Municipio de Mariana and Others V BHP Group and Another

IN THE HIGH COURT OF JUSTICE Claim No.
HT-2022-000304
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
BETWEEN:
(1) MUNICÍPIO DE MARIANA
And the Claimants identified in the Schedules to the Claim Form
Claimants
-and-
(1) BHP GROUP (UK) LTD

(formerly BHP BILLITON PLC and thereafter BHP GROUP PLC)
(2) BHP GROUP LTD
Defendants
___________________________________________________
BHP’S WRITTEN OPENING FOR TRIAL

___________________________________________________
Shaheed Fatima KC Daniel Toledano KC

Victoria Windle KC Nicholas Sloboda KC
David Lowe Oliver Butler
Daniel Burgess Tamara Kagan
Blackstone Chambers Maximilian Schlote
Stephanie Wood
Veena Srirangam
Jade Fowler
Michael Kotrly
Joe Johnson
One Essex Court
A. INTRODUCTION AND OVERVIEW .................................................................... 1
A1. The claims and BHP’s defence ....................................................................... 1

A2. The Stage 1 trial............................................................................................... 8
B. BHP, IRON ORE, BHP BRASIL AND SAMARCO ............................................... 9
B1. BHP ................................................................................................................. 10

B2. Iron Ore and BHP Brasil .............................................................................. 11
B3. Samarco .......................................................................................................... 13
C. BHP’S KNOWLEDGE: INFERENCE AND ATTRIBUTION .......................... 15
C1. Inferences ....................................................................................................... 15

C2. Attribution ..................................................................................................... 16
C2.1 Applicable law ...................................................................................................... 17
C2.2 Attribution of knowledge and conduct of BHP Australia and BHP UK’s organs .. 18
C2.3 Attribution of knowledge and conduct of BHP Australia and BHP UK’s directors
and BHP Australia’s officers .............................................................................................. 19
C2.4 Attribution of knowledge and conduct of the Named Individuals ............................ 19
C2.4.1 Whether BHP’s employees were their agents................................ 20
C2.4.2 Whether employees of and contractors to other companies in the
Group were agents of BHP ............................................................................. 22
C2.4.3 The position in relation to the other Named Individuals ............ 24
C2.4.4 Attribution of knowledge of the Named Individuals ................... 24
C2.4.5 Attribution of knowledge of Samarco Board directors and
Samarco Board committee and subcommittee members ............................ 25
C2.4.6 Attribution of conduct of the Named Individuals ....................... 28
D. THE DAM FAILURE: CAUSES OF THE COLLAPSE AND BHP’S ALLEGED

KNOWLEDGE OF THOSE CAUSES.................................................................... 29
D1. Geotechnical Evidence .................................................................................. 32

D2. The Fundão Dam ........................................................................................... 33
D3. The cause of the Collapse.............................................................................. 39
D3.1 The failure and subsequent blocking of the Main Underdrain ................................. 41
D3.1.1 Alleged causative effect .................................................................... 42
D3.1.2 Alleged BHP knowledge .................................................................. 43
D3.2 The failure to maintain the 200-metre minimum beach width ................................. 44
D3.3 The failure and plugging of the Secondary Gallery, creation of the Setback and the
subsequent raising of the Dam on the altered alignment ........................................................ 48
D3.3.2.1 Plugging of the Galleries and creation of the Setback: Samarco Board .... 52
D3.3.2.2 Plugging of the Galleries and creation of the Setback: Operations
Committee 56
D3.3.2.3 Plugging of the Galleries and creation of the Setback: Performance
Management Subcommittee ..................................................................................................... 57
D3.3.2.4 Plugging of the Galleries and creation of the Setback: the September 2011
report 59
D3.3.2.5 The ITRB’s recommendations in relation to the Setback ........................... 60
D3.3.2.6 The ITRB’s recommendations in relation to the Setback: Samarco Board
61
D3.3.2.7 The ITRB’s recommendations in relation to the Setback: Samarco
Operations Committee ............................................................................................................. 62
D3.3.2.8 The ITRB’s recommendations in relation to the Setback: Performance
Management Subcommittee..................................................................................................... 63
D3.3.2.9 The ITRB’s recommendations in relation to the Setback: other alleged
sources of knowledge ................................................................................................................ 64
D3.3.3 Summary............................................................................................. 65
D3.4 The increase in tailings deposits arising from the P4P Project .................................. 66
D3.4.2 Alleged BHP involvement ............................................................... 67
D3.4.2.1 Approval and authorisation ............................................................................. 68
D3.4.2.2 Funding of P4P .................................................................................................. 69
D3.4.2.3 Encouragement and approval of increases in production ........................... 69
D3.5 Use of the Dam to dispose of waste from Vale’s Alegria Mine ............................... 73
D3.6 Continued elevation of the Dam in 2013-2015 / Project 940 ............................... 76
D3.6.2.1 Alleged BHP Approval ..................................................................................... 77
D3.6.2.2 Alleged BHP Knowledge ................................................................................. 79
D3.7 Overall Summary .................................................................................................. 81
E. BHP’S INVOLVEMENT IN AND KNOWLEDGE OF THE OPERATIONS

OF SAMARCO........................................................................................................... 81
E1. Samarco’s acts which were allegedly “brought about” by BHP ............... 82
E2. Miscellaneous allegations as to BHP’s knowledge ..................................... 83
E2.1 The need for additional drainage ............................................................................ 83
E2.2 Further alleged problems with the Dam in 2014 .................................................... 86
E2.2.1 Alleged BHP knowledge................................................................... 87
E2.3 Significant risk of the failure of the Dam as a result of liquefaction especially at the left
abutment ............................................................................................................................ 88
E2.3.1 BHP’s knowledge .............................................................................. 91
E2.4 Alleged knowledge of the risk of collapse ................................................................ 92
E3. BHP’s alleged disregard of or failure to take sufficient action to address
warnings and recommendations given in relation to the Dam.................. 93
E3.1 Alleged knowledge acquired following the approval of Project 940 ........................... 94
E3.2 BHP’s management of critical controls ................................................................... 96
E3.3 ITRB Recommendations ....................................................................................... 97
E3.4 Alleged failure to address advice and recommendations from Pimenta ...................... 98
E3.5 Alleged failure to address safety concerns expressed in the Prístino Report ............... 99
E3.6 Alleged failure to address concerns raised at meetings of the Samarco Board ............ 99
E3.7 Alleged failure to address problems brought to attention of Samarco Operations
Committee and its subcommittees ....................................................................................... 101
E4. BHP’s risk reporting and audit/HSEC activity in relation to the Dam . 102
E4.1 Risk reporting activity in relation to the Dam ...................................................... 103
E4.1.1 Samarco’s risk reporting to BHP ..................................................103
E4.1.2 BHP’s internal risk reporting: Iron Ore .......................................105
E4.1.3 BHP’s internal risk reporting: GMC, Group RAC and SusCo .108
E4.2 BHP audit activity in relation to the Dam ........................................................... 108
E4.2.1 BHP’s internal audit function ........................................................108
E4.2.2 FY14 Samarco Audit .......................................................................110
E4.2.3 FY16 Samarco Audit .......................................................................112
E4.2.4 FY16 BHP Brasil Audit ..................................................................114
E4.3 Dow-Bentel Review ............................................................................................. 115
F. FUNDING / FACILITATION OF THE FUNDING OF THE OPERATIONS

OF SAMARCO......................................................................................................... 118
F1. Capital Contributions to Samarco as required by Article 10.1 of the

Samarco Shareholders Agreement ............................................................ 118
F2. Direct Loan Financing of Samarco’s Operations ..................................... 119
F3. Alleged Funding or Indirect Funding of 50% of the P4P Project / Project
940 ................................................................................................................. 119
F4. Alleged facilitation of and involvement with Samarco’s financing
arrangements ............................................................................................... 119
G. RELEVANT DEVELOPMENTS POST-COLLAPSE ....................................... 120
G1. BHP’s provision of support to Samarco via BHP Brasil in the immediate
response efforts following the Collapse ..................................................... 121
G2. Investigation into the causes of the Collapse ............................................ 121
G3. CPAs and their Settlement ......................................................................... 122
G4. Compensation Programmes Administered by Renova ............................ 123
G5. Cs allegations relating to BHP’s Post-Collapse Conduct ........................ 124
H. ENVIRONMENTAL LAW CLAIM ..................................................................... 126
H1. Brazilian Law Issues ................................................................................... 126

H1.1 Environmental Law Experts .............................................................................. 126
H1.2 BHP’s case / Prof Milaré’s evidence.................................................................... 127
H1.3 Cs’ case / Prof Sarlet’s evidence ........................................................................... 133
H1.4 Joint and Several Liability / subsidiary execution ................................................ 138
H1.5 “Exploit Mineral Resources”: Art 225 Federal Constitution (“FC”) ................. 139
H1.6 Burden of Proof ................................................................................................... 141
H2. Application of Environmental Law to the facts........................................ 142
H2.1 On BHP’s / Prof Milaré’s test ........................................................................... 142
H2.1.1 Direct polluter liability....................................................................142
H2.1.2 Indirect polluter liability .................................................................143
H2.2 On Cs’ / Prof Sarlet’s test .................................................................................. 146
H2.2.1 Control ..............................................................................................147
H2.2.2 “Creating the risk” ..........................................................................151
H2.2.3 “Participate and actively engage in risk activity” ........................152
H2.2.4 “Funding the risk activity” .............................................................154
H2.2.5 “Benefit from the activity” ............................................................155
I. CORPORATE LAW CLAIM .................................................................................. 157
I1. Brazilian law issues ..................................................................................... 159

I1.1 When will a person be treated as a controlling shareholder? ................................... 159
I1.1.1 Common ground and key sub-issues .............................................159
I1.1.2 First sub-issue: can Art 116(b) be satisfied by presumption? .....160
I1.1.3 Second sub-issue: members of a controlling group .....................162
I1.1.4 Third sub-issue: who is a controlling shareholder by reason of
indirect control? ...............................................................................................163
I1.2 Do Arts 116 and 117 impose an autonomous duty actionable by the ‘community’?
164
I1.3 What is the scope of the duties owed under Arts 116 and 117?............................ 169
I1.3.1 Common ground and key sub-issues .............................................169
I1.3.2 First sub-issue on scope of Arts 116 and 117: does Art 116
impose a proactive duty to minimise risk? ...................................................170
I1.3.3 Second sub-issue on scope of Arts 116 and 117: what is the scope
of liability under Art 117?...............................................................................172
I1.3.3.1 Fault ...................................................................................................................173
I1.3.3.2 Relevance of Art 187 CC................................................................................173
I1.3.3.3 Art 117(1)(a) – acting contrary to the national interest .............................173
I1.3.3.4 Art 117(1)(g) – irregularities ...........................................................................174
I2. Application to the facts ............................................................................... 174
I2.1 Controlling shareholder? ...................................................................................... 174
I2.2 Allegations of duty and breach ............................................................................. 176
I2.2.1 Alleged breach of Art 116................................................................177
I2.2.2 Alleged breach of Art 117................................................................178
J. CIVIL CODE CLAIMS ........................................................................................... 180
J1. Article 186 claim .......................................................................................... 180

J1.1 Article 186 Claim: Brazilian law issues ............................................................. 181
J1.1.1 Civil Law experts ...............................................................................181
J1.1.2 Art 186 CC .........................................................................................181
J1.1.3 Shareholder liability pursuant to Art 186.......................................182
J1.1.4 Unlawful act / omission ..................................................................184
J1.1.4.1 Unlawfulness ....................................................................................................184
J1.1.4.2 (Unlawful) acts and omissions .......................................................................184
J1.1.4.3 Source of duty to act .......................................................................................185
J1.1.4.4 Art 225 FC ........................................................................................................185
J1.1.4.5 Art 116 Corporate Law...................................................................................187
J1.1.4.6 Creation of, or contribution to, risk and/or assumption of responsibility
for risk 188
J1.1.4.7 Legal duty of safety .........................................................................................189
J1.1.5 Fault ....................................................................................................189
J1.1.6 Damage and causation .....................................................................191
J1.2 Article 186 Claim: application to the facts .......................................................... 193
J1.2.1 Acts, omissions and duty .................................................................194
J1.2.1.1 Acts ....................................................................................................................194
J1.2.1.2 Omissions and duties ......................................................................................195
J1.2.2 Breach .................................................................................................198
J1.2.2.1 Standards of conduct and content of duties................................................198
J1.2.2.2 Breach of standard / duty ..............................................................................200
J1.2.2.3 Acts ....................................................................................................................201
J1.2.2.4 Omissions .........................................................................................................203
J1.2.3 Causation ............................................................................................206
J2. Article 927 Claim ......................................................................................... 209
J2.1 Art 927, sole para Claim: Brazilian law issues ................................................... 210
J2.1.1 Specific legal provisions ...................................................................210
J2.1.2 Risk activity ........................................................................................211
J2.1.3 Author of the damage ......................................................................211
J2.1.4 Damage and causation .....................................................................214
J2.2 Art 927, sole para claim: application to the facts ................................................. 215
J2.2.1 On BHP’s legal case as to author of damage ................................215
J2.2.2 On Cs’ legal case as to author of damage ......................................216
J2.2.2.1 “Author of the damage”? ...............................................................................216
J2.2.2.2 Is the test of causation satisfied? ...................................................................217
J3. Articles 932(III) and 933 Claim ................................................................. 218
J4. Article 942 .................................................................................................... 218
K. LICENSING ............................................................................................................ 219
K1. Brazilian licensing regime and law ............................................................ 221

K2. Factual issues ............................................................................................... 224
K2.1 April 2013 RADA .......................................................................................... 224
K2.2 October 2013 EIA ............................................................................................ 225
K2.3 Response of Supram ............................................................................................ 227
K2.4 Knowledge of BHP .............................................................................................. 227
L. LIMITATION ......................................................................................................... 228
L1. Insufficient Info Defence ............................................................................. 230

L2. 3Yr Defence .................................................................................................. 236
L3. The Applicable Limitation Period ............................................................. 236
L3.1 The Consumer Defence Code ............................................................................... 236
L3.2 Public Entities .................................................................................................... 241
L3.3 Environment ....................................................................................................... 243
L3.4 Damage to public property ................................................................................... 245
L3.5 Indigenous Peoples ............................................................................................... 246
L4. Commencement of limitation period ......................................................... 247
L4.1 Knowledge acquired (or damage suffered) later ...................................................... 247
L4.2 Continuing Damages ........................................................................................... 249
L5. Interruption of the Limitation Period ....................................................... 250
L5.1 CPAs ................................................................................................................. 250
L5.2 Individual claims in England and Wales or Brazil .............................................. 256
L5.3 Protests ............................................................................................................... 257
L5.4 Instrument of Commitment .................................................................................. 258
L6. Suspension of the Limitation Period.......................................................... 260
L6.1 Capacity ............................................................................................................. 260
L6.2 Criminal Proceedings ........................................................................................... 260
L6.3 The Covid Law................................................................................................... 263
M. RELEASES .............................................................................................................. 263
M1. Relevant Brazilian law ................................................................................ 264

M1.1 Application of the CDC to the Settlement Agreements ......................................... 264
M1.1.1 Article 17 ..........................................................................................265
M1.1.2 Article 29 ..........................................................................................266
M1.1.3 Arts 2 and 6 .....................................................................................267
M1.2 Adhesion Contracts ............................................................................................. 268
M1.3 Effect of Settlement Agreements ........................................................................... 270
M1.4 Validity Control ................................................................................................. 270
M1.4.1 Validity Control under the CC ......................................................271
M1.4.2 Validity Control under the CDC ..................................................273
M1.4.2.1 Art 51, CDC does not apply to settlement agreements .............................274
M1.4.2.2 Article 51(I), CDC ...........................................................................................275
M1.4.2.3 Article 51(IV), CDC ........................................................................................275
M1.4.3 Validity Control under the CDC if the settlement agreements are
adhesion contracts ...........................................................................................277
M1.4.3.1 Art 46, CDC .....................................................................................................277
M1.4.3.2 Art 54, CDC .....................................................................................................277
M1.4.4 Time limit for annulment of settlement agreements .................278
M1.5 Factors affecting the enforceability and setting aside of the settlement agreements ..... 279
M1.5.1 The terms of the settlement agreements reflect judicial decisions
279
M1.5.2 Court decisions upholding categories of settlement agreements
281
M1.5.3 Legal assistance / advice ................................................................282
M1.5.3.1 Impact on CC voidability arguments ............................................................282
M1.5.3.2 Impact on CDC voidness arguments ...........................................................282
M1.5.4 Party seeking to set it aside has not made a successful
application to the Brazilian Court to have it set aside................................284
M1.5.5 Relevance of the settlement agreement having been
ratified/homologated by the Brazilian Court ..............................................284
M1.6 Interpretation of Settlement Agreements ............................................................... 285
M1.6.1 Restrictive interpretation of settlement agreements ..................286
M1.6.2 Interpretation of adhesion contracts ...........................................287
M1.6.3 If the CDC applies..........................................................................287
M2. The effect of the Sample Agreements ........................................................ 288
M2.1 Are the Sample Agreements adhesion contracts?................................................... 289
M2.2 Whether any of the Sample Agreements are void .................................................. 290
M2.3 Construction of the Sample Agreements ............................................................... 291
M3. Conclusion .................................................................................................... 291
MUNICIPALITIES’ STANDING TO SUE ......................................................... 292
N1. The Constitutional Framework.................................................................. 293

N2. Waiver of sovereign immunity and/or a legal relationship with a foreign
state ............................................................................................................... 294
N2.1 Waiver of Sovereign Immunity ............................................................................. 294
N2.2 Filing of lawsuits abroad establishes a legal relationship with foreign States ........... 297
N3. The Municipalities have no legal right to commence proceedings abroad
....................................................................................................................... 298
N4. Conclusion .................................................................................................... 300
A. INTRODUCTION AND OVERVIEW
A1. The claims and BHP’s defence
1. The collapse of the Fundão tailings dam (the “Dam”) on 5 November 2015 (the
“Collapse”) was a social and environmental disaster. As a result, a huge effort has been
made in Brazil over the past nine years to remediate the effect of the Collapse and
compensate those affected.
2. Compensation schemes (including the Novel System) have been established in Brazil, via
the Renova Foundation (“Renova”), overseen by the Brazilian courts and funded by
Samarco Mineração SA (“Samarco”), the owner and operator of the Dam. As at June 2024,
Renova had disbursed approximately US$7.7 billion in repair and compensation
programmes, including in indemnities and financial aid to around 430,000 people,1
including c. 200,000 of the Claimants (“Cs”).2 As at September 2024, US$1.7bn had been
disbursed to Cs.3 Not only does Renova make compensation payments, but it implements
numerous in-kind programs to address, for example, the reparation of environmental
damages. In addition to health, water treatment and re-training programmes it has built
three entirely new villages in Minas Gerais, to resettle those whose homes were impacted
by the Collapse (addressed further below in Section G4) and efforts continue.
3. Yet Cs do not, by this action, seek to bring claims against Samarco. They instead claim only
against the Defendants (together “BHP”) – i.e. the top companies in the BHP corporate
group (the “BHP Group”). There is no basis for such claims. No doubt that is why, in the
dozens of class actions brought by the most powerful institutions in Brazil, such as the
Federal Government and the Public Prosecutor, BHP have never even been sued, let alone
found liable – despite the fact that Brazil would take jurisdiction over any such action as of
right. No doubt this is also why Cs have been driven to adopt what BHP would suggest
are often extreme, expansive and novel interpretations of Brazilian law and why their case
rests, in large part, on far-fetched and untenable inferences. Although the MPOC does not
quantify the alleged damages, Cs’ representatives have said in the media that the claims are
worth £36 billion (with the lawyers and funders entitled to take up to 30% of Cs’
1 {F16/498.26.9.1/74}.
2 Letter from Slaughter and May to PG dated 3 October 2024 {M1/24/2}.
3 Letter from Slaughter and May to PG dated 3 October 2024 {M1/24/2}. Based on an exchange rate of BRL/USD
0.18 on 4 October 2024.
1
compensation in legal fees).4 BHP do not comment, at this stage, on this alleged quantum,
the individual merits of the Cs’ claims or the broader context on how they have come to
the English Court, but reserve their position to do so in future.5
4. The Court will be invited to dismiss all of the claims including for the following eight
overarching reasons.
5. First, BHP did not own or operate the Dam or any related facilities. Nor were they
the owner of Samarco (i.e. they were not even ‘parent companies’). Instead, an indirect
subsidiary of BHP Group Ltd (“BHP Australia”), BHP Billiton Brasil Ltda (“BHP
Brasil”), was a 50% shareholder in Samarco. The other 50% was held by Vale S.A.
(“Vale”). BHP Group (UK) Ltd (“BHP UK”) had no stake in Samarco at all.
6. Samarco was a huge business, with (at the end of 2014) over 6,000 employees and
contractors. The Dam was a single facility within that business, and Samarco had internal
and external engineers and experts whose role was, amongst other things, to consider the
stability and safety of the Dam. Samarco was well able to, and did, operate independently.
Indeed that independence was expressly required by the Shareholders Agreement (“SHA”),
which provided that Samarco was to be independently managed and operated (see further
§§39-41 below). That does not mean that the shareholders had no voice, but it does mean
that operational decisions were to be – and were – taken by Samarco’s management. That
reality is reflected in BHP’s description of Samarco as a Non-Operated Joint Venture
(“NOJV”).
7. Second, BHP had limited knowledge of the Dam, and no knowledge that its
stability was compromised. Cs allege that BHP, in the form of its two senior bodies
(namely the Board of Directors, “BHP Board”, and the Group Management Committee,
“GMC”), ‘knew’ of concerns as to the Dam’s stability and approved matters which caused
the Collapse: MPOC, §278.3 {A1/1/118}. However, Cs have identified very limited
information about the Dam which reached the BHP Board or GMC, none of which
4 See https://pogustgoodhead.com/bhp-bill-for-brazilian-dam-collapse-increases-to-36-billion-in-worlds-largest-
ever-class-action/; https://casoinglesmariana.com.br/; {PE29/3/167}.
5 See for example the Fifth Witness Statement of Efstathios Michael dated 29 November 2019: there are thousands
of property damage claims from areas that tailings did not reach, there are significant discrepancies in the alleged water
supply interruption at the same addresses, and claims regarding oily hair, chicken-pox, Alzheimer’s Disease and flowers
not being as beautiful as before. These are likely to be implausible or exaggerated as a matter of Brazilian law: Michael
5, §158 {PE11/14/77},
2
suggested that the safety of the Dam was seen as having been compromised or that the risk
of collapse was not well controlled.
8. Similarly, Cs have not identified any information showing that the BHP Board or GMC
considered or approved anything which the Panel of expert independent engineers
(addressed further below at §122) (“Panel”) subsequently, i.e. post-Collapse, identified as
causally relevant to the Collapse. In any event, even if after-the-event analysis identified
something that was causally relevant, that conclusion would be reached with the benefit of
hindsight. It does not follow that anyone could or should have appreciated the potential
relevance to stability at the relevant time, i.e. pre-Collapse.
9. Cs seek to draw an inference that detailed operational information about a single facility in
a NOJV would have reached the BHP Board or GMC, but that has no basis in the
documents. Nor is it consistent with Samarco’s position as a large, independently operated
business with its own management, experts and engineers. The contention that BHP Brasil-
appointed Samarco directors passed on to the BHP Board or GMC everything they learned
in their role on the Samarco Board is illogical: there is no evidence that they did so and, as
set out below, no evidence that there was anything relevant to pass on.
10. In the alternative, Cs mount a wide-ranging case on attribution and agency which includes
a novel and unavailing suggestion that the knowledge of individuals (including knowledge
of Samarco directors learned in their capacity as Samarco directors) should be attributed to
BHP simply because those individuals were employees either of BHP or a BHP Group
entity. There is no basis in law for that proposition, and again, no evidence of any such
person having any knowledge that the safety of the Dam had been or was being
compromised, or that the risk of collapse was not well controlled, to attribute in any event.
11. Third, BHP were not told that the safety of the Dam was being compromised. Cs’
case does not get off the ground, even if the knowledge of Samarco’s directors (or any
others) is attributed to BHP, or is inferred to be, or was in fact passed on to the BHP Board
or GMC. There was no relevant knowledge to attribute or pass on. The witness evidence
before the Court is that safety was BHP’s number one priority,6 and that BHP considered
Samarco had a clear focus on safety7 – Cs have no witness evidence of their own, let alone
to the contrary. The BHP Brasil-appointed Samarco directors were not told that the safety
6 Gillespie, §40 {B1/4/14}: Beaven 1, §66 {B1/1/22}.

7 Campbell, §§32-34 {B1/2/10}; Gillespie, §24 {B1/4/9}.
3
of the Dam was being compromised. Indeed, they were repeatedly assured by engineers
and experts, including independent experts, that Dam management was “well controlled”.8 Cs
have not and cannot identify any basis on which the Samarco Board (still less BHP) should
have disregarded those assurances. Nor have Cs identified any basis on which the Samarco
Board (let alone BHP) should have sought further, different, information.
12. In this context, it is important to avoid the dangers of hindsight analysis, mentioned at §8
above. The so-called “risks and warnings” on which Cs rely were not perceived that way by
the relevant subject matter experts at the time, i.e. pre-Collapse. Indeed, the technical cause
of the Collapse ultimately determined by the Panel (‘lateral extrusion’ triggering
liquefaction), (a) was not, pre-Collapse, a process well understood by tailings dam
engineers: “lateral extrusion” was not mentioned in any document relating to the Dam
before the Collapse; and (b) was found by the Panel to be the result of a combination of
events which took place over a number of years. There is no basis for suggesting that it
would, or should, have been appreciated by Samarco Board members or by other
individuals whose knowledge Cs argue should be attributed to BHP that those matters
taken together could compromise the safety of the Dam, or that it was susceptible to lateral
extrusion. None of the many people with operational responsibility and subject-matter
expertise for the Dam indicated they considered that it was at serious or imminent risk of
collapse.
13. Fourth, Cs’ case wrongly elides Samarco, BHP Brasil and BHP. This is a particularly
striking aspect of the factual way in which Cs put their case. Not only does this factual
approach completely fail to acknowledge the separate legal personalities, but it also seeks
repeatedly to pierce the corporate veil – in order to attribute liability for Samarco’s
operations to BHP. It is common ground that the separateness of legal personalities is a
core tenet of the Brazilian Corporate Law,9 and that Brazilian law will not permit veil-
piercing on the (alleged) facts of the present case. This illustrates Cs’ general approach - to
adopt extreme, expansive and novel interpretations of Brazilian law, including of the three
causes of action on which they rely, addressed in turn below.
8 For example, see {F10/35/28}; {F11/221/15}; {F12/399/21}.

9 As defined at §15 below; see Art 1 of the Corporate Law {I1/4}. All Brazilian constitutional and legislative provisions
at issue in these proceedings, along with agreed translations (or in a limited number of cases, the Cs’ rival translations,
where certain provisions were not agreed), are set out in the tables located at {I1/0.1}-{I1/13}. To avoid undue
repetition, the legislative provisions mentioned in these Opening Submissions are not referenced to those tables each
time they are mentioned.
4
14. Fifth, BHP are not liable to Cs under the Environmental Law: Brazilian
Environmental Law 6.938/1981 (the “Environmental Law”) provides for the civil liability
of polluters. Cs allege that BHP are strictly, and jointly and severally, liable under Arts 3(IV)
and 14 §1 of the Environmental Law, as indirect polluters: MPOC §§269-281 {A1/1/114}.
This is addressed in Section H below. In summary:
14.1. Cs contend that it is not necessary for any act or omission of a defendant to have
caused the environmental damage so as to ground liability. Instead, their case is
that it is sufficient if the defendant is in some way connected to the activity through
a so-called ‘multifactorial’ test (e.g. by benefiting from the activity, financing the
activity, or owning shares in the company that does the activity).
14.2. BHP contend that this is wrong as a matter of Brazilian law. As the text of the
Environmental Law reflects: there are two ‘types’ of polluters - direct and indirect
polluters. Direct polluters are those who operate, or carry out, the relevant activity.
Indirect polluters are those (a) on whom written law or contract imposes a duty of
safety with respect to the relevant activity, and (b) who fail to comply with that
duty of safety. In relation to both direct and indirect polluters: liability under the
Environmental Law only exists where the relevant defendant’s acts or omission
have – in fact – caused the damage.
14.3. Applying the (correct) law to the facts: BHP will contend that it was obviously not
the party operating the mine or Dam. And there is no law or contract which
imposed any duty of safety on the ultimate parent company of a non-controlling
shareholder and the other parent company in the same corporate group. Nor was
there any breach of such duty of safety. And nor did BHP’s acts or omissions cause
the Collapse (at most Cs rely on ‘but-for’ causation, which is not sufficient). In any
event, and even on the basis of Cs’ expert evidence, the facts do not support Cs’
legal case - BHP is insufficiently “connected” to the activity which caused the
environmental damage.
15. Sixth, BHP are not liable to Cs under the Corporate Law: Brazilian Corporate Law
(6.404/76) (the “Corporate Law”) regulates corporations and provides rules regarding the
rights and obligations of shareholders, controlling shareholders and managers. Cs allege
that BHP are jointly and severally liable under Arts 116 and 117 of the Corporate Law on
the basis that BHP breached duties owed as “controlling shareholders” of Samarco to Cs (as
5
part of the “community”): MPOC §§284-288 {A1/1/130}. This is addressed further in
Section I below. In summary:
15.1. BHP are not “controlling shareholders” of Samarco. BHP Brasil only has a 50% stake
in Samarco and is thus not itself a controlling shareholder in Samarco (it is a
controlling shareholder only when acting jointly). Therefore, BHP Australia’s
indirect ownership of BHP Brasil does not make it an indirect controlling
shareholder of Samarco. BHP UK had at the time of the Collapse, and still has, no
stake in Samarco at all.
15.2. Arts 116 and 117 do not impose on controlling shareholders a duty actionable by
members of the “community”. The only duty under those provisions is owed to the
controlled company itself. It is inherently unlikely that a corporate law would allow
such a general ability to disrespect corporate individuality as that for which Cs
contend in substance, and the Corporate Law does not do so.
15.3. Arts 116 and 117 do not impose a “proactive” duty on controlling shareholders to
“minimise risk”, or indeed any liability for omission (other than in the case of a
limited number of specifically identified legal duties, none of which are applicable
here). Nor does Art 117 require a controlling shareholder to investigate all
“management irregularities that are known or should have been known” (as suggested by Cs).
15.4. Even if BHP did owe the alleged duties: as a matter of fact their conduct was not
in breach of any such duties – not least because any such breach would require
intention, which Cs cannot establish. Furthermore, BHP’s conduct did not cause
the Collapse.
16. Seventh, BHP are not liable to Cs under the Civil Code: the Civil Code (“CC”)
establishes the foundations of private law relationships between individuals and legal
entities. Cs allege that BHP are jointly and severally liable pursuant to Arts 186 and 927
(head para) CC: MPOC §§282-283 {A1/1/123}. This is addressed further in Section J
below. In summary:
16.1. Liability under Art 186 can only arise in relation to a defendant’s own unlawful (or
illicit) acts or omissions. BHP are obviously not liable for Samarco’s acts or
omissions. Cs’ legal case is again inherently improbable, by seeking to ignore the
importance of corporate personality.
6
16.2. Cs’ case against BHP is largely an omission case. Liability for omissions requires a
specific legal duty to act – which must be imposed by written law or contract. No
written law or contract imposed any such duty on BHP. Cs’ assertion that “creation
of risk” or “assumption of responsibility” are sufficient is wrong as a matter of Brazilian
law (and in any event, as a matter of fact, BHP did not create the risk or assume
any such responsibility).
16.3. BHP did not commit an unlawful act or omission and did not act (or omit to act)
contrary to any applicable standard of conduct, nor in breach of any duty (if there
were one, contrary to BHP’s case). Cs’ case depends on them establishing that
BHP knew or should have known that the safety of the Dam was being
compromised, but this central premise is factually wrong, as summarised at §§7-12
above.
16.4. None of the acts or omissions attributed by Cs to BHP were the “direct and
immediate” cause of the Collapse, as required by the applicable test for causation in
Art 403 CC.
17. Cs also allege that BHP are strictly liable to Cs pursuant to Art 927, sole para, CC as “authors
of damage” caused by the Collapse: MPOC, §282A.4 {A1/1/129}; Reply, §132 {A1/3/100}.
This appears to be a repackaging of the Environmental Law claim: see MPOC, §282A.4
which alleges that the key Art 927, sole para, requirement of “authorship” is satisfied “by
reason of the matters referred to in paragraphs 271-276A, 278 and 280 above…”. Those paragraphs
of the MPOC are the Environmental Law claim. BHP will contend that the claim under
Art 927, sole para is (a) wrong in law; and (b) misconceived for the same reasons as are
given in response to the Environmental Law claim.
18. Eighth, the claims are precluded because of limitation, the effect of releases entered
into by Cs and the Municipalities’ lack of standing: These (ordinarily preliminary
issues) show that many, if not all, of the claims fall to be dismissed prior to any factual or
legal analysis on the merits of the Cs’ claims. In summary:
18.1. All Cs’ claims, or at least a very substantial portion, are time-barred. This is
addressed in Section L.
18.2. A very substantial number of Cs have compromised their claims by receiving

indemnification payments in Brazil (whether from Renova or Samarco) and in
7
doing so agreed to release Dam-related claims such as these. This is addressed in
Section M.
18.3. The Cs who are municipalities (whose claims are said to be particularly high value)
lack standing to sue. This is addressed in Section N.
19. After some brief remarks about the trial itself, the remainder of this document first
addresses the relevant facts (Sections B-G), then the Brazilian law causes of action (Sections
H-K), and finally BHP’s case on limitation, releases and the standing of the municipalities
(Sections L-N).
A2. The Stage 1 trial
20. Pursuant to the order of O’Farrell J dated 12 January 2023, this, the Stage 1 trial, will address
threshold issues of liability {H1/5/3}. BHP’s position in relation to each of the issues in
the agreed List of Issues (“LOI”) is set out in summary in Annex 1. A copy of the current
trial timetable, as approved following the PTR, is at {PJ/113/15}. Insofar as any of the
claims remain viable following this trial, a further trial has been listed to start in October
2026 to address the next phase of this litigation (issues such as causation of loss and
quantum).
21. In addition to the causes of the Collapse, the key issues of fact in the Stage 1 trial concern
the extent of BHP’s involvement in, and knowledge of, Samarco’s operations, and the
extent of their knowledge of alleged issues relating to the Dam’s safety and stability.
22. The Court has before it an extensive contemporaneous documentary record. It will also
hear oral evidence from 7 witnesses of fact called by BHP, whose statements are in Bundle
B. BHP have been limited as to the witnesses they can call due to ongoing Brazilian criminal
proceedings involving a number of the Named Individuals central to Cs’ case,10 including
Mr Wilson, Mr Randolph, Ms Beck, Mr Fernandes, Mr Ferreira, Mr Zweig, Mr Cardoso
and Mr Ottaviano. Whilst the Brazilian criminal proceedings are ongoing those individuals
are not prepared to provide evidence in the present proceedings and accordingly, certain
key individuals are not available to BHP as witnesses at this trial.11 Annex 2 introduces the
witnesses for BHP from whom the Court will hear.
10 The Named Individuals are addressed at §61 below.

