarco P4P”, row 6-7.
739
{F2/351/1}.
740
{F1/59/60-92}.
134
2005 and completed in mid-2008.741 It increased iron ore pellet production by 54% from
14.0 Mdmtpy of pellets a year to 21.6 Mdmtpy.742 This significant increase in iron ore
production resulted in a proportionate increase in tailings production and necessitated the
construction of the Fundão Dam in 2008 to provide sufficient storage space for the
increased tailings.743
257. After the P3P Project, the next stage of growth focused on the P4P Project.744 This sought
to increase Samarco’s iron ore pellet capacity by a further 37%.745 This involved the
construction of (i) a third concentrator, (ii) a third pipeline, (iii) a fourth pellet plant, and
(iv) certain enhanced Stock Yard and ship loading capacity at the Ubu port. The project also
included certain pre-investments to support a potential fifth pellet plant, including a larger
pipeline and civil works to support a new concentrator.746 The execution phase of the P4P
Project began in April 2011 and the project was completed in 2014, with the third
concentrator becoming operational from April 2014.747 As with the P3P Project, the P4P
Project led to a significant increase in tailings production, from c. 16.5 million tms in 2013
to c. 21.5 million tms in 2014748 when the third concentrator came online – an increase of
around 30% year on year.
258. The next stage of Samarco’s growth had originally contemplated building a fifth pellet
plant (“P5P”).749 However, as explained below, a decision was taken around 2013 to focus
instead on pursuing further production growth by utilising excess capacity in the system
pursuant to Project Maximum Capacity (“PMC”). PMC involved two phases. Phase 1
would increase concentrate production to 36.5 Mtpa through the installation of a fourth
concentrator at Germano, optimising Samarco’s existing pellet plants and selling the
remaining concentrate as pellet feed (i.e. concentrate) rather than pellets. Due to the
construction of a new concentrator, this phase was anticipated to generate a further
significant increase in tailings production. Phase 2 envisaged at least one further expansion
of 8.5Mtpa of concentrate fully to unlock the latent capacity.750 However, in April 2015,
741
{F8/180.2/11}.
742
{F8/180.2/7}.
743
The increased production made it “urgent to start operating another tailings disposal area”: {F1/1T/14}.
744
See {F1/139.2/8}; {F1/343/1}, tab “GC – Samarco P4P”, row 12.
745
Defence, §94(2) {A1/2/45}.
746
POC, §§62-64 {A1/1/33-34}; Defence, §§93-94 {A1/2/44-45}; {F2/392/4}; {F2/392/44-45}.
747
{D8/6/60-61}.
748
{PE49/12/186}.
749
{F1/139.2/8}.
750
{F9/93/6}; {F8/34/1}; {F8/55.1/7-17}; {F5/222/22-23}.
135
PMC was put into “hibernation” because economic conditions were challenging and
capital was tight.751 This project was still on hold at the time of the Collapse.
259. All BHP investments exceeding certain financial thresholds752 were considered “Major
Capital Projects” pursuant to GLD 0.30 (“Investment Process”753) and were required by
GLD 0.31 (“Major Capital Projects”) to be developed, refined, and optimised through an
“Identification Phase”, “Selection Phase” and “Definition Phase”, before being executed
in accordance with an approved “Project Execution Plan” during the “Execution Phase”.
In certain cases where expenditures exceeded “group thresholds”, as was the case with P4P,
BHP Board approval was required.754 P4P and PMC were each Major Capital Projects
which were subject to intense approval requirements under GLD 0.30 and GLD 0.31. While
Project 940 did not qualify as a Major Capital Project, it was still subject to approval
requirements in GLD 0.30 including that it go through an IPR.755 The Claimants do not
know whether the GLDs in force at the time that the P3P Project was approved are the same
as those that applied when the P4P Project was approved. However, it appears from the
documents available that investment commitments of USD $100 million (BHP share) were
categorised as Major Capital Projects at the time of its approval, and it is reasonable to
infer that a similar approvals process was in place at that time to that which applied to the
P4P Project.756
The P3P Project
260. On 20 October 2005, BHP and Vale (via the Samarco Board) approved the execution of the
project to open a third pellet plant (“P3P”) at a cost to BHP of USD $590 million. As a
news release issued by BHP at the time underscored, this was a BHP decision (“BHP
Billiton today announced the approval of the Samarco Third Pellet Plant project in Brazil
[…] at a cost of US$590 million (BHP Billiton share)”757). The P3P Project predates the
period for disclosure in these Proceedings, and for that reason, the documents available to
the Claimants about BHP’s involvement in the project are less substantial than those that
pertain to the P4P Project, the P5P Project, or PMC. However, the available documents
751
{F12/336/27}.
752
BHP investments over USSD $100M prior to 2006, investments where BHP’s share was over USD $250M
between 2006 and 2013, and where the total investment value exceeded and USD $250M thereafter:
{F11/96.2/54}.
753
{F16/50}; {F2/492}.
754
{F2/492/9}.
755
{F16/50/1-9}.
756
{F11/96.2/54}.
757
POC, §94 {A1/1/47-48}; Defence, §125(1) {A1/2/69}.
136
confirm the BHP Board approved this project,758 and given that the P3P Project was a Major
Capital Project, it is reasonable to infer that BHP’s control over and direct participation in
its development was no less extensive than BHP’s involvement in the P4P Project, the P5P
Project and PMC as continued in the following sections.
261. The P3P Project involved, amongst other things, 62 Project Development Study759 (“PDS”)
reviews,760 42 Coordination meetings, 24 shareholder evaluations (resulting in c. 30
opportunities for improvement in each evaluation) and 29 Steering Committee meetings761
which were attended by BHP representatives to provide “strategic direction for the
development of the project”,762 and two audits conducted by BHP and/or Vale.763 BHP’s
and Vale’s involvement in the P3P Project was described in a P3P Completion Report in
the following terms:
“Throughout the planning and execution phases several actions were developed aimed
at ensuring effective management of the Third Pellet Plant project. Senior experts from
both BHP Billiton and Vale, along with the project team, were involved on various
events, bringing additional value to the project through a strong focus on safety,
implementation schedule and costs forecast”.764
262. Similarly, BHP conducted at least one Independent Peer Review765 of the P3P Project,
which concluded that “[t]he area of most importance will be the new tailings dam in
Fundao Valley”766 and one “Post Investment Review” in November 2009 which noted
various “shortcomings”, such as the “leak at Fundao dam” (see §§77-78).
The P4P Project
263. On 6 April 2011, BHP and Vale (via the Samarco Board) approved767 the execution of the
project to open a fourth pellet plant (“P4P”) at a final cost to BHP of USD $1.6 billion (i.e.
758
The approval of the P3P Project predates the disclosure period. However, a CV for Jair Rangel, who was
Operations Manager – Samarco Brazil, BHP, between March 2005 and January 2007 states, “Member of the
Business Committee and Third Pellet Plant Project Steering Committee providing strategic direction for the
development of the project. This included successfully completing 3rd Pellet Plant Feasability Study and
gaining BHP Billiton’s Board approval for this US$ 1.2 billion investment” {F8/164/162}.
759
{F1/47/16}.
760
BHP also produced PDS reports in relation to P4P {F3/106/1}. We understand that “PDS” refers to the Post
Development Study.
761
{F1/59/91}.
762
{F8/164/162}.
763
{F1/59/90}.
764
{F1/59/90}.
765
{F1/90.2/1-9}. The review identified that the “issue of tailings management and future plans required special
attention” {F1/90.2/2} and that “current slimes disposal areas are limited and increased production may place
significant extra pressure on this bottleneck” {F1/90.2/3}.
766
{F1/90.2/5}.
767
This was subject to the approval of the project by the Administrative Board of Vale, which was expected by
19 April 2011 {F6/345/3}.
137
a combined cost to BHP and Vale of USD $3.2 billion).768 As a news release issued by BHP
at the time made clear, this was a BHP decision (“BHP Billiton Approves Samarco
Expansion”769) which is further underscored by the fact that it was also approved by the
BHP Board before it was approved by the Samarco Board.770 For that reason, once again,
BHP directly participated in, and exerted significant control over, the P4P Project, from
inception to execution. This is demonstrated by the following five points.
264. First, from the outset, BHP was actively involved in considering whether to pursue the P4P
Project. In 2008, BHP carried out its first “shadow” Resource Development Plan771
(shadow meaning, without Samarco’s direct participation772) (“Shadow RDP”) in order to
“analyze growth options for Samarco and assess alternatives to enhance Samarco’s value
based on current knowledge of its existing resources”773 and identify whether “the 4th Pellet
Plant [is] the best idea”.774 The two growth alternatives which were the main subject of
BHP’s analysis were pellet production and pellet feed (concentrate) production.775 BHP
concluded that investing in pellet plants yielded better returns and accordingly that
“Samarco therefore should consider investing for the development of its 4th pellet plant and
prepare itself […] for the development of its future expansions beyond the 4th pellet
plant.”776 Samarco did exactly that.
265. BHP was also involved in considering whether to include certain pre-investments in P5P
(such as a larger pipeline) within the P4P Project. In BHP’s independent review of the P4P
Project at Selection Phase, it identified that “several material scope choices associated with
the potential pre-investment for the potential 5th pellet plant are yet to be made”777 and
required that an interim review be conducted in mid-2010 for that purpose.778 To that end,
768
{F6/345/3}; POC, §65 {A1/1/34}; Defence, §96 {A1/2/45}.
769
POC, §138 {A1/1/62}; Defence, §167 {A1/2/86-87}.
770
“The Board […] resolved to delegate to the Chief Executive Officer the approval of the requested
capital expenditure of US$1,756,000,000 to progress the Samarco Fourth Pellet Plant from Definition Phase
to Execution Phase” {F2/415/11}.
771
BHP’s Shadow RDP for Samarco had the objective of “determining [Samarco’s] ultimate business
configuration and thus its ultimate size” {F2/304/5}. The RDP “Analysed Samarco’s resources and reserves,
assessed mine development alternatives […] and evaluated several optimization and expansion scenarios”:
{F1/151/2}. Amongst other things, BHP used its Shadow RDP to assess “influence Samarco with options we
[BHP] have identified” {F1/78/1}.
772
{F1/151/2}.
773
{F1/151/2}.
774
{F1/78/1}.
775
{F1/123.0.2/11}.
776
{F1/123.0.2/11}.
777
{F1/446/1}.
778
{F2/248.1/8}.
138
with BHP’s significant involvement,779 Samarco performed a Range Resources Analysis in
May 2010 to develop an inventory of Samarco’s resources.780 Using the findings from this
analysis, BHP carried out a 2010 Shadow RDP, which resulted in the conclusion in June
2010 that “Samarco should plan its investments considering a future investments in
P5P”.781 Samarco included these pre-investments in the final scope for the P4P Project .782
266. Second, from at least 2009, BHP’s growth strategy for Samarco was to “Progress P4P
through to Operation”.783 To that end, BHP’s representatives were required to influence the
implementation of the P4P Project. Thus, Mr Nogueira’s FY10 and FY11 KPIs included
“push Samarco to present a more sound Strategic plan”784 and “Progress Samarco P4P
through to Operation” and “Control implementation of P4P”785 respectively, and Mr
Campbell’s FY12 KPIs included “ensure effective monitoring and influencing of P4P”.786
267. Third, given that the project required BHP investment exceeding USD $250 million, its
development was carried out in accordance with the rigorous internal approval processes
required by both GLD 0.30 and GLD 0.31 (as outlined at §259 above). Through these
approval processes, BHP exercised significant control over the P4P Project throughout its
phases of development.
268. At both the Selection Phase (March 2008 - December 2009) and Definition Phase
(December 2009 - April 2011), BHP carried out its own detailed IPRs of the project. These
consisted of “detailed fit-for-purpose” reviews covering 17 different topics and further
subtopics787 (including mining, engineering development, infrastructure, strategy, HSEC
and operations management) which were performed by a multi-disciplinary team of
personnel selected from across BHP based on their “competencies, knowledge and
experience” and, where appropriate, their authority to represent a relevant BHP Corporate
Function.788
779
{F2/248.1/9}.
780
{F2/304/9}.
781
{F2/304/31}.
782
{F2/396/25}.
783
{F2/421} sheet “BHPBIO Regional Strategy”, cell C7.
784
{F1/358/1} cell C12.
785
{F2/421/1} sheet for Nogueira, cells D11 and J11.
786
{F16/334/1}; {F2/381/3}.
787
These included inter alia strategy, market analysis, risk management, geology and mineral resources, mining,
metallurgical processing, infrastructure, engineering development, HR, project execution, operations
management, information management, HSEC and work plan {F1/348/3-4}.
788
{F1/348/3}.
139
269. BHP’s IPR teams at both Selection and Definition stages made a large number of
recommendations to Samarco that were transposed into action items789 which covered a
wide variety of topics, ranging from developing new engineering studies, preparing range
analysis, carrying out market studies, documenting actions in a risk management plan,
methods to reduce operating costs, stakeholder management, port studies, geological
drilling studies, key personnel, and so on.790
270. BHP required Samarco to follow its recommendations,791 including as a precondition to

BHP’s approval of the project.792 To that end, BHP monitored Samarco’s implementation
of the action items on an “item-by-item” basis, including through monthly peer review
meetings,793 and updates to the Samarco Board.794
271. BHP’s final IPR Summary Reports and functional reports for the Selection795 and
Definition796 phases also set out various recommendations, findings, action items and
conditions to BHP’s recommendation that the project proceed to the next phase. Notable
examples include that endorsement to proceed to the next phase be conditional on (i)
commitment to a program of work to licence and construct additional tailings capacity in
the short term797 and (ii) a site visit by BHP Iron Ore’s P4P Project Manager to Iron Ore
Asset Development Projects with a view to ensuring that an “appropriate project
organisation” is established to ensure successful delivery.798
272. Fourth, demonstrative of the fact that the P4P Project was a project for which BHP was
responsible, it was subject to multiple stages of approval within BHP:
272.1. Prior to obtaining Samarco Board approval of the P4P pre-feasibility study on 2
December 2009,799 thereby moving the project from Selection Phase to Definition
Phase, the project went through a multi-stage internal approval process within BHP.
789
For Selection Phase IPR action plans (and documents reporting on these action plans) see e.g., {F1/312T/1};
{F1/133/1}; {F1/320.2}; for Definition Phase IPR action plans see e.g., {F2/7/1}; {F2/58/1}; {F2/135/1};
{F2/231/1}; {F2/233}; {F2/200T/1}.
790
{F1/312}.
791
{F1/132/1}.
792
{F1/202/1}.
793
{F1/263/1}.
794
{F14/151/3}.
795
{F1/434/1-3}; {F1/435/1}; {F1/436/1-2}; {F1/437/1-3}; {F1/438/1}; {F1/439/1}; {F1/440/1-2};
{F1/441/1-2}; {F1/442/1-2}; {F1/443/1-2}; {F1/444/1-2}; {F1/445/1-2}; {F1/446/1-2}; {F1/447/1-2};
{F1/450/1}; {F1/451/1-2}; {F1/449/1-3}; {F1/404/1-2}.
796
{F2/319/1-3}; {F2/267.3/1-2}; {F2/275/1-2}.
797
{F2/275/1}.
798
{F1/434/1}.
799
{F14/150/3}.
140
This included obtaining endorsement from (i) the IPR leader on 21 October 2009,800
(ii) Iron Ore’s President and Group Executive on 20 November and 23 November
2009 respectively,801 (iii) the Manager of the Investment Office on 24 November
2009,802 (iii) BHP’s Investment Committee on 1 December 2009,803 the latter
approval being a precondition to the Samarco Board’s ability to approve the
project.804
273. Prior to the Samarco Board’s approval of the project in April 2011, it similarly went through
multiple stages of endorsement and approval at BHP, including by (i) the IPR Leader on 4
January 2011,805 (ii) BHP’s GMC Owner on 9 January 2011,806 (iii) Iron Ore’s President
on 10 January 2011,807 (iv) BHP Project Management Services on 12 January 2011,808 (iv)
BHP’s Investment Office on 13 January 2011,809 (v) BHP’s Investment Committee on 18
January 2011, which “delegate[d] to BHPB management the authority to approve the
investment via Samarco Board approval”,810 and (vi) BHP’s Board of Directors on 3
February 2011, which delegated to the CEO the approval of the requested capital
expenditure of USD $1.756 billion to progress the project from Definition Phase to
Execution Phase.811
274. Fifth, BHP continued to exercise control over and directly participate in the execution of
the P4P project following its approval. As to this:
274.1. BHP’s “full time BHP Billiton Project Manager”,812 Mr Ferreira exercised direct
and daily oversight over the project during its execution phase813 “spend[ing] most
of his time in the field and in meetings with Samarco’s project team, engineering
Firms, contractors.”814 Mr Ferreira’s oversight was sufficiently effective to be
regarded by Mr Nogueira as being “an important factor for the success of the project
800
{F1/434/1}.
801
{F1/469/4}.
802
{F1/469/30}.
803
{F1/486/2}; {F1/469/1}.
804
{F1/457/2-6}.
805
{F2/396/30-34}.
806
{F2/396/2}.
807
{F2/396/3-29}.
808
{F2/393/1-2}.
809
{F2/396/33}.
810
{F3/94/2}.
811
{F2/415/11}.
812
{F3/106/2}.
813
{F3/107/3}.
814
{F4/11/2}.
141
so far.”815 In the course of his work, Mr Ferreira was supported by a junior engineer,
Thaís Jacques (of the Brazil Iron Ore team), who accompanied him on “site visits
and meetings” and in “all analytical work for P4P (analysis of drawings, schedules,
contracts etc).”816
274.2. Through Messrs Nogueira, Fonseca and its “permanent representative”817 Ferreira
as Committee members, BHP was careful to exercise control over the project
through the P4P Steering Committee which was set up in June 2011 with three
members from each of BHP, Vale and Samarco.818 The P4P Steering Committee
served an important purpose to support the Board “and the Project Team in making
important decisions about the project”819 and “give direction and guidance to
Samarco”820 The Claimants understand that the P4P Steering Committee met at least
42 times during the lifetime of the project.821 The Committee was able to exercise
significant influence over the execution of the project, in part, through the large
number of recommendations which it made to Samarco, which covered all manner
of strategic and operational matters ranging from Germano’s water intake system,822
delays in earthmoving in Ponta Ubu,823 risk management,824 shiploader setup,825
quality assurance,826 Germano basic grid access,827 and many more. It also had
considerable powers, including the ability to approve changes in scope, schedule,
specification and/or budget involving amounts over USD $10 million at a maximum
aggregate amount of USD $100 million.828
815
{F4/11/2}.
816
{F4/11/2}.
817
{F3/61.1/1}.
818
{F3/439/1}.
819
{F7/224/10}.
820
{F3/106/2} (refers to “key points” including a BHP/Vale P4P Steering Committee “to oversee the project
formally, give direction and guidance to Samarco, and make any decisions re change of expenditure on behalf
of the owners”).
821
{F3/84}; {F15/305/25-27}; {F15/305/28-30}; {F14/163}; {F14/165}; {F5/298/21}; {F3/365}; {F3/366};
{F3/374}; {F3/492}; {F15/155}; {F15/136}; {F4/485/12-19}; {F4/245}; {F4/405}; {F4/452}; {F5/276/15-
20}; {F5/276/23-28}; {F5/276/29-34}; {F5/276/35-40}; {F15/315/29-33}; {F15/315/34-39}; {F6/57};
{F15/315/40-45}; {F6/165}; {F15/315}; {F14/432/35-38}; {F14/432/39-46}; {F14/434}; {F14/433}; {F7/266};
{F7/367}; {F7/388}; {F9/100/31-35}; {F9/100/36-39}; {F9/100/40-41}; {F9/100/42-44}; {F9/100/45-48};
{F9/100/49-55}; {F15/319/40-47}.
822
{F3/365/2}.
823
{F15/305/29}.
824
{F15/310/26}.
825
{F15/310/42}.
826
{F3/492/2}.
827
{F4/485/12-19}.
828
{F3/439/2}.
142
274.3. BHP carried out periodic Execution Phase Reviews (“EPRs”) of the P4P Project
during its execution, including in July 2012,829 March 2013,830 July 2013,831 and
December 2013.832 Their purpose, as explained by Mr Mendoza – once a member
of Group Project Management (“GPM”) based in Santiago, Chile – in a 1782
deposition, “was to build a better project”.833 EPRs were led by BHP and focused
on assessing the project’s performance by reference to a variety of matters,
including general execution management, human resource management, risk
management, value improvement, engineering management, budget and cost
management and construction and fixed asset management.834 Again, they would
result in recommendations where any opportunities for project performance or
material issues were identified.835
274.4. As Mr Mendoza explained in a 1782 deposition, the EPR process necessitated

extensive, in-field, participation from BHP representatives. In particular, Mr
Mendoza’s evidence was that he had made “more than ten, less than 30” trips to
Samarco,836 and during such visits, he would spend “8 hours a day for 2 weeks”
with Samarco’s Operations Director,837 beginning his site visit with a tour
“throughout the site”.838 Mr Mendoza’s evidence also sheds light on the fact that
“the timing of the project was a primary concern”839 because of “BHP’s concern”840
that costs would be “higher if the project is behind”.841 As a consequence, “[t]here
was a lot of pressure on the team […] to regain the loss [sic.] progress”842 and
“things started slipping between the cracks […] because of the shear amount of
activities that were going on”.843
829
{F3/496/1-2}; {F4/233/13}.
830
{F14/383.1.0.2/1-3}.
831
{F8/463/3}.
832
{F7/450.4/1}.
833
Mendoza 72:22 {F17/26/19}.
834
{F5/17.4/1-3}.
835
{F5/17.4/1}.
836
Mendoza 188:21-22 {F17/26/48}.
837
Mendoza 68:19-20 {F17/26/18}.
838
Mendoza 93:20-22 {F17/26/24}. At 101:15-16, Mr Mendoza stated that he recalled seeing the Fundão Dam
during site visits - “They took us everywhere”: {F17/26/26}.
839
Mendoza 136:11-14 {F17/26/35}.
840
Mendoza 123:6-9 {F17/26/32}.
841
Mendoza 123:6-9 {F17/26/32}.
842
Mendoza 152:3-11 {F17/26/39}.
843
Mendoza 135:17-136 {F17/26/35}.
143
Project Maximum Capacity
275. In keeping with BHP’s exercise of (joint) control over, and direct participation in,
Samarco’s Growth Projects, BHP promoted Samarco’s decision to pursue PMC instead of
P5P. BHP’s growth strategy with respect to P4P initially contemplated building a further,
fifth, pellet plant (“P5P”).844 In January 2012, however, BHP’s position changed. The
GMC identified that BHP’s forecast capital expenditure for the following two years was
some USD $25 billion greater than operating cashflows. Mr Randolph conveyed the result
to BHP colleagues in the following terms: “We are going to need to cut back our spending
– substantially”, such that Samarco’s P5P would probably not proceed.845
276. Mr Wilson’s proposed counter-strategy, discussed in internal BHP correspondence, was to

switch Samarco’s focus away from P5P towards lower cost projects which could increase
concentrate (as distinct from pellet) production, thus utilising Samarco’s latent pipeline
capacity without the enormous capital expenditure that would have been needed to build a
fifth pellet plant.846 BHP coined this a “Capital-light” growth option,847 with Mr Zweig
being assigned the Action Item, following Iron Ore’s 2012 Directional Appraisal with Mr
Randolph and Graham Kerr, of increasing Samarco’s focus on expanding pellet feed
production.848 By November 2012, BHP’s CFO concluded that any spending on P5P would
have to be deferred until 2019 and would not be included in BHP’s Five-Year plan.849
277. That is the backdrop to Project Maximum Capacity, which came to Samarco’s Board as a
“pre-conceptual” project proposal on 13 April 2013.850 As the capital contribution required
for PMC exceeded USD $250 million, PMC was similarly subject to the rigorous internal
approvals process required by GLD 0.30 and 0.31. Accordingly, BHP, once again, directly
promoted and influenced the development of the project, including through the making of
recommendations which Samarco developed into action items,851 and the detailed
monitoring of their implementation of the same by Mr Ferreira.852 Similarly, Vale and BHP
844
{F2/381/8}.
845
{F3/285/2}.
846
{F4/379/1-3}.
847
{F4/425/16}.
848
{F5/19/2}.
849
{F5/359.1/1-5}; {F5/359.2/24}.
850
{F5/291/92-97}.
851
{F9/167/2}.
852
Mr Ferreira notes that IPR recommendations are missing from PMC Monthly Report {F9/147T/2}; Mr Ferreira
queries why a PMC monthly report refers to the use of a larger SAG mill being defined without referencing
the upcoming workshop with Steve Morell which will be the final decision making forum {F9/355T/4}; – note
that BHP appointed expert Steve Morell as their independent expert to review the proposed grinding circuit
configuration in accordance with the IPR recommendations {F9/101T/1}.
144
representatives (led by Alejandro Tapia)853 visited Samarco for an IPR of Samarco’s
preferred investment for PMC,854 BHP attended technical meetings with Samarco to
discuss selection phase studies,855 and meetings regarding structural projects (related to
PMC).856
278. In April 2015, PMC was earmarked for “hibernation” after the expected completion of the
Selection Phase later that year, because economic conditions were challenging and capital
was tight.857 This decision was made following high-level exchanges between BHP (Mr
Ottaviano) and Vale (Stephen Potter),858 and ultimately confirmed at Samarco’s August
2015 Board Meeting.859 P5P and PMC therefore illustrate that BHP could, and did,
reorientate Samarco’s production priorities. BHP influenced Samarco away from P5P to
PMC, then put PMC on ice. Projects would stall without BHP’s continued backing.
BHP’s control and participation in Project 940
279. On 15 April 2015, BHP and Vale (via the Samarco Board) approved the project to execute
Project 940 up to El. 920m860 at a capital expense to BHP of c. USD $49 million.861 On 5
August 2015, BHP (via the Samarco Board) approved the project to execute Project 940
up to El. 940m.862 Once again, this was a BHP decision which was subject to the rigorous
internal approvals process required by GLD 0.30. Further, as an investment commitment
of less than USD $50 million, Project 940 required approval by the “GMC Owner” and
notification to the BHP CEO.863 For that reason, BHP exercised control over, and directly
participated in, the project from inception to completion. It did so in four principal ways.
280. First, a particularly striking feature of BHP’s participation in Project 940 is Messrs Ferreira
and Fernandes’ involvement in lowering the CAPEX for Project 940 so that it could be
rushed through in April 2015. BHP’s share of Project 940 was originally estimated to be
USD $54.3 million, which would have required, pursuant to GLD 0.30, the approval of
BHP’s CEO rather than the President of BHP’s Iron Ore CSG.864 This would have slowed
down BHP’s approval process, which was the same for operated and non-operated
853
{F8/355/78}.
854
{F8/418/1}; {F8/419/1}.
855
{F11/265/1-5}.
856
{F10/497.2/1-59}.
857
{F12/336/28}.
858
{F10/328/1}; {F10/329/1-2}.
859
{F15/182/6}.
860
{F14/267/7}; POC, §205A.5 {A1/1/87}; Defence, §234A(5)(a)(i) {A1/2/161}.
861
{F11/257/9-11}.
862
{F13/454/6}.
863
{F16/50/8}.
864
{F10/432/1-2}; {F10/427T/1}; {F10/439/1}.
145
businesses.865 On 9 March 2015, Mr Ferreira emailed Mr Fernandes to explain that
Samarco would try to lower the CAPEX for Project 940 to around USD $49 million and to
ask whether presenting a CAPEX of USD $48-49 million was “pushing it”.866 On 10 March
2015, Samarco provided an updated CAPEX, the effect of which was to bring BHP’s share
to USD $49.429 million.867 The inference to be drawn is that Samarco reduced the CAPEX
because it was pressured to do so by Mr Ferreira.
281. Second, Project 940 entailed an investment commitment but one which was less than USD
$250 million. Hence, the IPR process required by GLD 0.30 applied and resulted, once
again, in a series of recommendations which Samarco was required to implement as a
precondition to Samarco Board approval. To that end, detailed feedback following BHP’s
IPR on Project 940 was given to Samarco at an all-day meeting on 19 March 2015.868
Thereafter, the final draft of the documents comprising the Definition Phase Study for
Project 940 (“DPS”) as required by BHP’s GLDs was sent to Anthony Artaud and others
at BHP in Australia on 31 March 2015.869 The review conducted by BHP’s and Vale’s
technical teams resulted in “recommendations for improvements” which were then
compiled into an action plan to be “treated with highest priority” to be resubmitted to
Shareholders on 9 April 2015 before the Samarco Board meeting on 15 April 2015.870
282. As part of BHP’s IPR process, BHP’s technical teams conducted numerous visits at the
Dam, for example:
282.1. On 3 December 2014, Mr Ferreira and Alan Paddon led a BHP technical visit which
discussed the construction of the drainage mats for Project 940, including the large
number of truck trips that would be required (300,000 m3 of sand representing
approximately 17,000 truck trips);871
282.2. On 17 March 2015, a BHP “Geotechnical team” visited the Germano mine and
participated in a technical meeting titled “Geotechnical issues – Tailings dam El.
940m”;872
865
{F10/450/1-2}; {F11/185/1-3}.
866
{F10/462/1-3}.
867
{F10/481/1-2}; {F10/481T/1-2}; {F10/483/1-3}; {F10/464/1-2}; {F10/464T/1-2}; {F11/52T/1-2}; {F11/52/1-
2}.
868
{F11/131/1-7}; {F11/131T/1-7}; {F11/132/1-9}; {F11/132T/1-9}; {F11/99/1-21}; {F11/99T/1-21}.
869
{F11/173/1-3}.
870
{F11/244/4}; {F11/244T/4}; {F11/244T/4}; {F11/233T/1-48}.
871
{F10/120T/1-2}; {F10/120/1-2}; {F10/2/1-22}.
872
{F10/492/4}.
146
282.3. On 13 April 2015, Devesh Baijnath, Mr Ferreira, Mr Mendoza and Gonzalez visited
the Germano mine for the express purpose of “Tailings Dam-El. 940”, including a
3½ hours “visit to the tailings dam – elevation 940”.873
282.4. On 14 April 2015, as part of BHP’s pre-Board preparations for the Samarco Board
Meeting the following day, numerous senior BHP representatives were due to visit
the Dam.874
283. Third, BHP (via Mr Fernandes, Mr Ferreira and/or Ms Jacques), closely monitored the
project from inception through their active participation in numerous Structural Update
Meetings, at which Project 940 was discussed under the code number “Project 3254”.875
For instance, on Friday 8 January 2015, having reviewed Structural Projects (“PPE”)
Monthly Report No. 3 for December 2014, Mr Ferreira wrote to Samarco requesting a
meeting on Monday 11 January 2015 that would last 2-3 hours to understand “in detail”
the issues raised.876 At the Structural Projects Update Meeting held on 15 January 2015,
Mr Ferreira conveyed BHP’s recommendation that the focus should be on the approval of
Project 940.877 Samarco’s Action Plans for its Structuring Projects program included
actions with respect to Project 940 which recorded BHP’s participation, such as: “Review
the progress curves and consider the effort and work to adapt the project to the
requirements of BHPB and Vale.”878
284. Fourth, BHP representatives also closely monitored the project from inception through
their active participation in numerous meetings of Samarco’s Board of Directors,879
Operations Committee,880 Performance Management Subcommittee,881 Capital Projects
Subcommittee,882 and Risks Subcommittee,883 where directions were given to Samarco
with respect to Project 940, often with the Setback in plain sight. Plans to fill the Setback
873
{F11/193T/1-3}; {F11/193/1-3}; {F11/262/1-2}.
874
{F11/257/9-11}; {F11/171/1}; {B1/5/23-24}. We note that whereas BHP have led evidence to dispute Mr
Lynch’s visit to the Dam on 14 April 2015, they do not dispute that Mr Ottaviano, Ms Hood, Ms Beck and Ms
Torres all did so.
875
{F9/471.2T/2}; {F10/497T/2}; {F11/469T/2-3}.
876
{F10/177T/1-2}; {F10/177/1-2}.
877
{F10/244T/1-10}.
878
{F10/93T/1}, Item no. 42, Row 49.
879
{F15/311/19}; {F10/474/4-5}; POC, §179.15 {A1/1/79-80}; {F8/302/7-11}.
880
{F5/203/37}; {F8/7/4-7}; {F12/274/8}; POC, §193 {A1/1/82}; Defence, §221 {A1/2/150-151}.
881
{F7/359/55-57}; {F10/379/9}; {F13/452/48-50}.
882
{F10/61/1-5}; {F11/55/2}; {F11/55/6}; {F12/69/6-7}.
883
{F10/413/39-41}.
147
were discussed, at the Performance Management Subcommittee in particular.884 Again,
BHP’s representatives were active participants. For example:
284.1. On 18 March 2015, Mr Fernandes (via the Operations Committee) approved the
split of Project 940 into two stages to minimise delays caused by the licensing
process based on a total CAPEX of BRL 291.6 million (i.e. less than USD $100
million, with half to be attributed to BHP).885
284.2. On 14 April 2015, BHP representatives attended a BHP pre-Board meeting which
discussed the approval of Project 940, including the “internal drainage system, new
spillway, and tailings pipeline system”.886
284.3. On 15 April 2015, included within the materials for the Samarco Board meeting
were large images of the Setback and images of the areas where internal drainage
would be built for Project 940.887
285. Following a Capital Projects Subcommittee meeting on 22 May 2015, Mr Ferreira added a
comment to the minutes that there was concern about late modifications to Project 940, and
risks posed by requiring changes to the body of the dam since a liquefaction analysis was
only then being carried out.888 (Project 940 continued without any credible liquefaction
analysis being produced, as confirmed by the Panel Report889).
BHP’s control and participation in the disposal of Vale’s tailings behind the Dam
286. As foreshadowed above, Vale disposed of tailings in the Dam.890 It did so pursuant to a
contract between itself and Samarco which provided that it could dispose 109,324 tonnes
per year (the “Tailings Agreement”).891 However, by 2009, Vale had in fact disposed 1.3
million tonnes per year, amounting to 25% of the total amount of the slime in the Dam. 892
BHP knew all of this893 and at an internal pre-Board meeting on 4 April 2012, it gave the
following instruction to its representatives on the Samarco Board “[d]o not force Samarco
to suspend the contract given Samarco’s high level of dependence on Vale”.894 That was
884
{F15/121/109} Slide 109 includes a diagram envisaging the complete fill of the Setback by El. 880;
{F9/264/70}; {F10/147/73}; {F10/147/82-83}; {F11/41/72-77}.
885
{F12/274/8}.
886
{F11/257/9}.
887
{F15/295/16}; {F15/295/37}; {F11/282/67}; {F11/282/86}.
888
{F12/69T/8}.
889
{D8/1/35}.
890
POC, §163 {A1/1/69}; Defence, §190(1) {A1/2/97}.
891
{F13/152.4T/1-3}; {F13/152.3T/1-3}; POC, §165 {A1/1/69-70}; Defence, §191{A1/2/97-98}.
892
{F3/316/3}.
893
{F3/316/3}; {F11/196.0.1/1}.
894
{F3/316/4}.
148
(self-evidently) a BHP decision and one which was in fact acted upon, because Vale
continued to dispose of its tailings in the Dam until it collapsed.
Conclusion
287. BHP’s control over, and participation in, the above matters was so direct and multifarious
that there can be little room for argument that BHP is responsible for Samarco’s activity,
and in this context, the TAG case (in which the STJ found that the involvement of an indirect
controlling shareholder in a project which caused environmental damage was relevant to
its responsibility as a polluter), is particularly analogous.895 That is all the more so in
circumstances where the P3P Project, the P4P Project, Project 940 and the disposal of
Vale’s tailings behind the Dam, individually or in combination with one another, caused
the Collapse, because the closer the connection between BHP’s conduct and the damage
caused by Samarco’s activity, the stronger the inference of responsibility (see §169.6
above).
288. As to the P3P Project, the Dam was built precisely in order to cater for the increased tailings
that resulted from the P3P Project.896 A Dam which was never built could never have
collapsed.897 The P3P Project also caused the production of enormous quantities of tailings
(both sands and slimes) and thereby caused the Dam to continue raising in order to store
them.
289. As to the P4P Project, this also produced enormous quantities of tailings (both sands and
slimes) (see Figure 12 above), including a marked increase in production in early 2014
when the P4P Project came onstream (see Figure 16). These tailings also had to be stored.
The Dam kept rising to store more tailings (see Figure 11). But the sand tailings behind
Dike 1 were loose and became saturated.898 By 5 November 2015, the Dam had reached a
“precarious state of stability”.899 This meant that, as the Dam increased in height, any
liquefaction trigger could set off a catastrophic flow slide.900 But-for BHP’s approval of the
P4P Project, the volume of tailings stored behind the Dam would not have kept
substantially increasing and the height of the Dam would not have been raised at the unsafe
895
See Appendix VI §§22-23.
896
{F1/1/14}. The increased production made it “urgent to start operating another tailings disposal area”:
{F1/1T/14}.
897
POC, §276A.1 {A1/1/117}.
898
{D8/1/85}.
899
{D8/1/3}.
900
{D8/1/72}; {D8/1/86}.
149
rate and in the unsafe conditions that it was, such that the Collapse would not have
happened.901
290. As to Project 940 and specifically the associated drainage works which were required for
its execution, this entailed, indeed it endorsed, the continued rise of the Dam along a
precarious alignment. In April 2015, a risk assessment on “dam implementation” identified
the following risk with respect to the Setback:
“Displacement of the main dam from Fundão upstream within “the reservoir" to allow
the implementation of drains. This gives rise to the risk of rupture by liquefaction or
low support capacity of the foundation. It is estimated that the overtopping of the
remaining body of the dam may be possible, and in an extreme case could lead to the
collapse of the entire structure. With this, the possibility of Santarém being able to
mitigate the flow of debris is small, leading to the collapse/overtopping of Santarém.”902
291. That rupture is what eventuated on 5 November 2015. Thus, but-for the continued rising
of the Dam on the alignment of the Setback, the Collapse would not have happened.903
292. As to the dumping of Vale’s tailings behind the Dam, this was a but-for cause of the
Collapse because these tailings were slimes. They accounted for 27% of all slimes
deposited behind the Dam between 2008 and 2015.904 These tailings were a further reason
why the Dam kept rising. Moreover, slimes were not kept behind Dike 2. Rather, slimes
inhibited the drainage of sands behind Dike 1, which became saturated, thus creating the
conditions for the catastrophic liquefaction flowslide that occurred on 5 November 2015.905
But-for BHP’s continued endorsement of Vale’s disposal of tailings waste behind the Dam,
the conditions for saturation would have at least reduced or alternatively, they would have
been avoided.906
293. The above conclusions are affirmed by the findings made in the Panel Report. The Panel
Report was specifically asked by BHP, Vale and Samarco not to assign responsibility for
the Collapse to any person (including, necessarily, them).907 For that reason, the Panel
Report did not identify the decisions which created the conditions for liquefaction which
triggered the Collapse. Nevertheless, those conditions are in fact attributable to the P3P
901
POC, §206A {A1/1/92}, §276A.2 {A1/1/117}.
902
{F16/498.26.4/236-237}; see also {F11/419} and {F12/98/1}, sheet ‘Bow-Tie ENGL’ - row 127, columns C –
I.
903
POC, §205A.4.3 {A1/1/87}.
904
POC, §163 {A1/1/69}, §168 {A1/1/70}; Defence, §190 {A1/2/97}, §196 {A1/2/100}; Reply, §75 {A1/3/46-47}.
See Panel Report {D8/6/67} for the total Vale slimes deposited behind the Dam.
905
{D8/1/66}.
906
POC, §206A {A1/1/92}.
907
{D8/1/14}.
150
Project, the P4P Project, Project 940 and the disposal of Vale’s tailings behind the Dam.
Those conditions were summarised by the Panel as follows
“A change in design brought about an increase in saturation which introduced the

potential for liquefaction. As a result of various developments, soft slimes encroached
into unintended areas on the left abutment of the dam and the embankment
alignment was set back from its originally-planned location. As a result of this
setback, slimes existed beneath the embankment and were subjected to the loading
its raising imposed. This initiated a mechanism of extrusion of the slimes and pulling
apart of the sands as the embankment height increased. With only a small additional
increment of loading produced by the earthquakes, the triggering of liquefaction was
accelerated and the flowslide initiated”.908
294. It follows from the above summary that, according to the Panel, there were two principal
causes of the conditions for liquefaction: the encroachment of slimes into unintended areas
on the left abutment and the continued raising of the Dam on the alignment of the Setback.
295. The P3P Project caused the Dam to start raising and the P3P Project, the P4P Project and
Vale’s disposal of slimes in the Dam caused the Dam to continue raising. Project 940 (and
the associated drainage works which it necessitated) caused the Dam to continue raising on
the alignment of the Setback. Had it not been for Project 940, the Setback would have been
restored. The Panel Report expressly recognised this in the following terms: “Infilling of
the setback was further delayed by requirements for the proposed raise of the Fundão Dam
to a crest elevation of 940 m”.909 Had the Setback been restored, the Dam would not have
continued to rise on a precarious alignment, and would not have Collapsed.
iv) BHP’s control over and direct participation in the management and audit of a
risk of a failure of Samarco’s dams
BHP’s management of the risks of a Dam failure
296. BHP controlled and directly participated in the management of the risk of a critical failure
of the Dam at Samarco.910 BHP did so in at least three ways: firstly, by the application of
its own risk controls to Samarco; secondly, through its direct participation and involvement
in the Risks Subcommittee; and thirdly, through certain BHP representatives who were
specifically charged with controlling and/or owning that risk.
297. First, BHP consistently recognised the critical failure of the operation of the Dam as one of
the Top 10 risks of its Iron Ore division from January 2013 onwards911 (having been one
908
{D8/1/4}.
909
{D8/1/57}.
910
See e.g., {F13/382/2}.
911
{F6/54/3}; {F6/185/3}; {F7/443/4}; {F11/454.1/11}; {F11/455/9}; {F12/311.2/9}.
151
of its Top 13 risks in August 2012).912 This was the case from the outset, but it became all
the more obvious in 2013 when BHP developed its own independent set of material risks
and critical controls.
298. The risk of the critical failure of the Dam was a BHP risk, and not just a Samarco risk, from
the outset. Samarco identified its material risks in ‘bowtie’ documents. These then ascribed
a Maximum Foreseeable Loss (“MFL”) and Residual Risk Rating (“RRR”) to each case.
The MFL was an assessment of the consequences of the risk occurring, on the assumption
that all controls were ineffective. The RRR represented an assessment of the residual risk,
on the assumption that these controls were effective.913 BHP Iron Ore always incorporated
risks reported by Samarco into its own registers, ascribing to these risks its own MFL and
a RRR.914 These risk ratings were circulated within BHP’s management on at least a bi-
annual basis through presentations to the BHP Iron Ore Risk and Audit Committee915 and,
from April 2013, on a monthly basis to the BHP Iron Ore Executive Committee.916
299. BHP’s own practice before 2013 was to “incorporate Samarco’s reporting of their material
risks, their MFLs and RRRs, and their critical controls, into our Iron Ore risk register”.917
Samarco’s risks thereby became BHP’s risks. The Claimants say that this alone would
justify the imputation of responsibility for Samarco’s activity to BHP. On any view, this
treatment of the risks deriving from Samarco’s activity within BHP reinforces the point
that BHP considered itself to have significant operational influence, if not control, over
Samarco’s activity.
300. However, BHP’s approach went some way beyond mere “incorporation” of Samarco’s
risks, even prior to 2013:
300.1. BHP personnel did not simply copy and paste the risks reported by Samarco but
engaged substantively with the subject. Upon receipt of risk material from Samarco,
these individuals would often question and even edit that material before integrating
it into BHP’s own risk register.918
912
{F5/23/3}.
913
Corless, §§20.4-20.5 {B1/3/6}.
914
See e.g., {F5/23/3}.
915
See e.g., {F5/109/1}.
916
This was done by way of Monthly Reports to the Iron Ore ExCo. See e.g., December 2014 {F7/274/12};
October 2014 {F9/236/3}; March 2015 {F11/48.1/14}; May 2015 {F11/405.1/11}.
917
Corless, §46 {B1/2/12-13}.
918
{F5/109/1}.
152
300.2. Samarco’s risk reporting was not distinct from BHP’s in any event, as it was heavily
modelled on the BHP Group Level Document, “GLD 0.17”919 by which BHP (i)
defined risks and assessed their severity, and (ii) designed controls for those risks
and assessing their effectiveness.
301. In 2013 and into 2014, BHP further extended its control over the risk of the Dam,
developing its own set of material risks and critical controls, as distinct from Samarco’s
risk control process. BHP’s witnesses Chris Corless (and, to some extent, Natie Victor)
were heavily involved in its creation. By way of outline:
301.1. BHP’s key material risk for present purposes was labelled “Failure of Samarco
Tailings Dam”. It designed “critical controls” that were intended to manage this
risk. These controls were refined throughout 2013, ultimately resulting in the
following six: (i) Dam Design, (ii) Failure Modes and Effects (“FMEA”), (iii) Dam
Monitoring, (iv) the Independent Tailings Review Board, (v) Incident Response, and
(vi) Risk Management Process.920
301.2. BHP also put in place its own assessments and tests, referred to as Control Design
Assessments (“CDAs”), and Control Effectiveness Tests (“CETs”), to measure the
effectiveness of these critical controls in managing the risk to which it was exposed
by the potential failure of the Dam. A CDA was an assessment of the design of the
critical control. A CET required a control owner to annually assess the effectiveness
of the critical control against a unique test plan for that control. Based on the CDAs
and CETs conducted for each control, a risk would be given an overall control status,
called a “Material Risk Control Assessment” (“MRCA”).
301.3. BHP had an internal data repository system referred to as “1SAP”. In 2013, BHP
launched 1SAP Release 4. This contained a separate risk management module,
which was the mechanism BHP ultimately utilised to report these risks.
302. Second, BHP was integral to the Risks Subcommittee. This was a Subcommittee of the
Samarco Finance and Strategy Committee which was intended to “improve overall risk
governance […] as well as increase the oversight over the dam”.921 It was a mechanism by
which BHP formally exercised influence over issues pertaining to Samarco’s material risks,
919
{F10/358/1-6}. See e.g., {F8/269/1-33}. Also see e.g., the Control Effectiveness Test for BHP’s risk
management process which explicitly stated that Samarco’s processes are “aligned with BHP requirements
(GLD 0.17)” {F16/429/1}.
920
The detail of these critical controls is set out, where relevant, in the context of the Claimants’ case on fault-
based liability at §§491-505 below.
921
{F7/209/1}.
153
including that of the critical failure of the Dam, amongst other things, by providing input
to Samarco on the same. BHP representatives such as Messrs Corless, Ferreira and
Fernandes were not only members of the Subcommittee, but were also instrumental in its
creation (see further at §244.4 above).
303. Third, BHP Iron Ore assigned to its representatives ownership of the risk of a “Failure of
Samarco Tailings Dam”. This person was accountable for ensuring that the risk was well-
controlled. BHP’s Risk Owners for the Failure of Samarco Tailings Dam included Mr
Zweig;922 and from October 2014 to 2015, Mr Fernandes.923 BHP also assigned to its
representatives ownership of the critical controls in respect of the risk of a “Failure of
Samarco Tailings Dam”. This person was responsible for ensuring that risk assessments
were carried out on these critical controls. They included Mr Ferreira, who was BHP’s
Control Owner for Dam Design, Failure Modes and Effectiveness Assessments (“FMEA”),
Dam Monitoring, the ITRB and incident responses;924 and Mr Arnold, who was BHP's
Control Owner for Samarco’s risk management processes until ‘mid-2015’.925
304. BHP’s witnesses accept that BHP encouraged Samarco to adopt its risk management
processes,926 and that Samarco’s resulting framework was “very similar to BHP’s processes
as set out in GLD 0.17”.927 They describe BHP’s interrogations928 and sign offs929 in
relation to Samarco’s risk material prior to 2013, as well as the development of BHP’s own
critical controls in respect of the Dam in 2013.930 More still, they explicitly accept in their
witness statements that “accountability” for Samarco’s dams lay with BHP.931
305. It is irrelevant for the purposes of imputing responsibility to BHP for Samarco’s activity
that BHP carefully sought to exempt itself from responsibility for Samarco’s risks through
the application of internal policies and procedures that were ostensibly intended to keep
BHP’s “fingers out”.932 As a matter of Brazilian environmental law, BHP cannot self-
servingly pick and choose between (to use Mr Campbell’s language) putting its nose in,
and keeping its fingers out. On the contrary, it is sufficient in itself for the purposes of
BHP’s characterisation as a polluter that BHP could and did put its nose in. That follows
922
{F6/337/11}; {F8/192/1}.
923
{F9/269/1}.
924
{F12/302}; {F6/44}.
925
Corless, §88, {B1/3/25}; Victor, §74 {B1/6/16}.
926
Campbell, §23 {B1/2/8}.
927
Corless, §69 {B1/3/19}, §110, {B1/3/30}; Campbell, §35 {B1/2/11}.
928
Corless, §36 {B1/3/10}.
929
Campbell, §56 {B1/2/19}.
930
Corless, §49 {B1/3/13}; Victor, §68 {B1/6/15}, §§73-74 {B1/6/16}.
931
Beaven 1, §69 {B1/1/23-24}; Campbell, §49 {B1/2/17}.
932
Campbell, §16 {B1/2/5}.
154
from Bioenergy, according to which, the relevant question is whether BHP knew about and
dominated the source of the risk; the natural and ordinary meaning of “dominate” being to
have power and influence over. In other words, that BHP was in a position (and indeed
actively sought) to mitigate the risks of a Dam failure is itself sufficient to justify the
imputation of responsibility to BHP for the said risks. Clearly, BHP knew about the risk of
a Dam failure at Samarco; and clearly BHP was in a position (and sought) to mitigate the
said risk by reason of its power and influence over it.
BHP’s audits over the risk of a Dam failure
306. BHP controlled and/or directly participated in the management of the risk of a critical
failure of the Dam at Samarco while performing audits at Samarco. The purpose of these
audits, more generally, was to provide an independent assessment to the management of
Samarco about the processes and policies in place to manage risks.933 As an illustration of
their importance, these audits were heavily resourced by audit teams which were often over
ten in number and including functional experts.934 They were a substantial exercise.
307. Various matters fell within the scope of BHP’s audits. The scope of BHP’s audits covered
aspects relating to Samarco’s tailings dams, including in 2010 (the “2010 Samarco
Audit”)935 and 2013.936 A particularly striking example of BHP’s involvement, through
audits, in the assessment of the risk of a dam collapse, is during the 2013 audit, which
included an Asset Integrity audit of Samarco’s tailings dams (the “2013 Samarco Audit”).
As the name would suggest, the purpose of Asset Integrity audits was to review the
processes in place for managing the structural integrity of BHP’s assets.
308. The 2013 Samarco Audit included within its scope an assessment of “control effectiveness”
for the material risk of “Catastrophic failure of the wall in one of the tailings storage
facilities of Samarco.”937 BHP stated at the time that the objective for the 2013 Samarco
Audit was to provide “reasonable assurance [to BHP] on the adequacy of the design and
operation of the TSF”.938 Owing to the acknowledged “complexity of the dam”,939 BHP’s
team considered that a “very thorough review of this risk” was required, “using all available
time to verify critical controls”.940 For that reason, BHP sought to obtain “an auditor of the
933
Lynch, § 45 {B1/5/9}.
934
Lynch, § 56 {B1/5/11}.
935
{F3/481/4}.
936
{F6/430/16}.
937
{F6/50/3}.
938
{F5/383/1}.
939
{F5/394/3}.
940
{F5/394/1}.
155
highest caliber [sic.].”941 That person was Vinod Garga, an international tailings dam
expert, who was selected to carry out the audit alongside Mr Wetzig (Engineer, Group Risk
Assessment and Assurance).
309. The 2013 Samarco Audit was carried out in accordance with BHP’s Asset Integrity Risk
and Control Matrix for Tailings Dams (“RACM”), which had been developed in early 2013
based on ICOLD’s Codes of Practice for tailings storage facilities and endorsed by Dr Gary
Bentel (member of the Subcommittee of the Australian Committee on Large Dams
(“ANCOLD”) before it was implemented by RAA.942
310. As a reflection of the sheer extent of BHP’s participation in the assessment of the risk of a
Collapse of the Dam, the MRCA which was applied to the 2013 Samarco Audit was an
impressively meticulous and detailed document. It identified ten geotechnical risks and for
each risk, there was (i) a high level description of the control in place to mitigate that risk
(or a “High Level Control Description”), (ii) an objective which that control was intended
to achieve (or a “Control Objective”) and (iii) a detailed list of steps which the auditor
was required to verify in order to ensure that the relevant controls had been effectively
designed (or “Control Design Effectiveness Test Step”) and were effectively operated
(or “Control Operating Effectiveness Test Step”, together referred to hereinafter as “Test
Steps”).943
311. Thus, by way of illustration, Risk R5a.3 in the MRCA 2013 was “Instability and failure of
the retaining embankment due to inadequate strength of the tailings […]”. The High Level
Control Description for that risk was, “Construction work closely supervised by owner's
engineers who are knowledgeable and experienced in the construction of tailings storage
facilities. Reconciliation of the actual performance, as measured by field observation and
testing (decant size and location, phreatic surface, strength tests) with that
predicted/required in the design. Control action plans for prompt response to symptoms of
potential failure.”944 To verify the effectiveness of the design and operation of that control,
there were numerous questions (or “Test Steps”) which BHP’s audit team had to answer,
including:945
“1. Have the assumptions made during the original design of the tailings storage facility
been compared with the results of observations and monitoring during subsequent
operation?
941
{F5/394/3}.
942
{F14/41/3-4}.
943
{F6/215/1}.
944
{F6/215/1}.
945
{F6/215/1}.
156
[…]
1. Is there a detailed record on file of the changes (if any) to material specifications and
construction details agreed to by the designer during the construction of the
embankment raise(s) ?
6. What means are used to schedule the monitoring and recording of the position of the
phreatic surface in the tailings storage (including in the embankment)?
a. Review a sample of the monitoring records of the phreatic surface. […]
b. Were any remedial actions required as a result of those measurements ? If so, is there
evidence that the remedial actions were implemented in a timely and effective manner
?
c. Through a site inspection of the tailings storage, visually assess the adequacy of the
facilities for monitoring the phreatic surface.”946
312. All of these questions were then answered, typically one-by-one, by BHP’s auditors.947 For
all ten risks, the number and nature of the Test Steps which were required to be taken by
BHP’s auditors was much the same.
313. Another of the controls on BHP’s audit roster was “risk management”. BHP conducted
audits of Samaro’s risk management processes in 2009, 2010, 2012 and 2015. Of particular
importance in this context was the risk management audit performed in 2015 (the “2015
Samarco Audit”) (c. three months prior to the Collapse). The scope of the audit of risk
management was concerned with verifying the effectiveness of the systems and controls
implemented to manage risks at Samarco, including the evaluation of, inter alia, (i) the
process for the identification of all risks material to Samarco’s business plans and decisions,
including the adequacy of its evaluation of the MFL and the completeness of its risk profile
and (ii) effective management of material risks identified by Samarco, including the design,
implementation and monitoring of associated selected critical controls.948
314.
Moreover, for the first time in 2015, BHP also performed an audit of Iron Ore’s risk
management in Brazil (the “2015 Iron Ore Audit”). This audit was concerned, inter alia,
with verifying the effectiveness of (i) BHP’s process for the identification of material risks
related to Samarco, including the assessment of the adequacy of evaluation of MFL,
severity and RRR; and (ii) effective management of material risks identified by BHP,
946
{F6/215/1}.
947
For Risk R5a.3, see {F6/204/1}.
948
{F13/284/15}.
157
including the design and implementation of associated critical controls for the material risk
“Critical Failure of the Dam”.949
315. In its audit report, BHP would make findings about the controls which it had assessed.
These were categorised as a “Priority 1” (“P1”), “Priority 2” (“P2”), “Priority 3” (“P3”)
or “Opportunity for Improvement”, with P1 being the most serious issue and Opportunity
for Improvement being the most moderate. Taking for example the 2013 Samarco Audit of
the risk, “Catastrophic failure of the wall in one of the tailings storage facilities of
Samarco”,950 two P2 findings were made as to (i) “deficiencies in the assessment of the risk
of tailings dam overtopping” and (ii) “deficiencies in the construction of starter dams.”951
In relation to the latter finding, the report stated: “If construction defects are not identified
by the QC and QA of the future Fundao EL940 project, similar occurrences may take place
and develop into a catastrophic rupture of the dam, causing material impacts on
SAMARCO of both financial and reputational nature.”952
316. The audit report would then make recommendations about how its findings should be
addressed. They were robust. For example, certain of the recommendations in the 2010
Samarco Audit stated, “[t]here is a need at Samarco to strengthen the overall control
environment”; “Samarco also needs to introduce anti-trust and anti-fraud policies and
programmes (including anti-corruption and anti-bribery), which need to be rigorously
exercised by all relevant staff”; “the accountability for certain risk management activities
and roles needs to be clearly defined”.953
317. These recommendations were required to be actioned through “management actions”