11 For further detail see Michael 17 §§119-127 {PE30/2/39}.
8
23. Cs are not calling any witnesses, but they have deposed or are seeking to depose in the
United States pursuant to 28 USC §1782 eight individuals, introduced in Annex 2. All of
these, with one exception, were BHP or Group employees or directors. Cs have served
hearsay notices in respect of certain of these depositions and may yet serve further hearsay
notices in respect of others. As of the date of this document: BHP do not know whether
or how Cs intend to rely on this material and, if necessary, BHP will address it once Cs
have made clear what use they seek to make of it.
24. Cs have also served hearsay notices with particulars running to some 250 pages {G4/2},
{G4/3} in respect of various materials in the Brazilian criminal proceedings, along with
over 40 pages in respect of Letters Rogatory issued in Brazil in connection with separate
US proceedings against Vale {G4/5}. These materials include, for example, questioning of
Joaquim Pimenta de Ávila (the Dam’s designer) and members of the Independent Tailings
Review Board (explained below) that advised Samarco’s geotechnical department. This
material, voluminous though it is, is of little (if any) relevance to the matters in dispute:
almost none of it relates to the issues before the Court, which concern BHP’s knowledge
or actions.
25. The Court will hear from Brazilian law experts in Environmental Law, Corporate Law and
Civil Law, after the factual evidence. Then, following the Christmas vacation, the Court
will hear from geotechnical experts in relation to the causes of the Collapse. All of the
experts are introduced in Annex 2. The evidence of most of the Brazilian law expert
witnesses will be given in Portuguese. The parties have made arrangements for oral
evidence to be simultaneously interpreted as required.
26. The Court also has written expert evidence on Licensing Law (in Bundle E). This relates
to one allegation of breach under Art 186 CC (MPOC §282 {A1/1/123}). The experts are
agreed on all issues in relation to licensing. That agreement is contained in the original
licensing Joint Expert Statement (“Licensing JES”) {E1/1T} and in {E1/2T}, pursuant
to clarificatory questions asked at Cs’ request. It is common ground that those experts will
not be cross-examined and (subject to the Court’s wish to question them) they should not
be needed to give evidence in person.
B. BHP, IRON ORE, BHP BRASIL AND SAMARCO
9
27. As noted above, Cs’ case rests on incorrectly eliding the distinctions between BHP, BHP
Brasil and Samarco. It is therefore important to begin by explaining (so far as is relevant to
these proceedings) the roles of BHP, the Iron Ore Business Group (“Iron Ore”),12 BHP
Brasil and Samarco, and the relationship between them.
B1. BHP
28. BHP were governed by the BHP Board13 and their most senior executive body was the
GMC. The GMC was comprised of presidents of each of BHP’s Business Groups (aligned
with the commodities extracted and marketed), and presidents who led particular functions,
such as the CFO and the Chief Legal Counsel.
29. The BHP Board and the GMC received very limited information about Samarco and had
almost no involvement in its affairs. This was for three key reasons.
30. First, the GMC did not have operational responsibility, or indeed any responsibility, for
particular assets, whether operated or non-operated. BHP’s business is huge; in 2014 the
Group workforce consisted of c.123,800 employees and contractors at 130 locations in 21
countries across a wide range of commodities {F15/198/4}. The GMC’s role was strategic
and Group-wide: its purpose was to provide leadership to the Group, determine its
priorities and to debate high-level matters important to the Group and to ensure consistent
development of Group strategy: {F15/483/2}, Beaven 1 §§35, 44-47 {B1/1/12}. The BHP
Board similarly – and obviously – did not have any operational responsibility for particular
assets. The purpose of both of those bodies was to address issues that were material to the
Group.
31. Second, the GMC had even less information available to it from NOJVs than it did from
operated assets, and BHP “could not just reach in and tell the management team what to do like it
could if the asset was a BHP-operated asset”: Beaven 1 §11, §15 {B1/1/5}. Therefore, “[i]t was
very unusual for NOJVs like Samarco […] to be considered in any detail by the GMC, given they were
non-operated, were often not materially significant in the scheme of BHP as a whole and were generally
12 Prior to 2013, the Businesses were referred to as Customer Sector Groups (“CSGs”) and Chief Executives of
divisions that included multiple CSGs sat on the GMC.
13 BHP UK and BHP Australia operated as a Dual Listed Company between 29 June 2001 and 28 January 2022
pursuant to a Sharing Agreement dated 29 June 2001: {F15/194} Pursuant to the Sharing Agreement BHP UK and
BHP Australia were required to operate as if they were a single unified economic entity through boards of directors
comprising the same individuals and a unified senior executive management.
10
operationally stable, well-run operations”: Beaven 1 §51 {B1/1/16}. The distinction between
operated and non-operated assets was one that BHP repeatedly made in public
documents,14 as well as internally. Samarco was not a subsidiary of BHP and it was not
treated as one (despite Cs’ suggestions to the contrary15).
32. Third, Samarco was not a substantial part of BHP’s business as a whole (Beaven 1 §85
{B1/1/29}). Samarco was a small part of BHP’s business, whether measured by reference
to production or revenue. In 2014, for example, Samarco’s production comprised only
5.4% of BHP’s total iron ore production, with the remainder coming from BHP’s Western
Australian Iron Ore assets: {F15/198/104}. In 2013 and 2014 Samarco’s revenue
contributed approximately 7-8% of Iron Ore’s total revenue: {F15/198/140}, Gillespie 1
§6 {B1/4/2}. When measured against the total revenue that BHP reported for 2013 and
2014 across all commodities produced by BHP, that figure goes down to approximately
2.5% {F15/198/32}.
33. For those reasons, it is unsurprising that the BHP Board and the GMC had limited
information provided to them about Samarco’s operations in general and about the
operation of the Dam in particular. Such matters were operational matters of an
operationally independent business, which were intended to be and were addressed at the
operational level by Samarco’s management.
B2. Iron Ore and BHP Brasil
34. At all material times, Iron Ore was one of BHP’s CSGs or Businesses. It was headquartered
in Perth. Western Australian Iron Ore, often referred to as “WAIO”, was Iron Ore’s
primary venture, contributing about 90% of the revenue and EBIT (earnings before interest
and tax), and was operated by BHP: Gillespie 1 §6 {B1/4/2}. Samarco, as an NOJV, was
14 From 2008 to 2010 BHP’s Annual Reports stated that Samarco operated as an independent business with its own
management team {F1/82/41}; {F1/496/40}; {F2/205/43} and from 2011 to 2015 their Annual Reports included a
statement in the risk factors section to the effect that their non-operated assets may not comply with BHP’s operating
standards, controls and procedures, including HSEC standards {F3/151/11}; {F4/194.2/12}; {F6/419/18};
{F9/250/24}; {F13/301/24}.
15 See MPOC §§48, 49.1, 92.9 {A1/1/25-27}; {A1/1/46}. To take one example, at MPOC §49.1 {A1/1/27} Cs rely
on BHP’s 2014 Sustainability Report in support of their allegation that BHP addressed issues such as health and safety
and sustainability on a Group wide basis, i.e. including Samarco, under the overall direction, management and control
of the BHP Board, the CEO and the GMC. But that Sustainability Report itself draws a distinction between operated
and non-operated assets: “At operated assets, BHP Billiton has the ability to set workplace health, safety, environment and community
(HSEC) standards and enforce their application. At our non-operated assets, we provide our HSEC performance requirements and seek
to influence the asset to follow them”: {F15/99/4}.
11
not operated by BHP and was therefore not operated by Iron Ore, but BHP monitored its
indirect investment in Samarco through Iron Ore, primarily through BHP Brasil: {F2/48};
Gillespie 1 §16 {B1/4/5}. The structure of BHP Australia’s indirect holding in BHP Brasil
is at Def, Appendix IV {A1/2/235}.16
35. Whether compared to the size of the Group or to Samarco (see Section B3 below) BHP
Brasil was small, and it carried out a limited role, as described further below. In 2011, for
example, it comprised fewer than 20 employees and contractors – one individual was BHP
Brasil’s legal counsel and six had accounting or financial planning roles: {F3/269/18}. BHP
Brasil was not wholly focused on Samarco. Until 2015, BHP Brasil also had other
investments in Brazil including (a) a 14.8% interest in Mineração Rio do Norte, which
owned and operated a large bauxite mine in Brazil; and (b) an interest in the Alumnar
integrated alumina refinery/aluminium smelter: see {F2/48/1}; {F4/207/16};
{F13/301/96}.17
36. The reporting that Iron Ore received from BHP Brasil concerning Samarco primarily
comprised (a) Samarco’s risk reporting (addressed in Section E4.1.1 below); and (b)
information concerning Samarco’s financial performance (revenue, costs etc); which was
prepared by Samarco on a monthly basis and sent to BHP Brasil, which translated that
information from Portuguese to English and converted it into the format used within Iron
Ore: Gillespie 1, §16 {B1/4/5}.
37. Iron Ore also had monthly meetings with Samarco. These meetings focused mainly on
Samarco’s financial performance, though the papers accompanying them did also report
on some safety matters, including Samarco’s total recorded injury frequency rate (the total
number of injuries per 1000 hours worked): Gillespie 1, §§22-25 {B1/4/8}, {F1/76/1},
Campbell 1 §§49-50 {B1/2/17}. Mr Campbell, who was both an alternate director of
Samarco from December 2010 to December 2011 and VP of Strategy and Business
Development in Iron Ore during that period, explains that these meetings were not the
primary channel through which issues in relation to the Dam were raised: he does “not
16 BHP sent Cs a draft Re-Re-Re-Re-Amended Defence to seek their consent to the proposed amendments including
to withdraw an admission including in relation to the employment of Margaret Beck. As of 3 October 2024, Cs had
not responded. Therefore the references cited are to the filed Re-Re-Re-Amended Defence. If the Cs accept BHP’s
amendments we will provide updated references in due course.
17 BHP divested itself of these assets in May 2015: {F13/301/96}.
12
remember learning of anything pertinent in relation to Samarco’s dams other than from Samarco’s
management at Samarco Board meetings”: Campbell 1, §52 {B1/2/18}.
B3. Samarco
38. Samarco was a large mining company: between 2008 and 2014 it had c.2000 to 3000
employees and c.2200 to 3500 contractors, i.e. (by 2014) 6500 staff in total: {F2/112.1/15};
{F11/459.2/5}. In particular, Samarco had a geotechnical department of 28 employees,
including engineers and technicians, covering a range of issues such as long and short-term
planning, facilities of dams, monitoring and inspections and projects: see {F4/352.1/3-4}.
Samarco’s geotechnical department was supported by the Independent Tailings Review
Board (“ITRB”), a group of independent geotechnical experts meeting regularly to advise
on tailings facilities (see further §101 below), and also by external consultants (introduced
at §65 of Annex 3). It is the evidence of BHP’s geotechnical expert, Dr Marr, that “ITRBs
were not widely used in mining” when the Samarco ITRB was established, that “each of the
individuals who served on the ITRB at its inception was a suitably qualified and experienced geotechnical
or civil engineer” and that members who joined the ITRB later “were suitable choices for
membership”: Marr 1, §§131-133 {D3/1/92}. He also says that the “respective individuals’
experience and qualifications complemented one another so that, taken together, the ITRB had the
appropriate range of skills to carry out its functions properly”: Marr 1, §133 {D3/1/93}. Samarco
also had a dedicated risk management team, which was in “constant contact” with operational
areas: {F3/441}, {F4/197}.
39. The Samarco CEO was elected by the Board of Directors of Samarco (the “Samarco
Board”) and required to be independent of the shareholders: clauses 4.15-16, SHA as
amended {F15/20T/10}, {F15/288}. The Samarco CEO then selected and appointed,
subject to approval by the Samarco Board, up to five (initially four) Executive Officers
(who were required to be independent of the shareholders: clause 4.16 SHA) who, together
with the CEO, formed the Executive Board. That independent Executive Board led the
management of Samarco: clause 4.2, SHA {F15/20T/6}.18
18Samarco’s governance and management structures are primarily set out in the SHA between BHP Brasil and Vale
(Vale had initially held its interest in Samarco through SAMITRI but in 2001 SAMITRI became a wholly owned
subsidiary of Vale and then merged with it, with the result that Vale became a party to the SHA) and the Samarco By-
laws: {F15/20T}.
13
40. The Executive Board reported to the CEO and carried 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”: clauses 4.17-18 SHA {F15/20T/10}. The
Executive Board ran Samarco; it had operational and financial responsibility for the
management of it. It also had overall responsibility for the integrity and safety of Samarco’s
dams and the General Manager of Samarco’s geotechnical team reported directly to the
Executive Board: {F6/170/3}. The ITRB reported to Samarco’s Executive Dams
Committee, a Samarco management-level committee which reported to the Executive
Board: {F1/309/2}; {F4/352.1/2}.
41. The Samarco Board,19 by contrast to the Executive Board (the members of which were
engaged full-time to run Samarco on a day-to-day basis), did not have day-to-day
involvement with Samarco or any operational or managerial responsibilities. Rather, the
Samarco Board was responsible for setting Samarco’s general policies, electing and
dismissing members of the Executive Board, monitoring the performance of the Executive
Board and setting Samarco’s business strategy/direction: Article 15, Samarco By-Laws
{F15/20T/30}; Campbell 1 §16 {B1/2/5}. At all material times, the Samarco Board was
not required to meet more than quarterly (Art 19, Samarco By-laws {F15/20T/31})20, by
contrast with the Executive Board, which was to meet on an ad hoc basis, whenever a
meeting was called by the CEO (Art 27, Samarco By-Laws {F15/20T/33}). For example,
from February to May 2014, the Executive Board met at least six times: {F15/369T},
{F15/370T}, {F15/371T}, {F15/372T}, {F15/373T}, {F15/374T}.
42. The Samarco Board members were not required to have geotechnical expertise and, in
relation to the Dam, the Board expected and required Samarco’s management team to
consider risks and to present to the Board their consideration of risks, any mitigating
19 The Samarco Board comprised eight members, four of whom were effective members and four of whom were
alternate members. Each of BHP Brasil and Vale were entitled to appoint two effective members and two alternate
members to the Samarco Board. The shareholders were also entitled to nominate a Chairman and Vice-Chairman on
rotation: clause 4.5, SHA {F15/20T/7}; Article 16 of the Samarco By-laws {F15/20T/31}. Annex 4 to these Opening
Submissions sets out the attendance at relevant Samarco Board meetings by individuals appointed by BHP Brasil as a
member or alternate member of the Samarco Board. Certain of the Samarco Board meetings were also attended by
personnel from BHP, including Mr Lynch (whose involvement was limited to presentations and discussions regarding
BHP’s audits of Samarco: Lynch 1, §§117-118 {B1/5/24}) and Ms Raman (who was invited to support the Board on
matters of finance generally).
20 The documentary record indicates that in practice, during the relevant period, there were ordinary meetings of the
Samarco Board only three times per year.
14
controls that were in place, their view of the effectiveness of those controls and any other
relevant issue that might arise: Campbell 1 §6 {B1/2/3}, §§16-17 {B1/2/5}.
43. The Samarco Board had three permanent advisory committees: the Finance & Strategy,
Operations and Remuneration Committees (see e.g. {F1/302/3}; {F12/290/10}). The
Finance & Strategy and Operations Committees had several subcommittees. None of these
committees or subcommittees had any operational or managerial responsibility for
Samarco either; as Board advisory committees they were part of its governance structure.
44. Under Brazilian law the directors of Samarco owed duties to it that English law would
recognise as fiduciary duties, including a duty to act in Samarco’s best interests and a duty
of loyalty: Arts 154-155 Corporate Law {I1/4/13}. Mr Campbell’s evidence is that, when
he acted as an alternative director, he had the duty to act in Samarco’s interests clear in his
mind: Campbell 1 §15 {B1/2/5}.
C. BHP’S KNOWLEDGE: INFERENCE AND ATTRIBUTION
45. Cs’ case on BHP’s knowledge is put on two bases:
45.1. First, Cs invite the Court to infer that the BHP Board and/or the GMC knew
certain matters because two of the BHP Brasil appointees on Samarco’s Board also
sat on the GMC (at different times). Those individuals are Mr Randolph (between
2007 and 2013) and subsequently Mr Wilson (between 2013 and 2016): e.g. MPOC,
§§ 92.2, 92.6 {A1/1/45}, §181 {A1/1/80}. We address this in Section C1 below.
45.2. Second, Cs say that BHP are to be attributed with the knowledge and conduct of
their alleged “organs” (explained at Section C2.1 below) and the knowledge and
conduct of 37 Named Individuals, alleged to be BHP’s agents: MPOC §§176A-C
{A1/1/72}, Cs’ RRFI dated 26 April 2024 {A3/7}. We address this in Section C2
below.
C1. Inferences
46. Cs say that it is to be inferred (a) that the substance of the matters discussed by the Samarco
Board was in fact communicated to the GMC, if not also the BHP Board; and (b) that
significant matters approved by the Samarco Board, such as the approval of the P4P
Project, were known to and in fact were approved by the GMC, if not also the BHP Board:
MPOC §181 {A1/1/80}. They invite the Court to draw these inferences on the bases that
15
(a) Mr Randolph and Mr Wilson sat on both the Samarco Board and on the GMC and (b)
on the basis of another inference, viz. that they would have reported these matters to the
GMC and/or the BHP Board.
47. There is no basis for any of these inferences.
48. First, BHP have disclosed the papers and minutes of all relevant GMC and BHP Board
(including BHP Board committee) meetings. What the GMC and the BHP Board
(including its committees) knew about Samarco is contained in those documents. The
meetings of the BHP Board, BHP Board committees and GMC were formal occasions,
accompanied by agendas and pre-reading material, and with minutes taken. There is no
basis for any suggestion that Mr Randolph or Mr Wilson said anything material about
Samarco that is not recorded in the contemporaneous documents, and as set out below,
there is no evidence that there was anything relevant for them to pass on.
49. Second, as explained in Section B1 above, both the GMC and the BHP Board focused on
matters that were material to the Group as a whole and therefore Samarco was rarely
discussed. It is therefore inherently unlikely that Mr Randolph or Mr Wilson would have
provided the GMC (or the BHP Board, on which they did not sit) with what – on Cs’ case
– would effectively have been a running commentary on all matters that were discussed at
Samarco Board meetings.
50. Third, as regards the limited reporting that the GMC and BHP Board committees received
in relation to the risk of a Dam collapse at Samarco (which shows that the Collapse was
neither foreseen nor foreseeable by the BHP Board committees or the GMC: see Section
E below), that reporting did not come from Mr Randolph or Mr Wilson. Instead, the
information received by the GMC and BHP Board committees primarily came from BHP’s
Group-wide Risk Assessment and Assurance (“RAA”) function, which established and
maintained BHP’s risk management standards and methodologies and was responsible for
BHP’s audit function: {F9/331.1/7}. It is therefore inherently unlikely that Mr Randolph
or Mr Wilson were reporting separately in relation to these matters.
C2. Attribution
51. Cs allege that the knowledge and conduct of the following are to be attributed to BHP
Australia and BHP UK: BHP’s Board; six board committees; four management-level
committees; one Iron Ore committee; their CEO (these are alleged by Cs to be BHP’s
16
“organs”), and 37 Named Individuals (identified in the annex to Cs’ 26 April 2024 RRFI
{A3/7/9}). Cs say that (a) BHP Australia and BHP UK are to be attributed the knowledge
of their organs and that BHP Australia and BHP UK are “primarily liable” for the conduct
of those organs; and (b) that the 37 Named Individuals were acting as agents for BHP, and
that therefore (i) their knowledge is to be attributed to BHP; (ii) BHP are “liable” for their
conduct; and (iii) BHP are “primarily liable” for their conduct. The distinction between (ii)
and (iii) is unclear, however BHP understands (ii) to be a plea of vicarious liability and (iii)
to allege that the conduct of those alleged agents is to be attributed to BHP.
52. As explained below, BHP Australia and BHP UK accept that the knowledge and conduct
of certain persons and bodies is to be attributed to them. That acceptance, however, applies
only insofar as that knowledge was obtained in the course of and for the purposes of the
relevant role and only insofar as that conduct was engaged in the performance of or by
reason of the work required for the relevant role.
C2.1 Applicable law
53. Before turning to Cs’ case on attribution it is necessary to address the applicable law.
54. BHP’s position is that the attribution of the knowledge and conduct of their organs and
their alleged agents is governed by: (a) in respect of BHP Australia, Australian law; and (b)
in respect of BHP UK, English law. It is not clear to BHP whether Cs dispute that in
relation to attribution of knowledge and conduct of their organs (see MPOC, §176C
{A1/1/73}), but Cs do contend that the attribution of knowledge of the Named Individuals
to either BHP Australia or BHP UK is governed by Australian law on the basis that this
issue relates to the alleged relationship of agency between BHP and the Named Individuals
(it is common ground that Australian law governs whether the Named Individuals are
agents of BHP21): Cs’ 26 April 2024 RRFI, §10 {A3/7/7}. There is no basis for Cs’ position.
Attribution of knowledge to a company is governed by the law of the company’s place of
incorporation: Integral Petroleum SA v SCU-Finanz AG [2014] EWHC 702 (Comm) at
[57] and [61] {J2/9/20}.
55. Cs’ position is that the Court should be asked to treat Australian and English law as
materially the same in relation to the agency and attribution issues that arise: {M1/11}.
21 Cs’ 26 April 2024 RRFI, §2 and Annex and Def, §§203A(4)(a)(i), 203A(4)(ab)(i).
17
Insofar as Australian and English common law are concerned, BHP are content for the
Court to adopt that approach, and we have adopted that approach below.
C2.2 Attribution of knowledge and conduct of BHP Australia and BHP UK’s organs
56. Cs allege that BHP’s organs are the BHP Board and those individuals and committees to
whom they allege the BHP Board’s powers and discretions were delegated: MPOC §176C.
57. BHP Australia and BHP UK accept that the knowledge and conduct of the BHP Board
and of their CEO is to be attributed to them, along with the knowledge and conduct of the
following BHP Board committees: (a) the Risk and Audit Committee (the “Group RAC”);
(b) the Sustainability Committee (“SusCo”); (c) the Finance Committee; (d) the
Remuneration Committee; and (e) the Nomination and Governance Committee.22 Of
these, the Group RAC, SusCo and the Finance Committee are likely to be most relevant
to these proceedings. The role of the Group RAC was to assist the BHP Board in its
oversight of matters such as risk management and audit ({F15/487/2}), while SusCo’s role
focused on matters involving health, safety, environment and community (“HSEC”)
{F15/488/2}. The role of the Finance Committee was to assist the BHP Board in
approving and overseeing financial matters, including matters relating to capital structure
and funding: {F14/244.2}.
58. BHP Australia and BHP UK deny that the following management-level committees
exercised any broad or general delegated authority from the BHP Board and therefore deny
that the knowledge or conduct of these committees is to be attributed to either of them:
(a) the GMC (the position of the individual officers who comprised the GMC is addressed
in Section C2.3 below); (b) the Financial Risk Management Committee;23 (c) the Investment
Committee;24 (d) the Disclosure Committee;25 and (e) the Business or CSG level risk and
audit committees (collectively known as “BRACs”), the relevant committee being the Iron
Ore Risk and Audit Committee.26 As regards the BRACs, where a person whose knowledge
22 BHP Australia and BHP UK do not accept that the knowledge or conduct of the Samarco Subcommittee, which
did not exercise any relevant delegated authority ({F16/421}, {F14/325.1/12}) is to be attributed to either of them.
23 Whose role was to assist the CEO to manage financial risks faced by the Group: {F15/485/2}.
24 Whose role was to oversee and monitor the Group’s investment process and to review all proposed investments
where the equivalent amount of BHP shareholder funds to be committed exceeded US$250 million: {F15/486/2}.
25 Whose role was to assist the CEO in overseeing the Group’s compliance with securities dealing and disclosure
obligations: {F3/198.1/2}.
26 The purpose of these committees was to assist the CEO and Group RAC to monitor and oversee the Group’s
obligations in relation to (among other things) risk management and audit: {F16/39.1/2}.
18
is attributable to BHP Australia and/or BHP UK when performing a particular role (e.g. a
member of Group RAC) attended a BRAC in the course of performing that role,27 BHP
accept that the knowledge obtained through attending that BRAC is to be attributed to
BHP Australia (if that person’s knowledge is attributable to BHP Australia) and/or BHP
UK (if that person’s knowledge is attributable to BHP UK).
C2.3 Attribution of knowledge and conduct of BHP Australia and BHP UK’s directors
and BHP Australia’s officers
59. BHP Australia and BHP UK accept that the knowledge and conduct of their directors
(including Andrew Mackenzie, BHP’s CEO from May 2013 until December 2019, and
Jacques Nasser, Chairman from 2010 to 2017) is to be attributed to them. BHP Australia
further accepts that the knowledge and conduct of the individual members of the GMC –
four of the Named Individuals sat on the GMC for part of the relevant period (Marcus
Randolph, James (Jimmy) Wilson, Dean Dalla Valle and Mike Henry) – acquired whilst
acting within the scope of their role as “officers” of BHP Australia (as that term is defined
under the Australian Corporations Act 2001 (Cth) {J1/18/1}) can be attributed to BHP
Australia.28 BHP do not accept that the knowledge of Mr Randolph and Mr Wilson
acquired in their capacity as directors of Samarco is to be attributed to BHP: see further
§§83-93 below.
60. As regards the attribution of the knowledge of the officers of BHP Australia to BHP UK,
Cs’ only pleaded case in this regard is that the knowledge of certain of those individuals
(who are among the 37 Named Individuals) is to be attributed to BHP UK on the basis
that they were agents of BHP. That case is unsustainable, as we explain immediately below.
C2.4 Attribution of knowledge and conduct of the Named Individuals
61. Of the 37 Named Individuals: four individuals were on BHP’s Board or in its senior
management; 11 were the BHP Brasil appointed effective and alternate directors of
27 If a chair or member of a BRAC was both a member of Group RAC and a President of a CSG/Business, then it is
denied that they chaired or were a member of the BRAC in their capacity of a member of Group RAC: Def, §203(4)(b).
28 BHP Australia does not accept that the knowledge and conduct of Business/CSG Presidents who were not officers
of BHP Australia (including Ian Ashby, President, Iron Ore from March 2005 to 2012) is attributable to it: Rej
§50D(9)(c) {A1/5/53}.
19
Samarco over the relevant period and 22 others held a wide variety of roles within the
Group and were employed by various entities.
62. We have set out in Section C2.3 above BHP Australia and BHP UK’s case as regards the
attribution of the knowledge and conduct of their directors and of the officers of BHP
Australia. The submissions in this section therefore relate to the remaining Named
Individuals.
63. Cs say that all of these were agents of BHP, either because: (a) they were employed by
BHP; or (b) for those who were employees of other companies within the Group or
contractors to them, that there was nevertheless a “collateral consensual relationship of agency”
between them and BHP: Cs’ 26 April 2014 RRFI, §§1.1-1.2 {A3/7/2}.
64. Before turning to address the detail of these allegations, we note their generality is such
that they might be alleged against most if not all employees that the Group had working
for it – which, as noted in Section B, amounted to 123,800 people in 2014. This is
implausible. The implausibility of Cs’ case is further illustrated by the fact that they allege
that all knowledge of the Named Individuals – regardless of whether it was acquired in the
course of their alleged agency – is to be attributed to BHP and that knowledge can be
attributed to BHP even if the Named Individuals did not know the relevant information,
on the basis that they should have known it (MPOC §§176B, 176C).
C2.4.1 Whether BHP’s employees were their agents
65. Ten of the Named Individuals were employed by BHP between 2008 and the Collapse or
for some part of that period.29 Cs allege this is “conclusive evidence” of their relationships of
agency with BHP for the duration of the period covered by the relevant contract: Cs’ 26
April 2024 RRFI, §1.1. BHP will submit that Cs’ case is unmeritorious and fails to establish
an agency relationship for at least the following reasons.
66. First, whether any Named Individual is an agent of BHP is a question of fact to be
determined by reference to whether (a) that person has authority from BHP to affect their
relationships with third parties; (b) that person owes fiduciary duties to BHP; and (c)
Mr Ashby, Mr Randolph, Mr Wilson, Mr Campbell, Mr Henry, Mr Oborn, Ms Raman, Mr Salvano, Mr Slaven and
29
Ms Torres: Def, §203A(3)(a) {A1/2/104}.
20
whether BHP had an ability to exercise a degree of control over that person. That is clear
as a matter of well-established legal principles:
66.1. Agency is the fiduciary relationship which exists between two persons “one of whom
expressly or impliedly manifests assent that the other should act on his behalf so as to affect his
legal relations with third parties, and the other of whom similarly manifests assent so to act or so
acts pursuant to the manifestation”: Bowstead & Reynolds on Agency at §1-001(1)
{J2/25/1}.
66.2. The usual characteristics of an agency relationship include “authority for the agent to
affect the principal’s relationship with third parties, a fiduciary duty owed by the agent to the
principal, and an ability on the part of the principal to exercise a degree of control over the agent.
… ‘the absence of any of these main characteristics must … be a significant pointer away from
the characterisation of a particular relationship as one of agency, even though there may be rare
exceptions’”: Haringey LBC v Ahmed [2017] EWCA Civ 1861, §27 {J2/13/8}.
67. Second, if the agency relationship is not express (and Cs do not allege that it is), the law
will not conclude that a person is an agent unless the behaviour of both the putative
principal and agent is consistent only with a relationship of agency.30
68. Third, agency is not an office or a status; it is a description of a person while and only so
long as the person is exercising the authority that is the touchstone of agency.31 It follows
from this that an employee cannot be an agent for their employer simply because of their
employment. The employee may not in fact be an agent at all32 – and, even if the employee
does have the requisite authority and so is an agent for some purposes, they will not be an
agent for all purposes.
69. Finally, Cs do not allege that the Named Individuals had authority to affect BHP’s
relationship with third parties or that the Named Individuals in fact owed BHP any
fiduciary duties. Nor do they allege that the specific knowledge which they seek to attribute
30 IBM United Kingdom v Lzlabs GmbH [2022] EWHC 2094 (TCC) {J2/18/20}, §78, The Magellan Spirit [2016]
EWHC 454 (Comm), §29 {J2/11/14}.
31 Bowstead & Reynolds, §1-004 {J2/25/3}: “The centrality to agency of the conferral of authority to alter legal relations suggests
that at common law being an agent is not a status, but a description of a person while and only so long as the person is exercising such
authority”.
32 In this regard, see Bowstead & Reynolds, §§1-004 {J2/25/2}, 1-034 {J2/25/13}: (“…employees and contractors often
have no authority to alter their appointer’s legal relations, and if not exercising any authority are not properly described as an agent”).
21
to BHP was knowledge acquired by a Named Individual while exercising authority granted
to them by BHP.
C2.4.2 Whether employees of and contractors to other companies in the Group were
agents of BHP
70. Cs plead that the remaining Named Individuals were employed by other companies within
the Group, and that there was a “collateral consensual relationship of agency” (understood to be
simply a relationship of agency) between them and BHP. BHP admit that 21 of these
individuals were employed by companies within the Group (for at least part of the relevant
period)33 and that a further two were contractors to BHP Brasil.34
71. Cs allege that these Named Individuals were agents of BHP primarily on the basis that they
are alleged to have been required to comply with the BHP Group’s Code of Conduct,
which in turn is alleged to have amounted to an agreement to act at the direction of, on
behalf of and in the interests of BHP. Cs also say that these Named Individuals were given
performance indicators which required them to act at the direction of, on behalf of and in
the interests of BHP and that the Named Individuals (who were not the CEO or Chairman)
ultimately reported to the President of Iron Ore, and/or to other members of the GMC
and/or to BHP’s CEO and to BHP’s Board or its committees: Cs’ 26 April 2024 RRFI
§1.2(1) {A3/7/3}, Reply §§78A.4, 78B.4 {A1/3/49}.
72. Again, BHP will submit that Cs’ case is unmeritorious and fails to establish an agency
relationship for at least the following reasons.
73. First, an allegation that a Named Individual acted at the direction of, on behalf of and/or
in the interests of BHP is insufficient as a matter of law to establish agency.35
33 Mr Artaud, Mr Cardoso, Mr Corless, Ms Beck, Mr Dow, Mr Fernandes, Mr Fonseca, Ms Hood, Mr Lynch, Mr

Mazza, Mr Nogueira, Mr Ottaviano, Mr Pereira, Mr Swayn, Mr Wetzig, and Mr Zweig (Def, §203A(3)(b)), plus Mr
Oborn, Mr Campbell, Ms Torres, Mr Henry and Ms Raman (who were also employed by BHP for other parts of the
relevant period) (Def, §203A(3)(ba)). As regards Ms Beck, BHP previously pleaded in error that Ms Beck was
employed by BHP. Ms Beck was in fact employed by BHP Billiton Marketing Asia Pte from 1 March 2009, by Broken
Hill Proprietary (USA) Inc from 1 September 2010 and by BHP Minerals Service Company from 10 March 2016.
BHP has sought Cs’ consent to make this amendment to the Defence.
34 Mr Ferreira and Ms Jacques: Def, §203A(3)(b)(iv).
35 See Bowstead & Reynolds, §1-004 {J2/25/2} (“the mere fact that one person does something in order to benefit another, and the
latter is relying on the former to do so or may have requested or even contracted for performance of the action, does not make the former an
agent of the latter”) and UBS AG v Kommunale Wasserwerke Leipzig [2017] 2 Lloyd’s Rep 621, [2017] EWCA Civ 1567
22
74. Second, even if an allegation that the putative agent agreed to act at the direction of, on
behalf of and/or in the interests of BHP were sufficient as a matter of law to establish
agency (which it is not), Cs’ reliance on the Code of Conduct does not establish such an
agreement. The Code of Conduct applied “throughout the Group, regardless of location or role”
{F2/487/10} (emphasis added) and it provided that it “must be adhered to by all those who work
for, act on behalf of or represent BHP Billiton”. Accordingly, even if the Code of Conduct were
capable of amounting to any kind of agreement to act at the direction of, on behalf of
and/or in the interests of any entity, that entity would not be BHP. Moreover, the Code of
Conduct is primarily focused on how the various employees, directors, officers and
consultants of the BHP Group as a whole should behave and covers such matters as
alcohol, drug and tobacco use, harassment and the like. There is no basis on which it can
be interpreted as constituting an agreement between each of those employees, directors,
officers and consultants to act as agents of BHP.
75. Third, the specific points on which Cs rely are unmeritorious. The mere fact that a person
does something in order to benefit another – or, as Cs plead, does work for the benefit of
BHP and has their performance assessed by reference to that work – is not sufficient to
establish agency.36 Similarly, even if it were the case that the Named Individuals ultimately
reported to BHP’s senior management or to the BHP Board, that too would not assist: at
its highest all that this allegation would establish is that BHP exercised a measure of control
over the Named Individuals, not that they were agents of BHP.
76. Fourth, if Cs’ allegations on agency were successful they would run roughshod over the
separate legal personality of these affiliate companies. Courts and commentators have
considered this approach in the context of considering whether subsidiary companies are
acting as agents for parent companies and have generally found that an agency analysis is
not appropriate.37 Their analysis and conclusions apply equally here. In substance, Cs invite
at §100 {J2/12/35} (“Of course it was part of the arrangement that UBS requested Value Partners to achieve a certain result. But, as
is pointed out in the passage cited above from the Tonto case, this of itself is insufficient to lead to a categorisation of agency”).
36 See Bowstead & Reynolds, § 1-004 {J2/25/2}.
37 See Bowstead & Reynolds, § 1-027 {J2/25/8} (“Agency reasoning is rarely an appropriate solution to problems of subsidiary
companies”) and §1-030 (“It may appear tempting to regard a subsidiary company as an agent for the parent company; or even the parent
as agent for the subsidiary. Similar inclinations can arise with companies that are related but not as parent and subsidiary. But succumbing
to such temptations would have the effect of circumventing (rather than piercing) the corporate veil. English courts have not looked favourably
on such attempts …”). See also Peterson Farms Inc v C&M Farming Limited [2004] 1 Lloyd’s Rep 603, [2004] EWHC
121 (Comm), §65 {J2/6/10} (“In commercial terms the creation of a corporate structure is by definition designed to create separate
legal entities for entirely legitimate purposes which would often if not usually be defeated by any general agency relationship between them”)
and IBM United Kingdom Limited v Lzlabs GmbH [2022] EWHC 2094 (TCC), §92 {J2/18/22} (“…[T]hat appears to
be close to suggesting that because a parent company owns and controls its wholly-owned subsidiaries, there must be an agent-principal
relationship. That is a surprising suggestion and is clearly incorrect”).
23
the Court to ignore the fact that these Named Individuals are employed by or have
contracts with other Group companies by finding that these Named Individuals were
agents of BHP themselves, thereby circumventing the separate legal personality of these
other Group companies: Reply, §§78A.2, 78B.2.
77. Finally, Cs, perhaps recognising the difficulty of their case, allege that these Named
Individuals were in fact dual agents, i.e. they were agents both for BHP and agents for their
employer: Reply §§78A.3, 78B.3. But that does not remedy the weaknesses in their case; it
compounds them. The dual agent allegation requires Cs to establish both that these Named
Individuals were ipso facto agents of their employers (which, as explained above, they are
not) and that these Named Individuals were, as a matter of fact and in relation to the
particular matters in question, agents for BHP (which they have not attempted to do).
C2.4.3 The position in relation to the other Named Individuals
78. Ten of the Named Individuals were employed by BHP and 23 were employed by other
companies within the Group or were contractors to BHP Brasil. BHP have not been able
to determine the employer of the remaining seven Named Individuals.38 If these individuals
were employees of BHP, then the analysis set out in §§65-69 applies, and if these individuals
were employees of or contractors to other companies in the Group, then the analysis set
out in §§70-77 applies. In either case, Cs’ case fails to establish that these individuals were
agents of BHP.
C2.4.4 Attribution of knowledge of the Named Individuals
79. BHP accept in principle that if (contrary to their primary case) any of the Named
Individuals were their agents then the knowledge of those individuals would be attributable
to them, but only insofar as that knowledge was acquired in the course of their agency. 39
That acceptance is subject to three important points of qualification.
80. First, knowledge acquired by an agent (or officer of BHP Australia, in the case of Messrs
Randolph, Wilson, Dalle Valle and Henry) in some other capacity will not be attributed.
This is a point that has particular relevance to those Named Individuals who were effective
38Mr Dalla Valle, Mr Ribeiro, Mr Victor, Mr Hart, Mr Villabolos, Mr Gomm and Mr Dotson.
39As Bowstead & Reynolds explains (at §8-211) {J2/25/17}, this is an orthodox statement of the law: “only knowledge
acquired by an agent whilst carrying out tasks for the principal will be imputed. Knowledge acquired when not acting for the principal,
whether acquired before or even during the period of employment, would not be imputed” (emphasis added).
24
or alternate directors of Samarco or who sat on Samarco Board committees and
subcommittees: see further §§83-93 below.
81. Second, Cs appear to assume that the knowledge of each of the Named Individuals can be
aggregated for the purposes of determining what BHP can be said to have known. In fact,
Cs need to prove both (a) that the Named Individual who is alleged to have had the relevant
knowledge was authorised to receive it and able to appreciate its significance; and (b) that
aggregation is appropriate in the circumstances, i.e. that the knowledge in question was not
so fragmented such that BHP cannot reasonably have been said to have known it. 40 Cs
have not attempted to explain in their pleadings why aggregation would be justified here,
and BHP reserve their position on this point pending such an explanation.
82. Third, BHP cannot be attributed with knowledge that their agents (or officers, in the case
of BHP Australia) did not in fact have. Cs’ allegation to the contrary at MPOC §176B
(“matters which were known or should have been known to [the Named Individuals] through the
performance of their work are to be treated as within the actual or constructive knowledge of BHP”
(emphasis added)) has no basis in law.
C2.4.5 Attribution of knowledge of Samarco Board directors and Samarco Board

committee and subcommittee members
83. As noted above, BHP Australia and BHP UK do not accept that the knowledge of any of
the Named Individuals, acting as effective or alternate directors of Samarco, is properly to
be attributed to either of them. As regards Mr Randolph and Mr Wilson, any such
knowledge was not acquired by them in their capacity as officers of BHP Australia, and if
any of the remaining effective and alternate directors were in fact agents of BHP (which
they were not, for the reasons at §65-78 above), then any knowledge they acquired was not
acquired in their capacity as agents for BHP.
84. BHP rely in this regard on well-established legal principles. Only knowledge acquired by
an agent whilst carrying out tasks for the principal falls to be imputed to the principal: see
§79 above.
40Mahli v Abbey Life Insurance Co Ltd [1994] CLC 615 (CA), p 20 {J2/5}, George on High Limited v Alan Boswell
Insurance Brokers Limited [2023] EWHC 1963 (Comm), §51 {J2/21/14}.
25
85. Moreover, an employee of a parent company who is appointed a director of a subsidiary
will not normally be acting as agent for the parent.41 That is illustrated by Holland v
Commissioners for HMRC [2010] 1 WLR 2793, [2010] UKSC 51. In that case, in the
context of an allegation that a director of a corporate director of a company was acting as
de facto director of the company itself, Lord Hope observed “So long as the relevant acts are
done by the individual entirely within the ambit of the discharge of his duties and responsibilities as a
director…, it is to that capacity that his acts must be attributed” (§42) {J2/8/20}. Holland is about
the attribution of acts but is equally relevant to the attribution of knowledge because there
is no principled analytical distinction between the attribution of knowledge and the
attribution of acts. Accordingly, if the knowledge of the Samarco directors is acquired by
them entirely within the ambit of the discharge of their duties and responsibilities as a
director, it is to that capacity that their knowledge must be attributed.
86. That is so even if those directors took account of BHP or BHP Brasil’s wishes, to the
extent that those wishes did not conflict with the best interests of Samarco. This is made
clear in Uavend Properties Inc v Adsaax Limited [2020] EWHC 2073 (Comm) where Vistra
Singapore, a trust management company, appointed a subsidiary, Prudence, to act as
corporate director of another subsidiary, Adsaax Ltd, and the directors of Prudence were
also employees of Vistra Singapore. It was held that “[w]hile they may have been required to accept
the appointment in the course of their employment by Vistra Singapore, once appointed, they ceased to be
acting in the course of that employment irrespective of the fact that they remained employees of Vistra
Singapore and irrespective of the fact that, as directors, they may have taken account of Vistra Singapore’s
wishes to the extent that those wishes did not conflict with the best interests of Adsaax Ltd” (§69)
(emphasis added) {J2/16/17}.
87. Further, even if one or more of the Samarco directors owed a duty to BHP to receive
information relating to Samarco (and there is no allegation that they did), that knowledge
will not be attributed to BHP unless the director owed a duty to Samarco to communicate
that information to BHP (there is no allegation of that either).42
41 See Bowstead & Reynolds, §2-033 {J2/25/15}; Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [1990]
3 WLR 297, p 222G {J2/2/36}; Thompson v The Renwick Group Plc [2015] BCC 855, §26 {J2/10/7}; Uavend
Properties Inc v Adsaax Limited [2020] EWHC 2073 (Comm), §69 {J2/16/17} and Carey Street Investments Ltd (in
liquidation) v Brown [2023] EWHC 968 (Ch), §295 {J2/20/60}.
42 El-Ajou v Dollar Land Holdings Plc (No 1) [1994] 2 All ER 685, p 698g (CA) {J2/4/14}: “It is established on the
authorities that the knowledge of a person who acquires it as a director of one company will not be imputed to another company of which he
26
88. Further still, pursuant to Articles 153 to 156 of the Corporate Law {I1/4/12-15}, the
Samarco directors had duties to Samarco, including a duty of loyalty and a duty to act in
accordance with Samarco’s best interests. Art 154, paragraph 1 of the Corporate Law
specifically provides that a director elected by a group or class of shareholders, as the BHP
Brasil appointees were, “has, towards the company, the same duties as the other managers, and shall
not fail to fulfil such duties, even for the defence of the interests of those who appointed him” (emphasis
added). As a result (a) Samarco’s directors owed independent duties to Samarco; and (b)
though the actions and decisions taken by Samarco’s directors might be consistent with the
interests of BHP, they could not be taken on the basis that they were in the interests of
BHP but only if they were in the interests of Samarco.
89. Cs admit that the directors owed these duties to Samarco but maintain that these duties did
not prevent them from taking direction from, acting on behalf of or acting in BHP’s
interests, with the result (they allege) that their knowledge is to be attributed to BHP: Reply
§§78D-E {A1/3/51}. Cs either misunderstand or misstate the Brazilian law position.
90. The only basis for Cs’ plea that the BHP Brasil appointed directors in fact took direction
from BHP or acted on its behalf or in its interests is the provisions of the SHA relating to
“Previous Meetings”: Reply §78D.3. A Previous Meeting (or preliminary meeting) is a
meeting between shareholders, held either before a general meeting or a board meeting,
who are parties to a so-called “controlling” agreement (a shareholders’ agreement between
two or more shareholders who together hold more than 50% of the shares), and it is
common for shareholders’ agreements to provide that directors are bound by decisions
taken by shareholders in a preliminary meeting – an outcome that the Corporate Law
specifically permits: Trindade 1 §§119-124 {C8/1/35-37}. The SHA contains such a term:
clause 3.7.2 {F15/20T/5}. But BHP are not a party to the SHA and therefore have no
rights under it.
91. Further, the fact that the Corporate Law and the SHA permits this outcome does not
detract from the directors’ duties to act in Samarco’s best interests. As Prof Trindade
explains (Trindade 1 §§124-125 {C8/1/36}):
“By allowing the directors to be bound by resolutions taken in preliminary meetings, the
Corporate Law has enhanced the effectiveness of agreements and legal certainty for investors.
However, it did so while preserving directors’ duties, as it does not exempt them from acting
is also a director, unless he owes, not only a duty to the second company to receive it, but also a duty to the first to communicate it”
(emphasis added).
27
and voting in the best interest of the company, even if such a vote shall be disregarded by the
chairman of the meeting, in the event it is contrary to the terms of the shareholders’ agreement
or the resolution adopted in the preliminary meeting (Article 118, paragraphs 8 and 9).”
“By confirming the duty of the directors to vote and act in compliance with the interests of the
company, the model adopted by Brazilian law sought to ensure that, even if there is a provision
for a shareholders’ preliminary meeting before the meetings of the board of directors, the duties
of the directors and, if applicable, their independence, will be preserved.”
92. Therefore, the terms of the SHA are irrelevant in this context. They do not supplant or
displace the duties Samarco’s directors owed to Samarco to act in its best interests and
therefore do not provide any basis for the allegation in Reply §78D.3 to the effect that
Samarco’s directors were obliged to act on BHP behalf and/or in BHP’s interests.
93. As regards the Samarco Board committees and subcommittees, the purpose of those
committees was to provide support and recommend decisions to the Samarco Board, and
the purpose of those subcommittees was to provide support to the committees: {F12/290}.
Accordingly, as regards the effective and alternate Samarco directors who sat on the
Samarco Board’s committees and subcommittees, any relevant knowledge they acquired as
a result of their membership of those committees and subcommittees is knowledge they
acquired in the course of their directorships and is not attributable to BHP for the reasons
at §83-92 above. As regards the BHP or other Group employees who sat on those
committees or subcommittees, they were acting to support the Samarco Board and their
knowledge is therefore not attributable to BHP (in any event they were not agents of BHP
(for the reasons at §65-78 above) and their knowledge is therefore not attributable to BHP
on any basis).
C2.4.6 Attribution of conduct of the Named Individuals
94. As noted above, Cs plead both that BHP are “primarily liable” for the conduct of their agents
(MPOC, §176C) and “BHP are liable in respect of the conduct” of their agents in the performance
of their work (MPOC §176B).
95. The plea at MPOC §176C is understood to be a plea that the acts of BHP’s agents are to
be treated as the acts of BHP. The principles set out at §79-93 above therefore apply to
this plea: there is no principled distinction between attribution of acts and knowledge. In
particular, for the reasons set out at §83-93 above, BHP are not to be attributed with the
conduct of Named Individuals (and BHP Australia is not to be attributed with the conduct
28
of its officers) while they were acting in their capacity as a director of Samarco or on a
Samarco Board committee or subcommittee.
96. As for the plea at MPOC §176B that appears to be a plea of vicarious liability, but such a
plea is irrelevant because Cs do not allege that any of the Named Individuals breached any
duty or are otherwise liable to them and there is therefore nothing for which BHP can be
vicariously liable. See Section J3.
D. THE DAM FAILURE: CAUSES OF THE COLLAPSE AND BHP’S ALLEGED

KNOWLEDGE OF THOSE CAUSES
97. In summary:
97.1. As set out at §122 below, it is common ground that the immediate cause of the
Collapse was “saturation and subsequent liquefaction of the sand near the left abutment”:
MPOC, §206A {A1/1/92}; Def, §235A(1) {A1/2/168}.
97.2. It is also common ground that liquefaction was triggered by lateral extrusion: Panel
Report p.73 {D8/1/85}. There is debate about whether that mechanism was well
recognised by geotechnical engineers at the time of the Collapse: see further §123
below.
97.3. There is some agreement as to the factors which contributed to causing the
Collapse, but also substantial areas of disagreement, as set out further at section
D3 below.
97.4. In any event, BHP did not know that those allegedly contributing factors posed
any risk to the stability of the Dam, as set out at sections D3.1-D3.7 below,
addressing each factor in turn.
98. Before addressing the parties’ cases as to the alleged causes of the Collapse and BHP’s
alleged knowledge of those causes in detail, it is instructive to consider Cs’ overarching case
that BHP could and should have known that the Dam was at risk of collapse.
99. The Dam, like all upstream tailings dams, was a dynamic and complex structure, which was
constantly under construction, as it was built over time from some of the material it was
designed to retain (see §109 below). The Panel Report (addressed at §122 below) (“Panel
Report”) noted the “evolutionary character of [the Dam’s] design and operation [made] the...Dam
29
extraordinarily complex” (Panel Report, p.21 {D8/1/33}). Cs’ geotechnical expert, Prof
Gens, says of the Samarco site that “this was a complex facility that incorporated several dams and
dikes in its design” (Gens 1, §131 {D2/1/45}), while Dr Marr notes that “upstream tailings dams
are large, complex and dynamic structures”: Marr 1, §272 {D3/1/172}. The Dam’s design also
evolved over time to respond to changing conditions at the site (which Dr Marr describes
as “commonplace” for upstream tailings dams: Marr 1, §49 {D3/1/26}).
100. As mentioned at §40 above, operational responsibility for the Dam rested with Samarco’s
geotechnical department, the General Manager of which reported to Samarco’s Executive
Board: {F6/170/3}. Samarco’s geotechnical department was supported by a large number
of independent engineers who worked and reported on various aspects of the Dam: see
§§65 of Annex 3. In summary, independent engineers were responsible for at least: (a)
verifying annually that the Dam was stable (see §§51-56 of Annex 3); (b) reviewing and
updating the Dam’s operational documentation, including the risk chart and emergency
action plan; (c) preparing and reviewing design proposals, including in relation to the
project for raising the Dam, and the neighbouring Germano dam, to El.940m (“Project
940”) (addressed at §§48-49 of Annex 3); (d) auditing the Dam, and reporting on its
operating condition as it stood at the time of the inspection; (e) assessing the feasibility of
future Dam raises; (f) carrying out, and reporting the results of, testing campaigns at the
Dam; and (g) reviewing the work of other independent engineers.
101. In addition, in May 2009, and on the recommendation of Dr Andrew Robertson (himself
an independent consultant geotechnical engineer), Samarco established the ITRB, which
the geotechnical experts agree was in line with best practice for a large tailings dam: Marr1,
§131 {D3/1/92}; Gens2, §145 {D5/1T/45}. The ITRB was a “group of experts appointed by
the dam owner that meets regularly to offer independent technical advice on the design, construction, operation
and/or closure of one or more tailings facilities” (Geotechnical Joint Expert Statement “JESGeo”,
issue 5 {D1/1/15}). The ITRB identified itself as offering “independent technical review” of
Samarco’s tailings storage facilities, including the “design, operation, monitoring, and maintenance
and closure in accordance with good international practice and guidelines”: {D7/51/6}. Further detail
on the role and composition of the ITRB is at §§57-64 of Annex 3. In total, the ITRB met
30
22 times between May 2009 and July 2015 and produced a report on the Dam on each
occasion.43
102. The ITRB was established, and other independent engineers involved, because the
operation, monitoring and oversight of the Dam required specialist geotechnical expertise
and engineering judgment (as is the case for any dam of this type).
103. The Dam was the subject of significant testing and monitoring. Samarco’s geotechnical
department produced at least the following (Panel Report, p.A-3 {D8/5/6}):
103.1. From May 2010 to December 2013, monthly geotechnical inspection reports;
103.2. From January 2011 to January 2014, monthly geotechnical monitoring reports;
103.3. From February 2012 to October 2015, weekly reports;
103.4. From February 2013 to August 2015, monthly tailings discharge reports; and
103.5. From February 2013 to October 2015, monthly instrumentation reports.
104. The Dam was also the subject of field-testing campaigns over the course of its life (Panel
Report, pp.C-4-6 {D8/23/7}), which are addressed in further detail at §§70-81 of Annex
3.
105. Despite the high volume of monitoring, testing and analysis carried out in relation to the
Dam: neither the ITRB, nor any of the multiple independent engineers who worked on the
Dam over its six-year lifespan, indicated that they considered that the Dam was at serious
or imminent risk of Collapse. Nor did they - in the three years prior to the Collapse -
recommend that tailings deposition at the Dam be halted.44 In this context it is unreal and
misconceived to suggest, as Cs do, that BHP ought to have considered otherwise, especially
given the remote and limited oversight role BHP had (as outlined at section B above) and
the limited information provided to it about Samarco.
43 The minutes of the ITRB meetings are sequentially numbered. After Meeting No. 9 in December 2010, the ITRB
meetings were restarted in April 2011 (under new terms of reference), with that meeting identified again as Meeting
No.1.
44 As depicted in the timeline at B.B21 of the Panel Report, tailings deposition was suspended at times prior to mid-
2012 as part of the remediation of the 2009 Piping Incident, and to allow investigations into the failure of the decant
galleries {D8/8/3}.
31
D1. Geotechnical Evidence
106. The parties’ geotechnical expert evidence addresses the factors which contributed to the
Collapse. Cs’ expert is Prof Antonio Gens, who has produced two expert reports in
response to the Geotechnical LOI: Gens 1 {D2/1}; Gens 2 {D5/1T} plus addendum
{D2/4}. BHP’s expert is Dr W Allen Marr, who has also produced two expert reports:
Marr 1 {D3/1}; Marr 2 {D6/1T}. For further information on the geotechnical experts see
§§14-16 of Annex 2.
107. This section provides an introduction to the Dam and its structures. Further detail in
relation to geotechnical issues is set out in (a) the “Background” section of Dr Marr’s report
({D3/1/20}), which explains some central concepts regarding upstream tailings dams in
general and introduces the significant features of the Dam; (b) a glossary of geotechnical
terms at Appendix 2 to Dr Marr’s report ({D3/1/281}) and (c) Annex 3 hereto.
108. Tailings are a by-product of the processing of iron ore. There are two types of tailings and
they have different properties; Panel Report, p.i {D8/1/2}):
108.1. Sandy tailings are composed of sand and silt-sized particles, which are relatively
free-draining.
108.2. Slimes are fine-grained and clay-like in nature, such that they are soft, compressible
and relatively impermeable.
109. The Dam was constructed according to the upstream method. In the upstream method, an
earthfill or rockfill starter dam is constructed, behind which sandy tailings are deposited to
form a buttress or ‘stack’ that retains behind it further sandy tailings and slimes: Panel
Report, p.5 {D8/1/17}. In other words, and with the exception of the starter dam, the
structural portion of the dam itself is constructed from sandy tailings. As the dam increases
in height, the dam crest moves progressively upstream over previously deposited tailings:
MPOC, §101 {A1/1/49}. The upstream method is only one method of tailings dam
construction; 37% of all operating tailings dams globally in 2021 had been or were being
constructed according to this method: {D2/3.1T/95}.
110. Water enters the dam from ordinary precipitation (e.g. rainfall), floods and during the
deposition of tailings (where, as at the Dam, they are transported to the dam in a water
suspension called slurry): Panel Report, p.6 {D8/1/18}. Draining the water from the sandy
32
tailings comprising the structural part of the dam is key to the upstream method because -
when saturated - sandy tailings may be susceptible to liquefaction. Adequate drainage
underlying the sandy tailings promotes the percolation of water through them and out of
the structure: Panel Report, p.4 {D8/1/16}.
111. The efficacy of drainage in the dam can be affected by the presence of slimes within the
sandy tailings, because the relative impermeability of slimes can impede downwards
drainage of water through the sandy tailings: Panel Report, pp.4-5 {D8/1/16}. Slimes
therefore need to be kept separate from the sandy tailings comprising the structural part of
the dam. If slimes and sandy tailings are to be deposited in the same impoundment, then
sandy tailings are deposited at the crest (i.e. the downstream end of the impoundment), and
the slimes upstream. To preserve the free-draining characteristics of the sands, a beach of
a prescribed width (i.e. the distance between the crest of the dam and the downstream edge
of any water pond (see §112 below) where slimes are deposited) is required to prevent
water-borne slimes from settling near the dam crest where they could impede drainage:
Panel Report, p.i {D8/1/2}.
112. A pond may form on the surface of the tailings in the impoundment. That water is
controlled by various decant structures, explained at §117 below, which allow excess water
to be removed from the impoundment without entering the internal drainage structures:
Panel Report, p.6 {D8/1/18}.
D2. The Fundão Dam
113. The Dam is depicted in Figures A to C below. Figure A depicts the Dam in February 2011
and is labelled with the locations of the Dam’s dikes (i.e. the embankments used to confine
the tailings within the Dam). The inset to Figure A shows the locations of the Dam’s right
and left abutments (i.e. the right and left sides of the man-made embankment abutting the
natural terrain, as viewed from the top of the Dam looking downstream), and its central
section, as at October 2015. Figure B depicts the Dam in October 2015 and is labelled with
the locations of the Dam’s drainage structures. Figure C also depicts the Dam in October
2015, but is instead labelled with the locations of the Dam’s decant structures and includes
a shaded yellow section indicating the location of the Setback and the plateau downstream
of it (explained further at §119 below).45 In all three figures, dashed lines indicate structures
45 This shading has been added and does not appear in Figure B.B1-3 of the Panel Report {D8/7/5}.
33
that were no longer in operation at the time of the Collapse, while solid lines indicate those
structures that were still operative in November 2015.
34
Figure A: the Dam as at February 2011 (showing location of dikes)
35
Figure B: the Dam as at October 2015 (showing drainage features)
36
Figure C: the Dam as at October 2015 (showing decant structures)
37
114. The Dam was comprised of two main dikes, which were initially separate from one another.
Those dikes are illustrated on Figure A. “Dike 1”, behind which sandy tailings were initially
deposited, was downstream of “Dike 2”, behind which slimes were initially deposited:
Panel Report, p.B.B1-2 {D8/7/4}. It was always intended that Dike 2 would be deliberately
“overtopped”, and that happened in March 2014: Panel Report, p.B-39 {D8/6/45} and see
further §19 of Annex 3. The Collapse initiated at the left abutment, which is illustrated on
the inset to Figure A. Dike 1A and New Dike 1A were temporary dikes, installed to allow
the remediation of the 2009 Piping Incident (see §129 below) and the Main Gallery (see
§117 below) respectively.
115. As explained at §111 above, the area between the crest of Dike 1 and the edge of the pond
in the impoundment is the ‘beach’ and the distance from the crest to the pond is the ‘beach
width’: Marr 1, Glossary {D3/1/282}, and see illustration at Marr 1 p.36 {D3/1/36}. The
Dam’s beach width is addressed in further detail at §§22-26 of Annex 3.
116. The Dam’s primary drainage originally comprised the “Principal Foundation Drain”
(which Cs refer to as the Main Underdrain) and the “Auxiliary Foundation Drain”, both
of which extended along the base of the Fundão valley (together, the “Original
Drainage”): Panel Report, pp.B-B1-13-14 {D8/7/15}. Both the Principal Foundation
Drain and the Auxiliary Foundation Drain are illustrated on Figure B. Following the 2009
Piping Incident, the Dam’s drainage was redesigned, such that the Original Drainage was
replaced with a blanket drain at El.826m (the “El.826m Blanket Drain”), also illustrated
on Figure B: Panel Report, p.B-B1-3 {D8/7/5}.
117. The Dam originally contained decant galleries known as the “Main Gallery” and the
“Secondary Gallery”, the purpose of which was to remove surface water from the Dike 2
and Dike 1 impoundments respectively: Panel Report, pp.B-B1-32-33 {D8/7/34}. The
decant galleries were eventually plugged with concrete, and replaced by the “Auxiliary
Spillway” and the “Fourth Spillway”: Panel Report, p.B.B1-4 {D8/7/6}. These structures
are illustrated on Figure C.
118. During periods when work was taking place on the decant galleries, a channel was opened
between the Dike 2 impoundment and the Dike 1 impoundment, known as the “Overflow
Channel”: Panel Report, p.B.B1-4 {D8/7/6}. The Overflow Channel is labelled on Figure
C (and depicted in Figure A) and addressed in further detail at §§18-21 of Annex 3. The
38
purpose of the Overflow Channel was to allow surface water from the Dike 2 impoundment
to exit the facility via the Secondary Gallery while the Main Gallery was being repaired:
Panel Report, p.B-39 {D8/6/45}.
119. A further feature of the Dam was the “Setback”, which is shaded yellow on Figure C. The
Setback was an area at the left abutment where the axis of the Dam’s crest was diverted and
moved further upstream: Panel Report, pp.11-12 {D8/1/23}. The flat area between the
downstream face of the Setback and the downstream face of the Dam on the original
alignment was known as the plateau, and is included in the yellow shading. The Collapse
originated at the Setback. The Setback is addressed in further detail at §§31-35 of Annex 3.
120. Adjacent to the plateau at the left abutment was a small valley called the “Grota da Vale”.
At the opposite end of the valley to the left abutment was a structure known as the “Vale
Sterile Waste Pile”, a neighbouring facility.46 The Grota da Vale contained various drainage
structures connected to the Vale Sterile Waste Pile, some of which are illustrated on Figure
B. The development of the drainage in the Grota da Vale is addressed at §§42-47 of Annex
3.
121. Shortly before the Collapse, Samarco completed the construction of a new blanket drain at
the left abutment plateau (the “El.860m Blanket Drain”): Panel Report, p.B.B1-3
{D8/7/5}. The El.860m Blanket Drain is illustrated on Figure C and addressed in further
detail at §§42-47 of Annex 3. At the time of the Collapse, a similar drain was under
construction at the right abutment: Panel Report, p.B.B1-31 {D8/7/33}.
D3. The cause of the Collapse
122. Following the Collapse, Samarco, BHP Brasil, and Vale instructed Cleary, Gottlieb, Steen
& Hamilton (“Cleary”) to investigate the Collapse and determine its cause. Cleary in turn
briefed the Panel. In August 2016 the Panel produced the Panel Report {D8/1}, which is
described in further detail at §§99-103 of Annex . Cs adopt the Panel’s conclusion that the
immediate cause of the Collapse was “saturation and subsequent liquefaction of the sand near the
left abutment”, which Cs say was “the result of a series of failures in and/or modifications of the original
A sterile waste pile is a dump of waste material from mining that contains no foreseeable economic value: Marr 1,
46
Glossary {D3/1/296}.
39
design of the Dam”: MPOC §206A {A1/1/92}. BHP do not dispute the conclusions in the
Panel Report.
123. The Panel concluded that the “flowslide that occurred on November 5, 2015 was instigated by a
lateral extrusion mechanism”: Panel Report p.71 {D8/1/83}. In relation to this Dr Marr
explains that before the Collapse, “neither experts, nor practicing engineers, would likely have employed
the concept of lateral extrusion within the tailings to analyse this dam” because lateral extrusion was
a “novel idea when the Panel referred to it”: Marr 1, §116 {D3/1/86}. Prof Gens’ disagrees, saying
that, prior to the collapse, lateral extrusion as a triggering mechanism was “well understood by
geotechnical experts”, but acknowledges that it was “probably not well understood by typical practicing
engineers working on tailings dams”: Gens 2 §14 {D5/1T/11}.
124. Cs identify three matters which are alleged by Cs to be “failures in and/or modifications of the
original design of the Dam”, which caused the Collapse (MPOC §206A {A1/1/92}), and which
were considered by the Panel:
124.1. the failure and subsequent blocking of the Main Underdrain;
124.2. the failure to ensure the 200-metre minimum beach width was maintained; and
124.3. the failure and plugging of the Secondary Gallery, the creation of the Setback and
the subsequent raising of the Dam on the altered alignment.
125. Cs also allege three further matters which are said to be “further contributing factors to the
Collapse”, which were not considered by the Panel:
125.1. the substantial increase in production and therefore in tailings deposits arising
from the P4P Project;
125.2. the use of the Dam to dispose of tailings waste from the Alegria Mine; and
125.3. the continued rapid elevation of the Dam in 2013-2015 notwithstanding the serious
problems that had by then been identified, especially around the left abutment.
126. These matters, their contribution to the Collapse, and BHP’s knowledge of them, are
addressed at sections D3.1-D3.7 below, and summarised in Annex 5, along with a summary
of the further allegations of knowledge addressed at Section E below. Section C1 above
addresses Cs’ reliance on a general inference that the substance of the matters discussed by
40
the Samarco Board was in fact communicated to the GMC, if not also the BHP Board –
there is no basis for such an inference – and Section C2 above Cs’ case on attribution and
agency. The submissions in Sections D and E below, which address the pleaded allegations
regarding BHP’s knowledge of specific matters, are made without prejudice to BHP’s
contentions in Section C above. In any event, as sections D3.1-D3.7 below demonstrate,
BHP’s knowledge of the alleged causes or contributing factors was limited, and did not
include knowledge that any of them posed a threat to the stability of the Dam, or that the
safety of the Dam had been or was being compromised.
D3.1 The failure and subsequent blocking of the Main Underdrain
127. The first of the three matters Cs identify as “failures in or modifications of the original design” that
caused the Collapse was the “failure and subsequent blocking of the Main Underdrain” in 2009:
MPOC, §206A {A1/1/92}.
128. Cs say the failure and plugging of the Principal Foundation Drain (which Cs refer to as the
Main Underdrain) and Secondary Gallery “had the effect of removing the whole of the drainage system
upon which the safety of the Dam depended according to its original design and that no “proposed corrective
measures” could provide satisfactory equivalent drainage”: Reply §127.1 {A1/3/97}. The Main and
Secondary Galleries did not drain the tailings, but instead decanted water from the pond:
Marr 1, §57 {D3/1/34}. The replacement of those Galleries with the Auxiliary and Fourth
Spillways had no impact on the drainage of the tailings, and neither the Panel nor Prof Gens
suggests that it did. For that reason, this section addresses the failure and plugging of the
Principal Foundation Drain only. The works undertaken in connection with the plugging
of the Main and Secondary Galleries, and BHP’s knowledge of the same, are addressed at
section D3.3 below in the context of the Setback.
129. The Principal Foundation Drain was a drain constructed at the base of the Fundão valley
which extended upstream beneath the Dike 1 impoundment, and which was designed to
drain water from the tailings placed above it: MPOC, §106 {A1/1/50}; Panel Report,
pp.B.B1-3 {D8/7/5} and B.B1-13 {D8/7/15}. On 13 April 2009, shortly after sandy
tailings were first discharged into the Dam, water started to seep out of the downstream
slope of the Dam (the “2009 Piping Incident”):47 Panel Report, B.B8-2 {D8/14/4}. In
response to the 2009 Piping Incident, Samarco interrupted the discharge of sandy tailings
47“Piping” is internal erosion caused by seepage which if left uncorrected can lead to a channel or a “pipe” developing
from the point at which the water is able to exit the dam back into the pond: see Marr1, Glossary {D3/1/292}.
41
and drained the Dike 1 impoundment: {D7/11/1}. Following extensive analysis and
investigation, as summarised in §11 of Annex 3, the cause of the 2009 Piping Incident was
found to have been the faulty construction of the Principal Foundation Drain. Remedial
action was taken, in the form of sealing the Principal Foundation Drain and replacing it
with the El.826m Blanket Drain: Panel Report, sections 2.2-2.3 {D8/1/19}. This was in line
with the recommendations of the designer of the Dam, Pimenta de Ávila (“Pimenta”)
{D7/13/7-8}, Dr Andrew Robertson (an independent geotechnical expert) {D7/18/11-12}
and the ITRB {D7/17T/8}.
D3.1.1 Alleged causative effect
130. Prof Gens’ opinion is that the El.826m Blanket Drain was “far from being a perfect substitute for
the original drain design” such that it was not “effective in maintaining unsaturated conditions for the
vast majority of the stored sand”: Gens 1, §§163, 165 {D2/1/61}. Prof Gens concludes, “If the
original dam concept of a drained stack had been carried out, no liquefaction failure would have occurred”:
Gens 1, §488 {D2/1/174}.
131. Dr Marr’s evidence is that “there is no reason to conclude that the replacement of the bottom drain with
a blanket drain was a factor in the Collapse”: JESGeo 20(d)(i) {D1/1/83}. His view is that the
El.826m Blanket Drain had as a central design principle the achievement of a low degree
of saturation within the tailings, the effect of which would be to reduce liquefaction risk, a
design principle which it shared with the Original Drainage: Marr 2, §§25-26 {D6/1T/13}.
Dr Marr also considers that the specific criticisms made by Prof Gens of the El.826m
Blanket Drain – addressed at §14 of Annex 3 – are incorrect, or not relevant to its
effectiveness. For that reason, Dr Marr concludes “I have not seen any reason to conclude that the
revised design would be less effective in controlling the risk of liquefaction than the original design, indeed it
might be more effective,”: Marr 2, §28 {D6/1T/15}, §62 {D6/1T/35}.
132. In short, the failure and sealing of the Principal Foundation Drain did not cause the
Collapse. Whilst the saturation of tailings at the left abutment contributed to the Collapse,
that saturation was not the result of the Principal Foundation Drain having been replaced
by the El.826m Blanket Drain. It resulted from the need for additional drainage to be
implemented as the Dam increased in height and therefore width, reaching into the left and
right abutments. That additional drainage was the subject of consideration by independent
geotechnical engineers over the course of the Dam’s lifetime (as outlined in §§42-47 of
Annex 3) and could have been required even had the Principal Foundation Drain been
42
retained. The need for additional drainage as the Dam increased in size is addressed at
section E2.1 below.
D3.1.2 Alleged BHP knowledge
133. Cs allege that the Samarco Board was informed of the drainage problems with the Dam
arising from the 2009 Piping Incident and authorised changes to the design of the Dam:
MPOC §114 {A1/1/55}; and that it should have been apparent to the Samarco Board that
the drainage of the Dam had been “irrevocably compromised” by the 2009 Piping Incident and
“no proposed corrective measures could provide satisfactory equivalent drainage”: Reply, §94.1
{A1/3/61} and §127.1 {A1/3/97}.
134. BHP agree that the Samarco Board was aware of the 2009 Piping Incident and did approve
the proposed corrective actions in relation to it. However, as the contemporaneous
documents show:
134.1. The Samarco Board took appropriate action in light of concerns about the
effectiveness of the proposed solution, appointing Vale’s dam management team
at the 22 July 2009 Samarco Board meeting to work on behalf of the Samarco Board
to produce a report on the proposed solution ({F6/61/3});
134.2. The Samarco Board was assured at the 2 December 2009 meeting that the
multifaceted corrective actions proposed (not limited to installation of the El.826m
Blanket Drain) would “assure the safe and normal operation of the Fundão Dam, returning
it to its initial operation conditions and assuring it the useful life for which it was designed”:
{F14/142/119-121}; {F1/469.1/138};48 {F14/150/4}. These actions were
highlighted as having been mutually agreed by Samarco’s geotechnical department,
and independent geotechnical engineers including Pimenta (the designer of the
Dam, and Engineer of Record), the ITRB and Dr Robertson (an independent
geotechnical expert), and were also endorsed by Vale’s dam management team;
134.3. Following implementation of the corrective actions and resumption of the

deposition of tailings behind Dike 1 on 25 March 2010, the Samarco Board was
informed at and/or in the board materials for the 12 May 2010 meeting that no
48 In the version of BHP’s written opening filed and exchanged on 4 October 2024, a small number of documents
referenced had not yet been uploaded to Opus 2 and such documents were instead referenced by Production / Bates
Number. Such references have now been updated in this revised version of BHP’s written opening.
43
abnormality had been observed. They were also told that Samarco had taken the
corrective measures required to “assure that the Dam would be able to resume operation at
no risk to the structure” and that further actions in accordance with the ITRB and
Pimenta recommendations so as “to assure the continued dam operation over the asset
functional expected useful life”, which were expressed to be unconnected to the 2009
Piping Incident, were already in progress and expected to be concluded by Q4 2010:
{F14/221.0.2/95-96}; {F4/226.0.5}; {F14/268/4}.
135. In summary, the Samarco Board was aware of the 2009 Piping Incident and the steps taken
to fix it, was informed that Samarco management took appropriate actions in response, was
assured that recommendations from geotechnical experts, including the ITRB, were being
implemented and (by May 2010) was informed that the Dam would be able to resume
operation at no risk to the structure.
D3.2 The failure to maintain the 200-metre minimum beach width
136. The second matter Cs identify as “failures in and/or modifications of the original design” that
caused the Collapse, was the “failure to ensure the 200-metre minimum beach width was maintained”:
MPOC, §206A {A1/1/92}.
137. The beach is the area of sandy tailings between the dam’s crest and the edge of the pond
which separates sandy tailings from slimes where the two are deposited in the same
impoundment, as was the case for the Dam when the Overflow Channel was open: see
§118 above. The relevance of beach width, and operation of maintaining it, is addressed at
§111 above, and at §§22-26 of Annex 3.
138. The geotechnical experts are agreed as to the impact of beach width on the stability of a
tailings dam: “In general, the wider the beach …the greater is the stability of the dam. In addition, if
properly drained, a wider beach can result in a large volume of stored tailings that are not saturated, thus
improving stability”: JESGeo issue 7 {D1/1/18}.
139. However, the experts disagree as to the causative impact of reductions in the Dam’s beach
width over time on the Collapse: Prof Gens concludes that the requirement to maintain a
200m beach width “was routinely breached during operations” and that this resulted in
encroachment of slimes into structural areas and affected stability and safety: Gens 1, §494
44
{D2/1/175}. In Dr Marr’s view, “the maintenance of the minimum beach width does not guarantee
that the dam will be safe or stable, and conversely, a reduction in the width of the beach does not mean that
the dam is bound to fail”. Dr Marr reviewed the data presented by the Panel as to the Dam’s
beach width over time and observes “although there was evidence of incursions onto the beach, that
evidence was inconsistent as to the duration and extension of those incursions”. He concludes that the
Panel’s finding that the beach width was violated “more often than not” was not “an accurate
summary of the data”. In short, Dr Marr’s evidence is that “the incursions into the beach were not
sufficient by themselves to cause the Collapse, and the extent to which they contributed to the Collapse is
uncertain”: Marr 1, §§157, 160 {D3/1/103}.
140. Cs allege that BHP were or should have been aware of the failure to maintain a minimum
beach width of 200m: Reply, §127.2 {A1/3/97}. They rely on (a) Samarco Board meetings,
(b) Samarco Operations Committee meetings, and (c) a meeting of the Samarco
Performance Management Subcommittee. The purpose of the Operations Committee was
to support the Samarco Board in operational and technical matters; it had three
subcommittees, including the Performance Management Subcommittee: {F1/302/4};
{F12/290/13}. Attendance at the Samarco committee meetings is addressed in Annex 4.
Cs say that at four identified meetings beach width of less than 200m was discussed, and/or
materials evidencing beach width of less than 200m were provided/presented: MPOC,
§179.10 {A1/1/77}, §179.13.2 {A1/1/78}, §191, 194 {A1/1/82}, 282.7.4 {A1/1/127}. Cs
also rely on Mr Ferreira’s attendance note in relation to a visit to the Dam on 26 January
2015: MPOC, §§205A.2.3, 205A.3 {A1/1/86}. Mr Ferreira was a contractor to BHP Brasil
and a member of various Samarco Board committees, including the Operations Committee.
Each of the matters relied on by Cs is addressed in turn below.
141. Samarco Board: insofar as beach width was mentioned at all, the consistent reporting to
the Samarco Board was that the beach width was adequate. There is no statement in the
materials for the Samarco Board meetings indicating that beach width was raised as a point
of concern:
141.1. Written presentations for the 4 December 2013 and 10 December 2014 meetings
each contained a topographical image of the Dam showing the beach width at
45
various points across the Dam: {F7/212/45}; {F10/91/56}.49 Neither presentation
contained any text accompanying the image drawing attention to the beach width
criterion, or referring to the beach width at all, or otherwise indicating that anything
shown in the image was a matter of concern.
141.2. The Company Report for the December 2013 Samarco Board meeting reported
that “all of the structures of the tailings disposal systems are operating accordingly”, showed
that Fundão Dike 1 and Dike 2 were above the “safety factor” and noted that the
disposal of tailings forecast for 2013 was “being carried out as planned”: {F7/175/24}.50
141.3. Similarly, the Company Report for each of the Samarco Board meetings in
December 2014 ({F10/35/28}), April 2015 (F11/221/15-16}) and August 2015
({F12/399/21}), reported that dam management for the short term was considered
“well controlled” by the ITRB. Each of these Company Reports also expressly noted
that “the beach [width] is adequate to support the maximum rain possible” (which was said
to be observable from the topographical image(s) of the Dam included in the
report)51.
141.4. None of the minutes of the Samarco Board meetings (corresponding to the
meetings for which the above materials were prepared) refer to any discussion
specifically in relation to beach width: {F7/224} (4 December 2013); {F14/266}
(10 December 2014); {F15/318} (15 April 2015); and {F15/182} (5 August 2015).
142. Operations Committee: Cs allege that “minimum beach maintenance, with width less than 200
metres” (among other matters) was discussed at nine different Operations Committee
meetings: MPOC, §194 {A1/1/82}. As to those meetings:
142.1. The written presentations for the 13 November 2013, 19 November 2014, 18
March 2015 and 10 July 2015 meetings contained a topographical image of the Dam
49 The beach width measurements shown in the 4 December 2013 presentation are 351m, 230m, 176m and 193m, and
in the 10 December 2014 presentation are 183m, 200m, 330m, 220m and 130m (in each case from right to left
abutment).
50 The Company Report (or ‘Board Meeting Report’) was a report prepared by Samarco ahead of each Samarco Board
meeting which provided summary updates on various topics, and which was provided to Samarco Board members in
advance as part of the board materials.
51 Whilst the Company Reports for the December 2014 and April 2015 Samarco Board meetings contained only a
single topographical image of the Dam, the Company Report for the August 2015 Samarco Board meeting also
included a topographical image of the Dam specifically showing the beach width at various points across the Dam,
namely 320m, 390m, 170m and 200m (from right abutment to left abutment): {F12/399/21}.
46
showing the beach width at various points across the Dam.52 But the relevant slides
contain no text accompanying the image drawing attention to the beach width
criterion or otherwise indicating that beach width was a point of concern.53 The
November 2013 and November 2014 presentations expressly highlighted (in
relation to tailings disposal) that Fundão Dike 1 and 2 were above the safety factor
in both normal and threshold conditions: {F5/60/26}, {F5/60T/26},
{F5/60/29}, {F5/60T/29}, {F12/280.1T/41}.
142.2. The written presentation for the 21 November 2012 meeting identified “monitoring
beach” as a risk control, but it contained no indication that the monitoring raised a
concern, what beach measurement was required, or what the impact of the control
was: {F5/31.4/34} {F5/31.4T/34}.
142.3. The written presentations for the November 2011 ({F3/199.3} {F3/199.3T}) and
14 March 2014 ({F8/5T}) meetings do not contain any reference to beach width.
143. Similarly, the minutes for those meetings, as well as those for the meeting on 26 March
2012, make no reference to any discussion by the Operations Committee in relation to
beach width, still less that it was a point of concern. As recorded in the minutes, from
November 2013 the general message relayed was that, to the extent that any ‘risks’ had been
identified, these were “mitigated”, with it being highlighted in March and August 2014 that
the ITRB considered dam management for the short term to be “well controlled”.54
144. Performance Management Subcommittee: the presentation for the 7 August 2014
meeting included a topographical image showing the Dam and the width of the beach at
various points, namely 299m, 342m, 135m and 225m (from right abutment to left
abutment). However, it contained no text accompanying the image drawing attention to the
52 The written presentations for these meetings showed measurements (in each case from right abutment to left
abutment) of 351m, 230m, 176m and 193m (November 2013) {F5/60/29} {F5/60T/29}; 183m, 200m, 330m, 220m
and 130m (November 2014) {F12/280.1T/43}; 350m, 470m and 210m (March 2015) {F10/153.3T/17}; 320m, 390m,
170m and 200m (July 2015) {F14/510.1.1/29} {F14/510.1.1T/29}.
53 It is also noted that the written presentation for the 19 August 2014 meeting (which is not referred to at MPOC
§194) contained a topographical image of the Dam showing the beach width at various points, namely 299m, 342m,
135m and 225m (from right abutment to left abutment). Again, the relevant slide contains no text accompanying the
image drawing attention to beach width criterion or otherwise indicating that beach width was a point of concern:
{F14/510.1T/38}.
54 {F14/506} (22 November 2011); {F3/425} (26 March 2012); {F4/488/32-40} (21 November 2012); {F5/363.2}
(15 March 2013); {F7/176/15-24} (13 November 2013); {F8/47/24-31} (14 March 2014); {F9/108/17-24} (19
August 2014); [{F10/36/16-23} (19 November 2014); {F11/216/20-29} (18 March 2015); and {F12/401/23-29} (10
July 2015).
47
beach width criterion, or otherwise indicating that the beach width was a point of concern:
{F15/312/109}. The minutes of the 7 August 2014 meeting do not record any discussion
in relation to beach width: {F15/316}.
145. Mr Ferreira’s attendance note of his visit to the Dam on 26 January 2015: this was sent
to Mr Fernandes (cc’ing Ms Jacques (a contractor to BHP Brasil) and Mr Cardoso (BHP
Brasil’s Finance Manager)) ({F10/274T}). The note records that “[c]urrently, on the left
abutment, this value [i.e. beach width] is slightly below 200m”. But the note concludes, “During the
field visit, the good management of operations was noted and no hazardous situations were detected”:
{F10/275T/2}.55
146. Thus, none of the materials provided to each of the Samarco Board, the Operations
Committee and Performance Management Subcommittee, or Mr Ferreira’s attendance
note, indicated that the beach width was a point of concern. There is, therefore, no basis
on which it can be said that BHP knew or should have known of any concern as to stability
arising from the beach width.
D3.3 The failure and plugging of the Secondary Gallery, creation of the Setback and the
subsequent raising of the Dam on the altered alignment
147. The third matter Cs identify as “failures in and/or modifications of the original design” that caused
the Collapse was the “failure and plugging of the Secondary Gallery, the creation of the Setback and the
subsequent raising of the Dam on the altered alignment”: MPOC, §206A {A1/1/92}.
148. It is common ground that, after the El.826m Blanket Drain was installed and tailings
deposition recommenced in March 2010, in July 2010 a sinkhole appeared at the right
55 In relation to Portuguese documents in the Trial Bundle the parties agreed a “Translation Protocol”. Pursuant to
the Translation Protocol Cs were to provide machine translations on a rolling basis of all Portuguese language
documents in the Trial Bundle not nominated for certified translation (“Internal Translations”), which BHP would
have the opportunity to review and comment on prior to uploading them to the Trial Bundle (§§22-27) {PO/2846}.
Contrary to the Translation Protocol, on 1 October 2024, Cs informed that Internal Translations “required for referencing
the Claimants’ opening note” should be uploaded directly to the Trial Bundle. Bundle {PO/3057/2}. Cs have not yet
provided Internal Translations for all the Portuguese documents in the Trial Bundle, or uploaded all the Internal
Translations to the Trial Bundle. Due to the Cs approach, BHP have in their references to Portuguese language
documents included the trial bundle reference for the translated version of that document (even where such document
is yet to be uploaded). This will allow the court and parties to navigate to machine translations of the document as
soon as they are available in the Trial Bundle. BHP's approach should not be taken as agreement to the Internal
Translations, and BHP reserve the right to obtain certified translations of these documents in due course. Informal
translations have been used by BHP in relation to Portuguese documents which have been referenced in these Opening
Submissions in some specific instances (e.g. where the parties have agreed to obtain a certified translation but this has
not yet been obtained).
48
abutment, directly above the Main Gallery: Panel Report B.B8-4 {D8/14/6}. Investigations
into both the Main Gallery and Secondary Gallery revealed that they had been defectively
constructed. After a period of attempted remediation, the Main and Secondary Galleries
were sealed and replaced by the Auxiliary Spillway and the Fourth Spillway: Panel Report,
pp.11 {D8/1/23}; B.B1-34-35 {D8/7/36}.
149. It is also common ground that the Main Gallery, the purpose of which was to drain surface
water from the impoundments behind Dike 2, was not functional during its attempted
remediation: Panel Report, p.B.B2-1 {D8/8/3}. To address that, the Overflow Channel
was constructed, which allowed water (and any slimes suspended in it) to flow from the
Dike 2 impoundment to the upstream end of the Dike 1 impoundment, such that excess
water could be decanted through the Secondary Gallery, the intake for which was in the
Dike 1 impoundment. The Overflow Channel was open between February 2011 and July
2012 and between July 2013 and December 2013: Panel Report, pp.39-40 {D8/1/51};
B.B2-1 {D8/8/3}. The Overflow Channel is addressed further in §§18-21 of Annex 3.
150. The investigation of the Secondary Gallery revealed that the height of tailings at the left
abutment already exceeded the load capacity of the Secondary Gallery: Panel Report p.11
{D8/1/23}. That led to the introduction of the Setback in around October 2012. The
purpose of the Setback was to move the crest of the Dam upstream so that, pending the
plugging of the Secondary Gallery, the deposition of new tailings would take place over a
smaller section of the Secondary Gallery than had the original axis been retained. The work
of infilling the Setback had started by January 2014, but was paused after November 2014
to permit drainage to be installed: in its report of January 2014 (No. 8) the ITRB referred
to “the ongoing construction to return the axis of Dyke 1 to its original alignment in its left-hand portion”
{D7/101T/6}. In its report of November 2014 (No.11) the ITRB recommended the
Setback “should be filled in as quickly as possible” {D7/121T/13}. In its report of April 2015
(No.12) the ITRB recognized that the filling of the Setback would only be executed after
installation of the El.860m Drainage Blanket {D7/135T/5}. The Setback is addressed
further in §§31-35 of Annex 3.
151. Cs identify the “creation of the Setback and the subsequent raising of the Dam on the altered alignment”
as a cause of the Collapse: MPOC, 206A {A1/1/92}. The geotechnical experts are largely
agreed as to the causative effect of the Setback on the Collapse. Prof Gens concludes that
49
the problems with the Galleries led to the creation of an overflow channel “resulting in more
slimes being deposited behind Dike 1” and that the “[s]etback of the Dam’s left abutment placed the
structural part of the dam closer to the weaker slimes. The setback also increased the distance of the sand
tailings from the elevation 826 m blanket drain. The continued raising of the Dam along the setback
alignment gradually reduced the factor of safety against global stability.” JESGeo, 20(d)(iv)-(v)
{D1/1/89}. Dr Marr’s view is that with hindsight it could be concluded that “the placement
of slimes behind Dike 1 in circumstances where the Setback was then built over the area where the slimes
had been placed, was a factor in causing the Collapse”: JESGeo, 20(d)(ii) {D1/1/85} and that “the
failure of the Secondary Gallery contributed to the Collapse, in that the Setback was adopted to enable work
made necessary by that failure, and the Setback was a contributory but not sufficient factor in causing the
Collapse.” JESGeo, 20(d)(iv) {D1/1/89}.
152. However, for the reasons set out at §§28-29 of Annex 3, the geotechnical experts are
essentially agreed that it is unclear to what extent the structural part of the crest at the
Setback in fact overlaid slimes previously deposited in the Dike 1 impoundment. The Panel
acknowledged that “the formulation of the behavior of the sand/slimes mixtures and their relative
proportions [was] the greatest source of uncertainty in [its] analysis”: Panel Report, p.62 {D8/1/74}.
Prof Gens’ evidence is that “the operation of the Overflow Channel...contributed to an encroachment
of the slimes into the sand tailings zone to an extent difficult to estimate precisely after the failure” (Gens
1, §512 {D2/1/181}) and Dr Marr considers that “the extent and constitution of [the] slimes is an
area of great uncertainty”: Marr 1, §256 {D3/1/164}.
153. Therefore, BHP’s case is that, without knowing where and in what quantity slimes were
deposited when the Overflow Channel was open, it is not possible to say to what extent the
Setback overlaid those slimes and it would not have been possible to say prior to the
Collapse. Only with hindsight can it be inferred from the fact of the Collapse that there
were slimes close to or underlying the Setback (as the Panel concluded), and that
combination was a cause of the Collapse.
154. Cs’ case appears to be that:
154.1. BHP knew or ought to have known about the Setback and BHP “failed to intervene
to halt the continued rise of the Setback when BHP knew or ought to have known of the increasing
risk to the stability of the Dam”: MPOC §§179.10, 179.13.2, 179.14.3, 179.15,
50
{A1/1/77}, §§194, 195 {A1/1/82}, §205A.1 {A1/1/85}, and §205A.11 {A1/1/90};
and
154.2. BHP knew that the ITRB had recommended that the Setback be infilled and,
pending that, that the height difference between the crest and plateau of the Setback
be maintained at not more than 20 meters, and knew those recommendations were
not implemented in a timely manner: MPOC §205A.9 {A1/1/88}, §205A.12
{A1/1/90}.
155. In alleging such knowledge, Cs rely on a wide range of sources as set out at MPOC §205A
{A1/1/85}. This section addresses:
155.1. First, the information known at the Samarco level about the plugging of the Main
and Secondary Galleries and creation of the Setback. In that regard, this section
addresses:
155.1.1 The information provided to the Samarco Board. In summary, whilst

the Samarco Board was informed of the plugging of the Main and
Secondary Galleries and the existence of the Setback, the overarching
message relayed to the Samarco Board was that dam management was
well-controlled.
155.1.2 The information provided to the Operations Committee. In

summary, neither “gallery problems” nor “problems associated with fixing the
Setback” are mentioned as having been discussed in the minutes for
any of the meetings to which Cs refer.
155.1.3 The information provided to the Performance Management

Committee. In summary, the materials for some Performance
Management Subcommittee meetings contained an image of the
Setback, or mentioned it, but neither those materials nor the minutes
of the meetings indicated that the Setback was identified as a point of
concern in respect of the Dam’s stability.
155.1.4 The knowledge allegedly conveyed in Pimenta de Avila’s September

2011 Report (as defined at §169 below). In summary, the September
2011 report concerned an alternative design for the Dam which was
51
not implemented and did not say anything about the effect of a
setback on stability at elevations below 920m. In any event, there is
no evidence that BHP knew of the existence or content of the
September 2011 Report.
155.2. Second, the ITRB’s recommendations in relation to the Setback (which BHP say
were complied with), in particular:
155.2.1 The information provided to the Samarco Board. In summary, the

documents provided to the Samarco Board and the minutes of the
Samarco Board meetings do not indicate that Samarco had failed to
implement ITRB recommendations.
155.2.2 The information provided to the Samarco Operations Committee

and Performance Management Subcommittee. In summary, both the
Samarco Operations Committee and Performance Management
Subcommittee only received updates as to the status of ITRB
recommendations, rather than the ITRB Reports themselves (because
the ITRB reported to Samarco’s Dams Committee (see §40 above),
and that those recommendations were identified as either in progress
or on time.
155.2.3 Other alleged sources of knowledge. In summary, none of the five

further sources of knowledge upon which Cs rely indicated that ITRB
recommendations were not complied with.
D3.3.2.1 Plugging of the Galleries and creation of the Setback: Samarco Board
156. The Samarco Board was informed of the plugging of the Main and Secondary Galleries and
the existence of the Setback, but the overarching message relayed to the Samarco Board
was that dam management was well-controlled, and that Samarco’s tailings structures were,
at minimum, at an adequate level of safety.
157. Samarco Board meetings in 2012-2013: At MPOC §128 {A1/1/59} Cs allege that “Mr
Terra was reporting to the Samarco Board in relation to the above issues concerning the Dam and the
stability thereof, including at Samarco Board Meetings held on 8 August 2012, 7 December 2012, 4 April
2013, and 4 December 2013”. The “above issues” referred to appear to be the “defects to the
52
galleries” and the proposal that “the crest of the Dam at the left abutment should be set back behind
the portion of the Secondary Gallery to be filled with concrete”: MPOC §§125-126 {A1/1/59}. There
is no statement in the Samarco Board meeting materials and minutes (including for the
meetings referred to at MPOC §128) that the plugging of the Main and Secondary Galleries
and existence of the Setback were raised in connection with a concern about the stability of
the Dam, or that they themselves could have a negative effect on stability:
157.1. The board materials for the August 2012 Samarco Board meeting reported that the
ITRB had concluded that the “Tailings disposal operation system is adequate” and
“Tailings governance model presented was considered adequate” {F15/292/30}.
157.2. It was reported to the Samarco Board in the board materials for the December
2012 Samarco Board meeting that “the risk assessment focused on the dam operation is
being carried out based on the methodology of FMEA…validated by the ITRB”, and that the
stability of Samarco’s tailings structures was adequate: the Board Report for the
meeting expressly stated that “[a]ll of [the] dams operate routinely, with adequate
freeboard…and safety factors above the minimum limits established by Brazilian and
international technical standards”, that “all geotechnical structures presents safety factors (SF)
higher than 1.5 and 1.4 in normal conditions and threshold conditions respectively, demonstrating
adequate stability of these structures”, and that “[a]ll of [the] dams were considered stable, based
on the stability expert opinions according to external audit reports”: {F4/488/91-92};
{F10/288/3}.
157.3. The minutes of the 4 April 2013 Samarco Board meeting record that Mr Terra
(Chief Operations and Infrastructure Officer at Samarco) presented an update on
the master plan of tailings disposal, highlighting the associated risks and mitigation
actions: {F5/299/3}. The report on tailings disposal management in the board
materials for the meeting stated that “[o]ne of the important points of the ITRB report
refers to the reliability of the spillway galleries (main and secondary) of the Fundão Dam”, and
that of 45 failure modes, 16 (which were associated with “the internal drainage system
and the spillway of the Fundão Dam”) were “above the risk level considered tolerable”.
However, the report also stated that the ITRB “concluded that it is prudent to plug these
galleries”, that the relevant 16 failure modes would have their respective risks
reduced with the implementation of the projects, including plugging of the Main
and Secondary Galleries, and that the recommendations of the ITRB made at their
October 2012 meeting (relating to ITRB Report No.5) had been, or were in the
53
process of being, implemented: {F14/283.1/33}. In other words, the information
provided to the Samarco Board was that the measures being adopted would reduce
risk, not create or exacerbate it.
157.4. The works proposed in the 4 April 2013 meeting materials do not appear to have
been linked to any stability concern. The board materials for the subsequent
Samarco Board meeting on 14 August 2013 (which were circulated to Mr Wilson,
Mr Zweig, Mr Fernandes and Ms Raman (VP – Iron Ore Finance at BHP) on 6
August 2013 {F6/296.1/1}) reported that every structure in the tailings disposal
and water storage systems was “functioning properly” and that the behaviour of the
dams was “highlighted as positive on the last ITRB report (April/2013 meeting)”, it being
noted that the ITRB stated that “[t]he monitoring presented indicated no risk condition for
the safety of the dams” {F6/296.2/34}. Similarly, the presentation for the August 2013
meeting included a graph showing that Dikes 1 and 2 of the Dam were above the
“safety factor” in both normal and threshold conditions: {F6/341.1/38}.
157.5. The minutes for the 4 December 2013 meeting record that Mr Terra presented
“detailed information about the tailings disposal system”: {F7/224/4}. The minutes do not
indicate what exactly was presented and/or discussed. The report on tailings
disposal management in the board materials for the meeting (which were circulated
to Mr Wilson, Mr Zweig, Mr Fernandes and Ms Beck on 28 November 2013:
{F7/172/1}) reported that projects were being executed to reduce the risk level,
including “Plugging/deactivation of the main and secondary galleries of the Fundão dam” and
“Drainage systems for the Fundão Dam”. The report also noted a number of other
points: (a) the risk level based on FMEA (i.e. Failure Modes and Effects Analysis,
see §§90-93 of Annex 3) was decreasing, (b) actions to mitigate and control risks
were being carried out as planned, and (c) based on the ITRB’s recommendations
and conclusions from its meeting in August 2013, “all of the structures of the tailings
disposal systems are operating accordingly”: {F7/175/24-25}.
157.6. Separately, the 4 December 2013 meeting minutes record that Mr Lynch presented
BHP’s audit report, including highlights of the 2013 audit: {F7/224/8}. Mr Lynch’s
written presentation records that the scope of the 2013 audit included “Asset
Integrity”, focusing on “material risks in tailings dams and key electrical switch rooms”. In
relation to this, the presentation noted four Priority 2 findings (as to which see
§298.3 below), of which only two were related to risks in tailings dams. These were:
54
(a) “Deficiencies in the assessment of the risk of tailings dam overtopping” (referring to the
fact that the risk of clogging of the decant water system with debris during a severe
flood event had not been assessed); and, (b) “Deficiencies in the construction of starter
dams” (referring to the absence of a plan to prevent deficiencies similar to those
that had occurred in relation to the construction of the Dam itself (see §129 above)
occurring during the construction of Project 940 (see Section D3.6 below))
{F7/219/4-5} {F7/219/7}. There is no mention in the presentation of any stability
risk in connection with the Main and Secondary Galleries or Setback.
158. Samarco Board meetings in 2014/2015: In alleging that BHP knew or ought to have
known about the Setback, Cs rely on presentations and/or materials for various Samarco
Board meetings in 2014 and 2015 which “described and/or depicted” the Setback: MPOC
§205A.1.1 {A1/1/85}. Topographical images of the Dam including the Setback were
included in the presentations and/or board materials for the Samarco Board meetings in
December 2013, 2014 and 2015 (MPOC, §179.10 {A1/1/77}, and §205A.1.1 {A1/1/85};
Def, §206(10) {A1/2/132}, and §234A(1)(b)(i) {A1/2/156-157}). It is accepted that the
Samarco Board was informed of the existence of the Setback. However, if Cs allege that
the depiction or description of the Setback in such materials identified the Setback as a
matter of concern or requiring consideration by the Samarco Board, that is wrong:
158.1. None of the written presentations (containing a topographical image of the Dam
with the Setback) included any text accompanying the image drawing attention to
the Setback or otherwise indicating that the Setback was a point of concern.56
158.2. Moreover, where a topographical image of the Dam with the Setback was included
in the report on tailings management in the Company Report (circulated in advance
of each of the 2014/2015 Samarco Board meetings), the report specifically stated
that dam management was considered “well controlled” by the ITRB, and in April
and September 2014 also noted that the main projects related to the Dam were, on
a general view, considered “well-conceived”.57
56{F7/212/22-45} (4 December 2013); {F8/63/47} (2 April 2014); {F10/91/55} (10 December 2014); {F11/282/67}
(15 April 2015); {F13/414/59} (5 August 2015).
57 {F8/48/16-17} (2 April 2014); {F9/107.1/18-19} (19 September 2014); {F10/35/28} (10 December 2014);
{F11/221/15-16} (15 April 2015); {F12/399/21} (5 August 2015).
55
158.3. None of the minutes of the Samarco Board meetings in 2014-2015 record any
discussion in relation to the Setback.58
158.4. None of the documents that Cs rely on identify that the Setback might have been
placed over previously deposited slimes. Indeed, as set out at §152 above, the extent
of any slimes underlying the Setback was and remains unclear.
D3.3.2.2 Plugging of the Galleries and creation of the Setback: Operations

Committee
159. Cs alleged that the “gallery problems” and “problems associated with fixing the Setback” (among
other matters) were discussed at nine different Operations Committee meetings between
November 2011 and July 2015: MPOC, §194 {A1/1/82}.
160. However, neither “gallery problems” nor “problems associated with fixing the Setback” are
mentioned as having been discussed in the minutes for any of the meetings referred to by
Cs, nor do those minutes record that there was a concern in relation to the Dam’s stability.59
161. While the written presentation for the 15 March 2013 meeting contains a slide headed “Short
Term Planning – FMEA Methodology to Fundão Dam (Ref. Dec/12)” setting out a risk matrix,
the text on the slide records that the failure modes identified with a higher risk level would
be reduced through projects including the plugging of the Main and Secondary Galleries.
There is no indication from the slide that there was any concern in this connection:
{F5/189/20} {F5/189T/20}.
162. A topographical image(s) of the Dam including the Setback was included in the written
presentations for the meetings in November 2013, and in 2014 and 2015. However, no text
accompanied the image drawing attention to the Setback or otherwise indicated that it was
a point of concern.60
58 {F7/224} (4 December 2013); {F14/465} (2 April 2014); {F10/16/4-9} (19 September 2014); {F14/266} (10
December 2014); {F15/318} (15 April 2015) and {F15/182} (5 August 2015).
59 See {F14/506} (22 November 2011); {F3/425} (26 March 2012); {F4/488/32-40} (21 November 2012);
{F5/363.2} (15 March 2013); {F7/176/15-24} (13 November 2013); {F8/47/24-31} (14 March 2014); {F10/36/16-
23} (19 November 2014); {F11/216/20-29} (18 March 2015); and {F12/401/23-29} (10 July 2015).
60 {F5/60/28-29} {F5/60T/28-29} (November 2013); {F8/5T/52} (March 2014); {F14/510.1T/37} (August 2014);
{F12/280.1T/42-43} (November 2014); {F10/153.3T/15-17} (March 2015); {F14/510.1.1/28-29}

{F14/510.1.1T/28-29} (July 2015).
56
163. The written presentation for the August 2014 meeting contains a slide headed “Tailings
Disposal Management – Cycloning Operation”: {F14/510.1T/40}. The slide contains a projection
of the infilling of the Setback and the Grota da Vale (labelled Area “A” and Area “B”
respectively) and provides estimates as to the volume of tailings required to complete those
projects, but it does not suggest that there was any concern regarding the stability of the
Dam, as a result of the infilling project or otherwise. On the contrary, the minutes record
that it was reported that dam management was considered well controlled by the ITRB,
who also considered the main projects related to the Dam to be well conceived, and that
“identified risks are mitigated”: {F9/108/19-20}.
164. Thus, the Setback was depicted in the materials provided to the Operations Committee, but
there was no indication it was a point of concern. The consistent message relayed to the
Samarco Operations Committee in relation to tailings disposal from November 2013 and
throughout 2014 and 2015 was that “risks are mitigated, the contingencies are progressing accordingly,
and medium term projects are leveraging the disposal needs in the future”.61
D3.3.2.3 Plugging of the Galleries and creation of the Setback: Performance

Management Subcommittee
165. Cs allege that:
165.1. At various meetings between June 2014 and June 2015, “problems, flaws or
nonconformities in the Dam…including the Setback”, were brought to the Subcommittee’s
attention: MPOC, §195 {A1/1/83]; and
165.2. Presentations for the meetings on 31 January 2014, 21 October 2014, 10 February
2015 and 29 October 2015 “described and/or depicted the Setback”: MPOC, §205A.1.2
{A1/1/85}.
166. Each of the written presentations for the meetings referred to at MPOC §205A.1.2 contain
a topographical image of the Dam including the Setback and/or refer to the Setback, as do
the written materials for the June 2014, August 2014, May 2015 and June 2015 meetings.
167. As to the minutes of the meetings:
61{F7/176/18} (November 2013); {F8/47/27} (March 2014); {F9/108/19} (August 2014); {F10/36/19} (November
2014); {F11/216/22} (March 2015); {F12/401/26} (July 2015).
57
167.1. The minutes for the January and August 2014 and February, May, June and October
2015 meetings do not record any discussion specifically in relation to the Setback.62
167.2. The January 2014 minutes record that Samarco presented the conclusions and
recommendations of the ITRB, highlighting that the “short-term planning for disposing
is satisfactory, as is the study of the transit of floods and the physical stability of dams”. The
minutes for each of the meetings in February, May and June 2015 record that this
was recognised by the Performance Management Subcommittee.63
167.3. The June 2014 meeting minutes record that Samarco “presented the status of the waste
disposal projects such as: (i) alteration of the main dyke and addition of waste; (ii) the extravasor
system; (iii) hydrocycloning…”. The references at (i) and (iii) appear to be references to
the addition of material at the Setback for the purpose of infilling, which was at
that time underway (see §32 of Annex 3), but there is no reference to the condition
or stability of the Setback. In fact, the minutes record that the subcommittee
“recognized the good condition for managing the waste disposal process both in the short term and
in future projects”: {F13/54.1.1T/5}.
167.4. The October 2014 meeting minutes mention the Setback (specifically, that one of
the initiatives presented was “Tailings cycloning – Release of UF for the return of the axis”,
i.e. release of material to be used in infilling), but there is no indication in those
minutes that it was raised as a point of concern in connection with the Dam’s
stability. Indeed, in response to Samarco’s presentation on tailings disposal, the
minutes record that the Performance Management Subcommittee “recognized the
process well controlled”: {F9/309.2T/7}.
168. In summary, the materials for some Performance Management Subcommittee meetings did
contain an image of the Setback, or mention it, but neither the materials for the meetings,
nor the minutes of the meetings, indicate that the Setback was identified as any point of
concern as regards the Dam’s stability.
62 {F14/194.2T} (January 2014); {F15/316 (August 2014); {F10/376T} (February 2015); {F13/54.2T} (May 2015);
{F13/199.2T} (June 2015) and {F13/451T} (October 2015). It is noted that the May, June and October 2015 meeting
minutes contain a topographical image of the Dam including the Setback, however, no text accompanies that image
indicating that the Setback was a point of discussion, let alone a point of concern.
63 {F14/194.2T/5} (January 2014); {F10/379T} (February 2015); {F14/506.0.1T/9} (May 2015); {F13/199.2T/8}
(June 2015).
58
D3.3.2.4 Plugging of the Galleries and creation of the Setback: the September 2011
report
169. Cs allege that BHP were, or should have been, aware of the “change in the axis of the Dam,
notwithstanding the concerns expressed in the September 2011 Report”: Reply, §127.3 {A1/3/98} and
that BHP “repeatedly ignored and/or did not take any or any sufficient or satisfactory action to inform
themselves and/or address Pimenta de Avila’s advice and recommendations”, including as contained in
the technical report prepared by Pimenta in September 2011 (“September 2011 Report”):
MPOC, §282.5-282.5.1 {A1/1/125}.
170. The September 2011 Report {D7/48} contained a design for the continued elevation of
the Dam which would allow the Grota da Vale, adjacent to the left abutment, to be used
for the deposition of sandy tailings. This was done following a request by Samarco to utilise
the Grota da Vale, and in light of concerns by Pimenta about retaining the original design,
following the deposition of slimes behind Dike 1A.
171. The September 2011 Report set out the Dam’s original design, which included a tapering
plateau and change in axis (MPOC Figure 7), and a revised design which did not include
the plateau and continued the axis of the lower elevation of the Dam (MPOC Figure 8).
The September 2011 Report recorded “it was found that the final layout (Elevation of 920.0 m)
that was originally proposed, no longer met the issues of global stability of mass, considering its original
layout (Elevation of 920.0 m) since installation of Dike 1A led to slurry being disposed of in its upstream
reservoir”, and explained that “In order to maintain the safety factor of the Fundão tailings disposal
system (SRF) above 1.5, and to fulfill the request by Samarco in occupying the valley downstream from the
Vale PDE, a new geometric layout was necessary” {D7/48/5}. Although the new design was
produced and analysed, it was ultimately not implemented. This is because the Setback –
which changed the Dam’s geometry differently to both the original design at MPOC Figure
7 and the revised design at MPOC Figure 8 – was constructed.
172. Thus, the September 2011 Report did indicate that, if the axis of the Dam followed the
original setback design, it would not achieve the required factor of safety at El.920m. The
September 2011 Report did not address the Setback which was in fact constructed or say
anything about the effect of a setback on stability at elevations below 920m.
173. In any event, there is no basis for concluding that BHP knew of the existence of the
September 2011 Report. Cs have not identified which individuals they allege knew or should
59
have known of the contents of the September 2011 Report, or how and when they came
to, or should have come to, have that knowledge. Instead, MPOC §282.5 {A1/1/125}
simply refers to “senior representatives serving in Samarco, on the Samarco Board and the committees
thereof”. In fact, there is no evidence to suggest that the September 2011 Report was
provided to the Samarco Board or the Samarco Operation or Performance Subcommittees
or to any Named Individual.
D3.3.2.5 The ITRB’s recommendations in relation to the Setback
174. Cs assert that BHP knew of the ITRB’s recommendation to infill (i.e. remove) the Setback
and, pending that, to maintain the height difference between the crest and plateau of the
Setback to no more than 20 meters. They also assert that BHP knew that the
recommendation was not implemented in a timely manner: MPOC, §205A.12 {A1/1/90}..
175. In fact, the ITRB’s recommendation in relation to the Setback, which changed over time,
was complied with:
175.1. In ITRB Report No.8, dated January 2014, the ITRB recommended that “the ongoing
construction to return the axis of Dyke 1 to its original alignment in its left-hand portion, which
is currently being done ‘dry’ with material taken from the beach of the current advanced dyke and
transported by truck and spread with a tractor, can be speeded up at a reasonable effective cost by
using hydrocyclones”: {D7/101T/6}.
175.2. In ITRB Report No.11, dated November 2014, the ITRB made further
recommendations in relation to the Setback, noting that the area “should be filled in
as quickly as possible in order to return the axis to its design position” and recorded Samarco’s
estimate that it would take 1 year to fill the area. The ITRB also recommended “For
the near future, the operations to fill the area and continue the release of tailings should ensure that
the elevation of the displaced axis is less than 20 m”: {D7/121T/13}.
175.3. In ITRB Report No.12, dated April 2015, the ITRB noted its understanding that
the return of the Setback would only be executed after construction of the El.860m
Blanket Drain and noted Samarco’s use of cycloning to fill in the area:
{D7/135T/11}. It emphasised that priority should be given to “the internal drainage
system of the Fundão dam”, noting “We consider it important to implement these drains,
regardless of the completion of all the elements of the raising project studies for the El.940m. The
60
implementation of additional drains seems to be essential if the satisfactory performance of the
Fundão dam is to be maintained, especially on the right abutment.”: {D7/135T/6-7}.
176. In short, the ITRB recommended that the Setback should not be more than 20m high and
that it should be filled in, but subsequently acknowledged that the installation of the
El.860m Blanket Drain would be prioritised over the infilling work, and did not reiterate
the 20m recommendation. It should be noted that the experts agree that the drainage at the
left abutment (i.e. the EL.860m Blanket Drain) was required before the Setback could safely
be infilled: Marr 1, §243 {D3/1/159}; Gens 2, §236 {D5/1T/81}.
D3.3.2.6 The ITRB’s recommendations in relation to the Setback: Samarco Board
177. Contrary to the allegations at MPOC §§179.13.2 and 179.14.2 {A1/1/78-79}, the
documents provided to the Samarco Board and the minutes of the Samarco Board meetings
do not contain any material indicating that Samarco had “failed to implement” any
recommendations.
177.1. At the Samarco Board meeting on 10 December 2014, a summary of ITRB Report
No.11 (of November 2014) was presented and the Samarco Board was informed
that “84% of the actions recommended had been implemented and 16% of the remaining actions
recommended were on track”: {F14/266/4}. The written presentation for the meeting
included a table indicating Samarco’s progress with respect to certain of the ITRB’s
recommendations. Of the recommendations shown, seven related to the internal
drainage system. Six of these recommendations were recorded as concluded and
the seventh, recorded as on track, was “ITRB suggests the research, by VOGBR company,
of the interference of the normal load on parameters of resistance”. In relation to the infilling
of the Setback, the recommendations were “Cycloning: Area B (area closest to the left
abutment) on Fundão Dam must be filled with cycloning underflow” and “Cycloning: ITRB
recommends testing fewer compaction trips with the bulldozer”, both of which were marked
completed: {F10/91/53}.
177.2. There is no evidence to suggest that the Samarco Board received the full ITRB
Report No.11 (as opposed to a summary of it), or that the Samarco Board was
made aware of the ITRB’s recommendation to maintain a distance of no more than
20m between the plateau and the crest of the Setback.
61
177.3. At the Samarco Board meeting on 15 April 2015 an update on the findings in ITRB
Report No. 12 (of April 2015) was presented and the Samarco Board was informed
that “actions were properly addressed and tailings system are safely protected”: {F15/318/6}.
The Company Report for the meeting recorded in relation to “ITRB action plans”
that “63% are on schedule and 37% have been concluded” with no items marked as
“attention” or “behind schedule”: {F11/221/15}. The materials for the 15 April 2015
Samarco Board Meeting did not (contrary to Cs’ case at MPOC §179.14.2) suggest
that it was “necessary to fix the internal drainage system in the region of the abutments in order
to guarantee the Dam’s stability.” Rather, the presentation for the 15 April 2015 Board
Meeting contained an aerial image of the Samarco tailings storage facilities, headed
“possible activities up to elevation 920m” upon which an outline of the additional
drainage at the right and left abutment was superimposed: {F11/282/86}. That
image was not accompanied by any statement as to the necessity or otherwise of
additional drainage for the stability or safety of the Dam.
D3.3.2.7 The ITRB’s recommendations in relation to the Setback: Samarco

Operations Committee
178. There is no evidence indicating that the ITRB Reports themselves were provided to the
Operations Committee. The Operations Committee did, however, receive updates on at
least some ITRB rReport conclusions at Operations Committee meetings.
178.1. The minutes of the 19 August 2014 Operations Committee record that Mr Terra
presented ITRB Report conclusions “that considered dam management for the short term
as well controlled” and that, in general, the ITRB considered the main projects related
to dam system be “well-conceived”: {F9/108/20}. As regards the ITRB’s
recommendations, the written presentation for the meeting contains a slide
containing a chart showing that 71% of the ITRB’s recommendations had been
concluded with the other 29% on time: {F14/510.1T/36}.
178.2. Similarly, the minutes for the 19 November 2014 and 18 March and 10 July 2015
Operations Committee meetings record that Mr Terra informed the Operations
Committee that implementation of the ITRB’s recommendations was “on track”.64
In this regard:
64 {F10/36/19} (November 2014); {F11/216/22} (March 2015); {F12/401/26} (July 2015).
62
178.2.1 The written presentation for the November 2014 meeting includes a
slide showing that 84% of the ITRB’s recommendations had been
concluded, with the remaining 16% being on time:
{F12/280.1T/40}. As regards the infilling of the Setback, the same
recommendations as noted in the presentation for the December
2014 Samarco Board meeting (see §177.1 above) are recorded as
concluded.
178.2.2 The written presentation for the July 2015 meeting includes a slide
showing that 46% of the ITRB’s recommendations had been
concluded and the other 54% were on time: {F14/510.1.1/34}
{F14/510.1.1T/34}. No items were shown as “Late” and there is no
text accompanying the slide indicating that there was any concern in
relation to the implementation of the ITRB’s recommendations.
D3.3.2.8 The ITRB’s recommendations in relation to the Setback: Performance

Management Subcommittee
179. There is no evidence indicating that the ITRB Reports themselves were provided to the
Performance Management Subcommittee. However, updates on the status of at least some
ITRB recommendations were delivered at Performance Management Subcommittee
meetings.
179.1. The minutes of the meetings held on 13 June 2014, 7 August 2014 and 21 October
2014, record that Mr Lopes/Mr Milagres presented “follow up to the action plan
recommended by the ITRB”.65 The written presentations for those meetings, as well as
that for the 10 February 2015 meeting, included a table indicating Samarco’s
progress with respect to some of the ITRB’s recommended actions, which showed
such recommendations as either concluded or on time.66
179.2. The minutes of the 19 June 2015 meeting record that, following a request from the
Performance Management Subcommittee at the previous meeting, Mr Milagres
presented the progress of the drainage of the left and right shoulders of the Dam
65{F13/54.1.1T/4} (June 2014); {F15/316/8} (August 2014); {F9/309.2T/6} (October 2014).