which gave effect to them. By way of illustration, in the Samarco 2010 Audit, out of the 21
recommendations given by BHP, 17 of the management actions simply stated, “The
recommendations made […] will be implemented”.954 In the 2013 Samarco Audit, while
the management actions did not simply restate the recommendations, they were similarly
drafted so as to give effect to them.955
318. Samarco treated its implementation of the management actions with the utmost importance.
That is evidenced by an email dated 15 October 2010,956 in which Mr Vescovi said to
multiple Samarco personnel: “I circle again the conclusion of the recent audit by BHPB,
949
{F12/182}; {F13/439/3}.
950
{F6/50/3}.
951
{F6/430/7}.
952
{F6/430/16}.
953
{F2/361/3}.
954
{F2/361/8}.
955
{F6/430/12-24}.
956
{F2/262/1}.
158
so that you can see, concretely, what I have told them about the importance of it: check the
list of distribution and the text of the original email itself, and you will see that the highest
level of BHPB management takes notice of and is formally held responsible for what
happens at Samarco.”957 Samarco did so because BHP required it to treat them that way.
In particular, BHP (and in particular, Mr Lynch) actively monitored Samarco’s completion
of its recommendations958 through both meetings of the Audit Committee959 as well as
through the review of an internal audit action tracker.960
319. The irrelevance of the distinction which BHP now attempts to draw between “noses in”
and “fingers out” applies mutatis mutandis to BHP’s participation in audits of the risk of a
Collapse of the Dam. Moreover, and at the risk of repetition, it is not a relevant
consideration for the purposes of BHP’s strict liability whether the approach to the risk of
dam failure as briefly summarised above conformed to standards reasonably to be expected
of a company in BHP’s position. It is sufficient that BHP knew of the risk of dam failure
and was in a position to prevent that risk, by reason of its power and influence over it.
v) BHP’s control over and direct participation in health and safety matters
320. A striking illustration of BHP’s power to control whatever matters at Samarco which it so
chose, is BHP’s extensive control over, and participation in, matters of health and safety at
Samarco. As a reflection of BHP’s interest in such matters, BHP’s representatives were
specifically tasked with influencing health and safety performance at Samarco in their
KPIs. For example:
320.1. Mr Fonseca’s 2009 KPIs included “HSE Business Development”.961 Mr Fonseca’s

achievement of said KPI included the following appraisal by Mr Nogueira, “In
Samarco he has demonstrated [sic.] care and intense managment [sic.] through the
introduction of new KPIs, controlling mechanisms on the HSEC front”.962
320.2. Mr Fernandes’ 2013,963 2014,964 2015965 and 2016966 KPIs all included a
requirement to ensure that Samarco’s operations were conducted safely. By way of
example, Mr Fernandes’ 2014 KPIs stated “Conduct exploration activities in full
957
{F2/262T/1}.
958
Lynch, §79 {B1/5/15}; Wetzig, §39 {B1/7/9}.
959
Lynch, §79 {B1/5/15}.
960
Lynch, §126 {B1/5/25}.
961
{F16/212/1}.
962
{F16/212/1}.
963
{F16/123/1}.
964
{F16/124/1}.
965
{F14/381/1}.
966
{F12/215/1}.
159
compliance with Group HSEC requirements (KPIs below) and ensure that
Samarco develops and implements appropriate action plans to improve its HSEC
performance (focus on reducing fatality risks)”.967 In Mr Fernandes’ self-appraisal
about his achievement of said KPI, he stated, “All controls required to comply with
the Group HSEC requirements have been implemented, and the BRIO team is fully
committed to the safe execution of the exploration activities […] BRIO team has
monitored Samarco's HSEC performance closely and has exercised significant
influence to ensure the implementation of appropriated action plans to reduce
critical fatal risks (e.g. improvement in controls related to interaction between
people and equipment and traffic management).”968
320.3. Mr Ribeiro’s KPIs included, “Full BHPB/Samarco HSEC standars [sic.] alignment
plan in execution”.969
320.4. Mr Zweig’s KPIs included “Ensure safe operations in Brazil activities […]
Influence safety performance at Samarco”970 for 2013 and “Brazil: Maintain H&S
performance (TRIFR targets for Samarco, BRIO 5% less than previous year)”971 for
2014.
321. Along with other BHP representatives, these individuals achieved those KPIs in four main
ways: firstly, through reporting; secondly, through the Samarco Board Committees and
Subcommittees; thirdly, through ad-hoc in-person visits, assessments and inspections; and
fourthly, through audits.
322. First, it is not disputed that BHP received reports about Samarco’s health and safety
performance.972 A particularly striking set of reporting was required of Samarco by BHP’s
Incident Cause Analysis Method (“ICAM”) Procedure,973 which Samarco adhered to. The
ICAM procedure required that an ICAM Report be prepared in the event of a fatality or an
actual significant incident,974 and a Significant Incident Report975 be prepared in relation
to a potential significant incident.976 Messrs Fernandes and Ferreira each took a highly
967
{F16/124/1}.
968
{F16/124/1}.
969
{F1/115/1}.
970
{F16/394/1}.
971
{F16/389/1}.
972
Campbell 1, §49 {B1/2/17}.
973
{F16/54/1-14}.
974
{F11/350.1/1-2}.
975
{F5/122.2}.
976
{F16/54/4}.
160
active role in their review of these reports, including by making recommendations and
asking questions. For example:
322.1. In response to a preliminary incident report about an employee suffering an electric

shock, Mr Ferreira stated, “This one didn't die because God helped, and a lot. A few
questions: Did he have a burn or other type of injury? Why is he still at home? What
is the forecast for the time away?”977 Mr Fernandes followed up in the following
terms, “This accident was very serious and we need to take all the necessary
precautions so that similar cases do not occur again. Would [like] to discuss the
ICAM of the same in the Operations Committee.”978
322.2. In response to a preliminary incident report about an employee being hit in the neck
and chest, Mr Ferreira asked, “didn't quite understand the description of this
incident. If employees were moving the key manually, how did it hit the neck and
chest? They carried this piece above the head? From the photo it seems to be heavy
to be loaded manually. Had a crane been involved in this operation? Please
clarify”.979
322.3. After a high number of incidents in May 2013, Mr Fernandes wrote to Rubens
Junior Bechara, “We are very concerned about the high number of incidents in the
month of May, most of which have high potential of severity. I would like to make
an appointment with you to discuss the possible reasons for this increase and the
measures to be taken to reverse the situation”.980
323. Second, as foreshadowed above, health and safety matters were considered in the Samarco
Board Committees and Subcommittees, and in particular, the Operations Committee and
the Performance Management Subcommittee. The Operations Committee had a standing
agenda item on Samarco’s employee health and safety, which it assessed by reference to a
BHP metric called the Total Recordable Injury Frequency Rate (“TRIFR”).981 Samarco’s
compliance with this target was actively monitored. For instance, on 19 November 2014
when the TRIFR reached 1.17, the “Committee […] expressed concerns with this KPI that
is beyond the limit set as a target, as well as the uphill trend that TRIFR has shown”.982
977
{F5/163.2T}
978
{F5/163.2T}
979
{F5/344.5/1}.
980
{F5/454.1/1-2}.
981
“TRIFR was first used as a measure for tracking employee safety in 2006”: {F1/5.4/5}.
982
{F14/503/2}.
161
324. The Performance Management Subcommittee also actively monitored Samarco’s safety
performance. It scrutinised numerous incidents, many of which were minor, such as the
breakage of a rear window of a loader due to a wire rope rupture.983 It also made
recommendations for Samarco to follow. For example, it recommended that Samarco (i)
perform a safety evaluation of cranes, as design capabilities “might deteriorate over time
and the company operates aged equipment”;984 (ii) present an action plan designed to
improve human/machine interaction;985 and (iii) re-evaluate the controls of the risk of
falling objects with the use of Bow-tie methodology.986
325. Thirdly, there were in-person visits, both by Samarco personnel to BHP’s operations and
BHP representatives to Samarco. In April 2014, Mr Bechara visited a BHP mine in
Australia to learn good safety practices.987 Following his visit, Mr Bechara informed
Belinda Stuckenberg and Chirag Sate (of BHP) that Samarco was implementing some
important actions “that will improve our HS [Health & Safety] system” and asked to receive
certain GLDs from BHPB which Samarco was required to consider “according to BHPB
procedure”.988 Mr Sathe replied with the GLDs requested (including GLD.012 on HSEC
Reporting), which were then forwarded to multiple Samarco employees.989
326. BHP HSEC personnel including, especially, Mr Swayn (Vice President of HSEC, BHPB
Iron Ore), also visited and inspected Samarco in relation to health and safety on multiple
occasions. These visits resulted in detailed recommendations about health and safety
matters which BHP required Samarco to implement. Following Mr Swayn’s visit in August
2013, he emailed Mr Bechara with his concerns, which included that safety glasses were
not being worn and that vehicle speed appeared too fast.990 On 9 September 2013, Mr
Ferreira forwarded Mr Swayn’s concerns to Samarco,991 requesting that an action plan be
made and that the matter be taken to the Operations Committee for follow up.992 On the
same day, Mr Ferreira emailed Mr Swayn assuring him that he had asked Samarco to put
together an action plan and that all Mr Swayn’s recommendations would be properly
implemented.993
983
{F13/268T/1-10}.
984
{F2/187/1}.
985
{F6/476T/1}.
986
{F13/268T/2}.
987
{F8/113/2}.
988
{F8/181.2.1/2}.
989
{F8/181.2.1/1}; {F8/185/1-5}.
990
{F6/385/2}.
991
{F6/403/1-3}.
992
{F6/403/1-3}.
993
{F6/403/1}.
162
327. Following a dramatic increase in significant incidents at Samarco from 31 (in 2011), to 54
(in 2012), to 96 (in 2013), to 259 (to date in 2014),994 Mr Swayn made another visit to
Samarco.995 Following this visit, Mr Swayn again, emailed Mr Bechara with his concerns,
which included that there was a lack of barrier protection near the water tanks on the new
crushing plant and that conveyor pull cords had not been properly maintained.996 This time,
Mr Swayn’s concerns were escalated to Messrs Ottaviano and Wilson and Ms Beck.997 On
10 December 2014, Mr Ferreira emailed Mr Swayn assuring him that that he would work
hard with Samarco to achieve the necessary improvements.998
328. Health and safety were also active considerations during the execution of the P4P Project.
These were principally assessed through EPRs (see §274.3). To that end, GPM carried out
an EPR on the P4P Project in July 2012999 which recommended the “implementation of
walkways to enable Heavy vehicle and People separation”1000 and gave an overall
assessment of “Caution – needs attention.”1001 Further EPRs were conducted in (i)
February/March 2013,1002 in which a safety recommendation was made about dropped
objects,1003 and (ii) November 2013, in which GPM found an overall deterioration in safety
and gave it an assessment of “Urgent corrective action required.”1004
329. Fourthly, BHP conducted health and safety audits on several occasions, resulting in
findings which Samarco acted upon. For example, (i) the HSEC audit of Samarco in June
20111005 resulted in findings that interaction among vehicles, mobile equipment and
pedestrians was not fully controlled; gas exposure detection was not working; and there
were inadequate working at height barriers;1006 (ii) the 2013 Samarco Audit resulted in
findings that there were significant deficiencies in the design and implementation of traffic
management controls at the Germano mine and Ponta Ubu facilities1007 and made a P3
finding in respect of seatbelts;1008 and (iii) the 2015 Samarco Audit resulted in findings of
weaknesses in the controls for “Worker Machine Interaction” material risk1009 and
994
{F10/9/12}.
995
{F10/7.2/1-47}
996
{F10/44/3}.
997
{F10/45/1}.
998
{F10/95/1}.
999
{F8/464/13}.
1000
{F8/464/13}.
1001
{F8/464/14}.
1002
{F6/52.13/1-11}.
1003
{F6/52.13/1}.
1004
{F7/207.2/11}.
1005
{F3/86.2/1-6}.
1006
{F3/86.2/4}.
1007
{F6/430/7}.
1008
{F6/430/9}.
1009
{F13/284/12}.
163
deficiencies in the design, implementation and verification of rescue plans for working at
heights.1010
330. The inference to be drawn from the sheer extent of BHP’s control over health and safety
matters at Samarco is that BHP had the power to control, and did indeed control, the
minutiae of any aspect of Samarco’s operations which suited its interests. With such
controlling power comes responsibility for Samarco’s activity.
vi) BHP’s control over and direct participation in dividends strategy
331. BHP was far from a passive investor, willing to sit back and receive whatever dividends
Samarco determined it was able to pay and when: BHP controlled, directed and influenced
Samarco’s dividend and corresponding funding strategy, maximising the benefit it derived
from Samarco’s activity.1011
332. BHP UK and BHP Australia benefitted equally from Samarco’s dividends, pursuant to the
DLC Equalisation Principles in the Sharing Agreement.1012 Correspondingly, control over
Samarco’s dividend strategy was exercised by BHP at Group level. BHP Group Treasury
and Corporate Finance, in particular, were the driving force behind key negotiations and
decisions, supported by BHP Group Tax, Iron Ore, and other Group functions. As set out
below, BHP conducted its own analyses of Samarco’s capital structure, negotiated key
tenets of the funding and dividend strategies directly with Vale, and worked through the
Samarco Board, Finance and Strategy Committee, and Treasury Subcommittee, to achieve
the outcomes evaluated as being most beneficial to BHP (which were usually also most
beneficial to Vale).1013
333. BHP’s overarching strategy in relation to Samarco’s dividends in the years preceding the
Collapse, was to maximise Samarco’s distributions while maintaining sufficient liquidity
on its balance sheet.1014 Operating Samarco within clearly defined debt parameters was
1010
{F13/284/7}.
1011
Reply, §120B {A1/3/86}.
1012
POC, §41 {A1/1/21}.
1013
{F3/201.3.1/1-2}; {F7/79.1/2}; F1/314/1}; {F8/263/3}.
“This strategy allows Samarco to use its balance sheet to continue its generous dividend policy and still
maintain a reasonably strong balance sheet structure.”: {F4/297.2/1}; “Historically, we have always
operated Samarco on a conservative basis, maintaining a BBB credit rating while trying to maximise
dividends to the shareholders.”: {F6/179/2}; “This strategy will allows Samarco to continue an aggressive
dividend policy whilst maintaining sufficient liquidity on balance sheet.” {F8/395/1}. This was consistent
with: (i) Clause 7.1 of the SSA, which stipulated that it was Samarco’s policy to maximise the distribution
of available cash to Shareholders (in accordance with all legal requirements and as permitted by Samarco’s
financial condition) {F15/286/13} and (ii) the progressive dividend policy operated at Samarco between
2002 and February 2016, by which BHP received substantial dividend payments: POC, §52 {A1/1/31}, §67
{A1/1/34}, §70 {A1/1/35}, §72.5 {A1/1/36}, §280 {A1/1/119}; Defence, §83 {A1/2/42}, §98 {A1/2/46},
§101 {A1/2/48}, §103.9 {A1/2/51}.
164
important to BHP, given that it consolidated Samarco’s financial statements with its own.
Samarco’s debt appeared on BHP’s own balance sheet, and could affect BHP’s own credit
rating. 1015 Moreover, several of Samarco’s financing facilities included covenants based
on a Net Debt/EBITDA ratio of 3.0x.1016 This meant that if Samarco took on too much debt
as against its earnings (before interest, tax depreciation and amortisation), it could have
been required to make early repayments of over USD $3 billion.1017 Similarly, maintaining
healthy debt ratios was important in order that Samarco could preserve its target credit
rating and obtain further third-party financing. This was particularly pertinent in the context
of the huge funding requirements for the P4P Project, which project was crucial to ensuring
the profitability of BHP’s investment in Samarco as the iron ore price sunk. Accordingly,
as further detailed below, BHP was closely involved in managing Samarco’s debt levels
and credit rating, as a key part of its dividend and corresponding funding strategies.1018
334.
Initially, BHP “operated Samarco on a conservative basis, maintaining a BBB credit rating
while trying to maximise dividends to the shareholders”.1019 Notably, BHP negotiated the
target credit rating directly with Vale in 2009, in the context of a “shareholders only
discussion (without Samarco management) […] given the strategic nature” of the matters
involved.1020 Samarco’s debt was, as noted by Mr Randolph, “a contentious issue” between
BHP and Vale: “They want more debt (they don't consolidate) and we want less”.1021 Once
Mr Randolph had agreed the strategy with his counterpart at Vale (Mr Martins), BHP
sought to “work through”, and “drive it from”, the Finance and Strategy Committee.1022
335. Notably, BHP acknowledged in a memorandum provided to Mr Randolph in July 2009,

dealing with Samarco’s approach to dividends and debt, that Samarco management “has
always pushed to have flexibility in terms of determining the best funding alternatives.”1023
BHP did not afford Samarco such flexibility, however, working through discussions “with
Vale in the Finance Committee and within an established treasury working group with
representatives of all parties” in order to push forward the BHP “Treasury recommended
approach.”1024 Indeed, a BHP summary of Samarco committee meetings dated March 2009
stated: “Samarco must operate within [Finance Committee] mandates and Shareholders
1015
{F1/330/2}; {F1/290/1}; {F1/299/2}; {F4/294/2}.
1016
Net Debt to Earnings before Interest, Tax Depreciation and Amortisation {F6/179/1-3}.
1017
{F6/314/1}.
1018
Reply, §120B.2 {A1/3/87}.
1019
{F6/179/2}.
1020
{F1/313/1}.
1021
{F1/299/2}.
1022
{F1/315/1}; {F1/314/1}.
1023
{F1/292/1}.
1024
{F1/292/1}.
165
agreement. No discretionary decision should be taken by Samarco management without
formal and express clearance/approval by the nominated BHPB and Vale
representatives”1025 (see further at §§370-374 below).
336. Owing to the vast expenditure on P4P and the volatility in the price of iron ore, Samarco
did not have adequate cash flows to pay the USD $450 million dividend due in December
2011. The 2011 dividend was a further point of contention between the Shareholders,
resolved in separate negotiations between Vale and BHP Group Treasury.1026 Vale sought
full payment of the dividend, funded, if necessary, by short term bridge financing (which
was more costly than long-term financing). BHP Group Treasury sought to defer the
dividend and pursue long-term financing to cover Samarco’s cash requirements, with
priority given to expenditure on P4P.
337. On or around 21 November 2011, BHP Group Treasury obtained Vale’s agreement to
reduce the dividend by half, and the Shareholders agreed to put their proposals to Samarco
in writing ahead of a Finance Committee meeting.1027 The Samarco Board, on 8 December
2011, approved the decision – taken in practice by Vale and BHP Group Treasury – on the
basis that the Shareholders formally commit to supporting to Samarco as lenders, in case
Samarco could not successfully achieve alternative third-party financing,1028 a condition
driven by BHP Group Treasury.1029 Indeed, in the years preceding the Collapse, BHP
consistently stood ready to fund Samarco if required, further demonstrating the extent to
which it treated Samarco as an important strategic and economic asset from which it
benefited.1030
338. Through late 2011 and 2012, as expenditure on P4P continued, BHP Group Treasury
analysed how Samarco’s net profits could be retained within Samarco.1031 Under Samarco’s
Bylaws and Brazilian law, Samarco was required to pay 25% of its net profit as
dividends,1032 and to allocate 100% of the remaining net profit either as additional
dividends, to its reserve account or to share capital.1033 Samarco’s reserve accounts were at
their maximum capacity (equal to share capital), and sums allocated to the share capital of
a Brazilian company were understood to be very difficult subsequently for a shareholder to
1025
{F1/170/5}.
1026
{F3/201.3.1/1-2}; {F3/228}; {F3/227}; {F4/466}.
1027
{F3/201.3.1/1}; {F3/194.1/1}; {F3/194.2/2}.
1028
{F3/234/4}.
1029
{F5/155/3}; {F4/495/3}.
1030
Reply, §120A-B {A1/3/85-87}; {F3/361.4/2}; {F15/441/20}; {F10/287/4}; {F9/46/2}.
1031
{F3/215.2/1}.
1032
Article 32, paragraph 1 {F15/290/6}.
1033
{F6/314/1}.
166
extract.1034 Redeemable shares were also considered; however, for accounting purposes,
these were treated as debt, and were not, therefore, considered to be in Samarco’s or BHP’s
interests.1035
339. Accordingly, BHP Group Treasury devised a strategy based on “more aggressive funding”
to allow Samarco to pay 100% of its net profit as dividends in 2013, with the Shareholders
standing ready to inject capital into Samarco to protect its credit rating and covenants as
necessary.1036 Samarco was required to carry out regular monitoring of its Net
Debt/EBITDA ratio, and should this be forecast to drop below 2.8x, the Shareholders would
inject capital into Samarco to return the ratio to 3.0x.1037 This was the “Capital Increase
Mechanism”, approved by the Samarco Board on 4 April 2013, subject to internal
shareholder approvals, obtained at BHP Group level, in accordance with GLD.028, in
August and September 2013.1038 This allowed BHP to inject only “what is absolutely
necessary when it is actually required to avoid a breach instead of cautiously putting profit
to capital” which may ultimately be “lost”.1039
340. That this strategy was driven by BHP (together with Vale) is further illustrated by the
unease expressed by Samarco as to how its use of the proceeds from its debt facilities to
fund dividends would be perceived in the markets. In particular, in relation to the proceeds
of the 2013 USD $7 million bond offering (advertised as being for the P4P Project and
general corporate purposes1040), Samarco’s Mr Guerra wrote to Ms Lennox (Group
Treasury), “We would like to avoid to pay dividends immediately after the bonds deal in
order to do not link it to that payment (dividends) and repass a “wrong” message to
market.”1041 Ms Lennox responded that BHP would like the dividends as soon as possible,
once further pre-export financing agreements had been concluded.
341. By way of the above, BHP controlled Samarco’s capital structure and balance sheet to
facilitate the funding of P4P and maximise dividends while maintaining sufficient liquidity.
With such control comes responsibility for Samarco’s activity.
vii) BHP’s control over and direct participation in Samarco’s funding
1034
{F6/179/2}.
1035
{F6/179}.
1036
{F6/179/1}.
1037
{F6/314/1}.
1038
“Endorsement/approval for the potential equity injection and delegation to approve the final amounts to the
Group Treasurer has been obtained in accordance with GLD.028 from the Head of Group Tax, Head of Group
Treasury and Corporate Finance, Vice President Iron Ore and Head of Group Reporting.”: Reply, §120B.2
{A1/3/87}; {F6/314/1}; {F6/442/26}; F6/361/1}. See also {F6/362/1}; {F6/358/1}.
1039
{F6/179/1}.
1040
{F7/19/27}.
1041
{F7/58/3}.
167
342. Further to the above, (i) BHP controlled and directed, (ii) was closely involved and
participated in, and/or (iii) facilitated, Samarco’s entry into key third-party debt
transactions. These were matters of commercial importance to BHP, given that Samarco’s
debt impacted BHP’s own balance sheet, and because the proceeds were used to fund the
P4P Project and additional dividend payments. Accordingly, numerous Group functions
and senior individuals at BHP were closely involved throughout the approval and execution
of such transactions.
343. As far as the Claimants are aware (in so far as BHP refused to provide further information
on the matter1042), the P4P Project was in part funded by (i) the issuance of unsecured notes
in the US on 31 October 2012 (USD $1 billion) and 24 October 2013 (USD $700 million)
(the “2012 Bond”1043 and “2013 Bond”1044 respectively), (ii) an export financing
agreement dated 27 September 2012 with a consortium of Japanese banks, insured by
Nippon Export and Investment Insurance (USD $450 million) (the “2012 NEXI
Transaction”),1045 and (iii) other export pre-payment facilities entered into in 2013 (the
“EPP Transactions”).1046 As set out below, BHP was closely involved in Samarco’s
execution of these transactions, as well as in the issuance of further unsecured notes on 24
September 2014 (USD $500 million) (the “2014 Bond”, marketed as being “for general
corporate purposes”).1047
344. First, BHP controlled Samarco’s entry into key funding transactions by directing its
representatives on the Samarco Board to act in accordance with, or subject to, the outcome
of BHP’s internal approval processes.1048 In accordance with GLD.0441049 (applied to
Samarco as if it were an operated asset), BHP’s Board of Directors was required to approve
Samarco’s entry into external debt financing equal to or over USD $500 million (together
with the endorsement of BHP’s Financial Risk Management Committee (“FRMC”). In
practice, BHP’s Board delegated authority to the BHP Finance Committee to approve such
financing, which delegated authority to BHP’s CFO and Group Treasurer, to determine the
1042
Defendants’ RRFI, 10 March 2023, §28 {A3/3/15}.
1043
{F14/299/1}.
1044
{F7/19/1}.
1045
{F4/235/1}.
1046
{F7/189/1}; {F7/190/1}; {F7/190/1-30}; {F11/121/1-30}. The Claimants understand that three further EPP
agreements were entered into between Samarco and Mizuho, Samarco and HSBC and Samarco and BTMU in
2013, but have not had sight of the agreements themselves. These documents have been withheld by the
Defendants on the purported basis that they are ’not relevant’. The issue of the Defendants withholding
documents pertaining to transactions, the proceeds of which were used to fund the P4P project, was addressed
in a letter from the Claimants to the Defendants dated 5 September 2024 {PO/2789/1-3}. The Claimants have
not received a response from the Defendants to this letter as at the time of the submission of Opening Note.
1047
{F9/183/26}.
1048
POC, §91.2-3 {A1/1/44-45}, §276.3-276.4 {A1/1/116}; Reply, §120B.1 {A1/3/87}.)
1049
{F5/398/5}.
168
final terms. BHP’s representatives on the Samarco Board were directed to approve the
relevant transactions either subsequent to and in accordance with, or conditional upon such
approvals. In this way, BHP controlled Samarco’s entry into, and the terms of, at least the
2012 Bond,1050 the 2013 Bond and EPP Transactions,1051 and the 2014 Bond.1052
345. Second, BHP was closely involved in and/or directed the execution of the transactions,
describing itself in internal communications as “an advisor / arranger” for such
processes.1053 In particular:
345.1. BHP representatives, Ms Lennox, Mike Rowe and Mr Cardoso, participated in a

workshop in June 2012 to develop Samarco’s funding strategy through the P4P
Project.1054 Following this, the Treasury Subcommittee (attended by Group Treasury
representatives on behalf of BHP) recommended that Samarco provide a detailed
execution plan (in respect of the 2012 Bond and other financing) “to be approved
by BHPB and Vale and start the process afterward.”1055 BHP continued thereafter
to direct Samarco through the Treasury Subcommittee as to the detailed analysis
Samarco was required to undertake in respect of its funding.1056
345.2. BHP was closely involved in the process of selecting the banks.1057 For example,
BHP provided extensive comments on the requests for proposals from the banks in
1050
BHP’s Board, on 15-16 August 2012, delegated authority to BHP’s Finance Committee to approve financing
up to USD $1 billion {F4/100.4.1/16}; The Finance Committee, on 12 October 2012, approved the issuance
of a bond up to USD $1 billion and delegated authority to BHP’s CFO and Group Treasurer (Messrs Kerr and
Murray) to determine the final terms thereof {F4/297.1/1} (considering a memorandum by Mr Kerr,
highlighting that the funding would support the “generous dividend policy”: {F4/297.2/1}). On 13 October
2012, Mr Murray endorsed the terms of the bond and recommended to Mr Randolph (via Mr Kerr) that he
approve it on the Samarco Board {F4/310/1}.
1051
Approval of the financing by BHP’s representatives on the Samarco Board was to be given “conditional upon
BHPB Board approval”, given that this was scheduled before the relevant BHP Board meeting {F6/283.2/1}.
The financing was approved by the Samarco Board on 14 August 2013 {F7/139/6-7}, and the BHP Board on
14 and 15 August 2013, with authority delegated to the CFO and Group Treasurer (Messrs Kerr and Chadwick)
to approve the final terms {F6/329.2/15}. Messrs Kerr and Chadwick approved the terms on 18 October 2013,
which Ms Lennox forwarded to BHP’s representatives on the Samarco Board, Mr Wilson, Mr Zweig and Ms
Beck {F7/3.1/1}.
1052
On 31 July 2014, BHP’s Board approved the raising of USD $500 million by a US bond or EPP financing, and
delegated authority to the CFO and Group Treasurer (Messrs Kerr and Chadwick) to approve the final terms
{F8/402.4/1}. The funding was approved on the basis that it would allow Samarco to pay 100% of its 2013 net
profit as dividends {F8/402.0.2/1}. On 26 August 2014, Mr Gillespie forwarded the relevant approvals to
Ottaviano and Beck, informing them that: “the below email confirmation and notification of appropriate
approvals from [Mr Kerr] and [Mr Chadwick] are sufficient for yourselves as Directors to approve the
transaction”: {F9/94/2}.
1053
{F6/428/1}; Reply §120B.2 {A1/3/87}; see also {F4/294/3}; {F4/310/1}; {F4/274/1}.
1054
{F3/494/1}.
1055
{F4/47/5}.
1056
{F3/189/1}.
1057
{F3/494/1}; {F4/268/2}; {F5/424/1}.
169
2012, and set what it considered were the main factors in respect of which the banks
should be selected.1058
345.3. BHP (together with Vale) was involved in shaping the terms of the transactions.
BHP (together with Vale) imposed a series of ‘don’ts’ for JP Morgan to “be clear on
during contract and documentation discussions regarding the [2012] Bond
transaction” (which included no restriction on dividends).1059
345.4. BHP was closely involved in drafting and reviewing the required documentation,
such as the term sheet for the 2012 NEXI Transaction (considered “a key
commercial decision that warrants all shareholders to fully understand and
approve”),1060 the issuance letters for the EPP Transactions1061, and the offering
memoranda for the bonds.1062 BHP also commented extensively on Samarco’s
roadshow presentations for the 2012 Bond.1063
346. Third, BHP was keenly aware that potential investors in Samarco considered favourably
the perception that BHP controlled and supported Samarco (even if it did not formally
guarantee the transactions).1064 BHP allowed Samarco’s financing transactions to be
marketed and structured accordingly, and by doing so, facilitated such financing. For
example:
346.1. JP Morgan’s pricing rationale, provided to Samarco in respect of the 2012 Bond,
stated that it expected investors to perceive a halo-effect due to “the strategic
importance of Samarco to its Shareholders.”1065 Similarly, HSBC’s proposal in
respect of the 2012 Bond emphasised as matters to which investors would attribute
value, BHP’s 50% shareholding, BHP being “non-Brazilian”, and its “implicit
support […] due to Samarco’s fit into BHP Billiton’s business model.”1066
346.2. BHP was aware of such halo effect. In an internal email dated 23 September 2013
(in the context of discussions regarding the possible divestment of Samarco, which
was raised briefly and eventually discarded as an option), Mr Lilley (Business and
Development Manager, Power and Ports) stated: “BHPBIO acts as an advisor /
arranger for these processes – if we were to announce or action an exist soon
1058
{F4/251/1}; {F4/252/4}.
1059
{F4/24/1}.
1060
{F3/375/1}.
1061
{F6/467/1}; {F6/468/1}; {F6/469/4}; {F6/470/1}; {F6/471/1}.
1062
{F9/25/1}; {F9/56.1/1}; {F13/59.1/1}.
1063
{F4/316/1}; {F4/317/1}; {F4/335/1}; {F4/336/1}; {F4/337/1}.
1064
Reply, §120A.6 {A1/3/86}.
1065
{F4/265/2}.
1066
{F4/269/4}.
170
afterwards, there may be questions about our disclosures or at least negative
sentiment from investors who had assumed [Vale] and ourselves would continue to
stand behind the asset.”1067
347. In accordance with the above, the offering memoranda for the 2012 and 2013 Bonds
included representations that Samarco was “controlled by Vale and BHP Billiton”;1068 and
the 2012, 2013 and 2014 offering memoranda underscored that Samarco’s management
benefited “from corporate governance practices approved by our shareholders which are
two of the most sophisticated mining companies in the world”.1069
348. The offering memoranda also included change of control provisions, which required
Samarco to offer the notes holders to repurchase the notes, if a person other than BHP UK,
BHP Australia, Vale “and any of their majority controlled or owned affiliates”, became a
beneficial owner of more than 50% of Samarco’s voting stock (unless Samarco had
redeemed the notes).1070 The 2012 NEXI Transaction also included a change of control
provision, defined to arise if Samarco ceased to be controlled by BHP Billiton, Vale or any
of their respective subsidiaries (individually or jointly), which would give rise to a
mandatory prepayment event.1071
349. By way of the above, BHP controlled, directed, was involved and participated in, and/or
facilitated Samarco’s entry into key financing transactions. It did so to maintain control
over its own balance sheet, to ensure the profitability of its investment in Samarco through
P4P, and to maximise dividends while maintaining sufficient liquidity in Samarco. With
such benefit, involvement and control, comes responsibility.
viii) BHP’s control over and direct participation in the post-Collapse response
350. The Court will recall from the PTR that the Claimants obtained permission (against BHP’s
opposition) for an amendment to permit the Claimants to rely on BHP’s post-Collapse
conduct as evidence relevant to the attribution or imputation to BHP of responsibility for
Samarco’s activity. That new component of the Claimants’ case is now pleaded at
RRAMPOC, §280AA.1072 Its Brazilian legal basis is summarised at §169.3 above.
351. The Claimants acknowledge that BHP has never admitted to liability (indeed, BHP has
been careful to ensure that neither its wholly owned subsidiary, BHP Brasil, nor its part-
1067
{F6/428/1}.
1068
{F14/299/47-48}; {F7/19/48}; {F9/183/1}.
1069
{F14/299/93}; {F7/19/96}; {F9/183/20}.
1070
{F14/299/161-162}; {F7/19/166-168}; {F9/183/143-145}.
1071
{F4/235/7}; {F4/235/24}.
1072
{A1/1/119}.
171
owned joint venture vehicle Samarco have admitted to liability either1073). The Claimants
also recognise that the mere provision of support in the wake of an environmental disaster
could not of itself found a claim for damages; otherwise, a charity might find itself on the
wrong end of a Court judgment merely for having assisted. BHP is not a charity, however,
and its motives are not altruistic. Indeed, large and sophisticated corporations do not
typically pay for other companies’ problems. The Claimants contend in those
circumstances that BHP’s post-Collapse conduct can properly be taken into account as
valuable insight into the reality of its relationship with Samarco and its underlying
responsibility for Samarco’s activity.
352. As already noted in Part I above, Mr Mackenzie (BHP’s then CEO) was swift to
acknowledge BHP’s “responsibility” and declare its “commitment” to making things
“right”.1074 No doubt this was because, although Samarco had operated the mine, BHP and
Vale were its joint owners and controllers and, in that capacity, the beneficiaries of its
commercial operations. There was not a hint from Mr Mackenzie of the case now advanced
in these proceedings that Samarco operated independently of BHP, thus relieving BHP of
any legal duty to do anything at all. Moreover, Mr Mackenzie also publicly referred on at
least three separate occasions to BHP working “through” Samarco to tackle the effects of
the Collapse.1075 To refer to BHP as acting through its co-owned joint venture vehicle is an
entirely apt description of the BHP/Samarco relationship both pre- and post-Collapse.
Indeed, just as BHP approved Samarco’s strategy and capital investments in its pre-
Collapse commercial operations, so too did BHP decide what should be done post-Collapse
(what “we think are the right things to do”1076) and fund Samarco accordingly. Clearly there
needed to be coordination with Vale as BHP’s joint venture partner but Mr Mackenzie was
pleased to confirm that they were “marching in lockstep” with Vale.1077
353. Samarco was not in any meaningful sense making autonomous decisions independently of
its Shareholders in the aftermath of the Collapse. Its communications were carefully vetted
by BHP,1078 whose representatives are recorded in the minutes of one Samarco
Communication & Stakeholders management Subcommittee as stating that they “want to
participate in the entire [press] strategy and execution”1079 as well as the digital,
1073
Defence, §314AB {A1/2/193-195}.
1074
{F14/193.4/1}; {F14/143.2/3}; {F15/461/4}; {F14/156.3/2}.
1075
{F14/101/4}; {F16/498.0.2/2}; {F14/106.1/1}.
1076
{F14/101/3}.
1077
{F14/101/4}.
1078
{F14/383.3/1-2}; {F14/390.0.1/1-3}; {F14/390.0.1T/1-3}. In one Samarco Q&A, BHP employee Karin
Ditchfield was careful to delete a reference to the potential legal liability of Samarco’s Shareholders:
{F14/208/6}.
1079
{F14/353/19}.
172
institutional and community liaison strategies;1080 so much so, in fact, that BHP sought to
arrange for a Brazilian Public Relations firm to advise Samarco on its Communications
Strategy.1081 Nor was there any relevant distinction between the local subsidiary, BHP
Brasil, and the wider BHP Group. A diagram of the “Proposed Interaction Model” shows
BHP giving “direction” to Samarco via BHP appointees to the Samarco Board.1082
Proposed corrective and emergency measures needed to be approved by BHP.1083 Indeed,
it is plain that BHP saw it as important to outwardly display “leadership”, and that the
remediation plan “aligned with BHP Billiton expectations as a global leader in
resources”.1084 By acting decisively, BHP hoped not merely to maintain but to “enhance”
its reputation with its own Shareholders.1085 To that end, Mr Mackenzie appointed one of
his “most senior and trusted lieutenants”1086 Mr Dalla Valle, to oversee BHP’s response.1087
354. Yet whilst wishing to be seen as a matter of fact to be firmly in control of the post-Collapse
response, BHP was careful to ensure that, as a matter of law, neither any BHP company nor
Samarco as the 50:50 joint venture made any formal admission of legal liability to any of
the victims. The TTAC1088 was thus orchestrated to introduce a compensation scheme but
pointedly without an admission of liability by anyone and without the ultimate parent
companies even being made party. Even the execution was convoluted: the CEO’s “trusted
lieutenant” Mr Dalla Valle signed the TTAC, not on behalf of BHP UK or BHP Australia,
but instead on behalf of the local subsidiary BHP Brasil, having been specifically
authorised to act for that company for this purpose. Self-evidently, however, the TTAC was
an instrument by which BHP, acting in its own commercial interests, had attempted to
confine its financial exposure, including by ensuring that Samarco (which had no
discernible defence) did not admit liability. BHP acknowledged in their Defence that BHP
Australia “had an interest in the situation that its indirect subsidiary faced and/or the
financial liabilities that it would assume”1089 and they involved themselves in meeting
about the TTAC accordingly. However, this only serves to reinforce the Claimants’ point
that BHP’s role was never as a passive shareholder, either pre- or post-Collapse. BHP’s
own shareholders also had an indirect interest in the financial liabilities arising under the
1080
{F14/353/19}.
1081
{F14/400.0.1/75}.
1082
{F14/236/4}.
1083
{F14/61.1T/1}.
1084
{F14/236/6}.
1085
{F14/236/6}.
1086
{F14/183.1/1}.
1087
{F14/183.1/1}.
1088
{A1/1/108}.
1089
POC, §256 {A1/1/108}.
173
TTAC but none of them were involved in the negotiation of an agreement to which they
were not a named party. Whilst a Part 20 Defendant in these proceedings, Vale had also
sought to expose BHP's contrived stance, pleading that “a non-signatory is bound by the
terms of a contract, as a matter of Brazilian law, if it participated in the negotiations and/or
performance of the contract”1090 and that “officers or employees of BHP Brasil […] simply
followed the directions of an/or acted in the interests of BHP”.1091 The Claimants do not
consider it a coincidence that BHP settled with Vale just as Vale's disclosure and evidence
was about to emerge.
355. The representations made by Flavio Bulcão of BHP at the homologation hearing in May
2016 also show BHP navigating a path between wanting to be seen to be taking
responsibility whilst not actually admitting liability or assuming any uncapped legal
obligation. Thus, Mr Bulcão referred to the “sponsors” of the TTAC including “companies
organized worldwide, which believe that the full redress of the impacts is a condition for
the survival of their own businesses”.1092 That was plainly a reference to the BHP parent
companies, as distinct from merely the local subsidiary.
356. The Claimants rely also on the carefully stage-managed instruction of Cleary Gottlieb to
oversee investigations into the cause of the Collapse. It is now known that whilst seeking
to give an outward impression of transparency, BHP was also trying to keep as much as
possible of the fact-finding exercise behind a veil of privilege. It is hardly surprising that
an organisation with the resources and sophistication of BHP should try to arrange its
affairs in that way. However, BHP’s efforts to control the flow of information and protect
itself from legal claims are again hard to reconcile with the attempt to characterise itself
for the purposes of the Environmental Law as aloof from the operations of Samarco.
357. Indeed, the unifying theme of BHP’s conduct both pre- and post-Collapse is its own pursuit
of profit (including the minimisation of any unavoidable damage). Hence it involved itself
in the clean-up exercise, the TTAC and the Panel Report investigation with a view to
limiting the financial fallout from the Collapse. Given that BHP is a publicly listed
commercial enterprise, accountable to its own shareholders, that is to be expected.
However, in the context of a Brazilian environmental law framework designed so that those
who participate in, control and benefit from a polluting activity are strictly liable to
compensate those who suffer damage, BHP’s position appears to the Claimants to be
impossible to sustain.
1090
{PC/2/108}.
1091
{PC/2/108}.
1092
{PE14/6.1/390}
174
358. BHP has now purported to explain its post-Collapse conduct through a supplemental
witness statement from Mr Beaven. With neither his then Chairman, Mr Nasser, nor CEO
Mr Mackenzie, appearing as witnesses in their own right, it has fallen to Mr Beaven to
explain what he thought his bosses meant when they said in the aftermath of the Collapse
that BHP “must respond in the right way”, that it would “fully play [its] part” and that it
recognised that it had a “responsibility”.1093 Beaven 2 also deals with the TTAC despite not
having been involved in its negotiation. In fairness to him, Mr Beaven does at least
acknowledge that it was “morally right” for BHP to support the response to the
Collapse.1094 The Claimants’ short point, however, is that the purpose and effect of
Brazilian Environmental Law is to align the moral obligations of a “topco” in BHP’s
position (with all of the features of control, influence, participation and involvement earlier
described with respect to Samarco’s activity) with its legal obligation.
ix) BHP’s conduct created and/or contributed to the risk inherent in Samarco’s
activity, including the risk of a Collapse
359. The P3P Project, the P4P Project, Project 940 and the disposal of Vale’s tailings behind the
Dam (individually or in combination with one another) actually caused the Collapse.
Necessarily, therefore, they also created and/or contributed to the risk of a Collapse.
x) BHP benefitted from Samarco’s activity
360. BHP derived substantial benefits from Samarco’s activity, not only in the form of
aggressive dividends, but also through the foothold which Samarco’s operations in Brazil
enabled BHP to establish both in the pellet market and the largest seaborne iron ore supply
country outside of Australia. Having regard to those benefits, BHP’s extensive control over
and participation in Samarco’s activity readily understandable. For BHP, Samarco was, as
Mr Randolph explained in a private letter to Mr Martins, a “growth vehicle”.1095 BHP’s
control over and direct participation in Samarco’s activity was thus entirely driven by its
strategic imperative of maximising the benefits which it so derived,1096 including through
BHP’s use of Samarco’s resources as an asset which it did “fully exploit.”1097
361. To that end, BHP channelled its strategy of value maximisation through the Samarco 5YP
(see §§236-239 above); held the levers of Samarco’s budget through its power to approve
Samarco’s budgets (see §§240-242 above); and engaged in various additional initiatives
1093
Beaven 2, §9 {B1/8/3}.
1094
{B1/8/3}.
1095
{F1/121/1}.
1096
{F8/309/5}.
1097
{F3/235.1.1/4}; {F2/354/2}; {F7/58.2/6}; {F7/124.1/4}.
175
which were premised upon Samarco’s profitability, including Growth Projects (see §§255-
278) and five further initiatives which merit introduction.
362. First, BHP was directly involved in securing Samarco access to lower cost iron ore.
Samarco had various iron ore and concentrate supply arrangements with Vale.1098
Cognizant that these supply arrangements enabled Vale to “capture the full economic
rent”1099 from Samarco, BHP acquired several leases in or around the Água Limpa region
with the dual strategic purpose of both securing Samarco a potential alternative low-cost
supply of iron ore and developing its own standalone iron ore mining business in the
region1100 (the “Água Limpa Leases”). BHP also sought to “take the lead in negotiations
with Vale” in relation to certain supply agreements in order to secure more favourable terms
for Samarco (and thus BHP).1101
363. Second, BHP sought to influence Samarco’s exploration programme and “steer Samarco
to focus on […] [i]ncreasing its reserves – out of its existing resources”.1102 To that end,
BHP was heavily involved in the first Resource Range Analysis (“RAA”) that Samarco
conducted in May 2010,1103 for which BHP’s and Samarco’s geologists attended a mineral
inventory workshop and BHP’s mining engineering team evaluated Samarco’s mining
inventory.1104 BHP’s exploration team made other technical visits, including to discuss
Samarco’s long-term development plan.1105 Based upon its assessment about the extent of
Samarco’s resources, including as a result of the RAA, BHP carried out its own Shadow
RDPs in 2008,1106 2009,1107 20101108 and 2011,1109 in order to analyse growth options for
Samarco based on the mineral resources that it had available, and thereby “[i]ncrease
Samarco’s value”.1110
364. Third, BHP used Samarco as a vehicle through which to extract a sizeable benefit from the
Água Limpa Leases. After it became clear to BHP that these leases had “[m]arginal value”
to Samarco and that a standalone operation for BHP was “not viable”,1111 BHP made a
1098
{F1/96/2}; {F1/384.1.2/27}.
1099
{F1/103/2}.
1100
{F4/433.2}.
1101
See e.g., {F1/96/11}; {F1/103/3}; {F2/73}.
1102
{F2/431/2}; {F2/72.1}; {F1/96/12}.
1103
{F2/304/9}.
1104
{F2/248.1/9}.
1105
{F2/169.1T/1}
1106
{F1/151}.
1107
{F1/384.1.2}.
1108
{F2/304}.
1109
{F4/121.5}.
1110
{F1/384.1.2/33}.
1111
{F6/325.2/2}.
176
decision to divest. To that end, over the course of 2009-2013,1112 BHP carried out
negotiations with Vale to swap the leases.1113 Eventually a three-way agreement was
reached as between BHP, Vale and Samarco,1114 which was approved by BHP and Vale (via
the Samarco Board)1115 and resulted in a “net benefit to BHPB above market value” of USD
$8-181 million.1116
365. Fourth, BHP pushed through Project 940 precisely in order to ensure that Samarco could
continue its rate of production and thus maintain its profitability. By early 2015, tailings
dam capacity was identified by BHP as having become “undoubtedly Samarco’s biggest
risk”.1117 Samarco therefore depended upon the timely completion of Project 940 in order
to provide the capacity needed to support production; so much so, that the Maximum
Foreseeable Loss associated with a one-year delay to Project 940 was USD $670 million
(based on a projected drop in production by 50%).1118 That is why BHP directly intervened
to expedite the approval of Project 940m by lowering its CAPEX to enable a quicker
approvals process to be followed and thereby ensure that there was sufficient capacity for
operations to avoid potential revenue losses that would have otherwise occurred.
366. Fifth, BHP was involved in seeking to “push Samarco” to work on developing an index-
type pricing mechanism1119 for pellets which would maximise EBIT.1120 To that end, BHP
had discussions with Samarco’s management on the objectives and rationale for this pricing
methodology and pursued its agenda through the Operations and Finance Committees.1121
Consequently, Samarco pursued an index type of pricing with clients on the basis of BHP’s
directions.1122
367. The above initiatives were pursued in order to maximise the commercial and financial
benefits which BHP derived from Samarco’s activity. As regards financial benefits, as a
Barclays Emerging Market Research bulletin explained, these dividends were
“aggressive”: “Samarco generally pays almost all of its free cash flow in dividends, which
is not unusual, given that it was set up to benefit its two shareholders”1123. Moreover, as
underscored in a private letter from Mr Randolph to Mr Martins dated 4 December 2008,
1112
For updates on the swap negotiations, see {F1/467.2}; {F3/298.1}; {F5/157}.
1113
{F2/72.1/8}.
1114
{F6/325.2/5}.
1115
{F6/330/3}.
1116
{F6/405.2/2}.
1117
{F10/346}.
1118
{F10/347}.
1119
{F2/31/7}.
1120
{F2/46/3}.
1121
{F2/46/3}.
1122
{F2/282.0.2/2}
1123
{F12/234.2/21}.
177
Samarco’s purpose as a growth vehicle was “primarily driven by its favourable tax
structure”.1124 Indeed, the “unusually favourable corporate tax rate of 18%” enjoyed by
Samarco (versus the statutory rate of 25%) was a key factor in BHP’s decision to approve
the P4P Project, seen to provide “the best investment return of any significant pellet plant
expansion project in the industry.”1125 For these reasons, senior figures at BHP were also
heavily involved in managing Samarco’s tax contingencies (including in respect of a
number of disputes with the Brazilian authorities),1126 in order to monitor and reduce the
impact of Samarco’s tax liabilities on BHP’s profits.1127
368. Having regard to the extent of these aforementioned benefits to BHP, it is unsurprising that
BHP do not seriously dispute the benefits which it derived from Samarco,1128 in particular,
(i) BHP admits that Samarco paid shareholder dividends to BHP Brasil amounting to 50%
of R$6,123,074,718.66 between 14 December 2012 and 24 June 2015;1129 (ii) BHP admits
that profits available for distribution to ordinary shareholders of BHP Australia included
earnings received from BHP’s investment in Samarco;1130 and (iii) BHP does not deny that
it treated Samarco and/or its mineral resource base as a physical, economic and strategic
asset from which it derived benefits.1131
369. In light of the above, there can be no room for argument that, as the only beneficiary of
Samarco’s activities together with Vale, BHP must also bear the burdens associated with
Samarco’s activity. For that reason, responsibility for Samarco’s activity is to be imputed
to BHP.
xi) BHP funded Samarco’s activity
370. BHP funded Samarco’s operations through provided capital contributions to Samarco at
least as required by Clause 10.1 of the SSA.1132 Moreover, in the years preceding the
Collapse and in the context of Samarco’s extensive expenditure on P4P, BHP stood ready
to inject capital into Samarco as required (and did so following the Collapse1133).
1124
{F1/121/1}.
1125
{F2/388/1}.
1126
See e.g., {F6/154.3.2/1}; {F6/154.3.1/1}.
1127
{F2/114.1/1}; {F2/462/1}; {F8/181.3/2}; {F8/384.1}; {F8/384.2/1}; {F6/129.2/1}.
1128
The core of BHP’s defence to this plea is that the mere fact of holding an equity interest and receiving dividends
would not be sufficient in itself to satisfy the test under Article 3, IV, of the Environmental Law: Defence,
§314 {A1/2/193}.
1129
POC, §70 {A1/1/35}; Defence, §101(2) {A1/2/48}.
1130
POC, §67 {A1/1/34}; Defence, §98(5) {A1/2/46}.
1131
The plea in Reply, §120A {A1/3/85} is met with a non-admission at Rejoinder, §67GA(1) {A1/5/91} coupled
with a bare denial that the facts on which the Claimants rely in support of that plea are in fact capable of
supporting it.
1132
POC, §279.1 {A1/1/119}.
1133
{F14/209.3.1/1}.
178
371. Further to the above, BHP entered into an export prepayment (“EPP”) facility with
Samarco on 17 December 2009, by which BHP co-lent USD $150 million to Samarco,
alongside a further USD $150 million provided by Banco do Brasil (the “2009 Co-lending
Facility”).1134 The financing was provided to Samarco Finance Limited (100% owned by
Samarco, which guaranteed the transaction) via BHP Billiton Finance BV (“BHPF”), a
Dutch entity controlled by BHP. Whereas BHP does not admit that BHP controlled BHPF,
and emphasises that it was only an “indirect subsidiary of BHP UK”,1135 BHPF was
described by Ms Sultemeier and others, without hesitation, as a “Treasury company”.1136
BHP’s Annual Reports refer to BHPF among the “significant subsidiaries of the group”,
denoting “The Group’s effective interest” as 100%.1137
372. BHP’s decision to execute the 2009 Co-lending Facility was clearly taken at Group level.
Approval for “the Group to participate as a co-lender” in the transaction was approved by
the FMRC on 17 September 2009,1138 considering a memorandum by the Group Treasurer,
Murray,1139 which highlighted that: “[b]y funding the assets from the centre, Treasury can
more efficiently manage the combined liquidity position of the Group. For example, where
the Group is long cash, surplus liquidity at the centre can be utilised to co-lend and avoid
the cost of unnecessary debt from a Group perspective”. This was in the context that BHP
consolidated Samarco’s financial statements with its own, and managed Samarco’s debt
levels in a manner beneficial to BHP.1140 Moreover, BHP specifically chose to fund through
BHPF by way of a “cross DLC loan”, because it considered that it would benefit from a
reduced tax rate on the interest differential in the Netherlands “which result[ed] in a NPV
uplift.”1141 Indeed, Ms Sultemeier confirmed that when BHP needed to provide funding, it
evaluated from which location (e.g., the US, Australia, the Netherlands) was most
beneficial, so as to maximise the benefits to BHP.1142 The entire structuring of the 2009 Co-
Lending Facility, therefore, was intended to benefit BHP.
373. That BHPF was controlled by BHP is further shown by an amendment to the 2009 Co-
Lending Facility in 2013 to remove the reference to redeemable shares from the definition
1134
POC, §279.2 {A1/1/119}; Defence, §313(2C) {A1/2/192}; {F1/490/1}.
1135
Defence, §313(2)(c)(b), {A1/2/192}.
1136
Sultemeier 146:15 {F17/56/38} as regards a Depositary Agreement by which funds received as dividends from
Samarco by BHP Brasil were deposited, to be invested by BHPF; {F4/54/1}; {F3/271.1/1-2}. In an email dated
6 January 2012, David Fletcher noted that the Depositary Agreement between BHP Brasil and BHPF was part
of a “Treasury company business model […] to make a spread on its lending/borrowing.”: {F3/275/1}.
1137
{F4/207/214}.
1138
{F15/429/10}.
1139
{F15/439/132}.
1140
POC, §51 {A1/1/31}; Defence, §82 {A1/2/41-42}; {F1/282/1}.
1141
{F2/449/1}; {F1/346/1}.
1142
Sultemeier 142:4-13, 143:2 {F17/56/37}.
179
of indebtedness. The amendment was signed by Nigel Chadwick on behalf of BHPF,
expressly in his capacity as Group Treasurer, as well in his capacity as Director of BHPF,
and was witnessed by Ms Lennox and Ricardo Pizarro (of Group Treasury).1143
374. Accordingly, in accordance with the principles set out above, and in particular, those
recognised in TAG, the fact that BHP funded Samarco’s activity further gives rise to the
imputation of responsibility for the polluting activity. This is a fortiori in circumstances in
which BHP’s funding of Samarco, together with its control over and involvement and
participation in, Samarco’s wider funding strategy, was designed to – and did – maximise
BHP’s own benefit from Samarco’s activity.
4) Samarco’s activity caused the Collapse
375. It is not in dispute that Samarco’s activity caused the Collapse. Samarco’s activity is, as set
out above, an activity for which BHP is responsible. Further, supposing (arguendo) that it
were necessary to establish that BHP’s conduct (separately) was a necessary cause of the
Collapse, it plainly was, for the reasons set out above.
5) Conclusion
376. In the Claimants’ respectful submission, there is an overwhelming case that BHP is (both
directly and indirectly) responsible for the activity which caused the Collapse and is
therefore a polluter within the meaning of Article 3, IV, and therefore liable to pay
compensation in respect of the damage caused by the Collapse pursuant to Article 14 §1 of
the Environmental Law.
377. In defence to all of the above, BHP raises Samarco’s alleged status as an “NOJV” as though
it were a complete answer.1144 BHP’s internal labelling, however, is of no legal relevance
under Brazilian Law; the only relevant question is what was, in substance, the true nature
of BHP’s connection to the activity. That connection is, as has been outlined above, one of
extensive, wide-ranging and direct control and influence over, and participation and
involvement, by BHP, in all significant areas of Samarco’s operations, all for the singular
purpose of maximising the growth and profitability of its joint venture vehicle, for BHP’s
direct benefit.
378. Moreover, the “NOJV” nomenclature used by BHP in relation to Samarco was never
intended to mean that BHP had no control over Samarco, but merely that control was shared
1143
{F6/70/1}; {F6/69/1}.
1144
Defence, §20 {A1/2/9-10}, §78(1) {A1/2/35}, §80(4) {A1/2/38}, §85 {A1/2/42}, §102(6) {A1/2/49}, §113(4)
{A1/2/61}, §294(3) {A1/2/186}, §308(2) {A1/2/191}, §319(2) {A1/2/202}, §338 {A1/2/217}.
180
with Vale. Post-collapse, this reality was recognised by BHP in a Non-Operated Joint
Venture Review dated 11 July 2016, in the following terms:
“From time to time there is value in having a local partner who may operate or share
operatorship through an independent joint venture. This is a third reason for such joint
ventures in our sector. While not part of the review, the thoughts of the Brazil team are
included for completeness. It is not clear whether the tailings dam failure at Samarco
would have happened had it been a joint venture operated by Vale, someone else or us.
Had Vale operated it is possible the cost to us would have been less than we now face;
but had we operated it could have been much more, especially in reputational
terms”.1145
379. BHP’s “partner” in this context obviously means a company in the position of Vale (just
as BHP’s other NOJV partners are listed in the appendix to the memo1146). The
“independent joint venture” would be Samarco,1147 through which BHP and Vale “share”
the responsibilities of operator.
380. To similar effect, in an Investor Analyst Call dated 16 November 2015, Mr Mackenzie
stated:
“[W]e have two types of non-operated joint ventures. There are those where somebody
else is the operator, which is chiefly the case in the Petroleum business, and then there
are three mining examples I quoted earlier, which are set up as a standalone company,
which often has third-party funding, but the equity is held and accounted for as equity
through a mixture of mining companies, like ourselves and Vale at Samarco […] That
is the kind of arrangement we need to review and have been reviewing, to be honest, to
decide not just the perspective of our shareholders, but the shareholders of the
companies who are partners to that joint venture and whether a more petroleum-type
model might be more appropriate in the future”.1148
381. Thus, the nomenclature of “non-operated joint venture” in the context of Samarco was
never intended to mean that “somebody else” (i.e. the Samarco management) controlled
Samarco, because that nomenclature only applied in the case of the first type of non-
operated joint venture (found, principally, in BHP’s Petroleum business). “NOJV” in the
context of Samarco was instead intended to reflect the fact that BHP “share[d]
operatorship” (i.e. control) with its joint venture partner, Vale. Samarco was described as
“independent” or “standalone” only because it was not in the exclusive control of either
BHP or its partner Vale. This was in contrast to a “third party operated joint venture” in
which BHP would have had very limited ability to exercise any control or influence.1149
1145
{F14/426/1}.
1146
{F14/426/5}. See also BHP’s description of Vale as its joint venture “partner”: {F3/183/2}.
1147
Defined as such in {F3/169/4}, {F6/427/2}.
1148
{F14/101/4}.
1149
{F3/169/4}.
181
The separate corporate personality and decision-making machinery of Samarco (Board of
Directors, Committees, Shareholder Meetings) – with the Executive Board being
ultimately subservient to the Board of Directors – was simply the means of accommodating
the possibility of divergent views between BHP and Vale. Hence Samarco’s Corporate
Governance model was perceptively described by the consulting firm retained by BHP and
Vale as a “format for negotiating and reaching agreement on operating a company that
benefits both parties […] to maximize value within decisions made by shareholders”.1150
382. Post-collapse, BHP’s view was that the upside of its decision to manage its asset through a
“share[d] operatorship” was that it limited its exposure in the event of a tailings dam
failure, “especially in reputational terms.” However, as a matter of Brazilian law, there can
be no such limit to BHP’s exposure.
383. The consequence of all of the above is that since BHP is responsible for the activity which
caused the Collapse, BHP is liable for the Collapse under the strict liability regime created
by Articles 3 and 14 of the Environmental Law (alternatively, if necessary, the strict liability
regime created by Article 927 sole paragraph of the Civil Code). That Samarco and/or Vale
would, if sued, have been jointly and severally liable on the same terms does not alter that
conclusion.
PART VII. THE FAULT-BASED CASE
384. If necessary, the Claimants also contend that BHP is liable, by reason of its own illicit acts
and omissions, for the damage caused by the Collapse of the Dam:
384.1. under Article 186 of the Civil Code, the general negligence provision in Brazilian
civil law; and
384.2. under Articles 116 and 117 of the Corporate Law, which provide for the liability
of controlling shareholders who have acted in breach of the duty “to respect and
loyally heed the rights and interests of… the community” including by the “abusive”
exercise of their “controlling power”.
385. The legal principles behind both the Civil Code and Corporate Law regimes are addressed
in turn below, before an application of these principles to BHP and the events leading to
the Collapse. The factual matters relied upon by the Claimants comprise both the factual
matters relevant to strict liability outlined above, and additional facts that establish the
“fault” or “illicit” conduct element on this second part of the Claimants’ case.
1150
{F8/309/5}.
182
A) Legal principles
1) Article 186 of the Civil Code
386. Article 186 is a general tort provision that establishes liability for persons who cause
damage by illicit acts or omissions:
“Article 186. Anyone who, by voluntary act or omission, negligence or imprudence,