66{F8/91.2T/53} (June 2014); {F8/342.2T/106} (August 2014); {F8/379T/55-57} (October 2014); {F10/319.1/70-
71} {F10/319.1T/70-71} (February 2015).
63
recommended by the ITRB. The minutes record in relation to this that the
subcommittee “recognized that short-term planning is satisfactory as is the study of flood traffic
and physical stability of dams”: {F13/199.2T/8}.
D3.3.2.9 The ITRB’s recommendations in relation to the Setback: other alleged

sources of knowledge
180. Cs also rely on the following five further sources of knowledge for the allegation that BHP
knew that the Setback should have been removed as soon as possible:
180.1. ITRB Reports 10-12: these are said to have been received by Mr Ferreira, Mr
Fernandes and Mr Corless: MPOC, §205A.1.3 {A1/1/85}. ITRB Report No.10 (of
July 2014) does not depict or describe the Setback, and Mr Corless did not receive
ITRB Reports Nos. 11 (of November 2014) and 12 (of April 2015), although Mr
Ferreira and Mr Fernandes did. But in any event, as set out in section D3.3.2.5-
D3.3.2.9 above, ITRB Reports Nos.10-12 contained recommendations, which
changed over time, and which were in any event complied with, in that the infilling
of the Setback had commenced by January 2014 and resumed on completion of
the installation of the El.860m Blanket Drain.
180.2. 14 November 2014 ITRB Closing Meeting: this meeting was attended by Mr
Ferreira. The notes of the meeting include “Axis return: give priority” ({F9/389T}),
however, as set out at §176 above, the ITRB subsequently recognised, and did not
disapprove of, the drainage being prioritised over the return of the axis.
180.3. Chapter 8 of the Definition Phase Study for Project 940: the Definition Phase
Study was sent to Mr Artaud, Mr Oborn, Mr Mazza and Mr Fernandes on 31 March
2015 (MPOC, §205A.1.5 {A1/1/85}) and did depict the Setback. But as Dr Marr
points out in his evidence, the report was a planning document and did not contain
“information as to the safety and stability of the Dam as of the date of the report”: Marr 1,
Appendix 1, §78 {D3/1/273}. Further, the report made clear that the overall
drainage project was organised such that the El.860m Blanket Drain would be
installed first, allowing infilling to recommence while the remainder of the drainage
project (in the Grota da Vale and at the right abutment) was completed: Definition
Phase Study Report: {D7/133/36-37}.
64
180.4. Mr Ferreira’s attendance note of his visit to the dams on 26 January 2015: this
was emailed to Mr Fernandes, Ms Jacques and Mr Cardoso, and referred to the
Setback. However, the note did not indicate any concern regarding the Setback and
as mentioned at §145 above, concludes “good management of operations was noted and no
hazardous situations were detected”: {F10/275T/2}.
180.5. FMEAs: Cs allege that FMEAs referred to the Setback and the need for it to be
returned: Reply §105E {A1/5/73}. Cs cite one FMEA dated 30 July 2015, which
contained the following action item: “[p]rioritize internal drainage of shoulder and return
of the axis”: {D7/140T}. Cs do not identify which individual(s) at BHP is said to
have received a copy of this FMEA and there is no evidence that it was provided
to any Named Individual. In any event, the July 2015 FMEA does not indicate that
the Setback “should have been removed as soon as possible” but – instead – that the internal
drainage of the left abutment should be prioritised, as well as the infilling of the
Setback. That was consistent with the ITRB’s understanding that the El.860m
Blanket Drain would be prioritised over the infilling of the Setback. And the
proposed actions were implemented, in that by the time of the Collapse the
construction of the El.860m Blanket Drain had been completed and infilling of the
Setback re-commenced: Marr 1, §381 {D3/1/213}, (although Prof Gens disputes
that the El.860m Blanket Drain had been completed by the time of the Collapse:
Gens 2, §236 {D5/1T/81}).
D3.3.3 Summary
181. In summary, the only relevance of the sealing of the Galleries to the Collapse was that the
works to remedy the faults with the Galleries led to the opening of the Overflow Channel
and the Setback being established. As regards the Overflow Channel, Cs do not allege that
BHP were aware of its implementation. As regards the Setback, the evidence shows that
while information provided to the Samarco Board and committees indicated the existence
of the Setback, the overarching message was that dam management was well controlled and
that Samarco’s tailings structures were, at minimum, at an adequate level of safety and that
the ITRB’s recommendations had been or were being complied with. That was true of the
materials provided to the Samarco Board, and of materials provided to the Samarco
Operations and Performance Management subcommittees. In relation to the sources of
information identified by Cs in respect of these allegations, the documents either were not
received by BHP or any Named Individual, or did not indicate that the Setback was a point
65
of concern or that any recommendation of the ITRB had not been, or was not in the process
of being, complied with.
D3.4 The increase in tailings deposits arising from the P4P Project
182. The fourth matter Cs rely on in MPOC, §206A {A1/1/92} is the “substantial increase in
production and therefore in tailings deposits arising from the P4P project”. Cs identify that factor as a
contributing factor to the Collapse, rather than a cause.
183. The P4P Project was a project to build a fourth pellet plant, third concentrator and an
additional slurry pipeline at Samarco. It is common ground that the P4P Project involved
an increase in production capacity at the Germano Complex of around 37%, and that this
would lead to a significant increase in the volume of tailings (MPOC, §140 {A1/1/62}). The
additional production capacity came on stream in March 2014: {F16/510.4/7},
{F16/510.4/55}, {F16/510.4/62}.
184. Prof Gens concludes that the increased production associated with the P4P Project “must
have resulted in a higher dam and, therefore, a lower factor of safety of the structure” Gens 1, §481
{D2/1/172}.
185. Dr Marr’s evidence is that “All other things being equal, each increase in the height of a dam will
marginally decrease the relative stability of the dam” but that “neither the contemporaneous reports nor the
Panel’s analysis indicate that the raising of the Dam to its eventual elevation of 902 meters caused the Dam
to fail”: JESGeo 17(b) {D1/1/63}.
186. Dr Marr’s conclusion that the height was not a significant contributing factor is supported
by the fact that the Collapse started at the left abutment, not at the right abutment. The
right abutment at the time of the Collapse had the same total elevation, and, as the Panel
recognised, a steeper slope and higher rate of rise immediately before the Collapse: Panel
Report §5.3 {D8/1/61}. The Panel did not expressly address the contribution made to the
Collapse by the absolute height of the Dam, but did conclude that it was apparent that “the
rate of embankment rise at the right abutment was not itself sufficient” to trigger liquefaction: Panel
Report, p.53 {D8/1/65}.
187. Prof Gens acknowledges that “the Panel concluded…that the rate of Fundao Dam rise did not affect
dam stability” but caveats that acknowledgment by stating that uncertainties in the data “could
66
modify the conclusion that the rate of Fundao Dam rise did not affect dam stability”: JESGeo, issue
17(c) {D1/1/64}.
188. Dr Marr notes, “A high rate of rise can affect the stability of an upstream tailings dam but it depends on
the ability of the materials to consolidate and therefore strengthen, with time”, but concludes that “rate
of rise of the dam was not a factor in the failure of the dam.”: JESGeo 17(c) {D1/1/64}. In any
event, the rate of rise at the Dam did not increase as a result of the additional tailings from
the P4P Project: Panel Report Figures B5-3 to B5-6 {D8/11/6}.
189. In summary, the only contribution the P4P Project is said to have made to the Collapse is
that it increased the amount of tailings produced. However, neither the experts nor the
Panel concluded that the rate of rise was a factor causing the Collapse, and BHP will invite
the Court to find that the absolute height did not cause the Collapse either: the Panel did
not find it to have done so, Dr Marr’s evidence is that the evidence does not indicate it did
and Prof Gens makes only a general point about higher dams having a lower factor of
safety. Therefore, the additional tailings produced by the P4P Project cannot have had any
significant contributory effect.
D3.4.2 Alleged BHP involvement
190. Cs says that BHP acted as follows in relation to the P4P Project:
190.1. BHP approved and thereby authorised the implementation of the P4P Project (and
related expenditure): MPOC, §91.2 {A1/5/44};
190.2. BHP in fact directly or indirectly funded or facilitated the funding of the P4P
Project: MPOC, §139 {A1/1/62}, §279.3 {A1/1/119}; and
190.3. BHP either were, or should have been, aware of “the substantial increase in production
and therefore in tailings deposits which would and did arise from the decision to proceed with the
P4P project” and “encouraged and approved increases in production and the further raising of the
height of the Dam to accommodate the consequential increased volume of tailings”: Reply
§§127.5, 130 {A1/3/98}.
191. Each of those allegations is addressed in turn below.
67
D3.4.2.1 Approval and authorisation
192. As is common in any large organisation, BHP Group employees were subject to internal
limits on their authority to approve capital expenditure. The relevant policy required BHP
Board approval for sums in excess of US$250 million and CEO approval for sums between
US$50 million and US$250 million; sums less than US$50 million only required approval
from the “GMC Owner”, which was usually the relevant CSG/Business President.
Accordingly, BHP Brasil’s appointees to the Samarco Board required BHP approval before
voting in favour of any capital project or transaction if BHP Brasil’s share of the capital
expenditure associated with that project or transaction exceeded the BHP internal limits of
their authority. That policy applied even if BHP Brasil’s share of the capital expenditure
was only notional, i.e. even if the capital expenditure was actually to be funded by Samarco:
Beaven 1, §55 {B1/1/18}, GLD.030 {F7/105}, Gillespie 1, §11 {B1/4/4}.
193. The fact that BHP Brasil appointees to the Samarco Board needed to seek internal BHP
capital expenditure approvals did not mean that BHP was being asked to approve the
project – rather the BHP Board was approving the expenditure of BHP Brasil’s notional
50% share of the project cost, thereby authorising the BHP Brasil appointed directors to
vote in favour of Samarco undertaking the P4P Project. If the matter came before the
Samarco Board (no doubt pursuant to Samarco’s own approval policies), then it would be
for Samarco’s directors (including the BHP Brasil appointees) to decide whether to approve
the project and Samarco’s expenditure on it pursuant to their duties to Samarco under
Brazilian law.67
194. Pursuant to BHP’s policy, authorisation from the BHP Board (the relevant approver
because BHP Brasil’s notional share of the capital expenditure for the P4P Project was in
excess of US$250 million) was sought before voting on the P4P Project at the Samarco
Board meeting. The minutes of the 2-3 February 2011 BHP Board meeting show the BHP
Board resolved to delegate to the CEO the approval of the requested capital expenditure
(noting that “the approval of the Samarco Board was required for the [P4P] project to proceed”):
{F2/414.1/11}.68 The Samarco Board, having considered the matter, approved the P4P
67 The existence of those duties is common ground: Def, §203A(7) {A1/2/111}, Reply, §78D {A1/3/51}, and see §44
above.
68 For large projects such as the P4P Project BHP’s approval process comprised three stages before deciding to
proceed: (a) the Identification Phase Stage, which confirmed the business case for a project at a high level, plus the key
options and the recommended option to be taken; (b) the Selection Phase Stage, in which the project’s business case
68
Project on 6 April 2011 {F6/345/3}. The 6 April 2011 decision was a Samarco decision,
made by Samarco directors, and was the P4P Project approval which enabled the Project
to proceed, i.e. BHP’s approval of the notional share of the capital expenditure did not
cause the project to go ahead. Only the Samarco Board’s decision could, and did, do that.
D3.4.2.2 Funding of P4P
195. Cs allege that BHP directly or indirectly funded or facilitated the funding of 50% of the
cost of the P4P Project: MPOC §279.3 {A1/1/119}. Cs do not identify the basis for this
allegation, and it is not correct, as set out in in Section F3 below.
D3.4.2.3 Encouragement and approval of increases in production
196. Cs allege that BHP had a role in the “encouragement” and “approval” “(through their representatives
on the Board of Samarco) at the Samarco Board Meetings of 2 April 2014, 19 September 2014, 10
December 2014, 15 April 2015 and 5 August 2015” of increases in production: Reply §130
{A1/3/99}. Cs’ position appears to be that at each of those meetings, the Samarco Board
resolved to increase the production of the fourth pellet plant and that anything BHP Brasil’s
appointees to the Samarco Board did, even in their capacity as Samarco directors, is to be
attributed to BHP. As explained in Section C2.4 above, that is wrong in law. In any event,
as to those particular meetings:
196.1. By the time of the 2 April 2014 Samarco Board meeting the P4P Project had already
been approved (on 6 April 2011). However, the fourth pellet plant had only begun
production in March 2014: MPOC, §62 {A1/1/33}, Def, §93(3) {A1/2/45}) and
was not operating at full capacity. At the 2 April 2014 meeting, Mr Terra informed
the Samarco Board that “P4P ramp was a key factor to enable the recovery of production
losses” and in light of that, the Samarco Board “encouraged the management to execute a
composed well planned ramp up” {F14/465/3}.
196.2. Cs refer to the presentation by Mr Vescovi (of Samarco) at the 19 September 2014
Samarco Board meeting of the main assumptions and projected results of
Samarco’s “Five-Year Plan”, in relation to which the importance of the tailings and
is further refined; and (c) the Definition Phase Stage, in which the business case and planning details are confirmed
and it is determined that there is a sufficiently attractive business case to seek approval for the capital expenditure for
the project from the BHP Board: Beaven 1, §57 {B1/1/18}. The BHP Board approval recorded in these minutes
relates to the approval for the P4P Project to progress from the Definition Phase to the Execution Stage, i.e. the final
stage in that process.
69
waste disposal investments was highlighted. The meeting minutes record that the
Samarco Board approved the Five-Year Plan as a guide and recommended,
amongst other things, that Samarco management should “resolve the tailings dams and
waste deposit constraints, making it the company top priority”: {F10/16/6}. There was no
approval at this meeting for an increase in production.
196.3. At the 10 December 2014 Samarco Board meeting, as recorded in the meeting
minutes, in connection with Mr Vescovi highlighting “[l]ower pellet production volume
by 12% YTD and 10.7% FY”, the Samarco Board “expressed disappointment with the low
production” and challenged Samarco’s executives to target a significant uplift in 2015:
{F14/266/3}.The Samarco Board reiterated that the priority was safety, ahead of
any other consideration including costs or productivity.
196.4. Cs refer to the Samarco Board approving the execution of raising the elevation of
the Dam in the context of Project 940 at the Samarco Board meetings on 15 April
2015 and 5 August 2015: MPOC, §144.3 {A1/1/63}, §§179.14, 179.15 {A1/1/79}.
These meetings are addressed at section D3.6.2.2 below in connection with Project
940. As explained there, at the meeting in April 2015 the Samarco Board approved
the raising of the Dam to 920m, in accordance with the existing licence which
permitted raises to 920m. But that approval did not affect the absolute height of
the Dam at Collapse, which occurred at 902m, or the rate of rise of the Dam, and
in any event, those factors did not significantly contribute to the Collapse: see
section D3.4.1 above.
196.5. Cs also contend that in the latter stages of implementation of the P4P Project,
Samarco “increased production to record levels over a relatively short period of time”: MPOC,
§145 {A1/1/63}. The complaint appears to be that “the P4P Project did not contemplate
the design or implementation of a new tailings dam to accommodate the resultant growth in tailings
waste, or make adequate provision, to the extent the same was possible, for the Dam to safely
accommodate the same”: MPOC, §147 {A1/1/64}. However, the P4P Project in its
final form planned to accommodate the resultant growth in tailings waste through
the expansion of Samarco’s existing facilities: {D7/41/16-17}.
197. In summary, the Samarco Board was the decision-maker in respect of the initial approval
of P4P and BHP’s authorisation for BHP Brasil’s appointees to the Samarco Board to
approve BHP Brasil’s notional share of capital expenditure for that project does not change
70
that position. Following P4P’s initial approval, the Samarco Board did not approve any
subsequent increases in production at the meetings relied on by Cs, and to the extent it
encouraged any increase in production, it did so in the context of a “composed well planned
ramp up” and reiterated that safety was the priority. And, in any event, the height of the Dam
and the rate of rise did not significantly contribute to the Collapse: see Section D3.4.1 above.
198. As set out at section D3.4.2.1 above, the BHP Board considered the P4P Project in
connection with its meeting on 2-3 February 2011. The Board papers in relation to the P4P
Project comprised (a) a covering memo from Mr Randolph ({F2/3}); (b) Sections 1 and 2
of an Investment Approval Request (or IAR) ({F2/386.1/1-2}; {F2/375.1}); (c) a memo
to Mr Kloppers (then BHP’s CEO) from the Chair of the Investment Committee recording
the committee’s endorsement of the progression of the P4P Project into the execution
phase on the condition that all relevant environmental and operating licences would be
obtained prior to approval ({F2/403})69; and (d) an accompanying PowerPoint presentation
({F2/414.0.1/1-6}), which appears to have formed the basis of a presentation to the BHP
Board by Mr Randolph.
199. These documents informed the BHP Board that the P4P Project was (as noted above)
forecast to increase Samarco’s pellet production by approximately 37%.70 There is no
suggestion in them that the P4P Project could or might increase the risk of the Dam
collapsing. Indeed, there is no suggestion in these documents that the P4P Project gave rise
to any concerns about the integrity or safety of the Dam at all. The key risks facing the P4P
Project were identified in Section 1 of the Investment Approval Request and related to (a)
the risk that there would be a lack of a skilled and qualified workforce to execute and operate
the project; and (b) the risk of delay in obtaining environmental licences or the loss of those
licences. They were not risks to the integrity or safety of the Dam.
200. Section 2 of the Investment Approval Request, a lengthier document that discussed the
project and its economics in greater detail, includes three further “P4P material risk issues”:
69The papers sent to the Investment Committee in connection with its decision to endorse the progression of the P4P
Project into the execution phase are at {F2/391} and {F2/392}. These papers, which substantially overlap with those
sent to the BHP Board, similarly do not suggest that the P4P Project gave rise to any concerns about the integrity of
the Dam.
70 Section 1 of the Investment Approval Request noted that the P4P Project would increase Samarco’s pellet
production by 8.25 Mtpa to 30.5 Mtpa by Q1 2015 {F2/386.1/1}, an increase of approximately 37%.
71
(a) that market demand might be lower than forecast; (b) the risk of “P4P expansion equipment
failure to achieve [its] contracted performance”; and (c) the risk of work and environmental
accidents (i.e. the risk of injury by project workers or environmental accidents arising from
the execution of the project) along with various risks in relation to price, cost, quantity and
schedule. Again, none of these risks suggest that the P4P Project could or might increase
the risk of instability in the Dam.
201. As regards the Samarco Board, Samarco’s capacity to store additional tailings as a result of
the increased production associated with the P4P Project was an issue to which the BHP
Brasil appointees to the Samarco Board were alive (Campbell 1, §§37-38 {B1/2/12}, §61
{B1/2/22}). However, the material presented to the Samarco Board and the minutes of the
meetings of the Samarco Board do not suggest that the additional tailings from the P4P
Project would increase the risk of the Dam collapsing.
202. To the extent that tailings disposal capacity was raised at Samarco Board meetings, the focus
of discussions was on whether the capacity of Samarco’s existing structures was sufficient
in the longer term to accommodate tailings from the P4P Project, and if not, what other
options were available – an important issue for Samarco (and indeed a fundamental aspect
of any expansion project involving the beneficiation of iron ore) and therefore for the
Samarco Board: Campbell 1, §§38-39 {B1/2/13}. Indeed:
202.1. As the minutes for the 12 May 2010 Samarco Board meeting record, in connection
with “Environmental Management” (rather than in connection with the separate
discussion at that meeting on the P4P Project: cf. MPOC, §179.3 {A1/1/75}), the
Samarco Board “requested Samarco to focus on infrastructure solutions to accommodate long
term requirements for waste and tailings disposal, necessary to the approval of the P4P project”:
{F14/268/2}.
202.2. As the minutes for the 6 April 2011 Samarco Board meeting record, the Samarco
Board requested that it be regularly updated on the progress of the waste and
tailings disposal solutions, “acknowledging the proximity of the exhaustion of existing
disposal structures” and requested that Samarco organise a presentation from an
independent tailings expert about the “risk of the existing structures”: {F6/345/3}.71
71A presentation by Ms Angela Küpper (an independent geotechnical consultant and member of the ITRB) on the
results of her assessment of “Germano Site Dam Safety and Emergency Response Plan” was subsequently provided at the 10
August 2011 Samarco Board meeting: see §271 below; {F2/379/3}.
72
As Mr Campbell explains, these requests did not reflect any concern about the
safety of Samarco’s dams and the reference to the “exhaustion of the existing disposal
structures” did not detract from the various options available to increase Samarco’s
tailings storage capacity: Campbell 1, §§36-39 {B1/2/12}.
203. Cs also refer to the P4P Project in connection with the 2 December 2009, 10 December
2014, and 15 April 2015 Samarco Board meetings, contending that: (a) in December 2009
there was “initial discussion regarding the P4P project” (MPOC, §179.2 {A1/1/74}); (b) in
December 2014 the Samarco Board approved the closure of the P4P Steering Committee
(a Samarco Board advisory committee established in 2011 whose purpose was to support
the Board regarding the execution of the P4P Project ({F6/345/3}, {F8/160/14},
{F8/160/14}, {F12/290/16}) (MPOC, §282.7.6 {A1/1/128}); and (c) in April 2015 the
pelletising plant reached its design capacity (MPOC, §179.14.1 {A1/1/79}). Those matters
were not identified as raising any issues or risks to stability.
204. In summary, BHP’s case is that although the BHP Board approved BHP Brasil’s notional
share of the capital expenditure in connection with the P4P Project, none of the papers
provided to it indicated that the additional tailings production associated with the P4P
Project would or could increase the risk of the Dam collapsing. The same was true of the
materials provided to the Samarco Board. Where the Samarco Board focused on tailings
storage capacity, it was concerned with the capacity of Samarco’s tailings storage facilities
and identifying options to accommodate the increased quantity of tailings generated by P4P,
not with stability.
D3.5 Use of the Dam to dispose of waste from Vale’s Alegria Mine
205. The fifth matter Cs rely on in MPOC, §206A {A1/1/92} is “Vale’s use of the Dam to dump its
own tailings waste from the Alegria mine”. Cs identify that factor as a contributing factor to the
Collapse, rather than a cause.
206. Vale had the contractual right to send tailings to Samarco, which retained sole discretion as
to where the tailings were placed: {F13/152.3T}. From 2008 Samarco chose to place tailings
from Vale’s neighbouring Alegria mine in the Fundão complex: Panel Report, p.B-61
{D8/6/67}. Those tailings were slimes, and were found by the Panel to have accounted for
25% of total slimes production and 6% of total tailings production: Panel Report p.B-69
{D8/6/75}.
73
207. Cs’ case is that “[t]he additional tailings waste from Vale’s Alegria Mine was an additional cause of the
Dam being continually raised in height”: Reply, §75 [A1/3/46}. The geotechnical experts
disagree as to the impact of the disposal of tailings from the Alegria mine on the overall
stability of the Dam. Prof Gens’ view is that “it is likely that the additional Alegria mine slimes
contributed to increase the amount of slimes eventually encroaching Dike 1”: Gens 1, §482 {D2/1/173}.
But Prof Gens does not explain in what sense this contribution played any causative role.
The Panel did not address the Alegria tailings at all. Dr Marr notes that the Panel did not
find that the use of the Dam to store tailings from the Alegria mines played a significant
role in the Collapse, and he considered they were correct not to have done so: Marr 1, §372
{D3/1/209}.
208. Cs contend that BHP were aware, or should have been aware, of the use of the Dam to
dispose of tailings waste from the Alegria Mine: Reply, §127.8 {A1/3/98} and that “[t]he
contract permitting Vale to deposit tailings in the Dam was something well-known to BHP”: MPOC,
§167 {A1/1/70}.
209. The only basis put forth in the MPOC as to how this was “well-known” to BHP is that
“BHP’s senior representatives…were present at the meeting of Samarco’s Operations Committee on 26
March 2012…at which a revised contract for the deposit of tailings in the Dam was discussed” and that
therefore “senior representatives of BHP” were aware of the “significance and effect of the deposit by
Vale of tailings into the Dam”: MPOC, §167 {A1/1/70}.
210. It is correct that the attendees at the 26 March 2012 Samarco Operations Committee
meeting were made aware that the Dam was being used for the disposal of waste from the
Alegria mine: the minutes record, in connection with agenda item 1 (“2011 Results, YTD Feb
2012 (Safety, Cost, Operations and Sales), Forecast 2012”), that the Samarco Operations
Committee requested Samarco to “properly classify any income related to the disposal of Vale’s
tailings in Samarco facilities, adjusting the current booking (cost-of-set), and reinforced the need for the
signature of the revised tailings contract between Vale and Samarco”: {F3/372/30}. But the allegation
that therefore they knew of the “significance and effect” of those deposits is entirely unclear.
There is no material indicating that the deposit of those tailings could or would have an
effect on the stability of the Dam so as to cause or contribute to a collapse. In any event (as
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noted at §207 above) the Panel did not identify the Alegria tailings as contributing to the
Collapse, and Dr Marr considers they were right not to do so.
211. In their 17 April 2023 RRFI, §64 {A3/4/28}, Cs also assert that it is to be inferred that
various Named Individuals knew about the agreement permitting Vale to deliver tailings to
Samarco. The only pleaded basis for the inference is “Vale paid Samarco pursuant to the Tailings
Agreement; and the deposit of Vale’s tailings was presented to Samarco’s Board, including in April 2014”.
Mr Wilson, Mr Zweig, Mr Fernandes and Ms Beck were present at the 2 April 2014 Samarco
Board meeting to which Cs refer, but the meeting minutes do not contain any reference to
discussions relating to the deposit of tailings from Vale, and therefore do not indicate that
this was a point of concern: {F14/465}.
212. The only time Vale’s contract to deliver tailings to Samarco was referred to in materials for
members of the Samarco Board was in April 2012, in a copy of the March 2012 Operations
Committee minutes included in the board materials for the 4 April 2012 Samarco Board
meeting, relating to the accounting treatment of the income from the contract and need for
signature of the revised contract {F3/372/30}. The use of the Dam to deposit tailings from
Vale was not a topic of the reports in the board materials for the 4 April 2012 Samarco
Board meeting,72 nor is it recorded as having been a topic of discussion in the 4 April 2012
meeting minutes: {F6/482} (or in the minutes of any other Samarco Board meeting
between 2008 and November 2015). For completeness we note that the contract was
referred to in a pre-Samarco Board meeting presentation for the BHP Brasil appointed
Samarco Board members (these were internal meetings of the BHP Brasil appointees
(and/or others from BHP Brasil/BHP) prior to Samarco Board meetings (Campbell 1, §20
{B1/2/7})), relating to the renegotiation of the contract: {F5/144.2/1}. In neither of those
documents were the Alegria tailings identified as giving rise to any concern as to safety or
stability.
213. One witness, from whom the Court will hear, was aware of the use of the Dam to dispose
of tailings from Alegria. Mr Gillespie, who was the acting Financial Controller of Iron Ore,
in March 2012 asked Mr Nogueira and Evilmar Fonseca (Operations Manager, BHP Brasil)
for an explanation of “the nature of the agreement with Vale for the use of the tailings dam” noting
“Given the environmental risk of a failure in the Dam wall we appear to be taking a substantial risk in
72 It is noted that Samarco’s contract with Vale to allow the latter to discharge slimes in Samarco’s dam is mentioned
fleetingly in a footnote in a report on “EBITDA” {F3/372/50}.
75
this area.”. Mr Gillespie explains that “All I had in mind was that there was a potential risk – as
there would be with any dam – of failure and that, if the dam failed, there would be serious consequences. I
did not have any concern that the dam would (or was likely to) fail”: Gillespie 1, §55 {B1/4/20}.
214. In summary, there is no basis for concluding that BHP were aware of the alleged “significance
and effect” of the Alegria tailings being deposited in the Dam, and in any event no basis for
concluding the Alegria tailings significantly contributed to the Collapse.
D3.6 Continued elevation of the Dam in 2013-2015 / Project 940
215. The sixth matter Cs rely on at MPOC, §206A {A1/1/92} was “the continued rapid elevation of
the Dam in 2013-2015 notwithstanding the serious problems that had by then been identified, especially
around the left abutment”. Cs identify that factor as a contributing factor to the Collapse, rather
than a cause.
216. The Dam continued to rise throughout the period 2013 to 2015. As set out in Section
D3.4.1 above, in the context of the P4P Project, (a) the rate at which the Dam rose did not
significantly change during that period, (b) neither the absolute height of the Dam, nor its
rate of rise, was a contributing factor in the Collapse, (c) none of the documents identified
by Cs in the context of the P4P Project contained material indicating that the continued
rising of the Dam posed a risk to the stability of the Dam. In any event, in the absence of
any allegation that BHP knew that the continued raising of the Dam posed a risk to the
stability of the Dam, BHP’s knowledge that the Dam continued to rise is irrelevant.
217. Cs make a related allegation that Project 940 entailed (a) the substantial further delay to the
return of the Setback; and (b) its continued elevation, and this was a major contributing
factor to the Collapse: MPOC, §205A.6 {A1/1/87}, 276A.3 {A1/1/117}. That allegation is
addressed in this section.
218. Project 940 was a Samarco project to raise the Dam beyond its originally licensed elevation
of 920m and is addressed further at §§48-49 of Annex 3. To be clear, at the time of the
Collapse, the Dam had only reached an elevation of 902m, and so was well within its
originally licensed height of 920m.
219. The causative impact of the Setback is addressed at D3.3.1 above. As addressed at D3.4.1
above, neither the absolute height, nor the rate of rise of the Dam, significantly contributed
76
to the Collapse. In any event, Project 940 had no impact on the continued raising of the
Dam on the axis of the Setback:
219.1. As set out at §150 above, the return of the Dam to its original axis was delayed by
the installation of drainage, which was required regardless of Project 940, and was
in the process of being installed when Project 940 was approved: Prof Gens agrees
that “the El.860m blanket drain had to be completed before filling the Setback to ensure a good
drainage of the granular fill to be emplaced there”: Gens 1, §528 {D2/1/184}. Dr Marr
agrees, explaining that “delaying implementation [of the additional drainage at the left
abutment] could lead to less efficient drains and potentially reduce stability”: Marr 1, §380
{D3/1/213}, see also §375.1 {D3/1/211}.
219.2. The Dam had not reached its previously approved elevation of 920m at the time
of the Collapse, so its continued elevation was not in response to the approval of
Project 940.
220. Cs contend that:
220.1. BHP approved Project 940: MPOC, §205A.5 {A1/1/87}, §276A.3 {A1/1/117};
Reply, §105L {A1/3/76}.
220.2. BHP knew or should have known that in connection with Project 940 the decision
was taken to keep the Setback in place, and continue raising it, while attempting to
undertake drainage works on the plateau of the Setback, the left abutment and the
neighbouring Grota da Vale: Reply, §127.11 {A1/3/99}.
D3.6.2.1 Alleged BHP Approval
221. Project 940 (and any associated capital expenditure) was never approved by BHP. It was
considered and approved by the Samarco Board in two stages.
222. First, at the 15 April 2015 Samarco Board meeting, the Samarco Board was asked to
approve the execution of Project 940 subject to the relevant environmental licence being
granted, and in the meantime approve execution of the raising of the Dam to 920m:
{F15/318/7}; {F11/282/81}, {F11/282/88}. In connection with this request, the board
materials for the April 2015 meeting reported that the Executive Board had “reviewed the
77
assumptions, scope and proposed schedule and requested the submission to the Board of Directors with the
recommendation to approve it as proposed”: {F11/217/6}; and that the Operations Committee
recommended approval: {F11/216/27}.73 The Samarco Board approved R$108 million for
the execution of raising the elevation of the Dam to 920m on the basis that approval for
the elevation to 940m would be sought at the subsequent Samarco Board meeting in August
2015, once the necessary licence had been obtained: {F15/318/7}.
223. Second, at the subsequent Samarco Board meeting on 5 August 2015, the Samarco Board
was told that the environmental licence had now been granted to raise the Dam to 940m,
and in turn it approved capital expenditure in the sum of R$183 million to raise the Dam
from the already approved 920m to 940m: {F15/182/6}.
224. Cs allege that Samarco, BHP and Vale “agreed that Project 940 would be divided into two phases”
when it “became clear that the licence [to permit elevation of the Dam to 940m] would not be granted as
anticipated”, and that the first was to start “irrespective of the issuance of the environmental licence”:
MPOC, §205A.7 {A1/1/88}. This is incorrect. The correct position is set out above.
225. Cs do not allege that the BHP Board, the GMC or BHP’s CEO approved Project 940 or
any associated expenditure. CEO approval was required for projects valued at US$50-250
million. Cs appear to allege that the expenditure associated with Project 940 was artificially
decreased to below US$50 million, so that the Samarco Board could approve Project 940
sooner, without needing to obtain BHP CEO approval: MPOC, §205A.8 {A1/1/88}, Reply
§§105I-105J {A1/3/75}. The relevance of, and basis for, that allegation is not easy to
understand, but in any event the amount of expenditure was not artificially decreased.
Although the estimated expenditure for Project 940 was originally identified as being
“roughly USD 50m” (BHP Brasil notional share) on 5 March 2015 {F10/462/2}
{F10/462T/2}, contemporaneous documents record that the Brazilian real/USD exchange
rate was fluctuating over that period and, by 1 April 2015, the estimated expenditure was in
fact slightly below US$50 million {F11/197/1-2}, i.e. below the threshold for BHP CEO
approval.
73At MPOC, §193 {A1/1/82}, Cs refer to the fact that, at the 18 March 2015 Operations Committee meeting, Samarco
presented Project 940, which was thereafter submitted and approved by the Samarco Board. Whilst this is admitted by
BHP (Def, §221 {A1/2/150}), beyond this fact the relevance of the meeting is not understood.
78
D3.6.2.2 Alleged BHP Knowledge
226. There is no allegation that any information was placed before the BHP Board, and/or GMC
in relation to Project 940 – as set out at §225 above, Cs expressly note it did not.
227. Insofar as Cs’ contention – that BHP knew or ought to have known of the additional risk
to the stability of the Setback posed by Project 940 – is premised on the knowledge of the
Samarco Board, it fares no better. When the Project was considered at the Samarco Board
meeting on 15 April 2015, not only was it reported to the Samarco Board that the ITRB
considered dam management to be “well controlled” ({F11/221/15-16}; {F11/282/68}), but
the board materials for the April 2015 meeting reported that the main risks of Project 940
were related to “the delay in obtaining the LP + LI [i.e. the environmental licences] beyond May / 15,
the Interferences with the operation of the Dams and the construction schedule may compromise handover”:
{F11/221/34}. There was no indication that the project would pose a risk to the stability
of the Dam.
228. Further, whilst the board materials for the April 2015 Samarco Board meeting depicted,
and referred to, the plan for additional drainage at the Dam (as to which see §§42-47 of
Annex 3), including the El.860m Blanket Drain, the report made no suggestion that
approval of raising of the Dam should be postponed pending the installation of that
drainage. Rather, it was noted that the construction of the drainage could be executed up
to elevation 920m (i.e. that installation could continue pending licensing approval to raise
to 940m), and that “Planning specialists [had] evaluated all the interferences of these activities with the
current operations in order to align the construction strategy and prevent problems”: {F15/295/36-37}.
The Samarco Executive Board and Operations Committee both recommended that the
Samarco Board approve the execution of Project 940 {F11/217/6-7}, indicating that the
Samarco Board was not told there were problems, but instead was told that Project 940
could be approved.
229. Cs also allege that Samarco’s Risks Subcommittee (a committee which met two or three
times per year to have a “a structured risk discussion on Samarco’s processes with shareholders’
contribution”: {F8/116/2}) discussed the risks involved in “critical failure of dam implementation”:
Reply, §105H {A1/3/74}. However, the risks which were identified in the presentations for
the meetings relied upon by Cs were financial risks, not any matter which is said to have
caused the Collapse: {F11/7/21}.
79
230. In support of their allegation that BHP knew about “defects and/or drainage problems at the
Setback”, Cs also assert that Mr Ferreira and/or Ms Jacques discussed “concerns” related to
the risks that Project 940 posed to the stability of the Dam in light of the Setback and the
August 2014 Cracking Incident (explained in further detail below at §242) at certain
meetings, addressed below: MPOC, §205A.2.4 {A1/1/86}. None of the minutes identify
concerns which had not been, or were not being, addressed.
230.1. PPE Update Meetings held on 15 January and 3 March 2015: each of these meetings
were attended by Mr Ferreira and Ms Jacques {F10/232T}; {F10/487T}. The
minutes of these meetings do not indicate any discussion of concerns relating to
the stability of the Dam as alleged by Cs.
230.2. A meeting held on 19 March 2015:74 this meeting was attended by Mr Ferreira and
Ms Jacques {F11/168T/1}. Again, the minutes of this meeting do not indicate any
discussion of concerns relating to the stability of the Dam as alleged by Cs. The
minutes do note a question by Vale regarding a stability assessment of the Dam,
which was to be actioned and (as set out at §230.4 below) was revisited at the
Project 940 Meeting on 9 April 2015.
230.3. ITRB Closing Meeting held on 20 March 2015: the notes from the meeting do not
record that Mr Ferreira or Ms Jacques attended ({F14/500T}), but Mr Ferreira
subsequently sent Ms Jacques notes from this meeting: {F11/127T/1}. The notes
record that the ITRB was “in agreement with the engineering” and emphasised the
importance of carrying out the right shoulder drain (i.e. the drainage at the right
abutment) as soon as possible. The drainage works at the right abutment were
progressed, as set out at §121 above and at §46.19 of Annex 3 but in any case, the
ITRB did not identify any concerns about the stability of the Dam at the Setback,
or at the left abutment more generally. The list of “important recommendations”
identified by the ITRB did not mention the Setback or left abutment.
230.4. Project 940 Meeting held on 9 April 2015: Mr Ferreira attended this meeting (and
Ms Jacques did not) {F11/320T}. Again, these minutes do not indicate any
discussion of the alleged concerns. The minutes note that Vale’s question about the
74At MPOC §205A.2.4 {A1/1/86}, Cs refer to a meeting on 19 March 2015, which is described as a “PPE Update
meeting”. There is no evidence indicating that a PPE Update meeting took place on 19 March 2015. It is understood
that the meeting referred to by Cs is that for which the minutes are at {F11/168T},
80
stability assessment (raised in the meeting on 19 March, see §230.2 above) was
answered by Mr Daviely Silva and “stated by him at the ITRB closure meeting in
March/15”.
231. In summary, there is no evidence that it was communicated to BHP (or indeed to the
Samarco Board or Risks Subcommittee or any Named Individual) that Project 940 posed a
risk to the stability of the Dam, by reason of delays to the infilling of the Setback or
otherwise. Nor was there any suggestion that internal drainage needed to occur before any
further raising of the Dam, or that the deposition of tailings in the Dam should be paused
pending the introduction of that drainage.
D3.7 Overall Summary
232. In summary, both geotechnical experts consider that the Collapse was the result of a
combination of factors: JESGeo, §20(g) {D1/1/94}. Prof Gens’ view is that the main
factors were “the presence of saturated contractive tailings within the structural part of the dam, the
encroachment of slimes towards the downstream face of the dam (aggravated by the location of the setback)
and the continuing rise of the dam when the structure had an insufficient margin of safety”. Dr Marr’s
view is that “with hindsight, a combination of factors together can be seen to have been factors playing a
role in the Collapse. It is not possible to quantify precisely the role of each”.
233. There is significant disagreement over the extent to which the six factors identified by Cs
caused the Collapse, or were significant contributing factors to it, with the exception of the
existence of the Setback, which both experts agree was causative (Dr Marr noting that
conclusion was formed with the benefit of hindsight). In any event, whether on BHP’s case
or on Cs’ case as to attribution, BHP’s knowledge of any of the alleged causes or
contributing factors was very limited, and did not include knowledge that they posed a
threat to the stability of the Dam, or that the safety of the Dam had been or was being
compromised.
E. BHP’S INVOLVEMENT IN AND KNOWLEDGE OF THE OPERATIONS OF

SAMARCO
234. This Section addresses additional factual allegations made by Cs, as follows:
234.1. In the context of their case under each of Environmental, Civil and Corporate law,
Cs allege that BHP’s acts or omissions “brought about” the activity of Samarco which
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caused environmental damage (i.e. the Collapse): MPOC, §270 {A1/1/114}, §276A
{A1/1/117}. Those allegations are reflected in LOI, §3(d) {A2/1/3} and §11(e)
{A2/1/9}, and addressed at Section E1 below;
234.2. In the context of their case under each of Environmental, Civil and Corporate law,
Cs allege that BHP knew or should have known specific matters. Those individual
allegations of knowledge are reflected compendiously in LOI, §§3(e), 11(a), 11(b)
{A2/1/8-9}, and to the extent not already addressed in Section D above, are
addressed at Section E2 below;
234.3. In the context of their case under both Civil and Corporate law, Cs allege that BHP
disregarded advice and warnings about the risk posed by the Dam and/or failed to
take sufficient or satisfactory action to address those matters. Those allegations are
reflected in LOI §§11(c) {A2/1/9}, 30(b) {A2/1/15} and, to the extent not already
addressed in Section D above, are addressed at Section E3 below.
E1. Samarco’s acts which were allegedly “brought about” by BHP
235. Cs allege that BHP “brought about” Samarco’s acts which caused the environmental damage
by “approval and authorisation” of (a) the Third Pellet Plant Project (“P3P Project”): MPOC,
§276A.1 {A1/1/117}, (b) the P4P Project (as noted above in Section [D3.4]) and (c) Project
940: MPOC, §276A.3 {A1/1/117}. BHP deny that the approvals or authorisation by BHP
relied upon “brought about” Samarco’s acts. It was Samarco – not BHP – that decided to
proceed with each of these projects. Furthermore:
235.1. P3P Project: This was a project to build a third pellet plant at Samarco, forecast to
increase Samarco’s annual iron ore pellet production capacity by 7.6 million tonnes:
MPOC, §94 {A1/1/47}. The Samarco Board approved the P3P Project on 20
October 2005 {F14/12.5T/2}. The BHP Board approved (BHP Brasil’s notional
share of) the capital expenditure associated with the P3P Project (c. $590 million)
on 19 October 2005: {F1/0.1/4}.75 Cs’ sole allegation is that the P3P Project (which
BHP allegedly approved and authorised) led to the construction of the Dam
(MPOC, §276A.1 {A1/1/117}) (and had the Dam not been constructed, it could
not have collapsed). But that cannot be said to be a legally relevant cause of the
75As explained in relation to the P4P Project above at §192, BHP Board approval was required for capital expenditure
in excess of US$250 million.
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Collapse, whether brought about by BHP or not because it relies on “but for”
causation, which it is common ground (at least in civil law) is not sufficient under
Brazilian law. See Section J1.1.6 below.
235.2. P4P Project: as set out at section D3.4 above, BHP approved (BHP Brasil’s
notional share of) the expenditure for the P4P Project, but did not bring about the
P4P Project, and in any event, the P4P Project was not a contributing factor in the
Collapse (as explained at §§184-189 above), and even if it had been, the information
received by BHP did not indicate that the P4P Project posed any risk to the stability
of the Dam.
235.3. Project 940: as set out at section D3.6 above, BHP did not approve Project 940
(or any associated expenditure) or bring about Project 940, and in any event, Project
940 was not a contributing factor in the Collapse (as set out at §219 above), and
even if it had been, the information received by BHP did not indicate that Project
940 posed any risk to the stability of the Dam.
236. It follows from these points that, even if BHP had approved or authorised the P3P Project,
P4P Project and Project 940 (which they did not – they approved the capital expenditure
that P3P and P4P would, if approved, entail), that approval did not “bring about” the activities
of Samarco which caused the environmental damage, both because BHP’s approval of BHP
Brasil’s (notional) share of capital expenditure (in relation to P3P and P4P only) did not
bring about the implementation of those projects (Samarco did that), and because in any
event none of those projects caused the environmental damage.
E2. Miscellaneous allegations as to BHP’s knowledge
237. In addition to their allegations that BHP knew about the matters which Cs say caused the
Collapse, dealt with at Section D above, Cs allege that BHP had knowledge of three other
matters, which knowledge Cs say is relevant to the standards of conduct to be expected of
BHP and/or gave rise to a duty to act: Reply §§127-129 {A1/3/97-99}. BHP’s knowledge
of the matters relied upon by Cs is addressed at sections E2.1-E2.3 below. The legal
consequences of any such knowledge as BHP had are addressed at sections H-K below
E2.1 The need for additional drainage
238. Cs case appears to be:
83
238.1. First, that “BHP employees and representatives knew or ought to have known about the defects
and/or drainage problems in the Setback”: MPOC, §205A.2 {A1/1/85}.
238.2. Secondly, that BHP were or should have been aware of “the need for additional drainage
shown by modelling of the Dam raised to 920m, the seepage, saturation and cracking which had
appeared in 2013 consistent with that modelling, and the continued rapid raising of the Dam
during 2013 notwithstanding those problems”: Reply, §127.6 {A1/3/98}.
239. Cs do not explain the basis on which they allege that BHP employees and representatives
knew or ought to have known about drainage problems at the Setback, nor do they identify
the BHP employees and representatives to which that allegation is intended to relate. Cs
also have not particularised the allegation that BHP should have been aware of the matters
pleaded in Reply §127.6 {A1/3/98}; that allegation includes a cross-reference to MPOC,
§148 {A1/1/64}, which itself refers to three-dimensional seepage modelling conducted in
February 2013, but Cs have not alleged that BHP were aware of that modelling, let alone
the individuals, if any, who are alleged to have received it.
240. Cs’ allegation that BHP was or should have been aware of the need for additional drainage
is therefore wholly unparticularised. In any event, (a) drainage is commonly added to or
adjusted to reflect a dam’s development (see Marr 1, §127 {D3/1/91}), and (b) only limited
information was received by to Named Individuals regarding the need for additional
drainage.
240.1. In February 2013, a timetable was provided to the Performance Management

Subcommittee for drainage projects at the left abutment, setting out that works on
the Dam’s internal drainage would be planned in 2013 and executed between
January 2014 and July 2015, while drainage works in the Grota da Vale would be
planned between January and April 2013, and executed between May and
September 2013: {F5/172.2T/113}. That timetable did not indicate any concern or
risk associated with the installation of additional drainage.
240.2. In January 2014, the ITRB noted the need for additional blanket drains at higher
elevations of the Dam and recommended in ITRB Report No 8 that they be
considered: {D7/101T/7}. That report was received by Mr Ferreira and Ms
Jacques, and is relied upon by Cs: MPOC, §205A.2.1 {A1/1/86}. The ITRB’s
recommendations did not state that there were drainage problems in the Setback
84
or concerns for stability and recommended only that abutment drains be
considered. The ITRB’s recommendations were noted in the minutes for the
Performance Management Subcommittee meetings on 31 January 2014
{F14/194.2T/5} and in August 2014 {F15/316/7}.
240.3. In November 2014, the El.860m Blanket Drain was under construction, an
observation which was made in ITRB Report No. 11 {D7/121T/4}, which was
received by Mr Fernandes, Mr Ferreira and Ms Jacques and on which Cs rely at
MPOC §205A.2.2 {A1/1/86}. The ITRB made specific recommendations in
relation to construction of the new drainage, but did not state that there were
drainage problems in the Setback or concerns as to stability. The ITRB’s
recommendations were recorded to be on time at the meetings of the Samarco
Board in December 2014 {F10/91/53} and the Performance Management
Subcommittee in February 2015: {F10/319.1/79}, {F10/319.1T/79},
{F10/319.1/82}, {F10/319.1T/82}.
240.4. On 26 January 2015, Mr Ferreira visited the Dam. Cs rely at MPOC 205A.2.3
{A1/1/86} on his attendance note of that visit. That note recorded Mr Ferreira’s
observation that the construction of drainage and the infilling of the Setback were
underway, but did not suggest that this was necessary because of drainage problems
at the Setback or because of a risk to the stability of the Dam: {F10/275T}.
240.5. The El.860m Blanket Drain was still under construction in July 2015, and photos
of it appeared in the presentation for the Operations Committee meeting held on
10 July 2015 ({F14/510.1.1/32} {F14/510.1.1T/32}), at which Mr Terra stated that
“the ITRB (Independent Tailings Review Board) recommendations implementation plan is on
track”: {F12/401/26}.
240.6. Cs also assert that Mr Ferreira and/or Ms Jacques discussed “concerns” related to the
risks that Project 940 posed to the stability of the Dam in light of the Setback and
the August 2014 Cracking Incident (explained at §242 below) at certain meetings:
MPOC §205A.2.4 {A1/1/86}. None of the minutes of those meetings record
discussions of the need for additional drainage at the left abutment. Those meetings
are discussed in the context of Project 940 at §230 above.
85
241. In summary, only limited information was provided to certain of the Named Individuals
about the need for additional drainage at the left abutment and the Grota da Vale. Although
that information indicated that additional drainage was planned and, latterly, was in the
process of being constructed, it did not indicate that the drainage was being introduced to
address an increased risk to the immediate stability of the Dam, nor did it indicate that the
process of installing new drainage posed a risk, nor that the safety of the Dam had been or
was being compromised. These Named Individuals were repeatedly informed that the ITRB
was aware of the progress of the additional drainage and the recommendations it had made
in relation to it were being actioned on schedule.
E2.2 Further alleged problems with the Dam in 2014
242. Cs allege that BHP knew or should have known of “the further serious problems with the Dam in
2014 and its further continued rapid raising during 2014 and 2015 notwithstanding those problems
without implementing the recommendations of Pimenta de Ávila”: Reply §127.7 {A1/3/98}. The rate
of rise of the Dam did not increase in 2014 and 2015, and the rate of rise did not cause or
contribute to the Collapse: see Section D3.4.1 above. Cs have not identified the “further
serious problems with the Dam in 2014” relied upon. The only incident specifically identified is
the “August 2014 Cracking Incident”, which comprised the emergence of cracks on the
crest of the Setback and the left abutment in August 2014: see Panel Report, p.B.B8-15
{D8/14/17}; Gens 1, section 3.4.7 {D2/1/86-91} and §463 {D2/1/167-168}; Marr 1,
section R(10) {D3/1/196-201}. In response to the incident Samarco constructed a
reinforcement berm at the Setback. The incident is addressed in further detail at §§38-39 of
Annex 3.
243. The geotechnical experts disagree about the significance of the August 2014 Cracking
Incident to the Collapse. Prof Gens’ view is that it indicated “very marginal stability” at the
Setback, with the potential to cause slope failure triggering general liquefaction: Gens 1,
§208 {D2/1/86}. Dr Marr considers that the August 2014 Cracking Incident was a
symptom of localised instability of the slope at the left abutment, but that the fact that the
tailings did not liquefy on this occasion was direct field evidence that “the tailings in this
location were dilative, not contractive” and so not susceptible to liquefaction: Marr 1, §355
{D3/1/201}.
86
E2.2.1 Alleged BHP knowledge
244. Cs allege that BHP knew about the August 2014 Cracking Incident “on or around 26 January
2015” (MPOC, §205A.3 {A1/1/86}), and rely on the matters addressed below. None of
them indicate that the August 2014 Cracking Incident, or any other incident at the Dam,
was not being addressed appropriately, or posed a risk to the stability of the Dam.
245. First, Cs contend that ITRB Report No.11 (dated November 2014) {D7/121T}, received
by Mr Ferreira and Mr Fernandes, described the August 2014 Cracking Incident: MPOC
§205A.2.2 {A1/1/86}. ITRB Report No.11 recorded the appearance in August 2014 of
cracks “in the area of the distance from the Fundão axis near the left abutment” and stated that
Samarco had performed “excellent work of retroanalysis…seeking to explain the rupture mechanism”.
The Report recorded the ITRB’s recommendation that the “area should be filled in as quickly
as possible in order to return the axis to its design position” and that the “operations to fill the area and
continue the release of tailings disposal should ensure that the elevation of the displaced axis is less than 20
m and that a minimum beach of 200 m is observed” {D7/121T/12-13}. Those recommendations
are addressed at sections D3.3.2.5-D3.3.2.9 above. The ITRB’s overall statement of the
current condition of the Dam contained no reference to the August 2014 Cracking Incident,
but instead recorded “The general operating condition of Samarco's dams is good: the freeboards are
adequate, the beaches have the width required in the project, the overflow channels visited are operating
properly, there is no significant erosion on the crest, slopes or abutments of the dams. The readings of the
installed instrumentation are within the expected ranges. Even with the total obstruction of the overflow
channels, the reservoir can store the critical rain (PMP) of 5 days with overtopping in 79 hours. This is a
favorable condition for a tailings dam in the operational phase.” {D7/121T/3}.
246. Second, as noted above at §230, Cs assert that Mr Ferreira and/or Ms Jacques discussed
concerns related to the risk that Project 940 posed to the stability of the Dam in light of the
Setback and the August 2014 Cracking Incident at certain meetings. However, the minutes
of those meetings do not indicate any discussion of the August 2014 Cracking Incident.
247. Third, in connection with the 2014 August Cracking Incident, Cs also allege that “BHP
repeatedly ignored and/or did not take any or sufficient or satisfactory action to inform themselves and/or
address Pimenta de Avila’s advice and recommendations”, contained in Pimenta’s reports of
September and December 2014: MPOC, §§282.5, 282.5.2-282.5.4 {A1/1/125}. Cs have not
identified any BHP individuals who they say had knowledge of the September and
December 2014 reports (as to which see further §§39.3 and 39.5 of Annex 3, respectively)
87
which were addressed to Samarco, not to the Samarco Board. There is no evidence those
reports were received by any Named Individual.
248. Fourth, to the extent that Cs rely on any other incidents, including those listed in the Panel
Report, p.11 {D8/1/23} (MPOC, §148 {A1/1/64-65}, Reply, §105A.9 {A1/3/70}), Cs
have not identified who is said to have known about such other incidents, or the source of
their knowledge. In any event, the documents and meetings on which Cs rely did not
identify defects and drainage problems, whether as to the August 2014 Cracking Incident,
the beach width or otherwise, which had not been or were not being addressed
appropriately.
E2.3 Significant risk of the failure of the Dam as a result of liquefaction especially at the
left abutment
249. Cs allege that BHP knew or should have known of the “significant risk of the Dam’s failure as
a result of liquefaction of sands, especially in the area of the left abutment”: Reply, §127.9 {A1/3/98}.
Cs contend that the FMEAs produced in respect of the Dam had “repeatedly identified the need
to complete liquefaction studies, and BHP must have known that any liquefaction study should be a credible
one and that no such study had been completed when it approved Project 940”: Reply, §105K.2
{A1/3/76}. BHP accept that the FMEAs identified static liquefaction as one of more than
40 potential failure modes in relation to the Dam. But, contrary to Cs’ allegation, BHP did
not know that no “credible” liquefaction risk assessment or study had been completed for
the Dam and do not accept that premise, for the reasons explained at §251 below.
250. Cs rely at Reply, §105K.2 {A1/3/76} on five FMEAs, only three of which were received
by Named Individuals (those of May 2013, November 2013 and July 2014). In any event,
none of them contained information from which BHP must have known that no credible
liquefaction study had been carried out by 15 April 2015 when the Samarco Board approved
Project 940. Specifically, as set out in Table 4 of Annex 3, the FMEA of:
250.1. May 2013 recorded that liquefaction potential studies were in progress
{D7/81T/2};
250.2. November 2013 recorded an action to complete liquefaction studies {D7/99T};
250.3. July 2014 commented “complement the studies to increase sample representativeness or conduct
new studies if necessary due to change in the tailings” {D7/109T/2};
88
250.4. December 2014 contained a similar comment about complementing or conducting
new studies {D7/123T}; and
250.5. July 2015 recorded an action “Complement the liquefaction studies for the raising to elevation
940” {D7/140T}.
251. In any event, BHP do not accept the factual premise that no credible liquefaction study had
been completed when the Samarco Board approved Project 940 in April 2015. The
following studies were carried out (there is no evidence that any of the studies were received
by Named Individuals):
251.1. Terratek: An engineering study was carried out by Terratek, a geotechnical

engineering firm, in April 2014 {D2/3.2T/509-555}. The report was a feasibility
study into a hypothetical situation where the Germano and Fundão Dams would
reach El.920m, after which an additional pile of tailings would be placed on top of
the consolidated dams. It concluded that static liquefaction could be ruled out for
that hypothetical.
251.2. Anelisa Vasconcelos: Anelisa Vasconcelos was a geotechnical engineer employed

by Timenow, an independent geotechnical consultancy firm, who was contracted
to work for Samarco between March 2013 and July 2015. She produced a
liquefaction analysis on 17 December 2014, following the August 2014 Cracking
Incident (see section E2.2 above). Ms Vasconcelos’ analyses showed that, applying
peak undrained strengths and taking into account the reinforcement berm, a factor
of safety of 1.81 would be achieved, meaning that the Dam was expected to be
stable: {D7/128T/2}. Using residual undrained strengths (i.e. the strength of the
tailings in a liquefied state, see Marr 1, Glossary {D3/1/293}), the factor of safety
was lower than 1.0 (i.e. indicated that the Dam would be expected to collapse, see
Marr 1, Glossary {D3/1/287}). However, Dr Marr explains that the use of a
residual liquefied strength was “very conservative” and that there was no reason to use
residual strengths in this analysis, because there was no analysis to show that the
Dam’s tailings had, in fact, already liquefied (which is the factual premise underlying
a residual undrained strength analysis): Marr 1, Appendix 1 §75.2 {D3/1/271}. Prof
Gens’s evidence is that “The undrained liquefied/residual strength is, conceptually, the
minimum that the material would attain. Therefore, assuming its occurrence everywhere in the
liquefiable material is a ‘worst‐case’ scenario” but nonetheless considers that “a check with
89
residual strength everywhere in the slope was anyway necessary”: Gens 2, §80(b) {D5/1T/27},
§102 {D5/1T/34}.
251.3. VOGBR April 2015 study: In April 2015, VOGBR, a geotechnical engineering
firm, first issued a report entitled “GERMANO/FUNDÃO EL. 940m – DAM
RAISES BAY 3 – ELEV. 925M - LIQUEFACTION STUDY”: {F14/123T}.
That report was produced pursuant to an agreement between VOGBR and
Samarco to “develop and implement a detailed plan to raise the Germano and Fundão dams to
an elevation of 940m, including a plan to raise the Bay 3, which will serve as infrastructure for
channeling the tailings pipe system”: {F14/123T/3}. This report formed part of Project
940, but did not specifically consider static liquefaction in the relation to the Dam.
The report itself contained a liquefaction analysis of Bay 3 (within the neighbouring
Germano dam complex), concluding that the area would not liquefy up to an
elevation of El.923m: {F14/123T/16}.
251.4. VOGBR January 2016 study:76 VOGBR produced a liquefaction study in relation
to the Dam in January 2016: {D7/154T}. That report was a further part of Project
940, and its aim was to determine the risk of static liquefaction of the Dam as it
was projected to stand at El.940m: Marr1, Appendix 1, §89 {D3/1/279}. It
concluded that there was “a tendency for a liquefaction trigger to occur for the structure in
El.940m” and that “the liquefaction studies showed the need for a reinforcement berm for the
structure, which will allow it to be raised to El.940m”: {D7/154T/13}. The report did not
address the Dam as it stood at any time before the Collapse, but instead considered
the condition of the Dam as it would have been if it had been raised to El.940m,
and concluded that in order for the Dam to be raised to El.940m, a reinforcement
berm would be required, the size and shape of which would be determined in due
course: Marr 1, Appendix 1, §89.3 {D3/1/280}.
252. In summary, four liquefaction analyses were carried out in relation to the Dam or Project
940. Only one of them was carried out for the conditions of the Dam as it stood at the time
of the report (being Ms Vasconcelos’ analysis, see §251.2 above), and that did not indicate
a significant risk of liquefaction in the Dam, finding a factor of safety of 1.8 for peak
undrained strengths. The factor of safety of less than 1 was obtained in an analysis using
residual (liquefied) strengths, which does not assess the margin of safety against liquefaction
76 This Report was produced post-Collapse, on the basis of data gathered before the Collapse.
90
occurring, but rather indicates whether the dam would be expected to fail if all the tailings
had only the strength of liquefied materials. The other analyses considered the stability of
the Dam following future projected rises, but their conclusions as to future stability did not
indicate that there was a risk to the stability of the Dam as it stood at the time each such
study was being carried out.
E2.3.1 BHP’s knowledge
253. Cs do not explain who at BHP is said to have known that a liquefaction study ought to have
been carried out, or that no credible such study had been carried out, or by what means that
information was conveyed to them. Nor do they explain which individual(s) it is alleged
knew or should have known of the “significant risk of the Dam’s failure as a result of liquefaction
of sands, especially in the area of the left abutment”, or how they knew or should have known that.
Thus, the allegations at Reply §§127.9 {A1/3/98} and 105K.2 {A1/3/76} are entirely
unparticularised.
254. The information provided to certain Named Individuals in relation to liquefaction was, in
any event, very limited and did not indicate that (a) any risk of liquefaction failure was not
being appropriately managed; or (b) that a liquefaction study needed to be carried out, but
had not been. In particular, certain Named Individuals were aware:
254.1. That in ITRB Report No 9 (of February 2014), the ITRB had reviewed Project 940
and, in that context, concluded that the “risk of tailings liquefaction” was an “important
design consideration” but that “the good practices already used by Samarco should guide the
project”, and that there was “no need for additional field and laboratory research programs to
study this issue”: {D7/103T/7}.
254.2. That in October 2014, external specialist engineer André Fahel had given a
presentation at a meeting of the Samarco Technical and Sustainability
Subcommittee (attended by Mr Fernandes, Mr Ferreira and Mr Pereira), setting out
the conclusions of “his studies (which also lasted 2 years) on a new concept for the Disposal of
Tailings and Sterile Tailings in Samarco”: {F9/267.1/1}. The minutes recorded that
“extensive research was carried out, considering the different variables and the various issues and
risks involved in the disposal process of tailings and sterile tailings” but that Mr Fahel had
“confirmed that there was no risk of liquefaction of any kind”: {F9/267.1/1-2}. In the slide
deck for his presentation (received by Mr Fernandes, Mr Ferriera and Mr Cardoso:
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{F9/208.1/1} {F9/208.1T/1}, and by Mr Pereira: {F9/271T}), Mr Fahel
concluded “Dynamic and static liquefaction = no potential risk”: {F9/271.1T/27}.
254.3. That on 20 April 2015, a meeting to update BHP Brasil and Vale was held (attended
by Mr Ferreira and Ms Jacques), for which the minutes noted that “Investigations
[would] be carried out on the crest of the Fundão Dam for the assessment of liquefaction”:
{F11/463.2T}. That investigation was to be carried out in support of VOGBR’s
later liquefaction analysis for Project 940: {D7/154T}.
255. None of the limited information communicated to certain Named Individuals indicated
that a liquefaction study was necessary but had not been carried out. Rather, the information
indicated that the engineers working on the Dam, including the ITRB, were aware of the
possibility of liquefaction in tailings dams, planned investigations to assess liquefaction
potential, and on at least one occasion, specifically following Mr Fahel’s investigations, had
concluded that there was no risk of liquefaction based on field and laboratory testing data.
E2.4 Alleged knowledge of the risk of collapse
256. Cs say that BHP’s knowledge of the risk of collapse of the Dam is evidenced by two
statements admitting to such knowledge – in BHP’s AGM in relation to the Prístino Report
and in an article in the Australian Financial Review: MPOC, §278.4 {A1/1/118}. No
relevant admission was made in either case, as explained below.
257. Prístino Report (dated 21 October 2013):
257.1. This was prepared at the request of the office of the public prosecutor of Minas
Gerais for the purpose of revalidating the Dam’s operating licence {D7/95T}. The
Prístino Report identified the possibility of future erosion of the Dam and
destabilisation of the Vale Sterile Waste Pile as a result of contact between those
structures: see Prístino Report, §4 {D7/95T/4-8}. The report did not comment on
the current safety and stability of the Dam but did “note the possible risks that would
eventuate if, in future, there were to be contact between the Dam and the Vale sterile waste pile”:
Marr 1, Appendix 1, §58 {D3/1/259}). Since the Dam never touched the Vale
Sterile Waste pile (see Panel Report, p.B.B1-5 {D8/7/7}), BHP’s knowledge of the
Prístino Report is irrelevant, but in any event, there is no evidence suggesting that
it was in BHP’s possession, or received by any Named Individual, prior to the
Collapse.
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257.2. As regards BHP’s knowledge of the Prístino Report, Cs rely on an account of an
exchange between BHP’s then Chairman, Jac Nasser, and a Greenpeace
campaigner at BHP’s AGM in 2015, published in “Metals & Mining Daily”. In that
exchange Mr Nasser is reported to have said to the campaigner that “I don’t agree
with you on the Instituto Prístino report that came out in 2013. I don’t think that issue is relevant
here. We’ve looked at it, we looked at it back then, we’ve looked at it now – it’s an interesting
and unfortunate circumstance that happened, but not related to this”: {F15/113/12}. Cs say
that this is an admission that BHP had known in 2013 about the Prístino Report
and that it had warned of serious risks at the Dam: MPOC §92.10.1 {A1/1/47},
§278.4 {A1/1/118}). Mr Nasser’s statement cannot bear the weight Cs attempt to
put on it. Mr Nasser’s statement is not clear, and there is no evidence it was received
by BHP or any Named Individual before the Collapse. Mr Beaven has no
recollection of it either: Beaven 1, §65 {B1/1/22}. Moreover, given the role BHP
had in relation to Samarco (as outlined at Section B above), it is inherently unlikely
that the Prístino Report, which related to a specific relationship between the Dam
and the Vale Sterile Waste Pile, would have been considered by the BHP Board, its
committees, the GMC or BHP’s senior management. In any event, the statement
reflects the fact that the matters raised in the Prístino Report were not causative of
or relevant to the Collapse.
258. Australian Financial Review (article dated 1 November 2017): Mr Wilson is quoted in
this article as saying, “[w]e identified the risk, we were doing things to manage that risk, but the event
still occurred”: MPOC, §92.10 {A1/1/47}, §182 {A1/1/80}, §278.4 {A1/1/118}. Mr Wilson’s
statement is unclear, but cannot bear the weight Cs attempt to put on it: it appears to refer
to the risk identification and management processes in place at BHP (as to which see
Section E4), rather than an identified and specific problem.
E3. BHP’s alleged disregard of or failure to take sufficient action to address warnings
and recommendations given in relation to the Dam
259. Cs allege that in the period leading up to the Collapse, BHP “repeatedly disregarded the advice
and warnings, from a variety of sources, all of which pointed towards the Dam posing an increasingly serious
health and safety risk” (MPOC, §282.4 {A1/1/124}) and failed “to take any or any sufficient action
to investigate or respond to repeated warnings that the safety of the Dam was being compromised” (MPOC,
§287.2 {A1/1/132}). This serious allegation is not supported by the contemporaneous
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evidence. At Sections E3.1 to E3.7 below we address the allegations which have not already
been addressed in Sections D or E2 above.
E3.1 Alleged knowledge acquired following the approval of Project 940
260. Cs allege that BHP were informed about further problems at the Dam in the months
following the approval of the planned elevation of the Dam to 940m, and that the matters
at MPOC, §§205A.10.1-205A.10.8 {A1/1/89} constituted warnings. But none of the
“problems” or matters pleaded by Cs suggest that the safety of the Dam was being, or had
been, compromised – let alone that BHP knew that. Cs rely on:
260.1. An email dated 18 May 2015 from Mr Ferreira to Mr Rodrigues, which stated that
the drainage at the right abutment “should be constructed as quickly as possible…if the dam
is raised without this drain, there could be grave problems in the future”: MPOC, §205A.10.1
{A1/1/89}; {F12/152T/2}. The additional drainage at the right abutment was part
of the wider additional drainage scheme addressed at §§238-241 above. The
construction of the drainage at the right abutment commenced in August 2015:
Panel Report B.B1-31 {D8/7/33}. The email was not a “warning” or “advice” that
was ignored. In any event, it was not about any matter which contributed to the
Collapse: it relates to potential issues in the future if the Dam was raised, and the
Collapse did not start at the right abutment.
260.2. The minutes of a PPE Update meeting attended by Mr Ferreira and/or Ms Jacques
which state that liquefaction investigations were being performed on the crest of
the Dam: MPOC, §205A.10.2 {A1/1/89}; {F11/469T}. The statement does not
disclose any warning as to the safety of the Dam, or that any recommendation had
been ignored.
260.3. The meeting minutes of a Capital Projects Subcommittee (a subcommittee of the

Operations Committee {F1/302/3}) held on 22 May 2015, attended by Mr
Fernandes and Mr Ferreira, which record that the subcommittee noted that .“there
is a risk of changes in the body of the dam as the liquefaction analysis is being carried out [] now”:
MPOC §205A.10.3 {A1/1/89}; {F13/221T}. The statement does not disclose any
warning as to the safety of the Dam, or that any recommendation had been ignored.
260.4. An FMEA received by Mr Ferreira on 14 July 2015 which recorded that the action
“Implement drainage system (Stage II)” which had been forecast to start on 23 January
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2015 had “still not started”: MPOC, §205A.10.4 {A1/1/89}. However, the FMEA
was sent under cover of an email which stated that “what is not started also need to be
updated because it is on schedule and in progress” {F12/281T}. The “warning” in the
FMEA was therefore negated by the content of the covering email, which made
clear that “Implement drainage system” was in fact on schedule and in progress.
260.5. The minutes of a technical visit to the Dam by Mr Ferreira and Ms Jacques on 30
July 2015. Cs say this records that Samarco was to present controls of the freeboard
(i.e. the height of the crest of the Dam above the pond) and calculations of the
freeboard for the protection of the Dam at the right abutment in the event of a
maximum flood (i.e. to ensure that if the maximum flood which the Dam was
designed to withstand occurred, the water in the pond would not over-top the crest
of the Dam): MPOC, §205A.10.5 {A1/1/89}. Those matters were recorded as “in
progress” {F12/486T/2}. In any case, none of that discloses any warning as to the
safety of the Dam, or that any recommendation had been ignored.
260.6. The minutes of a PPE Update meeting dated 13 August 2015 attended by Mr
Fernandes and Ms Jacques which Cs say state that “they [i.e. Mr Fernandes and Ms
Jacques] reinforced their request that Samarco continue monitoring the freeboard at the Dam”.:
MPOC, §205A.10.6 {A1/1/90}. The minutes in fact state that the “shareholders”
reinforced their request, but in any event such statement does not disclose any
warning as to the safety of the Dam, or that any recommendation had been ignored
{F13/203T}.
260.7. The minutes of a PPE Update meeting dated 17 September 2015, attended by Mr
Fernandes and Ms Jacques, which Cs say state that Mr Ferreira “demonstrated great
concern” that the freeboard was 3.5m different to what was communicated: MPOC,
§205A.10.7 {A1/1/90}. The minutes record this statement. However, it related to
the reporting of the freeboard, not to any matter which caused the Collapse
{F14/191T}.
260.8. An email dated 21 September 2015 from Mr Ferreira to Mr Milagres stating that
“there is a great concern in [BHP Brasil] with regard to the operations at the dams” and in
particular, the freeboard {F13/299T/1}. Mr Ferreira asked Mr Milagres to
“guarantee that all of the critical controls linked to the safety of the dams are rigorously obeyed”:
MPOC, §205A.10.8 {A1/1/90}. The email does not disclose any warning that any
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recommendation had been ignored, and in any event, referred specifically to the
freeboard, not to any matter which caused the Collapse.
E3.2 BHP’s management of critical controls
261. Cs assert that BHP was closely involved in Samarco’s own risk management: Reply, §105A
{A1/3/67}, §105M.1 {A1/3/76-77}. Cs rely on the following two matters as instances of
that alleged “close involvement” which they say gave rise to knowledge that the safety of the
Dam was being, or had been, compromised:
261.1. Various risk documents which were emailed by Samarco to Mr Ferreira, Mr Victor,
Mr Cardoso and Mr Fernandes on or around 21 June 2015, including what Cs
describe as “’bow-tie’ documents which identified an increased MFL with respect to a failure of
a Samarco tailings dam, in particular by reference to the displacement of Fundão Dam to enable
the implementation of drains”: Reply, §105M.1 {A1/3/76-77}.77 The documents to
which Cs appear to be referring were provided to the BHP Iron Ore Risk function
as part of Samarco’s annual updates to BHP on the conclusion of Samarco’s risk
assessment cycle: Victor 1, §59 {B1/6/13}. They had been prepared by Samarco
without any involvement from BHP. Moreover, the specific bow ties to which Cs
appear to be referring (dated 22 April 2015 and 18 May 2015) related to risks which
Samarco named “Unavailability of volume for disposal of tailings and waste” and “Critical
failure in the implementation process of dams and waste dumps”, and not to the risk which
Samarco named “Critical failure of dam operation”. Further still, MFL refers to the
worst foreseeable consequences of a risk event, on the assumption that there are
no effective risk controls in place (see §281 below). An increased MFL reported by
Samarco for these risks did not indicate anything about Samarco’s perception of
the safety of the Dam, let alone that it was being compromised.
261.2. An email from Mr Ferreira to Samarco dated 25 June 2015 which Cs say provided
BHP’s comments on Samarco’s risk management, “including that the ‘number of critical
controls should be greater’” and noting that the “ITRB is no longer effective” including because
the last inspection had involved “only 1 member”: Reply, §105M.1 {A1/3/77}. The email
stated that it contained “my”, i.e. Mr Ferreira’s, comments, not those of BHP. The
reference by Mr Ferreira to the number of critical controls was to the number of
77 A
bow-tie is a document summarising in a standardised format the key risk information (the causes, consequences,
MFL and RRR, controls and improvement actions) in respect of a given risk.
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controls listed by Samarco in its risk documentation, not to the number of controls
which Samarco had in place or which related to the Dam (Mr Ferreira went on to
identify two additional Samarco controls which he suggested should be included in
the documentation) {F12/150T}. Contrary to what Mr Ferreira wrote in that email,
the ITRB did in fact remain effective. Although the last meeting had only involved
two members, with only one of those attending on site, the third member of the
ITRB had died prior to the meeting, and the fourth was on sabbatical: Rej,
§60DD(4) {A1/5/86}. An additional expert was set to join the ITRB in 2016, in
response to a consensus view that a specialist in hydrology and hydraulics was
required: {F13/452T/54}. In any event, Mr Ferreira’s email does not indicate that
BHP knew of or disregarded any warning or recommendation as to the safety of
the Dam.
E3.3 ITRB Recommendations
262. Cs allege that “BHP knew or ought to have known about failures to implement the ITRB’s
recommendations” (Reply, §105M.3 {A1/3/77}). Cs have not set out who is said to have
known about the alleged failures. In any event, the five specific matters Cs rely on, which
are addressed below, do not demonstrate that Samarco failed to implement ITRB
recommendations, still less that BHP knew that.
263. First, Cs say that ITRB Report No.5 from October 2012, which was received by Mr
Fernandes, Mr Ferreira and Ms Jacques, identified a “serious problem” in that it observed that
there was an “unusually large number of designers for projects so intimately related as the Samarco tailings
disposal facilities”, and “an increasing loss of continuity and depth of understanding” Cs say the ITRB
recommended that “Samarco corporate management review the corporate risk and liability increase
inherent in this approach”. Cs have not identified any basis for asserting that such
recommendation was not followed up or, if it was not, that BHP knew this. In any event,
as mentioned at §157.3 above, the board materials for the April 2013 Samarco Board
meeting record that all of the ITRB’s recommendations relative to their October 2012
meeting (i.e. ITRB Report No.5) had been, or were in the process of being, implemented:
{F14/283.1/33}.
264. Second, Cs appear to refer (Reply, §105M.3.2 {A1/3/78}) to an observation made in the
FY14 Samarco Audit report that the ITRB had “not yet noted” Samarco’s lack of awareness
of the relevance of QC (Quality Control) and QA (Quality Assurance) processes during
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construction. The FY14 Samarco Audit noted that the ITRB had not raised a concern about
failings in the QC and QA process during construction of the Principal Foundation Drain
and Galleries. It does not disclose any failure to implement any recommendation of the
ITRB, or of Pimenta. The auditors specifically considered, and rejected as inappropriate,
the suggestion of making a finding about the ineffectiveness of the ITRB on this basis
{F6/256}. The FY14 Samarco Audit is addressed further at section E4.2.2 below.
265. Third, Cs rely on the ITRB’s recommendation in ITRB Report No.8 dated January 2014
that more drainage blankets be installed at the abutments: Reply, §105M.3.3 {A1/3/78}.
That recommendation was followed up, as set out at section E2.1 above, such that the
El.860m Blanket Drain was in place in August 2015 and a further blanket drain was under
construction at the right abutment at the time of the Collapse.
266. Fourth, Cs point to the ITRB’s recommendation in ITRB Report No.10 dated July 2014
that the abutment drainage blankets should be complemented with finger drains: Reply,
§105M.3.4 {A1/3/78}. That recommendation was followed up, and finger drains were in
the process of being installed at the right abutment at the time of the Collapse: Marr 1, §61
{D3/1/39}.
267. Fifth, Cs rely on the ITRB’s recommendation as to the infilling of the Setback, which is
addressed at section D3.3.2.5-D3.3.2.9 above, and, as there set out, was complied with.
E3.4 Alleged failure to address advice and recommendations from Pimenta
268. At MPOC, §282.5 {A1/1/125} Cs allege that BHP ignored or wrongly failed to take
sufficient action in response to advice and recommendations from Pimenta provided in the
September 2011 Report and in the period September 2014 to December 2014 (referring
back to MPOC, §§155-156 {A1/1/68}). This is another unfounded allegation. The
September 2011 Report was addressed and provided to Samarco, not to the Samarco Board
(or BHP) (see §173 above). Similarly, the reports produced by Pimenta in September 2014
and December 2014 were addressed and provided to Samarco, not to the Samarco Board,
or to BHP, and there is no evidence that they were received by any Named Individual prior
to the Collapse, or were referred to in any Samarco Board meeting or meeting of a
committee of the Samarco Board. In short, there is no evidence that the three Pimenta
reports on which Cs rely were received by BHP or any Named Individual before the
Collapse, and therefore no basis for asserting that BHP was or should have been aware of
their contents.
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E3.5 Alleged failure to address safety concerns expressed in the Prístino Report
269. At MPOC, §282.6 {A1/1/125}, Cs allege that BHP ignored or failed to take sufficient action
to address safety concerns in the Prístino Report. As set out at §257 above, the Prístino
Report identified a risk related to contact between the Grota da Vale and the Dam, but, as
noted in §257.2 above, there is no evidence that it was received by BHP or any Named
Individual before the Collapse. In any event, the Prístino Report recognises that “all the
programs are designed to prevent risks” {D7/95T/4}, and, as explained at Section E2.1 above
and in §§44-46 of Annex 3, drainage was designed and installed to ensure that water flowing
from the Grota da Vale, in which the Vale Sterile Waste Pile was located, did not infiltrate
the Dam. Thus, the concern raised in the Prístino Report was addressed, and in any event
the risk identified by the Report never materialised, and did not cause or contribute to the
Collapse.
E3.6 Alleged failure to address concerns raised at meetings of the Samarco Board
270. Cs refer to Samarco Board meetings at which they say concerns were raised which BHP
ignored or took no, or insufficient, action to address: MPOC, §282.7 {A1/1/126}. To the
extent that the matters relied upon by Cs were raised in materials for or at Samarco Board
meetings, there is no indication in the documents that the Samarco Board were informed
that those matters gave rise to a risk of Collapse, or indicated that the safety of the Dam
had been or was being compromised. We address below each of the alleged matters in turn.
271. First, at the 10 August 2011 meeting:
271.1. The Samarco Board requested Samarco “assess and present tailings disposal alternatives
to the elevation of the existing structures” {F2/379/3}. This request was not a
recommendation of the ITRB (contrary to Cs’ case) and did not reflect concerns
about the stability of the Dam or about the proposal to elevate the Dam, which as
Mr Campbell explains, was relatively common practice and not in and of itself a
particularly risky thing to do: Campbell 1, §43 {B1/2/15}.
271.2. Additionally, Ms Küpper (an independent geotechnical consultant and member of

the ITRB) presented an independent assessment to the Samarco Board in August
2011, in which she concluded that Samarco’s tailings structures were “at an adequate
level of safety” and were “operated and monitored in a satisfactory manner, consistent with
international standards”: {F4/206/7}; {F2/379/3}. Her assessment also reported
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that there had been “significant improvement in Samarco’s tailings governance system” which
was “expected to lead to a process of continuous improvement of the operations of the tailings
system and to better risk management”: {F8/287/35}; {F4/206/8}.
271.3. In any event, far from ignoring concerns as alleged by Cs, the meeting minutes
record that the Samarco Board requested Samarco, among other things, to “fully
address recommendations made by the ITBR [sic]” and “identify and keep focus on the
catastrophic risks identified by its risk assessment, undertaking the necessary measures to prevent
their occurrence”: {F2/379/3}.
272. Second, Cs assert that at the meeting on 8 August 2012 “the need for the resettlement of
communities near the Dam was identified”: MPOC, §282.7.2 {A1/1/126}. The minutes do not
record that this was raised in the context of any concern as to the integrity of Samarco’s
tailings storage: {F10/287/3}; and Mr Campbell’s recollection was that it did not relate to
any such concern, but rather it was not uncommon for mining companies to plan for
relocations so that a plan would be available if a decision to relocate people was taken:
Campbell 1, §47 {B1/2/16}. In any event, as recorded in the minutes of the 4 August 2013
Samarco Board meeting, the matter was acted upon: Samarco engaged an outside consulting
firm, YKS, to conduct a study regarding alternatives for the Bento Rodrigues community
in light of planned works at the Mirandinha (not the Fundão) dam. The study concluded
that, in light of the “resistance to relocation”, among other things, “the best option would be to keep
Bento Rodrigues community and consider their staying during the construction and operation of the
Mirandinha Tailings Disposal System”: {F6/296.2/35}.
273. Third, as regards the 4 April 2013 meeting:
273.1. The minutes record that Mr Terra provided the Samarco Board with “an update on
the master plan of tailings disposal, highlighting the associated risks and mitigation actions”.
Contrary to Cs’ assertion that “no meaningful remedial action was taken or instigated” in
connection with this (MPOC §282.7.3 {A1/1/127}), as the minutes record, the
Samarco Board endorsed the initiatives presented and “reinforced the importance of
progressing the studies on alternative tailings facilities, given the increasing environmental challenges
to obtain the permits to expand such facilities”: {F5/299/3}.
273.2. Separately, and prior to the discussion on Samarco’s tailings disposal plan, the
meeting minutes record that the Samarco Board reviewed Samarco’s 2013 YTD
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October results and were presented the CY2013 forecast. In connection with this,
the Samarco Board recognised Samarco’s good performance and “encouraged Samarco
to increase sales in the second quarter to take advantages of the current favourable market
conditions”: {F5/299/2}.
274. Fourth, as to the 4 December 2013 meeting, the minutes record that “tailings is still an issue
of considerable concern particularly around securing future tailings storage capacity”, and the board
requested Samarco present its contingency plans at the next board meeting: {F7/224/4}.
This was not a concern about the integrity of the existing tailings storage (i.e. the Dam).
Indeed, as regards the integrity of the Dam, the board materials for the meeting reported
that “all of the structures of the tailings disposal systems are operating accordingly”, and that the stability
analysis of Dikes 1 and 2 of the Dam in normal and threshold condition were above the
“safety factor”: see §157.5 above.
275. Fifth, in relation to the 2 April 2014 meeting, the meeting minutes record that the Samarco
Board highlighted that “as the iron ore cost curve was changing, with all iron ore business improving
costs performance, Samarco should keep or exceed the pace” and accordingly requested Samarco “to
carry out a competitive costs analysis, showing benchmarking outcomes and the position where Samarco is
and where it will be in five years” and “make the report on the progress of the initiatives to improve
Samarco’s costs competitiveness a regular part of the Board papers”: {F14/465/3}. Contrary to Cs’
assertion at MPOC, §179.11 {A1/1/77}, §282.7.5 {A1/1/128}, there is no indication in the
minutes that the Samarco Board’s remarks in this regard were directed at, or led to, the
budget for Samarco’s General Geotechnical Management (who are not mentioned in the
minutes) to be cut.
E3.7 Alleged failure to address problems brought to attention of Samarco Operations