violates a right and causes damage to another, even if exclusively moral damage,
commits an illicit act.”
387. It is to be read alongside the head paragraph of Article 927 of the Civil Code: “Anyone
who, through an illicit act (articles. 186 and 187), causes harm to another is obliged to
repair it.” Provided that the elements of liability in Article 186 of the Civil Code are
satisfied, a defendant will be obliged to redress the harm caused by their illicit act under
Article 927, head paragraph, of the Civil Code.1151 Liability will be established with the
presence of three basic elements: (i) a “voluntary act or omission” (which “violates
rights”); (ii) amounting to “negligence”; (iii) which “causes harm”. These elements are
addressed in turn.
i) Voluntary act or omission
388. The first of these elements relates to conduct and the question of what sort of voluntary act
or omission will be considered to ‘violate rights’ for the purposes of Article 186 of the Civil
Code.
389. The experts are agreed on the basic characteristics of the commissive act. First, the conduct
must be voluntary, i.e. the author of the act must have capacity.1152 Second, insofar as a
commissive act ‘violates rights’, the experts agree that this is simply another way of saying
that the act will breach a legal duty.1153
390. There is a dispute as to what forms of conduct will give rise to liability for omission, in
particular whether liability for omission is contingent upon breach of a ‘specific legal duty’
to act, established in either a contract or in the law (i.e. in a further provision, outwith
Article 186 of the Civil Code).1154 These criteria are put forward by Professor Tepedino on
behalf of BHP, but as noted by Professor Rosenvald:
1151
Rosenvald 1, §§74-77 {C3/1T/36-38}.
1152
1153
Rosenvald 1, §§77, 88, 334 {C3/1T/37-38} {C3/1T/40} {C3/1T/135}; Tepedino 1, §90 {C7/1T/48}, §96
{C7/1T/49-50}, §98 {C7/1T/50}; Rosenvald 2, §61 {C16/1T/28}. Rosenvald 1, §88 {C3/1T/40}, §§327-328
{C3/1T/133}; Tepedino 1, §94 {C7/1T/49}, §§97-99 {C7/1T/50}.
1154
Tepedino 1, §§100-109 {C7/1T/50-53}.
183
390.1. There is no special rule requiring a stricter or narrower type of duty to be proven in
the case of omissions. The STJ’s dominant position has been to treat omissive
conduct on the same terms as commissive conduct without requiring the presence
of special circumstances giving rise to a duty to act.1155 In practice, a Brazilian court
would simply ask whether the act or omission was negligent in the circumstances
of the particular case, thus rolling up these elements of the Article 186 test.1156
390.2. This analysis is supported by the terms of Article 186 of the Civil Code itself, which
provide for liability by “omission”, without making reference to any condition upon
which such liability will arise.1157
390.3. The duty of neminem laedere (“to hurt no one”), is – on Professor Tepedino’s own
evidence1158 – embodied in Article 186 of the Civil Code and provides for a general
duty not to cause harm to others.1159 According to the academic scholarship upon
which Professor Tepedino relies, a breach of the general duty not to harm others
(including by omission) is sufficient in itself to give rise to liability under Article
186 of the Civil Code.1160
391. This is not to say, of course, that Brazilian law does not recognise the existence of specific
duties in defined circumstances, which, when breached, will also amount to conduct
‘violating a right’. It is simply to note that this type of specific duty may be relied upon as
an additional basis of establishing liability under Article 186 of the Civil Code. In the
1155
Rosenvald 1, §92 {C3/1T/41-42}.
1156
Rosenvald 1, §95 {C3/1T/43}; Rosenvald 1, §93 {C3/1T/42}, §§110-111 {C3/1T/48-49}; Rosenvald 1, §94
{C3/1T/42}.
1157
Contrast this with Article 13, §2, of the Criminal Code, according to which criminal liability for omission will
only arise in the event of special circumstances giving rise to a duty to act, viz. a legal obligation of care,
protection or surveillance; an assumption of responsibility to prevent the outcome; and previous behaviour
which creates the risk of the occurrence of the result. Rosenvald 1, fn. 64 {C3/1T/47-48} {C3/3.3T/1091-
1092}.
1158
Tepedino 1, §98 {C7/1T/50}.
1159
Rosenvald 1, §88 {C3/1T/40}; Rosenvald 2, §61 {C16/1T/28}.
1160
“In fact, there is no possibility of defining fault without starting from the notion of duty. Savatier […] shows
that the establishment of fault in comparison with the procedure of a well-informed man necessarily
presupposes his diligence in relation to the observance of his duties, which can be of various orders: a) a legal
duty […] b) a determined moral duty […] c) contractual damage; d) the general duty not to harm. The damage
will or will not be culpable depending on whether or not it results from a breach of this duty”: {C7/4.6T/2978};
“The discussion is mainly based on the following controversy: is the existence of a specific prior norm essential
or is the generic prediction of the neminem laedere sufficient for the determination of illicit behaviour. In
Brazil, the statement by R. LIRA, […] is underlined for whom “When it is asserted [...] the violated duty, in tort
liability, must be based on the law, the reference is to the law in its formal and material sense, emanating from
a predetermined legislative process, also the law as an expression and foundation of a system, having as its
general foundation the neminem laedere, the duty not to cause harm to others”: {C7/4.7T/3038}. See also
Rosenvald 2, §59 {C16/1T/26-27}, §61 {C16/1T/28}, §74 {C16/1T/34}, §155 {C16/1T/65}.
184
context of the claims against BHP, there are several specific duties that stand out as
relevant.1161
392. First, those who create or contribute to a risk will, if negligent, be liable to compensate
those who are harmed by their activity.1162 It is not clear whether this is seriously disputed:
Professor Tepedino accepts that an omission preceded by commissive negligent conduct
will breach a legal duty and there is no material difference between that scenario and
Profess Rosenvald’s analysis of liability arising by reason of the creation and/or
contribution to risk.1163 The difference may be one of semantics. In any event, Professor
Rosenvald’s analysis encapsulates more accurately the case law1164 and, on analysis, the
doctrine relied upon by both Professor Milaré1165 and indeed Professor Tepedino in their
reports.1166 As explained by the STJ in Appeal 1.698.726/RJ, citing the Brazilian scholar,
Sergio Cavalieri Filho:
“[T]he duty to act, of carrying out an act intended to prevent the harmful result, may be
originated from the law, a legal transaction or even conduct previously practised by the
actor themself that has, with it, created the risk of the result occurring. In such cases,
not preventing harm from occurring would be the same as allowing the cause to
operate.”1167
393. Second, a duty to prevent harm may arise on the basis of an assumption of responsibility.
An assumption of responsibility may arise in various circumstances. It may be contractual
1161
Rosenvald 1, §98 {C3/1T/43-44}; Rosenvald 2, §57 {C16/1T/25-26}.
1162
Rosenvald 1, §§109-114 {C3/1T/48-52}.
1163
Tepedino 2, §108 {C18/1T/45}. Rosenvald 1, §338 {C3/1T/135-136}, §344 {C3/1T/137}; Rosenvald 2, §70
{C16/1T/32-33}.
1164
“In addition, in cases of omissive conduct, causation must be assessed normatively, based on the agent's legal
duty to avoid the damaging result (or produce a different result), whether of a legal, contractual nature or
because the agent itself has created or aggravated the risk of the occurrence of the result”: Rosenvald 1, §98
{C3/1T/43}, STJ, REsp 1.698.726/RJ, Third Panel, Reporting Justice Ricardo Villas Boas Cueva, judged on 1
June 2021 {C3/3.2T/909}; “On this case, still in the teaching of Sérgio Cavalieri Filho, the following example
is extracted: “[...] The third situation from which the duty to act may arise is a consequence of a previous
activity of the person causing the danger. Anyone who creates danger has a legal obligation or duty to prevent
it from becoming damage”: Rosenvald 1, §114(a), fn 71 {C3/1T/50-51}, {C3/3.3T/1092}; TJPR No. 0001084-
23.2019.8.16.0075, Reporting Judge Marco Antonio Antoniassi, 5 December 2022 {C3/3.3T/1092}.
1165
“In the Brazilian law, the one that fails to act is liable for the civil reparation of the damage: (i) in the situations
it has the legal obligation to act (ex., the policeman or the firefighter on duty); (ii) having contractually
assumed the responsibility to prevent or avoid a harmful result (ex., the guard that was contracted precisely to
protect the building, but leaves the reception unattended); (iii) after having, with its previous behaviour,
actively created a risk situation, failing to act to avoid that such risk was consummated, causing damage to the
victim” {C5/5T/612}.
1166
“Whoever created the danger, even without fault, has the duty to eliminate it. Those who caused the risk are
responsible for it, because they have a duty to avoid harm. In this case, the illegal act may not be a positive
one, but only a negative one” {C7/4.6T/2927}.
1167
Rosenvald 1, §338 {C3/1T/135-136}, STJ, Special Appeal 1.698.726/RJ, Third Panel, Reporting Justice
Ricardo Villas Boas Cueva, judged on 01 June 2021 {C3/3.2T/893-912}.
185
(as Professor Tepedino accepts).1168 Or it may follow from holding oneself out as having a
particular status which brings with it a responsibility to prevent harm. In many contexts
(including the present one) there will be an overlap between the creation of a risk and the
assumption of responsibility for that risk. For example:
393.1. In Itaipava Rally (STJ, 2024), the defendant organised a motor racing competition
and failed to provide medical assistance to a competitor who had an accident. The
STJ’s finding of liability was based upon the defendant’s status “as the organiser”
of the competition and the fact the defendant had made a medical team available at
the competition.1169 So, unsurprisingly, a voluntary (even if non-contractual)
assumption of responsibility can clearly be sufficient.
393.2. In Odair (TJPR, 2022), the defendant indicated an unsafe place for children to swim,
resulting in one of their deaths. The TJSP held that Mr Odair was liable by reason
of his creation of a risk1170 and his assumption of a status of ‘guarantor’. With regard
to the second basis, the TJSP held that, “by proposing the irresponsible tour in a
place totally inappropriate for bathing, indicating to the minors the place where
they should swim, undertook the position as guarantor, hence given cause to his
liability.”1171
394. Third, a duty arising from statute. For the purposes of this case, there are three further
relevant statutory duties, the breach of which will give rise to liability under Article 186 of
the Civil Code, namely (i) Article 116 of the Corporate Law, (ii) Article 225, head
paragraph, of the Constitution, and (iii) Article 225, §2 of the Constitution. They are to be
interpreted and applied alongside Article 186 of the Civil Code having regard to three basic
points:
394.1. As foreshadowed in §§386 and 390 above, Article 186 of the Civil Code is a general
clause for tortious conduct which imposes liability for the breach of any legal duty,
whether that arises from statute or otherwise.
394.2. According to the principles of interpretation which apply as a matter of common

ground (see §132.2), legislation is to be interpreted literally (at least in the absence
1168
Tepedino 2, §117 {C18/1T/48-49}, §174 {C18/1T/71-72}.
1169
Rosenvald 1, §110 {C3/1T/48-49}; {C3/3.3T/1309-1310}.
1170
Rosenvald 1, §114(a) {C3/1T/50-51}; {C3/3.3T/1092}.
1171
Rosenvald 1, §114(a) {C3/1T/50-51}; {C3/3.3T/1091}.
186
of contrary teleological or systematic considerations). Thus, if a legislative
provision states that a person has a duty, that is what it means.
394.3. There is no concept in Brazilian law that a statutory duty must be sufficiently
“specific” for the purposes of liability under Article 186 of the Civil Code or
otherwise.1172 The position could not be otherwise, given the generality of the
neminem laedere principle which underpins negligence liability. On Professor
Tepedino’s own evidence, all that is required by way of “specificity” is that the
relevant legal duty is a duty to do or not do to.1173 If a legal duty to do is breached
by omission, it will, in Professor Tepedino’s words, be “contrary to the legal system,
i.e. unlawful voluntary behaviour that violates a legal or contractual duty”.1174
395. The content of each of these duties is set out in detail elsewhere. See §§172.1-172.2 above
for Article 225 of the Constitution. See §§413-419 below in respect of the content of Article
116 of the Corporate Law.1175 For present purposes, it is merely noted that each of these
provisions provides for positive legal duties in accordance with the rights of third parties.
An act or omission in breach of such duties will be conduct “violating the rights of others”.
ii) Fault
396. The experts agree that fault is to be assessed by reference to the objective standard of
conduct of an average person in the defendant’s position having regard to the circumstances
of the specific case.1176 The overarching inquiry is whether different conduct would have
been expected of the average person in the defendant’s position, applying the objective
standard of conduct that is applicable to them.1177
397. It is also common ground that the objective standard of conduct is varied by reason of
expertise,1178 although only Professor Rosenvald accepts the logical consequence of that
proposition: that the expected standard of conduct for a person with expertise is higher than
for a person without.1179
1172
Civil Liability JS, Issue 5(b), page 4 {C1/2T/4}.
1173
Tepedino 1, §104 {C7/1T/52}, §113 {C7/1T/55}.
1174
Tepedino 1, §167 {C7/1T/69-70}.
1175
Rosenvald 1, §§100-106 {C3/1T/44-47}; Muller Prado 1, §423 {C2/1T/166}.
1176
Rosenvald 1, §§123-124 {C3/1T/55-56}; Tepedino 1, §§176-178 {C7/1T/73-75}, §190 {C7/1T/78}; Tepedino
2, §120 {C18/1T/50}, §125 {C18/1T/51-52}.
1177
Rosenvald 1, §125 {C3/1T/56}; Tepedino 1, §76 {C7/1T/44-45}.
1178
Rosenvald 1, §124 {C3/1T/55-56}; Tepedino 1, §177 {C7/1T/74}.
1179
Tepedino 2, §122 {C18/1T/50}; Rosenvald 2, §48 {C16/1T/21-22}; Tepedino 1, §175 {C7/1T/72};
{C7/4.7T/3006}.
187
398. A further issue arises as to the relevance of foreseeability to the fault inquiry (explained by
Professor Rosenvald at Rosenvald 1, §§125-1271180). Professor Tepedino disputes the
presence of this ingredient on the basis that fault “is measured by objective criteria”.1181
That is, of course, correct, but it provides no answer to the question of whether a reasonable
person in the position of the defendant ought to have acted differently. That question is
answered by reference to whether such a person would have foreseen a risk of harm by
their conduct; and that is the approach demonstrated by STJ case law.1182 (It is also the
position adopted in Professor Tepedino’s own publications,1183 and, on analysis, the
authorities upon which he relies in his expert report).1184
399. In light of the above, the Claimants submit that the relevant test for fault is to be formulated
as follows: whether an average person in the defendant’s position, having regard to the
extent of his expertise, would have foreseen that his conduct would have caused harm.1185
iii) Causation
400. The experts agree that Art 403 of the Civil Code applies to the “causal nexus” for liability
under Article 186 of the Civil Code. The consequence is that the defendant’s conduct must
be a “necessary” (i.e. a but-for) cause of the damage.1186 As developed at §192 above, it
may also be necessary to determine whether the relevant cause was “adequate” to produce
the relevant damage,1187 but the dispute about whether this is an express element of the test
is immaterial, because Professor Tepedino’s analysis acknowledges questions of causal
sufficiency to be inherent in the test of necessary causation in any event.1188
401. The principles applicable to “multiple causes” are materially agreed. Provided that but-for
the defendant’s tortious conduct, the damage would not have occurred, the causal test will
be satisfied; regardless of whether the damage was ultimately produced in combination
with other but-for causes.1189
1180
Rosenvald 1, §§125-127 {C3/1T/56-57}.
1181
Tepedino 1, §124 {C7/1T/58}.
1182
Rosenvald 2, §51 {C16/1T/23}.
1183
Rosenvald 2, §52 {C16/1T/24}, {C16/3T/218}; Rosenvald 2, §53 {C16/1T/24}, {C7/4.7T/3007}.
1184
Rosenvald 2, §53 {C16/1T/24}; {C7/4.7T/3007}.
1185
Rosenvald 1, §124 {C3/1T/55-56}.
1186
Rosenvald 1, §148(a) {C3/1T/68}, §153 {C3/1T/71}, §350 {C3/1T/138}; Rosenvald 2, §§104-105
{C16/1T/45-46}; Tepedino 1, §§200-202 {C7/1T/81-82}, §214 {C7/1T/86-87}, §230 {C7/1T/91}, §240
{C7/1T/93}, §254 {C7/1T/97}; Tepedino 2, §54 {C18/1T/25}, §164 {C18/1T/66}, §176 {C18/1T/73}.
1187
Rosenvald 1, §142(b) {C3/1T/63}.
1188
Tepedino 1, §205 {C7/1T/82-83}.
1189
Rosenvald 1, §148 {C3/1T/68-69}; Tepedino 1, §207 {C7/1T/84}, §267 {C7/1T/100}.
188
iv) Joint Liability
402. It is common ground that where multiple defendants are found liable under Article 186 of
the Civil Code in respect of the same damage, they will be jointly and severally liable under
Article 942 of the Civil Code.1190
2) Articles 116 and 117 of the Corporate Law
403. The Corporate Law is a special law that supplements the general rules of private law found
in the Civil Code.1191 Among the provisions made for regulating corporate actions, Section
IV of the Corporate Law sets out rules relating to the position of the “controlling
shareholder”. Article 116 of the Corporate Law defines who will be a controlling
shareholder and (in Article 116, sole paragraph) stipulates duties imposed on such persons.
“Art 116. Controlling shareholder is an individual or a legal entity, or a group of

individuals or legal entities bound by a voting agreement or under common control,
which:
holds shareholder rights that permanently assure it a majority of votes in resolutions of