Committee and its subcommittees
276. At MPOC §282.8 {A1/1/128}, Cs allege that BHP ignored or failed to take sufficient action
to address problems brought to the attention of the Samarco Operations Committee and
its subcommittees, referring back to MPOC, §§183-196 {A1/1/80} and §205A {A1/1/85}.
The meetings referred to in those paragraphs have been addressed above (at §§142-144,
159-168 and 178-179). The key point is that the minutes of the meetings relied on by Cs do
not show any concerns being raised about the stability of the Dam, or any ignoring of or
failure to take action to address problems.
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E4. BHP’s risk reporting and audit/HSEC activity in relation to the Dam
277. The allegation at MPOC, §282.4 {A1/1/124-125} that BHP disregarded “advice and warnings”
in relation to the safety of the Dam does not cross-refer to any alleged advice or warning
from BHP’s risk reporting or audit/HSEC activity in relation to Samarco. However, Cs’
generalised assertions about BHP’s “knowledge of and involvement in” events leading to the
Collapse include the allegation that BHP knew or should have known that “the safety of the
Dam was being, or had been compromised” by reference to, among other things, BHP’s risk
reporting and audit/HSEC activity in relation to Samarco: Reply, §105A {A1/3/67}. This
allegation does not withstand scrutiny because, as explained further in Sections E4.1-E4.2
below:
277.1. From 2014 to 2015 Samarco’s risk management team reported to BHP that it had
assessed the risk of critical failure of a Samarco tailings dam as “Well Controlled”.
Moreover, from late 2013 BHP carried out its own assessments relating to
Samarco’s management of the risk of a Samarco dam failure, by reference to BHP
Brasil’s periodic monitoring of Samarco’s operational risk controls. At all times (in
late 2013, late 2014 and mid-2015) BHP also assessed the risk as “Well Controlled”
by Samarco.
277.2. The BHP audit of Samarco in 2013 (“FY14 Audit”), for which BHP brought in an
independent geotechnical expert, did not raise any issue about the stability or safety
of the Dam.
277.3. The BHP audit of Samarco in 2015 (“FY16 Samarco Audit”), while suggesting
certain improvements to Samarco’s risk assessment methodology, stated “Samarco’s
systematic approach to identify risks, define and implement controls to manage and reduce that
risk was noticeable, resulting in an adequate level of control across the processes reviewed”
{F13/270}.
277.4. An issue was raised by the BHP audit of BHP Brasil in 2015 (“FY16 BHP Brasil
Audit”), but the issue concerned the descriptions of BHP Brasil’s monitoring
controls set out in BHP’s risk management database: the descriptions were too
general and did not describe the monitoring activities that BHP Brasil was
performing. The finding did not relate to the monitoring activities themselves, nor
the underlying risk of dam failure. The auditor’s view was that BHP Brasil’s
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monitoring activities were adequate, and that, having regard to the information
collected pursuant to those activities, “it could be concluded tha:t the risk of Tailings Dam
Failure is well controlled by Samarco”.
277.5. The Significant Dams Risk Review carried out by BHP’s HSEC function in
2012 (the “Dow-Bentel Review”) was a desktop review of 30 dams which, as
regards Samarco, reflected the assessment reported by Samarco’s own risk
management team that there were aspects of Samarco’s risk controls in relation
to tailings dams which could be improved (as explained further at section E4.3
below). Notably, the external specialist who assisted HSEC with the review
commented to Mr Corless that “the Samarco Tailings management and oversight was
leading edge amongst the group of tailings dams”: {F4/428}.
277.6. BHP’s risk reporting and audit/HSEC activity in relation to Samarco did not,
therefore, indicate that the safety of the Dam had been compromised; and there is
no evidence that anyone at BHP believed, or had reason to believe, that it had been
compromised.
E4.1 Risk reporting activity in relation to the Dam
E4.1.1 Samarco’s risk reporting to BHP
278. According to a well-established industry model for risk management, there are three ‘lines
of defence’ for managing risks in a business (see Victor 1 §42-46 {B1/6/9}). The first line
of defence is the operational management of the business, which has primary responsibility.
The second line of defence is a dedicated risk management function, which oversees the
risk management processes and provides challenge, oversight and support to the first line.
The third line of defence is internal audit, which provides independent assurance as to the
effectiveness of the first two lines of defence.
279. As identified at section B3 above, Samarco had its own embedded risk management team
which provided second line defence to Samarco’s operational management (the first line of
defence). At all times, it was Samarco’s risk management team which was responsible for
implementing Samarco’s risk management processes in relation to Samarco’s operational
risks, which included the risk of a failure of its tailings dams.
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280. Samarco’s risk management methodology and processes, as they evolved, were summarised
in various presentations provided to BHP.78 Samarco had an annual risk assessment cycle,
which concluded typically around June/July. The conclusion of each cycle resulted in
updated risk information, including updated assessments of the MFL or RRR for
Samarco’s identified risks.
281. MFL referred to the Maximum Foreseeable Loss, or the worst foreseeable consequence of
the risk occurring, assuming no effective risk controls were in place (a risk control is a
means used to manage a risk). RRR referred to the Residual Risk Rating, or an assessment
of the residual risk assuming reasonable effectiveness of the risk controls in place. RRR was
determined by multiplying a “Severity Factor”, (i.e. the level of damage expected from a risk
event assuming reasonable effectiveness of mitigating controls), by a “Likelihood Factor”, (i.e.
the likelihood of the event occurring assuming reasonable effectiveness of preventative
controls).
282. Samarco’s annual risk assessment cycle also resulted in an updated assessment by Samarco’s
risk management team of how well controlled each risk was, having regard to Samarco’s
risk controls in place. Samarco’s risk management team’s assessment could indicate that the
risk was well controlled, or that it required some or significant improvement. Where a risk
was assessed as requiring improvement, Samarco identified actions which it would take to
improve the status of the risk.
283. Upon request,79 Samarco’s risk management team reported the output of Samarco’s annual
risk assessment cycle to BHP Brasil (and latterly to the Iron Ore risk team in parallel), for
the purposes of the Iron Ore risk team’s internal BHP risk reporting (explained further in
Section E4.1.2 below).
284. For present purposes, the key point is that nothing in the risk information reported by
Samarco’s risk management team to BHP in the years preceding the Collapse indicated that
the safety of the Dam was being or had been compromised:
78 E.g. In June 2009 {F2/166T}, May 2012 {F3/441}, September 2012 {F4/243}, June 2014 {F8/269} and August
2015 {F13/174}.
79 Article 16.6.1 of the SHA gave the Shareholders the right to request information from Samarco {F15/20T/24}.
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284.1. In 2012 Samarco reported that it had assessed the status of a risk named “Critical
failure of dam operation” as “Requires some improvement”, with four outstanding
“Improvement tasks”: {F6/85}.
284.2. By November 2013, Samarco reported that one of these improvement tasks had
been completed, and that the remainder were expected to be completed in
December 2013: {F7/149}.
284.3. In April 2014 ({F8/440}) and April 2015 ({F12/100}) Samarco reported that its
assessment of this risk was that it was “Well Controlled”, with no outstanding
improvement tasks.
285. Cs at times seek to suggest that the mere identification of potential risks associated with the
Dam in itself was indicative of awareness of existing problems with the Dam (e.g. Reply
§105A.3). This is spurious. The identification of risks is the first step in effective risk
management, by enabling consideration to be given to controls for the risks. It would be
remiss of a business in the aviation industry not to identify the risk of aircraft failure: the
identification of that obvious risk does not indicate that the business has a specific concern
about an aircraft (Corless 1 §20.2 {B1/3/5}).
E4.1.2 BHP’s internal risk reporting: Iron Ore
286. At all material times the Iron Ore risk function was required to produce a Risk Management
Report twice a year for Iron Ore RAC meetings, to provide an update on the CSG’s material
risk profile.80 It was for the purposes of producing these bi-annual reports that the Iron Ore
risk team asked Samarco to report its risk information, so that Iron Ore management could
be made aware of risks associated with Samarco’s business to which BHP was indirectly
exposed as a result of BHP Brasil’s shareholding in Samarco (Corless 1 §46 {B1/3/12}).
287. Up to the August 2013 Risk Management Report, the approach of the Iron Ore risk team
was to “port through” the risk information reported by Samarco’s risk management team:
{F5/223/1}. The Iron Ore risk team might raise queries with Samarco about the
information reported to clarify their understanding (Corless 1, §§42-44 {B1/3/12-13};
80A material risk at CSG level was a risk which had been assessed as having an MFL of over $250 million or a RRR of
90 or above (BHP used a materially similar risk assessment methodology to Samarco, in part because both BHP and
Samarco’s methodologies were derived from international standards and in part because Samarco elected to base its
methodology on the BHP methodology, see e.g. {F13/174/4}.
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Victor 1, §§61-63 {B1/6/13}), but the essential approach was to “include Samarco’s top risks
from their register in the Iron Ore risk register”: {F5/368/1}.
288. Accordingly, it was on the basis of the MFL and RRR information determined and reported
by Samarco81 that a risk entitled “Dam Failure (Samarco)” was first included in an Iron Ore
Risk Management Report as a new material risk in July 2010 ({F2/144/18}). Information
about this risk (including assessments of how well controlled it was, and outstanding
improvement actions) was reported to Iron Ore by Samarco’s risk management team and
was reflected in Iron Ore Risk Management reports up to the August 2013 report.
289. In late 2013 Iron Ore changed its approach to reporting risks associated with Samarco:
instead of incorporating Samarco’s risk management team’s assessments of Samarco’s
operational risks into BHP’s risk reporting, the Iron Ore risk function designed a new
approach which sought to enable BHP to make its own assessments of the material risks to
which BHP was indirectly exposed through BHP Brasil’s shareholding in Samarco: see
Victor 1, §66-67 {B1/6/14}.
290. The new approach involved identifying and creating in the Iron Ore risk register new BHP-
specific risks relating to Samarco,82 then creating new BHP monitoring controls in respect
of these risks (which were distinct from Samarco’s operational risks and controls). Each
BHP-specific risk relating to Samarco had a BHP “risk owner”, and each BHP monitoring
control had a BHP “control owner” (their roles are explained at §292 below). These BHP-level
controls were intended to capture the periodic monitoring which BHP Brasil and Iron Ore
did in respect of Samarco’s operational management of risk: Corless 1, §50 {B1/3/13},
Victor 1, §68 {B1/6/15}.
291. The BHP-specific risks relating to Samarco which BHP identified for the purposes of this
new approach included a risk relating to the failure of a Samarco tailings dam, which was
named “Samarco: critical failure of dam operation”. As regards this risk:
81 In relation to a risk which Samarco at that stage called “Rupture of German and Fundao tailings dam”. In 2012 Samarco
restructured the dam-related risks on their risk register and the relevant risk for present purposes became known as
“Critical failure in the process of dam operation” {F4/220/9-11}, and encompassed the Fundao, Santarem, Germano, Matipo,
North Ubu and Germano Cava tailings structures (see e.g. {F6/79}).
82 As explained in a November 2015 paper for Group RAC, “The system design is based on risk descriptions which represent the
potential impact and potential associated losses of the risk event on BHP Billiton, not the Non-Operated Joint Venture entity”: {F14/54}.
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291.1. The BHP risk owner was Mr Zweig (VP for Strategy and Development at Iron
Ore) until October 2014, when Mr Fernandes took over.
291.2. The approach designed in 2013 identified six separate BHP periodic monitoring
controls which corresponded to Samarco’s operational dam controls (though by
early 2015 work was underway to simplify this to two more general BHP
monitoring controls: {F10/453}, {F10/454}). Mr Ferreira was the control owner
for five monitoring controls (named “Dam Design”, “FMEA Analysis”, “Dam
Monitoring”, “ITRB” and “Incident Response”), which each involved periodic targeted
reviews by the control owner of Samarco’s activities in respect of the respective
underlying Samarco operational control; and Ben Arnold in the Iron Ore risk team
was control owner for the remaining control (“Risk Management Process”, which
involved periodic monitoring of the general health of Samarco’s risk management
process: Victor 1, §75 {B1/6/16}) until early 2015, when Mr Victor took over.
292. Under this new approach, from late 2013:
292.1. BHP control owners were required to assess their periodic monitoring control(s)
annually and rate them as effective or ineffective (via a Control Effectiveness Test
or “CET”). A monitoring control could fail a CET if the control owner’s
assessment was that the control was not adequately monitoring Samarco’s
underlying operational control or that the Samarco operational control was not
effectively managing the underlying risk {F7/51/1}.
292.2. The BHP risk owner was required to complete a Material Risk Control Assessment
(“MRCA”) at least annually (and, from 2015, biannually in respect of the top Iron
Ore risks by MFL, which included the “Samarco: critical failure of dam operation” risk)83
to assess the status of the BHP-specific risk overall. An MRCA was to be completed
on the basis of the results of the CETs in respect of each BHP monitoring control,
and any relevant audit findings or management reviews (see e.g. {F8/183/6}). The
role of BHP risk owner did not entail any involvement in the management of
Samarco.
293. For the present purposes, the key point is that none of the BHP assessments in respect of
the new BHP-specific risk “Samarco: critical failure of dam operation” indicated that the safety
83 See {F11/360} and {F10/405}.
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of the Dam was being or had been compromised. On the contrary, the MRCAs completed
by Mr Zweig in late 2013 {F7/311}, and Mr Fernandes in late 2014 and June 2015, all rated
this risk as “Well Controlled” (as acknowledged at Reply, §105A.8 {A1/3/69}).84
294. Reflecting the above, from February 2014 the Iron Ore Risk Management Reports each
showed the status of the “Samarco: critical failure of dam operation” risk as “Well Controlled”, with
no outstanding remediation tasks: {F7/443/4}, {F10/105/11}, {F10/352/9},
{F12/479/9}.
E4.1.3 BHP’s internal risk reporting: GMC, Group RAC and SusCo
295. Twice a year, a summary of the Risk Management Reports produced by each CSG was
produced (in the form of a “Group Risk Profile” or “Group Material Risk Report”) and sent to
the GMC for approval ahead of being sent to the Group RAC and/or SusCo: Beaven 1,
§20 {B1/1/7}, §75 {B1/1/25-26}.
296. In line with the contents of the Iron Ore Risk Management reports, the May 2014 Group
Risk Profile stated that the risk of a tailings dam failure at Samarco was “Well Controlled”
({F8/176/6}); and the subsequent Group Risk Profiles/Reports before the Collapse did
not indicate any change in this regard: {F9/251/8}; {F15/30.1}; {F13/5.1/41}.85
E4.2 BHP audit activity in relation to the Dam
E4.2.1 BHP’s internal audit function
297. As explained above, in the terms of the ‘three lines of defence’ model for risk management,
the first two lines of defence (operational management and a dedicated risk management
team) were performed by Samarco. However, Samarco did not have its own internal audit
function to perform the third line of defence (independent assurance as to the effectiveness
of the first two (Samarco) lines of defence). Samarco therefore sourced internal audit
services from its shareholders, BHP Brasil and Vale. BHP’s internal audit function therefore
incorporated Samarco into its annual group-wide planning. The internal audit functions of
84 An assessment of “Well controlled” meant that “controls, processes and performance requirements evaluated are adequate,
appropriate and effective to provide reasonable assurance that risks are being managed”: {F8/183/6}.
85 So far as relevant, the substance of the reports sent to SusCo and the GMC were the same as those sent to the
Group RAC. See e.g. {F8/105.2/6}, {F8/108/6}. As noted in the “Introduction” to the report produced for the Group
RAC, “A report addressing HSEC Risk Management has been extracted from this report and submitted to the Sustainability
Committee”: see e.g. {F9/251/3}.
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BHP and Vale made proposals in relation to their respective audit coverage, for approval
by the Samarco Board. BHP carried out audits in accordance with its proposals and
presented the results to the Samarco Board: Lynch 1, §§24-27 {B1/5/6}, §§40-42 {B1/5/8-
9}.
298. BHP’s internal audit function and its process/methodology, as applied to audits of
Samarco, are explained at Lynch 1, §§11-23, 28-39, 44-82 {B1/5/3-16} and Wetzig 1, §11-
48 {B1/7/4-11}. For present purposes, the key points are as follows:
298.1. Internal audit at BHP was risk-based. It provided an independent assessment to the
management of the business being audited and of the quality of the controls in
place to manage risks in different areas (processes). From 2012, audits generally
alternated each year between ‘business’ audits (covering business processes like
finance and accounting) and ‘technical’ audits.
298.2. Technical audits included a process known as “Asset Integrity”, which was concerned
with reviewing whether the business had adequate systems in place to look after
the integrity of major infrastructure, including tailings dams. Mr Wetzig was an
Asset Integrity auditor and reported to Neil Salvano, who was in charge of Asset
Integrity assurance. The detailed scope of an Asset Integrity audit (the specific risks,
controls and related infrastructure to be reviewed during the limited timeframe of
an audit) would be developed in discussions within the audit team in the run-up to
the scheduled period for the fieldwork (the time on site).
298.3. Findings raised by audits were given a “Priority rating” of either 1, 2, or 3. A Priority
1 (“P1”) finding denoted a “Serious weakness in the design/operating effectiveness” of a risk
control which required immediate attention; a Priority 2 (“P2”) finding denoted “A
weakness in the design or operating effectiveness” of a control which was compromising
effectiveness; a Priority 3 (“P3”) finding denoted “A minor weakness” (see e.g.
{F4/385.2/43}). It was rare for an audit not to make at least some P2 findings,
because BHP had a culture which encouraged caution and continuous
improvement (Lynch 1, §67 {B1/5/13}, Beaven 1, §78 {B1/1/27}).
298.4. In light of the number and nature of any findings raised, each process reviewed by
an audit was also given a “Process Rating”, which could be “Well Controlled”, “Requires
Some Improvement” or “Requires Significant Improvement”. A process rating of “Requires
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Some Improvement” indicated that a few weaknesses had been noted but that controls
were generally “adequate, appropriate and effective” (see e.g. {F4/385.2/43}).
298.5. Findings and ratings were set out in an audit report. At the end of each report was
a distribution list. The reports from the audits at Samarco on which Cs rely were
distributed to Samarco, BHP Brasil, management at Iron Ore and individuals in
Group RAA. The results of internal audits in a CSG were summarised at CSG RAC
meetings, and a summary of key internal audit findings was prepared every six
months for Group RAC meetings (Lynch 1, §81-82 {B1/5/16}; Beaven 1, §30
{B1/1/10}).
298.6. BHP conducted technical audits at Samarco in July 2013 and August 2015. These
audits were respectively known as FY14 and FY16 audits because BHP’s financial
year commences on 1 July.
E4.2.2 FY14 Samarco Audit
299. The FY14 Samarco Audit included, within the Asset Integrity process, assessment of
Samarco’s controls relating to the risk of a tailings dam failure. BHP brought in an external
geotechnical consultant, Dr Vinod Garga, to assist Mr Wetzig with this part of the audit.
300. The audit report raised two P2 findings in respect of this part of the audit, numbered 3.1
and 3.2 in the report {F6/430/15-17}.86 Cs rely on finding 3.2 (Reply, §105A.6 {A1/3/68}).
This finding identified deficiencies in Samarco’s Quality Control and Quality Assurance
(“QC and QA”) processes which, the report considered, had allowed defects in previous
construction at the Dam to go unnoticed until issues had arisen in 2009 (the 2009 Piping
Incident) and 2011/2012 (damage to the decant water galleries). The finding was made
because the auditors considered there was no specific action plan in place at Samarco to
address these QC and QA deficiencies and “with the aim to prevent similar occurrences during the
construction of the next Fundao EL940 tailing dam project”: {F6/430/7}.87
86 The papers for the Group RAC meeting on 22 October 2013 referred to these findings, observing that “The key
findings associated with the Asset Integrity process related to deficiencies in managing construction quality in the Fundao tailings dam and
in the assessment and management of the overtopping risk for that dam during flood conditions”. {F16/510.0.2/14}.
87 Samarco observed in response to the proposed finding that actions to improve QC and QA processes were already
in hand, following “intensive discussion” about quality control in geotechnical works after the Piping Incident {F6/325},
but the auditors maintained the finding.
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301. The finding was therefore concerned with “enhancement of future QC and QA activities” at
Samarco so that any construction defects during “construction of newer tailings dams” could be
promptly identified {F6/430/16}. It was forward-looking: it was not made on the basis of
any concerns about defects in the existing Dam structure: Wetzig 1, §80 {B1/7/18}.
302. The process rating for Asset Integrity (which also included a review of Samarco’s controls
relating to the risk of fire in an electrical sub-station) was “Requires some improvement”
{F6/430/4}. The auditors explained that this rating was appropriate because “the
deficiencies/weaknesses identified do not constitute a systematic or generalized problem within the areas that
are managing the integrity of the assets involved, but are rather isolated issues which can be fixed by means
of implementing specific actions” {F6/270/1}. They further noted that “the management and
engineering personnel of the two areas reviewed are adequately skilled, were diligent and transparent in
providing information to the auditors, recognized the correctness of the deficiencies/weaknesses identified and
stated willingness to expeditiously implement the recommendations provided by Group RAA”.
303. Cs seek to rely on comments from Mr Salvano in emails to Mr Wetzig during the audit:
Reply, §105A.7.1-2 {A1/3/69}. Mr Salvano was not part of the audit team for this audit
(and was based in Australia): his comments were based entirely on (his understanding of)
email updates he received from Mr Wetzig. It was Mr Wetzig and Dr Garga who were on
site at Samarco conducting the audit, for over a week. The findings which they considered
appropriate after their review were as set out in the audit report.
304. Cs also seek to rely on an email ahead of the audit in May 2013 from Dr Andrew Robertson,
a geotechnical consultant: {F5/391}, Reply §105A.7 {A1/3/68}. Dr Robertson had been
approached on behalf of BHP in connection with acting as an expert auditor for the
upcoming technical audit at Samarco. In response to a query about whether he would
qualify as independent, Dr Robertson identified his past involvement with Samarco and
position on the ITRB, and said he would send an introduction to Dr Garga. Dr Robertson
also made various observations in his email about Samarco’s management of its tailings
structures, from which the Cs (again) quote selectively: for example, the Cs quote Dr
Robertson’s description of the ITRB, before he joined it in 2011, as “ineffectual”, but fail to
quote his subsequent observation in relation to the-then constitution of the ITRB that
“Working together the Review Board should be effective”.
305. In any event, BHP took the observations made by Dr Robertson seriously, and they
informed the subsequent audit. BHP retained the independent geotechnical expert
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recommended by Dr Robertson (Dr Garga); and Dr Robertson’s email was forwarded to
the audit manager (Carlos Villalobos), who observed that it “confirms the need of doing a very
thorough review of this risk, with a high competent person” {F5/394}, and to Mr Salvano, who
forwarded it to Mr Wetzig ahead of the audit {F5/391/1}, and again during the audit, when
Mr Salvano added that “While you and Vinod [Garga] are on site you should ensure that no points
in Alan's [sic] email which currently remain a concern” {F6/195/2}.
306. Having given careful attention to Dr Robertson’s email, the auditors’ findings in relation to
the tailings dam were limited to the P2 finding described above, and a separate P2 finding
(relating to the lack of a study by Samarco assessing the risk of clogging of the decant water
system). The auditors did not raise any concerns about the safety of the Dam, or about
Samarco’s general approach to managing its tailings facilities. On the contrary, Dr Garga
commented positively in an email to Mr Salvano shortly after the audit that he had “managed
to go through a large number of reports and information that was readily provided by the Geotechnical Dam
Engineering Department. This Samarco Department was remarkable transparent and forthcoming and
was welcoming of any suggestions for improvements” {F6/257/1}. Dr Garga also subsequently
accepted an offer from Samarco to join the ITRB {F14/408/2}.
E4.2.3 FY16 Samarco Audit
307. The FY16 Samarco Audit also included the Asset Integrity process. The scope of the Asset
Integrity process on this occasion involved looking at Samarco’s management of risks
associated with its shiploader (a large item of infrastructure used to load material onto
ships). It did not include a further review of Samarco’s controls in relation to its tailings
facilities.
308. Cs appear to criticise this audit planning decision, but on the circular hypothesis that BHP
already “knew or should have known” that the risk of dam failure was not well-controlled
(Reply, §105A.9 {A1/3/70}). The decision was manifestly reasonable: as Mr Wetzig
observed at this time, “the risk of failure of tailings dams at Samarco was covered in depth in the
previous Asset Integrity audit (we carried out with Vinod Garga), so we should not revisit this topic”
{F12/44/2} {F12/44T/2}. The previous audit relating to the tailings dams at Samarco had
not raised any P1s so as to require a follow up audit (Lynch 1 §80 {B1/5/15}). Furthermore,
BHP’s internal audit plan provided for a separate review in relation to the risk of a tailings
dam failure at Samarco’s dams, via a review of BHP Brasil’s monitoring controls (see below
in E4.2.4 in relation to the FY16 BHP Brasil Audit). As Mr Salvano observed to Mr Wetzig,
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“It is appropriate to approach the TSF [tailings storage facility] risk this time from a ’governance by
BHPB Iron Ore’ perspective, given that you and Vinod did a ’direct on the ground’ audit in FY13 of how
Samarco managed that risk as Operator” {F12/56/1}.
309. The scope of the FY16 Samarco Audit included a review of Samarco’s risk management
process. The report raised two P2 findings in this regard {F13/270/6}. Cs rely on these
findings (Reply, §105A.10 {A1/3/70}), but they quote selectively from the report, and the
findings must be seen in their proper context. The two findings were points of detail: the
first P2 finding related to the averaging method used by Samarco to score the effectiveness
of individual controls and overall risk evaluation, and the second P2 related to Samarco’s
approach to selecting severity levels for the purposes of its RRR calculations. By contrast,
the “Overview” section of the report noted: “Overall, the audit observed a disciplined and structured
approach to maintain an adequate control environment.”: {F13/270/3}.
310. The P2 findings (which were made by a guest auditor from BHP’s Group Investment and
Value Management team: {F12/318}; {F13/95.5}) must also be seen in the context of
contemporaneous views from Iron Ore’s risk management professionals about the quality
of Samarco’s risk management environment:
310.1. In May 2012, Mr Corless observed after visiting Samarco that “I have visited many
Mining operations around the world and the risk management program and buy in by Samarco
Management is one of the best examples I have seen” and noted that everyone he had met
had “highlighted how risk management is an integral part of Samarco’s management systems”
{F3/444/1}.
310.2. In April 2013, Mr Corless observed after another visit to Samarco that “It was evident
to me that everyone I came into contact with was not just completing risk assessments but really
managing their risks which is a testament to Samarco’s strong risk leadership and the processes
that support it” {F5/338/1}.
310.3. In March 2014 Mr Victor observed in an email to Mr Corless during a visit to

Samarco that “I'm so impressed with the Samarco team, in particular their attention to detail”
and that “We had a really packed day to Germano. I cant speak highly enough of that
operation… It is clear that their risk management program is driving most of their investment
decisions” {F8/24/1}.
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310.4. Mr Corless replied that Mr Victor’s thoughts on the Germano operations “echo my
impressions as well each and every time I visit”. He noted that it was great that Mr Victor
had been able to connect with two individuals from Samarco’s risk management
team as “both are really on it when it comes to risk which is great. I would hire both in an instant
I think!” {F8/25/1}.
311. The suggestion that, as a result of the FY16 Samarco Audit, BHP ought to have believed
that Samarco’s previous risk reporting in respect of the Dam was fundamentally unreliable
is therefore fanciful.
E4.2.4 FY16 BHP Brasil Audit
312. The FY16 BHP Brasil Audit also took place in August 2015, in parallel with the FY16
Samarco Audit.
313. The audit included an evaluation of the design and implementation of selected Iron Ore
controls for two BHP-specific risks related to Samarco, one of which was the “Critical
Failure of the Dam” risk {F13/365/8}. As explained in the scope for the FY16 Samarco
Audit: “The assessment of controls for the Catastrophic Failure of a TSF will be focused on the monitoring
that is performed by BHP Billiton Iron Ore Brazil over the management of that risk by Samarco”
{F12/423/2}.
314. Cs rely on a P3 finding raised by the FY16 BHP Brasil Audit in this regard, described in the
report as “Weaknesses in BHP Billiton Iron Ore's monitoring process of Samarco's management of
Tailings Dam failure risk” (Reply, §105A.11.2 {A1/3/71}). This was a P3 finding (denoting a
“minor weakness”, as set out at §298.3 above), that BHP’s risk management database (1SAP)
“did not fully reflect the governance activities that were actually performed by BHP Billiton (BHPB) Iron
Ore to monitor the management of the Tailings Dam Failure risk by Samarco JV”. This was in
particular because each control “was described in a way that implied BHPB Iron Ore had
implemented operational controls for the risk, whilst in practice the risk was not managed by BHPB Iron
Ore but only monitored”: {F13/211.1.1/1}. The finding did not reflect any adverse view about
Samarco’s controls.
315. On the contrary, and notwithstanding the P3 finding, the auditor (Mr Wetzig) observed that
“based on the documentary evidence provided by BHPB IOB, which consists of Samarco’s internal reports
and ITRB reports” it could be concluded that “The risk of Tailings Dam Failure is well controlled
by Samarco” and that “The activities that BHPB IOB perform to carry out monitoring of Samarco’s
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management of the risk are adequate, although not reflected in the defficiently [sic] worded” controls
{F13/25/4}.
316. The nature of the issues underlying this P3 finding is also made plain from Mr Wetzig’s
exchanges with Mr Salvano during the audit:
316.1. When Mr Wetzig sent Mr Salvano his preliminary findings he noted that he was
inclined to consolidate them into “just one finding, the rating of which is not clear to me,
but possibly a P3, because of the risk (TSF Failure) is well controlled by Samarco (based on the
evidence made available, and especially the ITRB reports). Therefore, the finding is all on the
adequate definition (wording) of the Critical Controls that IO has identified, that should reflect
the monitoring (not operating) nature of those controls” {F13/70/1}.
316.2. Mr Salvano replied that he agreed a P3 finding was appropriate since the findings
“are essentially ’documentation issues’, as distinct from weaknesses in the actual management of
the TSF by Samarco” {F13/70/1}.
317. Once again, nothing about the results of the FY16 BHP Brasil Audit indicated that the
safety of the Dam had been compromised or that the risk of failure was not well controlled
by Samarco.
E4.3 Dow-Bentel Review
318. Cs also rely on the Dow-Bentel Review, which took place much earlier, in 2012 (Reply,
§105A.1 {A1/3/67}). The purpose of this review was “to test if dam risk across the Group has
been understated having regard to industry experience and known dam failures” {F4/287/1}. The
review included contacting Samarco “to explore Samarco’s approach to the management of significant
dams and waste dumps” {F3/446/3} {F3/446T/3}. The review was undertaken by Erika
Korosi, a Senior Manager in HSEC, in conjunction with Dr Gary Bentel, an independent
geotechnical consultant.
319. The review culminated in an internal BHP Memorandum from Lucas Dow, Group head of
HSEC, addressed to the “Business Chief Executives”, circulated on 12 September 2012
{F4/287}.88 The Memorandum described the exercise that had been undertaken as a “desk
The individuals that received this Memorandum include the following Named Individuals: Mr Mackenzie and Mr
88
Dalla Vale {F4/177}, Mr Randolph {F4/176.1/1}, Mr Wilson and Mr Swayn {F4/180}, Ms Beck {F4/181}, Mr Zweig
115
top review” which “did not involve physical inspection or detailed analysis of instrumentation”. As regards
Samarco, the review process involved Samarco responding to a detailed set of questions
({F3/387}, {F3/388}), and then a follow-up call ({F3/466}).
320. Cs rely on the fact that, in Appendix 1 to the Memorandum, the “Group HSEC Review
Rating” for dam control effectiveness in respect of Samarco was shown as “Requires
Improvement”. This did not indicate that the safety of the Dam had been compromised (14
of the 30 dams received the same rating); indeed, it reflected Samarco’s own risk assessment
at the time (as reported to BHP in August 2012 {F6/85} – the first page of the
Memorandum stated “Samarco noted some improvement was required”. As Mr Corless commented
when the Dow-Bentel Review was circulated to him, the Memorandum “does not provide any
additional clarity and really confirms what we know, it’s a material risk and the controls need some
improvement” {F4/192/1}.
321. In a later email on 24 September 2012, Mr Corless observed that Samarco had “a significant
amount of technical expertise that work on the dam both on a daily basis and on a periodic basis particularly
with the participation of the Independent Tailings Review Board. The comments in the report do not appear
to recognise this level of sophistication at Samarco.”
322. These observations by Mr Corless had been reflected in notes previously prepared by Dr
Bentel of his call with Samarco in June 2012. These notes recorded that {F4/7/1}:
“The feedback from the interviewers is that Samarco is clearly implementing leading practice risk
management of the tailings dams and waste dumps correctly and consistent with the BHP Billiton
risk management procedure. There do not appear to be any material gaps in the Samarco risk
management system.
The reviewers recommend that Samarco's risk management systems for its major waste facilities be
communicated to other operations, not only as a benchmark within the Group in terms of leading
practice alignment of operational risk management with GLD.017 requirements,89 but also in terms
and Ms Raman {F4/185}, Mr Corless {F4/187} , Mr Victor ({F4/190}; Victor 1 §82 {B1/6/17-18}), Mr Salvano
{F5/34.1/1}, Mr Villalobos (in December 2012) {F5/34.1/1}, Mr Gomm (in January 2013) {F5/135.01}, Ms Torres
(in March 2013) {F5/182.0.1/1}, and Mr Ottaviano (post-Collapse) {F13/484}.
89 GLD 0.17 was BHP’s internal risk management framework. Samarco, as an NOJV, was not required to apply GLD
0.17 and had its own internal risk management framework, although this was similar to GLD 0.17 (Corless 1 §36
{B1/3/10}, Victor 1 § 58, 60 {B1/6/13}).
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of its risk-based tailings governance system and its leading practice operational facilities risk
management.”
323. In late November 2012, Mr Corless further noted in an email to Ms Raman that he had met
with “the consultant that wrote the report for Lucas Dow” (Dr Bentel) and that “During the
conversation he [Dr Bentel] said that the Samarco Tailings management and oversight was leading edge
amongst the group of tailings dams. Interesting how that didn’t come through in the report” {F4/428/1}.
324. The proposition that the Dow-Bentel Review indicated that the safety of the Dam had been
compromised is therefore entirely unfounded.
325. Cs also appear to refer to a briefing paper for a GMC meeting on 2 October 2012, which
recommended that the GMC should continue to monitor and review management of the
risk of tailings dam failures (Reply, §105A.2 {A1/3/67}). Cs allege that the GMC failed to
do so. This is inaccurate. The GMC Group Material Risk Report dated March 2015 refers
to a management review of tailings dam risk being undertaken for submission to SusCo
later in the year: {F10/394/9}. Dr Bentel carried out that second dams risk review for BHP,
essentially as a follow up to the 2012 review ({F14/37.0.2}). In his June 2015 report, which
was due to be presented to SusCo in November 2015 (see {F14/78}), Mr Bentel assessed
Samarco’s dams as “well controlled” and, in relation to Samarco and three other dams rated
as material risks, observed that:
“While detailed documentation from the sites was not reviewed, it was very heartening to observe that
these sites had taken the recommendations from the 2012 review on board, and were not only compliant
with the GLD material risk requirements, but were doing this in a way that clearly indicated the
respect with which they were treating their dams, and their appreciation of the continuous application
of well-designed and operated critical controls. In other words, it was clear that they were not simply
doing this for compliance reasons.” {F14/37.0.2}
326. Cs also refer (at Reply, §105A.2 {A1/3/67}) to the fact that the GMC briefing paper for
the 2 October 2012 meeting showed the “Likelihood” in respect of the “Rupture of Germano
and Fundao tailings dams” risk as “Possible”. As explained above, in 2012 BHP was ‘porting
through’ risk information reported by Samarco’s risk management team. This “Likelihood”
factor thus reflected the RRR assessment for this risk reported by Samarco’s risk
management team, which showed a “Severity Level” which assumed only a “partial interruption
of the new [P4P] plant for 3 weeks”: {F4/9}. The risk which Samarco’s risk management team
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reported as “possible” was thus a minor failure of the Dam which would only interrupt the
P4P plant for 3 weeks, rather than a more serious failure (which would obviously interrupt
production for far longer): Corless 1, §63 {B1/3/17}.
F. FUNDING / FACILITATION OF THE FUNDING OF THE OPERATIONS

OF SAMARCO
327. In connection with their case under Environmental Law, Cs make four allegations related
to Samarco’s funding:
327.1. BHP, through BHP Brasil, “provided capital contributions to Samarco at least as required by
Article 10.1 of the Samarco Shareholders Agreement”: MPOC, §279.1 {A1/1/119};
327.2. BHP “procured direct loan financing of Samarco’s operations through BHP Billiton Finance
BV”: MPOC, §279.2 {A1/1/119};
327.3. Between 2012 and 2015, BHP “directly or indirectly funded or facilitated the funding of 50%
of the cost of the P4P project”: MPOC, §279.3 {A1/1/119}. Cs also allege generally that
BHP funded Project 940: MPOC, §205A.11 {A1/1/90}; and
327.4. BHP allegedly “controlled, directed, influenced, facilitated and/or was involved and participated
in Samarco’s entry into and management of key financing transactions”: Reply, §120B
{A1/3/87}.
328. The factual matters relating to Cs’ allegations as set out at MPOC, §279 {A1/1/118} and
Reply, §120B {A1/3/87} are addressed below, although, as explained in Section H2.2.4
below, they do not result in any liability under Brazilian law.
F1. Capital Contributions to Samarco as required by Article 10.1 of the Samarco

Shareholders Agreement
329. Cs do not point to any capital contributions. BHP has been an indirect shareholder in
Samarco since around 1984. The SHA itself has been in place for nearly 25 years. Article
10.1 does not require capital contributions. It simply provides that if Samarco had funding
requirements they would be met by capital contributions and external financing. The
documents disclose no capital contributions having been provided.
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F2. Direct Loan Financing of Samarco’s Operations
330. It is common ground that BHP Billiton Finance BV entered into a US$150 million export
prepayment credit facility agreement with Samarco Finance Limited, a subsidiary of
Samarco, on 17 December 2009 and that the principal was repaid in December 2014:
MPOC, §279.2 {A1/1/119}, Def, §313(2C) {A1/2/192}. This was the only loan to Samarco
by a BHP Group entity.
F3. Alleged Funding or Indirect Funding of 50% of the P4P Project / Project 940
331. Cs allege that BHP funded or indirectly funded the P4P Project: MPOC, §279.3
{A1/1/119}. That was not the case.
332. The P4P Project was funded by (a) two large bond issuances by Samarco (the first, for US$1
billion on 26 October 2012 and the second, for US$700 million on 21 October 2013), (b)
other debt facilities, and (c) cash from Samarco’s own operations: Offering Memorandum
for the 2012 Notes ({F14/299}: see pages 18, 27, 40, 49 and 75), Offering Memorandum
for the 2013 Notes ({F7/60.1}: see pages 16, 26, 48, 67, 73 and 93), {F4/360.3/6}. BHP
therefore did not fund the P4P Project.
333. Nor did BHP “indirectly” fund the P4P Project. There is no indication in the documents that
BHP provided any kind of guarantee or surety for the funding for the P4P Project. In
particular, the 2012 and 2013 Samarco bond issuances referred to above at §332 were not
guaranteed by Vale or BHP, and were non-recourse to the shareholders. More generally, as
recorded in a memorandum to the BHP Finance Committee in July 2014: “Any funding raised
at Samarco is non-recourse to its shareholders and is marketed on an independent basis.”: {F9/4/2}.
334. As regards the allegation that BHP funded Project 940, Cs do not identify the basis for this
allegation and BHP has not been able to identify any evidence of such funding in the
contemporaneous documents.
F4. Alleged facilitation of and involvement with Samarco’s financing arrangements
335. Cs make a further wide-ranging allegation that BHP “controlled, directed, influenced, facilitated
and/or was involved and participated in Samarco’s entry into and management of key financing
transactions”: Reply, §120B {A1/3/87}. They also make a more specific allegation that BHP
facilitated the funding of 50% of the cost of the P4P Project. These are addressed together
in this section.
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336. First, in support of these allegations, Cs rely on the fact that the BHP Board approved a
number of Samarco financing transactions, namely: (a) Samarco’s bond issuances in 2012
and 2013 (which did fund P4P, as set out at §332 above); (b) a bond issuance in 2014 (which
did not fund P4P),90 and (iii) an export pre-payment finance transaction by Samarco to raise
up to US$800 million in 2013 (which was raised to fund P4P, being one of the debt facilities
mentioned at §332 above).91 As explained in §192 above, these approvals were necessary as
a matter of internal BHP policy in order to authorise the BHP Brasil appointees on the
Samarco Board to vote in favour of these transactions at Samarco Board meetings. It is not
the case, as Cs contend, that this is somehow evidence that these transactions were “treated
at the highest levels of BHP as matters of economic and strategic importance”: Reply, §120B.1
{A1/3/87}.
337. Second, Cs plead that “BHP, acting at Group Level, was closely involved and participated in the
determination and execution of the bond issuances and other financing transactions”: Reply, §120B.1.
There are documents that indicate that BHP’s Group Legal and Group Treasury functions
reviewed the terms of the bond issuances: e.g. {F4/281/3}, {F8/390.2/2}, {F3/494}. Mr
Beaven explains that it would have been standard practice for Group Treasury to have
provided advice on the terms of any lending or bond issuances: Beaven 1, §84 {B1/1/28}.
Mr Gillespie (Acting Financial Controller and then Financial Controller for the Iron Ore
CSG), makes a similar point, explaining that BHP and Vale had more experience with
issuing US dollar bonds than Samarco and had insight to offer Samarco in this regard:
Gillespie 1, §§42, 44 {B1/4/15}. Nevertheless, it was Samarco which participated in all of
the investor roadshows, sent out the offers to participate and determined how it would
issue those bonds: Gillespie 1, §42 {B1/4/15}.
338. As explained in Section H2.2.4 below, BHP Board’s approval of Samarco’s larger financing
transactions, and the limited assistance that BHP provided Samarco as to the terms of any
lending or bond issuances, does not result in any liability under Brazilian law.
G. RELEVANT DEVELOPMENTS POST-COLLAPSE
90 The funds from this bond issuance were intended to be used for general corporate purposes: 2014 Offering
Memorandum {F9/183/40}.
91 Cs further allege that the BHP Board approved “several pre-export finance (EPP) transactions in 2013”. However, BHP
has not identified any transaction other than that set out in this paragraph.
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339. Cs plead (in relation to their Environmental Law claim) that BHP’s support of BHP Brasil
and Samarco after the Collapse justify an inference that BHP “participated in the activity [i.e.
before the Collapse] which caused the environmental degradation”: MPOC, §280AA {A1/1/119}. As
explained in Section G5 below, none of the alleged facts and matters support such an
inference.
G1. BHP’s provision of support to Samarco via BHP Brasil in the immediate response
efforts following the Collapse
340. Shortly after the Collapse BHP indicated it would provide support for recovery efforts by
way of assisting Samarco: see {F14/437.1/1};92 {F16/498.0.2/2}.93 As part of that support,
Dean Dalla Valle (then Chief Commercial Officer of BHP) was seconded to BHP Brasil
and was assigned day-to-day responsibility for BHP Brasil’s response to the Collapse. He
was accompanied by a small team (including people from BHP’s legal and finance
functions) also to be based in Brazil: Beaven 2, §15 {B1/8/6}.
341. In addition, the BHP Board formed a Samarco Subcommittee, whose purpose was to
consider and oversee matters relating to the Collapse including BHP Brasil’s support of
Samarco’s recovery and response efforts, investigation of the cause of the dam failure
(discussed below) and engagement with key stakeholders: {F16/498.25.1/38}.
G2. Investigation into the causes of the Collapse
342. The Court will recall from the Court’s Ruling on Interview Notes {PK/19}, and §122
above, that in early December 2015 Samarco, BHP Brasil and Vale agreed to retain Cleary
to conduct an investigation into the causes of the Collapse, and Cleary subsequently
engaged the Panel.
343. Cs allege that BHP’s involvement in the investigation suggests they participated in
Samarco’s activity leading to the Collapse: MPOC, §280AA.3(ii)-(v) {A1/1/120}; Reply,
§120E.3 {A1/3/89}. That is a non-sequitur. The Court has already concluded that the
dominant purpose of conducting those investigations was for the purpose of potential
92 Where BHP’s then Chairman indicated that “The organisation must respond in the right way and immediately, doing everything
possible to support the recovery efforts in an urgent way” and the Minutes recorded that the response to the Collapse “should go
through Samarco, with BHP Billiton providing a supporting role”.
93 Where BHP’s then-CEO stated “…we are all working very closely with Samarco to provide our full support to the response efforts”,
“we are 100 per cent committed to do everything we can do to support Samarco and make this right” and “We will do this working hand
in hand with… Vale, and through… Samarco.”
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litigation which was contemplated immediately following the Collapse: §§7, 13 &
15 {PK/19/4}.
G3. CPAs and their Settlement
344. On 30 Nov 2015, a class action or CPA was filed by the Federal Government and various
other governmental entities against Samarco, Vale and BHP Brasil which sought orders to
require the companies to, inter alia, pay at least R$20bn to fund the remediation of the
Collapse (“20bn CPA”): CA Judgment, §26 {H2/4/13}.
345. On 2 March 2016, the parties to the 20bn CPA agreed the Transaction and Conduct
Adjustment Term or TTAC to resolve the claim. A translation of the TTAC is at {I3/8T}.
346. Cs allege that BHP participated in the negotiation of the TTAC: MPOC, §280AA.4.1
{A1/1/120}, and also suggest that because the Chief Commercial Officer “was authorised to
sign the TTAC on behalf of BHP Brasil that BHP, not BHP Brasil, was ultimately responsible for the
TTAC’s execution”: Reply, §120E.1 {A1/3/88}.94 It is not understood where these points
lead. BHP is not a party to the TTAC. The terms of the TTAC provide in any event that
neither execution nor performance of the TTAC constitute an admission of fault or liability:
see the recitals {C3/7.1T/488} and §256 {C3/7.2T/601}.
347. The TTAC provided for a Foundation (to be created by Samarco, BHP Brasil and Vale) to
provide full redress to victims of the Collapse by way of both remediation and
compensation programmes: TTAC, §2 {C3/7.1T/497}.95 Renova was established for this
purpose: CA Judgment, §27 {H2/4/13}. Various provisions of the TTAC provided for its
governance and external oversight by Brazilian public authorities.96 Samarco had an
obligation under the TTAC to fund Renova. Vale and BHP Brasil each had the obligation
to pay half of the contributions Samarco was required to make under the Agreement should
Samarco fail to make them: TTAC, §237 {C3/7.2T/591}. Accordingly, Samarco was the
primary obligor under the TTAC.
94 BHP Brasil’s authorisation for Mr Dalla Valle to sign the TTAC on their behalf is at {F16/381.1T}.
95 See also §§208-209 {C3/7.2T/581}
96 For example, the Inter-Federative Committee (“IFC”) was responsible for defining the guidelines for the preparation
and implementation of Renova’s reparatory and compensatory programs by Renova as well as validating the plans,
programs and projects presented by Renova. The IFC was composed of representatives from the Ministry of
Environment, the Federal Government, the States and Municipalities of Minas Gerais and Espírito Santo, and the
Hydrographic Basin Committee of Rio Doce. See TTAC §§244-245 {C3/7.2T/594-596}.
122
348. The Federal Public Prosecutor (“MPF”) was not party to the TTAC and was critical of its
terms and Renova’s governance structure. On 2 May 2016 the MPF filed another CPA
making larger claims for relief on behalf of the victims of the Collapse, estimating the
damage to be at least R$155 billion (“155bn CPA”): CA Judgment, §28 {H2/4/13}.
349. On 25 June 2018 the parties to the 155bn CPA reached a detailed interim settlement
agreement called the Governance and Conduct Adjustment Agreement (“GTAC”)
pursuant to which the MPF accepted the terms of the TTAC subject to changes in the
governance structure and external supervision of Renova: CA Judgment, §31 {H2/4/14}.97
Samarco remained the primary obligor under the GTAC.
G4. Compensation Programmes Administered by Renova
350. Renova was established to implement programmes to effect full redress of the damage
caused by the Collapse. Renova does so through about 40 programmes. These included
reparatory programmes to dredge and remove the tailings, to treat and clean the Rio Doce
and to restore biodiversity in affected areas. It also includes programmes to resettle the
residents of three small towns immediately downstream of the Dam into newly constructed
towns built to the specifications of the communities in question, as well as employment and
health programmes. Renova has also administered a number of compensation programmes
which are relevant to this trial. As noted at §2 above, as at June 2024, more than US$7.7bn
had been spent on the various programmes.
351. The primary compensatory programmes were known as PIM Water (for water interruption
claims) and PIM General (for other heads of loss). For background on PIM Water and
PIM General, see CA Judgment, §§58-59 {H2/4/20}.98 PIM Water closed to new
registrations in December 2017. PIM General closed for new registrations on 31 December
2021: CA Judgment, §59. Participation in these programmes was optional: TTAC §34(1)
{C3/7.2T/521}. Those who received payments were required to sign releases: CA
Judgment, §§58 & 60. As at September 2024, c. 14,000 Cs had been paid under PIM General
and c. 133,000 under PIM Water: {M1/24/2}.
97 The GTAC also provided a formal process to renegotiate the TTAC’s Programs provided by Renova: (e.g. section
1, § (III) {C3/7.2T/628}).
98 How PIM operated in practice is not seriously in dispute: see Reply, App A, §§6-8 {A1/4/3}; Rej, App A, §§23-34
{A1/5/112}. In short, there would be a series of mediated meetings, including a preparation meeting, an admission
meeting, a meeting of clarification, a proposal meeting and a signature meeting.
123
352. A further compensatory programme was later created by judicial order. It is known as the
Novel System. It is also administered by Renova. For a summary of its creation and how
it operated, see CA Judgment, §§68(1)-(3) and 70 {H2/4/22-24}).99 Applicants must be
legally represented, and must sign a release before receiving compensation. As at September
2014, some 145,000 Cs made claims under the Novel System, c. 68,000 of which had
reached agreements are were paid: {M1/24/2}. The Novel System was to close for new
registrations on 29 September 2023.100
G5. Cs allegations relating to BHP’s Post-Collapse Conduct
353. Cs’ recently added allegations are that BHP’s participation and involvement in post-
Collapse matters is evidence of (or provides the basis of an inference regarding) BHP’s pre-
Collapse participation in the underlying polluting activity: MPOC, §280AA {A1/1/119}.
354. BHP contend that Cs’ allegations are untenable.
355. It is important to begin by putting this point into perspective. Insofar as Cs’ pleadings
(MPOC, §280AA; Reply, §120C.2 {A1/3/88}) may suggest that there is a rule of Brazilian
law which requires consideration of post-event conduct when determining responsibility
under the Environmental Law, or that post-event conduct by itself provides a legal basis
for liability: that is wrong. There is no such rule, as noted by Prof Milaré: Milaré 3, §4, 8-16
{C21/1T/3}, {C21/1T/5-6}.101
356. Rather, it is simply an evidential inference which the Court is being invited to draw by Cs
on the basis that it is, under Brazilian law, permissible to do so. But whether or not after-
the-event matters are probative of what happened before the event obviously depends on the
relevant matters and is highly fact-sensitive: Milaré 3, §§16.4.1, 19 {C21/1T/7}. E.g. an
express admission of liability could be relevant: Milaré 3, §21 {C21/1T/8} (but Cs accept
99 Inshort, it provides for compensation in fixed amounts in accordance with a “matrix”, thereby not requiring evidence
of damage or loss. It has been described as “rough justice”. How the Novel System operated in practice is not seriously
in dispute: see Reply, App A, §§4-5 {A1/4/1}; Rej, App A, §§6-22 {A1/5/110}.
100 On 28 Jul 2023 the 4th Federal Court ordered the Novel System to end on 29 September 2023 because the parties
who commenced the proceedings leading to its creation did not have the capacity to do so {C3/7.2T/752}. However,
previous agreements under the Novel System would remain preserved {C3/7.2T/752}. The Novel System was closed
for new registrations by 7 October 2023.
101 Prof Milaré notes that in any event none of the decisions referred to by Prof Sarlet on this issue treated post-event
conduct as a proper legal or evidential basis for a finding of polluter liability: Milaré 3, §§25-51 {C21/1T/9}. Cs
indicated that Prof Sarlet may wish to respond to Milaré 3 (served on 21 September) but declined to confirm whether
they in fact intended to do so or to give any date by which they would if so. BHP therefore reserve their position
should Cs in due course indicate that Prof Sarlet now wishes to respond.
124
there was no admission here: see below). Or, to take an example given by Prof Milaré at
Milaré 3, §16.4.2 {C21/1T/7}, when considering whether a particular defendant had
liability as a polluter there might be a factual dispute about whether that defendant had
access to the premises required to operate the activity before the event. If the defendant
had – after the polluting event – accessed the premises (for example as part of carrying out
the clean-up) then that might be considered relevant to assessing whether it was considered
the operator. There is no suggestion that anything like that is present here either.
357. In this case Cs have accepted that nothing in what they allege BHP did after the Collapse
was “any admission…of liability as a polluter”: MPOC, §280AA {A1/1/119}. That is an
important concession: Milaré 3, §20 {C21/1T/8}. All that is alleged in effect is that BHP
personnel (who were working on behalf of BHP Brasil) provided support to Samarco in
their immediate response efforts following the Collapse, had some role in the settlement of
the 20bn CPA and had a role in the Panel Report investigatory process.
358. However, Cs have also pleaded (Reply, §120I {A1/3/92}) that the reason BHP attended
meetings at which the TTAC was discussed was because BHP “regarded itself as responsible for
Samarco’s activity and the consequences thereof”. That is a surprising shift in case (given Cs had
previously deleted that very allegation from the draft MPOC amendment put before the
Court, after BHP’s objection). That allegation of a ‘recognition’ of responsibility/liability is
difficult to reconcile with the concession that BHP did not, in anything it did or said, admit
any responsibility/liability. But more fundamentally, the reason BHP personnel had some
involvement (addressed in the recent responsive evidence in Beaven 2 {B1/8}102) in those
post-Collapse matters is not because BHP accepted responsibility for the Collapse, and it
does not come close to showing, to use Cs’ Brazilian law expert’s words, that BHP
“participated in the risk activity” prior to the Collapse (Beaven 2, §7 {B1/8/3}, §§17-24
{B1/8/6}). It reflected: (a) the importance of supporting Samarco in recovery efforts as the
morally right thing to do in light of this serious and tragic event; and (b) the fact that BHP
had a significant interest in any response to the Collapse given the potential financial,
reputational and legal repercussions for BHP, BHP Brasil, and Samarco (in which BHP
Brasil was a 50% shareholder).103
See especially §§7 {B1/8/3} and §§17-24 {B1/8/6}.