general meetings and the power to elect a majority of the corporation’s management
[including Board of Directors and Executive Board]; and
effectively uses its power to direct the corporation’s activities and to guide the
operations of the corporation’s bodies.
Sole paragraph. The controlling shareholder shall use its power in order to make the
corporation accomplish its purpose and complies with its social function and shall have
duties and responsibilities towards the other shareholders of the company, those who
work in it, and the community in which it operates, whose rights and interests they shall
loyally respect and heed.”
404. As explained further below, Article 116 of the Corporate Law was enacted to acknowledge
the position of the “controlling shareholder” as the “de facto manager” of a controlled
company. This status justifies the imposition of the duties set out in Article 116, sole
paragraph, to protect other shareholders, workers and the wider community.1192 A legal
entity which, although not itself a direct shareholder in the controlled company, indirectly
exercises control through other controlled companies (as referred to in Article 243,
1190
Rosenvald 1, §308 {C3/1T/128}, §314 {C3/1T/126-127}; Tepedino 1, §§267-268 {C7/1T/100-101}.
1191
Civil Code, Article 1.089: “Corporations are governed by special legislation, supplemented by this Code where
the legislation is omissive”: {I1/2/43}.
1192
Muller Prado 1, §§105-108 {C2/1T/47-50}.
189
paragraph 2 of the Corporate Law) may be treated as an “indirect controlling
shareholder”.1193
405. Article 117 of the Corporate Law goes on to provide (in Article 117, head paragraph): “A
controlling shareholder shall be liable for any damage caused by acts performed with
abuse of power.”1194 In this context, an abuse of controlling power comprises conduct
which excessively prioritises the controlling shareholder’s own interest, so as to harm
others;1195 or, in the words of Professor Trindade: “The exercise of controlling power
should be considered abusive when an act carried out by the controlling shareholder, in
the exercise of the controlling power, does not observe the limits and purposes established
in the sole paragraph of Art 116 of the Corporate Law.”1196
406. The essence of conduct that amounts to an abuse of power is not that the conduct is illicit
per se. In that sense, the concept is distinguished from conduct that gives rise to liability
under Article 186 of the Civil Code. However, Brazilian law places limits on the extent to
which otherwise lawful powers can be exercised. It is the exercise of rights beyond those
limits that amounts to an abuse. Specifically, in the Corporate Law context, those limits are
defined (at least in part) by reference to Article 116, sole paragraph. Article 117, paragraph
1193
Corporate Law, Article 243, paragraph 2: “A controlled company is one in which the controlling company,
directly or through other controlled companies, holds shareholder rights that permanently assure it a
preponderance in corporate resolutions and the power to elect the majority of the management.”: {I1/4/24};
POC, §284.2 {A1/1/130}; Defence, §329 {A1/2/213-214}.
1194
Corporate Law, Article 117: “A controlling shareholder shall be liable for any damage caused by acts performed
with abuse of power. § 1: The forms of abusive exercise of power are: guiding the corporation towards purposes
unrelated to its corporate object or harmful to national interests, or leading it to favour another corporation,
whether Brazilian or foreign, to the detriment of the participation of minority shareholders in profits or in the
assets of the corporation, or of the national economy; promoting the liquidation of a prosperous corporation, or
the transformation, merger, incorporation, or split up of the corporation, with the aim of obtaining undue
advantage for oneself or others, to the detriment of other shareholders, those who work in the corporation, or
investors in securities issued by the corporation; promoting a statutory amendment, issuing securities or an
adoption of policies or decisions which are not in the interests of the corporation and are intended to cause
damage to the minority shareholders, to those working at the corporation or to investors in securities issued by
the corporation; electing a manager or auditor known to be morally or technically inapt; inducing, or attempting
to induce, any manager or fiscal council member to commit an illegal act, or, in violation of their duties defined
in this Law and in the bylaws, promoting, against the interests of the corporation, its ratification by the general
meeting; concluding contracts with the corporation directly, through a third party or through a business in which
the controlling shareholder has an interest, under unduly favourable or inequitable conditions; approving or
allowing the approval of irregular accounts of managers for personal benefits, or failing to investigate a
complaint that they know or should have known to be valid, or that justifies well-founded suspicion of
irregularity. subscribing to shares, for the purposes of Article 170, with the contribution of assets foreign to the
corporation’s object. § 2. Under paragraph 1 (e), above, a member of management or a fiscal committee member
who commits an unlawful act shall be jointly and severally liable with the controlling shareholder. § 3. The
controlling shareholder who holds the position of manager or fiscal council member also has the duties and
responsibilities specific to the position.”: {I1/4/5-7}.
1195
Muller Prado 1, §434 {C2/1T/169}.
1196
Trindade 1, §40 {C8/1T/11-12}.
190
1 sets out a non-exhaustive, exemplary, list of ways in which a controlling shareholder’s
actions may incur liability. A breach of Article 116 sole paragraph will also be considered
an abuse for the purposes of Article 117.1197
i) Definition of controlling shareholder
407. As noted in §403 above, Article 116, head paragraph, of the Corporate Law defines a
controlling shareholder as an individual or a legal entity, or a group of individuals or legal
entities bound by a voting agreement or under common control, which (i) holds shareholder
rights that permanently assure it a majority of votes in resolutions of general meetings and
the power to elect a majority of the corporation’s managers and (ii) effectively uses it power
to direct the corporation’s activities and to guide the operations of the corporation’s bodies.
408. Article 243, §2, which recognises the existence of indirect control, only requires element
“a” of Article 116 in order to define a controlling company. That is, the controlling
company is the holder of shareholder rights that permanently assure it a preponderance in
corporate resolutions and the power to elect the majority of the management.
409. There is no dispute between the experts that it is possible for two persons to jointly control
an entity via a Shareholders’ Agreement which establishes that control, and further that
such control, may be indirectly exercised. Vale and BHP exercise joint control over
Samarco by the Samarco Shareholder’s Agreement, which establishes the basis upon which
BHP (via its controlled entity, BHP Brasil) and Vale will exercise their voting rights in
Samarco.1198 There are of course no shareholders of Samarco other than BHP and Vale.
Their voting power is (and has been at all relevant times) permanent, affords complete
control of Samarco in general meetings, and with it the power to elect all of Samarco’s
officers.
410. The experts disagree on two main issues: whether de facto control can be presumed and
whether indirect shareholders who are part of a control group can be considered
individually as indirect controlling shareholders. Regarding the presumption of de facto
control, Professor Muller Prado argues that a presumption must arise from circumstances
in which the controlling shareholder has the unfettered ability to remove officers of the
1197
Muller Prado 1, §434 {C2/1T/169}, §441 {C2/1T/170-171}.
1198
{F15/286/1}; {F15/286/4-11}; {F15/286/15-18}; Muller Prado 2, §27 {C14/1T/9-10}; {C8/1T/30}.
191
controlled company. It is only realistic in such circumstances to recognise the influence a
controlling shareholder will hold over a corporation’s activities.1199
411. Even if there is no such presumption, the fact of effective control is easily made out by
reference to the controls over Samarco put in place by BHP and Vale. The SSA legates the
role of management in Samarco to following Shareholders’ directions, on most, if not all,
substantial matters and management can in any event be removed at the behest of the
Shareholders’ appointees to the Board of Directors.1200
412. The question of the “individual status” of a controlling shareholder in a control group is
principally concerned with whether individual liability can be visited upon a member of
the control group. Even if at a conceptual level a “controlling power” is indivisible by
nature, this does not mean that a member of the controlling group cannot be considered
individually as a controlling shareholder for the purposes of attribution of liability. This is
particularly so when the fault element of Article 117 is considered (see further below at §§
422-424). 1201
ii) Duties on controlling shareholders
413. As seen from the text of article, cited above, Article 116, sole paragraph:
413.1. obliges controlling shareholders to use their power with the aim of making the
controlled company achieve its purposes and fulfil its social function;
413.2. expressly provides that a controlling shareholder “has duties and responsibilities”
towards the other shareholders of the controlled company, its workers, “and the
community in which it operates”; and
413.3. in that context provides that the controlling shareholder must “loyally respect and
heed” the rights and interests of the other shareholders, workers, and the
community.
414. The policy reasons for the imposition of these duties on controlling shareholders are
explained at Muller Prado 1 §§105-108 and 115-118. The Explanatory Memorandum of
1199
Muller Prado 1, §248 {C2/1T/99}.
1200
Muller Prado 2, §27 {C14/1T/9-10}; Muller Prado 1, §252 {C2/1T/100-101}.
1201
Muller Prado 2, §§111-117 {C14/1T/33-36}; {C2/3.3T/1199-1264}.
192
the Law1202 identified the figure of the ‘controlling shareholder’ as a ‘de facto manager’ of
the controlled company (and hence spoke of the need to establish “strict rules on the
liability of managers, both de jure and de facto (i.e. the controlling shareholder)”) and
explained the imposition of duties to the wider community as follows:“[T]he Bill [that
became the Corporate Law] seeks to develop a system based on the following principles…
[including] in attention to the basic fact that business institutions, particularly on the scale
that modern economy imposes on them, are of increasing social importance and have more
duties towards the community in which they live and from which they live, the Bill
introduced the novelty of the duty of loyalty of such institutions, imposed as a norm of
behaviour on controlling shareholders and managers, towards the country […]”. Professor
Trindade notes that in earlier wording of the Bill, there was a proposal to frame the Article
116 duty as a duty to ‘promote’ and ‘fulfil’ the interests of minority shareholders, workers,
and the community; and this was amended to a duty to ‘respect’ the interests of such social
groups.1203 He fails to acknowledge that the wording of Article 116 sole paragraph as
enacted in fact requires the controlling shareholder to “loyally respect and heed” the rights
and interests of these third parties. But more generally, his observation on the amendment
of a duty from one of ‘promotion of’ to ‘respecting’ the rights of the specified third parties
does not disprove the existence of the duty under Article 116; rather it reinforces the point
that when enacting the Corporate Law, the Brazilian legislator sought to ensure the
controlling shareholders owed duties to the protected third parties.
415. In their doctrinal writing, the authors of the Bill, Lamy Filho and Bulhões Pedreira, have
equated the controlling shareholder with the ‘supreme manager’ of a company.1204 As
further set out in the Explanatory Memorandum:
“Art 116 gives a specific status in Brazilian law to the figure of the ‘controlling
shareholder”. This is an innovation in which the legal rule aims to match the underlying
economic reality. Indeed, it is well known that legal entities have the same behaviour
and honesty as those who control them, but the exercise of such power is not always
responsible or within the reach of the law, because it is hidden behind the veil of agents
or third parties elected to manage the company. It turns out that the power and social
importance of a company, particularly on the scale imposed by modern economy, are
1202
Ministry of Finance, Explanatory Memorandum No. 196 of 24 June 1976, page 1. {C2/3.5T/1989}. The
Explanatory Memorandum was drafted by the Ministry of Finance and presented together with the Bill of the
Corporate Law. It is one of the main legislative documents used by scholars and case law to interpret the Bill of
the Corporate Law. The Explanatory Memorandum clarifies the main goals and guidelines of the Corporate Law
and includes the Exposition of Grounds where the authors of the Bill of the Corporate Law explain the legislative
choices made for each section or provision of the Corporate Law.
1203
Trindade 1, §§159-161 {C8/1T/46-47}; Trindade 2, §§100-101 {C19/1T/24}.
1204
193
so relevant to the community that those who manage it should be in the foreground of
economic life, either to enjoy fair recognition for the benefits they generate of to be
held liable for the harm they cause. The topic grows in importance when one considers
that the controlling shareholder is often a foreign company or group, which, due to its
place of origin, is excluded even from the moral sanctions of the community.
“The basic principle adopted in the Bill, which constitutes the standard for assessing
the behaviour of controlling shareholders, is that the exercise of the power of control is
only legitimate to make the company achieve its purpose and fulfil its social function,
while loyally respecting and complying with the rights and interests of all those linked
to the company, i.e. those who work there, minority shareholders, market investors, and
members of the community in which it operates.
“The features of the “controlling shareholder” are defined in the sole paragraph of Art
116 and assume, in addition to a majority of votes, the actual exercise of the power of
control to manage the company. By way of example, in Art 117, which lists more
frequent forms of abusive exercise of power by the controlling shareholder, the Bill
does not exclude other situations that real life and the application of the law will
unfold.”1205
416. As Professor Muller Prado concludes, these passages explain the assumptions behind the
Corporate Law, acknowledge the power and importance of the company within society,
and seek to attribute liability for harm not only to the company but to those who manage
it, in particular, in the case of a controlled company, the controlling shareholder.1206
417. As to the content of the duty imposed on controlling shareholders:1207
417.1. Article 116 of the Corporate Law is a “general clause” in that it imposes a standard
of conduct on a controlling shareholder (as opposed to being a rule that specifically
determines the precise behaviour that is permitted or prohibited).1208 Accordingly,
an assessment of what the duty requires must be made by reference to the individual
facts, and what it would have been reasonable for a controlling shareholder to do in
the circumstances of the case.1209 It will be relevant to consider what mechanisms
were available to the controlling shareholder in exercising its power (both inside
and outside of the general meeting).1210
417.2. At a minimum, Article 116, sole paragraph reflects the general principle in Brazilian
law of the duty not to harm other people’s rights (neminem laedere). This aligns
1205
{C2/3.5T/2001-2002}.
1206
Muller Prado 1, §117 {C2/1T/53}. NB the duties co-exist with the de jure managers’ duties and responsibilities:
CVM, Administrative Sanctioning Proceeding No. 19957.003190/2019-64, Reporting Commissioner Chairman
Marcelo Barbosa, judged on 26 May 2020, item 11 {C2/3.3T/1258}. Muller Prado 1, §395b {C2/1T/158}.
1207
See generally Muller Prado 1, V.3 {C2/1T/141-169}; Muller Prado 2, IV {C14/1T/36-42}.
1208
Muller Prado 1, §360 {C2/1T/141}, §342 {C2/1T/135}.
1209
Muller Prado 1, §141 {C2/1T/60}, §§198-205 {C2/1T/84-86}.
1210
EMAE, §28 {C2/3.2T/917}.
194
with the concept of the social function of the company, albeit the key point in
relation to Article 116, sole paragraph, is that it imposes the duty on the controlling
shareholders rather than the controlled company.1211
417.3. However, the Article 116 duty goes further than merely the avoidance of harm and
is expressed as a requirement to “loyally” respect and heed with the interests of other
shareholders, workers and the community. As described in EMAE, this amounts to
“an active duty on the controlling shareholder” to “ensure that the company fulfils
its corporate purpose, while meeting the interests of the people and groups indicated
by law.”1212 It will be a breach of the duty of loyalty for the controlling shareholder
to place its own interests above the interests of the protected groups affected by the
business activity;1213 and such conduct, excessively prioritising one’s own
advantages, is also the essence of an “abuse of power”.
418. BHP (through the arguments advanced by Professor Trindade) dispute that Article 116 sole
paragraph imposes any sort of “autonomous” or “freestanding” duties on a controlling
shareholder, or that it sets out duties owed to the community.1214 Such a position is
unsustainable:
418.1. The plain words of Article 116, sole paragraph, state in terms that the controlling
shareholder owes duties to third parties, including the community in which the
controlled company operates. Indeed, it goes beyond stating that a duty exists and
requires that the controlling shareholder “loyally” respect and heed the rights of the
protected third parties (i.e. other shareholders, workers, and the community in which
the company operates). Professor Trindade’s attempt to suggest that a literal
interpretation of the words “has duties and responsibilities” in Article 116 sole
paragraph requires the reader to discount the imposition of any duties is as startling
as it is unconvincing.1215
418.2. The Explanatory Memorandum to the Bill that became the Corporate Law, sections
of which are cited above, explicitly sets out the rationale for the creation of
autonomous duties within Article 116 upon the controlling shareholder, including
duties owed to the community. Professor Trindade suggests that the effect of Article
1211
Muller Prado 1, §411 {C2/1T/162}; {C2/3.5T/2074}.
1212
EMAE, §27 {C2/3.2T/917}.
1213
Muller Prado 1, §419 {C2/1T/165}; EMAE {C2/3.2T/901-935}; Petrobras {C2/3.3T/995-1021}.
1214
Trindade 1, §165 {C8/1T/48-49}; Trindade 2, §§29-34 {C19/1T/7-10}.
1215
Trindade 2, §42 {C19/1T/11}.
195
116 simply aimed to establish “a general standard of ethical conduct.”1216 That is
simply not what the Explanatory Memorandum says: on the contrary it is clear that
it was intended to recognise the existence of formal legal duties and the
corresponding obligation to repair damage the controlling shareholder may be liable
for.
418.3. It is (unsurprisingly, given the above) well established in the Brazilian case law that
Article 116 imposes duties on the controlling shareholder. Professor Muller Prado
analyses a selection of these cases, at Muller Prado 1 §§361-389. Professor Muller
Prado has also identified two cases that recognise the duties owed to the community
under Article 116 by BHP Brasil and Vale as controlling shareholders of
Samarco.1217 Professor Trindade does not engage with the majority of these cases in
his supplemental report.1218
418.4. The position is also an orthodox one amongst scholars: the doctrinal writings of
Calixto Salomão,1219 Modesto Carvalhosa,1220 Ana Frazão,1221 Anelise Paschoal
Duarte1222 and Ana Paula Massaro Binotto1223 all support the existence of a
‘freestanding’ or ‘autonomous’ duty under Article 116, sole paragraph.
419. BHP also seeks to rely on the existence of duties for managers of a company, at Articles
153 to 156 of the Corporate Law, as being somehow incompatible with the existence of an
autonomous duty owed by a controlling shareholder. It is said that there is no sense in the
creation of overlapping duties.1224 To which the simple answer is: there is no difficulty at
all in the Corporate Law imposing duties on two separate categories of person. All
companies will have managers; not all companies have controlling shareholders. The duties
1216
Trindade 2, §73 {C19/1T/18}.
1217
Muller Prado 1, §390, fn 234 {C2/1T/156}; {C2/3.2T/958-979}; {C2/3.4T/1559-1566}. In addition, in the
Interlocutory Appeal 2162175-19.2014.8.26.0000, which addressed the environmental liability of a controlling
shareholder, the State Court of Sao Paulo ruled that a controlling shareholder had standing to answer for an
environmental damage claim as Article 116 imposes a duty on the controlling shareholder to “direct the
controlled company to fulfil its social function, which includes the socio-environmental function” {C2/3.2T/829}.
1218
Professor Trindade briefly addressed the Interlocutory Appeal 2162175-19.2014.8.26.0000, stating that he
disagrees with the conclusion because “Under the Corporate Law, the controlling shareholder is only liable
towards third parties if the legal entity’s personality is disregarded – which does not follow from Article 116 of
the Corporate Law. Furthermore, as explained above [in my Expert Report], decisions made by the managers
shall not be deemed to be acts of the controlling shareholder.”: Trindade 2, fn. 34 {C19/1T/30}.
1219
Muller Prado 1, §356 {C2/1T/139-140}; {C2/3.4T/1678-1679}.
1220
Muller Prado 1, §360 {C2/1T/141}; {C2/3.4T/1693-1696}.
1221
Muller Prado 2, §164 {C14/1T/49}; {C14/3T/373}.
1222
Muller Prado 2, §§168-169 {C14/1T/50}; {C14/3T/376-378}.
1223
Muller Prado 2, §170 {C14/1T/50-51}; {C14/3T/383}.
1224
Trindade 2, §§65-67 {C19/1T/16-17}.
196
owed by managers (e.g. a duty of loyalty owed to the company) are in terms familiar to
any advanced system of company law. The Corporate Law deliberately goes further than
others in identifying specific duties and liabilities of the figure of the controlling
shareholder (for all the reasons set out in the Explanatory Memorandum and the case law),
who the law recognises as the “de facto” manager of a company. These are complementary
provisions; they are, in the words of the CVM in the CNP case, “a double safety net”.1225
iii) Liability for breach of the duties under Article 116 sole paragraph
420. As noted at §§128-129 above, the Claimants’ case is that a breach of Article 116 sole
paragraph may lead to liability both as an illicit act for the purposes of Article 186 of the
Civil Code and as an abuse of power for the purposes of Article 117 of the Corporate Law.
There ought to be no conceptual difficulty in either proposition. If the requirements of fault,
a causal link, and damage are present Article 186 of the Civil Code will be satisfied.
Professor Rosenvald considers that the relevant question is whether a controlling
shareholder has acted with expected care (objectively assessed against the behaviour of a
prudent and diligent controlling shareholder); if not, then the breach of Article 116 of the
Corporate Law will be an illicit act for the purposes of liability under Articles 186 and 927
head paragraph of the Civil Code.1226 As to the application of Article 117 of the Corporate
Law, it is common ground between the experts that Article 116 sets the parameters for, and
defines the limits of, the exercise of controlling power.1227
421. There is a subsidiary issue between the parties as to whether such liability can ever be
“individual” in the sense of falling on one but not the other of two controlling shareholders.
Professor Trindade argues that “acts of control” in a situation of “joint control” must be
joint acts and therefore it is not possible to speak of individual liability.1228 This may well
be true in many cases; but it is not necessarily so.1229 A scenario of joint control imposes
controlling shareholder duties on both (or several) members of the controlling shareholder
group, however liability may attach to a single member of that group if it was their actions
that breached the duty in Article 116 sole paragraph in a manner characterised by fault.1230
1225
Muller Prado 1, §371 {C2/1T/145}.
1226
Rosenvald 2, §86 {C16/1T/41}.
1227
Muller Prado 2, §198 {C14/1T/58}; Trindade 2, §80 {C19/1T/19-20}.
1228
Trindade 2, §172 {C19/1T/40}.
1229
In the CVM Sanctioning Administrative Proceeding 09/93, for example, Professor Trindade, as Reporting
Chairman, recognised the status of controlling shareholder and the liability of only one of the members of the
control block {C2/3.1T/482-499}.
1230
Muller Prado 2, §§73-101 {C14/1T/24-32}.
197
It may be, for instance, that two controlling shareholders have different states of knowledge
that rendered it negligent of one to approve a corporate act, but not the other. It may be that
only one of the controlling shareholders was financially interested in the outcome of a
decision, so as to sustain an allegation that they had preferred their own interests
excessively. Conduct must always be individually considered.1231 But in any event, this
point takes BHP nowhere if it merely goes to show that Vale was a joint author in violating
Article 116 of the Corporate Law; the Claimants are still entitled to sue BHP alone.
iv) Liability for abuse of power under Article 117 of the Corporate Law
422. As noted at §405-406 above, in addition to Article 116, sole paragraph, the Corporate Law
imposes limits on the controlling shareholder’s powers through Article 117: a controlling
shareholder shall be liable for any damage caused by acts amounting to an “abuse of
power”. Also as noted, an “abuse of power” is not limited to the examples supplied in
paragraph 1 of Article 117. Any exercise of power by the controlling shareholder in a
manner that violates the rights of others within the meaning of Article 187 of the Civil
Code1232 is an abuse of power; and a breach of Article 116 sole paragraph may also amount
to an abuse of power.1233
423. For the purposes of the present case, the relevant hypotheses at Article 117 paragraph 1 of
the Corporate Law include those at paragraph 1(a) (being harmful to the national interest);
and paragraph 1(g) (which is to be interpreted, by analogy, as a general failure to investigate
a report of something wrong which the controlling shareholder knew, or should have
known, to be well founded, or which gave grounds for a reasonable suspicion of
irregularity).1234 However the Claimants’ principal case is that BHP’s acts amounted to an
abuse of power because it acted contrary to the duties set out in Article 116, sole paragraph
and caused harm.
424. Conduct amounting to an abuse of power under Article 117 of the Corporate Law must be
intentional (i.e. an unwitting or accidental act will not suffice); but the Claimants contend
1231
Muller Prado 2, §§97-98 {C14/1T/31-32}.
1232
Civil Code, Article 187: “The holder of a right also commits an illicit act if, in exercising it., he manifestly
exceeds the limits imposed by its economic or social purpose, by good faith or good conduct” {I1/2/14}.
1233
RAMPOC, §287 {A1/1/131}.
1234
Muller Prado 1, V.4.1.4(i) {C2/1T/182-183} and Muller Prado 2, §§200-203 {C14/1T/58-59}.
198
that there is no need to establish on the part of the controlling shareholder an intent to cause
harm or an intent that the conduct be abusive.1235
v) Standing to bring a claim for breach of Article 116 of the Corporate Law
425. BHP and its experts rely on Article 246 of the Corporate Law to argue that the Claimants
lack standing to bring a claim against it.1236 That provision is as follows:
“Art. 246. A controlling company shall be obliged to compensate any damage it may
cause to a controlled company by any acts infringing the provisions of articles 116 and
117 [of the Corporate Law].
Paragraph 1. Proceedings for compensation may be brought by:
shareholders, representing five per cent (5%) or more of the capital;
any shareholder, provided he guarantees payment of court costs and legal costs in the
event of the action being dismissed.”
426. From this provision – which is quite plainly dealing with a scenario in which it is the
company (and not any of the third parties referred to in Article 116) that has suffered loss
- BHP asserts that no claims under Articles 116 and 117 of the Corporate Law can be
brought by persons other than shareholders of the controlled company.1237 In other words,
notwithstanding that the terms of Article 116 provide that a controlling shareholder has
“duties and responsibilities towards the other shareholders of the company, those who work
for the company and the community in which it operates”, only the first of these identified
groups has standing to bring a claim – and only then, to do so only in a derivative capacity
in respect of damage suffered by the controlled company.1238
427. Such an analysis leads to the effective nullity of the duty contained in Article 116 of the
Corporate Law, and the protections against abuse of power set out in Article 117 of the
Corporate Law. There is no avenue, on BHP’s analysis, for a violation of rights to be
actioned by either a minority shareholder on its own behalf, workers or the community in
1235
Superior Court of Justice, Special Appeal 798.264-SP, Reporting Justice Carlos Alberto Menezes Direito,
Reporting Justice for judgement Justice Nancy Andrighi, judged on 6 Februrary 2007 {C2/3.2T/518-519}; CVM,
Administrative Investigation 23/99, Reporting Commissioner Joubert Rovai, judged on 26 October 2000, items
42 and 45 {C2/3.1/89}; Superior Court of Justice, Special Appeal 1.636.561/SP, Reporting Justice Raul Araújo,
judged on 4 October 2018 {C14/3T/159}; Superior Court of Justice, Special Appeal 1.337.265/SP, Reporting
Justice Ricardo Villas Bôas Cueva, judged on 26 November 2014 {C8/4.1T/234}. Rejoinder, §76A {A1/5/106}
1236
Tepedino 1, §155 {C7/1T/66-67}.
1237
Defence, §332 {A1/2/216}, §337(3)(c) {A1/2/214-215}.
1238
Trindade 1, §199 {C8/1T/59}.
199
which the controlled company operates.1239 As Professor Muller Prado notes, such a
conclusion would offend Article 5, XXXV of the Constitution and Article 3 of the Law
13.105/2015 (“the Civil Procedure Code”).1240 She also asks, rhetorically, how, on BHP’s
case, the Corporate Law could assume that a company with a controlling shareholder would
file a claim against the controlling shareholder based on the interests of workers and the
community?1241 It plainly could not, and BHP’s position makes a nonsense of the
controlling shareholder regime.
428. Article 116 imposes duties on the controlling shareholder owed to the company (which are
referrable to Article 246) as well as to third parties (which are not referrable to Article 246).
The fact that the Corporate Law has made special provision for derivative actions (hardly
unusual in any advanced system of company law) does not mean that there can be no
ordinary standing for other persons with a claim. There is ample support in the case law to
recognise actions by third parties (including, in this context, minority shareholders acting
on their own behalf, rather than in pursuit of a derivative claim on behalf of the controlled
company) following infringements of Articles 116 and 117 of the Corporate Law.1242
Anyone whose rights are violated is a legitimate party (ordinary legitimacy) to seek legal
recourse, in accordance with Article 17 of the Code of Civil Procedure. The Corporate Law
does not establish rules on legal standing in the case of damage caused to those mentioned
in Article 116 because it does not need to. 1243
B) Application to facts
429. The Claimants rely on the factual matters set out in Part VI above in addition to the further
facts set out below to demonstrate (i) the duties that attached to BHP in relation to the
Fundão Dam; and (ii) the illicit acts and omissions of BHP which amounted to a breach of
those duties, leading to the Collapse.
1) Duties
1239
Professor Muller Prado notes that this would lead to a violation of the constitutional principle that all injury or
threat to rights must be capable of being brought before the courts. Muller Prado 2, §185 {C14/1T/54}.
1240
Article 5, XXXV of the Constitution: “the law shall not exclude any violation of or threat to rights from the
authority of the Judicial Branch.”: {C14/1T/54}. Article 3 of the Civil Procedure Code: “No threat or harm to
rights will be excluded from judicial assessment.”: {I1/3/1}; Muller Prado 2, §185 {C14/1T/54}.
1241
Muller Prado 2, §186 {C14/1T/54}.
1242
See e.g., Superior Court of Justice, Special Appeal 633.388-DF, Reporting Justice Ari Pargendler, Judged on 5
September 2006 {C2/3.1T/397-420}.
1243
Muller Prado 2, §§153-154 {C14/1T/46}.
200
430. In addition to the general duty imposed by Article 186 of the Civil Code (i.e. not to cause
harm – neminem laedere), BHP’s liability arises:
430.1. first, because BHP created or contributed to a risk in the form of the Dam;
430.2. second, because BHP assumed responsibility for the safety of the Dam;
430.3. third, because BHP was a controlling shareholder of Samarco within the meaning
of Article 116 of the Corporate Law; and
430.4. fourth, because BHP was obliged by Article 225 of the Constitution to defend and
preserve the environment, and to restore degradation to the environment.
i) Creation of risk
431. By reason of the matters outlined at Section VI above, by its conduct in approving the P3P
Project, the P4P Project, Project 940 and the continued disposal of Vale’s tailings behind
the Dam, BHP created the risk of a Collapse of the Dam (which in the event, materialised).
ii) Assumption of responsibility
432. By reason of BHP’s control over and direct participation in Samarco’s activity as outlined
at Part VI above, BHP assumed a status which carried with it a responsibility to prevent the
Collapse of the Dam.
433. This is confirmed by BHP’s own risk control processes relating to the Dam, particularly
the risk of the Dam’s critical failure. This flowed from the fact that it was BHP that
controlled Samarco’s activities. BHP cannot legitimately deny that it assumed such a
responsibility by branding its conduct as “governance” rather than “management”. BHP
recognised that the risk of Dam Collapse was a risk to BHP, and it devised a system to
control that very risk.
434. As explained in more detail at Part VI, C, 3, vi, above, BHP initially incorporated
Samarco’s risks into its own risk profile and ascribed its own separate BHP MFL and RRR
to these risks. BHP assumed even greater responsibility over these risks in 2013: it
developed its own set of material risks and critical controls relating to the Dam failure, as
distinct from Samarco’s.
435. BHP devised six ‘critical controls’ that were intended to manage this risk. These controls
were refined throughout 2013, ultimately: (i) Dam Design, (ii) Failure Modes and Effects
Analysis (“FMEA”), (iii) Dam Monitoring, (iv) the Independent Tailings Review Board,
(v) Incident Response, and (vi) Risk Management Process. The details of individual critical
controls, and BHP’s measurement of their efficacy through CETs, CDAs, and MRCAs, are
201
set out further below where relevant in the context of BHP’s particular failings in respect
of risk management.
436. As also explained in more detail at Part VI, C, 3, vi, above, BHP also performed numerous
audits of Samarco. One of the processes which BHP audited was known as “Asset
Integrity”. This was concerned with the risk of catastrophic failure/major damage of critical
equipment and infrastructure – including tailings dams.1244 Another of the processes which
BHP audited was “risk management”.
437. The undertakings entailed by these audits as set out above confirms BHP’s duty with
respect to the risks posed by the Dam; and carries a further duty for BHP to conduct audits
to a satisfactory standard.
438. There were various other ways in which BHP’s responsibility was confirmed, and which
further illustrate the illusory nature of the distinctions BHP seeks to draw.
Operational Synergies Working Group
439. In April 2015, Messrs Fernandes and Ferreira joined the “Operational Synergies Working
Group”, the purpose of which was “to investigate potential operational synergies between
Samarco and Vale’s operations”. One of the operational synergies to be investigated was
“Rationalisation of supporting structures such as Tailings dams”1245. In August 2015, BHP
developed a “Samarco Synergies Project Brief” involving a BHP “Steer Co”, a Technical
Team and a Valuation Team.1246
BHP’s Public Statements
440. A notable feature of the way BHP presented itself to the outside world was that safety came
first, above all else.1247 BHP repeatedly held itself out as prioritising health, safety, and
sustainability in Annual Reports, its Sustainability Reports, and in speeches made by senior
representatives of BHP.
441. Each of the Annual Reports in 2013-2015 described a supposed “overriding commitment”
to safety.1248 The first value of BHP’s Charter was “Sustainability: Putting health and safety
first, being environmentally responsible and supporting our communities”.1249 BHP stated
1244
Wetzig §14 {B1/7/4}.
1245
Agenda for Operational Synergies working group project {F11/222.2.2}.
1246
{F13/226.1}, slide 3.
1247
See e.g., {F9/282/6}; {F6/419/8}; {F6/419/9}; {F15/198/16}; {F13/301/8}; {F13/301/18}; {F7/450/3}.
1248
{F6/419/10}; {F15/198/12}; {F15/198/30}; {F13/301/30}.
1249
{F6/419/2}.
202
that it was ‘guided’ and ‘defined’ by its Charter values in all its Annual Reports in 2013-
2015.1250 The Charter value of Sustainability featured in a large number of speeches given
by senior BHP representatives.1251
442. Further, BHP’s Annual Reports in 2013-2015 represented that BHP were committed to
complying with, and, where applicable, exceeding, the laws and regulations of the countries
in which it operated.1252 The 2013 and 2014 Sustainability Reports also highlighted BHP’s
“commitment to and support of international policies, standards and management
practices”.1253
443. Finally, BHP expressly identified the risk of “[u]ncontrolled tailings containment
breaches”1254 and made reassuring comments about this risk.1255 Further, in the ‘BHP
Billiton Iron Ore 5 Year Plan FY2013-2017’ Mr Wilson identified an ‘Initiatives Road Map’
for Samarco, which included to “[d]eliver a safe and sustainable business”.1256
444. BHP’s case is to seek to distance itself from years of self-serving public proclamations.
BHP falls back on its mantra that Samarco was an NOJV. BHP claims that the Annual
Reports and the Sustainability Reports, and any statements made about health and safety
therein, did not technically apply to Samarco as an NOJV.1257 This is a cynical response
which fails to acknowledge the reality of BHP’s public statements on safety.
445. First, the overriding impression created by BHP’s public statements in 2013-2015 was that
BHP was a company which prioritised health, safety, and sustainability above all else in
relation to all of its assets. In the same documents in which BHP made public statements
about the importance of safety, BHP also emphasised that Samarco was one of its “core”
assets.1258 In every Annual Report between 2011-2015, BHP used the phrase “our
operations in Brazil” when referring to Samarco.1259 BHP’s retrospective attempt to draw
an artificial distinction between statements which applied to NOJVs, and those that did not,
when those statements were made in documents which referred to both operated and non-
operated assets, is unconvincing.
1250
{F6/419/9-10}; {F15/198/10-12}; {F15/198/29}; {F15/198/144}; {F15/198/179}; {F13/301/136}; {F13/301/14};
{F13/301/28}.
1251
See e.g., {F7/26/15}; {F7/26/22}; {F7/138/18}; {F7/138/31}; {F9/275/13}; {F9/275/33}; {F13/432/7}.
1252
{F6/419/100}; {F15/198/62}; {F13/301/12}.
1253
{F6/427/7}; {F15/99/8}.
1254
{F15/198/25}; {F6/419/18}; {F13/301/25}; {F6/427/10}.
1255
{F6/419/58}; {F6/427/34}.
1256
{F3/407.1.4/26}.
1257
Defence, §80(3)-(5), {A1/2/38}.
1258
See e.g., {F9/282/8}; {F15/198/20}.
1259
{F3/151/32}; {F4/207/32}; {F6/419/5}; {F6/419/33}; {F15/198/42}; {F15/198/84}; {F13/301/44};
{F13/301/85}.
203
446. Further, BHP only pleads that the Annual and Sustainability Reports did not technically
apply to Samarco.1260 BHP makes no such plea in relation to the speeches made by senior
BHP representatives in which they emphasised the importance of safety. Obviously, BHP
representatives did not enter any disclaimer that the integrity of Samarco’s tailings dams
were not BHP’s concern. Rather, BHP continually held itself out as prioritising safety in
relation to all of its assets, including Samarco. Mr Wilson even publicly confirmed BHP’s
intention to “deliver a safe and sustainable” operation at Samarco.1261
447. If BHP had wished the position to be that which it now asserts, it should have said nothing
about Samarco at the time. It should have explained that it had no responsibility for, or
awareness of, the safety of one of its “core” assets and operations. By failing to clearly and
unequivocally state this position, and indeed, in some circumstances making statements
about safety that clearly encompassed Samarco, BHP (no doubt deliberately) held itself out
on the basis that BHP’s oversight of health, safety, and sustainability applied to all its assets
equally.
448. Second, even taking BHP’s case at its highest, by its own admission BHP at least sought to
influence NOJVs to adopt its standards on safety. BHP’s 2014 and 2015 Annual Reports
stated that BHP “seek to influence the application of our standards to non-operated
assets”.1262 BHP’s 2014 Annual Report stated that BHP “seek to influence the asset to
follow” its GLD performance requirements”.1263 In the 2015 Annual Report, BHP claimed
that “[w]e also seek to apply GLD performance requirements to our non-operated
assets”.1264 BHP did not say that they were not able to exert influence to ensure that tailings
dams were safe.
449. Third, BHP’s Annual Reports and Sustainability Reports emphasised its Sustainability
Committee, whose role was to assist the Board to take reasonable steps to oversee the
Group’s health, safety, environment, and community framework and performance.1265 The
Sustainability Committee also provided oversight of the preparation and presentation of
the Sustainability Report.1266 Neither the Annual Reports nor the Sustainability Reports
made a qualification as to the role of the Sustainability Committee in relation to Samarco.
1260
Defence, §§80-81 {A1/2/37}.
1261
{F3/407.1.4/26}.
1262
{F15/198/27}; {F13/301/27}. In 2013, the same statement was made in relation to “non-controlled” assets:
{F6/419/20}.
1263
{F15/198/52}.
1264
{F13/301/53}.
1265
{F6/419/149}; {F15/198/170}; {F13/301/158}; {F6/427/13}; {F13/256/7}; {F15/99/7}.
1266
Ibid. See also: {F6/427/11}; {F15/99/11}.
204
450. Fourth, BHP made repeated public statements about production increases at Samarco,
including on 21 January 2015,1267 22 April 2015,1268 22 July 2015,1269 and 21 October
2015,1270 without any suggestion of the case it now advances, that BHP wished somehow
to absolve itself of any responsibility for the safety of those same production increases.
451. By holding itself out as a company that emphasised safety above all else, BHP assumed
responsibility for the safety of the Dam.
iii) Controlling shareholder of Samarco
452. It is not disputed that, as Samarco’s only Shareholders, BHP (through BHP Brasil) and Vale
are together able to obtain 100% of the votes in resolutions of general meetings1271 and
appoint all of the members of the Samarco Board.1272 Article 116(a) of the Corporate Law
is satisfied. As regards Article 116(b) of the Corporate Law, this is presumptively satisfied
for the reasons given at “Definition of controlling shareholder” above, but in any event,
BHP did in fact use its controlling power to effectively guide Samarco’s activities and the
functions of Samarco’s management.
453. Article 116(a) requires that a controlling shareholder “holds shareholder rights that
permanently assure it a majority of votes in resolutions of general meetings and the power
to elect a majority of the corporation’s officers”.1273 The experts agree that the Corporate
Law acknowledges the existence of joint control;1274 with the consequence that BHP may
be considered a controlling shareholder together with Vale.
454. The joint control is established by the Samarco Shareholder’s Agreement, which
establishes the basis upon which BHP (via its controlled entity, BHP Brasil) and Vale will
exercise their voting rights in Samarco.1275 There are of course no shareholders of Samarco
other than BHP and Vale. Their voting power is (and has been at all relevant times)
permanent, affords complete control of Samarco in general meeting, and with it the power
to elect all of Samarco’s officers.
455. Article 116(b) requires that a controlling shareholder “effectively uses it power to direct the
corporation’s activities and to guide the operations of the corporation’s bodies”. Whereas
1267
{F10/235/8}.
1268
{F11/311/3}.
1269
{F15/199/5}.
1270
{F13/426/6}.
1271
Defence, §103(4)(a), §103(7) {A1/2/51}; {A1/2/52}.
1272
POC, §72.2 {A1/1/36}; Defence §103(8) {A1/2/51}.
1273
Muller Prado 1, §§232-241{C2/1T/94-97}.
1274
Corporate JS, Issue 26, pages 3-4 {C1/6T/3-4} and Issue 26a, pages 4-6 {C1/6T/4-6}.
1275
{F15/286}; Muller Prado 2, §27 {C14/1T/9-10}.
205
Article 116(a) refers to the powers of a controlling shareholder within the general meeting,
the Article 116(b) requirement relates to the actions of controlling shareholders outside the
general meeting. It refers to the de facto exercise of controlling shareholder power.1276
456. The experts disagree as to whether de facto control can be presumed to follow from
satisfaction of Article 116(a), or whether it must be proved without regard to that
context.1277 Professor Muller Prado argues that a presumption must arise from
circumstances in which the controlling shareholder has the unfettered ability to remove
officers of the controlled company. It is only realistic in such circumstances to recognise
the influence a controlling shareholder will hold over a corporation’s activities.1278
457. Even if there is no such presumption, the fact of effective control is easily made out by
reference to the controls over Samarco put in place by BHP and Vale. These are most clearly
seen in the terms of the SSA addressed discussed in Part VI.
458. Against that backdrop, there ought to be no serious doubt that BHP is a controlling
shareholder of Samarco (together with Vale) and that as such BHP owed duties under
Article 116, sole paragraph of the Corporate Law. The dispute then turns to (i) the scope of
the duties created by Article 116, and (ii) whether BHP may be made individually liable for
breach of such duties in circumstances where it is a joint controlling shareholder, as
explained at “Liability for breach of the duties under Article 116 sole paragraph”
above.
459. In the context of the present case, the Article 116 sole paragraph duties required BHP, when
exercising its powers as a controlling shareholder, to:
459.1. Acknowledge and identify the potential negative risks of Samarco’s mining activity,
to which the community was exposed.1279
459.2. Ensure that Samarco’s managers monitored and adequately managed the risks of the
mining activity to avoid having negative impacts on the rights and interests of the
community.1280 This ought to have been achieved by ensuring the implementation
of effective policies, processes, procedures, governance structures and
communication channels.1281
1276
Muller Prado 1, §§242-244 {C2/1T/97-98}; Trindade 2, §§152-159 {C19/1T/36-37} and §§167-168
{C19/1T/39-40}.
1277
Muller Prado 2, §69 {C14/1T/23}; Trindade 1, §106 {C8/1T/33}.
1278
1279
Muller Prado 1, §403 {C2/1T/160}, §419 {C2/1T/165}.
1280
Muller Prado 1, §414a {C2/1T/163}.
1281
Muller Prado 2, §119 {C14/1T/37}.
206
459.3. Actively collaborate with members of the community in which Samarco
operated.1282
iv) Article 225 of the Constitution
460. Article 225 is addressed at §§172.1-172.2 above. There are two elements for present
purposes: the overarching obligation expressed in the head paragraph of Art 225 that both
the government and the community have a duty to defend and protect the environment.
There is also the more specifically focused duty set out in Art 225 paragraph 3 requiring
those who exploit mineral resources to compensate for the environmental degradation
caused by their activities. Professor Tepedino seeks to restrict the scope of this
constitutional provision by arguing that it is merely “programmatic” in nature; in other
words it cannot be enforced directly in civil actions.1283 But such an interpretation would
diminish the effectiveness of Art 225. Professor Rosenvald is clear that it imposes direct
and immediate duties on individuals (including companies), who must act in accordance
with the environmental principles established in the Constitution.1284
2) Illicit acts
461. The Claimants contend that BHP was at fault because a reasonable person in BHP’s
position, having regard to BHP’s expertise, would have foreseen that its conduct would
cause the Collapse when it had not ensured that the Dam was safe to store tailings. It is in
this context that BHP’s pleaded case, that it did not have “contemporaneous knowledge”
of incidents at the Dam, save for “two exceptions”, falls to be seen.1285 Upstream tailings
dams were well-known to be high risk structures.1286 At 110 metres, the Dam was one of
tallest tailings dams ever built in Brazil.1287 The Dam sat in a valley with a large water dam
(Santarém) downstream, and the community of Bento Rodrigues at risk of being struck
within some 10 minutes. The consequences of a failure would obviously be catastrophic.
Against that, BHP trumpeted that safety was its priority above all else. A reasonable person
in BHP’s position would properly satisfy itself of the true condition of such a structure,
before driving Samarco to produce more and spend less. The many ways in which BHP
failed to act as a reasonable person in its position would have done are summarised under
eight sub-headings below.
1282
Muller Prado 2, §137 {C14/1T/41}.
1283
Tepedino 1, §18 {C7/1T/15-17}.
1284
Rosenvald 2, §78 {C16/1T/35-38}.
1285
Defence, §24.
1286
{F14/32/26}, Gens 1, §82 {D2/1/32}.
1287
{D2/1/46}.
207
461.1. BHP’s negligence in continuing to increase production without ensuring the Dam
was safe;
461.2. BHP’s negligence in approving Vale’s use of the Dam;
461.3. BHP’s failure to ensure that applicable standards were followed;
461.4. BHP’s negligence with respect to the ITRB;
461.5. BHP’s negligence with respect to risk management;
461.6. BHP’s negligence with respect to audits;
461.7. BHP’s negligence with respect to the Prístino Report; and
461.8. BHP’s inappropriate reliance on the licences granted for the Dam.
462. The Claimants do not rely on any one single act or omission of BHP to prove its negligence,
or that its conduct was an abuse of power. They do say, however, that there were identifiable
strands of behaviour, any one such series of acts or omissions is capable of satisfying the
test under Article 186 of the Civil Code; and they certainly do so in combination. The
Claimants’ case on abuse of power under Article 117 of the Civil Code is dealt with last, at
Part VII, B, 3, below.
i) Continuing to increase production without ensuring the Dam was safe
463. The fragility of the Dam, and the dangers of its continued expansion, are well illustrated in
the parties’ material on Geotechnical issues. Although there will be separate opening
submissions relating to these issues1288 a brief introduction is given here to provide that
illustration.
464. The Panel Report concluded that the “immediate cause” of the Collapse was the lateral
extrusion (i.e. horizontal spreading) of softer slimes due to loading caused by raising of the
Dam, like squeezing toothpaste from a tube, which pulled apart adjacent (saturated) sands
to trigger a liquefaction flowslide. Liquefaction is the well-recognised process whereby
contractive saturated soil suddenly loses strength and flows like a liquid.1289 It can be
induced by a dynamic/cyclic force (like earthquakes or explosions) or a static force.1290
With an upstream tailings dam, the risk of liquefaction increases when drainage stops
1288
Order of Mrs Justice O’Farrell dated 12 August 2024, §45 {PJ/113/7}.
1289
{D8/1/2}.
1290
{D8/1/34}; {D8/51/1-23}.
208
functioning properly as this enables sandy tailings to become saturated (and hence
susceptible to liquefaction).1291
465. BHP’s geotechnical case contends that lateral extrusion, as the “trigger” mechanism which
the Panel Report concluded set off the liquefaction flowslide, was not well-recognised
before the Collapse, at least not by practising engineers, such that the entire liquefaction
flowslide was supposedly not foreseeable at the time.1292 BHP appears to consider this to
be relevant to the question of its fault-based liability. However, the Claimants’ case is that
a specific trigger mechanism does not need to be identified in advance for the risk of static
liquefaction to be identified. The risk is identifiable from a structure’s condition. Once that
condition is precarious, the structure is akin to “an unexploded bomb” susceptible to being
detonated at any point.
466. There is no suggestion that static liquefaction itself was not a well-recognised risk with
tailings dams, nor that the conditions for liquefaction susceptibility (namely the presence
of saturated contractive material in the structural part of the Dam) were not well-known.1293
Indeed, following the Mount Polley incident in August 2014, a Review Panel reported on
“spontaneous liquefaction” or “[u]ndrained failure”,1294 and a BHP internal presentation
highlighted that raising a dam without properly analysing the site conditions “may be
likened to creating a loaded gun.”1295
467. Within the Panel Report are two very important conclusions, which BHP must accept.
467.1. First, the Panel found that the Dam was in a “very fragile state” and that the
embankment “showed serious signs of distress” from at least as far back as August
2014.1296
467.2. Second, the Panel found “no credible pre-failure assessment for liquefaction for the
Fundão Dam in any of the documents it reviewed”.1297
1291
See Part III, The Dam, and the “drained stack” concept in particular.
1292
Defence, §23(5) {A1/2/14}; Rejoinder, §6A(3) {A1/5/6}. However, the Panel Report confirms that “lateral
extrusion as a static liquefaction trigger mechanism is not new or without precedent”: {D8/1/67}.
1293
See e.g. {F13/390} – sheet titled ‘Events 2014’ which chronicled a “Chronology of the largest tailings dam
failures of the last 50 years” including multiple examples of liquefaction.
1294
{D5/3.1T/337}. The Mount Polley failure was due to the undrained failure of the foundation, rather than
liquefaction of tailings. But exhortation to analyse conditions is pertinent.
1295
{F16/522/2}. After the Mount Polley dam disaster in 2014, Mr Ottaviano contacted Knight Piesold in the
following terms: “A tailings dam breach is one of the biggest risks for our Samarco business in Brazil given the
dam’s proximity to the town so we are keen to find out what has happened and ensure we have the correct
controls in place”: {F9/152/1}.
1296
{D8/1/81}; {D8/1/57}.
1297
{D8/1/35}.
209
468. It is no answer for BHP to claim that this “very fragile state” was not in fact appreciated in
the period prior to the Collapse. The Panel’s finding that BHP had made no credible
assessment of the liquefaction risk is a matter that reveals its negligence rather than
providing exculpation.
469. In an article published by one of the Panel members after publication of the Panel Report,
Steven Vick identified that the reason the failure was unanticipated was “because the
contributing conditions had come to be accepted as normal”.1298 Mr Vick highlighted three
“deviations” in particular, each of which should not have been treated as normal, but
were:1299
469.1. First, there were repeated breakouts of seepages on the Dam which introduced the
potential for sand liquefaction, but “saturation and the associated liquefaction risk
had become an accepted, hence normal, aspect of dam operation”.1300
469.2. Second, instead of sands and slimes being separated, they were “repeatedly allowed
to intermingle during deposition, with the slimes encroaching on the dam crest
where exclusively sands were intended”.1301
469.3. Third, whereas the Setback was originally supposed to be temporary, it was
“maintained throughout subsequent raising, thus becoming an expected and normal
condition despite a near-miss involving the abrupt appearance of extensive cracking
on the slope”.1302
470. BHP’s effort to generate a geotechnical debate - as to whether “lateral extrusion” of

interbedded slimes triggering the liquefaction of saturated sands was sufficiently well
understood – is in truth a diversion from the undisputed position that slimes and sands were
supposed to be kept entirely separate; that drainage was to be adequately maintained such
that sands in an upstream tailings dam would not become saturated and hence susceptible
to liquefaction; and that significant modifications to a tailings dam embankment should be
developed in accordance with an adequate design.
471. BHP acted to deliver a “Samarco growth programme” through significant Growth Projects.
The P3P Project increased iron ore pellet production by 54%. After the P3P Project was
completed, the P4P Project sought to increase iron ore pellet production by a further 37%.
1298
{D2/3.3T/1290}.
1299
{D2/3.3T/1289}.
1300
{D2/3.3T/1289}.
1301
{D2/3.3T/1289}.
1302
{D2/3.3T/1289}.
210
472. By August 2014 at the very latest, and probably earlier, a reasonable person in BHP’s
position would not have endorsed the continued raising of the Dam, with the Setback
remaining in place, without satisfying themselves that the succession of incidents and
drainage problems at the Dam had been resolved and that materials would not be
susceptible to liquefaction. In this context, BHP’s non-admissions with respect to its
contemporaneous knowledge of even the existence of the Setback confirms BHP’s
unsatisfactory approach. Despite a succession of seepages and drainage-related incidents,
BHP approved Project 940 in April 2015 having overseen the Definition Phase Study for
that project which included plans for drainage projects, but those plans kept the Setback in
place, as well as approved the execution of the Dam up to elevation 920m.1303 The Setback,
which was supposed to be a temporary fix in late 2012, kept rising for three years and was
36 metres tall by the time of the Collapse.1304
473. The simple fact is that it was not safe to keep raising the Dam (in particular along the
alignment of the Setback) because the Dam was in a very fragile state and it showed signs
of serious distress. There were numerous warning signs to this effect, readily known to, or
discoverable by, a reasonable person in BHP’s position. Rather than pause to resolve the
issues in a comprehensive way, or at all, to ensure the Dam was safe, as it ought to have
done, BHP commissioned ongoing increases of production that raised the height of the
Dam.
ii) BHP’s negligence in approving Vale’s use of the Dam
474. Millions of tonnes of slimes from Vale’s Alegria mine were dumped behind the Dam. This
accounted for 27% of all slimes dumped behind the Dam between 2008 and 2015.1305 BHP
approved this arrangement even though it was unsafe and uneconomic for Samarco.
Gillespie 1 accepts that the arrangement was “not appropriate”.1306 BHP’s decision, which
persisted for years, fell below the standard of conduct of a reasonable mining company in
its position because it had a damaging effect on the structural integrity of the Dam.1307
475. The slimes from Vale’s plant were deposited behind Dike 2, from where they could flow
through into the Dike 1 reservoir. This was depicted in numerous presentations considered
1303
{F14/267/7}.
1304
{D8/6/21}.
1305
POC, §§163, 168 {A1/1/69-70}; Defence, §§190,196 {A1/2/97-100}; Reply, §75 {A1/3/46}. The Panel Report
records annual weights of Vale’s slimes deposited behind the Dam in dry metric tons (i.e. a unit of measurement
for the weight of material after all water has been removed): {D8/6/67}.
1306
{B1/4/20-21}. See also {F12/215.0.1/3}; {F12/215.0.1T/4} (recognising that the transactions were not
“commercial”).
1307
As to this being BHP’s decision, see e.g. Part VI, C, 3, iii, (c) above.
211
by BHP personnel.1308 This arrangement persisted pursuant to the Tailings Agreement
(defined above) dated 1989, which entitled Vale to deposit 109ktpa dry metric tons per
year.1309 In fact, as BHP approved, the volume of slimes dumped by Vale had increased
“informally without any amendments to the original contract” to 1.3Mtpa in 2009.1310 In
other words, BHP knew that Vale was dumping more than tenfold the volume of tailings
specified by the Tailings Agreement.1311
476. BHP allowed this to continue despite some internal discomfort:
476.1. On 23 March 2012, following a question from Mr Randolph, Mr Gillespie requested

an explanation of the arrangement. He added this: “Given the environmental risk of
a failure in the Dam wall we appear to be taking a substantial risk in this area.”1312
476.2. On 30 March 2012, Ms Raman emailed Mr Zweig to question the arrangement,

stating that she had not known of it previously: “Who is negotiating this on our
behalf and should we even be allowing this to happen at all”.1313
476.3. On 3 April 2012, BHP personnel attended a pre-Board meeting before the Samarco
Board Meeting to be held on 4 April 2012 in Rio de Janeiro. This included a
presentation titled: “Contract for the Disposal of Vale slime in Samarco’s tailings
dam”. 1314 The slides record BHP’s approval and BHP’s rationale.
(1) The slides refer to Vale’s disposal rate equating to 25% of Samarco’s total
slimes disposal (slide 3)1315 In other words, BHP knew that Vale’s slimes were
using up a substantial proportion of Samarco’s slimes capacity.
(2) The slides refer to Vale paying Samarco proportionally according to the
incurred operational expenditure and capital costs of the Dam (slide 3).1316 In
other words, BHP knew that Samarco did not make any profit from the
arrangement: it was entirely uncommercial.
1308
{F3/448/4}; {F14/187/5}; {F4/499/49}; {F5/251/58}; {F5/310/4}; {F9/30/13}; {F8/23/4}; {F10/2/15};
{F11/428/4}.
1309
POC, §164 {A1/1/69}; Defence, §191{A1/2/97-98} (where BHP corrects the Claimants that merger between
Vale and SAMITRI took place in 2001 rather than 2000).
1310
{F3/316/3}.
1311
{F11/196.0.1T/1} (noting that the proposal for a new contract in 2012 had provided for 12 times the original
volume of Vale tailings).
1312
Gillespie 1, §55-56 {B1/4/20}; {F3/377/1-2}.
1313
Mr Zweig responded to Ms Raman as follows: “Nor was I. I will enquire. We can discuss in Brazil.”:
{F3/379.1/1}.
1314
{F3/316}.
1315
{F3/316/3}.
1316
{F3/316/3}.
212
(3) The slides refer to Vale having “no dam available to disposal slimes from its
Alegria Plant” (slide 3).1317 In other words, BHP knew that Vale was entirely
dependent upon its access to the Dam.
(4) The slides refer to BHP’s recommended position: “[d]o not force Samarco to
suspend the contract given Samarco’s high level of dependence on Vale”. The
first reason recorded for BHP’s decision was that future elevations of the
Germano and Fundão dams depended on Vale’s cooperation with respect to
“interferences”, including the Fábrica Nova waste pile (slide 4).1318 In other
words, BHP approached the arrangement as a potential bargaining chip to
secure Vale’s agreement to future dam raises.
477. The Panel Report records the annual weights of Vale’s slimes deposited behind the Dam in
dry metric tons (i.e. a unit of measurement for the weight of material after all water has
been removed).1319
Year Vale’s slimes (dry metric tons)