102
As noted earlier, this Court has already concluded that litigation was considered reasonably in contemplation
103
immediately following the Collapse and that steps such as the Panel investigation were for that dominant purpose.
125
359. As regards the TTAC, BHP Brasil had been sued in the 20bn CPA for a very large sum and
the TTAC – to settle that claim – was to contain significant financial commitments on the
part of Samarco, BHP Brasil and Vale. Given BHP Brasil was a wholly owned indirect
subsidiary, and would be obliged to cover any of Samarco’s shortfall in complying with the
TTAC obligations as per the terms of that agreement, it is unsurprising that BHP were
interested in the TTAC discussions, and in the progress of Renova’s work (which was also
the subject of further litigation).
360. None of these points tell the Court anything about whether BHP were originally responsible
for the Collapse – they were not.
H. ENVIRONMENTAL LAW CLAIM104
H1. Brazilian Law Issues
361. Cs contend that BHP are jointly and severally liable pursuant to Articles 3(IV) and 14 §1 of
the Environmental Law.
362. Contrary to Cs’ case, BHP are not liable in Environmental Law. In particular, BHP were
not the operator of the activity that caused environmental damage (i.e. a direct polluter) and
they did not owe or omit to comply with any specific legal or contractual ‘duty of safety’
with respect to Samarco’s activities (i.e. an indirect polluter). BHP’s conduct (whether
alleged act or omission) did not cause any environmental damage (i.e. cause the
Collapse). Cs’ case is misconceived as to both (i) the content and meaning of Brazilian law
(see Section H1 below) and (ii) the facts (see Section H2 below).
H1.1 Environmental Law Experts
363. The Environmental Law experts are Prof Milaré (for BHP) and Prof Sarlet (for Cs): see
further §§5-7 of Annex 2.
364. The principal disagreement between the experts is over the test for determining when
environmental civil liability (within the meaning of Arts 3(IV) and 14 §1 of the
Environmental Law) arises. Those articles provide that ({I1/5/2} and {I1/5/6}):
“3(IV) For the purposes set forth in this Law, the following definitions shall apply:
104 Annex 6 sets out an explanation of Brazilian legal sources and the Court system.
126
[…]
Polluter: a natural or legal person, of public or private law, that is directly or indirectly
responsible for any activity resulting in the degradation of environmental quality.
14 Without prejudice to the penalties defined by the federal, state and municipal legislation, the failure
to comply with the measures necessary for the prevention and correction of the damages caused by the
degradation of the environmental quality shall subject the transgressors to the following:
[…]
§ 1 Without prejudice to the penalties provided for by this article, the polluter is obliged to,
independently of being guilty or not, indemnify or repair the damage caused to the environment and
third parties, affected by its activities …”
H1.2 BHP’s case / Prof Milaré’s evidence
365. Prof Milaré’s evidence is that the reference to “directly or indirectly” in Art 3(IV) refers to two
well-understood terms or concepts in Brazilian law: the “direct polluter” and the “indirect
polluter”: e.g. Milaré 1, §48 {C5/1T/64}.
366. The distinction between an indirect and direct polluter is reflected in Art 3(IV) of the
Environmental Law, i.e. a polluter is a party “that is directly or indirectly responsible”. Prof Milaré
points out that, were there no distinction between direct or indirect, the wording of Art
3(IV) would make no sense: Milaré 2, §77.1 {C17/1T/30}.
367. That the terms are conceptually different, and therefore treated differently, is also apparent
from Brazilian case law and doctrine, including cases cited by Prof Sarlet: Milaré 1, §48
{C5/1T/64}. For example, in the Braskem case (cited by both experts), the Reporting
Judge stated that “A considerable part of the jurists supports the idea that there is only contribution from
someone (indirect polluter) to the damage caused by another (direct polluter) if that someone fails to observe
a safety duty assigned thereto by the legal system, precisely to control the damage.” {C5/1T/24};
{C4/1T/153-156}
368. Until Prof Sarlet’s evidence, it was understood to be common ground that there were two
distinct types of polluter liability in Brazilian law. See, e.g. the CA’s understanding of Cs’
case, and pleading, as alleging “strict liability as an indirect polluter”: CA Judgment, §11(1)
{H2/4/8}. Cs’ then expert, Prof Rosa, opined that “the requirements to establish indirect polluter
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liability are well known”: CA Judgment, §309(2) {H2/4/88}. The Public Prosecutor in the
155bn CPA was recorded as having sued BHP Brasil only as “indirect polluter”: CA Judgment,
§106 {H2/4/32}.
369. As to the test for polluter liability: in both indirect and direct polluter liability there must
be: (a) conduct (act or omission); (b) environmental damage; and (c) causation between the
conduct (act or omission) and the damage. The required conduct is, however, different in
direct and indirect polluter liability.
370. Direct polluter liability (Milaré 1, §55-61 {C5/1T/19}): the direct polluter is the one who
operates or executes the activity that caused the environmental damage. There may be other
synonyms for this person used in the cases (including the ‘exploiter’, ‘explorer’ or ‘exerciser’
of the activity), but the key point is that the direct polluter is the party who does the relevant
activity (that is their ‘conduct’) which causes the environmental damage. This is common
sense, and clear from the cases and the doctrine. For example:
370.1. The Vicuña case (addressed at §376.2 below). As Prof Milaré explains, the reason
the purchasers of the cargo in the Vicuña could only be held liable as indirect
polluters was because they were not the operator of the vessel or the port terminal
where the vessel exploded (Milaré 1, §56.2 {C5/1T/19}). See also the Bioenergia
case: Milaré 2, §10.6.2 {C17/1T/48}.
370.2. See also Érika Bechara (Professor of Environmental Law at the Pontifical Catholic
University of São Paulo):
“In a few words: whoever develops/executes the polluting activity is the direct polluter. […]
As a direct polluter, we have, for example, the industry that discharges its liquid effluents
into a river without any prior treatment, the agricultural company that promotes burnings,
and the municipality that disposes of household solid waste in an empty parcel of land. All
of them directly carry out the polluting activity (discharge of untreated industrial sewage,
destruction of vegetation, emission of gases into the atmosphere, and deposition of solid waste
in an inappropriate area)” {C5/1T/21}
371. In the context of environmental damage caused by (lawful) mining activities the operator
of the activity (and thus the potential direct polluter) is identified by asking who the mining
licensee is (Milaré 1, §60 {C5/1T/21}) – and in this case it is common ground that the
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licensee was Samarco. In other words, the only potential direct polluter in this case is
Samarco – it is the sole owner, operator and licensee of the mine and Dam.
372. Indirect polluter liability (Milaré 1, §63 {C5/1T/22}) is imposed in the following
circumstances: (a) the defendant must have a specific legal or contractual duty of safety with
respect to the activity which caused the environmental damage and omitted to comply with
that duty (that is their ‘conduct’); (b) there must be environmental damage; and (c) there
must be causation between the defendant’s omission and the environmental damage.
373. It is helpful to begin with (c), causation, since that is also material to the discussion about
(a), ‘duty of safety’. Prof Milaré’s position is that for a person to be liable (whether as direct
or indirect polluter) there must be causation (within the meaning of Art 403 CC) between
the defendant’s act or omission and the environmental damage (Milaré 1, §87 {C5/1T/32}).
374. Art 403 CC refers to the need for losses to have been the “direct and immediate” result of the
defendant’s acts and omissions {I1/2/28}. The question of what Art 403 means is
addressed by the civil law experts, namely Profs Rosenvald (for Cs) and Tepedino (for
BHP). The dispute between them is as to whether the correct causal theory is ‘adequate
causality’ or ‘direct and immediate causality’ – both agree it is not ‘equivalence of
conditions’. Regardless of the precise formulation, both civil experts agree that, under Art
403, the damage must be shown to follow necessarily from the defendant’s acts or
omissions.105 In other words, the defendant’s act or omission must necessarily – or
decisively – cause the damage. It is common ground that this is not ‘but for’ causation:
Tepedino 1, §205 {C7/1T/82}106 and Rosenvald 1, §134, first bullet {C3/1T/59}. See
further, Section J1.1.6 below.
375. It is common ground that, in Environmental Law, ‘integral risk theory’ applies. This means,
as Profs Milaré and Sarlet agree,107 that a defendant cannot invoke the specific exclusion of
liability provisions under the Civil Code (acts of god, force majeure and act of third party).
105 See, e.g. Tepedino 1, §201 {C7/1T/81}, Rosenvald 2, §104 {C16/1T/45-46} (where Prof Rosenvald states there is
little if anything between him and Prof Tepedino).
106 Prof Tepedino (Tepedino 1, §205 {C7/1T/83}) gives the example of “failure in the supply of electricity by the power utility.
Faced with the incident, a certain individual resorts to the use of candles, which later cause a fire. In one sense, the failure in the electricity
supply may have contributed to the fire – because without the failure, the person would not have used the candle, and the fire would not have
occurred. However, such circumstance is not sufficient to impose the duty to compensate. The lack of electricity is not a necessary cause of the
accident.”
107 See Sarlet 1, §369 {C4/1T/175}; Milaré 1, §40 {C5/1T/15}.
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That does not change the causal test – it just means that provided the causal test is otherwise
met one cannot invoke those specific exclusionary provisions of the CC.
376. That causation requirement, under Art 403 CC, although present in both direct and indirect
polluter liability, is of particular significance in the context of the indirect polluter, where it
plays a key role in ensuring a coherent limit on liability. One finds the need for such
causation identified in the cases, and in doctrine: see Milaré 1, §101.1 {C5/1T/37}. For
example:
376.1. The Mangroves case: the defendants were the owners of mangroves in which (a)
third parties dumped waste and (b) the defendants then filled in the mangroves to
construct a sports facility. The Superior Court of Justice (“STJ”) made clear that it
is only “once the causal relationship between the appellant’s action [of infilling the mangrove] and
omission [to prevent dumping by third parties] and the environmental damage in question has been
established, there is an objective duty to…indemnify any remaining damage” {C5/5T/214}.
Thus, in that case, it was held essential to establish that there was causation between
the defendants’ acts and omissions on the one hand, and the environmental damage
on the other.
376.2. The Vicuña case {C5/5T/46-90} (a ‘repetitive’ appeal on which ten, rather than
the usual five, STJ Justices sat): the Vicuña vessel exploded whilst being unloaded
in the port, and leaked its cargo (oil and methanol), causing environmental damage.
The purchasers of the methanol were sued, by local fishermen, as indirect polluters.
The ratio of that case concerned the need for causation. Reporting Justice Ricardo
Villas Bôas Cueva explained that:
“... the application of the theory of integral risk to cases of civil liability for environmental
damage does not hold the plaintiffs of suits for damages harmless from the duty to demonstrate
the existence of a chain of causation between the damaging effects that they claim to have
suffered and the acts or omissions of the parties that they considered to have caused, either
directly or indirectly, said damage.
Along these lines, the well-established case law from this Court on the matter must be stressed,
for it is firm in stating that, considering the fact that liability for environmental damage is
strict (and based on the theory of full risk), it is crucial, to entail the duty to indemnify, to
demonstrate the chain of causation that connects the damaging result to the acts actually
performed by the party that allegedly caused it.” {C5/5T/59}
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376.3. To similar end, Justice Salomão held (referring to Art 403) that:
“…the majority of Civil Law legal writing adopts the theory of adequate causation or direct
and immediate damage, so that only if the chain of causation is considered to exist when the
damage is a necessary and appropriate effect of a cause (action or omission). This theory was
welcomed by the Brazilian Civil Code of 1916 (article 1,060) and Civil Code of 2002
(article 403)…” (emphasis added) {C5/5T/81}
377. There are many other cases to similar effect: Milaré 2, §68 {C5/1T/24}. So, in sum, BHP’s
case, and Prof Milaré’s evidence (Milaré 1, §87 {C5/1T/32}), is that to establish
environmental civil liability there must be causation (within the meaning of Art 403 CC)
between an act or omission of the defendant and the environmental damage.
378. Turning to Prof Milaré’s analysis of the duty of safety requirement in indirect polluter
liability (i.e. (a) in §372 above), the key points are as follows (Milaré 1, §§65-81 {C5/1T/23}
and Milaré 2, §§94-98 {C17/1T/39}):
379. Indirect polluter liability is concerned with those who are not the operators of the relevant
activity, but who had a specific duty of safety imposed on them by Brazilian written law (i.e.
statute) or contract. These are thus normally cases of omission, in the sense of a failure to
comply with that duty. As pointed out in the Braskem case: “In the case of an indirect polluter,
causation does not usually arise from an action, but rather from an omission.” {C4/3.3T/1006}.
380. As to what is meant by a ‘duty of safety’, this is short-hand used by Prof Milaré, and in some
of the cases. The content of the duty will be determined by the relevant law or contract that
specifically imposes the duty in the first place: Milaré 1, §§72-81 {C5/1T/26}. Prof Milaré
has given examples of Brazilian laws that create specific duties of safety (and explain what
the duty requires). For example, there is a specific law requiring commercial or industrial
purchasers of timber to ensure the timber is sourced from licensed (lawful) timber felling.
The rationale for requiring the existence of such a duty as an “essential element” is obvious:
“If there is no such duty or there is no omission to comply with such a duty, there is no ‘how’ or ‘why’
someone should be held “liable” (in circumstances where they are not directly responsible for the activity). A
different interpretation would make the law extremely uncertain, which would be undesirable from a policy
perspective.” (Milaré 1, §71.2 {C5/1T/25})
381. The need for this duty of safety is well-supported by case law, and doctrine. It was stated
in the Vicuña, in the context of indirect polluter liability, that “It is not reasonable to also affirm
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that the liability of the appealed parties would be a logical result from possible omissive behaviour, as this,
as known, is only verified in cases in which the agent (supposed polluter), having
the duty to prevent degradation, it still fails to do so, benefiting, even if indirectly, from the
behaviour of a third party directly responsible for the damage caused to the environment” (emphasis added)
{C5/5T/70}.
382. Similarly, in the Braskem case, the Reporting Justice stated that “A considerable part of the
jurists supports the idea that there is only contribution from someone (indirect polluter) to the damage caused
by another (direct polluter) if that someone fails to observe a safety duty assigned thereto by the legal system,
precisely to control the damage. Therefore, indirect polluters are those to whom the rule imposes diligence to
avoid the polluting event and the degradation of the environment, but who do not comply with this, allowing,
due to their undue action or failure to act, the occurrence of environmental damage” {C5/5T/113}. Prof
Sarlet criticises Braskem on this point for failing to cite any STJ case (Sarlet 1, §324
{C4/1T/155}), but as Prof Milaré points out – in fact the first instance decision (which the
appeal court endorsed) referred to the Vicuña. Prof Milaré has pointed to numerous
eminent authors who also refer to the need for such a duty (see, Milaré 1, §70 {C5/1T/24}),
and other STJ cases such as the Jacupiranga Park case (see Milaré 2, §91.1 {C17/1T/38}).
Prof Sarlet has not pointed to a doctrinal work or precedent which addresses and rejects
the idea that a duty of safety is necessary.
383. As already noted, the duty of safety must be specifically imposed by law – i.e. statutory
provision – or contract. And Prof Milaré observes that:
“I am not aware of any law that states, in general, that shareholders (including controlling
shareholders) owe a specific duty of safety in relation to the activities of the company in which they are
shareholders, or even in relation to the activities of another company in which its company is the
shareholder. Indeed, in judging the Braskem case, a lawsuit of great repercussion in Brazil, involving
mining activity, the Judiciary denied the claim that the shareholders of a given company should be
considered as indirect polluters. This occurred since the mere fact of being shareholders, that is, without
the due demonstration of (i) the existence of a duty of safety attributed thereto, or (ii) an omission with
respect to such duty, does not imply liability.” (Milaré 1, §76 {C5/1T/29})
384. As the appeal court also pointed out in Braskem, the proposition that shareholders (one of
which was a controlling shareholder in that case) could bear liability simply because they
were shareholders would (if right) drive a coach and horses through corporate personality
(which is a fundamental principle of Brazilian law):
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“it cannot be admitted that the partners and managers be directly and jointly liable with the legal
entities for harmful events directly caused by the latter, since this possibility would bring great legal
uncertainty to investments and to the actions of legal representatives in the day to day operation of the
companies, as it would eliminate the legal distinction between the assets of the shareholders and of the
company in any and all proceedings seeking redress for environmental damage, which would abolish
legal personality.” {C5/5T/113}
385. Thus, both of these points – the need for causation between the defendant’s act or omission
and the environmental damage and the need for a duty of safety - exist for good reasons:
to provide a fair, practical and clear basis for indirect polluter liability.
H1.3 Cs’ case / Prof Sarlet’s evidence
386. Prof Sarlet does not accept any relevant or conceptual distinction between direct and
indirect polluter liability. Instead he posits a liability test (Sarlet 1, §§236-238 {C4/1T/109})
that contains two “links”:
386.1. The first link is to establish direct or indirect responsibility by the defendant for
an “activity”: Sarlet 1, §235 {C4/1T/108}. He argues this requires legal (or
‘normative’) causality but not factual causality: Sarlet 1, §236 {C4/1T/108}. In
other words, he says that this is the mere imputation of causation by law or norms
(an “imputation link”, Sarlet 1, §406 {C4/1T/191}) rather than because causation
exists in fact. This “imputation link” is to be evaluated by a “multifactorial” test of any
and all possible connections linking the defendant to the activity in question.
386.2. The second link is to consider whether the “activity” – and not the defendant’s acts
or omissions – actually caused the environmental damage. Unlike the first link, this
is a “factual” test of causation, and is thus the “only naturalistic causation link that needs
to be established in article 3, IV)”: Sarlet 1, §238 {C4/1T/109}.
387. It follows that Prof Sarlet’s position is that for environmental civil liability to accrue, the
defendant’s acts or omissions do not need to have in fact caused the environmental damage
– only that the underlying “activity” which the defendant is to be treated as connected with by
a “multifactorial” test did in fact cause the damage.
388. Prof Sarlet states that Arts 3(IV) and 14 §1 of the Environmental Law refer to an “activity”
which gives rise to environmental civil liability rather than referring to a defendant’s act or
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omission. He suggests that the term “activity”, used “in place of the classic expressions ‘action and
omission’ used for the institute of civil liability”, is significant because the concept of an “activity”
is a “distinct legal category used by Brazilian environmental legislation to express conduct that is broader
and more complex than just direct and immediate actions and omissions”.108 Similarly, in the JES
{C1/5T/7} he states that “The concept of activity enshrined in Brazilian environmental legislation
(arts. 3, IV, and 14, §1, of the NEPA) is completely distinct from the concept of action/omission…”.
He states that “It is not necessary to prove that the defendant's acts and/or omissions directly caused
environmental degradation in order to ascertain its liability under Articles 3, IV, and 14, §1, of the
NEPA” {C1/5T/10}.
389. In relation to causation, Prof Sarlet argues that Art 403 CC does not apply in Environmental
Law because it is part of the system of general civil liability, whereas Environmental Law is
governed by an independent and distinct microsystem of liability. In the JES, Prof Sarlet states
that “environmental civil liability is governed, in a specialized manner and due to its strict nature, by the
Brazilian environmental legislation (EL, Constitution, etc.), and not by the civil liability system established
by the Civil Code” and that “It is also completely wrong to support the indistinct application of the theory
of adequate causality (or theory of direct and immediate damage) set out in Article 403 of the Civil Code
in the field of environmental civil liability” {C1/5T/4}, {C1/5T/10}.
390. As for Prof Sarlet’s “multifactorial test”, he identifies a multitude of factors by which such a
“connect[ion]” with an “activity” might arise: these factors are said to include (a) control over
the “activity”; (b) economic benefit from the “activity”; (c) creation of the risky situation; (d)
active participation and / or involvement in the “activity”; and (e) financing of the “activity”:
Sarlet 1, §286 {C4/1T/138}. This “multifactorial test” is said by Prof Sarlet to derive from the
following sentence in the Mangroves case:
“(...) For the purpose of determining the causal link in environmental damage those who do, those who
do not do when they should do, those who let them do it, those who don’t mind them doing, those who
finance them doing, and those who benefit when others do, are all treated equally.” {C4/1T/129}.
391. Prof Sarlet appears to reject the relevance of the duty of safety. For example, he states that
whilst he “recognise[s] the authority of the authors cited by Professor Milaré” on this point he believes
they are espousing “doctrinal critiques” of the legal system rather than stating what they
consider Brazilian law to be: e.g. Sarlet 2, §47 {C15/1T/21}.
108 Sarlet 1, §§240-241 {C4/1T/110}. See also §39 {C4/1T/24} and §406 {C4/1T/191}.
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392. Prof Sarlet’s argument – that causation between the defendant’s act and omission and the
damage is not required, and instead, the Court is simply to assess (via a “multifactorial test”
and “imputation link”) whether there is any possible connection between the defendant and
the activity – faces significant problems.
393. The need for causation between the defendant’s actions or omissions and the damage is the
ratio of the Vicuña, which in terms also considered and decided that the correct causal
theory applicable in Environmental Law was that found in Art 403. As noted, the Vicuña
is unusually authoritative because it involved ten STJ justices sitting together under the
repetitive appeals procedure (which produces binding ratios: see Annex 6). In Sarlet 1, §288
{C4/1T/139} and §294 {C4/1T/142}, Prof Sarlet described the Vicuña as a “very
enlightening” case, and that “it is possible to identify the reasonableness of the position adopted by the
STJ”. But the Vicuña surely contradicts his thesis.
394. That same causal requirement between the defendant’s acts or omission and the damage as
the basis of environmental liability (rather than merely needing some “imputation link”
between the defendant and the activity), is also stated in the Mangroves case on which Prof
Sarlet places great reliance. As noted earlier, Reporting Justice Benjamin in the Mangroves
case concludes his opinion by explaining that “[o]nce the causal relationship between
the [appellant’s] action and omission and the environmental damage in question
has been established, there is an objective duty to promote the recovery of the affected area and
indemnify any remaining damage.” (Emphasis added) {C17/1T/21}. The passage to which Prof
Sarlet refers in that judgment has to be read in that context.
395. Prof Sarlet has not identified (a) any decisions or doctrine referring to a “multifactorial” or
‘two link’ approach (contrary to his view, as noted above, the Mangroves case refers
explicitly to the need for causation between the defendant’s act or omission and the
damage); or (b) any decision or doctrine supporting his contention that the causal theory in
Art 403 CC is inapplicable in Environmental Law. Prof Sarlet does not mention the Vicuña
on causation / Art 403 CC – even though it directly addresses that point.
396. Prof Milaré’s evidence is that Prof Sarlet’s ‘multifactorial approach’ is not only devoid of
authority or doctrinal support, but so broad and unclear as to be untenable. As he puts it:
“a test derived from a "silhouette" of factors described in the precedents without any basis in written law and
which seems to require the court to assess whether it is "reasonable" to hold a party liable, does not, in
essence, constitute a test per se. It would represent an alien approach to Brazil's legal regime, based on written
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laws” (Milaré 2, §91.3 {C17/1T/38}). Further, “it would leave natural and legal persons (and Courts
seeking to apply the law) completely uncertain as to what would or could lead to the imposition of civil
liability for environmental damage.” (Milaré 1, §80 {C5/1T/32})
397. It is also noteworthy that Prof Sarlet’s thesis on causation and an alleged multifactorial test
has been recently considered and rejected by the Rotterdam Court:
397.1. In that case, the claimants, represented by Pogust Goodhead, Cs’ advisers in this
case, sued Braskem SA (the Brazilian mining company which operated a salt mine
in Brazil) as well as several Dutch subsidiaries of Braskem SA under Articles 3(IV)
and 14 of the Environmental Law. Whilst the subsidiaries did not operate the mine,
the claimants argued (supported by an expert opinion from Prof Sarlet) that they
could be liable as indirect polluters under the Environmental Law because they
were in the same economic group, and financed and benefited from Braskem SA’s
activities {J2/32T/20}:
“[5.43] Plaintiffs argue that in this context two types of causal connection are relevant: (i) the
causal connection between the addressed polluter and the risky activity and (ii) the causal
connection between the risky activity and the damage. According to the plaintiffs, only the latter
actually requires a causal connection. For the remainder, Article 3 (IV) NEPL does not
require an actual, but only a normative causal connection (reference is made to the Expert
Opinion I Rosa and the Expert Opinion II Professor [Sarlet]…). According to the plaintiffs,
this is met if the risky activities are directly or indirectly benefited from by the Braskem NL
entities or if these activities are directly or indirectly financed by them. In particular, they refer
to a judgement of (reporting) judge [Herman Benjamin in the Mangroves case] […] and the
Vicuña-judgement of the STJ.”
397.2. But the Rotterdam Court rejected Prof Sarlet’s argument on that point
{J2/32T/22}:
“[5.51] Although the text of the Brazilian (environmental) legislation

seems to allow for the plaintiffs’ view (meaning that instead of a factual
causal connection between the addressed polluter and the risky activity,
a normative causal connection is sufficient), this is not the impression
formed from studying Brazilian case law on this point. …In the Vicuña
case… the STJ mentions three possibilities as necessary elements: a failure to act, an intrinsic
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risk of the cargo that materialized, and the fact that arranging the involved transport was the
responsibility of the cargo stakeholders. The first two possibilities evidently relate to a factual
causal connection. The third element carries some normative weight, but still pertains to a direct
and factual relationship to the damaging fact..” […]
“[5.55] An absolute rule that in the event of environmental damage a

normative causal connection suffices in the case of environmental
damage finds insufficient support in Brazilian case law and legal
literature […]” (emphasis added)
398. In Sarlet 1, §§298-350 {C4/1T/143}, Prof Sarlet has sought to address the individual factors
that he contends would be relevant for his multifactorial approach. Prof Milaré has
responded in detail to each of these factors (and the cases relied on by Prof Sarlet) in Milaré
2, §§105-148 {C17/1T/47}. In summary, Prof Milaré’s position is that none of those cases
on proper analysis, support Prof Sarlet’s thesis.
399. As noted, Prof Sarlet does not accept that a duty of safety is required for indirect polluter
liability (Sarlet 1, §364 {C4/1T/173}). That position may naturally follow from his
argument that (a) there is no separate concept of “indirect polluter” liability and (b) that the
liability test is based on a “multifactorial” / “imputation link” assessment. But he has made
further points in this regard in Sarlet 2.
400. First, he argues that the requirement for a duty of safety is incompatible with strict liability:
Sarlet 2, §§56 {C15/1T/24} and 101 {C15/1T/40}. This will be explored with him in due
course – e.g. the references to the need for a duty of safety in, e.g., Vicuna, Braskem, or
Jacupiranga Park, or the many doctrinal works.
401. Second, he argues that if there is a need for a duty of safety, it is provided by Art 186 CC,
Art 13, §2 of the Penal Code, Art 225 of the FC or (for controlling shareholders) under Art
116 of the Corporate Law: Sarlet 2, §61 {C15/1T/25}.
402. The reference to Art 186 CC (concerned with fault-based liability addressed in Section J1.1
below) makes no sense. Art 186 CC does not impose a duty of safety and is not applicable
to the Environmental Law claim. Similarly, Art 13 §2 of the Penal Code (not even
mentioned in any pleading) appears to relate to when an omission is criminally relevant
under the Penal Code – not when and whether someone has a duty of safety. Meanwhile,
Art 225 FC imposes what is regarded as a “general duty” on society for the protection of the
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environment and does not impose a specific duty of safety (see Milaré 1, §74 {C5/1T/27},
Tepedino 1, §123-125 {C7/1T/57-58}, and further J1.1.4.4 below). If anything, Prof
Sarlet’s argument proves too much – if he were right then Art 225 FC would impose a duty
of safety on everyone in every circumstance, which is unrealistic and inconsistent with case
law.
403. As regards Art 116 of the Corporate Law, the sole basis for Prof Sarlet’s statement (Sarlet
2, §37 {C15/1T/17}) that this provides a duty of safety on all controlling shareholders is a
single sentence in the Braskem decision, which does not even refer to Art 116. That
sentence states that “There is nothing in the case file to show that the companies failed to fulfil the duty
of safety assigned to them by the legal system”. That is simply stating the absence of any basis for
alleging a failure to fulfil a duty of safety. It is not a finding that the companies owed a duty
of safety, let alone that the basis for that duty was Art 116 (which is not mentioned anywhere
in the decision). Art 116 does not impose any such duty.
404. That explains the main points of disagreement between the experts on the legal test for
polluter liability. There are three related matters that fall to be addressed briefly: (a) the
‘subsidiary liability’ point, (b) the meaning of “exploit mineral resources” in the FC and (c) the
burden of proof.
H1.4 Joint and Several Liability / subsidiary execution
405. The parties’ experts accept that environmental civil liability can apply jointly and severally
where there are multiple polluters for the same damage. The divergence as to joint and
several liability relates to whether the joint and several liability of indirect polluters is of
subsidiary execution. The principle of subsidiary execution would require the following,
before any enforcement against the indirect polluter: (a) the claimant to succeed in a claim
against the direct polluter; (b) the claimant to have initiated enforcement against the direct
polluter; and (c) enforcement against the direct polluter had not been satisfied. The
application of this principle is not a matter for the Court’s discretion: Milaré 2, §178
{C17/1T/78}.
406. Prof Milaré’s evidence is that joint and several indirect polluter liability is of subsidiary
execution. In Precedent 652 {C5/5T/696} (in which Jacupiranga Park was one of the
underlying cases), the STJ held, in the context of an environmental claim involving the State,
that the state was a “reserve-debtor, only [summoned] if the original, direct or material degrader (=main
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debtor) fails to settle the debt”. As the summary states: “The responsibility of the administration for
damages to the environment resulting from its omission in the duty of supervision is of a joint nature, but of
subsidiary execution”. Prof Sarlet agrees this establishes “subsidiary execution” in Environmental
Law (but, as explained below, he considers this only applies to the State): Sarlet 1, §§382-
383 {C4/1T/181}.
407. Prof Milaré contends that subsidiary execution applies not just to state entities, but also
private entities. This is because of the principles of isonomy and legal certainty, both of
which are provided for in Art 5, head paragraph, of the FC. The principle of isonomy
provides that all persons are “equal before the law, with no distinction whatsoever” {I1/1/2}. There
would be an unwarranted preference shown to state entities if subsidiary execution were
limited only to state entities but not private ones as well: Milaré 2, §177.3 {C17/1T/77}.
The principle of legal certainty would also be infringed if subsidiary execution applied only
to state entities but not private ones. Moreover, the application of subsidiary execution to
private entities is confirmed by the STJ’s decision in Special Appeal 647, §493 (the Coal
Case), which held that subsidiary execution applies to private entities and persons – as well
as state / public entities: Milaré 1, §158.6 {C5/1T/56}. It was also confirmed in the
Braskem decision (that even if the shareholders were liable, it would be “in a subsidiary manner
in relation to that of the company [i.e. the direct polluter]” {C5/5T/113}).
408. Prof Sarlet argues that the effect of Precedent 652 is limited only to state entities, such that
subsidiary execution applies only where the state or state entities are indirect polluters. He
contends that the Coal Case and Braskem are wrongly decided, and accordingly should be
ignored and also suggests that the STJ’s Jacupiranga Park decision limits subsidiary
execution to state entities: Sarlet 1 §384-386 {C4/1T/182}. Prof Sarlet’s position is
unsustainable, as will be explored with him in due course.
H1.5 “Exploit Mineral Resources”: Art 225 Federal Constitution (“FC”)
409. Cs have also sought to rely on Art 225, paragraph 2, FC, which provides that: “Those who
exploit mineral resources shall be required to restore the degraded environment, in accordance with the
technical solutions required by the competent government body, as provided for by law”: {I1/1/27}. The
relevance of this (if any) to the question of environmental civil liability, or indeed to BHP’s
position (in circumstances where no public agency has demanded that BHP restore the
degraded environment) is unclear. Nevertheless, the evidence can be summarised as
follows:
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410. Prof Milaré explains that Art 225, §2 {I1/1/27}, FC establishes that the parties holding
mining rights and an environmental licence who carry out mining activity should be required
to restore environmental degradation resulting from that activity. Those who “exploit mineral
resources” for the purposes of the said paragraph are those who hold the mining rights and
an environmental licence and carry out mining activity: Milaré 1, §176 {C5/1T/65}. That
is not BHP.
411. Prof Sarlet, by contrast, asserts that Art 225, §2, must be interpreted broadly, such that
“exploit mineral resources” refers to “all activity and practices developed within the scope of the ‘mining
activity’ in relation to the entire production process”, such that persons “may be considered
exploiters of mineral resources when carrying out any activity that is related to such activity” (emphasis
added): JES Issue 5(f) {C1/5T/13}.
412. As to this debate:
412.1. First, Prof Milaré has consistently drawn a distinction between Art 225, paragraph
2, FC on the one hand, and environmental civil liability under the Environmental
Law on the other (Milaré 1, §172 {C5/1T/62}). Prof Sarlet appears now to accept
that – at Sarlet 2, §81, he clarifies that “The purpose of article 225, § 2, of the Federal
Constitution is to assist in the proper systematic interpretation of the environmental civil liability
microsystem, more generally, and not to answer the question of responsibility for the activity under
article 3, IV, of the [Environmental Law]” (emphasis added) {C15/1T/33}. So it may
be that it is agreed.
412.2. Second, in any event, Prof Sarlet’s construction of those who “exploit mineral
resources” appears overly broad and legally uncertain. Prof Milaré observes at Milaré
1, §175.2.2 that, if right, it would follow that a supplier of information services used
in mining research could be required under the FC to restore any environmental
damage caused by a miner {C5/1T/64}. That seems implausible.
413. In sum, Art 225, §2, FC does not, without more, have a bearing on environmental civil
liability. BHP was not the party which held the relevant mining rights and environmental
licence. Should it matter, Prof Milaré’s interpretation should be preferred.
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H1.6 Burden of Proof
414. While not pleaded or mentioned in the parties’ List of Issues, Prof Sarlet has raised a point
about burden of proof. It is worth having regard to what is pleaded at MPOC, §280B:
“…[I]n relation to the question whether loss and damage suffered by the Claimants was caused by the Collapse,
the burden of proof is to be reversed in accordance with STJ Precedent 618, applicable in this case pursuant to
Article 22 of Rome II.” {A1/1/123}.
415. Thus, the pleaded burden of proof point related to whether Cs have suffered loss and
damage because of the Collapse and not to whether BHP’s acts or omissions caused the
Collapse. If Cs are indeed contending that BHP bear the burden of establishing that they
did not cause the Collapse, that is not pleaded at all.
416. In any event, under Brazilian procedural law, the ordinary position is that the burden of
proof rests on the claimant in relation to the facts necessary to make out their claim. Prof
Milaré’s evidence is that the circumstances in which the burden of proof may be reversed
in Brazilian law is regulated by Art 373, §1 of the Civil Procedure Code (“CPC”) {I1/3/6}:
Milaré 1, §122 {C5/1T/45}. This provides that “in view of the peculiarities of the action relative to
the impossibility or excessive difficulty [of discharging the burden].., the judge may assign the burden
differently, provided this is done in a reasoned decision, in which case the party must be given the opportunity
to discharge the burden assigned.” Thus the burden can potentially be reversed in claims for
environmental damage, but its application is “exceptional”: Milaré 1, §§121-126 {C5/1T/45}.
417. Nevertheless, Prof Sarlet asserts that in cases concerning environmental civil liability, “the
defendant has the burden of proving that his activity did not cause the alleged damage”: Sarlet 1, §52
{C4/1T/30}, purporting to rely on Precedent 618 {C4/3.2T/935-937}. It is difficult to
understand the relevance of this – BHP does not dispute that Samarco’s activity caused
environmental damage. But that does not bear on BHP’s alleged indirect polluter liability.
Moreover, elsewhere, Prof Sarlet seems to accept Prof Milaré’s view (set out above) that
any burden reversal is non-mandatory and depends on satisfaction of Art 373, §1 of the
CPC. In Sarlet 2 §75 {C15/1T/31}, he appears implicitly to concede the point, referring
only to “the possibility of reversing the burden of proof in environmental matters has been recognised by
Non-Binding Precedent 618 [Sumūla] of the STJ…”.
418. Thus a reversal of burden point is ultimately irrelevant. It is common ground that Brazilian
procedural law permits a judge to order the reversal of the burden of proof in the
exceptional circumstances under Article 373 §1 {I1/3/6}. A claimant must seek this and
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the Court must order it in advance. That has not happened here. Indeed Cs have not
pleaded or even suggested they fall within Art 373 §1 or how the question of whether BHP’s
acts or omissions caused the Collapse satisfies that provision (which it does not). It is
therefore not open to the Cs (and nor is there any basis for them) to rely on Article 373 §1.
419. In any event, even if one were to reverse the burden of proof none of BHP’s acts or
omissions caused the Collapse.
H2. Application of Environmental Law to the facts
420. As is apparent from the above, the parties’ experts are fundamentally at odds as to the
correct ‘test’ under Brazilian law for environmental civil liability. That being so, BHP’s
position on the relevant facts depends on the legal test the Court applies. We start,
therefore, by addressing the facts in relation to the test advanced by Prof Milaré and BHP,
before addressing the facts in relation to the test advanced by Prof Sarlet and Cs. On either
test, it is submitted that BHP are not liable.
H2.1 On BHP’s / Prof Milaré’s test
H2.1.1 Direct polluter liability
421. By definition, BHP are not and cannot be direct polluters. They were not the owner or
operator of any of Samarco’s facilities or the Dam – Samarco was. BHP were not doing any
mining in Brazil. BHP had no mining licence to do so.
422. Assuming that BHP are right about that legal test, Cs’ case on the facts as regards direct
polluter liability is unclear. It is instructive to set out Cs’ case in Reply on this point (which
sets out Cs’ case on liability if BHP’s case on the legal test is adopted):
“118. As to paragraph 285:
118.1. It is denied that a person or legal entity will only be a polluter within the meaning of Article
3(IV) and Article 14, paragraph 1 of the Environmental Law if (a) they have carried out an activity
that has caused environmental degradation, or (b) they omitted to act in breach of a specific legal duty
and thereby caused environmental degradation.
118.2. However, if it were necessary to show that the Defendants satisfy one of the conditions set out
in the previous sub-paragraph, that test would be met, for the reasons pleaded at paragraphs [124]-
[130] below in relation to civil liability”. {A1/3/82}
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423. The reference to Reply §§124-130 {A1/3/95} is inexplicable. That simply sets out Cs’ reply
on liability under the CC. It contains no allegation that BHP owned or operated the mine
or Dam. They obviously did not. Thus, if BHP are right about the direct polluter test, there
can be no serious allegation that BHP satisfy it.
H2.1.2 Indirect polluter liability
424. As to whether BHP are indirect polluters, BHP’s case is as follows:
425. First, they did not owe any duty of safety. There is no law or contract which imposes a
specific duty of safety on companies in BHP’s position.
426. As seen above, all that one has from Cs on that point (i.e. assuming Prof Milaré is right on
the legal test) is the cross-reference in Reply, §118 {A1/3/82} to Cs’ case on liability under
the CC in Reply, §§124-130 {A1/3/95}. Those paragraphs do not contain any allegation
that there was any contractual duty of safety on BHP. So at least that point is common
ground. As to whether any specific duty of safety is imposed by law, at Reply §126
{A1/3/97} Cs plead:
“126. Further or alternatively, having regard to the matters referred to in paragraph [124] above, and
to their duty both to protect the environment and to the communities liable to be affected by Samarco’s
activities (see Re-RAMPOC paragraph 282.1), the Defendants were under a legal duty of safety and
environmental care which included a duty to take the steps set out in paragraph [125]
above.”{A1/3/97}
427. That is, with respect, another unclear plea:
427.1. Reply §124 does not mention or identify any provisions of Brazilian law that impose
a specific duty of safety (which is the test Prof Milaré has described, and which
BHP pleaded at Defence, §285 {A1/2/183}). Reply §124 {A1/3/95}, instead,
makes various assertions about BHP’s role and knowledge. So this reference is
inexplicable.
427.2. The cross-reference to MPOC §282.1 {A1/1/123} does refer to two provisions of
Brazilian law (albeit only in the context of liability under Art 186 CC rather than
environmental law) viz. an apparent “duty to act” under Art 225 of the FC {I1/1/27}
and/or under Art 116 of the Corporate Law {I1/4/4}. But as explained earlier,
neither of those provisions contains a specific duty of safety.
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427.3. As also noted earlier, an important feature of requiring a specific duty of safety
arising from contract or law is that one looks to the contract or the relevant
Brazilian law to find the standard – i.e. what does the duty of safety require?
Instead, at Reply §125 {A1/3/96}, Cs simply plead a shopping list of what
“procedures” BHP should have “insisted” on in these particular circumstances. At
Reply, §128 {A1/3/99}, one then has a further identification of two matters that it
is said BHP “should have been expected to insist” on, viz. not raising the Dam, and
making disclosure to Supram. There is no attempt whatever to identify how these
matters are part of a specific “duty of safety” under Brazilian law, let alone one derived
from Art 225 of the FC or Art 116. They are neither part of a specific duty of safety,
nor derived from either of those provisions.
427.4. The sort of requirements one finds, in Brazilian law, in the “duty of safety” are specific
duties – found in the relevant law or contract – to do, or check, specific things (e.g.
check the origin of the timber, check the activity one is financing is properly
licensed, maintain the gasoline tanks etc). They are the sort of specific duties that a
person can know with certainty that they are under – by looking at the relevant law
or contract – so as to regulate their behaviour accordingly (as Prof Milaré points
out). Those are not the sort of duties that Cs have alleged.
428. Second, there was no failure by BHP to comply with any duty of safety even if one were
imposed. It is understood, from Reply, §118.2 {A1/3/82}, that Cs’ case on how any alleged
duty was breached is simply its case for liability under the CC set out at Reply, §130
{A1/3/99}. To avoid repetition, BHP’s response on those matters is addressed in Section
J1.2 on liability under the CC below.
429. Third, there was no causation between any failure of BHP to comply with any duty of
safety and the damage (i.e. the Collapse). Again this matter – which is exclusively pleaded
by Cs in the section on liability under the CC – is addressed further in the section under the
CC below. To summarise:
429.1. Nothing which BHP are alleged to have done or failed to do was the direct and
immediate cause of the Collapse, as required by Art 403 CC – which is the causal
test for environmental civil liability. It is instructive, in that regard, to consider Cs’
case on causation, as set out in Reply, §131 {A1/3/100}. Each is expressly pleaded
in ‘but for’ terms – i.e. ‘had BHP not done something or failed to do something,
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the Collapse would not have occurred’. These are not pleas that anything BHP did
or did not do was a direct and immediate cause of the Collapse. It is a pleading of
the very thing that it is common ground is insufficient for Art 403 (i.e. ‘but for’
causation). See §374 above and Section J1.1.6 below.
429.2. Thus the conclusionary plea in Reply §132 {A1/3/100} makes no sense. That avers
that “even if it is necessary to establish a direct causal connection between the Defendants’
conduct and the Collapse, as alleged by the Defendants, that test is satisfied”. Cs
offer no explanation for how this could be right (given the causation they actually
allege) – save to assert in Reply, §123.1 {A1/3/95} that “[e]ven if, and to the extent
that, the test set out in Article 403 can be applied in non-contractual contexts, under Brazilian
doctrine and jurisprudence that test will be treated as satisfied if a sufficient causal link is
established as set out in Re-RAMPOC paragraph 295”. But MPOC §295 {A1/1/134}
does not plead the test under Art 403 but pleads ‘but-for’ causation (“A loss is
recoverable if it would not have occurred but for the relevant conduct or event”) – which is
insufficient.
429.3. Furthermore, the three ‘causation’ points relied on in Reply §131 {A1/3/100} are
wrong in fact, or based on false premises:
429.3.1 There is no basis for the assertion that, “without the Defendants’
encouragement and approval” of increases in production, the Dam would
not have continued to be raised along the alignment of the Setback:
Reply §131.1 {A1/3/100}. The Dam continued to be raised along the
alignment of the Setback pending installation of the El.860m Blanket
Drain and thereafter the infilling of the Setback, which from August
2015 was underway. It would have continued to be raised on that
alignment until the infilling was completed, regardless of the level of
production, because until then the original axis would be below the
level of the crest at the Setback.
429.3.2 The assertion that, had the Defendants insisted on reports by