2008 326,068
2009 1,416,776
2010 1,144,967
2011 1,267,254
2012 1,188,023
2013 1,029,042
2014 1,005,581
2015 995,669
TOTAL 8,373.380
478. This arrangement would make it more difficult to manage the balance between sands and
slimes (and their composition) at the Dam – the flow and composition of slimes on any
given day would depend on Vale’s Alegria mine, not Samarco’s mine. BHP endorsed this
extraordinary arrangement without taking any steps to ensure that Samarco was able to deal
with Vale’s slimes in a safe manner. BHP did so for years, even though the arrangement
was uncommercial for Samarco. BHP did this because it was more interested in potential
future bargains with Vale. The safety of the Dam was compromised in pursuit of that end.
1317
{F3/316/3}.
1318
{F3/316/4}.
1319
{D8/6/67}.
213
iii) BHP’s failure to ensure that applicable standards were followed
479. ICOLD stands for the “International Committee on Large Dams”. It is an international
body which publishes technical norms for the design of tailings dams.1320 These standards
include warning of the liquefaction risk posed by loose saturated tailings.1321 BHP’s own
“critical controls” required it to confirm that Samarco’s dams were “designed and
constructed” to standards aligned with ICOLD. The details of the various standards are
traversed by the geotechnical experts and can be developed in due course, but the nature of
BHP’s failings can be seen by applying common sense.
480. Three points may be made to summarise how BHP failed to ensure basic standards were
met:
480.1. First, the Panel concluded that, from 2013 onwards, a “saturated mass of tailings
sands was growing”.1322 The Setback meant that, as the Dam continued to be raised
upstream, it became distant from the El. 826 Blanket Drain - increasing the volume
of saturated tailings further still.1323 At this most basic and fundamental level, the
continued rise of an upstream tailings dam on top of a growing, saturated mass fails
to comply with any relevant standard (a fortiori given the scale and location of the
Dam).
480.2. Second, the geotechnical experts agree that a good drainage system is important for
dam stability.1324 They also agree that the encroachment of slimes layers towards
the face of a dam is a common reason for faulty behaviour in upstream tailings
dams.1325 The succession of seepages, slumps, cracking, and the failure to maintain
the beach width prescribed in the Dam’s operation manual (see Part III above),
confirm that basic standards were repeatedly breached in the runup to the Collapse.
These repeated breaches apparently came to be accepted as normal. The result was
that loose and saturated sands became prevalent at the Dam’s left abutment.1326
480.3. Third, absent from BHP’s disclosure is any geotechnical design for the Setback. No
such design is considered in the Panel Report. Hearsay evidence consistently
1320
See Geotechnical Experts JS, Issue 8 {D1/1/19-20}; Gens 1, §§313-315 {D2/1/121-122}, noting that the Dam’s
original designer, Dr Pimenta de Avila, was an active member of the ICOLD tailings dam technical committee
{EBB/1/121-122}.
1321
Gens 1, §§317-326 {EBB/1/122-124}.
1322
Panel Report, page ii {D8/1/3}.
1323
Panel Report, page 30 {D8/1/42}.
1324
Marr 1, §165 {D3/1/107}.
1325
Marr 1, §172 {D3/1/109-110}.
1326
{D8/1/2}.
214
confirms that there was no such design.1327 Rather, the Setback was effectively
implemented ‘on the fly’ by someone who had only joined Samarco a few months
before, without consulting the Dam’s designer. This established part of the Dam
along the original diagonal offset alignment,1328 even though that design had been
abandoned because of safety concerns. That the Setback remained in place for 3
years, and was allowed to rise to 36 metres (the height of an eleven-storey building),
is extraordinary.1329
481. No reasonable mining company in BHP’s position would have continued to push up
production, driving yet further dam raises, without even pausing to confirm that a
geotechnical design was in place for such a drastically altered and precarious structure. As
Gens 2 further observes, it is “difficult to understand that such a major design change as
the implementation of the Setback did not prompt the performance of a stability evaluation
using suitable procedures”.1330 As noted above, no credible liquefaction risk assessment
had been done either.1331
iv) BHP’s negligence with respect to the ITRB
482. BHP’s response to the allegations of negligence pleaded against it is to point to the role of
Samarco’s ITRB. It is suggested that the operation of this panel gave comfort to Samarco
and BHP, and that it was reasonable for its output to be relied upon.1332 But this case is
without merit, for three principal reasons.
483. First, the role of the ITRB (and ITRBs generally) was not to perform a dam safety analysis
or a structure audit. It did not perform any independent analysis or testing. The ITRB’s
usual function was to make a site visit, then provide a brief verbal summary and a written
report with their “observations, opinions and recommendations”.1333 The terms of
reference for Samarco’s ITRB were clear: it was merely an advisory Board, which did not
act as a ‘gate’ or ‘approvals’ body. The adoption or application of any ITRB
recommendations was a matter for Samarco.1334 Dr Robertson explained that the ITRB
1327
{G4/2/59}; {G3/16.T/5}; {G4/2/63}; {G3/21.T/1}; {G4/2/72}, {G2/1.T/12}; {G4/2/234}, {G2/6.T/9}.
1328
{F4/170/3}.
1329
{D8/6/21}; the Dam designer’s reaction was “THAT there is no way to make a setback of 30-meters without a
designer as Samarco did”: {G4/2/59}
1330
Gens 2, §35 {D5/1T/16}, §53 {D5/1T/19}, §62 {D5/1T/21}, §217 {D5/1T/69-70}.
1331
See §285 above.
1332
Defence, §207 {A1/2/139-140}.
1333
Geotechnical Experts’ JS, Issue 5, page 15 {D1/1/15}.
1334
{D7/51/7}. See also {D7/43T/4} and {D7/45T/6}.
215
merely provided advice, and he gave numerous examples when advice was not
followed;1335 and Dr Garga likewise.1336
484. Second, the critical ITRB recommendations were not followed. One of BHP’s own “critical
controls” (addressed more fully below) required BHP to “ensure” that ITRB
recommendations were implemented by Samarco in a “timely manner”.1337 But three
examples suffice to demonstrate this was not followed in practice.
484.1. Before Dr Robertson joined the ITRB, he recommended that the Dam needed a
buttress dam built in front of Dike 1, to reduce the risk of the Dam’s failure.1338 The
ITRB made the same recommendation in October 2011, advising that Samarco
should commit to this before focusing on raising the Dam to El. 940m.1339 Gens 1
summarises that the buttress project “lingered on” but was not “seriously pursued”,
before it was finally abandoned in February 2014.1340
484.2. ITRB recommendations to fill the Setback and limit its height to 20 metres were not
followed. The ITRB first advised to fill the Setback as early as December 2013.1341
Marr 2 seeks to defend the failure to fill the Setback in early 2014 on the basis that
the constraint was using a safe method of deposition.1342 This is unpersuasive
because Samarco chose to keep raising the Dam (and the Setback) in the meantime.
In November 2014, following the August 2014 Cracking Incident, ITRB Report No.
11 recommended that the Setback should be filled “as quickly as possible” and that
“every effort be made to complete this work as a matter of priority”.1343 ITRB
Report No. 11 included the distinct recommendation that, in the meantime, the
height of the Setback should not exceed 20 metres. The Setback was not filled, and
the height of the Setback was raised to 36 metres.1344
1335
{G4/2/3-5}.
1336
{G4/2/195}.
1337
{F6/446/1} tab “Controls (Standards and Test Plans), cell D8.
1338
Gens 1, §§435-436 {D2/1/160}. See also {D7/41/16}: “current planning includes a Fundao Buttress Dam
(FBD) downstream of FD1 [Fundao Dyke 1]. Such a dam will enable the performance vulnerabilities of the
current FD1 system (the vulnerable Main and Auxiliary Galleries and the impaired FD1 dam internal
drainage) to be replaced by more robust and reliable systems”.
1339
Gens 1, §437 {D2/1/160}.
1340
Gens 1, §438 {D2/1/160}.
1341
Gens 1, §440 {D2/1/161}, referring to ITRB Report No. 8, January 2014 (following a visit in December 2013),
which advises that the filling which was currently being done by trucks and tractors “can be speeded up at a
reasonable cost by using hydrocyclones”) {D7/101T/6}.
1342
Marr 2, §80 {D6/1T/45-47}.
1343
{D7/121T/13}.
1344
{D8/6/21}.
216
484.3. ITRB recommendations to resolve drainage issues at the Setback and Grota da Vale
area were not followed promptly or at all. Dr Garga has confirmed that need for
additional upstream drainage at the Dam was a “constant concern of the ITRB”
during his entire membership of the ITRB.1345 But drainage solutions to extend the
reach of the El. 826m Blanket Drain were developed far too late, some 2.5 years
after the need was first identified.1346 All the while the height of the Dam continued
to be raised.1347
485. Third, BHP knew that the ITRB could not be relied upon in any event. BHP’s 2013 Samarco
Audit process identified that the ITRB was not some reliable failsafe through which BHP
could believe that it had discharged its duties. The audit report commented on (i) the 2009
Piping Incident and (ii) the 2011 and 2012 failures with the galleries, then identified a “lack
of awareness about the relevance that the QC and QA processes have in preventing the
occurrence of flaws during the construction of a tailings dam and its critical components.”
As to this, the auditors concluded that “the [ITRB] which advises Samarco has not yet noted
the above lack of awareness.”1348 BHP knew that the ITRB was unable to identify that
Samarco was unaware about the relevance of quality control and quality assurance
processes during the construction of a tailings dam. BHP had been provided with repeated
warnings before then by both the ITRB itself and one of its members about issues that the
ITRB was facing in carrying out its role.1349
v) BHP’s negligence with respect to risk management
486. BHP failed to follow its own internal standards. Its actions did not accord with the
requirements of, inter alia, its six “critical controls” for managing the material risk of the
failure of the Dam (as set out above at §435). BHP continued to assess the risk of the Dam’s
failure as “well controlled” from January 2014 onwards (and even ‘revalidated’ the risk as
“well controlled” in June 2015) when it self-evidently was not. Moreover, it downplayed
significant issues with the Dam and failed to take reasonable steps that it could and should
have taken. BHP’s assessment of the Dam on paper bore little resemblance to the reality
on the ground. This can be illustrated in seven ways.
487. First, BHP permitted significant departures from the design of the Dam. The first of BHP’s
so-called “critical controls” for the Dam was titled “Dam Design”. The separate placement
1345
{G4/2/191-192}; {G3/22/2}.
1346
Gens 2, §19 {D5/1T/12-13}.
1347
Gens 1, §204 {D2/1/84}.
1348
{F6/430/15-16}.
1349
See e.g., {F5/391/2}; {D7/51/3}; {D7/55T/11}.
217
of sands and slimes, in order to keep slimes away from the structural portion of the Dam,
was a critical safeguard against the risk of the Dam’s collapse.1350 There were two key
mechanisms in place to ensure that this occurred, neither of which were adhered to.
487.1. One was the original design of the Dam, which sought to ensure that the sands were
free-draining by “physically separating and separately discharging of the sand and
slimes tailings behind Dikes 1 and 2, respectively”.1351 This mechanism was
breached when the Dam’s design was abandoned after the Piping Incident, and
further still when the Overflow Channel was constructed while repair works were
taking place for the galleries. BHP was aware of this at the time; Dr Robertson’s
report dated 13 April 20111352 identified that slimes were being deposited behind
Dike 1,1353 and BHP relied on Dr Robertson’s report in a presentation given to
BHP’s Iron Ore Executive Committee (“ExCo”) in November 2012.1354 ITRB
Reports Nos. 2-4 also identified that slimes were being discharged into Dike 1.1355
The Overflow Channel conveying slimes into the Dike 1 reservoir was closed in
August 2012, but not before slimes had been deposited between EL. 824m and El.
850m.1356 It opened again in July 2013 until December 2013.1357
487.2. Additionally, the Dam’s Operating Manual required a 200m minimum beach to be
maintained upstream of Dike 1.1358 This requirement existed in part to prevent
slimes from intermingling with sands in the structural portion of the Dam. Despite
the Dam’s Operating Manual stating that “violation of the 200m beach will be
considered a serious operational failure”,1359 the minimum beach length
requirement was regularly violated at the Dam, including after the deposition of
slimes in Dike 1 (the area originally intended to store sandy tailings only).
488. BHP was aware of these breaches at the time; there were numerous meetings of the
Samarco Board and Samarco Subcommittees between 2013-2015 in which it was made
clear in the presentation materials that there was no adherence to the 200m minimum beach
width.1360 Indeed, some of the presentation materials showed that the beach width was as
1350
{D8/1/51}.
1351
Ibid. {D8/1/51}.
1352
{D7/41}.
1353
{D7/41/12}; {D7/41/27}.
1354
{F6/172/4}.
1355
{D7/45T/9}; {D7/51/8-10}; {D7/54/4}.
1356
{D8/1/52}.
1357
{D8/8/3}.
1358
{D7/61T/12}; {D7/61T/23}; {D7/61T/27}.
1359
{D7/61T/27}.
1360
See e.g., {F7/212/45}; {F8/342.0.2T/109}; {F10/91/56}; {F12/215.2T/31}.
218
low as 130m1361 or 135m.1362 BHP representatives, including on some occasions Mr
Wilson1363 and Ms Beck1364, were present at these meetings.1365
489. BHP’s approach to the Setback is a further example of this. In addition to disregarding the
ITRB’s recommendations in relation to the Setback, BHP in fact developed the Setback
without any design.1366 Wanderson Silva Silvério, a Samarco employee, explains in his
deposition to how the Setback did not comprise a design, or even a drawing: rather, it was
“six points” based on an existing drawing from a previous project where there was a
Setback.1367 There was never a technical design for the Setback. The Court can be sure that,
if there was one, it would have been disclosed and scrutinised in the Panel Report.
490. Second, and relatedly, BHP failed to monitor the Setback as required by its critical controls.
BHP overlooked at least three crucial issues with the Setback that, had it followed its own
“Dam Design” and “Dam Monitoring” controls, it would have identified:
490.1. First, BHP should have been aware of the lack of design for the Setback. BHP’s
“Dam Design” critical control required that BHP “[t]hrough review of evidence and
interview, ensure that Samarco’s dams remain designed and constructed to Brazilian
standards, and remain in alignment with international standards” and “[a]ll
embankment elements demonstrate compliance with design and material
specifications”.1368 BHP should have identified that there was no design for the
Setback and that it was not in accordance with the original design for the Dam.
Indeed, in the 2014 Dam Design CET, Mr Ferreira explicitly stated that “All the
Samarco’s projects for elevation of the dam and for construction of new dams is
designed and constructed in alignment with Brazilian and international
standards.”1369 This was simply untrue.
490.2. Second, following the August 2014 Cracking Incident, there was not only a failure
to follow the ITRB’s recommendation to make “every effort” to fill the Setback “as
quickly as possible”, there was also a failure, contrary to BHP’s “Dam Monitoring”
critical control, to conduct “stability analysis and inspection any deformation
1361
{F10/91/56}.
1362
{F8/342.0.2T/109}.
1363
{F7/224/1-1}; {F14/266/1}.
1364
{F14/266/1}.
1365
{F10/147T/70}.
1366
{G4/2/59}; Dr Pimenta de Ávila's states that “there is no way to make a setback of 30 metres without a designer
as Samarco did”: {G3/16.T/5}. See also: {G4/2/63}; {G3/21.T/1}.
1367
{G4/2/234}; {G2/6.T/9}.
1368
{F16/425/1-4}.
1369
{F16/427/1-2}.
219
cracks/bulges, seepages zones/damp in unexpected areas” (sic) and an “inspection
if there are any deformation cracks/bulges, seepages zones/damp in unexpected
areas”.1370 BHP did not seek stability analyses or inspection reports, and notably
failed to seek inspection reports from Dr Pimenta de Ávila relating in particular to
the Cracking Incident from September 2014 and December 2014.1371
490.3. Third, BHP also failed to seek stability analyses showing the performance of the
Setback including on the basis of data from piezometers installed in September and
October 2014. This was despite the fact that BHP’s “Dam Monitoring” critical
control required BHP to obtain “evidence of instrumentation & monitoring records
demonstrating detection of potential issues linked to leading indicators” and
“stability analysis, understanding performance of structure according to the
instrumentations data.”1372
491. Third, BHP failed to assess for the risk of liquefaction at the Dam. BHP was aware, or at
least should have been aware, about the need to assess liquefaction risk at the Dam from as
early as 2012. The risk continued to be flagged to BHP through various mechanisms, which
it failed to notice. Three examples are illustrative in this regard: BHP own critical controls,
specifically (i) ‘FMEA’, (ii) the 2011 Robertson report, and (iii) Samarco’s bowties.
Instead, BHP endorsed a scenario whereby the Dam kept raising without any credible
liquefaction risk assessment being done.
491.1. FMEA: BHP’s second critical control for the failure of the Dam was ‘FMEA’, by
which BHP was required to obtain and assess Samarco’s FMEAs which set out
potential ‘failure modes’ for the Dam and the actions to be taken to prevent the risk
of such failures from eventuating. From 21 May 2012 onwards, Samarco’s FMEAs
consistently recognised the risk of static liquefaction could cause “[g]lobal rupture
(in undrained conditions) with discharge of water and sediment reaching the
Santarém Dam reservoir and the area downstream”.1373 The FMEAs identified the
need to conduct studies of liquefaction potential.1374 For over 3 years, this action
remained outstanding. It remained only “in the initial phase” up to, and including,
in the FMEA conducted in July 2015, which was the final FMEA conducted before
1370
{F16/437/1}.
1371
{D7/117T}; {D7/130T}.
1372
See e.g. {F16/423/1}.
1373
{D7/83T/1} and other FMEAs thereafter, see for example {D7/81T/2} tab “FMEA” cell G9, referring to “Global
rupture (in undrained conditions) with discharge of water and sediment reaching the Santarém dam reservoir
and the area downstream”.
1374
{D7/83T/1} and other FMEAs thereafter.
220
the Collapse.1375 The Panel Report confirmed that there was “no credible pre-failure
assessment of liquefaction for the Fundão Dam in any of the documents it
reviewed”.1376 Despite this, BHP rated the FMEA critical control as a ‘Pass’ in all of
its CETs.1377 The basis on which it did so is difficult to credit where the actions set
out in those FMEAs were never completed and closed out.1378
491.2. 2011 Robertson report: Dr Robertson produced a report dated 13 April 2011, which
identified a risk of “sustained liquefaction” caused by the rate of slimes deposition
behind Dike 1 and the low permeability of those slimes.1379 As noted above, BHP
relied on Dr Robertson’s report in a presentation given to the Iron Ore ExCo in
November 2012.1380 BHP must therefore be taken as being aware of the developing
risk of liquefaction at the Dam as early as 2012.
491.3. Samarco bowties: BHP failed to identify, or act on, the risk of liquefaction even
where it was clearly identified in Samarco’s 2015 bowties for the risks of (i) ‘critical
failure in the implementation process of dams and waste dumps’1381 and (ii) the
‘unavailability of volume for the disposal of tailings and waste’.1382 The bowties
identified the “risk of rupture due to liquefaction” as part of the basis for their
calculation of an MFL of $3373mn for each of these risks. That BHP did not
identify, or act on, this significant risk when Group RAA conducted a detailed
review of at least one of those bowties for the purposes of the Samarco 2015 Audit
of Samarco’s risk management function, specifically the basis on which the MFL
was calculated (i.e. that section of the bowtie setting out the liquefaction risk) falls
below the standard of a reasonable person in BHP’s position. BHP also failed to
identify the risk when the bowties were directly shared with BHP by email on 21
June 2015,1383 or when they were considered shortly thereafter by BHP at the
1375
{F13/409/1}. Other FMEAs in which this action remains in the initial phase: {F7/129/1}; {F7/130/1};
{F8/167T/1}; {F12/216.1T/1}; {F9/378/1}.
1376
{D8/1/35}.
1377
{F16/424/1}; {F16/430/2}.
1378
BHP appears to rely on a study carried out by Anelisa Vasconcelos after the August 2014 Cracking Incident.
However, she told Brazilian investigators and testified before the Brazilian court that her computer hard drive
had somehow burned up, and that her initial liquefaction susceptibility studies had in any event showed there to
be material that was “susceptible to liquefaction”: {G3/15.T/1-2}, {G2/2.T/11-12}; {G4/2/13-14, 24-25}.
1379
{D7/41/12}.
1380
{F6/172/4}.
1381
Samarco simplified bowtie for the “Critical failure in the implementation process of dams and waste dumps”:
{F12/98/1}.
1382
These bowties identified the “risk of rupture due to liquefaction” as part of the basis for calculating an MFL of
$3373mn for each of Samarco’s bowties. In 2015, Samarco assessed, inter alia, the risk of a ‘critical failure in
the implementation process of dams and waste dumps Samarco simplified bowtie for the “Unavailability of
volume for the disposal of tailings and waste”: {F12/92/1}.
1383
{F12/102/1}
221
Samarco Risks Subcommittee.1384 This failing is only compounded when
considered against the background of Samarco’s significant increases in the MFL
for these risks in 2014 and again in 2015 (as discussed further below). The
reasonable approach would have been to take more care in reviewing these bowties
rather than less.
492. Fourth, BHP’s risk management system allowed for years of inaction and half-measures
with respect to addressing drainage issues. Good drainage was critical to avoid the sandy
tailings becoming saturated and therefore susceptible to liquefaction. Drainage issues were
ongoing at the Dam for several years prior to the Collapse (on which, see Part III, The Dam,
above).
493. BHP knew, or indeed should have known, of the ongoing drainage issues at the Dam and
the associated risks (and acted to mitigate their impact):
493.1. Again by way of its ‘FMEA’ critical control which, as mentioned above at §491.1,
required BHP to obtain and assess Samarco’s FMEAs. Samarco’s FMEAs from 21
May 2012 identified that a failure of the internal drainage system, or an insufficient
drainage system, could result in a “global rupture” of the dam.1385
493.2. BHP’s representatives were informed at a meeting of the Samarco Board on 4 April
2013 that the 16 failure modes which were “above the risk level considered
tolerable” were “associated with the internal drainage system and the spillway of
the Fundao Dam”;1386 and via ITRB reports and meetings, as well as the meeting of
the Operational Performance Subcommittee. For example, ITRB Report No. 8,
dated January 2014, concluded that an analysis of the results from the
instrumentation of Dike 1 of the Fundão Dam “seems to indicate the ineffectiveness
of the internal drainage”.1387 The report also identified two seepage incidents at the
Dam in June 2013 and November 2013, which indicated that “the drainage blanket
(El. 826 to 828m and located more to the right of this site) does not contribute for
the control the phreatic surface at this location” and recommended consideration of
one or more additional drainage blankets for better control of the phreatic surface
in the dam body and stated that “[a]butment drains must also be considered”.1388
BHP representatives were aware of the higher water level on the left abutment and
1384
{F16/524.4.1/1-4}.
1385
{D7/83T/1}.
1386
{F5/274/31}.
1387
{F15/275/4}.
1388
{F15/275/5}.
222
that the ITRB had recommended the construction of new drainage.1389 Samarco’s
Operational Performance Subcommittee considered the ITRB report in January
2014.1390 The Subcommittee was told about the finding of the “inoperability or
inefficiency of the internal drainage in the left shoulder” and the Subcommittee
accepted the need to build a new system of internal drainage at the Dam.1391 BHP
representatives were present at this meeting.1392 BHP was then made aware of two
further seepage incidents identified by the ITRB in preparation for Report No.12 on
20 March 2015.1393
494. Fifth, BHP artificially upgraded the MRCA for the critical failure of the Dam to “well
controlled” in late 2013 / 20141394 and then revalidated this in June 2015.1395 Importantly,
the risk had previously been reported to the ExCo as “requires some improvement”.1396 The
impact of this upgrade was that BHP no longer put in place a management plan to mitigate
against that risk, per the requirements of GLD 0.17.1397 The upgrade was no more than a
flawed paper exercise but was one with very real consequences.
495. By way of brief explanation, the upgrade to “well controlled” was artificial both because
the decision may have been premature1398 and, because the underlying assessments were
unreliable. For instance, BHP did not satisfy the requirements of its Incident Response
critical control but nonetheless rated this CET as ‘Pass’ in December 2013. In short:
495.1. In August 2013, there were two remediation tasks for the risk of critical failure of
the Dam. For present purposes, the relevant task was for Samarco to develop and
implement a mutual aid plan (“MAP”).
495.2. By November 2013, Samarco had cancelled the MAP and replaced it a requirement
to (i) “disseminate, train and provide” an Emergency Action Plan (“EAP”) and a
Business Continuity Plan (“BCP”), and to (ii) “perform internal dams disruption
simulation”.1399 This simulation was carried out on 21 November 2013.
1389
Mr Ferreira’s notes from the ITRB closing meeting which he emailed Mr Fernandes and Ms Jacques on 19
December 2013: {F7/355/1}.
1390
{F7/437/5}.
1391
{F7/359/55}.
1392
{F7/412/1}.
1393
{F11/128/1}.
1394
BHP’s October 2013 records indicate that the MRCA may have been assessed prematurely and inaccurately as
“well controlled”: BHPUK-000186651-00001 {F15/55}; {F7/230}; {F9/30}.
1395
{F15/73/1}; {F15/73/1}.
1396
{F6/422/5}.
1397
{F11/456/6}.
1398
{F15/55}.
1399
{F7/252T/2}.
223
495.3. Critically, the simulation did not include Bento Rodrigues, which is the village that
BHP recognised would be “most affected in a breakage”.1400
495.4. BHP monitored the simulation through its ‘Incident Response’ critical control. This
control required a “[d]am safety emergency response plan demonstrating how all
operations personnel and persons potentially in the path of a dam break will be
evacuated to safety well in advance of a failure”.1401 Put differently, the critical
control could not be met without a proper evacuation plan in respect of Bento
Rodrigues.
495.5. BHP’s December 2013 CET for the Incident Response critical control was
nonetheless rated ‘Pass’, despite the attendant comment for this rating reading
“needs improvement in the evacuation plan for Bento Rodrigues and a update of the
rupture simulation for all dams”.1402
496. What is more, BHP’s personnel did not themselves understand why the risk was being
upgraded in 2014. Mr Arnold considered that the Incident Response critical control for this
risk should be rated ‘fail’ in 2013 and that the material risk as a whole should continue to
be rated as “requires some improvement”.1403 Messrs Ferreira and Fernandes also expressed
confusion as to why the risk was upgraded to “well controlled” in January 2014.1404
497. It is unnecessary for the Claimants to explain the collective psychology which allowed such
deviations to become accepted by BHP, but there were clear advantages at this point for
BHP’s defining the risk as “well controlled”.
498. Sixth, BHP’s culture for assessing critical controls was seriously deficient. This is clear
from the findings of the 2015 Iron Ore Audit.1405 To take a further and illustrative example,
those who were tasked with assessing BHP’s controls, including performing the CETs,
were given insufficient time to do so. BHP’s approach to the December 2014 MRCA cycle
shows this. Mr Ferreira’s request for more time because he would like to “go to Germano…
before performing the CETs”1406 was instead met by Mr Victor asking him to “bring his
dates forward” for completing the CETs.1407 The emphasis was on deadlines rather than
1400
{F16/426/1-1}.
1401
{F16/426/1-1}.
1402
{F16/426/1-1}.
1403
{F7/256/1}.
1404
{F7/319T/1}.
1405
{F13/439/4-8}; {F13/440/1}.
1406
{F9/431/2}.
1407
{F9/431/2}.
224
scrutiny; Mr Victor’s main concern was that the CETs should not be rated as ‘overdue’.
That would not be “a preferred position.”1408
499. The same can be seen with the MRCA assessment in 2015. Mr Victor asked Mr Fernandes
to re-assess this ahead of the June 2015 RAC,1409 but emphasised that this would just be a
“sanity check” that should be “fairly simple to complete”. Mr Fernandes specifically
commented that he had been “busy these days” and hence had been delayed in completing
the MRCA.1410 Shortly thereafter, Mr Fernandes noted on 1SAP on 15 June 2015 that there
was “No change in status” for the MRCA from the well-controlled rating in December
2014.1411 There is a complete absence of supporting documentation attached to this
“revalidation” of the risk on 1SAP.
500. Seventh, BHP was insufficiently rigorous when assessing the MFL for the risk of the
critical failure of the Dam. BHP sought to minimise the MFL where possible. This was
apparent as early as 2012: BHP strenuously opposed the assessment of the MFL as $10
billion in the “Significant Dams Risk Review” (the “Dow Memo”)1412 and ultimately
reported an MFL of $1.98bn, which was more than five times lower. This does not appear
to be commented on directly in a follow up report on the Dow Memo in 2015 (which the
Defendants disclosed to the Claimants only on 2 October 2024).1413 BHP’s impetus can
again be seen in 2014 and 2015, where Samarco’s MFL significantly increased year on year
but there was no resultant change in BHP’s which remained static at $1190m.1414
vi) BHP’s negligence with respect to audits
501. BHP set out to audit Samarco consistent with its assumption of responsibility for Samarco’s
activities. However, its performance of the 2013 Samarco Audit and the 2015 Samarco
Audit was negligent in several respects that related specifically to the safety of the Dam.
502. BHP failed to carry out the necessary investigations prior to commencing (or whilst
conducting) the 2013 Samarco Audit. It was decided within BHP that an independent
auditor with experience in tailings dams should be engaged to carry out the asset integrity
part of this audit. On 2 May 2013, Dr Bentel emailed Dr Robertson (an expert on tailings
dams and a then-member of the ITRB) asking him whether he would be qualified to act –
and if not whether he knew someone who might. In the email, Dr Bentel referred to the
1408
{F9/431/1-3}.
1409
{F12/53/2}.
1410
{F12/53/2}.
1411
{F15/73/1}.
1412
{F4/287/1-13}.
1413
{F14/37.0.2/1-8}.
1414
{F4/340}; {F7/443/4}; {F10/105/4}; {F11/455/9}; {F12/311.2/9}.
225
Samarco dams as “pretty complex.”1415 Dr Robertson replied on 4 May 2013, with a
criticism of Samarco’s dam management: “They have pushed the dams to limits of
operating tolerances that are beyond what I consider appropriate. And continue to do
so.”1416 He also explained how members of the ITRB were not able to attend meetings due
to Samarco’s tendency to change pre-planned meeting dates at short notice and raised
question marks as regards the expertise of two of the ITRB members. Dr Robertson
suggested Dr Garga as an independent auditor.1417 Dr Robertson’s email ought to have
placed the audit team on high-alert as to (i) the complexity of the Samarco tailings dams,
(ii) deficiencies in Samarco’s management of the risk of a failure of them, and (iii) the
effectiveness of the ITRB. But in fact BHP failed to make any enquiry with Dr Robertson
as to his concerns (which were of the utmost seriousness and longstanding) or to adequately
investigate the issues he identified.
503. BHP proceeded to award an unjustifiable rating of “Requires some improvement” in the
2013 Samarco Audit1418 when the only reasonable conclusion on the evidence before it was
at least a rating of “Requires significant improvement” – great care to be taken thereafter,
if the Dam was to be raised any further.
503.1. During the course of the audit, Mr Wetzig sent four draft Asset Integrity findings to
Mr Salvano.1419 Mr Salvano replied “I have reviewed all four drafts and agree with
all of those. The two regarding the TSFs clearly articulate fundamental issues with
the (in)adequacy of the design and construction of TSFs at Samarco, plus the
current limited effectiveness of the (ITRB). By themselves, those two TSF audit
Findings would warrant a ‘requires significant improvement’ process rating, in my
view. Add the other two P2 Findings and that process rating is confirmed, as I see
it.”1420
503.2. On 1 August 2013, the audit closing meeting took place. Two “P2” findings were
made in respect of the dams: (i) deficiencies in the construction of starter dams; and
(ii) deficiencies in the assessment of overtopping.1421 Asset Integrity was given a
process rating of “Requires some improvement”1422. Carlos Villalobos sent the slides
1415
{F5/391/3}.
1416
{F5/391/2}.
1417
{F5/391/2}.
1418
{F6/430/4}.
1419
{F6/235/1-2}.
1420
{F6/235/1-2}.
1421
{F6/242/12}.
1422
{F6/242/7}.
226
for the closing meeting to Mr Dotson.1423 Mr Dotson replied and said he would “like
to understand the rationale […] for asset integrity not being a red with four
P2’s”.1424 This was the second time an experienced auditor stated that Asset Integrity
should have been given an overall process rating of “Requires significant
improvement”.
503.3. However, Asset Integrity was in the end given an overall process rating of “Requires
some improvement”1425 – despite Mr Salvano’s and Mr Dotson’s observations. The
reason for this rating is most extraordinary. As explained in an email from Mr
Gúzman to Mr Dotson of 6 August 2013: “The requiring some improvement rating
in the Asset Integrity process is because these findings have a potential impact in
more than six month(s) and if this process is qualified as Require(s) Significant
Improvement “RED”, management could be distracted from the main concern that
they and the audit team have today which is a fatality due to a fail in the safety
management process during the next 6 month(s) when the project should be
concluded”. 1426 The “main concern” that is referred to by Mr Gúzman was a “P1”
finding under the Safety process – “Significant deficiencies were observed in the
design and implementation of traffic management controls at the Germano Mine
and Ponta Ubu facilities”.1427 The only reason, therefore, that Asset Integrity was
not given an overall process rating of “Requires significant improvement” was
because (in BHP’s estimation) there was a more pressing issue with traffic.
504. This (remarkably) was the last time the risk of failure of the Samarco dams was audited
prior to the Collapse over two years later. In preparation for the 2015 Samarco Audit, Maria
Sierra emailed Mr Wetzig asking him about its scope. Mr Wetzig replied to say that “The
risk of failure of one of the tailings dams at Samarco was covered in depth in the previous
Asset Integrity audit (we carried out that audit with Vinod Garga), so we should not review
this issue again.”1428
505. The risk of Samarco’s dams failing was therefore not audited in 2015, despite the
background to the 2013 Samarco Audit (including Dr Robertson’s concerns that were not
followed up); the concerns that were noted, albeit without due emphasis, in the 2013
Samarco Audit; and the discovery of cracking and breaking of the Dam that had been
1423
{F6/243/1}.
1424
{F6/243/1}.
1425
{F6/430/4}.
1426
{F6/284/2}.
1427
{F6/430/7}.
1428
{F12/44T/2}.
227
identified as being caused by liquefaction and reported as being the beginning of the rupture
in August/September 2014 (i.e after the 2013 Samarco Audit).
506. A reasonable mining company in BHP’s position would have traced the history of these
events (including observations made by experts and auditors) and insisted that the tailings
dams be audited during this cycle. Not to have done so was negligent. The 2015 Samarco
Audit was the last opportunity any auditor had to assess the management by Samarco of
the risk of the failure of its dams before the Collapse. What is more, there is no reference
in the audit scope of there being a follow-up of previous audit findings.1429
507. The 2015 Samarco Audit did not examine the risk of the Dam failing; but it did cover risk
management processes; and found deficiencies. Two “P2” findings followed (“Deficiencies
in the methodology to evaluate Critical Controls to inform material risk overall
assessment”; and “Inadequacies in the application of the RRR calculation.”).1430 This
obviously called into question the manner in which Samarco’s risk calculations were
performed (and the metrics underlying same). However, BHP was content for Samarco to
perform a benchmarking exercise in order to get further understanding about risk
assessment processes from similar industries (with a target date of 30 June 2016). Another
“action” was to purposedly delay any remedial action until the end of Samarco’s risk
management 2016 cycle in June 2016 – thereby keeping the current deficient system in
place for another ten months.1431
vii) BHP’s negligence with respect to the Prístino Report
508. BHP failed to take steps, adequately or at all, to ensure that the serious concerns raised in
the Prístino Report (of which BHP was aware at the time) were addressed.1432 Whereas
BHP seeks to dismiss the Prístino Report as only raising “safety concerns related to a
hypothetical future problem”,1433 the Prístino Institute readily identified (based on the
information available to it) that attention needed to be paid to area around the Dam’s left
abutment.
509. The Prístino Institute (a not-for-profit environmental and geotechnical modelling institute
affiliated with the University of Minas Gerais) was retained by the Minas Gerais State
Prosecutor’s Office (“MPMG”) to study the Dam and to prepare a report in connection
1429
{F12/380/1-7}.
1430
{F13/284/6}; The 2015 Iron Ore Audit separately concluded that Iron Ore did not demonstrate a process to
identify its own risks at all, which were not directly related to Samarco operations{F13/439/4}.
1431
{F13/284/8-11}.
1432
POC, §§197-205 {A1/1/83-85}; {D7/95T}.
1433
Defence, §234(1) {A1/2/156}.
228
with Samarco’s application to renew its operating licence (discussed below) (the “Prístino
Report”). The Prístino Report, published on 21 October 2013 on the website of the State
of Minas Gerais’ environmental regulator, SUPRAM, highlighted the risks posed by the
overlap between the Dam and the adjacent União Sterile Pile, or Fábrica Nova Waste Pile,
managed by Vale, close to the Dam’s left abutment (see Part III, The Dam, above). The
report highlighted that:
“There are areas of contact between the [Vale] pile and the dam. This situation is
inappropriate for the context of both structures, due to the possibility of destabilizing
the pile body of the dam and increasing the potential for erosion processes. Although
all the programs are designed to prevent risks, contact between these two structures is
not recommended due to their physical nature. The sterile pile requires low humidity
and good drainage; the tailings dam has high humidity conditions since it serves as a
water reservoir.”1434
510. The Prístino Report warned that the overlap between the structures could lead to the
saturation of the Vale sterile pile.1435 Accordingly, the Prístino report recommended that
“studies be conducted into the possible impacts of contact between the structures.”1436 The
report was yet another warning as to stability concerns at or around the left abutment of the
Dam.
511. Senior figures at BHP were aware of the Prístino Report prior to the Collapse.1437 At the 19
November 2015 annual general meeting, BHP’s Chairman of the Board, Mr Nasser,
admitted that BHP knew about the Prístino report in 2013.1438 Moreover, as reported in an
article by SNL Metals & Mining Daily on 23 November 2015, Mr Nasser stated in
reference to the Prístino Report, “We’ve looked at it, we looked at it back then, we’ve looked
at it now.”1439 BHP argues that Mr Nasser’s statement “is not clear”, and that “it is not clear
to whom at BHP [he] was referring when he said “we looked at it back then.”1440 BHP has
not, however, produced any evidence, or offered any proper explanation as to what Mr
Nasser is purported to have meant. The only reasonable interpretation is that senior figures
at BHP were aware of the report, at a time when BHP could have taken steps to address the
safety concerns raised within it.
512. That BHP knew of the concerns regarding the possible interference with these structures
reinforces the seriousness of its breaches set out above, in particular: (i) the failure to ensure
1434
{D7/95T/4}.
1435
{D7/95T/7}.
1436
{D7/95T/7}.
1437
POC, §205 {A1/1/85}.
1438
POC, §203 {A1/1/84}; {F14/146/13}.
1439
POC, §204 {A1/1/84-85}, §278.4 {A1/1/118}.
1440
Defence, §234(1) {A1/2/155-156}, §311A {A1/2/191}.
229
that the ITRB recommendation to resolve drainage issues at the Setback and Grota da Vale
area were followed, promptly or at all (see §484.3 above); and (ii) the continued raising of
the Setback, notwithstanding that a proper geotechnical design for the change in axis, so
close to the area of concern flagged in the Prístino Report, had not been carried out (see
§472 above).1441
513. Gens 1 explains that there had been even earlier concerns raised about waters coming from
the Vale sterile pile in 2011; that similar concerns were repeated in the Prístino Report in
2013; and it was only later (in late 2014) that a decision was taken to connect the drainage
of Vale’s sterile pile to the El. 860 Blanket Drain at the left abutment.1442 Moreover, the
Panel Report identifies that ponded water was “consistently noted” at the toe to the El. 860
Blanket Drain in 2015.1443 In fact, as noted above (see Part III, the Dam), by October 2015,
surface drainage and pipes had been constructed to convey water from the Grota da Vale
area across the plateau and alongside the Setback – although no drawings or designs for
this system were available to the Panel. As further recorded by the Panel Report, the “flow
from Grota da Vale elevate[d] the piezometric surface on the left abutment” of the Dam.1444
The interconnection between the drainage systems was, therefore, directly relevant to the
Dam’s stability, the delay to the return of the Setback, and the Prístino Report was but
another early warning about drainage concerns in this area of the Dam, to which insufficient
attention was paid.
viii) BHP’s inappropriate reliance on the licences granted for the Dam
514. On 15 April 2015, the Samarco Board, attended by Mr Ottaviano, Mr Fernandes, Ms Beck,
Ms Torres and Ms Hood on behalf of BHP, approved the initiation of works to raise the
Dam to the licensed elevation of 920m, with the additional CAPEX for the further raising
of the Dam to 940m to be approved at a Board meeting in August 2015, when the necessary
license was expected to be in place.1445 The Board did so despite knowing that the Setback
had already been significantly raised, and that issues in the Dam’s internal drainage system
needed to be rectified to guarantee the Dam’s stability.1446 BHP invites the Court to infer,
however, that the Board’s decision was reasonable on the basis that the Dam’s existing
1441
{G4/2/71}; {G4/2/202-203}; {G4/2/33-34}.
1442
Gens 1, §72 {D2/1/28}, §526 {D2/1/183}, §530 {D2/1/184}.
1443
{PE49/12/243}.
1444
{PE49/12/176}.
1445
POC, §179.14.4 {A1/1/79}. The original project as licenced in 2005, allowed for a maximum height of 920m
{F14/267/7}. See also Gens 1, §137 {D2/1/13}.
1446
POC §179 {A1/1/74-80}; see also Gens 1, §53 {D2/1/25}; §60 {D2/1/26}; §475 {D2/1/171}; §476 {D2/1/171-
172}; §485 {D2/1/173}; §500 {D2/1/176}.
230
licences permitted its elevation to 920m, and that the licence to raise the Dam to 940m was
ultimately obtained.1447
515. BHP’s proposed inference is unsustainable in circumstances in which the Dam’s operating
licence, renewed on 29 October 2013 (the “REVLO”), and the preliminary and installation
licence to raise the Dam to 940m, granted on 30 June 2015 (the “940 LP+LI”), were
obtained on the basis of material misrepresentations and non-disclosures to the licensing
authorities.1448 In particular, it was not reasonable for the Samarco Board, and BHP’s
representatives thereupon, to rely on the Dam’s licences without having satisfied
themselves that the litany of issues with, and modifications to, the Dam since 2009 - of
which BHP was aware - had properly been communicated to, and where appropriate,
authorised by, the licensing authorities. This is a fortiori in light of the following:
515.1. The grant of the 940 LP+LI was a matter of huge importance to BHP at the time.
Samarco submitted the application on 5 September 20131449, and it was initially
expected the licence would be granted in December 2014, ahead of the Board
meeting in April 2015.1450 However, the grant was delayed. By November 2014, it
was calculated that a year’s delay to Project 940 would result in an MFL for Samarco
of USD $670 million, due to the lack of tailings storage capacity and the need to
reduce production by 50%.1451 By February 2015, this was considered by BHP to
be “without a doubt Samarco’s greatest risk”.1452
515.2. BHP was aware of previous issues regarding Samarco’s compliance with its
licensing requirements. For example, delays of up to 15 months in the provision of
necessary documents to the licensing authorities were highlighted in an audit by
Vale in 2010.1453 On receiving the audit report, Mr Randolph wrote to Samarco,
“This does not leave a very positive impression of Samarco. Can’t we do better than
this? I continue to be concerned that these audit results are not taken seriously
enough”.1454
515.3. Samarco considered how it could reduce the delays1455, and in March 2015, wrote
to the licensing authorities asking for the application to be expedited due to the lack
1447
Defence, §206(14)(e) {A1/2/138}; {E2/26CT}.
1448
Reply, §88.2 {A1/1/42-43}, §§89-91 {A1/1/44-45}.
1449
{E2/12CT}; {E2/10CT}.
1450
{F9/133/2}; {F10/80/9}.
1451
{F9/312/5}; {F9/333.4}. The meeting was attended by Messrs Fernandes, Ferreira and Corless.
1452
{F10/346T/1}.
1453
{F2/15.2/10}.
1454
{F2/15.1/1}; {F2/21/1-2}.
1455
{F9/206T/1}.
231
of space for tailings.1456 In this context, Samarco remained silent on the litany of
further issues occurring at the Dam since the application was submitted (such as
cracking at the Setback in August 2014) which would at the very least, have led to
further studies being required, and further delays.1457
515.4. In any case, State regulations in force at the time of the Collapse provided that, “The
activities of the regulatory bodies do not exempt the owners of full responsibility for
the safety of the dams and reservoirs in their undertakings, as well as the
consequences of their malfunctioning” (Article 7, sole paragraph, DN COPAM
62/2002).1458 Even if BHP’s proposed inference as to the reasonableness of the
Board’s decision could be entertained as a matter of fact, it does not exonerate BHP
as regards its responsibility for the matters which led to the Collapse and liability
for the damage caused.
516. The licensing regime in force at the time was made up of federal and state laws and
regulations, cited in the Licensing JS and the experts’ joint answers to clarificatory
questions put to them by the parties (the “Licensing Clarifications”). The key principles
and provisions for these purposes are, in the Claimants’ submission, properly to be
interpreted as follows:
516.1. “Any issues resulting or that could result in new or additional socially relevant
environmental impact” needed to be submitted to formal prior consultation, and
disclosed to SUPRAM upon a licence application.1459
516.2. The above accords with Art. 10 of the Environmental Law, by which the
construction, installation, expansion and operation of structures and activities which
use environmental resources, “which are considered effectively or potentially
pollutant, as well as capable of causing environmental degradation,” must be
licenced in advance. Indeed, the guiding principle of the licensing regime was to
evaluate and control an activity’s polluting potential, to protect the general right to
1456
{F11/126T/1-2}; {F11/125/1}.
1457
Reply, §89.6 {A1/3/58-59}, §91.3 {A1/3/60}; {E1/1T/9-10}.
1458
{E1/1T/4}.
1459
The Regional Environmental Superintendence (SUPRAM) was responsible for processing and analysing
licence applications and for monitoring an operator’s ongoing compliance with licensing conditions once a
licence were granted. It was part of the Environment and Sustainable Development (SEMAD). SUPRAM
produced ‘Sole Opinions’ for consideration by the State Council for Environmental Policy (COPAM), an
advisory body within SEMAD, made up of members from federal and state government departments (including
the DNPM) and from across civil society (as stipulated under Art. 3, State Decree 18.466/1977, amended by
Decree 19.986/1979; DN COPAM 470/2013; and DN COPAM 489/2013). COPAM created regulations and
voted on whether or not licences should be granted, and on what terms at Council meetings {E1/1T/3};
{E1/1T/4}.
232
an ecologically balanced environment, (Art. 225 of the Constitution; Art. 214 §1,
IV of the Minas Gerais State Constitution).1460
516.3. Matters “resulting or that could result in new or additional socially relevant
environmental impact” include alterations to dam stability, given that dam failure
would “of course” result - and did result - in significant socially relevant
environmental impact.1461 Indeed, “dam safety” is defined under Art. 2, III, Law
12.334/2010, as the condition which aims to maintain, inter alia, “the preservation
of life, health, property and the environment”. Environmental risk and dam safety
risk go hand in hand, and the legislation on dam safety informs the licensing regime.
516.4. In accordance with the above, an operator was obliged to inform “the respective
supervisory body of any change that may cause a reduction in the dam’s discharge
capacity or that may compromise its safety” (Art. 17, IV, Law 12.334/2010).1462 The
National Department of Mineral Production (“DNPM”) is listed as the body
responsible for regulating dam stability under Law 12.334/2010; however, this is
expressly “without prejudice to the supervisory actions of the environmental bodies”
(Art. 5).1463 Accordingly, “the respective supervisory body” for the purposes of Art.
17, IV, is both DNPM and SUPRAM.
516.5. The experts state that, in practice, dam stability was analysed by engineering or
geological experts within DNPM. However, the burden still fell to the operator to
provide DNPM’s authorisations or analysis to SUPRAM.1464 Notably, SUPRAM
was also called upon to carry out technical studies related to dam safety (as in the
Prístino Report, and State Prosecutor’s (“MPMG”) submission to the licensing
authorities on 24 October 2013, regarding the interference between Fundão and
Vale’s neighbouring waste pile).1465
516.6. BHP’s refrain that the relevant issues with, and modifications to, the Dam did not
need to be disclosed to the authorities because they did not “generate any new or
additional environmental impact”, fails to take account of the purpose and substance
of the licensing regime, centred upon on controlling risk (as opposed to immediate
impact), where environmental and dam safety risk are one and of the same.1466
1460
{E1/1T/3-4}.
1461
Licensing Clarifications, Q. 1(b) {E1/2T}.
1462
{E1/1T/4}.
1463
{E1/1T/4-5}.
1464
Licensing Clarifications, Q. 1 {E1/2T}.
1465
{E2/16CT}.
1466
Rejoinder, §54(2)(b) {A1/5/55}, §54(3) {A1/5/55}, §55(2)(b) {A1/5/57}.
233
517. The material misrepresentations and non-disclosures to the authorities were eightfold.
518. First, Samarco failed to consult SUPRAM on a series of considerable modifications to the
Dam, prior to their implementation. Art. 7 of the Minas Gerais State Decree 44,844/2008
provides that, “The expansion or modification of an enterprise or activity that has already
been the subject of an Environmental Licence … must be preceded by formal prior
consultation with the environmental agency, to determine whether a new Environmental
Licence … is required”. This accords with Art. 214 §1, IV of the Minas Gerais Constitution,
which provides that the “reform” of structures capable of causing environmental
degradation must be authorised in advance.1467
519. The experts note that the legislation does not specify the types of modifications which must
be submitted for prior formal consultation, beyond such matters “resulting or that could
result in a new or additionally socially relevant environmental impact”.1468 In accordance
with the provisions set out above, an operator could reasonably be expected to have
submitted to SUPRAM all modifications associated with a reduction in drainage capacity,
and/or which could change the dam’s polluting potential, by impacting its stability, or
otherwise. Contrary to the above, Samarco did not consult SUPRAM in respect of the
sealing of the Main Underdrain, the construction of the El. 826 Blanket Drain or Dike 1A,
the change of the axis in 2011, the sealing of Main Gallery and Secondary Gallery, or,
significantly, the Setback.1469
520. Second, despite the implementation of such modifications (without prior authorisation),
when asked under s. 6.7 of the Environmental Performance Assessment Report (“RADA”)
submitted as part of the REVLO application in April 2013, whether there had been any
modification to the project, Samarco represented that there had not been any.1470
521. In line with s. 6.7, in an application for or to renew an operating licence, an operator was
obliged to include in its environmental studies an analysis of the performance of the dam’s
management system (Articles 1, II, 4(d) and 5 §3 of DN COPAM 62/2002).1471
‘Management system’ was defined for these purposes as “the set of operating, inspection
and monitoring procedures, and any interventions in the dam and its reservoir, with the
aim of guaranteeing its safety and minimising its real risk” (Art. 1, II, DN COPAM
1467
{E1/1T/3-4}.
1468
{E1/1T/3}.
1469
Reply, §89.1-3 {A1/3/58}; Gens 1, §25 {D2/1/19}, §35 {D2/1/21}, §65 {D2/1/27}, §68 {D2/1/27}, §69
{D2/1/28}, §§161-166 {D2/1/58-63}, §181 {D2/1/69}, §251 {D2/1/103}, §255 {D2/1/104}, §384 {D2/1/136},
§455 {D2/1/166}, §458 {D2/1/167}; Gens 2, §§262-266 {D5/1T/89-90}; Marr 1, §§34 {D3/1/17}, §370.3
{D3/1/208}.
1470
{E2/9T}.
1471
{E1/1T/4}.
234
62/2002).1472 Contrary to the above, none of the interventions listed in §519 above were
disclosed in the RADA. It is notable in this regard that Samarco was aware, at least as of
April 2013, of concerns expressed by the MPMG as to changes being carried to activities
(such as dams) after licences had been granted, without sufficiently detailed studies being
conducted.1473
522. Third, the Environmental Impact Study (“EIA”) submitted in October 2013 as part of the
940 LP+LI application, referred to the installation of the El. 826 Blanket Drain, but did not
mention the failure of the Main Underdrain (which had made the El. 826 Blanket Drain
necessary), the failure and subsequent sealing of both the Main and Secondary Galleries,
or, crucially the Setback at.1474 In fact, the EIA misleadingly referred to the existence of the
two galleries.1475
523. It was known to Samarco that the Setback reduced the efficiency of the drainage at the left
abutment.1476 Moreover, after submitting the EIA in October 2013, Samarco embarked on
constructing what the Panel Report describes as a “complex and elaborate” drainage
system.1477 In accordance with Art. 17, IV, Law 12.334/2010, this should have been – and
as far as the Claimants are aware, was not - disclosed to SUPRAM (and DNPM) while the
application for the 940 LP+LI was pending.
524. Fourth, the EIA misleadingly referred to a stability report carried out in June 2012, but this
was before the implementation of the Setback. This was despite the Dam’s Operating
Manual having recommended revised stability analyses if the Dam’s geometry were
altered.1478 BHP argues that the June 2012 report was sufficient, given that the Operating
Manual recommended but did not require revised stability analyses.1479 It is striking that
BHP emphasises it was unnecessary to comply with the recommendations of the Dam’s
designer. Moreover, the need for revised stability analyses “whenever structural changes
occur”, was required by legislation cited by BHP’s own Licensing and Geotechnical
experts (Art. 16 §1, DNPM Ordinance No. 416/2012).1480
1472
{E1/1T/4}.
1473
{F5/359/1}.
1474
Reply, §91.1 {A1/3/59}; {E2/13/39}.
1475
{E2/13T}.
1476
{F11/94T}. In a chat with Germano Lopes on 17 March 2015, Wanderson Silva Silvério emphasised that it
was important that this information as regards the Setback be included: {F11/76T/1}. Gens 1, §396 {D2/1/143}.
1477
{D8/1/25}.
1478
Reply, §91.1 {A1/3/59}; {D7/61T/5}.
1479
Rejoinder, §55(3)(b)-(c) {A1/5/58}.
1480
Licensing Clarifications, Q. 3 {E1/2T}; Marr 1, §175.3; {D3/1/112}.
235
525. BHP further argues that stability analyses conducted by VogBR in at least April 2013,
August 2014 and July 2015, indicated that the Dam was stable.1481 However, those reports
“contain several important deficiencies and cannot be considered an appropriate state‐of‐
the practice report, much less a report complying with Brazilian regulation DNPM
416”.1482 Moreover, Samarco was fined by DNPM for not having submitted dam safety
declarations by 31 March 2013 as required.1483
526. Fifth, the EIA stated that the beach width would be kept to a minimum of 200m, without
disclosing that this requirement had repeatedly been violated.1484 BHP contends that it was
sufficient for the EIA to set out future commitments in relation to beach width. However,
according to the Licensing experts, operational considerations such as alterations to the
beach width, should be analysed by the DNPM, with such analysis brought to SUPRAM’s
attention by the operator, and the relevant conclusions set out in the EIA.1485
527. Sixth, Project 940, as described in the EIA, was premised upon the implementation of an
earlier project designed to reinforce the Dam which was not in fact carried out.1486 On 28
October 2012, Samarco applied for a LP+LI for the construction of a new starter Dike
downstream of the Dam, and a buttress between the new starter Dike and Dike 1, which
would be stacked through continuous upstream elevations to an eventual height of 920m
(the “Optimisation Project”).1487 This was presented as ‘phase 1’ of the project to increase
tailings storage capacity, followed by the project to raise the Dam to 940m (which would
be ‘phase 2’). However, by 27 August 2013 (even before the LP+LI for the Optimisation
Project itself was granted on 17 December 20131488), Samarco decided to pursue a cheaper,
faster option, which involved raising the Dam with a much smaller stability berm, rather
than a new starter Dike and buttress.1489 Samarco acknowledged that this departed from the
1481
Rejoinder, §55(3)(d) {A1/5/58}. Note that the 2013 stability analysis was carried out in August 2013, not April,
as BHP contends: {D7/91T/2-3}.
1482
Gens 1, §40 {D2/1/22}, §46 {D2/1/23}, §51 {D2/1/24}; Gens 2, §36 {D5/1T/16}, §229-232 {D5/1T/74-77},
§277 {D2/1/92}.
1483
{F13/136T/1}.
1484
POC, §115 {A1/1/55}; Reply, §91.1 {A1/3/59}; {E2/13T}. See also Gens 1, §67 {D2/1/27}, §80 {D2/1/31},
§81 {D2/1/32}.
1485
Licensing Clarifications, Q. 4 {E1/2T}.
1486
See the last two paragraphs of Chapter 4.2.2 of the EIA for the 940 LP+LI {E2/13T}.
1487
{F14/242T/1-2} 28 October 2012; {F5/29.3T/21}; {F5/29.3T/52}, EIA submitted in the application for the
Optimisation LP+LI.
1488
{F15/255/1}.
1489
{F6/381/1-4}, Samarco Report on Project 3181, 27 August 2013 {F6/381}. This sets out the four Alternatives
considered by Samarco. The project submitted to the licensing authorities was Alternative 4; Samarco then
went on to consider Alternative 2, before proceeding with Alternative 1. An internal Samarco presentation sets
out the relative CAPEXs of the alternatives (slide 28) {F6/380.1T/28}. The CAPEX for Alternative 2 was much
lower than Alternative 4.
236
scope of the project submitted to the licensing authorities1490 and that this would speed up
the licensing of ‘phase 2’.1491 Notwithstanding, Samarco applied for the 940 LP+LI on the
basis that the original Optimisation Project would go ahead.
528. Samarco abandoned the Optimisation Project altogether in early 2014. This was after the
ITRB assessed that the design for a smaller buttress presented to it, did not meet its
technical expectations.1492 Despite having previously recommended a buttress, the ITRB
subsequently advised that the need to install one could be kept under review.1493 Crucially,
Samarco had previously ruled out the elevation of the Dam to 940m without any
reinforcement, on the basis that this would not meet the safety requirements.1494 What is
more, Samarco gave a presentation to the licensing authorities in November 2014 (when
concerns were mounting as to the delays to the 940 LP+LI), which included an image of
the original Optimisation Project, as well as an image of the Dam without the Setback.1495
The licence for the Optimisation Project was cancelled only after the Collapse, on the
initiative of SUPRAM.1496
529. Seventh, Samarco did not disclose to SUPRAM, Vale’s use of the Dam.1497 BHP contends
that it was sufficient for Samarco to inform SUPRAM of the total volume of tailings to be
contained in the Dam, and that Samarco did this.1498 However, (at least in an application
for an installation licence) an operator was obliged to submit the physical-chemical make-
up of the material to be disposed of as part of its environmental studies (Articles 4(b) and
5, §2 of DN COPAM 62/2002).1499 As noted above, of all slimes deposited behind the Dam
between 2008 and 2015, 27% originated from Vale’s Alegria mine, which made it much
harder for Samarco to manage the delicate balance between sands and slimes, and their
composition.1500 Vale’s disposal of slimes in the Dam should, therefore, have been
disclosed to the licensing authorities.
1490
{F6/381T}.
1491
{F9/177.2T}.
1492
{F5/169/5}.
1493
{F9/394/3-11}; Gens 1, §52 {D2/1/24-25}, §§413-414 {D2/1/149}, §§435-438 {D2/1/160}. The ITRB indicated
to Samarco that the reinforcement of the Dam under ‘Phase 1’ was not necessary, and that reinforcements could
be introduced if future monitoring indicated they were required. {F8/7/7}; Samarco Operations Committee
Minutes, 14 March 2014, notes that ‘phase 1’ would be “canceled [sic] according ITRB evaluation” {F8/7/7};
and {F8/65/6} Pre-Board Presentation, 1 April 2014, noting the “Cancellation of the Fundao Dam Phase I
project given the understanding that the reinforcement of the Fundao Dyke (the buttress project) will not be
required”; this saved BRL 55 million in CAPEX.
1494
{F6/381T}.
1495
{F9/438T}; {F9/439T/5}; {F9/439T/7}.
1496
See e.g. Sole Opinion No. 0917403/2016 (SUPRAM), 17 August 2016 {F15/488.5/289}.
1497
Reply, §89.4 {A1/3/58}, §91.2.1 {A1/3/59}.
1498
Rejoinder, §54(4) {A1/5/55}, §55(5)(a) {A1/5/60}.
1499
Licensing JS, issue 3 {E1/1T/4}.
1500
Gens 1, §55 {D2/1/25}, §63 {D2/1/27}.
237
530. Eighth, Samarco did not disclose to SUPRAM further serious issues at the Dam occurring
between 2013 and April 2015 while the 940 LP+LI application was pending, including, in
particular, the cracking at the Setback in August 2014 and attempts to stabilise the slope
thereafter.1501 As noted above, Samarco gave a presentation to the licensing authorities on
November 2014, but none of these matters were disclosed. In all the circumstances, it
cannot be inferred that the decision of the Samarco Board, and BHP’s representatives
thereupon, to keep raising the Dam to El. 920m, then to back the further raise the Dam to
El. 940m, despite the many issues at the Dam, was reasonable in light of the licences
obtained.
531. Further to the above, it was not reasonable for Samarco Board and BHP’s representatives
thereupon, to have relied on the REVLO, without having satisfied itself that the serious
concerns raised in the Prístino Report had been addressed (as discussed above).1502 BHP
further invites the Court to infer that SUPRAM did not perceive the Dam to be at risk of
Collapse, given that it renewed the licence without each of the recommended
conditions.1503 Those conditions were, however, largely imposed (save for the subtle
difference that the Prístino Report recommended geotechnical and structural monitoring at
less than yearly intervals, and the REVLO imposed a maximum of year intervals). In any
case, the proposed inference is unsustainable in light of the material misrepresentations and
non-disclosures set out above.
532. BHP also wrongly contends that the conditions recommended by the Prístino Institute were
in any event fulfilled.1504
532.1. First, in purported compliance with Condition 8 of the REVLO, Samarco submitted
geotechnical monitoring reports to SUPRAM in October 2014 and September
2015.1505 However, these failed to consider, either properly or at all, a series of
significant anomalies and modifications to the Dam, including the cracking at the
Setback, as well as seepage, cracks and key piezometer failures.1506 BHP’s position
that Condition 8 required Samarco only to carry out, but not to submit such reports
1501
{E2/29/3}; Gens 1, §56 {D2/1/25}, §§197-199 {D2/1/74}, §§207-208 {D2/1/85-86}, §§417-418 {D2/1/149-
150}, §463 {D2/1/167}, §505 {D2/1/177}, §§514-515 {D2/1/181}; Gens 2, §§272-273 {D5/1T/92}, §293
{D5/1T/96}.
1502
POC, §201-205 {A1/1/83}.
1503
Defence, §231(2) {A1/2/155}; Reply §103 {A1/2/155}.
1504
Defence, §234(2) {A1/2/156}; Reply, §104-104A {A1/3/64}.
1505
{D7/119T/1-22}; {D7/148T/1-25}.
1506
Reply §104A, {A1/3/64}.
238
to SUPRAM is unrealistic.1507 Samarco itself considered that by submitting the
reports to SUPRAM, it was complying with Condition 8, as apparent from its
covering letters to SUPRAM.1508
532.2. Second, in purported compliance with Condition 9, Samarco presented a

contingency plan to SUPRAM on 16 April 2014 (the “Contingency Plan”).
However, this did not comply with the minimum requirements.1509 The laws and
regulations in force at the time did not specify the minimum requirements of a
contingency plan (though this was required at all stages of a dam’s lifespan under
Art. 4(d) DN COPAM 62/2002 and DNPM Ordinance 237/2001).1510 Upon
submitting a contingency plan, operators were in practice, therefore, expected to
comply with the minimum requirements of an emergency action plan (defined under
Art. 12 of Law 12.334/2010 and DNPM Ordinance No. 526/2013) and any
particular requirements imposed in the licence condition.1511
533. The Contingency Plan did not even mention Bento Rodrigues, as specifically required
under Condition 9. Moreover, in situations of imminent collapse, the operator was obliged,
quickly and effectively, to alert communities in the ‘self-rescue zone’ in accordance with
notification procedures set out in the plan (Articles 5, IV, 11, VIII and 17 of DNPM
Ordinance No. 526/2013, and Art 12, IV of Law 12.334/2010). A flow diagram included in
the Contingency Plan, depicting communication in the case of an emergency, indicated at
a high level that Samarco would notify the downstream population.1512 However, the text
of the Contingency Plan stressed that the Civil Defence (a public body) was responsible
for alerting the downstream populations,1513 and included no details of notification
procedures by which Samarco would notify Bento Rodrigues. Moreover, whereas federal
legislation stipulated that the population must be informed of and encouraged to participate,
directly or indirectly, in preventative and emergency actions, the Contingency Plan made
1507
Rejoinder, §59A {A1/5/62}.
1508
{D7/119T/1-22}; {D7/148T/1-25}. Moreover, the Licensing experts liken Condition 8 to Art. 4 DN COPAM
62/2002. Licensing Joint Statement, Issue 14(i) {E1/1T/11}. Articles 4(g) and 5, §3 provide that periodic
stability audits must be carried out and included as part of the environmental studies submitted in an operating
licence application. In this context, it can reasonably be expected that a condition requiring monitoring to be
carried out, also requires the results of such monitoring to be submitted to SUPRAM, as the body which
monitors and inspects dams throughout their lifetime.
1509
Reply §105.2 {A1/3/66}; {E2/21T/1-32}.
1510
Licensing Joint Statement, Issue 13(ii) {E1/1T/11}. The minimum requirements of a contingency plan were
only expressly set out in law in 2023 (Art. 1. VII, of Law 12.609/2012, as amended by Law 14.740/2023).
1511
Licensing Joint Statement, Issues 13(i) and (ii){E1/1T/10}; Reply, §105, {A1/3/66}.
1512
{E2/21T/13}.
1513
{E2/21T/5}; {E2/21T/9}.
239
no provision for training or simulations to be carried out with Bento Rodrigues (Art. 4, II,
Law 12.334/2010).
534. Such omissions are particularly severe given that, as noted in the Contingency Plan itself,
the facilitation of correct decision making in an emergency was necessary in order to
“maximise the time available for the notification and alerting of the population living
downstream of the dam […]”.1514 BHP’s response, citating parts of the Contingency Plan
which, it purports, comply with the relevant requirements,1515 does not engage with the
substance and significance of that fundamental omission. This is all the more striking in
light of BHP’s public statements as to protecting the safety of the communities in which it
operates.1516 The Contingency Plan was but another failure in that regard.
3) Abuse of power
535. BHP’s conduct set out above was driven by a relentless pursuit of profits, particularly as
iron ore prices plummeted and higher volumes of production were required to maintain a
profitable investment. As described above, BHP was closely involved in maximising the
benefit it derived from Samarco’s operations, through its control over and participation in
Samarco’s Growth Projects and dividend strategies, inter alia. Pursuit of profits is – of
course – not illicit in itself. However, it becomes so when safety concerns are ignored and
the rights of the community are harmed, as occurred to such a catastrophic extent.
536. Two illustrations of this have already been addressed above:
536.1. BHP’s insistence that the P4P Project be pursued despite Vale’s reluctance, as set
out at §222.3. BHP threatened to exercise its powers (which arose because of the
deadlock provisions in the Samarco Shareholder’s Agreement) to force through an
increase in production which served BHP’s economic interest, but which was
recklessly dangerous given the fragile state of the Dam, and ultimately caused
massive harm to the environment and the community. At the same time BHP drove
through the P4P expansion in April 2011, Dr Robertson audited Samarco’s tailings
dams and described the Dam as a “vulnerable structure”.1517
536.2. BHP’s permission for Vale’s tailings to be dumped at Fundão despite this having no
present economic benefit to Samarco (rather it having future commercial
advantages, as BHP perceived, to BHP) and despite it fundamentally undermining
1514
{E2/21T/20}.
1515
Rejoinder, §60(4) {A1/5/66}.
1516
POC, §48.2; 50 {A1/1/25}; A1/1/28}.
1517
{F3/1/17}.
240
the intended mechanisms for the separation of slimes and sands, again ultimately
harming the environment and the wider community in which BHP operated. See
further at Part VII, B, 2, ii, above.
537. A third example of BHP acting beyond the limits of its power is the decision it took to leave
Bento Rodrigues exposed to the risks of a dam collapse, due, inter alia, to the reputational
and financial considerations of relocation.
538. BHP knew the risks were high. A risk matrix shared with BHP in 2009 considered that the
failure of Germano and Fundão could lead to “100 fatalities (Bento Rodrigues district)”.1518
A BHP presentation in November 2012,1519 further highlighted that a breach of the Dam
could reach the community “in less than 10 minutes”, and that the lack of a relocation plan
for Bento Rodrigues (in the context of a planned new dam) was a matter for
improvement.1520 In this context, BHP considered the benefits of relocating Bento
Rodrigues from at least 2011,1521 and on 25 August 2012, Samarco employees commented
that “the Shareholders want to remove people from Bento in any possible way.”1522
539. A study regarding such relocation was accordingly produced by consultants YKS Serviços
(“YKS”) in June 2013, considering the near exhaustion of Samarco’s tailings storage
capacity, and plans to construct of a further dam, ‘Mirandinha’, even closer to Bento
Rodrigues.1523 The report concluded that there was a high level of resistance among the
community to relocation,1524 and that one of the associated risks (particularly of relocating
the community in groups) was “Samarco’s image”.1525 The latter was reinforced in a report
to the Samarco Board in August 2013, which recommended that the community should not
be relocated.1526 Further, in October 2014, Samarco flagged to BHP that there were high
risks to the Mirandinha project associated with the intensification of conflicts with residents
of Bento Rodrigues, and delays or failures in the licensing process.
1518
{F1/166T} See sheet ‘Mapeamento’ / ‘Mapping’, line item 69, column P.
1519
This was produced by Messrs Zweig and Corless and sent to Mr Wilson and Ms Raman {F6/171.1/1}.
1520
{F6/172/3}.
1521
In the Samarco Board meeting on 8 December 2011, the Directors requested that Samarco establish a long-
term initiative to remove the community from Bento Rodrigues {F3/234/6}; Mr Fernandes asked Mr Ferreira
and Ms Jacques in August 2012 if the plan to mitigate the risks to Bento Rodrigues was to relocate the
community, to which Mr Ferreira responded that relocating the entire community was very difficult due to a
historical road and church (which were indeed significantly damaged by the Collapse) {F4/83/1-2}; {F4/83T/1-
2}; the Board Report for the Samarco Board meeting on 8 August 2012 noted that Samarco was evaluating the
strategies “to deal with” Bento Rodrigues {F15/297/93}; POC, §179.6 {A1/1/76}; Messrs Zweig and Wilson
discussed the evacuation and relocation options in respect of Bento Rodrigues in July 2013: {F6/296/1}.
1522
POC, §179.7 {A1/1/76}; {I3/13T/223}; {F4/102T}.
1523
{F5/376T}.
1524
{F5/376T/53-54}.
1525
{F5/376T/86}.
1526
{F15/306/35}.
241
540. It can reasonably be inferred from the above that the risks to reputation and production, as
were highlighted by YKS and underscored by the increasing conflicts, contributed to the
decision not to relocate Bento Rodrigues. This was notwithstanding the many warnings as
to dam safety which had emerged since the initial concerns had been raised in 2012.
541. Notably, the YKS study of 2013 had emphasised that, as there was no specific legal
obligation for the community to be relocated, “the decision required consideration of highly
subjective aspects such as the wellbeing of the community and guarantee the safety of the
structure.”1527 Detailed and proactive consideration of such factors lies at the heart of the
duty under Art. 116, sole paragraph of the Corporate Law which Professor Muller Prado
describes as: “not a rule that specifically determines the behaviour required (permitted or
prohibited), but a legal duty that serves as a parameter to evaluate and define a standard
of behaviour.”1528 By deciding, through its representatives on the Samarco Board, not to
relocate Bento Rodrigues in the circumstances set out above, BHP - contrary to its
numerous public statements - placed its own interests above the rights and interests of the
community in which it operated.
542. Additionally, it is not clear when or on what basis it was done, but by August 2014, the
impact risk assessment that had once suggested up to 100 people may die following a
Collapse had been redrawn to state just 5 fatalities overall by August 2014.1529 The
inconvenient possibility that the Dam might collapse at night, such that fatalities would
inevitably be much higher, was discounted.
543. Moreover, Samarco’s Contingency Plan (presented to SUPRAM in 2014 in purported

compliance with Condition 9 of the REVLO) did not comply with the relevant
requirements (as outlined at §§532.2-534 above). Contrary to its numerous public
statements, therefore, BHP failed drastically to protect the community in which it operated.
i) Summary
544. Each of these examples amount to acts of BHP that led to (catastrophic) harm being caused
to the wider community in which Samarco operated. As controlling shareholders, BHP
acted in breach of its duties under Article 116 sole paragraph of the Corporate Law, and in
doing so it is liable under Article 117.
545. Indeed, having regard to the provisions of Article 225, 231 and 232 of the Constitution,
such conduct was harmful to the national interest and therefore also an abuse of power
1527
{F5/376}, {F5/376T/87}.
1528
Muller Prado 1, §360 {C2/1T/141}.
1529
{F12/311.2/9}.
242
within the meaning of Article 117, paragraph 1(a). The conduct of BHP in repeatedly failing
to take any or any sufficient action to investigate or respond to repeated warnings that the
safety of the Dam was being compromised constituted a failure to verify a complaint which
BHP knew or should have known was well founded; and accordingly an abuse of power
within the meaning of Article 117, paragraph 1(g).
4) Causation
546. BHP’s conduct persistently failed to meet the standard expected of a person in their
position. BHP caused the Collapse through its voluntary acts, omissions, negligence and
imprudence. BHP’s conduct was a necessary (i.e. but for) cause of the damage and the
causation test under Brazilian law is met. BHP repeatedly prioritised production – its own
short-term self-interest – over the safety of the Dam. The Court will therefore be invited to
find that BHP has an obligation to redress the full extent of the resulting damage.
546.1. As to the P3P Project (Part VI, C, 3, iii, (a) and §§288-295 above), without BHP’s
approval in 2005 the Dam would not have been built in the Fundão valley and
tailings (sands and slimes) would not have been stored behind the Dam at all.
546.2. As to the P4P Project (Part VI, C, 3, iii, (a) and §§289-295 above), in 2011 BHP
drove this project through over Vale’s opposition and hesitation. The 37% increase
in production meant that the Dam had to keep rising (to store sands and slimes)
when it was unsafe.
546.3. As to the slimes from Vale’s Alegria mine (Part VII, B, 2, ii, and §§292-295 above),
BHP repeatedly (in 2008-2009 then again in 2012 and 2015) endorsed the
extraordinary arrangement whereby Vale dumped 27% of all slimes behind the
Dam. BHP recognised that this entailed, in Mr Gillespie’s words, “substantial
environmental risk”. BHP paused for a brief moment to question whether it should,
in Ms Raman’s words, “even be allowing this to happen at all”. But BHP decided
not to push Samarco to suspend the arrangement. BHP approached the issue as part
of a broader negotiation with Vale about additional tailings storage areas. The Dam
had to keep rising (to store these slimes), and slimes inhibited the drainage of sands
behind Dike 1, which became saturated thus creating the necessary conditions for a
catastrophic liquefaction flowslide.
546.4. As to Project 940 (Part VI, C, 3, iii, (b) and §§290-295 above), BHP was closely
involved with, and approved this Project 940 in the rushed circumstances (as
described at §§280 and 365). BHP endorsed the continued rise of the Dam along a
precarious alignment – the Setback – until the Collapse.
243
546.5. As to the basic standards for tailings dams (Part VII, B, 2, iii, above above) BHP
repeatedly endorsed – as though it were normal - the flouting of basic standards of
tailings dam safety. BHP endorsed a situation where there was no design for the
Setback, Samarco’s Operations Manual was not updated after 2012, Samarco’s Risk
Chart with respect to the Dam was not updated after 2013 (see Appendix III, The
Geotechnical Case for more details), and no credible liquefaction risk assessment
was ever done before the Collapse. BHP thereby caused an unsafe dam to keep
rising – despite Dr Robertson specifically telling BHP in May 2013 (see §502
above) that Samarco had “pushed the dams to the limits of operational tolerances
that are beyond what I consider appropriate. And continue to do so.”1530
546.6. As to the ITRB (Part VII, B, 2, iv, above), BHP knew that the ITRB was ineffective
and not a failsafe control. BHP knew that Samarco was not following ITRB
recommendations with respect to the safety of the Dam. BHP endorsed the refusal
to follow the ITRB’s recommendations to fill the Setback, the ignoring of the
suggested limit to the height of the Setback, and the long running failure resolve
drainage issues at the Setback and Grota da Vale area. BHP caused the continued
raising of the Dam regardless.
546.7. As to BHP’s risk management failures (Part VII, B, 2, v, above), BHP artificially
assessed the risk of the critical failure of the Dam as “well-controlled” from January
2014 onwards, revalidating this in 2015. This, compounded with its numerous
failures to follow its own critical controls in respect of, for example, identifying the
liquefaction risk at the Dam, addressing drainage issues, and departing from the
design of the Dam, led to a ‘parallel universe’ whereby BHP’s risk management
paperwork did not reflect reality at the Dam. It failed to rectify these issues,
contributing to the Collapse of the dam.
546.8. As to BHP’s audit failures (Part VII, B, 2, vi, above), BHP was on notice about
significant concerns with the Samarco dams both prior to and following the Samarco
2013 Audit. However, it did not act appropriately to defuse any possibility of dam
failure. BHP raised too favourable a process rating in respect of at least one dam
finding in the 2013 Samarco Audit and too favourable an overall process rating for
Asset Integrity. This meant that the findings weren’t given the attention they
warranted. Following on from this (and despite further issues with the dam in the
intervening period) BHP did not audit the risk of dam failure in the 2015 Samarco
1530
{F5/391/2}.
244
Audit. Following the 2015 Samarco Audit and the 2015 Iron Ore Audit, BHP was
also on notice with respect to deficiencies in Samarco’s and Brazil Iron Ore’s risk
management functions – yet it failed to act appropriately in the circumstances. BHP
should have taken all these matters into account and halted production until they
had been properly investigated and resolved. Had this occurred, the Collapse would
have been avoided.
547. BHP’s own conduct pushed the Dam to failure. But for BHP’s conduct, the Dam would not
have kept rising in such an increasingly precarious state until it collapsed. BHP’s conduct
in driving up Samarco’s production to the maximum, without pausing to ensure that the
Dam was not susceptible to liquefaction, caused the Collapse.
PART VIII. ATTRIBUTION

A) Introduction
548. One consequence of the abstract nature of a company as a legal person is that all its
decisions and its actions must inevitably be taken by natural persons. This section addresses
the Claimants’ case on the question of attribution, i.e. the issue of establishing whose acts
(or decisions or knowledge) count as BHP’s acts (or decisions or knowledge) for the
purposes of the present claims.
549. Expressed in its simplest terms, the Claimants’ case is that BHP is directly liable for the
conduct of (i) its company organs and (ii) its agents; and is fixed with their knowledge.1531
The parties agree that the question of whether BHP will be liable for the conduct of its
organs and/or its agents is one of Brazilian law,1532 but that there are different applicable
laws to the question of who or what is (i) an organ of BHP, and/or (ii) an agent of BHP.1533
550. The principal areas of likely controversy are questions of fact. In particular (beyond a few
instances of common ground) the questions will be whether on the facts it can be shown
that certain bodies and individuals were corporate organs; and/or there was a relationship
of agency between the individual or entity and BHP.
551. In the bigger picture, these issues go to an attempt by BHP to compartmentalise artificially
the knowledge of BHP-affiliated personnel involved with Samarco, for instance by denying
that individuals could have been both directors of Samarco and agents of BHP, i.e. by
1531
POC, §176C {A1/1/73-74}.
1532
Claimants’ RRFI, 26 April 2024, §9 {A3/7/7}; Defence, §203B(1)(a) {A1/2/111}. The principles relied upon
to establish the proposition – as a matter of Brazilian law – that BHP is directly liable for the acts of its organs
and its agents (and is fixed with their knowledge) are set out below.
1533
Defence, §203B(2)(b) {A1/2/111}; Claimants’ RRFI, 26 April 2024, §§2-3 {A3/7/3}.
245
denying the possibility of individuals acting in a dual capacity. BHP asserts that although
BHP’s directors and agents may in fact have made consequential decisions and/or held
important information relevant to the safety of the Dam, the Court must accept the unreal
proposition that they did such things only in their capacity as directors of Samarco; whilst
simultaneously holding no knowledge of the same on behalf of BHP. But there is no legal
obstacle to individuals acting in a dual capacity and the Claimants will invite the Court to
find that when directors (or other agents) of BHP sitting on Samarco’s Board became
possessed of relevant knowledge, that knowledge was attributable to BHP irrespective of
whether it was also attributable to Samarco. This not only accords with the reality that it
was the same natural person who held the relevant knowledge; it is consistent with the very
purpose for which BHP had appointed these individuals to Samarco’s Board, namely, to
promote BHP’s interests and ensure BHP knew about and controlled its subsidiary
operations. BHP’s contrived position on questions of capacity and attribution cannot
overcome the practical reality, which Mr Randolph acknowledged, that part of the job as a
Samarco Board Member was to “protect BHP’s interest”.1534
1) Liability for corporate acts under Brazilian law
552. There is no difficulty in principle with a corporation being found liable for negligent
conduct under Article 186 of the Civil Code; Professor Rosenvald and Professor Tepedino
agree that a company can be held liable for its own acts under this provision.1535 Professor
Rosenvald identifies two routes to establishing the company’s liability; the first through
the acts of those that represent the company;1536 and secondly via an omission (which ex
hypothesi will not involve any act as such) where the company is under a duty to act.1537
553. Although both experts address the question of whose acts will be treated as the “acts of the
company”, quite naturally, from the perspective of Brazilian law, as noted above and
addressed below, the parties are agreed that a different applicable law applies to this
question in relation to BHP.
554. Liability under Articles 186 and 927 of the Civil Code and/or Articles 116 and 117 of the
Corporate Law is liability for BHP’s own acts. The Claimants do not advance a case in
1534
Randolph 111:5-12 {F17/88/29}.
1535
Rosenvald 1, §258 {C3/1T/105-106}; Tepedino 2, §185 {C18/1T/75-76}.
1536
Rosenvald 1, §258(a) {C3/1T/105}, §288 {C3/1T/117-118}.
1537
Rosenvald 1, §258(b) {C3/1T/106}. Professor Tepedino’s response to this paragraph at Tepedino 2, §189 fails
to grapple with the essential logic of the point that an “omission” scenario displaces the enquiry of whose act
is to be attributed to the company {C18/1T/77}.
246
these proceedings based on the vicarious liability of BHP, i.e. a form of strict liability that
flows from the liability of a representative.
2) Corporate organs
555. The question of which are the constitutional bodies of a company (i.e. its corporate organs)
is a matter of the law of that company’s incorporation. Hence, English law for BHP UK
and Australian law for BHP Australia. This is agreed by the parties. It also appears to be
common ground that there is no material difference between English and Australian
common law in this area, albeit that is subject to the respective corporate legislation enacted
in each jurisdiction.1538
556. The starting point in identifying whether a body or persons are to be counted as a corporate
organ rests in the constitutional documents of the company (i.e. the articles of association),
to be read in light of any provisions implied by company law.1539 BHP accepts (as it must)
that it acted through the Boards of Directors of BHP and that the knowledge of the Board
of Directors is attributable to BHP.1540 It also accepts that certain committees acted with
powers delegated by the Board such that the knowledge of those committees and
individuals is also attributable to BHP.1541
557. There is a dispute between the parties as to precisely which other committees and
individuals count as organs of BHP. For these purposes, the Claimants accept that the test
they need to satisfy is to show that such committees and individuals were acting within the
scope of properly delegated powers under BHP’s articles. Or to put it another way, the
question to be answered is: who were the relevant committees and individuals to whom the
Board delegated its powers and discretions, including any committees or person to whom
such powers and discretions have been legitimately sub-delegated?1542
558. The Claimants contend that the relevant organs of BHP include:
558.1. the Boards of Directors of BHP UK and BHP Australia;
558.2. BHP’s Risk and Audit Committee (the “RAC”);
558.3. BHP’s Sustainability Committee;
558.4. the Chief Executive Officer;
1538
Defence, §203B(2)(c) {A1/2/112}; Reply, §78B.1 {A1/3/50}; {PO/2584/1}; {PO/2599/1}.
1539
Meridian Global Funds Management Ltd v Securities Commission [1995] BCC 942 at 945 {J1/4/4}.
1540
Defence, §203C(3)(a) {A1/2/114}.
1541
Defence, §203C(3)(d) {A1/2/114}.
1542
In principle the test is admitted at Defence, §203C(2) {A1/2/113}.
247
558.5. the GMC;
558.6. the Investment Committee;
558.7. the Samarco Subcommittee (from 17 November 2015);
558.8. and those persons to whom the authority of the Board was delegated or sub-
delegated from time to time (for example members of the GMC and/or the RAC
who chaired or attended meetings of the Business Risk and Audit Committee).1543
559. BHP accepts that each of the above acted with general delegated powers and authority,
except for:1544 the GMC as a committee;1545 the Investment Committee; and the Samarco
Subcommittee. But there is no basis to draw the line in this way. The Claimants will rely
on the Terms of Reference (where available) for these committees and the fact that Board
powers were delegated to management committees (including the GMC and the Investment
Committee) by the CEO (who was empowered to do so).1546 As an alternative case, the
Claimants will say that insofar as any of these committees are found not to be an organ of
BHP, they and relevant members were still agents of BHP (as were many other persons)
according to the principles below.
B) Agency
560. The Claimants plead their reliance on BHP representatives, and reproduce at Appendix VII
of this Opening Note, a digest of select representatives with a summary of some of the key
material relevant to explaining the role of each individual, and the factual basis on which
the Claimants contend these individuals ought to be treated as agents of BHP, such that
both their conduct and knowledge is to be attributed to BHP. This Appendix will be
supplemented with references to BHP’s witnesses in due course.
561. Despite the potential complexity that arises upon consideration of the applicable law to the
agency relationship of all of these individuals, there is common ground on the pleadings
which helpfully distils the analysis to the following:
561.1. Some were employed directly by either BHP UK or BHP Australia. Their
employment contracts (or admissions made by the Defendants where no contracts
1543
POC, §176C {A1/1/73}.
1544
Defence, §203B(2)(c)-(d) {A1/2/112}, §203C(3)(d) {A1/2/114}.
1545
BHP admits, somewhat curiously, that knowledge of GMC members acting in an officer role was attributable
to BHP, but denies that the GMC held any broad or general delegated authority: Defence, §203B(2)
{A1/2/112}, §203C(3)(d)(ix) {A1/2/116}; see also Rejoinder, §50D(9) {A1/5/53}.
1546
Reply, §78F {A1/3/52}; {F15/483/1-4}; {F16/498.4.13}; {F16/498.13.2/1-3}; {F16/498.13.3/1-3}; {F15/486/1-
4}.
248
have been provided) are relied upon as conclusive evidence of these individuals’
relationships of agency for the period of the employment contract.
561.2. Some were employed by another entity within the BHP Group. In respect of these
individuals, the Claimants argue that there was a collateral consensual relationship
of agency between these individuals and BHP, as indicated by the obligations to
follow BHP Group codes established by BHP; their reporting lines to members of the
BHP Board; and key performance indicators which showed their employment was
geared towards them acting on behalf of and promoting the interests of BHP.
562. Some individuals were contracted independently, but nonetheless were contracted to
act on behalf of and promote the interests of BHP.1547 For instance, they held specific
roles within BHP’s Iron Ore division irrespective of the myriad legal entities that
BHP decided to use as employers.
563. Given the connections identified and relied upon by the Claimants, the applicable law to
almost all of the above relationships of agency is Australian law:
563.1. It is agreed that Australian law applies to those individuals whose employment
contracts identified it as the law that governing those employment relationships.1548
Where an employment contract (with BHP UK) identified English law, then that
was the governing law.
563.2. Australian law also applies to individuals who were not employed directly by the
Defendants and/or for whom there is no choice of law provision in their contracts
because either (a) the habitual residence of the individual was Australia; or (b) the
relevant relationship of agency was manifestly more closely connected with
Australia. BHP does not admit the basis on which the choice of law analysis is made,
however it does agree that Australian law applies generally a table of “Named
Individuals” identified by the Claimants in an RFI who fall within this category.1549
564. An issue then arises as to the substance of the test of agency, as a matter of Australian law
(which, again, is agreed to be materially identical to English law).1550 BHP argues that,
1547
Mr Ferreira, for example, was not employed by BHP or a BHP-affiliate. He was a contractor engaged pursuant
to a service agreement between GCF Engenharia e Consultaria Ltd and BHP Brasil. Notwithstanding the
contractual position, Mr Ferreira represented BHP and was held out as such, including via his appointment as
BHP’s “Control Owner” for various critical controls with respect to the risk of a dam collapse. Reply, §78C.2
{A1/3/50}.
1548
Defence, §203A(4)(a)(i) {A1/2/105}.
1549
Defence, §203A(4)(ab) {A1/2/107}. It is not exhaustive of this category because there are some people for
whom BHP does not seem to know the employment status: Defence, §203A(3)(c) {A1/2/105}.
1550
Reply, §78B {A1/3/49}; Slaughter and May, 31 July 2024 {M1/10/1}; Pogust Goodhead, 1 August 2024
{M1/11/1}.
249
“Under Australian law, a person will not be an agent for another unless the principal has
conferred authority on them to create or affect legal relations as between the principal and
third parties.”1551 To the extent that BHP seek, by this formulation, to suggest that there
must have been an express conferral of authority in such terms, it is wrong.
565. In particular, agreement between principal and agent for the conferral of authority may be
implied. Agency relationships must often be inferred by the Court from the circumstances
of the case,1552 and the Court will make an objective assessment of the intention of the
parties to the alleged agency relationship. There is no conceptual reason requiring there to
be a contract between principal and agent to confer authority, let alone an express
agreement: “It is sufficient if the principal manifests to an agent that the principal is willing
for the agent to act, and the agent does so in circumstances indicating that the agent’s acts
arise from the principal’s manifestation.”1553
566. As further explained in Dal Pont (an Australian law text) at 4.7:1554
“4.7 The focus on intention dictates that the parties need not actually use agency
language for the law to infer an intention to create an agency relationship. The parties
may not even appreciate the legal concept but may nonetheless create an agency
relationship if what they have done is best reflected by that concept. This may be so
even if they profess to disclaim agency, whether by the terms of the contract between
them or otherwise.
An intention to create an agency may be manifested ‘simply by placing another in a

situation in which, according to the ordinary rules of law, or … according to the ordinary
usages of mankind, that other is understood to represent and act for the person who has
so placed him.’1555 It need not involve a positive act by the principal, but may be created
by the principal’s acquiescence. Jordan CJ explained this in Bonette v Woolworths Ltd
as follows:
Evidence that a person is purporting to do acts on behalf of a principal in some capacity

in such circumstances that the knowledge and approval of the principal may fairly be
inferred is evidence that the principal has authorised him to act in the particular capacity.
If there is evidence justifying such an inference, it justifies the further inference that the
person has authority to do such acts as would be done, as a matter of ordinary business
practice, by a person acting in such a capacity.”1556
1551
Defence, §203A(4)(a)(iii) {A1/2/106}.
1552
See e.g., Branthwaite v Worcester Works Finance Limited [1969] 1 AC 552 at 587, per Lord Wilberforce
(dissenting); cited at §2-030 of Peter Watts and F.M.B. Reynolds, Bowstead and Reynolds on Agency
{J1/29/71}.
1553
Bowstead and Reynolds on Agency, §1-006 {J1/29/6}.
1554
Law of Agency, 4th edn {J1/27/6}.
1555
Pole v Leask (1863) 8 LT 645 {J1/1/2} applied in Pola v Commonwealth Bank of Australia [1997] FCA 1476
(19 December 1997) {J1/7/1-16}.
1556
Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142 at 150 {J1/2/9}.
250
567. There is no bar on an agent acting for more than one party, and whether an agent has in fact
acted for more than one party is always a question of fact.1557 That is true of employees: an
employee of one party may be agent for another.1558 When an individual shares dual roles
within a group of companies, there may be arguments over the capacity in which the
individual acts; that is a dispute to be settled on the facts, by reference to the particular
circumstances of the case.1559 There is no conceptual difficulty with, or legal prohibition
of, an agent acting in a dual capacity.
1) Members of the Samarco Board
568. BHP asserts that members of the Samarco Board could not have been agents for BHP
because they were subject to duties applicable to their position as directors of Samarco to
act in accordance with Samarco’s best interests. BHP relies on Articles 153 to 156 of the
Corporate Law in support of this argument.1560
569. BHP’s argument is flawed on two levels.
569.1. First, and as noted above, the applicable law of the question whether these
individuals were agents of BHP is Australian law. The relevant test for agency is
therefore the one described above. BHP does not rely on any averment of Australian
law to suggest that it excludes the possibility of agents acting in a dual capacity,1561
or any other reason why the provisions of a foreign law would be relevant at all.
569.2. Second, and in any event, while Articles 153 to 156 of the Corporate Law impose a
series of duties, including fiduciary duties, on a director to a company, they do not
themselves exclude the possibility that that company director will also in fact
(legitimately or illegitimately) be acting as agent for another entity, in particular an
appointing shareholder. BHP’s argument amounts, in effect, to an assertion that
because duties arise under Articles 153 to 156 of the Corporate Law, then (i) a
company director can be under no other duties; and (ii) the relevant director must
always be taken to be acting consistently with those duties.1562 Neither proposition
is tenable.
1557
Bowstead and Reynolds on Agency, §2-015 {J1/29/58}.
1558
Man Nutzfahrzeuge AG v Ernst & Young [2005] EWHC 2347 (Comm) at [99] {J1/9/21}.
1559
Cool Seas (Seafoods) Ltd v Interfish Ltd [2018] EWHC 2038 (Ch) at [154]-[159] {J1/11/25}.
1560
Defence, §203A(7) {A1/2/111}. See also Trindade 1, §95 {C8/1T/30}; Tepedino 1, §258 {C7/1T/98};
Tepedino 2, §195 {C7/1T/79}.
1561
There is no such proposition.
1562
Rejoinder, §50A {A1/5/48}.
251
570. As explained in by Professor Muller Prado, the Corporate Law recognises the legitimate
influence and control of controlling shareholders over the conduct of a controlled company,
and the possibility of directors being bound by the directives of controlling
shareholders.1563 It also places a limit on the exercise of such powers, for example
identifying as an example of abuse of power under Article 117 paragraph 1, subparagraph
e, of the Corporate Law, an act to “induce or attempt to induce a director or inspector to
carry out an illegal act”.1564
571. The possibility of there being external relationships directing the actions of a company
director are well recognised in the Brazilian case law on Article 154 of the Corporate Law,
including the CVM case 2005/7229 (Rapporteur Marcelo Trindade), which condemned
“the Chairman of the Board of Directors acted there without attention to the Company’s
interest, and with zeal and precaution that, for being excessive, are confused with undue
protection of the interests of certain shareholders, who had also elected him, and with
whom he had a well-known connection.”1565
572. In the present case, co-existence of duties on Samarco Board members was ensured by the
SSA. Clauses 3.7, 3.7.5, 4.4, 4.5.2 and 4.14 of that agreement provide for BHP and Vale to
direct the Board of Directors according to instructions agreed by BHP and Vale in advance
of a general meeting or Samarco Board meeting; for directions to be followed; and to
replace any member of the Board of Directors who does not cooperate. This ensured that
notwithstanding the Samarco Board’s duties to Samarco under Articles 153 to 156 of the
Corporate Law, the Board was obliged to act on BHP’s and Vale’s behalf/in their
interests.1566
573. Indeed, these express terms and the potential which they acknowledge for divergent
interests as between the ultimate co-owners of Samarco distinguish this case from that of a
wholly owned subsidiary (see Bowstead: “An employee of a parent company, for instance,
who is appointed a director of a subsidiary is not normally assumed to be acting as agent
of the parent when making decisions in his capacity as a director, but regard must always
be had to the particular circumstances.”1567).
1563
See e.g., Article 118, §§8-9 of the Corporate Law {I1/4/7}. See further Muller Prado 2, §§19-25 {C14/1T/8}.
1564
1565
CVM, Administrative Sanctioning Proceeding 2005/7229, Rapporteur Director Marcelo Fernandez Trindade,
judged on 10 May 2006, item 16 [VM2/0014] {C14/3T/23}.
1566
BHP’s response to these points at Rejoinder, §50C merely confirm the fact that the SSA ensured BHP and
Vale’s control over the Samarco Board {A1/5/49}.
1567
Bowstead and Reynolds on Agency, § 2-033 {J1/29/74}.
252
574. For these reasons, BHP’s attempt to compartmentalise the actions and knowledge of
Samarco Board members, by reference to Articles 153 to 156 of the Corporate Law, must
fail. The capacity in which the BHP-affiliated personnel acted is a matter of substance not
form, to be determined on the facts and not merely by reference to their position on the
Samarco board of directors.
2) Attribution of knowledge
575. There is a dispute between the parties as to which law governs the question of attribution
of knowledge. The Claimants say that this is an issue pertaining to the alleged relationship
of agency between BHP and the Named Individuals.1568 The Defendants deny this and aver
that the issue is governed by the law of the relationship between the Named Individuals
and BHP.1569 This debate is likely to be immaterial, in circumstances where both
approaches lead to the application of Australian law; or Australian law and English law,
which are agreed to be the same for these purposes.
576. The Defendant’s test for the attribution of knowledge is that BHP will be attributed with
the knowledge of its directors or agents acquired whilst acting within the scope of their
directorship or agency.1570 That is of course correct as a broad statement of principle, but it
says little about the factual enquiry that underpins any assessment: whether the knowledge
of officers, agents or employees is attributed to a corporation will depend on the facts of
the case and the issue at stake. A starting point may be that the more senior the agent the
less appropriate it is to permit the principal to disown inconvenient knowledge.1571 The
summaries provided by the Claimants at Appendix VII show that the individuals identified
by the Claimants were in roles that were executive in nature, designed to further BHP’s
interests as a single economic entity, and were created precisely because BHP wished to
know about and control its valuable asset at Samarco.
PART IX. DISREGARD
577. The disregard doctrine was first raised on Vale’s pleadings and it has been belatedly
incorporated as a positive case by BHP in its Re-Re-Re-Amended Defence.1572 The argument
is that unless the requirements of (i) Article 4 of the Environmental Sanctions Law; and/or
(ii) Article 50 of the Civil Code are satisfied “BHP cannot be found liable to the Claimants
1568
Claimants’ RRFI, 26 April 2024, §10(b) {A3/7/7}.
1569
Defence, §203B(2)(a)-(b) {A1/2/112}.
1570
Defence, §203B(2)(c) {A1/2/112}.
1571
Bowstead and Reynolds on Agency, §8-215 {J1/29.1/10-11}.
1572
Defence, §42B {A1/2/21}.
253
as a result of BHP’s indirect shareholding and/or alleged controlling shareholding in
Samarco and/or for Samarco’s own acts or omissions.”
578. Article 4 of the Environmental Sanctions Law and Article 50 of the Civil Code are both
“disregard” provisions under which the liability (either Environmental Law liability or civil
liability respectively) of a company may be passed on to the shareholders of that company.
The provisions are explained in the expert materials, as are the tests required to be met in
each circumstance.1573
579. However, a debate on the terms of Article 4 of the Environmental Sanctions Law and Article
50 of the Civil Code is unnecessary. These provisions are entirely peripheral to the claims
brought by the Claimants, none of which involve a denial of the separate legal personality
of the entities within BHP Group:
579.1. The Claimants do not allege that BHP is liable merely “as a result of BHP’s indirect
shareholding” or “controlling shareholding” in Samarco; nor for “Samarco’s own
acts or omissions”. As repeatedly emphasised above, the Claimants proceed on the
basis that they must show that BHP is liable as a consequence of its own conduct
and connection with Samarco’s activity (on the strict liability case) and as a result
of its own acts and omissions (on the fault-based liability case).
579.2. The Claimants, obviously, do not dispute the fact of separate legal personality as
between Samarco, BHP Brasil and BHP (i.e. the two topcos). Equally, it is plain that
each of these entities may be jointly and severally liable for the damage caused by
the Collapse. Only BHP’s liability is in issue in these proceedings.
579.3. The fact that the Claimants had an additional route to establish BHP’s liability – by
potentially pleading one of the disregard provisions and relying on that to import
Samarco’s liability to BHP – does not make the disregard doctrine a mandatory
ingredient of the freestanding causes of action that the Claimants in fact advance
against BHP.1574
580. Should further grounds be needed to demonstrate the fallacy in BHP’s position, the exhibits
to the expert reports provide ample examples of Brazilian case law establishing liability
1573
Civil law JS, Issue 37, pages 14-15 {C1/2T/14}; Rosenvald 1, §§321-326 {C3/1T/130}; Rosenvald 2, §§143-
149 {C16/1T/61}; Tepedino 1, §§272-273 {C7/1T/102}; Tepedino 2, §§203-210 {C18/1T/81}; Sarlet 1 §202
{C4/1T/94}.
1574
The Claimants determined as far back as 2019 to remove the further claim based on disregard from the MPoC:
see deleted section E.4 of the Master pleadings {A1/1/132}.
254
under the Environmental Law,1575 the Civil Code,1576 and the Corporate Law,1577 on
shareholders, for their own conduct and acts or omissions, without the disregard doctrine
being referred to. In other cases where disregard has been relied upon, it is apparent that it
is advanced as an additional (rather than mandatory) route to establishing liability.1578
PART X. PRESCRIPTION
A) Introduction
581. BHP asserts that the Claimants’ claims, or at least some of them, are time-barred as a matter
of Brazilian law. There is no dispute that it is Brazilian limitation law which is applicable
in respect of the Claimants’ exclusively Brazilian law causes of action. No point is taken
by the Claimants that the operation of Brazilian limitation law would somehow offend
English public policy.
582. The Claimants do contend, however, that BHP’s limitation analysis is simply wrong and
that it fails to have proper regard to:
582.1. the significance of there being parallel criminal proceedings in relation to the
responsibility for the collapse;
582.2. CPAs having also been commenced in order to obtain collective civil redress;
582.3. the characterisation of the Claimants as “consumers by equivalence” for the

purposes of the Brazilian Consumer Defence Code;
582.4. the more generous limitation period available to Municipalities and Utilities; and/or
582.5. the imprescriptible nature of the collective claims by the Municipalities, Indigenous
and Quilombola Claimants.
583. There are, in addition, more granular issues (such as the time at which prescription starts
running depending on the circumstances of the Claimants) which indicate that many
thousands of claims will survive even on BHP’s case.
584. It is important context to the consideration of the points identified above that the limitation
period for personal actions for damages such as those pursued in these proceedings used to
1575
See e.g., Latina Derrailment (TJSP, October 2013); Sarlet 1, §§312-313 {C4/1T/150-151}, §346 {C4/1T/165};
{C4/3.2T/590-595}; and TAG (TJSP, May 2014; STJ, May 2019; TJSP, August 2023), Sarlet 1, §§306-309
{C4/1T/146-147}, {C4/3.2T/997-989}.
1576
See e.g., Civil Appeal n. 5001319-40.2018.8.13.0521 (TJMG, June 2021), Rosenvald 1, §234 {C3/1T/98};
Tepedino 2, §175 {C18/1T/72-73}.
1577
See e.g., Muller Prado 1, fn 234 {C2/3.2T/958-979; {C2/3.4T/1559-1566}; Interlocutory Appeal 2162175-
19.2014.8.26.0000 (TJSP, October 2013) {C2/3.2T/829}.
1578
See e.g., BHP/Vale (TJMG, May 2019) Sarlet 1, §317 {C4/1T/152} {C4/3.2T/971-976}.
255
be 20 years, until the coming into force of the current Civil Code in 2002. Although the
ordinary limitation period for such a claim is now the drastically reduced period of 3 years
the Claimants contend that what would otherwise be the harsh operation of this much
shorter time limit has been softened not only by express statutory provision (such as Art
200 of the Civil Code) but also where necessary by the adoption in Brazilian jurisprudence
of a generous and flexible concept of those whose rights are entitled to additional
“consumer” protection.
585. So far as claims arising out of the Collapse are concerned, one of the lines advanced by the
Defendants at the jurisdiction phase was that Claimants would be entitled to bring those
claims in Brazil; this point was run throughout 2019-2022,1579 well beyond the period of 3
years since the Collapse that Defendants now contends for. There is no suggestion even
now in Brazil that finality has been achieved because of the expiry of prescription. Indeed,
it may be thought surprising that the Defendants raise limitation defences in this action
whilst simultaneously seeking to persuade the Claimants and other victims of the disaster
to enter into a repackaged compensation scheme in return for a compromise of their
claims.1580
586. The Claimants contend that BHP’s stance on prescription is not merely unattractive but as
a matter of Brazilian law misconceived.
B) Collective and Individual Redress
587. In order to frame the consideration of limitation issues, it should be kept in mind that in
addition to the individual claims for compensatory damages of the kind pursued in these
English proceedings, Brazilian law and procedure also allows for the pursuit of remedies
on a collective basis or in the wider public interest. Thus, the Brazilian prosecutor (the
federal Ministério Publico Federal or “MPF”, or the state prosecutors) can as part of a
criminal prosecution seek an order that financial compensation be paid to the victims of
wrongdoing. Instead of or in addition to bringing those criminal proceedings, the same
MPF can initiate a Public Civil Action or “CPA” in the Brazilian civil courts. Other parties,
including state prosecutors, the states themselves, the federal district, municipalities and
associations with a common interest can also commence CPAs. Not only are these powers
in principle available, they have in fact already been exercised in the case of the Collapse;
1579
On 30 March 2022, BHP wrote in terms that it would “submit to the jurisdiction of the Brazilian courts in
respect of any New Proceedings” and would be prepared to acknowledge those proceedings to the Brazilian
court within 15 days of filings {PO/155.1/1-2}.
1580
{F16/498.26.11/4}.
256
thus the MPF has initiated both a criminal complaint1581 which sought to establish not only
the criminal liability of those responsible for the Collapse but also financial redress1582; and
also the “155bn CPA”. There have also been two other CPAs of note, one commenced by
the Association for the Defence of Collective Interests (“ADIC”) and the “20bn CPA”
commenced by the Federal Government, the states of Minas Gerais and Espírito Santo and
nine government entities.
588. The Claimants’ simple position is that whilst these parallel proceedings have remained on
foot, time has not been running against them for the purposes of bringing any of their own
civil claims.1583 Potential Claimants are not required under Brazilian law to launch claims
whilst parallel proceedings which may yet vindicate their entitlement have yet to reach a
conclusion; nor can a named defendant to such proceedings, nor other entities who may be
jointly and severally liable alongside such a defendant, safely or properly assume they will
face no further claims. There is certainly no injustice in the Claimants seeking to hold BHP
properly to account in London in circumstances where the potential routes for redress in
Brazil have not been effective.
C) Brazilian Criminal Complaint/Civil Code Art 200
589. Logically, the first category of parallel proceeding to consider is the Criminal
Complaint.1584 Although BHP UK and BHP Australia are not parties, both Samarco and
BHP Brasil are defendants. Moreover, the individual defendants in the original complaint
included: Jimmy Wilson, Margaret Beck, Marcus Randolph and Jeffery Zweig. Mr Wilson,
Ms Beck and Mr Randolph were employees of BHP Australia; Mr Zweig was the owner of
Critical Failure of Dam Operation risk within BHP’s Iron Ore division.1585 It will be
recalled that BHP has relied upon the existence of the criminal proceedings in the present
action as a reason for the unavailability of several relevant witnesses, and indeed as a reason
why the First Stage Trial should be delayed.1586
590. These criminal proceedings are ongoing, and in fact now technically take the form of two
separate proceedings (the charges against the foreign domiciled defendants, including Mr
Wilson, Mr Ottaviano, Ms Beck, Mr Zweig and Mr Randolph having been split into
1581
{I3/13T/1-273}.
1582
{I3/13T/272}.
1583
The proceedings are parallel in the sense that they share the same “remote cause of action” (“causa de pedir
remota”). This corresponds to the facts that give rise to the action and is to be distinguished from the “proximate
cause of action” which is the legal basis of the claim. See further Rosenvald 1, §507 {C3/1T/195}, §511
{C3/1T/194}; Rosenvald 2, §§312-315 {C16/1T/134-135}.
1584
{I3/13T/1-273}.
1585
See also Appendix VII on BHP’s Representatives.
1586
{PE30/2/39-42}, §§119-127.
257
separate proceedings in June 2018).1587 Evidence has been taken, including the large
amount of documentary evidence that the Claimants have been able to access for the
purpose of advancing their claims in these proceedings. Closing submissions have recently
been filed in the main criminal complaint. A number of appeals are awaiting determination
in respect of the status of the foreign-domiciled individuals in the second set of
proceedings.1588
591. Article 200 of the Civil Code provides: “when the action originates from a fact that must
be ascertained in the criminal court, the prescription period will not run before the
respective final judgment”. 1589
592. No one suggests that there are any facts which are uniquely within the competence of the
criminal courts rather than the civil courts. Facts which may give rise to criminal liability
must be investigated and determined in the criminal court in the sense that every offence
ought (at least in an ideal world) to be so dealt with.1590 The Claimants accept that if no
such investigation or prosecution ever gets underway then a victim of the wrongdoing does
not benefit from any suspension of the limitation period.
593. Here, however, a criminal investigation was underway within a week of the Collapse1591
and a formal criminal complaint filed in October 2016.1592
594. As to the relevant legal principles as identified by the parties’ experts:
594.1. It is common ground that Art 200 will apply when there is a “prejudicial
relationship” between civil and criminal actions.1593 The point of disagreement is as
to precisely what is meant by a “prejudicial” relationship.
594.2. Art 200 will apply irrespective of whether the civil claim is one of objective or
subjective liability.1594
1587
The main action is Criminal Action No. 0002725-15.2016.4.01.3822. The spun-off action against the foreign
domiciled defendants is Criminal Action No. 0001189-95.2018.4.01.3822.
1588
The Defendants have also sought to rely on material derived from the criminal proceedings: see, for example,
the hearsay notice served by the Defendants in respect of the testimony of Vasconcelos {G1/2/1}.
1589
{I1/2/16}.
1590
As very clearly explained in Special Appeal 1.393.699-PR, at §14, the only exception to the principle (which
is not here applicable) arises in circumstances where a criminal proceeding would depend upon a complaint or
representation which is not in fact made within time. NR-1A, §§281-282 {C3/3.1T/281-282}.
1591
The Federal Police Department of Belo Horizonte began police investigation No. 1843/2015 on 11 November
2015, six days after the disaster {I3/1T/1-2}.
1592
The MPF filed the criminal complaint on 20 October 2016 in the Federal Court of Minas Gerais, subsection of
Ponte Nova, against 4 legal entities and 22 individuals {I3/13T/1-273}.
1593
Rosenvald 1, §482 {C3/1T/183-184}, §560 {C3/1T/214-215}; Tepedino 1, §458 {C7/1T/172}; Tepedino 2,
§300 {C18/1T/122}.
1594
Rosenvald 1, §§491-494 {C3/1T/187-189}; Tepedino 2, §313 {C18/1T/128}, §315 {C18/1T/129-130},
§316{C18/1T/130}.
258
594.3. There is nothing to prevent the civil action from being brought before the conclusion
of the criminal proceedings.1595
595. The central areas of disagreement appear to be over whether the Claimants can benefit from
the suspension of the limitation period even where:
595.1. they do not require either a conviction or evidence from the criminal proceedings in
order to progress their civil claim in London;1596
595.2. the Defendants to the civil claim are not defendants to the criminal proceedings.
1) Application to the Facts
596. The above areas of disagreement will be explored with Professor Tepedino in cross-
examination, including by reference to STJ caselaw and the underlying logic and policy of
Art 200. In brief summary, however, the Claimants’ position is that Art 200 imposes no
requirement that the civil claim should depend on the outcome or evidence in the criminal
proceedings. This is clear from the fact that a Claimant is free to commence a civil claim
prior to conclusion of the criminal case and, if it has concluded, then irrespective of its
outcome. A prejudicial relationship exists if a police investigation has been initiated or if a
criminal action has been filed regarding a fact or event that gives rise to a civil claim.1597
The key point is that the victims of wrongdoing are entitled to wait and see what happens
in the criminal investigation (including whether any evidence of value to the civil claim is
produced)1598 without time running against them for the purposes of their civil claim. The
underlying policy behind Art 200 is to assist the victims of crimes.1599
597. As to the separate question of parties, it is equally clear from the STJ caselaw1600 that non-
parties to the criminal proceedings (such as employers of the criminal defendant or the
owner of a vehicle involved in a collision) can potentially face civil claims for damages
arising out of the same events as were the subject of criminal investigation and/or
prosecution. Art 200 is equally applicable to suspend limitation as against those third
parties as it would have been in relation to the named criminal defendant. It is sufficient
that the factual basis of the civil defendant’s liability overlaps with the matters which are
or were the subject of the criminal investigation or proceedings. The twin rationale for this
1595
Rosenvald 1, §480 {C3/1T/183}, §483 {C3/1T/184}, §487 {C3/1T/186}; Rosenvald 2, §§294-295
{C16/1T/125-126}, §297 {C16/1T/125-127}; Tepedino 1, §494 {C7/1T/185}.
1596
Rosenvald 1, §§457-458 {C7/1T/171}; Tepedino 2, §299 {C18/1T/122}.
1597
Rosenvald 1, §§482, 560 {C3/1T/183-184}, {C3/1T/214-215}.
1598
Rosenvald 1, §490 {C3/1T/187}.
1599
Rosenvald 1, §487 {C3/1T/186}.
1600
Rosenvald 1, §§488, 490, fn.348, 491, 492, 493 {C3/1T/186-188}.
259
is: first, to benefit the victims of wrongdoing who can await the outcome (and make use of
the evidence obtained) in the criminal sphere rather than take on the burden of proving the
wrongdoing themselves; second, to reduce the risk of inconsistency if the same matters are
being investigated in parallel proceedings. The Claimants respectfully suggest that this is
a coherent scheme. Indeed, they submit that having regard to the absence of any conclusion
to the 2016 Criminal Complaint, including as against BHP’s wholly owned subsidiary BHP
Brasil and employees of both BHP Brasil and Australia, there is no proper justification of
principle or policy why BHP should now be able to avoid liability through a limitation
defence. It is telling that in these English claims, BHP has conceded in principle that if one
of its employees or agents were to be found personally liable, then it too would be liable in
respect of that conduct.1601
598. The interrelationship between the criminal and civil spheres is nowhere more clearly
illustrated than in BHP Brasil’s very own Closing Submissions for the criminal
proceedings.1602 The introductory summary of BHP Brasil’s submissions on the merits1603
stresses the separate legal personality and independent management of Samarco, i.e. the
very same arguments being advanced by BHP Brasil’s ultimate parent in these English
proceedings. BHP Brasil denies any knowledge of an imminent risk of collapse, again the
same factual defence being run by its parent BHP in defence of the Claimants’ fault-based
case. BHP Brasil also assert that “Members of SAMARCO’s Board cannot be considered
legal or contractual representatives of BHPB…”. This of course is precisely the same
argument about BHP Representatives acting exclusively in a Samarco capacity, and not as
agents of BHP, as arises in these civil proceedings. All these defences are then expanded in
exhaustive detail in the pages of the Closing which follow. Self-evidently, it would be
acutely “prejudicial” to BHP’s ability to defend the civil claim if evidence emerged in the
Brazilian criminal proceedings which undermined lines of argument which were common
to both proceedings.
599. Indeed, if there were no overlap between the civil claim and the criminal proceedings then:
BHP would not have had the difficulties it claims to have had in securing the attendance of
key witnesses;1604 the unwieldy regime of Protective Orders in respect of the s.1782
arranged by the Claimants would have been unnecessary; and those deponents would not
have asserted a privilege against self-incrimination to avoid answering the Claimants'
1601
Defence, §203B(1)(b)-(c) {A1/2/112}.
1602
BHP closing arguments {I3/76.7.1T}.
1603
BHP closing arguments {I3/76.7.1T/8}.
1604
Michael 17, §§120-127 {PE30/2/40-42}.
260
questions which were of obvious relevance to the fair determination of factual issues in
these proceedings.
600. The Claimants note also that BHP itself has served a hearsay notice identifying its intention
to rely on the Declaration to the Federal Police of Anelisa Vasconcelos,1605 further
underscoring the interrelationship between the two proceedings and the evidence relevant
to each of them.
D) CPAs
601. The next category of parallel proceedings of relevance for limitation purposes are CPAs.
Should the Claimants not satisfy the Court that prescription has been suspended by reason
of the Criminal Proceedings, they rely on the commencement of CPAs in Brazil to show
that prescription has been interrupted. A CPA is the Brazilian procedure designed (inter
alia) to protect communities and victims of wide-ranging harm. It automatically includes
all of those affected as potential beneficiaries of the action, with the intention being that
such beneficiaries will subsequently be able to enforce their individual rights to a “generic
sentence” once the CPA claim has been determined. An individual however is not obliged
to wait until the CPA has been determined if they wish instead to commence their own
action. The case law establishes that a CPA interrupts prescription for all claims so that the
system will work as intended.1606
602. An English Court’s consideration of the effect of these CPAs upon the running of time for
individual claims is complicated by the fact that neither the Civil Code nor the Civil
Procedure Code make any express provision for it. Nevertheless, it is common ground
between the parties’ experts that a CPA can interrupt prescription in accordance with Art
202 (I) of the Civil Code,1607 and that it is capable of (i) interrupting prescription for
individual claims, (ii) against defendants who are jointly and severally liable.1608
603. There is a dispute as to which individual Claimants and which claims are in principle within
the scope of this interruption: Professor Tepedino argues that for a claimant’s individual
claims to benefit from the interruption that claimant must have been part of the “collective”
or “community” represented in the CPA; and also that the legal causes of action must be
1605
{G1/2/1}.
1606
Special Appeal 1641167/RS {C3/5.1T/186-187}.
1607
Civil Code. Article 202. “The interruption of the prescription, which can only occur once, will occur: I - by
order of the court which orders the service of process, even if it has no jurisdiction, if the interested party
promotes it within the term and under the manner set out in the procedural law.” {I1/2/17}
1608
Civil Code. Article 204. Paragraph 1. “Interruption by one of the joint and several creditors benefits the others;
as well as the interruption made against the joint and several debtor involves the others and their heirs.”
{I1/2/18}
261
identical. The Claimants do not accept that the interruption is subject to such restrictions.
Professor Tepedino also argues that to benefit from the interruption caused by the CPA an
individual claimant must seek a stay of the individual claim.1609 Again, the Claimants reject
that requirement. The Claimants’ position, supported by both Professor Rosenvald and STJ
case law, is that if an underlying event (such as the Collapse) gives rise to claims then all
those claimants who may have individual claims arising out of that event will benefit from
the interruption of limitation for individual claims if a CPA is commenced in respect of
diffuse and/or collective rights.
604. Much like the position with parallel criminal proceedings under Art 200, those Claimants
are entitled to wait and see what the CPA generates by way of outcome without time
running against them for the purposes of individual civil claims. Professor Tepedino’s
further suggestion that an individual claimant in this position must file a claim and then
have it stayed is perverse: if such a claim is filed within time, and subsequently stayed, then
there is obviously no need to rely upon any interruption of limitation under Art 202 (I).
605. It is common ground that the effects of the interruption will extend to joint and several
debtors.1610 It has been said against the Claimants, however, that in order to invoke that
interruption, a claimant must obtain a ruling of the Court as to that joint and several
liability.1611 The Claimants find that impossible to understand: in a case such as the present
the defendant’s joint and several liability will only ever be determined after a full trial on
the merits, whereas claimants obviously need to know whether they are entitled to rely on
the fact of an extant CPA (the allegations in which will ex hypothesi not yet have been
determined) to postpone the running of time.
606. In terms of the effect of an interruption, the experts agree that it will prevent time from
running until the “last act of the proceedings”. At that point, time will start running
anew.1612 The “last act of the proceedings” is the moment when the final decision of the
proceedings becomes final and unappealable (and if it is a judgment on the merits, the
decision has become res judicata).1613
1609
Tepedino 1, §484 {C7/1T/181-182}.
1610
Rosenvald 1, §515{C3/1T/196}; Tepedino 1, §§476-477 {C7/1T/179}, Tepedino 2 §320 {C18/1T/132}.
1611
Rejoinder, §18 {A1/5/21-22}.
1612
Rosenvald 1, §286 {C3/1T/186-187}, §489 {C3/1T/116-117}; Tepedino 1, §515 {C7/1T/189}, §518,
{C7/1T/190}.
1613
262
607. The detailed operation of the above principles is made more complicated by the fact that
there have been many separate CPAs commenced in Brazil, and Art 202(I) of the Civil
Code only allows for a single interruption.1614 It is complicated further by the fact that what
became the “Main CPAs”, the 20bn and 155bn CPAs, did not proceed in an orthodox
fashion to a “generic sentence” and the possibility of individual claimants enforcing their
rights thereafter. The “TTAC” and subsequently the “GTAC” have instead led to a bespoke
(and highly controversial) reparation scheme, which itself has given rise to years of
litigation (as more fully set out in Appendix IV to this Opening Note). It is of course
because of the inadequacy of, or Claimants’ dissatisfaction with or ineligibility for these
mechanisms of redress in Brazil in their various incarnations that these English proceedings
have been launched.
608. Nevertheless, the Claimants’ position is that it was the ADIC CPA which first interrupted
limitation for the Claimants’ individual claims. It was issued on 17 November 2015, just
12 days after the Collapse. Samarco’s voluntary appearance on 12 January 2016 dispensed
with the need for formal service and the interruption of limitation had retroactive effect
back to the original date of filing.1615
609. The ADIC CPA was suspended upon the ratification of the GTAC agreement on 8 August
2018,1616 and accordingly it is still in progress (or to put it another way, there has not yet
been a concluding or “last act” of the ADIC proceedings for the purposes of Art 202(I) of
the Civil Code).1617 The Claimants contend that the consequence is therefore that limitation
remains interrupted in respect of their claims in these proceedings.
610. The Defendants deny that the ADIC CPA was the first in time, so as to qualify as the
“interrupting event”. On their case, it was the 20bn CPA that interrupted prescription
because notwithstanding it had been filed two weeks after the ADIC CPA, Samarco elected
to enter an appearance (again precipitating service) several weeks earlier than it did in
respect of the ADIC CPA, on 18 December 2015. The reason that this matters for the
Defendants is that they also seek to rely upon the order of 8 August 2018 which records
that there has been a termination of the “merits phase” of the 20bn CPA upon the entry of
the parties into the GTAC.
1614
Albeit that, as already noted, it simply does not contemplate CPAs, let alone multiple CPAs arising out of the
same underlying event.
1615
NR-2B, §§746-755 {C16/5T/746-755}.
1616
Ratification of the GTAC agreement on 8 August 2018 {I3/24T/1-22}.
1617
Rosenvald 2, §§309, 323 {C16/1T/132}, {C16/1T/139-140}.
263
611. These facts give rise to novel and complex questions of both applying the “first in time”
aspect and the “last act of the proceedings” aspect of Art 202(I) of the Civil Code, without
any obvious precedent in the Brazilian case law. Professor Rosenvald is clear in his
understanding that the ADIC CPA, as the first in time to be filed, was the “interrupting
event”; and he refers to Brazilian decisions in which it is noted as having been the first CPA
filed in relation to the Fundão disaster.1618 On the other hand, Professor Rosenvald
concludes that if the 20bn CPA is the relevant action, then it terminated, with its final and
unappealable act on 19 September 2019 (the date when the decision of 8 August 2018
became res judicata).1619
612. The Claimants do not need to rely on any interrupting event should the court agree that
time has been suspended under Art 200, because there is no doubt that the criminal
proceedings are ongoing. But if they do need to so rely, the upshot of the above is as
follows. If the Claimants succeed in establishing that the ADIC CPA interrupted
prescription, then time has not yet re-started for prescription purposes; however, if the
Defendants are correct that it was the 20bn CPA that interrupted prescription, the evidence
points to any applicable period of prescription commencing afresh on 19 September 2019.
In either scenario the English Claim Forms commenced in November 2018 and May 2019
were in time. In the second scenario, the Claimants rely on any applicable limitation period
being 5 years (as opposed to 3 years) to bring the February 2023 Claim Forms within time
as well.
E) Consumer Defence Code
613. The first of the bases relied upon to establish that the claims in these proceedings are subject
to a prescription period of 5 years is the Consumer Defence Code (the “CDC”). This
legislation sets out protections for both consumers (as its name suggests) and “consumers
by equivalence”. The latter category is defined in Articles 2, sole paragraph, 17 and 29 of
the CDC, and further explained in the Brazilian case law. The purpose is to protect
“vulnerable” individuals and entities by, for example, affording them a more generous
period in which to bring claims for violation of their rights than under the Civil Code.1620
1618
Rosenvald 2, §323 and fn 282 {C16/1T/139-140}.
1619
Albeit Professor Rosenvald notes that the order does not appear to reflect reality in that there had in fact been
no resolution of the merits in the 20bn CPA and no provision for individual relief for the victims. Rosenvald
2, §323 {C16/1T/139-140}.
1620
This is not the only benefit for any prospective litigant: Article 6 of the CDC provides that a consumer or
consumer by equivalence may have the benefit of a reversal of the burden of proof when they bring claims to
recover their losses. CDC. Article 6. VIII – “the facilitation of the defence of their rights, including the reversal
of the burden of proof, in their favour, in civil proceedings, when, at the discretion of the judge, the allegation
is credible or when the party has fewer resources, according to the ordinary rules of experience”. {I1/7/2}
264
The Brazilian courts have consistently held that victims of environmental disasters
(including victims of the Collapse) are to be considered “consumers by equivalence” and
therefore entitled to a prescription period of 5 years rather than 3 years.1621
614. The provisions of the CDC that are particularly relevant for limitation purposes are Articles
17 and 27. Article 17 provides that “all victims of the event are deemed consumers” and
Article 27 supplies the prescription period of 5 years “starting the counting of the time from
the knowledge of the damage and its authorship.”1622 The disagreement between the
Claimants’ and the Defendants’ experts is most prominently focused on the question of
what will qualify as an “event” for the purposes of Article 17. Professor Tepedino argues
for a restrictive interpretation that permits only of what he terms “consumer accidents”,
limited to those where there is damage resulting from a defect in a consumer product.1623
He denies that the Collapse qualifies as such.
615. Professor Tepedino’s restrictive analysis, and insistence on the identification of a “base
consumer relationship” 1624 between the supplier of goods or services and their end user is
simply not borne out by the case law. On the contrary, Professor Rosenvald is able to cite
a large body of authority that makes clear that victims of an environmental disaster who
suffer loss from that disaster will be considered “victims of an event” under Article 17 of
the CDC.1625 There ought, in fact, be no real dispute in the face of repeated decisions
relating to the application of Article 17 (and via that provision, Article 27 of the CDC) to
environmental claims; including, as already noted, victims of the Collapse; and a series of
cases arising from the Brumadinho dam disaster1626 that raise (for immediate purposes at
least) identical considerations.
616. The more nuanced issue is which of the English Claimants - beyond the Individuals and
Indigenous and Quilombola cohorts - will be entitled to rely on the CDC? For Professor
1621
The first STJ decisions holding that victims of environmental accidents were to be considered consumers by
equivalence under Article 17 of the CDC are from 2014 {C16/1T/105-106}. In June 2023, the STJ published
the third edition of ‘Case law in Theses’ for environmental law. Thesis 4 establishes that “It is possible to
recognise the figure of consumer by equivalence (bystander) in the event of individual damage resulting from
the exercise of business activity causing environmental impact, due to the characterisation of a consumer
accident.” {C16/5T/288}.
1622
In other words, Article 27 of the CDC not only provides an extended limitation period for consumers and
consumer by equivalence; it also expressly states (unlike the Civil Code) that time will not start running until
the claimant has knowledge of the damage and the author of the damage: Article 27. “The right to claim for
redress for damages caused by the fact of the product or service provided for in Section II of this Chapter is
subject to prescription in five years, starting the counting of the prescription time from the knowledge of the
damage and its authorship” {I1/7/8}.
1623
Civil JS, Issue 44(a), page 6 {C1/3T/6}.
1624
{C18/1T/18}, §34.
1625
Rosenvald 1, §§460-468 {C3/1T/174-179}.
1626
This was another tailings dam in Brazil, owned by Vale, that collapsed in 2019, causing many deaths and
widespread environmental damage.
265
Rosenvald the policy behind the concept of “consumers by equivalence” is to protect
vulnerable persons, and there is no difficulty in considering legal persons (as well as natural
persons) as potentially vulnerable vis-à-vis the defendants.1627 In the present case, all of the
Claimants are victims of an environmental catastrophe, and there is no distinction to be
drawn between victims of environmental harm for the purposes of applying Article 17 of
the CDC.1628 Professor Tepedino again adopts a more restrictive analysis, but even he
recognises that the concept of a consumer can be extended to include legal persons
engaging in business activities.1629 Professor Tepedino agrees that there is a touchstone of
“vulnerability” to the application of the CDC, and his reasons for denying that a claimant
such as the Municipalities cannot benefit from the CDC is that they fail that test, not that
the legislation does not apply to legal persons.1630
617. For the reasons set out below, the Municipality and Utilities Claimants do not necessarily
need to rely upon the CDC to establish a 5-year limitation period for their claims. The
present issue may therefore principally affect the claims of businesses and the Faith-Based
Institutions. Since Professor Tepedino already appears to accept that some business
enterprises are capable of being classified as “vulnerable”, it is difficult to see why the
policy objectives would not extend to not-for-profit religious organisations, particularly
ones faced with losses caused by an environmental disaster. As to commercial enterprises
affected by the Collapse, it is obviously impossible for the Court at the Stage 1 trial to
determine whether a given business is inside or outside the scope of consumer protection.
F) Municipalities and Utilities/Isonomy
618. The Municipality and Utility Claimants contend that they have the benefit of a 5-year
prescription period to bring their claims based on certain legislative decrees and the
application of those decrees by the senior Brazilian courts with regard to the principle of
“isonomy”. The starting point is Article 1 of Decree 20.910/1932 that made specific
provision for a 5 year prescription period to apply to (i) claims for tax debts by state bodies;
and (ii) claims generally against state bodies (including Municipalities).1631 However, the
Brazilian courts have given a wider meaning to the decree, and the STJ now confirms that
the 5 year period must apply to claims generally involving a state body (including a
1627
Rosenvald 1, §640 {C3/1T/246}.
1628
Rosenvald 2, §241 {C16/1T/98-99}.
1629
Tepedino 1, §410 {C7/1T/155}.
1630
Tepedino 1, §412 {C7/1T/156}.
1631
Decree 20.910/1932. “The passive debts of the Federal Government, of the States and Municipalities, as well
as any and all rights or actions against the Federal, State or Municipal Treasury, whatever their nature, are
subject to prescription in five years from the date of the act or fact from which they originate” {I1/10/13}.
266
Municipality) and must apply equally whether it is the state body or the private citizen who
is the claimant.1632 The Brazilian law principle of “isonomy”, that underpins this application
of the decree, is a requirement to achieve a symmetrical and equal position between state
and private citizen in the procedural relationship.
619. Both sides’ experts agree that the initial design of the decree was not necessarily aimed at
achieving this result.1633 Professor Tepedino insists that the terms of the decree have either
been superseded by the 2002 Civil Code, and otherwise must still be read literally; and he
disputes the intention to extend the prescription period to benefit the state bodies.1634 Yet
the weight of recent (post-2002) authority from the STJ shows that application of the 5 year
period to claims by Municipalities is now well-established; to the extent that courts will
now consider a 5 year period to apply to Municipalities’ claims without needing to justify
this conclusion by reference to Decree 20.910/1932.1635
620. The effect of a second decree, Decree 4.597/1943, and again applying the principle of
isonomy, is that Utility entities are in the same position as the Municipalities, i.e. claims
brought by the Utilities are subject to a prescription period of 5 years.1636 Save for reference
to the later decree, the analysis of the Utilities’ position is not materially different to that
outlined above.
G) The Term of Commitment
621. On 26 October 2018, the Brazilian companies (Samarco, BHP Brasil and Vale) entered into
an instrument with the MPF and others known as the “Term of Commitment” within the
20bn/155bn CPA conjoined proceedings. It recorded: “There shall be no deterioration of
rights and intentions of the affected people, based on the statute of limitations, on 5
November 2018.” It went on to seek to caveat that declaration in terms that it would “apply
only to the Brazilian jurisdiction.”1637
622. The experts agree that this is an unusual document.1638 If (contrary to the Claimants’ case
above on the effect of the criminal proceedings and the CPAs) time was running for the
purposes of prescription and it had not already been interrupted, it would be open to the
Claimants to rely on the Term of Commitment as an unequivocal act which interrupts
1632
Rosenvald 1, §475 {C3/1T/181}.
1633
Tepedino 1, §§384-389 {C7/1T/145-147}; Rosenvald 2, §288 {C16/1T/122}.
1634
Tepedino 1, §§384-395 {C7/1T/145-149}; Tepedino 2, §§259 {C18/1T/105}.
1635
Rosenvald 2, §§288-290 {C16/1T/122-124}.
1636
Rosenvald 1, §478 {C3/1T/182-183}.
1637
Term of Commitment {I3/27T/1-4}.
1638
267
prescription under Article 202, VI of the Civil Code.1639 However, if successful on either
of their primary analyses above, the Claimants do not need to rely on this instrument to
show that time stopped running against their claims, and so the issue takes on lesser
importance for the resolution of the limitation argument as a whole. Rather the Term of
Commitment’s importance lies in the acknowledgment in Brazil that limitation did not
expire 3 years after the Collapse, as now contended for by BHP. Professor Tepedino himself
accepts that if the Term of Commitment has declaratory effect (as he thinks it does), it
“recognises that a certain state of fact already existed.” In this context it is also worth
noting that BHP’s offer to submit to a New CPA, made in these proceedings on 30 March
2022, came more than 3 years after the statement made in the Term of Commitment.
H) Claims not Subject to Prescription
623. There are certain categories of claim, namely claims in vindication of diffuse or collective
rights, that are not subject to prescription under Brazilian law. On the Claimants’ case these
include:
623.1. The claims brought by the Municipalities for damage to the environment, to cultural
heritage, landscape and tourism, and to the quality of life of the community.
623.2. The claims brought by the Municipalities for damage to “public assets”, as defined
by reference to Article 99(I) of the Civil Code: “the assets for the common use of
the people, such as rivers, seas, roads, streets and squares.”
623.3. The claims brought by the Indigenous and Quilombola Claimants related to damage
to their lands, practices, traditions, and cultural heritage.
624. Brazilian law recognises that claims arising from the infringement of “diffuse” rights are
brought on behalf of the community generally, and for both present and future generations.
Art 225 of the Constitution is exemplary in this respect: “Everyone has the right to an
ecologically balanced environment, which is an asset of common use and essential to a
healthy quality of life, and both the Government and the community shall have the duty to
defend and preserve it for present and future generations.” An important consequence in
respect of such rights is that they are imprescriptible. It would defeat the purpose of
ensuring the protection of rights for future generations if the rights had been prescribed
before those generations were born. Fundamental rights of this nature are indispensable
and must remain capable of vindication. Also, because these rights are diffuse in nature
1639
There are in fact many cases in Brazil in which the Term of Commitment has been relied upon to show that
there is no limitation defence available to the Brazilian companies. Rosenvald 2, §336 {C16/1T/144-145}.
268
there is no one individual or entity who bears the burden of enforcing them: in that sense,
the usual policy reason for seeking legal certainty by forcing a party with a claim to sue
within a specified time period has no application.
625. There is agreement between the experts at a high level as to the imprescriptible nature of
claims in defence of diffuse rights, particularly those relating to the protection of the
environment.1640 Professor Tepedino seeks to limit the scope of application of that
principle, however, by reference to a technical distinction between the so-called
“environmental macrobem” and “environmental microbem” assets. So far as can be
discerned from Professor Tepedino’s analysis, the latter category, which he says will be
subject to prescription, encompass all claims that may be brought by either private
individuals (such as the Indigenous and Quilombola claimants) or even public entities such
as the Municipalities in ordinary proceedings.1641 Such conclusions are no doubt
convenient for BHP, but they are in truth built upon discursions into Brazilian procedural
law that have no bearing on the issue of limitation. Professor Tepedino asserts, for example,
that claims in defence of a “macrobem” asset must seek payment into a specific, federally-
administered fund (the “FDD”).1642 But as Professor Rosenvald points out, the status of a
claim for limitation purposes cannot depend on the destination of any compensation
payable; the rules of prescription do not change according to the destination of the relief
sought after the violation of a right.1643
626. There is, in addition, a particularly important decision of the STF in this area, “Theme
999”, which sets down in terms that collective claims arising from environmental damage
are not subject to prescription. The ruling makes no reference to the distinction between
“macrobem” or “microbem” assets as relied upon by Professor Tepedino.1644 The
Defendants’ insistence on the prescriptible nature of the collective claims brought by the
Indigenous and Quilombola Claimants is particularly puzzling in light of Theme 999, since
it was itself a case that addressed the non-applicability of prescription from the perspective
of the special protections of indigenous rights, covering damages suffered to their lands,
practices, traditions and cultural heritage. It is to be noted that although some of the
compensation payable upon the successful outcome of the claims in Theme 999 was
1640
Rosenvald 1, §§422-424 {C3/1T/159-161}; Tepedino 1, §§335-337 {C7/1T/130-131}.
1641
Tepedino 1, §§341-359 {C7/1T/133-139}.
1642
Tepedino 1, §§341 {C7/1T/133-134}.
1643
Rosenvald 2, §194 {C16/1T/78}.
1644
Rosenvald 2, §196 {C16/1T/79}.
269
ordered to be paid into the FDD, the majority was not: it was paid elsewhere, to and for the
benefit of the affected indigenous communities.1645
627. Accordingly, the Claimants will invite the Court to find that the three categories of
collective claims identified above will not be subject to prescription. To the extent that
there is any dispute on the pleadings as to whether any aspects of pleaded loss fall within
the categories described (which dispute may not become clear until the time comes for the
Defendants to plead back to the Claimants’ updated pleading on heads of loss), they are
issues that may fall to be determined at Stage 2.
I) Other factors affecting the running of Prescription
628. There are four subsidiary issues addressed by the parties that may affect the running of time
for the purposes of prescription.
629. First, capacity: the experts agree that prescription will not run against minors until after
their 16th birthday. The experts also agree that adults lacking capacity should likewise
benefit from a suspension of prescription for the period of their incapacity (the experts
differ on the precise reasons why, but it is respectfully submitted that there is no practical
consequence of such disagreement at this stage).1646 This is a significant issue as it will be
relied upon, should the Claimants be unsuccessful in their principal arguments on
limitation, to demonstrate that several thousand claims will not be time-barred on any
analysis. Litigation friends have been appointed in respect of both (a) minors; and (b) adult
protected parties, and the relevant individuals may be identified (if necessary) via the
Master Schedule.
630. Second, coronavirus suspension: there is no material dispute between the experts as to the
effect of a provision enacted as a response to the coronavirus pandemic in 2020, namely
Art 3 of the Emergency and Transitional Legal Regime Law (Law 14.010/2020). This
suspended any prescription periods that were running as of 10 (or 12) June 2020 until 30
October 2020.1647 It is difficult to envisage a scenario in which this provision is relied upon
in a way that makes any difference to the limitation position of significant numbers of
claimants. However, given the complexity and potential permutations from a claimant
cohort of the present size and complexity, the Claimants do not abandon reliance on this
point should it prove to be necessary.
1645
Rosenvald 2, §198 {C16/1T/79-81}.
1646
Rosenvald 2, §§357-360 {C16/1T/154-155}; Tepedino 2, §318 {C18/1T/131}.
1647
Rosenvald 1, §§533-535 {C3/1T/202-203}, Rosenvald 2, §339 {C16/1T/146}; Tepedino 1, §§463-465
{C7/1T/174}; Tepedino 2, §317{C18/1T/130-131}.
270
631. Third, the theory of actio nata: there is a debate between the experts as to whether the
objective or subjective theory of “actio nata” (“the birth of the action”) should be applied
to the Claimants’ claims. The objective theory, contended for in Professor Tepedino’s
reports, states that a limitation period will begin to run at the time the substantive right is
violated, irrespective of the knowledge of the claimant. The subjective actio nata theory
instead defers the commencement of the limitation period until a claimant has unequivocal
knowledge of nature and extent of damage suffered and the identity of the person
responsible.1648 Art 27 of the CDC, as referred to above, is considered to be an example of
subjective act io nata written into legislation. Professor Tepedino accepts that a more
limited form of subjective actio nata may apply in exceptional circumstances. However,
he contends that the limitation period thereby begins when the claimant could have
obtained knowledge of circumstances sufficient to bring their claim, assessed from an
objective perspective – an interpretation not supported by the case law.1649 The point made
by Professor Rosenvald is that subjective actio nata has moved from being a doctrine of
exceptional application to one of pre-eminence in the STJ case law of recent years,
especially in cases of non-contractual liability.1650
632. There are obvious implications in the present case, where not only was the damage caused
by the Collapse inflicted across a vast geographical scale, it has taken on many, complex
forms. These are matters to be investigated, as necessary, at the Stage 2 trial. Doctrine in
Brazilian environmental law acknowledges that environmental harm gives rise to
particularly fact-sensitive questions of date of knowledge (whether objectively or
subjectively considered) from the continuing nature of most polluting events. Professor
Milare, for example, has written:
“The prescription period for the right to claim begins only when the owner of the
violated right becomes aware of the fact and the extent of its consequences, which can
only be established when the environmental damage resulting from the collective
damage are definitively resolved, at which point it will be possible to assess even their
individual sphere of interest. In other words, the unequivocal knowledge of the effects
arising from the damaging act, in the individual sphere, will only occur when the
collective environmental damage has been definitively resolved.”1651
633. Fourth, as the Court will have noted, the first claim forms in these proceedings were issued
in November 2018 against BHP UK only. They were served in March 2019. The first claims
against BHP Australia were issued and served in May 2019. Should it be said by BHP that
1648
Rosenvald 1, §§536, 540 {C3/1T/203}, {C3/1T/205}.
1649
Tepedino 1, §§297-302 {C7/1T/116-120}; Rosenvald 2, §347 {C16/1T/149-150}.
1650
Rosenvald 2, §§341-347 {C16/1T/147-150}.
1651
This excerpt is quoted in Rosenvald 1, §551 {C3/1T/211}.
271
this makes a material difference to the commencement of relevant claims as between the
two Defendants (and ex hypothesi if the Claimants have not succeeded in one of their
primary analyses such as effect off the suspension or interruption of time by the criminal
proceedings and the CPAs) the Claimants rely on the November 2018 claim forms issued
in these proceedings to interrupt time against BHP Australia.
634. The principles enabling the Claimants to rely on the November 2018 claim forms in this
way are not controversial. The experts agree that where there is an individual action relied
upon as the interrupting event under Art 202 I, the claimant(s) to that action can rely on
that interruption. It is also agreed that there is no distinction to be made for the purposes of
Article 202 I whether the action was commenced in Brazil or elsewhere, and its effect will
extend to any jointly and severally liable co-debtor.1652
635. For completeness, and as raised at List of Issues § 47b-c, the filing of a formal protest or
an individual legal action in Brazil to interrupt prescription may also become relevant
should the Claimants’ principal limitation arguments fail. Although the scrutiny of such
protests and claims is outside the scope of Stage 1, there are an unidentified number of
individual protests and claims that have been brought by Claimants at various times in
Brazil, and if necessary those will be relied upon as stopping time for those Claimants only.
J) Procedural vs Substantive Requirements
636. Although the limitation debate is almost exclusively a matter of Brazilian law, one issue of
English law does arise in relation to whether steps required under Brazilian law in order to
stop time running for limitation purposes are properly characterised as procedural or
substantive. While it is clear that Brazilian law applies as the substantive law of limitation,
by virtue of Article 15(h) of the Rome II Regulation;1653 it is equally clear that matters of
procedural law are excluded from the scope of the Rome II Regulation (see Article 1(3)
thereof) and English law will apply to matters of procedure.1654
637. The Defendants wrongly conflate Brazilian procedural requirements in the formulation of
a claim form with the steps required to stop time running for limitation purposes.1655 The
provisions of the Civil Procedure Code relating to the format and content of a claim form
(particularly Article 319 of the Civil Procedure Code) form no part of the Brazilian
1652
Rosenvald 1 §524 {C3/1T/199}; Tepedino 1 §§490-491 {C7/1T/184}.
1653
Which is retained EU law subject to minor (and immaterial) amendments by SI 2019/834, reg 11 {I1/8/1-2}.
1654
Background commentary on Articles 1(3) and 15(h) of the Rome II Regulation is found in Dicey, 16th edn, §34-
036 and §§34-064 to 34-065 {J1/20/28-30}, {J1/20/47-48}.
1655
Defence, §§38-41{A1/2/19-21}.
272
substantive law of prescription.1656 Professor Rosenvald explains that, on the contrary,
Brazilian rules of prescription emphasise the importance of service as the key procedural
step required to stop time running; i.e. when read fully, Article 202 (I) of the Civil Code
requires not only that there be an “order for citation” (which is equivalent to an English
court taking the step of issuing a claim from) but for prescription to be interrupted the claim
must then be properly served.1657 What amounts to proper service will itself be a question
of procedural law (so, for example, it is submitted that the English claim forms fell to be
served within the time limits provided for by the English CPR rather than the Civil
Procedure Code).1658
638. Accordingly, the Claimants accept that it is a substantive requirement of Brazilian law that
a claim be served or alternatively deemed served through the making by a defendant of a
voluntary appearance, in order for time to stop running: it is not enough merely to have
issued the claim. The relevant date for the purposes of interruption is then the original date
of filing rather than the date of service or appearance.1659 However, the Claimants contend
that Brazilian law’s requirements as to the form and content of the documents which bring
a claim into being are self-evidentially matters of Brazilian procedure which cannot
sensibly be transposed onto a claim brought in England under the CPR. A Claim Form
which complies with the CPR and which is properly issued and served upon a defendant
will stop time running as a matter of Brazilian limitation law, notwithstanding that those
documents may be in a different format to that required as a matter of Brazilian procedure.
639. In any event, the Claimants have done everything that was properly required to commence
the claims in England. This distinguishes the present claims from those brought in Vilca v
Xstrata [2018] EWHC 27 (QB), where a very similar argument was made to the one now
advanced by the Defendants. In Vilca, the only claims that were advanced within the
limitation period were English law claims, and those claims were later abandoned in order
to advance claims under Peruvian law (which was in fact the applicable law of the dispute).
The Vilca claims that were first issued were substantially defective for this reason. It was
1656
Rosenvald 1, §414 {C3/1T/154-155}, Rosenvald 2, §§179-181 {C16/1T/71-72}.
1657
Rosenvald 1, §§414-417 {C3/1T/154-157}. Other cases in which service has been found on the applicable law
to be an essential procedural step in the stopping of time for limitation purposes include Johnson v Berentzen
[2021] EWHC 1042 (QB) {J1/13/1-17}, and Pandya v Intersalonika General Insurance [2020] EWHC 273 (QB)
{J1/12/1-10}. It does not appear that there were relevant provisions of retroaction to the date of filing in these
cases, as applies by operation of Art 240 of the Brazilian Civil Procedure Code {I1/3/3} in the present case.
1658
Rosenvald 2, §190 {C16/1T/76}. As noted in Dicey, 16th edn., at §34-065: “Where […] those conditions [for the
interruption of limitation] involve a procedural act (such as the issue or service of a claim) in connection with
proceedings pending before an English court, English law as the law of the forum must be referred to in order
to determine whether that condition has been satisfied.” {J1/20/47-48}.
1659
Civil Procedure Code, Article 240 {I1/3/3}; and see Tepedino 1, §316 {C7/1T/123}.
273
this “central issue” that determined the case rather than any requirement that the English
claims be brought (impossibly) so as to mirror Peruvian procedural forms.1660
PART XI. WAIVERS

A) Introduction
640. The Defendants contend that they have the benefit of Brazilian compensation agreements
entered into by certain Claimants, with the effect that these individuals are barred from
bringing claims in these proceedings. A number of these agreements are identified at
Appendix VI of the RRRAD.1661 From these, a smaller number have been selected by the
parties to form “the Sample Set” of compensation agreements by which issues 59-68 of the
LoI are to be determined.1662 It is common ground that Brazilian law applies to the question
of the interpretation and effect of these agreements.
641. The majority of the agreements have arisen from the compensation schemes offered by or
through the Renova Foundation (“Renova”). Such schemes have provoked widespread
controversy, and years of litigation. Brazilian courts have frequently commented on the
inadequacy of the compensation schemes, failings by Renova, and abusive practices visited
upon victims of the Collapse seeking to access the schemes. The waiver clauses themselves
have also been subject to judicial scrutiny, with clear indications given that they simply do
not operate in so broad a manner as BHP contends. The Claimants are aware from press
reports that BHP and Vale intend to make yet another attempt to establish a compensation
scheme in Brazil, with the timing of this proposal and the trial of the English claims
unlikely to be a coincidence.1663 If that are fresh offers of compensation being made to
Claimants who have already entered into compensation agreements, belying any assertion
by BHP that it considers those agreements truly to have achieved finality.1664
642. In that context, the issues for the Court may be approached in three stages:
642.1. What are the relevant principles of interpretation that should be applied to the
“waiver” clauses? On this point the Claimants contend for the application of the
1660
Vilca v Xstrata [2018] EWHC 27 (QB) per Stuart-Smith J at [49], [78], [105]-[106] {J1/15/15}, {J1/15/21},
{J1/15/26}.
1661
Defence, Appendix VI {A1/2/237-264}.
1662
The Sample Set includes 10 agreements selected by BHP and the Claimants pursuant to the Order of 27 July
2023 {H1/9/8}, and 4 additional agreements proposed by Vale during its participation in proceedings. It is not
thought that the Vale nominations substantially add to the issues to be determined, and since they were part of
the Sample Set at the time the experts considered the waivers issues, they are retained notwithstanding the
discontinuance of BHP’s Part 20 claim. {I3/79}; {I3/80T}; {I3/81T}; {I3/82T}; {I3/83T}.
1663
{F16/498.26.11/1-3}.
1664
BHP has refused to confirm whether any new compensation scheme would be open to any of the Claimants.
{PO/2063/3}; {PO/2098/1-2}, {PO/2124/1-3}, {PO/2220/1-2}.
274
CDC as supplementing the rules of ordinary contractual interpretation to be derived
from the Civil Code. The Defendants deny that the CDC applies.
642.2. Whether the “waiver” clauses are valid in principle. The Claimants’ primary case
on the invalidity of certain “waiver” clauses rests upon the application of the CDC
to these agreements.
642.3. If the “waiver” clauses are valid, what is their scope and effect? The Defendants’
primary case is that they operate to bar any participation in these proceedings. The
Claimants contend that if the clauses are valid, they are properly interpreted as a
partial discharge of claims and/or compromising only the right to claim certain
(identified) heads of loss.
643. As matters stand the pleadings on the compensation agreements are expressed in general
terms, and conclusions reached by reference to the Sample Set will be indicative of the
approach the parties ought to apply to the wider pool of agreements. There is of course the
potential for individual factors to be relied upon as vitiating any agreements entered into:
for example, mistake, misrepresentation or lesion.1665 However, these will be issues for
Stage 2, if necessary, and form no part of the context at this trial.
B) Background
1) TTAC, Renova and PIM
644. As set out at POC §256,1666 in March 2016, the parties to the 20bn CPA signed the Term
of Transaction and Adjustment of Conduct (the “TTAC”). This agreement created Renova
as a conduit for the programmes of redress envisaged in the TTAC. One of the criticisms
of the TTAC by many victims of the Collapse and the MPF (which informed, at least in
part, its decision to issue the 155bn CPA) was the apparent imposition of Renova between
the obligation to pay compensation and the mining companies responsible for the disaster.
Although nominally “independent”, Renova is the creature of BHP and Vale via their
powers of appointment to its board, and Renova’s reliance on BHP and Vale for funding.1667
Indeed, BHP staff were seconded to Renova1668, Mr Mendoza confirmed in a 1782
1665
Reply, §§44.4 - 44.6 {A1/3/29}.
1666
POC, §256 {A1/1/108}.
1667
Mr Beaven, in his second witness statement, confirmed that BHP staff were seconded to Renova {B1/8/6}.
Lynch, in his first witness statement, confirmed that he was seconded from BHP to Renova {B1/5/3}, and Mr
Mendoza confirmed in his 1782 deposition that Renova is viewed as a “project” within BHP’s GPM division:
Mendoza 44:24, 45;1, 17-24 {F17/26/12}.
1668
{B1/5/3}, §9.
275
deposition that BHP views Renova as a “project” within its GPM division and BHP’s own
website1669 identifies Renova as one of BHP’s “locations”.
645. One of the remediation schemes operated by Renova was the “Programme for Mediated
Compensation” (the “PIM”). This had two parts, “PIM General” and “PIM Water”.
646. “PIM General” was presented as a scheme to indemnify individuals, families and small
businesses impacted (in terms defined by the TTAC) by the Collapse; and who suffered
material or moral (i.e. non-pecuniary) damages (save in respect of water interruption, to
which see below), and/or loss of income. Eligibility was defined at an early stage by a
registration programme overseen by Samarco.1670 If an individual or business was included
on this register, they were then entitled to apply to Renova for compensation under the PIM
General programme. The application process was conducted in person until 2023, when an
online platform was created. The programme remains open. If Renova accepted a claim, it
applied a damages matrix (of its own creation);1671 and in return for the receipt of
compensation, individuals were required to sign a compensation agreement including a
purported release of further claims. In evidence submitted during the jurisdiction dispute
in these proceedings, André de Freitas (President of Renova) stated that the effect of these
agreements was to discharge Renova and the Brazilian companies (i.e. Samarco, Vale and
BHP Brasil) “from any obligation to indemnify them from the heads of loss for which the
person has been indemnified in their settlement with Renova” and “where a settlement
includes payment for loss of profits or income, the discharge is only for those years for
which indemnification payments have been made.”1672
647. “PIM Water” had a more limited function of providing compensation to individuals who
had suffered moral damage as a consequence of interruption to their water supply for the
Rio Doce.1673 PIM Water opened in Governador Valadares in October 2016 and
subsequently opened in other municipalities. The programme was closed on 31 December
2017.1674 Again, recipients were required to sign compensation agreements. The release
clause in these agreements discharges any further obligation to pay compensation for
damage arising from the temporary suspension of water supply. The agreement wording
does not include other heads of loss; however, the release clause is broad, including but not
1669
BHP global locations {F16/498.26.15/1}.
1670
Reply, Appendix A, §6 {A1/4/3}.
1671
Submission filed by the Brazilian Companies information that the PIM programme remains open and the damage
matrix was created by Renova: {I3/78T/2}; {I3/78T/5}.
1672
Freitas 1, §9.6 {PE11/12/47}.
1673
Freitas 1, §8.2 {PE11/12/41}.
1674
Freitas 1, §8.3 {PE11/12/42}.
276
limited to loss of profits, material and moral damage arising from the suspension in the
supply.1675
648. Mr de Freitas estimated that by the time PIM Water had concluded, “approximately
269,096” individuals had received payments from Renova under this scheme and signed
compensation agreements.1676 Figures recently submitted by the Brazilian Companies to
the Brazilian court indicate that there have been 291,133 compensation awards.1677 The
compensation received amounted to R$ 880.00 (£120) for residents of Espírito Santo; and
R$ 1,000.00 for residents of Minas Gerais (£140).1678
649. The amounts paid to individuals under PIM General will have varied a great deal. The
Brazilian companies have recently indicated that 39,321 individuals have been
compensated through the general damages scheme.1679
650. The relatively small number of payments under the PIM General scheme speaks to the
dysfunction of the scheme and the inadequacy of the compensation on offer. In 2018 the
GTAC was signed by parties to the TTAC and parties to the 155bn CPA, with the stated
purpose of seeking to reform the programmes that Renova had been charged with
delivering, including the PIM schemes. However, disputes as to the implementation of the
TTAC and GTAC quickly led to the supervising court, the 12th Federal Court, creating nine
“Priority Axes”, which were proceedings within the umbrella of the 20bn and 155bn CPA
proceedings, each relating to a particular aspect of remediation. “Priority Axis 7”
encompassed disputes concerned with PIM General.1680
2) Novel System
651. In addition, the judge in charge of the 12th Federal Court, Judge Mario de Paula Franco
(“Judge Mario”), oversaw a further series of proceedings to hear representation from
“Local Commissions” (essentially local spokespersons) of affected areas. In 2020, the
“Local Commission of Affected People of Baixo Guandu” applied for an order that the
compensation mechanism on offer from Renova be simplified and made more flexible.
Judge Mario acceded to this request by ordering Renova to implement what he termed a
1675
Sample 15B {I3/83T/1-2}.
1676
Freitas 1, §8.18(A) {PE11/12/45}, §25.2(A) {PE11/12/84}. The GBP comparisons in Mr de Freitas’s statement
are GBP £170 and GBP £190. The figures given in this Opening Note are rounded and based on current exchange
rate figures. The exchange rate of course will have fluctuated over the years. Nothing turns on the precise figures;
the GBP comparisons are intended to give the court a general sense of the value of the compensation received.
1677
Submission filed by the Brazilian Companies on 26 July 2024 {I3/78T/5}.
1678
Freitas 1, §8.7(A)-(B) {PE11/12/43}.
1679
1680
Decision rendered by Judge Mario on 19 December 2019 creating nine “Priority Axes”. Additional “Priority
Axes” were established in the subsequent years. {I3/29T/3-8} {I3/29T/10}.
277
“Simplified Indemnification System”, commonly referred to as the “Novel System”. This
introduced a new damages matrix based on a concept of “rough justice” (i.e.
acknowledging the amounts were incapable of providing adequate compensation for the
loss suffered), with different occupation groups, such as fishermen or washerwomen, as the
reference point. The Novel System was then implemented by Renova in the regions of
Baixo Guandu and Naque; and via subsequent decisions of Judge Mario, its scope was
extended to other affected areas. The compensation amount was fixed initially in a range
from R$ 23,980 (GBP £3,836,80) to R$ 94,585 (GBP £15,133,60) depending on the
occupation of the applicant.1681 Recipients of compensation were required to sign a broadly
framed waiver which included express reference to claims brought overseas.
652. On 30 October 2021, Judge Mario created a sub-category within the Novel System named
“water damage” to compensate individuals for water interruption, with compensation
payable in the sum of R$ 2,000 (£280) per day of interruption (as declared by local water
companies).1682 Renova has estimated that 82,629 individuals were compensated via the
general Novel System and 30,309 via the water damage scheme.1683
3) Litigation relating to the Renova schemes
653. The Novel System was controversial and its creation resulted in a fresh wave of
litigation.1684 On 21 June 2022 the TRF-1 granted a request from the MPF to partially
suspend the establishment of the Novel System for residents on Naque, citing the fact that
proceedings had taken place in secrecy and without the notification of the MPF (raising
echoes of the means by which the TTAC had first been approved). The decision criticised
Judge Mario both for these offences against public order, and a situation in which victims
of the Collapse had been led to accept the value established in the Novel System. The court
considered the victims to be in an extremely vulnerable situation without any real
autonomy to choose. Further, the requirement to sign general release terms, including
waiving claims in foreign jurisdictions, had been established without a prior discussion.
The compensation sums had been based on a seemingly random amount, which could
1681
Decision rendered by Judge Mario on 1 July 2020 {I3/33T/27-29}, {I3/33T/116-117}. The Renova website
subsequently advertised compensation sums both below and in excess of this range, again depending on the
occupation of the applicant. See: https://www.fundacaorenova.org/wp-
content/uploads/2020/10/13_07_Matriz_de_Danos_Sistema_de_Indenizacao.pdf.
1682
Decision rendered by Judge Mario within the scope of the Priority Axis 7 proceeding on 30 October 2021
{I3/43T/64}.
1683
1684
Writ of mandamus filed by the MPF on 27 October 2020 against Judge Mario {I3/38T/1-56}; Application filed
by the Institutions of Justice on 29 October 2020 {I3/39.1T/1-20}; Special Appeal and extraordinary appeal filed
by the MPF on 23 September 2022 within the scope of the proceeding of the Local Commission of Baixo Guandu
{C3/7.2T/671}, {C3/7.2T/726}.
278
therefore be considered only a partial release.1685 This decision was later reversed on
jurisdictional grounds; however the Claimants submit that the Brazilian’s court’s general
assessment of the Novel System was an important criticism.1686
654. Further disputes arose from Renova’s reliance on the broad terms of the waiver clauses
contained in the Novel System compensation agreements. For example, on 29 June 2022
the TRF-1 ordered Renova to recommence payments of PIM “AFE” (emergency
sustenance payments to victims), which Renova had stopped for individuals entering into
a Novel System agreement, relying on the waiver provisions in the Novel System.1687 On
16 September 2022, Judge Mario ruled (against Renova) that an individual who received
compensation for “General Damage” through Novel could also request “Water Damage”
compensation notwithstanding the terms of the waiver in the general scheme. He also
confirmed that the scope of the waiver in the PIM General agreements was partial and
needed to be read alongside the nature of the damage compensated.1688
655. Perhaps most significantly, on 28 July 2023, the 4th Federal Court (which succeeded the
12th Federal Court as the managing court for Collapse related proceedings) under Judge
Vinicius Cobucci (“Judge Cobucci”) issued a decision declaring the entire Novel System
to be a nullity.1689 Judge Cobucci identified that the Novel System offered compensation
for homogenous individual rights (according to the classification at Article 81 of the CDC,
which he applied). He noted that the “Local Commissions” granted audience by Judge
Mario had no standing to sue in enforcement of the TTAC or GTAC, or any standing for
collective protection. As a result, the proceedings that gave rise to the Novel System should
be deemed “null and void ex officio”. The TTAC and GTAC established an extrajudicial
compensation scheme, and Judge Cobucci found as “an alternative and optional
extrajudicial method of conflict resolution, I understand that it is not up to the Judiciary to
think up new criteria for assessing the damage matrix.” The parties were required to think
again upon the question, “How can we guarantee this compensation in accordance with
the Public Civil Action Law and the Consumer Protection Code, with the creation of
certain, determined, liquid and enforceable obligations to pay that allow settlement and
provide legal certainty?” A major flaw with the Novel System was that it “does not allow
1685
Decision rendered by the President of the TRF-1 on 21 June 2022 {I3/47T/6}.
1686
Decision rendered by the TRF-1 on 8 September 2023 {I3/64T/2-5}.
1687
Decision rendered by the TRF-1 on 29 June 2022 {I3/48T/3}.
1688
Decision rendered by the 12th Federal Court on 16 September 2022 {I3/50/22}.
1689
Decision made within the scope of Priority Axis No. 7 on 28 July 2023 {C3/7.2T/766-767}. See also Rosenvald
1, §718 and §720(a) {C3/1T/279-280}; Rosenvald 2, §470 {C16/1T/204}.
279
lawyers to discuss their clients’ individual situations.”1690 The judgment concludes with an
order to shut down the Novel System from 29 September 2023.
656. These decisions illustrate several of the issues that have arisen with the Renova schemes
since its establishment; and they are pertinent to the issues that arise for determination of
the English court. There is not the space in this opening note (or even within the confines
of this trial) to traverse in detail the controversies surrounding PIM and Novel. What is
clear is that the Brazilian courts have lost patience. In a recent decision, the TRF-6 4th panel
summed up the state of affairs thus:
“[A] Tower of Babel, complex and confusing, is what the compensation system for
those impacted by the Dam tragedy has become. Registrations and payments didn’t talk
to each other, didn’t communicate. Strict eligibility criteria and lax criteria alternated in
dealing with the issue. And the people affected, stunned, were overlooked, lost, as they
should have been, in the immense confusion”.1691
The decision1692 [under appeal] also refers to past payments, present payments and
future payments. There are references to payments that were rejected, for who knows
what reasons, and which will now have to be reviewed and resumed. There is reference
to the accumulation of payments of different hues. There are references to lists and CIF
Resolutions. In short, chaos has ensued and the compensation payments will go on
forever, going round in circles, which is utter nonsense for all the parties involved in
the episode.1693
657. It is these circumstances, of course, that help explain why there are more than 600,000
claimants seeking redress against BHP in the English courts. But it is also submitted that
this background provides important context to the reliance now placed on the “waiver”
clauses by BHP to seek to shut out a substantial number of these claimants.
4) Mariana CPA and individually negotiated agreements
658. Finally, there are a smaller number of compensation agreements entered into by individuals
through either (i) the compensation scheme provided for in the TAC that settled the
“Mariana CPA”, which operated differently to the TTAC and applied to residents in
Mariana; or (ii) settlement agreements compromising individual proceedings (i.e. private
actions by victims of the Collapse) in Brazil. Agreements with such origins are represented
in the Sample Set numbers 8 and 9 and numbers 6 and 10, respectively.1694
1690
Decision made within the scope of Priority Axis No. 7 on 28 July 2023 {C3/7.2T/765}.
1691
Decision rendered by the TRF-6, on 23 July 2024 {I3/74T/2}.
1692
Decision rendered on 15 May 2024 by the 4th Federal Court. See also Rosenvald 1, §721 {C3/1T/280}; Rosenvald
2 §379 {C16/1T/162}.
1693
TRF6 decision from 23 July 2024 staying the effects of 15 May 2024 decision {I3/74T/2}.
1694
Sample 8 {I3/79/80-85}, Sample 9 {I3/79/93-96}, Sample 6 {I3/79/54-56} and Sample 10 {I3/79/104-109}.
280
659. The “Mariana CPA” refers to the CPA filed by the State Prosecutor of Minas Gerais on 16
December 2015 against Samarco, BHP Brasil and Vale, on behalf of victims of the Collapse
within the judicial district of Mariana.1695 It proceeded through the Mariana State Court,
rather than being merged with the 20bn CPA and 155bn CPA in the 12th Federal Court. On
2 October 2018 the parties entered into a transaction term, the “Mariana TAC” that – in
contrast to the TTAC, with its imposition of Renova – recorded the direct obligation of the
Brazilian companies to provide compensation to affected persons. Further, clause 3 of the
Mariana TAC provided that the calculation and payment of indemnification was to be
carried out on an individual basis. The implementation of this scheme was also not without
controversy,1696 but for present purposes it is sufficient to note that the Mariana TAC
provided the basis for individuals to file enforcement proceedings. Typically, the victim
would then enter into a compensation agreement with the Brazilian companies (and Renova
– from which payment was received notwithstanding they had no direct obligation under
the Mariana TAC), with a waiver that varied in scope depending on the agreements.
660. In respect of individual actions, all that needs to be stated at this stage is that these actions
would commence from the filing of an ordinary private law claim in the Brazilian courts,
i.e. bypassing any of the schemes of compensation outlined above; and the parties settled
the relevant action on the terms included in the individual agreement.
C) Legal principles
1) Principles of interpretation
661. There are some very basic (almost trite) propositions that are common ground:
661.1. There is prima facie binding force in a contractual agreement, including an

agreement of settlement and waiver.1697
661.2. The extent and effect of an agreement will depend on the terms of the agreement,
properly interpreted.1698
661.3. A waiver will not prevent claims arising that are different to and not included in the
object of the agreement entered into.1699
1695
Mariana CPA filed on 16 December 2015 {I3/4T}.
1696
A summary of some of the disputes that arose can be found in the evidence filed at the jurisdiction phase. See
e.g., Deluiggi 1, §§324-325 {PE11/56/130-131}.
1697
Tepedino 1, §589 {C7/1T/233}; Rosenvald 2, §362 {C16/1T/156}.
1698
Rosenvald 1, §617, §§619-620 {C3/1T/236-238}; Tepedino 2, §337 {C18/1T/139} §345 {C18/1T/143}.
1699
Rosenvald 1, §614 {C3/1T/236}; Rosenvald 2, §364 {C16/1T/156-157}; Tepedino 1, §581 {C7/1T/229};
Tepedino 2 §345 {C18/1T/143}.
281
662. Beyond this, there are certain principles of Brazilian law relied upon by the experts that are
relevant to the exercise of contractual interpretation. These include: (i) the private
autonomy of the parties; (ii) objective good faith; (iii) the social function of the contract;
and (iv) contractual balance.1700 The experts differ as to the weight or emphasis to be placed
on each one. Professor Tepedino identifies the private autonomy of the parties as “the pillar
of contracts” in order to argue that contracting parties must be bound strictly by the terms
of the contract without any material reference to contextual circumstances.1701 Professor
Rosenvald considers that such an approach may be appropriate in a commercial context;
but that it is inappropriate as a governing principle of general application (because it fails
to balance the four principles set out above); and it is particularly inappropriate when there
is a consumer relationship (or equivalent), in which case there are important, additional
protections to consider.1702
663. The Claimants contend that there are several reasons why the Sample Set agreements are
contracts to which the CDC will apply.
663.1. First, by reason of Article 29 of the CDC.1703 As noted above (§613) this is one of
the three provisions within the CDC that extends protections to “consumers by
equivalence”. It states that “all persons” exposed to the practices in Chapters V and
VI of the CDC “are deemed consumers”. Those practices include abusive
contractual practices (e.g. demanding excessive advantage (Article 39, V); imposing
obligations without providing necessary information, or where comprehension as to
meaning or scope is hindered (Article 46); removing or exonerating a supplier’s
liability (Article 51, I); transferring responsibilities to third parties (Article 51, III
establishing obligations that are incompatible with principles of good faith (Article
51, IV)). Professor Rosenvald highlights the potential for agreements in the Sample
Set to limit rights contrary to Article 51 of the CDC as particularly relevant in this
regard.1704
663.2. Second, by reason of applying Article 17 of the CDC.1705 This is an alternative and
independent (although not mutually exclusive) route to that offered by Article 29.
1700
Rosenvald 1, §563 {C3/1T/216}.
1701
Tepedino 2, §355 {C18/1T/147}.
1702
Rosenvald 1, §564 {C3/1T/216}. Professor Tepedino does not necessarily disagree the rules of interpretation
will be different in a consumer context; he simply denies that there is a consumer relationship in issue on the
Sample Set: Tepedino 2, §356 {C18/1T/147-148}.
1703
Consumer Defence Code. Article 29. “For the purposes of this Chapter and the following one, all persons,
determinable or not, exposed to the practices contemplated therein, are deemed consumers.” {I1/7/9}.
1704
Rosenvald 1, §646 {C3/1T/249-250}; Rosenvald 2, §393 {C16/1T/169}.
1705
Rosenvald 1, §636 {C3/1T/244} §645 {C3/1T/248-249}; Rosenvald 2, §§395-396 {C16/1T/170}.
282
In circumstances where the STJ has repeatedly affirmed the application of the CDC
to situations in which there is damage resulting from environmental disasters, as
addressed above in the context of limitation, it would be consistent to apply the
CDC to any transaction of the claims arising from such a disaster. It is notable that
in his decision of 28 July 2023 nullifying the Novel System, Judge Cobucci made
several references to ensuring the protection of the CDC applied to the victims. He
did so without any reference to “gateway” provisions such as Articles 2 or 17; the
implication being that its relevance was obvious.1706
663.3. Third, the policy reason that underpins the application of the CDC, namely to
protect those in a position of vulnerability, applies squarely to the victims of the
Collapse who find themselves seeking to obtain some measure of compensation for
their losses.1707 As Professor Rosenvald notes, there is doctrinal support for applying
the CDC to contractual relations in situations of vulnerability, including in Professor
Tepedino’s writings (albeit Professor Tepedino appears to take a very different view
in his report for BHP in these proceedings).1708
664. If it is concluded that the CDC applies to the interpretation of the Sample Set (or any
number of the agreements therein) interpretation of the agreements must have regard to the
following provisions found within the CDC:1709
664.1. Art 46 of the CDC provides that contracts that are not fully intelligible or where the
relevant instruments are written in such a way that makes it difficult for consumers
to understand their meaning and scope will not bind the consumer (or consumer by
equivalence).1710
664.2. Art 47 of the CDC states that “Contract clauses shall be interpreted in a manner
most favourable to the consumers”. This provides a rule of interpretation of general
application to clauses in a contract governed by the CDC. There is no requirement
that it is first demonstrated that the clause is “ambiguous” (cf. Article 423 of the
Civil Code, addressed below).
664.3. Article 51 of the CDC provides that if any clause falls within one of the situations
set out in Article 51, I to XVI (including, as noted above, exoneration of a supplier,
transfer of liabilities to a third party, or per Article 51, IV “stipulating obligations
1706
See §663.2 above.
1707
Rosenvald 2, §§397-399 {C16/1T/170-171}.
1708
Tepedino 2, §§391-397 {C18/1T/158-160}.
1709
Articles 46 and 47 {I1/7/9-10}; Article 51 {I1/7/10-12}; Article 54 {I1/7/13}.
1710
Rosenvald 1 §707 {C3/1T/273-274}.
283
considered unfair or abusive that put the consumer at an exacerbated disadvantage
or that are incompatible with the good faith or equity”) then it “will be nullified”.
Article 51 §1 sets out the criteria for assessing whether an advantage will be
“exaggerated”; they include provisions that “offend the fundamental principles of
the legal system”, “restrict fundamental rights”, and/or are “excessively onerous
for the consumer, considering the nature and content of the contract, the interests
of the parties, and other particular circumstances to the case.”
664.4. Article 54 of the CDC sets out certain requirements in relation to “adhesion
contracts”. These are addressed in further detail below (see §667ff).
665. In this way, the CDC supplements the Civil Code (which provides the general rules of
interpretation of contracts). If it is determined, contrary to the Claimants’ case, that the
CDC does not apply to any of the Sample Set agreements, then regard will be had solely to
the Civil Code provisions. The most important of these are:
665.1. Article 112 stipulates that effect is to be given to parties’ intentions over and above
its literal text.1711
665.2. Article 114 provides waivers must be interpreted in a restrictive manner. Article 843
makes similar provision in respect of any settlement of an action. Professor
Rosenvald explains that as a result: “only those points which are expressly set out
in the contract and are within limited time parameters or which naturally and
necessarily originate from the terms of such contract can be deemed valid and
effective.”1712
665.3. Articles 113 and 422 oblige parties to observe the principle of good faith and require
that contracts be interpreted “in conformity with good faith”. These provisions
favour a meaning that is most consistent with honest dealing between the parties.1713
665.4. Article 421 establishes the “social function” of the contract: this expressly limits the
autonomy of the parties where wider social interests, or the human dignity of a party,
is threatened by the terms. Violation of this clause leads to a finding of nullity.1714
665.5. Article 423 makes provision for the interpretation of adhesion contracts in favour
of the adhering party in cases of ambiguity. It will be addressed further below.
1711
Rosenvald 2, §370 {C16/1T/158-159}, §378 {C16/1T/162}.
1712
Rosenvald 1, §610 {C3/1T/234}.
1713
Rosenvald 1, §570 {C3/1T/219-220}, §§577-590 {C3/1T/222-227}.
1714
Rosenvald 1, §593{C3/1T/228}.
284
666. The relevance of these provisions in the Civil Code is not disputed, merely the weight to
be attached to each in the context of the Sample Set. The Claimants note that irrespective
of the protections afforded by the CDC, there are express provisions in the Civil Code that
require the scope and effect of waiver clauses to be interpreted restrictively. To that extent
at least, there should be no real scope for disagreement.
2) Adhesion Contracts
667. Brazilian law makes special provisions in both the CDC and the Civil Code for “adhesion
contracts”. These are contracts characterised by uniformity, the predetermination of the
clauses by the drafting party, the absence of any ability to negotiate the general clauses of
the contract, and the indeterminacy of potential adherents.1715 Colloquially, they can be
described as contracts which propose a “take it or leave it offer” on standard terms offered
to (but not materially negotiated with) the acceptee or “adherent”. In Article 54 of the CDC,
adhesion contracts are described as “an agreement whose clauses have been approved by
the competent authority or established unilaterally by the supplier or goods or services,
without the consumer being able to discuss or substantially modify its contents.”
668. When applicable, Article 54 of the CDC goes on to require adhesion contracts to be drawn
up in such a way that (i) it is easily understandable and legible generally; and (ii) any
clauses that limit consumers’ rights will be specially highlighted “so that they can be
quickly and easily understood.” Failure to observe these practices will result in the nullity
of those clauses.1716
669. Article 423 of the Civil Code states that “when there are ambiguous or contradictory
clauses in a contract of adhesion, the interpretation most favourable to the adhering party
shall be adopted.” There are further restrictions on the waiver of future rights in adhesion
contracts provided by Article 424 of the Civil Code; such waivers will be nullities.1717 In
this way, even without the protections added by the CDC, Brazilian law limits the extent
to which the rights of parties may be prejudiced by agreeing to the terms offered in an
adhesion contract. This recognises that adhesion contracts cannot be approached on the
same terms as contracts individually negotiated between two equal parties. There is no
equality in the scenario of the adhesion contract, and simply applying in isolation the
principle of the “autonomy of the parties” (as Professor Tepedino would contend)
overlooks that basic inequality.
1715
Rosenvald 1, §§673-674 {C3/1T/260}.
1716
Rosenvald 1, §669 {C3/1T/257-258}.
1717
Rosenvald 1, §669 {C3/1T/257-258}.
285
3) Ratification
670. It was and is standard practice for the compensation agreements entered into (whether
through PIM, Novel or resulting from individual proceedings) to be “ratified” by the
Brazilian court. BHP relies on this fact to suggest that the agreements are thereby somehow
unimpeachable. BHP is wrong.
670.1. First, the “ratification” exercise for these agreements do not involve judicial
scrutiny of the terms of the agreements. There have been tens of thousands of
agreements “ratified” by the Brazilian court; often this is done in bulk, with
thousands processed at one time. It is a rubber-stamping exercise, not an exercise of
analysing the merits; it creates no res judicata.1718
670.2. Second, the fact that agreements arose from PIM (i.e. the TTAC and GTAC), the
Mariana TAC or Novel does not elevate the agreements into creatures of a “court-
approved settlement” as BHP contend. The decisions referred to above at §655 as
well as others1719 clearly state that these compensation schemes were extrajudicial.
To the extent that Novel was once the creation of Judge Mario, its nullity has now
been pronounced. There is no additional status to the compensation agreements to
be attained by virtue of its background in the Renova schemes.
670.3. Third, the purpose of the ratification of an out-of-court settlement is to grant

enforceability to the agreement established between the parties. That is no bar to the
matter being reopened if grounds present themselves to do so, or an action being
brought to allege nullity if it is considered (for example) that a clause is abusive.1720
The relevant challenge is to the conduct of the other party rather than that of the
Brazilian Court.1721 And of course, “ratification” without consideration of any
merits issue cannot operate as a bar to a party taking a point of interpretation as to
the effect of an agreement. That would be perverse and defeat most of the
protections afforded in the CDC and the Civil Code.
671. The nature of the “ratification” exercise is also important for the reception of these
agreements in the English court, because on their face the ratification decisions may be
said to be judgments of a foreign court, and the question will arise as to its recognition.
1718
Rosenvald 1, §734 {C3/1T/286}; Rosenvald 2, §§459-464 {C16/1T/200-202}; Tepedino 1, §546 {C7/1T/217-
218}; Tepedino 2, §432 {C18/1T/170}.
1719
See decision rendered on 25 January 2024 “PIM and Novel are out-of-court compensation systems arising from
an obligation to do” {I3/68T/6}.
1720
Rosenvald 1, §733 {C3/1T/285-286}.
1721
Contrast the different provisions of the Civil Procedure Code quoted in Rosenvald 1, fn 489 and fn 490
{C3/1T/240}.
286
That question is to be answered by reference to the common law rules of recognition, Brazil
not being party to any relevant convention of which the UK is party. As a matter of English
common law, only a foreign judgment that is a judgment on the merits will be recognised.
So, for example, in Salah v Director of the Serious Fraud Office [2017] EWCA Civ 18, an
order made when a claimant withdrew their claim was not a judgment on the merits for the
purposes of recognition: the order of the foreign court “was plainly not the product of a
decision-making process, in which the relevant facts were considered and weighed, in
which the relevant principles of law were set out and applied to the facts found, and from
which a conclusion was reached […] There was no judgment in that sense at all, simply an
order […]”.1722 See also, Dicey 16th edn., at §§14-034 to 14-040.1723
672. Accordingly, the procedural act of “ratification” of the compensation agreements in this
case adds nothing to the strength of BHP’s case. There is no suggestion that the ratification
took place following an assessment of the merits of the issues; there is no material res
judicata as a matter of Brazilian law; the Brazilian case law demonstrates that challenges
based on both alleged nullity and a dispute as to the proper interpretation of a ratified
agreement is permissible; and finally, there is nothing in the fact that the ratification has
resulted in a court order to engage the English common law rules of recognition. The
dispute properly turns on the substance of the compensation agreements to determine their
status and effect.
D) Application to the Sample Set
673. The 14 agreements within the “Sample Set” are summarised in this table, and the relevant
“waiver” provisions in each agreement are identified.
No. Category Waiver provision(s) OPUS ref

1 Novel System (informal fishing) Under “Release” and {I3/79/5-7}
“Waiver/Withdrawal”
2 PIM General (professional fishing) Clause 5 {I3/79/17}
3 PIM General (agriculture) Clause 7 {I3/79/30-
31}
4 PIM General (agriculture and cattle) Clause 5 {I3/79/41}
5 PIM Water (Governor Valadares) Clause 4 {I3/79/48}
6 Individual proceedings agreement Paragraphs 3 and 4 {I3/79/55}
7 PIM General (housing) Clause 6 {I3/79/66}
8 Individual proceedings agreement Paragraphs 6 and 7 {I3/79/81-
82}
9 Individual proceedings agreement Paragraphs 5 and 6 {I3/79/94}
1722
Salah v Director of the Serious Fraud Office [2017] EWCA Civ 18 at [54] per Simon LJ {J1/14/10}.
1723
{J1/28.1/4-5}.
287
10 Individual proceedings agreement Paragraphs 3, 4 and 12
{I3/79/105-
107}
1A Novel System (water damage) Under “Settlement” and {I3/80T/4-6}
“Waiver/Withdrawal”
14A PIM General (agriculture) Clause 5 {I3/81T/5}
15A PIM General (professional fishing) Clause 6 {I3/82T/3}
15B PIM Water (Governador Valadares) Paragraphs 2 and 3 {I3/83T/1-2}
1) PIM and Novel System agreements are adhesion contracts
674. As stated above, “adhesion contracts” are agreements in which the general terms have not
been the subject of negotiations. They are characterised by uniformity and a “take-it-or-
leave-it” type offer. Both the PIM and the Novel Systems operated in this way. Indeed,
given the volume of agreements entered into, it could hardly have been otherwise. A
summary of the steps taken by applicants to PIM and Novel is pleaded at Appendix A of
the Reply,1724 and that summary is largely uncontroversial.1725 In addition, Professor
Rosenvald has analysed the process that an applicant to the Novel System would have
followed,1726 taking account of the key steps which would have been followed via the
Novel System’s online platform. He observes “the rigidity and uniformity of the clauses,
as well as the lack of flexibility to adapt to the particulars of each case, typical
characteristics of adhesion contracts.” The online process concludes with an invitation:
“[i]f you agree with the terms of compensation presented, proceed to the next step, in which
the clauses of the terms of acceptance and discharge to be signed will be presented.”1727
In other words, the compensation will be offered on terms of release already drafted. It is
then explained: “If you do not agree with the presented terms of compensation, the request
will be terminated, and the applicant’s denial will be registered.”1728 In the terms contained
within Sample Set agreement 1, it is reinforced: “Renova Foundation emphasizes that, if
the terms of the indemnity presented here are rejected, it will not be possible to make a new
request for indemnity through the online platform. The refusal is final and there will be no
resubmission of the indemnity term.”1729 This would have been presented to the applicant
before they had sight of the terms of the waiver.
675. The Novel System agreements present themselves as adhesion contracts on their face: this
can be seen at page 2 of Sample Set agreement 1 and page 1 of Sample Set agreement
1724
Reply, Appendix A, §§5.1-5.13, §7.2.5 {A1/4/1-4}.
1725
Rejoinder, Appendix A, §§7-22, §§23-33 {A1/5/109-115}.
1726
Rosenvald, 2, §§421-423 {C16/1T/182-186}.
1727
NR-2C/507 {C16/7T/507}.
1728
NR-2C/507 {C16/7T/507}. See also {I3/80T/2} and {I3/79/4}.
1729
{I3/79/4}.
288
1A.1730 The PIM agreements do not, but this does not alter the essential similarity of the
process. Although PIM applications were made in person, until the creation of an online
platform in 2023, the meetings that took place did not involve negotiation of the terms of
the compensation agreement waiver clauses. That is clear from the agreed summary of the
procedure on the pleadings, the explanatory documents produced by Renova, and in the
evidence given previously in these proceedings by Mr de Freitas.1731
676. BHP’s answer to this, in the form of Professor Tepedino’s evidence, is that settlement
agreements cannot by their very nature be adhesion contracts because the
claimant/applicant has the freedom to choose whether or not to agree to its terms.1732 This
is incorrect: it could be said of any contract, in the absence of duress or capacity issues,
that a party has the freedom to choose whether or not to enter into it. An “adhesion contract”
cannot be defined by this absence of choice; which goes rather to whether this is an
enforceable contract at all. Rather it is defined by the absence of freedom to choose the
formulation of the contractual provisions; because it is unilaterally drafted and presented
to an adherent simply for execution.
677. Nor can it be said that the presence of a lawyer in the process can alter the characteristics
of the PIM and Novel System agreements as adhesion contracts. It is not suggested that the
role of the lawyers afforded any opportunity to negotiate the terms of the compensation
agreements or in particular the waiver provisions in either scheme.1733 In respect of Novel,
Judge Cobucci dealt with this point in terms in the decision of 28 July 2023: “Due to its
deficiencies, Novel does not allow lawyers to discuss their clients’ individual
situations.”1734 On 6 August 2024, Judge Cobucci ruled that Renova must be prohibited
from requiring applicants to hire a lawyer to adhere to the TTAC programmes. The judge
found there was no basis in Brazilian law for mandating legal representation in extrajudicial
proceedings.1735 Far from promoting the victims’ rights, the Renova mandated legal
representation was a further infringement.
1730
{I3/79/4}; {I3/80T/1}.
1731
Reply, Appendix A {A1/4/1-7}; explanatory documents produced by Renova {C16/7T/255-370},
{C16/7T/372-611}.
1732
Tepedino 1, §§648-650 {C7/1T/251-252}.
1733
A point illustrated by the timestamps that can be seen at various stages of the application process: there could
not possibly have been any discussion of the provisions between the administrative stages recorded.
Timestamps on Sample Set 1 {I3/79/4} and {I3/79/7}; timestamps on Sample Set 1A {I3/80T/3} and
{I3/80T/5}.
1734
Decision rendered on 28 July 2023 by the 4th Federal Court {C3/7.2T/765}. See further Rosenvald 2, §424
{C16/1T/186}.
1735
Decision rendered on 6 August 2024 by the 4th Federal Court {I3/75T/23}.
289
678. Therefore, the Claimants invite the Court to characterise 10 of the Sample Set agreements
(numbers 1-5, 7, and 11-14) as “adhesion contracts” for the purposes of Article 54 of the
CDC and/or Article 423 of the Civil Code. The Claimants do not contend that the
compensation agreements that arose on Sample Set agreements 6, 8, 9 and 10 are adhesion
contracts. These are settlements of individual proceedings and the context in which these
agreements were negotiated (with it being inferred that there was at least the potential for
negotiation of terms) is quite different to the Novel and PIM schemes.
2) Clauses that are invalid by reason of Articles 46 and/or 51 of the CDC
679. On the basis that the CDC applies to the Sample Set (via any of the gateways referred to at
§663 above), certain waiver provisions are null or non-binding on the adherents.
680. First, the Claimants contend that all of the Novel System waiver provisions (i.e. both those
titled “Release”/“Settlement” and “Waiver/Withdrawal) offend Art 46 of the CDC, with the
result that they will not be binding.
681. The process in which adherents to the Novel compensation agreements entered into the
terms of those agreements demonstrates that they were “not given previous knowledge of
the content” of those provisions. As noted above, it was only after an acceptance of the
compensation on offer that an adherent would be shown the terms of the release required
by Renova.
682. It is true that prior to reaching that point, the adherent would be told the following: “[T]he
Judge of the 12th Federal Court of Belo Horizonte, in the judicial decision of February 12,
2021, issued in the records of lawsuit No. 1037382-90.2020.4.01.3800, established [that]
the free and voluntary adhesion to the novel indemnity system “implies a definitive release
and covers all financial claims arising from the Collapse, with the exception – of course –
of any future damages.” However, this makes matters worse, since the waiver that was then
imposed on the adherent purported to release all claims including in relation to future
damages.
683. Article 46 of the CDC also relieves a consumer (or equivalent) from obligations arising
“from text [that] is worded so as to hinder comprehension of meaning or scope.” The
confusing manner in which the waivers in the Novel System agreements were drafted is
evidenced by the series of Brazilian court decisions that reach different views on the scope
of the agreements.1736 In other words, even if the adherents had been given the opportunity
1736
See the following decisions: (i) decision handed down within the scope of an interlocutory appeal (1008684-
91.2021.4.01.0000) in the 20bn CPA (1024354-89.2019.4.01.3800), dated 29 June 2022, {I3/48T/2-3}; (ii)
290
to review the terms of the waiver prior to acceptance, their comprehension was hindered
by the drafting of the waiver provisions, and the contradictory information presented as to
the scope of the release.
684. In addition to the challenge that is made by reference to Article 46, these provisions ought
also to be set aside under Article 51, IV: the attempt to enforce provisions with uncertain
consequences is a breach of the duty of good faith.1737
685. Second, the “Waiver/Withdrawal” provision in the Novel System Agreements is an abusive
provision within Article 51 of the CDC. These provisions (as noted above, unseen before
acceptance) are targeted at the English proceedings in particular, and require the adherent
to waive and/or withdraw any foreign claims. This provision places the adherent at an
exaggerated disadvantage because it (i) offends the fundamental principle of providing
access to justice; (ii) goes beyond what is necessary for the purposes of the contract, thus
undermining the contractual balance; and (iii) would have the costly impact on the adherent
of denying them effective recourse for compensation that has not been provided. It is
important in this context to emphasise that the Novel System was never designed to
compensate all damages: as expressly stated by Judge Mario upon its establishment, at least
future damages were outside its scope. Accordingly, an attempt to frustrate any further
recourse to court even in respect of damage that was not within the scope of the
compensation agreement is abusive (Article 51 IV of the CDC).
686. Third, in respect of the PIM General and PIM Water waiver clauses, the Claimants contend
that these failed to comply with the provisions of Article 54 of the CDC and for that reason
are to be considered null for abuse under Article 51.1738 The waiver clauses in these
agreements (i.e. Sample Sets 2, 3, 4, 5, 7, 14A, 15A and 15B) undoubtedly sought to limit
the adherent’s rights; however, they were not specially highlighted so that they could be
quickly and easily understood (as required by Article 54, §4). This is apparent from the
Order handed down within the scope of the 20bn CPA (1024354-89.2019.4.01.3800), dated 18 August 2022,
{I3/49T/1}; (iii) decision handed down within the scope of Priority Axis 7 (1000415-46.2020.4.01.3800) dated
04 July 2023 {I3/60T/5-6}; (iv) Decision handed down within the scope of Priority Axis 7 (1000415-
46.2020.4.01.3800) dated 16 September 2022, {I3/50T/95-97}; (v) decision handed down within the scope of
Priority Axis 7 (1000415-46.2020.4.01.3800) dated 22 September 2023 {I3/65T/6-7}; (vi) Decision handed
down within the scope of Priority Axis 7 (1000415-46.2020.4.01.3800) dated 25 March 2024 {I3/69T/5-6} and
{I3/69T/10} {I3/69T/12}; (vii) Decision handed down within the scope of Priority Axis 7 (1000415-
46.2020.4.01.3800) dated 15 May 2024 {C3/7.2T/778-783}.
1737
Rosenvald 2, §414 {C16/1T/178-179}.
1738
Rosenvald 1, §695 {C3/1T/269}.
291
face of the agreements, where the relevant provisions simply appear within the run of text
that comprises the agreement.1739
687. The upshot of the Claimants’ arguments if successful will be that the relevant waiver
clauses identified in the table at §673 above are declared to be non-binding (Article 46) or
null (Article 51). The Claimants do not seek a finding of nullity in respect of the agreements
as a whole. Further, as has been pleaded by the Claimants throughout these proceedings,
credit will be given for any sums received in partial compensation (the records of which
will all be obtainable from Renova) so as to prevent double recovery.
688. Again, the Claimants do not challenge the prima facie binding nature of the individually
negotiated compensation agreements (Sample Set agreements 6, 8, 9, 10). The dispute in
respect of those agreements is limited to the questions of interpretation that follow.
3) Interpretation of waiver provisions if valid
689. Should the Claimants fail to establish in their primary case based on Articles 46 and 51 of
the CDC, they submit that nonetheless the waiver provisions in the Sample Set agreements
should still be interpreted in favour of the adherents (by reason of Art 47 of the CDC or Art
423 of the Civil Code);1740 and/or restrictively (by reason of 114 and 843 of the Civil
Code)1741 so as to ensure the effect of the compromise goes no further than would be
consistent with the principles of good faith (i.e. Articles 113 and 422).1742 In practical terms,
that calls for consideration of two broad issues: who can benefit from any release/waiver;
and what is the scope of the agreement, i.e. what loss does the release/waiver cover?
690. On the first of these questions: none of the Sample Set agreements name BHP expressly as
a party or as a beneficiary of any purported release. However, with one exception, the
Claimants do not pursue a case that BHP is unable to take benefit of the compensation
agreements. It is accepted that if the agreements are valid and are expressed to have the
effect of releasing liability in relation to losses caused by the Collapse, they will be effective
as against BHP to the same extent as they would be against any other of the jointly and
severally liable parties for the relevant loss.
691. As to that second question, the Claimants’ position is that the settlement agreements should
be interpreted in such a way that limits the extent of any waiver or release to either (i) a
discharge for the amounts of compensation received; or (ii) a waiver or release of certain
1739
Sample 2 {I3/79/17}, Sample 3 {I3/79/30-31}, Sample 4 {I3/79/41}, Sample 5 {I3/79/48}, Sample 7 {I3/79/66},
Sample 14A {I3/81T/5}, Sample 15A {I3/82T/3} and Sample 15B {I3/83T/1}; {I3/83T/2}.
1740
Rosenvald 1, §§603-605 {C3/1T/232-233}, §683 {C3/1T/264}, §689 {C3/1T/265}.
1741
Rosenvald 1, §§610-611 {C3/1T/234}.
1742
Rosenvald 1, §566 {C3/1T/217}, §619 {C3/1T/237-238}.
292
heads of loss. On a proper reading of the Sample Set agreements, none of them have the
effect of excluding the possibility of further claims.
692. In respect of the Novel System compensation agreements, which contain the most broadly
worded releases, the Claimants contend that these agreements do not extend to cover future
loss (and accordingly they cannot operate to preclude all further claims where loss has been
suffered after the date of the compensation awarded).1743 The Claimants rely on the
summary given by Judge Cobucci in his decision of 15 May 2024, which arose in the
context of a dispute over whether loss of profits beyond the date of the compensation award
were recoverable, notwithstanding entry into a “Novel” waiver:
692.1. The agreement signed under Novel could not imply an unrestricted and absolute
discharge, without any time parameters. In this case, there would be unjust
enrichment on the part of those who caused the damage, to the extent that they failed
to compensate the victims for the ongoing and permanent effects of the dam
collapse, which are renewed by the passage of time and inertia in producing ideal
socio-economic and environmental conditions.
692.2. While the property right consisting of compensation resulting from the disaster is
waivable, the possibility of claiming it is unwaivable, since it is linked to the right
in action and the right to due judicial protection. Any transaction [i.e. settlement] is
only possible with the stipulation of a time frame for full discharge in the case of
loss of profits.
692.3. For those who have opted for Novel, the discharge given for loss of profits is total
and absolute until October 2021 [i.e. the period to which the Novel damages matrix
had calculated loss of profits]. However, as of this date, the discharge is no longer
effective. As the situation of damage persists, it is fully possible and legally
enforceable to pay loss of profits for the period after October 2021 to the present
date.
693. The position of the companies and Renova implies unjust enrichment and a violation of
objective good faith, since they benefit from their own turpitude. Moreover, admitting it
would be tantamount to a new violation of the fundamental rights of those affected. This
understanding violates the very dignity of the human person of the victim, who is only
compensated for a period of time, while the cause of the damage is rewarded for not
1743
In the context of this decision, “future loss” was any loss of profits incurred after October 2021. The Novel
System had provided a compensation figure based on compensating loss of profits up to and including that
date. The decision confirmed that in doing so, a claim to losses suffered beyond those for which compensation
had been provided remained available.
293
redressing the consequences of the damage and obtaining compensation for a limited period
of time with the pretence that it will last for eternity.1744
694. In a similar vein, an earlier decision of the 12th Federal Court examined the scope of waiver
provisions in the PIM agreements, and explained that while there had been an effective
global and definitive release regarding the damage compensation, it was partial in scope:
“Therefore, from what it seems, it is an apparent confusion with the terms full and
partial. The content of the agreement, when considered by itself, is complete and final.
The extent, in turn, is partial and depends to the nature of the damage. Given the above
and in accordance with these considerations, I … determine that the extent of the
discharge within the scope of the PIM, although full and definitive with regarding the
aspect of damage under discussion, shall be partial and according to the nature of the
damage.”1745
695. Applying the above to Sample Set agreement 4, for example,1746 the Claimants highlight
the following provisions:
695.1. Clause 1, which defines the object of the agreement as “indemnification for all the
damages suffered by the Signatory(ies) as a result of the Collapse, including all loss
of profit regarding their agriculture and cattle-raising activities.”
695.2. Clause 2 specifies the amounts to be paid in compensation, identifying payments

only in respect of “loss of profits due to interruption of perennial agricultural
production” and “moral damage Agriculture and Cattle-raising.”
695.3. Clause 5 – termed “Release” – is expressed as granting a “mutual, reciprocal, broad,

full, general, irreversible and irrevocable release to Renova Foundation, to make no
further complaints, in or out of court, regarding the damage related to, originated
from or resulting from the Collapse, as described in Clause One of this Settlement
Agreement.”
(4) Clause 5 sole paragraph extends the benefit of the release to other parties, stating
the effect of the agreement to be that there was “nothing more…due regarding the
damages settled in this Settlement Agreement.”
696. The effect of these provisions was a partial discharge of claims, limited to agriculture and
cattle raising. This was the damage identified in clause 1 of the agreement; as confirmed in
clause 2 of the agreement; and the release clauses themselves are expressly related to the
damage identified in the agreement. The waiver was not, therefore, a general release of any
1744
Decision rendered by the 4th Federal Court on 15 May 2024 {C3/7.2T/779-780}.
1745
{I3/50T/59}.
1746
Sample 4 {I3/79/40-41}.
294
and all claims flowing from the Collapse (e.g. if the individual had suffered personal injury,
or damage to their residential property). To interpret it in a broader manner would offend
(i) Article 47 of the CDC, which requires all clauses to be interpreted in favour of the
consumer by equivalence; and/or (ii) Article 423 because this is an adhesion contract,
meaning that it must be interpreted in the adherent’s favour; and/or (iii) Articles 114 and
843 of the Civil Code which require waivers to be interpreted restrictively. The Claimants
further submit that procuring a general release of claims that have not been compensated
in any way would offend the principles of good faith that Brazilian law requires contracting
parties to observe. A broad interpretation would also run contrary to the determination of
the 12th Federal Court regarding the partial scope of the PIM waivers.
697. Finally, the Claimants contend for a similar analysis (save for reliance on Article 423 of the
Civil Code) in respect of the individually negotiated settlement agreements (i.e. Sample
Set agreements 6, 8, 9, 10). To take Sample Set agreement 61747 (arising from a claim for
water loss) for illustrative purposes:
697.1. Paragraph 1 of the agreement identifies that the claimant has been paid R$ 1,700
(£230) in settlement. Paragraph 3 records that upon payment of that amount, the
claimant would grant “full, general, absolute, and irrevocable discharge on the
subject matter to the request, valid and applicable both in Brazil and in any other
jurisdiction”.
697.2. Paragraph 4 then provides that the claimants has waived “any rights and claims
arising from the interruption of the supply and/or quality of water, related to the
Fundão dam collapse.”
698. The Claimants contend that the effect of this agreement is limited to a waiver of any claims
related to water interruption caused by the Collapse. It is plainly not an agreement that
contemplates a broader or more general discharge of the individual’s right to seek redress
for other forms of damage if such damage arises.
699. A summary of the Claimants’ position on each of waiver clauses in the Sample Set
agreements, identifying the interpretation contended for, is set out at Appendix V.
PART XII. STANDING OF THE MUNICIPALITIES

A) Introduction
1747
Sample 6 {I3/79/52-59}.
295
700. Some of the Claimants, including the first-named of them, are municipalities. These are
local government bodies with their own legal personality and a recognised status under the
Constitution.1748 BHP asserts in its Defence that all of these municipalities lack “standing”
and/or “capacity” and/or the “entitlement” to pursue their claims for damages before an
English court.1749 (If BHP intends to distinguish between the three pleaded concepts of
standing, capacity and entitlement then that has yet to be explained.)
701. It is common ground that as a matter of Brazilian law, municipalities are autonomous legal
entities, identified as legal persons in Article 41(III)1750 of the Civil Code. The Claimants’
straightforward submission is that in the absence of express prohibition or limitation
municipalities are in the same position as any other natural or non-natural legal person.
Like any other such person they can therefore sue and be sued, both within Brazil and in
courts outside Brazil.
702. BHP’s more convoluted argument is built on the premise that the commencement of
litigation before a foreign court is an engagement with a foreign sovereign state which is
said to be an act of sovereignty reserved to the Federal Government of Brazil. BHP
contends that a submission to the jurisdiction of a foreign court necessarily involves the
waiver of any otherwise applicable sovereign immunity and that only the Federal
Government may waive Brazil’s immunity. It is said on behalf of BHP that the familiar
distinction between conduct jus imperii (acts of sovereign authority)1751 and jus gestionis
(acts of a private law character) is irrelevant in this context and that the limitation on a
municipality’s ability to bring claims abroad is absolute.1752
703. If indeed the municipalities were acting unconstitutionally and beyond their powers then
one might have expected the Attorneys General of one or more of the 46 Claimant
municipalities to have noticed. Although a constitutional objection has recently been raised
before the STF, it was not initiated by Brazilian central government but by a mining
industry body, years after the commencement of these English claims and only then with
1748
Brazilian Constitution 1988. Article 1. “The Federative Republic of Brazil, formed by the indissoluble union
of the States and Municipalities and the Federal District, is constituted in a Democratic State of Law and has
as its fundamentals: [...]”;’ Article 18. “The political and administrative organization of the Federative
Republic of Brazil comprises the Federal Government, the States, the Federal District and the Municipalities,
all autonomous, in the terms of this Constitution.” {I1/1/1} {I1/1/8}
1749
Defence, §51(1) {A1/2/23}.
1750
Standing of Municipalities JS, Issue 69 {C1/1T/2}; Tepedino 2, §450 {C18/1T/176}; Civil Code, Article 41:
“The following are legal persons governed by internal public law: I - the Federal Government; II - the States,
the Federal District and the Territories; III - the Municipalities” {I1/2/2}.
1751
The translation in some of the Brazilian law materials is the more literal “acts of empire”, as distinct from “acts
of management”. The meaning is the same, however.
1752
Tepedino 2, §469 {C18/1T/182}.
296
covert encouragement and financial support from BHP. BHP eventually admitted to its
behind-the-scenes role only after the Claimants had issued their application in England for
an anti-suit injunction to restrain what the Claimants unsurprisingly perceived to be a
cynical attempt to use the IBRAM claim to derail these proceedings.1753
1) Legal Principles
704. The Claimants accept that the municipalities as local government bodies are creations of
Brazilian law and therefore subject to the law of their creation.1754 English law recognises
the status of such foreign law juridical persons as a matter of comity. Under English
conflicts rules, it is Brazilian law which governs their capacity.1755
705. Brazilian law could, for instance, have expressly stipulated that municipalities were unable
to bring legal claims before a foreign court. Alternatively, Brazilian law could have
required the commencement of such foreign litigation to be approved by central
government. The entry by a municipality into foreign financial transactions, such as a loan
from a non-Brazilian bank, is subject to precisely that control mechanism pursuant to
Article 52(V) of the Constitution, requiring approval from the Federal Senate.1756 BHP
point to no similar provision in the Constitution or in infra-constitutional legislation, nor
indeed to any principle identified in Brazilian jurisprudence, which purports to deal with
the commencement of legal proceedings outside Brazil.
706. BHP’s argument is instead based upon the exclusive competence of the Federal
Government of Brazil to exercise the sovereign power of the Brazilian state, including a
decision to waive Brazil’s sovereign immunity by submitting to the jurisdiction of a foreign
court. BHP, through its expert Gustavo Tepedino, characterises the commencement of
foreign litigation as an act of sovereignty which is beyond the constitutional competence
of a municipality.
707. It is common ground that a municipality as a subordinate body cannot exercise the
sovereign power of the federal state of Brazil, nor can it waive Brazil’s state immunity
before an English Court. The key issue for trial is whether the municipality’s pursuit of a
damages claim to obtain compensation for its own losses even engages any of these
sovereignty issues.
1753
{PE53/1/1-5}; {PE53/2/5-6} §§14-14.3; {PO/2402/1-4}.
1754
See e.g., The Law Debenture Trust Corporation plc v Ukraine [2023] UKSC 11 at [29] {J1/16/9-10}.
1755
Haugesund Kommune & Anor v Depfa ACS Bank & Anor [2010] EWCA Civ 579 at [48] {J1/8/10}.
1756
Although Article 52(V) is being relied upon by IBRAM in the STF claim in Brazil, it is not relied on by BHP
in England.
297
708. Although BHP’s argument presupposes that the ability of a municipality to claim immunity
before a foreign court is exclusively a matter of Brazilian law, a court outside Brazil will
apply its own law to determine whether a defendant is immune. If, for example, an attempt
were made to sue a municipality in the US a US Court would apply the Foreign Sovereign
Immunities Act. The equivalent legislation in the UK is the State Immunity Act 1980. In
relation to federal states (such as the US or Brazil), s.14(5) of the SIA 1980 permits an
Order in Council to confer immunity on individual “constituent territories”, without which
that territory has no claim to immunity of its own.1757 There is no such Order in respect of
the 26 states of Brazil or its federal district. Moreover, the “constituent territories”
contemplated by s.14(5) are the federative units (e.g. the individual states of the US or
Brazil, Canadian provinces or Swiss cantons) rather than lower-level administrative
subdivisions such as Brazilian municipalities or US counties. A Brazilian municipality
could only ever claim immunity as a “separate entity” of the state and only then if the claim
against it related to its exercise of the sovereign authority of the federal government of
Brazil.
709. If the foreign court would not treat a municipality as immune from suit as defendant then
no question of waiver of immunity ever arises if the municipality issues proceedings as
claimant.
710. The Claimants contend that:
710.1. as noted, it is common ground that municipalities are autonomous but not sovereign;
710.2. the pursuit in a foreign municipal Court of a private law claim for compensatory
damages is in any event not a sovereign act, as is most clearly illustrated by the fact
that in these very proceedings the municipalities bring their claims alongside
equivalent claims by private individuals and companies;
710.3. no question of waiver of immunity or the exercise of sovereign authority therefore

arises: there is no relevant distinction between a municipality’s damages claim and
that of an entity incorporated under Brazilian private law;
710.4. indeed, if the municipalities’ attempt to recover compensatory damages from BHP
through a claim in the English Court were properly characterised as an assertion of
Brazilian sovereign authority then the claim would fall foul of the “sovereign
authority rule” which prevents recourse to an English Court for the extra-territorial
1757
Pocket Kings Ltd v Safenames Ltd [2009] EWHC 2529 (Ch) {J1/10/4}.
298
enforcement of the sovereign power of a foreign state: see Skatteforvaltningen (the
Danish Customs and Tax Administration) v Solo Capital Partners LLP [2023]
UKSC 40.
711. BHP’s counter-arguments in response to the above analysis will obviously be explored in
the cross-examination of Professor Tepedino. The Brazilian courts seem never to have
addressed the topic1758 and there is limited scholarly writing. Although BHP relies on parts
of International Constitutional Law,1759 much of the reasoning in that book appears to the
Claimants to confuse public international law with private international law. No issue arises
in this case of recognition or conduct of states or state entities on the international plane.
PART XIII. CONCLUSION
712. For all of the above reasons, although the parties and the Court are about to embark on a
very substantial trial, the Claimants respectfully submit that BHP’s liability to compensate
them for their losses is, at the end of the day, straightforward and obvious. BHP is a polluter
and must therefore pay.
ALAIN CHOO CHOY KC RUSSELL HOPKINS ANISA KASSAMALI
ANDREW FULTON KC IBAR MCCARTHY HANNAH TAYLOR
NICHOLAS HARRISON GRACE FERRIER
JONATHAN MCDONAGH ANTONIA EKLUND 4 October 2024
1758
As none of the experts (including Professor Abboud, appointed by Vale) seem to be aware of previous
judgments on this matter.
1759
{C18/4.3T/1203}.
299

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Claim No.

IN THE HIGH COURT OF JUSTICE

IN THE MATTER OF THE FUNDÃO DAM DISASTER

(1) BHP GROUP (UK) LTD (formerly BHP BILLITON PLC

CLAIMANTS’ OPENING NOTE FOR THE FIRST STAGE TRIAL

References to the Trial Bundle are in the form {Bundle A to M/Tab/Page}.

References to the PCMB are in the form {Bundle PA to PO/Tab/Page}.

References to the Authorities Bundle are in the form {Bundle J/Tab/Page}.

PART I. INTRODUCTION .................................................................................................................................... 6

B) The Claimants’ Claims .................................................................................................................................. 8

C) BHP’s Defences ............................................................................................................................................... 8

D) Procedural Context ........................................................................................................................................ 9

E) Material Before the Court ........................................................................................................................... 10

F) Background to the Evidence ........................................................................................................................ 12

G) Adverse Inferences ....................................................................................................................................... 17

PART II. PARTIES ............................................................................................................................................... 19

A) The Claimants ............................................................................................................................................... 19

B) The Defendants ............................................................................................................................................. 20

PART III. THE DAM ............................................................................................................................................ 23

A) Iron Ore Mining ........................................................................................................................................... 23

C) The Overflow Channel ................................................................................................................................. 44

E) Filling the Setback ........................................................................................................................................ 55

F) The August 2014 Cracking and Upwelling Incidents ................................................................................ 58

PART IV. SUMMARY OF THE CLAIMANTS’ CASE .................................................................................... 65

PART V. INTRODUCTION TO BRAZILIAN LAW ........................................................................................ 67

A) Basic Legal Framework ............................................................................................................................... 67

PART VI. THE STRICT LIABILITY CASE ..................................................................................................... 71

A) Strict Liability under the Environmental Law .......................................................................................... 71

C) BHP’s liability as a Polluter....................................................................................................................... 101

PART VII. THE FAULT-BASED CASE........................................................................................................... 182

A) Legal principles .......................................................................................................................................... 183

PART VIII. ATTRIBUTION .............................................................................................................................. 245

A) Introduction ................................................................................................................................................ 245

B) Agency ......................................................................................................................................................... 248

PART IX. DISREGARD ..................................................................................................................................... 253

PART X. PRESCRIPTION................................................................................................................................. 255

A) Introduction ................................................................................................................................................ 255

B) Collective and Individual Redress ............................................................................................................ 256

C) Brazilian Criminal Complaint/Civil Code Art 200.................................................................................. 257

D) CPAs ............................................................................................................................................................ 261

E) Consumer Defence Code ............................................................................................................................ 264

F) Municipalities and Utilities/Isonomy ........................................................................................................ 266

G) The Term of Commitment ......................................................................................................................... 267

H) Claims not Subject to Prescription ........................................................................................................... 268

I) Other factors affecting the running of Prescription ................................................................................ 270

J) Procedural vs Substantive Requirements................................................................................................. 272

A) Introduction ................................................................................................................................................ 274

B) Background ................................................................................................................................................. 275

C) Legal principles .......................................................................................................................................... 281

D) Application to the Sample Set ................................................................................................................... 287

PART XII. STANDING OF THE MUNICIPALITIES .................................................................................... 295

A) Introduction ................................................................................................................................................ 295

PART XIII. CONCLUSION ............................................................................................................................... 299

B) The Claimants’ Claims

13.2. that all of the Claimants’ claims are time-barred; and/or

14. These are addressed in the relevant sections below.

E) Material Before the Court