independent experts “it is highly likely that such reports would have
recommended that there should be no further raising of the Dam or
the removal of the Setback before the further raising of the Dam”:
Reply, §131.2 {A1/3/100}, similarly has no foundation in fact. The
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evidence indicates the opposite: (a) the investigations / reports that
were produced and the extensive ongoing monitoring of the safety of
the Dam (as explained in the Geotech Annex), did not contain or
result in such recommendations; and (b) what, if any,
recommendation would have been made is highly uncertain, in light
of the uncertainties (which it is apparent from the existing
reports/ongoing monitoring would have existed) in relation to the
inputs into the putative evaluations/reports, the analyses that would
have been conducted, the significance that would have been attached
to any identified risk, and the remedial work that would have been
recommended.
429.3.3 The assertion that certain disclosures should have been made to
Supram, that in response to that disclosure Supram would have taken
certain steps, and that had Supram taken those steps the Collapse
would not have occurred: Reply, §131.3 {A1/3/100}, is similarly
unfounded in fact and in terms of causation, see further Section K2
below.
430. In sum, if the legal test advanced by Prof Milaré is accepted, BHP will contend they are not
liable under the Environmental Law. There is no law or contract that imposed any duty of
safety on them, they did not fail to comply with any such duty, and in any event any failure
to comply with any such duty did not cause the Collapse.
H2.2 On Cs’ / Prof Sarlet’s test
431. As explained above, Prof Sarlet’s opinion is that liability is established by two links. First,
applying a “multifactorial” “imputation link” to assess whether BHP are to be treated as
responsible for Samarco’s activity (relevantly, the operation of the Dam), and then, second,
a factual causation test to assess whether Samarco’s activities caused the Dam collapse.
432. Starting with the first link, when it comes to applying the multifactorial test Prof Sarlet states
that the factors that might be relevant to this are incapable of definition: “there is no closed list
of exhaustive criteria”: Sarlet 1, §277 {C4/1T/132}. It might be based on one factor, or a
combination of factors. But as noted earlier, he points to certain factors that he contends
have been established in the case law, viz. “(i) control over the risky activity, (ii) economic benefit
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from the risky activity; or (iii) the creation of a situation of risk; (iv) participation and/or active involvement
in the risky activity; and (v) financing the risky activity”: Sarlet 1, §286 {C4/1T/138}.
433. Cs, in turn, have pleaded the matters they rely upon as part of the multifactorial test at
MPOC, §§271-281 {A1/1/114-123}. It is to those – the pleaded factual matters Cs contend
satisfy the multifactorial test – that we turn.
H2.2.1 Control
434. This allegation is understood to be based on MPOC, §270 {A1/1/114}, viz. “(i) by reason of
ultimate ownership and/or control (either solely or jointly with others) of the entity directly responsible for
the damage”.
435. MPOC, §§271-274 {A1/1/114-116} largely plead Cs’ case as how the BHP “Group” of
companies was organised and managed.
436. The corporate structure has been addressed earlier. Samarco is not a subsidiary of BHP. It
is not a ‘group company’. There is no suggestion otherwise. Insofar as BHP has influence,
it would be derived from BHP Brasil’s rights as 50% shareholder, under the SHA and/or
Bylaws. BHP Brasil could only appoint two effective and two alternate directors of the
Samarco Board (with Vale enjoying the same rights). BHP Brasil alone could not and did
not control the Samarco Board and was not able to require the executive officers to act at
its direction. Samarco was a very large self-standing business, had an independent Executive
Board, independent executive officers and was operationally independent of its
shareholders. Put differently, it cannot be said that the shareholders ‘ran’ this business. They
did not.
437. That does not mean that Vale and BHP Brasil, had no voice – but it does mean that
operational decisions were to be, and were, taken by Samarco. Cs rely on two particular
matters at MPOC, §275 {A1/1/116}.
437.1. First, the shareholders’ power to appoint directors to the Board. But that does not
mean BHP Brasil (let alone BHP) could or did control Samarco. While the directors
would have a say at a high level over Samarco’s business, the exercise of their power
was circumscribed by (a) Samarco’s Executive Board and officers being
independent of the shareholders; (b) their fiduciary duties owed to Samarco
(including to act with loyalty to and in the best interests of Samarco); (c) neither
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shareholder having a majority on the Samarco Board; and (d) the fact that the
Samarco Board only met around three times a year.
437.2. Second, Cs also refer to the shareholders’ right to require executive officers to
implement decisions made in preliminary meetings. As explained in Section C2
above, the SHA contained terms that permitted the shareholders to require
Samarco’s directors or its shareholders (acting in the general shareholders’ meeting)
to observe and implement decisions the shareholders had made in a Previous
Meeting. But Cs have not identified any such relevant Previous Meeting or any such
decisions, so the significance of this allegation is unclear.
438. Therefore, it does not follow – either in fact or law – that because BHP Brasil and Vale, as
shareholders, had the rights described above, that they controlled any or all of Samarco’s
operational decisions, or controlled the “risk activity” generally (to adopt Prof Sarlet’s
terminology). They did not control the operation of the mine, or the design, operation or
maintenance of the Dam. They did not, e.g. control whether or where the Setback was
constructed, or how it was constructed, or drained, or whether and what Samarco explained
to Supram and so on. Those were all operational matters controlled by Samarco. If the
contrary is alleged (and it is not clear that it is), it is unclear what the basis for it would be.
439. In reality, it appears that the specific allegations of control on which Cs rely in this context
are those set out at MPOC, §276 {A1/1/116} (said to be particulars of how “such control by
was BHP was manifested”). It is striking how thin they are:
440. First, MPOC, §276.1 contains twoallegations {A1/1/116}.
440.1. That the “Samarco Operation” was a significant part of BHP’s iron ore business. As
noted earlier, the revenues from Samarco were a relatively small part of BHP’s iron
ore business. But, more fundamentally, even if Samarco revenues were a significant
part of BHP’s iron ore business, that tells the Court nothing about whether BHP
“controlled” the relevant activity. It is not a manifestation of control.
440.2. Cs then point out that Messrs Randolph and Wilson had senior roles in BHP’s iron
ore business, sat on the GMC and were also directors of Samarco. It is said there
is “thus a direct reporting line between the representatives of BHP serving on the Samarco Board
and the GMC”. The ‘inference’ alleged by Cs (i.e. that everything they learned was
passed on to the BHP Board and/or the GMC) is wrong and was addressed earlier.
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But, regardless, it is not understood how this manifests that BHP, and not Samarco,
was in control of the relevant “risk activity”. It is another non-sequitur.
441. Second, MPOC, §276.2 {A1/1/116} contends that other representatives of BHP were
members of the Samarco Board or committees, and were in practice nominated by BHP
rather than BHP Brasil. Again, that is not a manifestation of control by BHP over Samarco’s
“risk activity”.
442. Third, MPOC, §276.3 {A1/1/116} avers that “Key decisions such as in relation to the approval of
major capital projects, including the P4P Project and other key decisions concerning the Samarco operation
(including the Dam and the stability thereof) were made by or at least approved by the GMC, if not also
BHP’s common Boards of Directors”.
442.1. The approval process for the P4P Project has been addressed above: see Section
D3.4. Given the size of Samarco’s capital investment in the project, the BHP Board
discussed and delegated the power to approve BHP Brasil’s notional share of the
expenditure to BHP’s CEO. That was a BHP internal capital approval process.
BHP did not make or control Samarco’s investment decision, let alone control the
P4P Project, the tailings it generated or the storage of the same. Samarco’s Board
had to and did consider and reach its own decision in accordance with the directors’
duties – and Samarco itself was responsible for the actual project and its funding.
442.2. Cs’ reference to other “major capital projects” or “other key decisions concerning the Samarco
operation (including the Dam and the stability thereof)” being “approved” by the GMC or
BHP Board is unclear. We have addressed earlier BHP’s alleged involvement in
Samarco’s activities.
443. Fourth, MPOC, §276.4 {A1/1/116} avers that “Key issues in relation to the Samarco operation
(including in relation to the Dam and the stability thereof) were referred to and considered by the GMC, if
not also BHP’s common Boards of Directors”. Again, no explanation is given as to what these key
issues are (let alone how they relate to “the Dam and the stability thereof”).
444. Finally, fifth, MPOC, §276.5 {A1/1/117} contends that “BHP further influenced, participated
and/or was involved in the operations of Samarco, including as pleaded in paragraph [205A] above”.
444.1. The cross-reference to §205A {A1/1/85} is to a lengthy section of the pleading

entitled “BHP’s knowledge and conduct in the months preceding the Collapse”. This largely
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sets out allegations about what the Samarco Board, or various employees of BHP
knew. They have been addressed above (see Section E), and are in any event not
allegations of influence, participation or involvement.
444.2. The only ‘conduct’ referred to in MPOC, §205A is limited. First, there are the bare
allegations that “BHP approved Project 940” and “funded” it: MPOC, §§205A.5
{A1/1/87} and 205A.9 {A1/1/88}. These allegations are unsustainable and have
already been addressed in Section D3.6 above. In short, BHP did not approve
Project 940, or even any notional share of the funding of it. Project 940 was
approved by the Samarco Board.
444.3. Cs also allege (MPOC, §205A.7 {A1/1/88}) that BHP agreed with Samarco and
Vale to divide Project 940 and to proceed with initial works prior to obtaining the
licence for the full project. This allegation was addressed above at Section D3.6.2.1.
444.4. In any event, even if BHP were shown to have engaged in the limited ‘conduct’
alleged, none of that shows it influencing, participating or being involved in the
operations of Samarco. Still less does it establish a manifestation of control of those
actions, or of Samarco’s “risk activity”.
445. That is all that Cs plead in respect of their allegation of control of “risk activity”. It does not
bear scrutiny. As discussed in greater detail in Section I below on Corporate Law, BHP
Brasil and Vale are – together (but not individually) – to be regarded as controlling
shareholders under Brazilian law. But that is not sufficient to make BHP Brasil (still less
BHP) bear environmental civil liability for Samarco’s activities, as the Court held in the
Braskem case addressed earlier at §384. Indeed, as Prof Milaré points out, if the status of a
controlling shareholding was sufficient to confer liability, the legislator would not have
provided for the existence of separate corporate personality, or indeed specifically for the
disregard doctrine in the environmental context in Brazilian law (i.e. veil piercing in limited
circumstances in environmental law, none of which are suggested to exist here): Milaré 1,
§77 {C5/1T/31}. It would make no sense for a veil piercing doctrine to exist specifically
under environmental law because – if Prof Sarlet were right – by definition all parent
companies (as controlling shareholders) would automatically be liable for environmental
damage caused by any underlying activity. Cs’ case is legally and commercially unreal.
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H2.2.2 “Creating the risk”
446. The next pleaded ‘factor’, relied on by Cs, is at MPOC, §276A {A1/1/117}. This avers that
“As pleaded in paragraphs 54 to 206A above, acts of BHP brought about the activities of Samarco which
resulted in environmental damage and/or created or contributed to the risk that Samarco’s activities would
cause environmental damage. In particular…”.
447. Although unclear, this appears to be a reference to Prof Sarlet’s factor (d): “create the risk”:
Sarlet 1, §286 {C4/1T/138}, §338 {C4/1T/161} et seq.
448. Cs’ compendious reference to more than 150 paragraphs of pleading is unilluminating. The
matters relied upon appear to be the three matters pleaded in MPOC, §§276A.1-276A.3
{A1/1/117}. They are as follows:
448.1. First, Cs contend that BHP created the risk by approving the Third Pellet Project
– i.e. P3P – in 2005 which “directly led to the construction of the Dam”. The ‘approval’
point has been addressed earlier: see §235 above. BHP simply approved BHP
Brasil’s notional share of the capital expenditure. But, moreover, the decision to go
ahead with the P3P Project (and build the Dam) was that of Samarco, not BHP.
And there is – notably – no suggestion that BHP was responsible for the design or
construction of the Dam. The proposition that the mere approval of capital
expenditure on a pellet project means that BHP themselves are to be regarded as
legally responsible for creating the risk of the Dam collapsing (and thus, on Cs’
case, legally responsible and liable for its collapse) is so far reaching as to be unreal.
448.2. Second, Cs contend that BHP approved the P4P Project which, “directly led to the
elevation of the Dam…which was a major contributing factor to the Collapse”. We have already
addressed, at Sections D3.4.2.1 and D3.4.1, respectively, the approval point and the
fact that the P4P Project was not a “major contributing factor” to the Collapse. But
regardless, and as noted at §442 above, there is the same fundamental problem with
the C’s approach here, as there was with the P3P: BHP were not responsible for
the elevation of the Dam or creating any risk that it posed. They did not design,
construct or operate the P4P Project or any elevation of the Dam. Their approval
of BHP Brasil’s notional share of capital expenditure on the P4P Project (many
years prior to the Collapse) cannot be describing as creating the risk of the Collapse
so as, on Cs’ case, to make BHP legally responsible for that Collapse.
151
448.3. Third, and finally, it is alleged that BHP approved ‘Project 940’, and thus “the
elevation of the Dam continued thereafter on the axis of the Setback, and this was a major
contributing factor to the Collapse”. The Project 940 approval point has been addressed
above: see Section D3.6.2.1). BHP did not approve Project 940 – unlike P4P, they
did not even approve BHP Brasil’s notional share of the expenditure. But in any
event, the Dam did not continue to rise along the axis of the Setback due to Project
940: the Dam continued to rise pursuant to the existing licence permitting raises to
920m, and the Dam rose along the axis of the Setback pending the installation at
the El.860m Blanket Drain (which was required regardless of Project 940, see §219
above), and thereafter pending the infilling of the Setback. The Dam was far below
920m when it collapsed.
449. Those are the only particulars of the allegations that BHP “brought about the activities of
Samarco” or created the relevant risk. BHP will contend they did not.
H2.2.3 “Participate and actively engage in risk activity”
450. The next pleaded ‘factor’ relied upon for the multifactorial test is the allegation at MPOC,
§278 {A1/1/117}, viz. that “As pleaded in paragraphs [71]-[92] and [177]-[205A] above, BHP
participated and/or was involved in the activities and/or management of Samarco, including in relation to
the operations and decisions which ultimately led to the Collapse pleaded in paragraphs [93]-[176] above,
and had direct knowledge of those matters including the risk that the Dam might collapse.” It is
understood that this is to satisfy Prof Sarlet’s limb “I” of the multifactorial test, namely to
“participate and actively engage in risk activity”: Sarlet 1, §344 {C4/1T/164}.
451. Two points should be noted at the outset: (a) Prof Sarlet does not suggest that “knowledge”
has anything to do with this limb of his test (and it is difficult to see how or why it would
be relevant): see Sarlet 1, §§344-346 {C4/1T/164}; and (b) the case relied on by Prof Sarlet
as establishing this ‘participation’ limb is instructive. It is the ’TAG case’. The quotation at
Sarlet 1, §345 {C4/1T/164} shows that there, Petrobras – the owner of a pipeline – had
itself planned and designed the relevant pipeline works, had applied for a licence to do the
works and itself been granted the relevant licence. Petrobras then decided to sub-contract
the actual works to a subsidiary Petrobras company (i.e. TAG). As Prof Milaré observes,
this was thus a case of direct participation by Petrobras – as planner and licensee of the
relevant works, and indeed the owner of the pipeline. It is a long way from the facts relied
on in the present case.
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452. Turning to the particulars given by Cs of alleged ‘participation’, they are thin and repetitive
of the points already addressed above:
453. First, MPOC, §278.1 {A1/1/117} essentially relies on two matters – (i) the “approval, and the
subsequent putting into effect of the P4P Project” and (ii) “deciding to proceed with the raising of the height
of the dam in 2015 in the period leading up to its collapse”. These have both already been addressed
(see esp. Sections D3.4.2.1 and D3.6.2.1 above) and provide no basis for the allegation that
BHP actively participated in the “risk activity”. BHP did not ‘put into effect’ the P4P Project.
BHP did not ‘decide to proceed’ with the raising of the height of the Dam, that being an
operational decision for Samarco. Neither of these matters caused the Collapse in any event.
454. Second, MPOC, §278.2 {A1/1/118} contends that the Samarco Board, including the BHP
Brasil appointees to that Board, “were given repeated warnings […] as to the risk of harm posed by
the Dam and the collapse thereof”. That is not a particular of participation at all – so it is not
clear what it goes to. But in any event, if it is intended to suggest that the Samarco Board
(and any BHP Brasil appointees to that Board, or BHP itself) ignored any such warnings or
pursued any course of conduct knowing that it could lead to the Collapse, then that is
entirely wrong. Cs’ case as to the alleged ignoring of warnings, as pleaded at MPOC, §282.4
{A1/1/124} is addressed above at Section E3 and below at Section J1.2.2.4.
455. Third, MPOC, §278.3 {A1/1/118} alleges that “[i]n the circumstances referred to in paragraph
[275] above, it is reasonably to be inferred that the substance of the concerns in respect of the Dam and the
stability thereof as raised at the meetings of the Samarco Board were communicated to the GMC, if not also
to the BHP Boards of Directors, and that significant matters approved by the Samarco Board, such as the
approval of the P4P Project and the expenditure incurred in connection with, were approved by the GMC,
if not also by the BHP Boards of Directors.” This (misconceived) allegation has already been
addressed at Section C1 above. There is no evidence that concerns about the stability of the
Dam were raised at the Samarco Board meetings (let alone any evidence that any such
concerns were passed on to the GMC and/or BHP Board).
456. Fourth, MPOC, §278.4 {A1/1/118} refers to BHP’s alleged knowledge of the risk of
collapse based on two statements, one by Mr Wilson and one by Mr Nasser. These have
been addressed at Section E2.4 above. But – more fundamentally – this is not an allegation
that BHP actively participated in any risk activity. It is, at best, an allegation of knowledge.
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457. Fifth, and finally, MPOC, §278.5 {A1/1/118} is similar to the plea at MPOC, §276.5
{A1/1/117} – i.e. quoted and addressed at §444 above in the context of alleged “control”. It
is similarly untenable in this context. The actual conduct alleged is minimal, and even if the
factual allegations were made out, they would not establish participation by BHP in
Samarco’s activities.
Post-Collapse Conduct
458. It is only in the context of the ‘participation in risk activity’ limb that Prof Sarlet has raised
the prospect that post-event conduct could be relevant evidence of pre-event responsibility:
Sarlet 1, §346 {C4/1T/165}109 and Reply, §120C {A1/3/87-88}. BHP’s alleged post-
Collapse conduct (and Prof Milaré’s evidence on Brazilian law) was addressed at Section
G5 above. BHP’s involvement after the event – such as it was – cannot conceivably be the
basis for an inference that, prior to the Collapse, BHP in fact participated in the risk activity
(i.e. the mining, or operation of the Dam).
H2.2.4 “Funding the risk activity”
459. As Prof Sarlet observes, there is “no case law stating that mere financing, without any other indication
of responsibility…is enough to establish responsibility”: Sarlet 1, §350 {C4/1T/167}. So even on
Prof Sarlet’s evidence, this point is questionable to say the least.
460. Cs make four allegations of “financing”, “funding” or “facilitating” funding in MPOC, §§279.1-
279.3 {A1/1/119}. These are said to be “pending disclosure, the best particulars the Claimants can
give”, but there has been no amendment since disclosure. Those four factual allegations are
addressed at Sections F1-F4 above. In summary:
461. First, MPOC, §279.1 {A1/1/119} contends that “BHP (through BHP Brasil) provided capital
contributions to Samarco at least as required by Article 10.1 of the Samarco Shareholders Agreement. Cs
are unable to specify the manner or amounts in which, or the dates on which, such contributions were made.”
As set out at Section F1 above, there is no evidence of any capital contributions and, in any
event there is no allegation that any alleged contributions financed anything to do with the
Dam, let alone caused the Collapse.
109“...conduct after the environmentally damaging event is relevant to determining whether the actor is responsible for the polluting activity.”
See also Sarlet 2 FNs 1 {C15/1T/5} and 8 {C15/1T/10}.
154
462. Second, MPOC, §279.2 {A1/1/119} refers to BHP Billiton Finance BV having entered into
a US$150m export prepayment credit facility agreement with Samarco and Samarco Finance
Limited in December 2009. BHP has admitted that (Defence §313(2C) {A1/2/192}). It is
impossible to understand why that matters. There is no allegation that this financed
anything to do with the Dam let alone the Collapse.
463. Third, MPOC, §279.3 {A1/1/119} contends that: “between 2012 and 2015 BHP directly or
indirectly funded” 50% of the costs of the P4P Project. As explained at Section F3 above, this
allegation is replete with errors. BHP did not directly or indirectly fund the costs of the P4P
Project.
464. Fourth, MPOC §279.3 {A1/1/119} contends that BHP “facilitated the funding of 50% of the
costs of the P4P Project”. As explained at Section F4 above, the “facilitation” allegation is
factually untenable – reviewing the terms of a bond issuance is not facilitating the funding.
It is also legally untenable. There is no support from Prof Sarlet for the allegation that
facilitation of financing can be treated as “responsibility” and thus liability under Brazilian law
(as noted above, he accepts there is not even jurisprudence determining that direct financing
alone is sufficient).
H2.2.5 “Benefit from the activity”
465. Finally, at MPOC, §280 {A1/1/119}, Cs plead that BHP received “very substantial earnings by
way of dividends received from BHP’s equity investment in Samarco”.
466. Simply receiving profits from an equity investment cannot – even on Prof Sarlet’s
hypothesis – be sufficient to ground liability for acts by the investee. Such a position would
seemingly implicate all BHP’s shareholders as indirect beneficiaries of Samarco’s
operations; or anyone who held a pension invested in BHP shares, or funds with BHP
shares. That cannot be, and is not, the true effect of Brazilian law.
467. Prof Sarlet appears to acknowledge this. In Sarlet 1, §329 {C4/1T/157} he suggests that “a
consumer who buys a product from a polluting entrepreneur will not qualify as a polluter because they have
not internalised the risk of the polluting activity. Thus, an important distinction can be drawn between those
who benefit from activities that in some way in the production process contributed to the creation of the risk
and those who receive tangential benefits which, on their own, will not be enough to configure the normative
causal link.” This is not easy to follow – but he appears to be saying that if one simply
benefitted from the activity but did not also “create the risk” one would not “qualify as a
155
pollutant”. So, in that sense, it may be that this “benefit” point is a distraction and on Prof
Sarlet’s analysis Cs must establish the “create the risk” allegation at MPOC, §276A
{A1/1/117}, addressed earlier.
468. In addition, by way of very recent amendment to the ‘benefiting’ allegation, in the final
sentence of MPOC, §280 {A1/1/119} Cs have now added “Moreover, by reason of its indirect
ownership of 50% of the shares in Samarco, BHP held rights to 50% of Samarco’s net assets.” That is a
distraction. The pleaded language was (Cs have confirmed) simply taken from BHP’s
Annual Report. It has a specific accounting meaning, as BHP have explained in their
response in their Defence. “Rights” to “net assets” refers to the fact that the shareholders of
Samarco (and thus, indirectly, BHP Australia as ultimate parent company of BHP Brasil)
would have rights, upon the winding up of Samarco and after satisfaction of its liabilities,
to its assets (i.e. its net assets). There is no suggestion – whether under the SHA or Brazilian
law – that Samarco’s shareholders have any rights to its assets prior to its winding up. So
the point is irrelevant.
469. Cs have sought to address this in their most recent amendments to the Reply, further
alleging that “BHP itself treated Samarco and/or Samarco’s mineral resource base as a physical, economic
and strategic asset from which it derived benefits that were not conditional upon Samarco’s winding up”:
Reply, §120A {A1/3/85}. However, again, this allegation goes nowhere, as made clear by
the documents on which Cs rely in support of it: namely (a) quotations from BHP
documents where Samarco is described as an “asset”, and which describe (in different ways)
its value to BHP; (b) statements in BHP documents describing a strategy “to fully exploit
Samarco’s mineral resource base”; and (c) statements in Samarco and third party documents
referring to Samarco’s importance to its shareholders, or the shareholders’ support for
Samarco. It is not disputed that BHP Brasil’s 50% shareholding in Samarco was an asset
within the BHP Group, from which benefits were derived and anticipated. But that does
not mean that BHP had any rights to Samarco’s assets prior to any winding up (and it
appears, from the Reply, that Cs cannot contest that).
470. Finally, and as regards Prof Sarlet’s second link, mentioned earlier, i.e. did Samarco’s activity
cause the Collapse – BHP do not dispute that, if this causal question were part of the
relevant legal test, it would likely be satisfied, given Samarco was the owner, operator, and
licensee of the Dam. If Prof Sarlet’s legal test were accepted, the debate thus, unsurprisingly,
would focus on the multifactorial first link.
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I. CORPORATE LAW CLAIM
471. This claim arises out of Arts 116 and 117 of the Corporate Law {I1/4/4-7}, which concern
the “duties and responsibilities” of a “controlling shareholder” in respect of its “controlling power”
over a corporation. The claim and defence are principally pleaded, respectively, at MPOC,
§265 {A1/1/112}, §282.1 {A1/1/124}, §§283-288 {A1/1/130}, and Def, §280 {A1/2/180},
§317 {A1/2/200}, and §§326-340 {A1/2/212}.
472. The Brazilian law relating to these claims is addressed by expert witnesses: Prof Trindade
for BHP and Prof Muller Prado for Cs (see further §§8-10 of Annex 2). Each contributed
to a JES and subsequently submitted two individual reports.110 Relevant evidence is also
given by BHP’s civil law expert Prof Tepedino, in particular in relation to the relationship
between Arts 116 and 117 of the Corporate Law and Arts 186, 187 and 927 CC.
473. Art 116 provides, under the heading “Duties” {I1/4/4}:
“A controlling shareholder is understood to be a person, natural or legal,, or a group of persons bound

by a voting agreement or under common control, which:
(a) holds shareholder rights that permanently grant them the majority of votes in the general meeting
and the power to elect the majority of the company’s management; and
(b) effectively uses their power to direct the company’s activities and to guide the functioning of the
company’s bodies.
Sole Paragraph. The controlling shareholder must use its controlling power with the aim of making
the company achieve its object and fulfil its social function, and has 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 must be loyally respected and fulfilled.”
474. Art 117 is headed “Liability”, and provides in those parts of principal relevance {I1/4/5-7}:
“A controlling shareholder shall be liable for any damage caused by acts performed by the abuse of its
power.
1. An abuse of power may take any of the following forms:
110 Corporate JES {C1/6T/1}; Trindade 1 {C8/1/1}; Trindade 2 {C19/1/1}; Muller Prado 1 {C2/1T/1}; Muller Prado
2 {C14/1/1}.
157
(a) to guide a corporation towards an objective other than in accordance with its corporate purposes
clause or harmful to national interest…
(g) …to approve, or cause to be approved, irregular accounts rendered by corporation officers as a
personal favour, or to fail to verify a complaint which he knows, or should know, to be well founded,
or which gives grounds for a reasonable suspicion of irregularity”
3. A controlling shareholder who holds the position of manager or fiscal committee member shall also
have the duties and responsibilities relating to that position.”
475. Cs allege that BHP are liable to them by virtue of acting in breach of these provisions
and/or under Art 186 and Art 927 (head paragraph) CC. BHP deny any liability. Contrary
to Cs’ case, and in summary: (a) BHP are not “controlling shareholders” for the purposes of
these provisions, either generally or in relation to the specific acts and omissions relied upon
by Cs; (b) Arts 116 and 117 give rise only to duties to a controlled company itself, actionable
by the company (or its shareholders on a derivative action), they do not create any
freestanding (i.e. independently actionable or “autonomous”) rights of claim to third parties
such as the “community” (that is, on Cs’ case, everyone affected by an event arising from
Samarco’s activities); (c) Art 116 constrains the use of controlling power, when a controlling
shareholder chooses (or is required) to exercise it – it does not give rise to any sort of duty
of care or “proactive” duty to ensure that a controlled company conduct its activities in a way
which “minimises the risk of damage to the community”; and (d) none of the matters alleged by Cs
falls within the scope of “abuse” of controlling power covered by Art 117. Moreover, Cs’
claims depend on allegations of fact which they cannot sustain.
476. Accordingly, Cs claim fails as a matter of law (see Section I1 below) and fact (see Section
I2 below). Cs’ claim is a radical and ambitious one. The expansive duties that Cs ask the
Court to find have not been recognised by the Brazilian courts, and have far-reaching and
highly questionable implications. By contrast, BHP’s case accords with the text of Arts 116
and 117, the wider provisions of the Corporate Law, and the Brazilian case law. Further, by
contrast with the substance of Cs’ case, BHP’s case respects the “fundamental premise of
Brazilian law…that shareholders are not liable for the company’s debts, as reflected in Article 1 of the
Corporate Law”: Trindade 1, §39 {C8/1/10}.
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I1. Brazilian law issues
477. The experts have addressed an agreed list of issues {A2/1/1}.111 These detailed issues can
conveniently be addressed by reference to three key, over-arching issues, considered in turn
below:
477.1. First, when will a person be treated as a controlling shareholder under the
Corporate Law?
477.2. Second, do Arts 116 and 117 impose autonomous duties allowing for claims for
breach by individuals in the community?
477.3. Third, what is the scope of the duties owed under Arts 116 and 117?
I1.1 When will a person be treated as a controlling shareholder?
I1.1.1 Common ground and key sub-issues
478. As set out in the Corporate JES {C1/6T}, the experts agree on a number of matters.
Accordingly, in principle:
478.1. To be treated as a controlling shareholder, a person or group of persons (bound by

a voting agreement or under common control) must satisfy the tests set out at Art
116(a) and (b) of the Corporate Law, namely (a) holding shareholders’ rights
permanently assuring them of a majority in a company’s general meetings and to
elect a majority of its officers; and (b) the use of their power in practice to direct
corporate activities and guide the departments of the controlled entity: see
Corporate JES, Issue 26 {C1/6T/3}. To assess whether these conditions are met
in the case of a group of persons by virtue of a voting agreement requires
consideration of the terms of that agreement.
478.2. There is no special test applicable in cases of a 50/50 split in shareholder voting
rights: the “reasoning…is exactly the same” as for any company where no one
shareholder has controlling power: Muller Prado 1 §§280-281 {C2/1T/116}, and
see Corporate JES, Issue 26(a) {C1/6T/4}.
111The Corporate JES was prepared by reference to an earlier draft of the agreed LOI than the present, but there has
been an opportunity to address the limited subsequent changes in individual reports.
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478.3. Art 116 condition (b) can be fulfilled by conduct outside (as well as inside) a general
meeting: see Muller Prado 1, §§248-249 {C2/1T/116}, and Trindade 2, §§152-154
{C19/1/35} and §§172-173 {C19/1/39}.
478.4. A person or group of persons can satisfy the conditions in Art 116 by way of
indirect control over an entity. Such a finding is dependent on the necessary
conditions under Art 116 being “met at the base of the corporate chain”: Corporate JES,
Issue 26(b) {C1/6T/6}.
479. The experts disagree on three key points, addressed in turn below:
479.1. First, whether the condition in Art 116(b) can be satisfied by the operation of a
“presumption” when the condition in Art 116(a) is satisfied, or when there is indirect
control (as per Cs); or whether this condition must instead be proved by evidence
(as per BHP) (Corporate JES, Issue 26 {C1/6T/3}).
479.2. Second, in a situation of joint control by a ‘controlling group’ of persons (“CG”),

does each member of the CG individually have the status of controlling
shareholder, with individual liability (as per Cs); or is it only the CG itself that is the
controlling shareholder, with liability for a member only arising for conduct as part
of the CG (as per BHP)? (Corporate JES, Issue 26(a) {C1/6T/4}).
479.3. Third, is a person who controls a member of a controlling group of shareholders

itself a controlling shareholder (as per Cs), or not (as per BHP)? (Corporate JES,
Issue 26(b) {C1/6T/6}).
I1.1.2 First sub-issue: can Art 116(b) be satisfied by presumption?
480. Prof Muller Prado contends that where a person satisfies the condition in Art 116(a) (and
so can exercise controlling power), it is presumed that they use that power in practice, first as
a general matter and second in cases of indirect control, where the controlling entity is a
company, by virtue of Art 243 of the Corporate Law: Prof Trindade considers that there is
no presumption, in any case.112
112See Muller Prado 1, §§245-254 {C2/1T/98}, §278 {C2/1T/115} and §§317-326 {C2/1T/129}, and Muller Prado
2, §§63-72 {C14/1T/22}; Trindade 1, §36 {C8/1/9}, §§102-111 {C8/1/32}; and Trindade 2 §§10-12 {C19/1/4},
§§156-157 {C19/1/36}, §§159-168 {C19/1/36}
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481. The extent of Prof Muller Prado’s first argument is not easy to understand. She says that
where the condition in Art 116(a) is satisfied, a claimant can establish the condition in Art
116(b) by way either of a “relative presumption” or by actual proof, “depending on the specific case
and circumstances” {C2/1T/99}. But it is not clear on what this “depends”. Her essential
rationale for the asserted presumption is that, because controlling shareholders are able and
permitted to influence an entity’s business and its manager’s actions, they do in fact do so,
and she says that such a presumption “stems from” the fact that managers can be hired and
fired at will by controllers: Muller Prado 1, §§246-248 {C2/1T/99}, see also Muller Prado
2, §65 {C14/1T/22}.
482. Prof Trindade gives three principal reasons as to why there is no such presumption. First,
“under Brazilian law, presumptions must always be express”, that is, set out in a statute, contract or
regulation: Trindade 1, §105 {C8/1/32}.113 But none is stated in Art 116 (or elsewhere), and
Prof Muller Prado does not suggest otherwise. Second, the Brazilian Securities and
Exchange Commission (the “CVM”)114 does not interpret Art 116(b) as provable by
presumption: Trindade 1, §104 {C8/1/31}.115 Third, such a presumption would not reflect
the reality of corporate control, whereby a number of different bodies can make or influence
decisions, such that “companies can and do make decisions and take action outside of general meetings
without any involvement from the controlling shareholder”: Trindade 2, §159 {C19/1/37}. This
reflects the fact that it is a logical fallacy to say that because someone can act in a particular
way, they will necessarily do so in practice: Trindade 2, §§152-156 {C19/1/36}.
483. Prof Muller Prado’s second argument (see §480 above) is based on Art 243 of the Corporate
Law.116 She argues that Art 243(2) creates a presumption that a company (‘X’) which can
control another entity (‘Y’) will do so in practice, because to exercise such control will be
113 See further Trindade 2 §162 {C19/1/37}, citing scholarship confirming that “relative presumptions” (the language used
by Prof Muller Prado) are a species of legal presumption, which depend upon statute.
114 The CVM is an administrative body (a special agency) which has authority to determine and punish violations of
the Corporate Law in relation to publicly-held companies. Its decisions are not binding on Brazilian courts, but can be
considered persuasive given the agency’s expertise: see Trindade 1 §44-45 {C8/1/12}.
115 At Muller Prado 2, §§66-67 {C14/1T/22}, some commentators are cited in support of her view. But these all derive
from Prof Comparato’s assertion that “disuse or misuse of power is not a defining element of the status” in cases of majority
control, a view which is contrary to the language of Art 116 itself. She does not cite any passages that refer to a
“presumption”.
116 “The annual management report must list the company’s in affiliated and controlled companies and mention the changes that occurred
during the tax year. // Paragraph 1. Corporations in which the investor has significant influence are affiliated. // Paragraph 2. A
corporation is controlled when a controlling corporation holds shareholder rights, either directly or through other controlled corporations, which
permanently assure it prevalence in voting and the power to elect the majority of the managers…” {I1/4/24}.
161
part of X’s corporate purpose: Muller Prado 1, §166 {C2/1T/69}, §§317-326 {C2/1T/129}
and Muller Prado 2, §§69-72 {C14/1T/23}. She says that this extends to Art 116.
484. Prof Trindade explains that this is wrong. Art 243, which appears in a section of the
Corporate Law headed “Information in Management Report”, is concerned with the
requirements of management reports, and Art 243(2) is a definition section solely for the
purposes of Art 243, head paragraph. Art 243 is simply irrelevant for the purposes of
determining who is a controlling shareholder under Art 116, which sets its own criteria in
that regard: Trindade 1, §§108-111 {C8/1/32}.117
I1.1.3 Second sub-issue: members of a controlling group
485. The experts disagree over whether members of a CG should be treated individually as
controlling shareholders for the purposes of Arts 116 and 117, and whether they can
accordingly be held liable under those provisions for individual acts.
486. Prof Trindade addresses this issue at Trindade 1, §§112-137, esp at §§132-137 {C8/1/38},
and Trindade 2, §158 {C19/1/36}, §§172-174 {C19/1/39}. He explains that “the power of
control is, by nature, indivisible: each company has, merely, one controlling shareholder, or it has no
controlling shareholder”.118 It follows, he says, that where control power is held jointly by a
CG, it is the CG itself which is the controlling shareholder, and each member of the CG is
not considered individually to be the controlling shareholder for the purposes of Art 116.
In such cases, control power “can only be exercised unitarily”, or in other words “acts of
control…will be those performed by the group and not those performed individually by a member of
the group”.119 That means there can only ever be liability for breach of Art 116 or 117 for
joint acts of the CG. Nevertheless, such liability ultimately remains an individual matter for
each member of the CG, because fault is also a necessary element of liability, and that must
117 As for Prof Muller Prado’s statement that Art 243 appears in a broader section regarding “Associated, Controlling and
Controlled Corporations”, which also contains Art 246, that is nothing to the point: the scope of Art 243 is clear, and by
contrast Art 246 expressly refers to Arts 116 and 117 (see Muller Prado 2, §107 {C14/1T/33}, in the context of the
basis for the application of Art 116 to indirect controllers).
118 At Trindade 1, §134 {C8/1/39}, citing Professor Alfredo Lamy, one of the most respected Brazilian scholars in the
field of corporate law, and one of the authors of the Corporate Law itself.
119 Trindade 1, §133 {C8/1/39}; Trindade 2, §158 {C19/1/36}. He cites in support CVM decisions concerning Art
254A of the Corporate Law (a provision addressing transfers of control), which establish that control is not transferred
by selling the shares of one member of a CG: Trindade 1 §135-136 {C8/1/40}. Prof Muller Prado does not consider
this relevant: Muller Prado 2, §§81-89 {C14/1T/26}.
162
be assessed individually for each person involved (Trindade 2 §10 {C19/1/3} and §171
{C19/1/39}).
487. Prof Muller Prado addresses this issue at Muller Prado 1, §§288-303 {C2/1T/118} and
Muller Prado 2, §§73-101 {C14/1T/24}. She accepts that, in principle, controlling power
is indivisible: Muller Prado 2, §74 {C14/1T/24}. Notwithstanding this, her view is that
“control is joint, but the status of controlling shareholder…is individual” (Muller Prado 1, §296
{C2/1T/121} on the basis that a CG does not have its own legal personality; liability is
“subjective” (i.e. culpability must be shown), and it would be wrong to make a person liable
for ‘joint’ action where he was not culpable; certain acts (such as under Art 117(1)(e), (f)
and (h)) could be practised by only one member of a CG; and liability is “instrumental” such
that it could be applied to a CG group member acting alone. Prof Muller Prado relies,
among other things, on two CVM decisions in which a view was expressed by Prof
Trindade, claiming that these support her position (a matter which Prof Trindade has
refuted; indeed, the decisions are not on point since they were concerned with other
matters).120
488. None of these points provides a real answer to the fact that the controlling power is
indivisible, and that a controlling shareholder must therefore be the person or group that
wields that power. Prof Trindade does not suggest that anyone can be held liable other than
persons with recognised legal personality who are themselves at fault. What his evidence
shows is that the idea of an individual status as controlling shareholder for a member of a
controlling group is misplaced: it makes no sense when one recognises that Arts 116 and
117 are concerned with the exercise of controlling power. This means that the fact that
members of a controlling group together satisfy Art 116(a) and (b) is only the start of the
inquiry when considering liability for the acts of its members. It is necessary then to consider
whether there has been breach of duty in relation to the exercise of the controlling power
by that group (see Trindade 2, §43 {C19/1/10}).
I1.1.4 Third sub-issue: who is a controlling shareholder by reason of indirect control?
489. The issue of indirect control is addressed at Trindade 1, §38 {C8/1/9}, §§138-143
{C8/1/40}, Muller Prado 1, §§304-326 {C2/1T/123} and Muller Prado 2, §§105-117
{C14/1T/33}. It is common ground that persons who control a controlling shareholder
120 Muller Prado 1, §§293-294 {C2/1T/119}; Trindade 2, §174 {C19/1/40}.
163
are themselves controlling shareholders. However, as a result of their difference in view on
the second sub-issue just discussed, the experts disagree on whether a person (‘X’) that
controls a member of a controlling group of shareholders (‘Y’) is itself a controlling
shareholder. Prof Muller Prado says yes, because Y is considered a controlling shareholder;
Prof Trindade says no, because Y is not, individually, a controlling shareholder (and his
view on that issue should be preferred, for the reasons explained above).
I1.2 Do Arts 116 and 117 impose an autonomous duty actionable by the ‘community’?
490. This issue is addressed at Corporate JES Issues 26(c), (d) and (f) {C1/6T/8}, {C1/6T/10}
and {C1/6T/14}. Professor Trindade considers that claims for breaches of Arts 116 and
117 can only be made by the company itself (or a shareholder, in a derivative suit), pursuant
to Art 246 of the Corporate Law. Further, Arts 116 and 117 cannot be invoked to make a
claim under Arts 186 and 927, head para, CC (a view shared by Prof Tepedino: Tepedino
1, §§141-151 {C7/1T/62}, Tepedino 2 §§40-41 {C18/1T/20}, §§85-92 {C18/1T/35}
§§206-207 {C18/1T/83}). By contrast, Prof Muller Prado considers that Arts 116 and 117
give rise to duties owed by a controlling shareholder directly to, and actionable by, individual
members of the “community in which it operates” (broadly understood), and that claims for
breach can be brought under Arts 186 and 927, head para, CC.
491. Art 246 of the Corporate Law provides, as relevant, under the heading “Controlling
Corporations” {I1/4/25}:
“A controlling corporation shall be obliged to compensate the damage caused to the controlled company
for acts performed in violation of the provisions in articles 116 and 117.
§1. Proceedings for compensation may be brought by:
(a) shareholders representing five per cent (5%) or more of the capital;
(b) any shareholder, provided he guarantees payment of legal costs in the event of the action being
dismissed.”
492. Professor Trindade addresses this issue principally at Trindade 1, §§197-207 {C8/1/57}
and Trindade 2, §§29-149 {C19/1/6}. A number of key factors support his view:
492.1. Language: The first part of Art 116, sole para (“The controlling shareholder must use
its controlling power with the aim of making the company achieve its object and fulfil its social
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function”: {I1/4/4}) impose a clear and general legal duty, whose object – how to
use the control power – is expressly defined. It is clear that this must be a duty to
the company because (a) the controlling power is exercised over the company; and
(b) this is confirmed by Art 246 (see §492.4 below). By contrast, the last part of Art
116 (“and has duties and responsibilities” to the end)121 uses quite different language. It
does not impose any specific or defined duty (or create any right): the “duties and
responsibilities” to which it refers are not defined (by contrast with elsewhere in the
Corporate Law where such language is used). Its purpose is instead to elucidate
what it means to ensure that a company performs its “social function” (as part of the
general duty established in the first part of the paragraph). The words “duties and
responsibilities” provide a link to the exhortation and the end of the provision to
“respect” and “fulfil” the “rights and interests” of the relevant groups (these verbs
meaning to “take into account” and “pay attention to”).122 See generally Trindade 2,
§§35-74 {C19/1/9}.
492.2. Purpose: Arts 116 and 117 are intended to protect the “corporate interest” against the
“selfish interest” of its controllers (citing Professor Lamy, one of the authors of the
Corporate Law). They do so by placing “limits” on the exercise of controlling
power. Accordingly, they confer rights only on the company and its shareholders,
not third parties. If a company causes harm to a third party (whether due to the
action of a controlling shareholder or otherwise), that is a matter to be addressed
between those third parties and the company itself, unless some other statute makes
another person liable (such as a controlling shareholder being liable by virtue of the
disregard of legal personality under specific laws that provide for that): see Trindade
1, §§201-203 {C8/1/58}, Trindade 2, §48 {C19/1/11}, and generally as to the
purpose of these provisions at §§75-95 {C19/1/18}.
492.3. Legislative history: This purpose is confirmed by the legislator’s decision to

eschew language of “promoting” and “complied with” third party rights and interests,
in favour of the terms “respect” and “fulfil”. This underscores that Art 116 is not
121 “…and has 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 must be loyally respected and fulfilled”.
122 See Trindade 2, §55 {C19/1/13}: “In all other passages of the Corporate Law - and also of the Civil Code - the statute uses the
plural, speaking of “duties”, “responsibilities”, or “duties and responsibilities”, it refers to a determined list of duties or responsibilities
contained in the statute itself.” Examples are given there in footnote 17 of such instances, for example Section IV of
Chapter XII of the Corporate Law and Arts 153ff; Art 68; Art 165; and Arts 210 and 217.
165
intended as a proactive duty, but rather meant to put limits on the exercise of
controlling power: Trindade 1, §§159-161 {C8/1/45}, Trindade 2, §§96-103
{C19/1/22}.
492.4. Systematic interpretation: The wider provisions of the Corporate Law also
support Prof Trindade’s view. First, Art 246 (see above) expressly establishes that
the company can claim for damage caused by breach of Arts 116 and 117, with
permission also given for derivative claims by shareholders. This shows that the
company is the person which suffers damage from abuse of controlling power:
Trindade 1, §§199-200 {C8/1/58}, Trindade 2, §49 {C19/1/11}. Further, the
inclusion of the head paragraph of Art 246 shows this provision is intended to
establish and delineate liability to the company, and not just (cf. Prof Muller Prado)
set out a special “rule of standing”. Secondly, by contrast with Art 246, where the
Corporate Law intends to confer or preserve third party rights, it does so expressly,
such as in relation to claims against managers: Trindade 1, §205 {C8/1/59},
Trindade 2, §§50-51 {C19/1/12}, §107 {C19/1/24}. Thirdly, Prof Muller Prado’s
interpretation critically undermines the fundamental provision in the Corporate
Law (Art 1) for limiting shareholder liability and separation of legal personality: see
Trindade 1, §§46-62 {C8/1/13}, Trindade 2, §110 {C19/1/25}. Prof Muller
Prado’s riposte – that this principle is not undermined because Arts 116 and 117
impose duties on the shareholder – is formalistic and fails to look at the substance.
492.5. Absence of case law: Prof Muller Prado herself says it is “important to note the absence
of judicial or administrative decisions involving the liability of the controlling shareholder for breach
of the duties towards the community” under Art 116 or Art 117 (Muller Prado 1 §217
{C2/1/86}). Prof Trindade says that this lack of precedent is “eloquent” (Trindade
2, §127 {C19/1/29}): it reflects the fact that Arts 116 and 117 do not create duties
to third parties, rather than (as Muller Prado 1, §217-221 would have it
{C2/1T/89}) issues with the Brazilian legal system. For instance, if such duties
existed, the CVM could have addressed them, yet it has not done so (nor even
received a complaint or examined a case in this regard) in almost 50 years of the
Corporate Law. See Trindade 1, §204 {C8/1/59}, Trindade 2, §§114-140
{C19/1/26}. The handful of cases on which Prof Muller Prado seeks to rely are
addressed below at §494.
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492.6. No Civil Code claim: There is no place for any claim by a third party against the
controlling shareholder under Arts 186 or 927, head para, CC for a breach of Arts
116 or 117. Within the Brazilian law civil liability system, the Corporate Law defines
the scope of controlling shareholders’ liability in this area. Further, it is the company
itself that is the (potential) subject of those provisions of the CC (in relation to an
action for damage caused to third parties by the company’s acts or omissions), not
its controlling shareholder: Trindade 2, §109 {C19/1/26}, and see also Tepedino
as cited at §490 above).123
493. Prof Muller Prado addresses this issue principally at Muller Prado 1, §§327-358
{C2/1T/131}, §424 {C2/1T/167} and Muller Prado 2, §§141-187 {C14/1T/42}. She
considers that:
493.1. Arts 116 and 117 are intended to give rise to an autonomous duty to those in the
“community”, with such persons having a corresponding right “not to have their legal
sphere negatively affected”. She says that this arises as a matter of literal interpretation,
where Art 116 imposes “duties and responsibilities” to the community; historical
interpretation, because these provisions recognised that a controlling shareholder’s
actions can affect third parties; teleological interpretation, for what appears to be
the same reason; and systematic interpretation in line with constitutional principles
to enforce “compliance with the company’s social purpose and justice”: Muller Prado 1, §348
{C2/1T/136}, §424 {C2/1T/167}, Muller Prado 2, §§180-183 {C14/1T/53}.
BHP will contend that none of her reasoning gives a persuasive answer to Prof
Trindade’s exposition of these provisions.
493.2. In this regard, her view is that the term “community” has a very wide meaning,
extending to all “individuals positively or negatively affected by a specific event arising from the
development of business activity”, including through “environmental risk and physical risk”:
Muller Prado 1, §§337-338 {C2/1T/133}, §346 {C2/1T/136}. This is said to be
distinct from a use of the term “community” to denote only “diffuse” or
“transindividual” or “indivisible” rights and interests: Muller Prado 2, §§156, 158
{C14/1T/47}, §§171-176 {C14/1T/51}. The right for which she contends (and
with which Prof Trindade disagrees) is accordingly extremely broad.
123 And in this regard see further below at section J1.1.4.5.
167
493.3. Breach of this duty is said to amount to “illicit conduct” for the purposes of Arts 186
and 927 CC, head para, entitling those in the community who are caused loss
(within the scope of Art 403 CC) to seek compensation directly from the
controlling shareholder by way of a claim under those provisions (pursuant to Art
17 CPC): Muller Prado 1, §§348-350 {C2/1T/136}. This is misguided, because (as
per §492 above) there is no such duty owed to third parties, and in any event Arts
116 and 117 cannot be invoked in the context of those CC code provisions.
493.4. Prof Muller Prado attempts to explain away Art 246 of the Corporate Law as a
specific rule of standing for the company and for derivative actions, where there is
harm to the company, but does not take away the ordinary right to sue under Art
17 CPC, where there is harm to the community itself. She says that nothing in this
Article, or the Corporate Law more generally, displaces or precludes the application
of Arts 186 and 927, head para CC. A situation where the “community” does not
have standing would create a “conflict of interest” meaning that companies might not
in practice pursue controlling shareholders for breaches: Muller Prado 1, §351
{C2/1T/137}, Muller Prado 2, §§147-150 {C14/1T/44}, §154 {C14/1T/46},
§§159-162 {C14/1T/47} and §§177-187 {C14/1T/52}. However, all this appears
to beg the question of whether there is a duty directly to the community to begin
with.
494. Having sought also to explain away the lack of any supportive precedent (see §492.5 above),
she relies on three specific decisions. First, a case where the State Court of São Paulo
recognised the (public law) standing of employees alleging a breach of Art 116 to sue the
(public body) controlling shareholder;124 and then on two instances of summary proceedings
said to have recognised BHP Brasil (and Vale) as controlling shareholder of Samarco in a
claim by third parties: Muller Prado 1, §§223-224 {C2/1T/92}, §287 {C2/1T/117}, §§351-
357 {C2/1T/137}.125
495. As Prof Trindade explains, on analysis these cases do not support Prof Muller Prado’s
position. The State Court of São Paulo decision was a public law case, in which the question
of the standing of an employees association to obtain a writ of mandamus against the
Governor of the State and the Secretary of Finance in relation to a publicly-controlled
124 TJSP, MS 049.565.0/6-00, Special Body, Reporting Appellate Judge Alvaro Lazzarini, judged on 27 June 2001
{C2/3.1T/105-111}.
125 {C2/3.1T/105-111}; {C2/3.2T/608-615} and {C2/3.1T/105-111}.
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company was raised. Writs of mandamus deal only with “potential “illegal actions or abuse of
power” exclusively committed by a public authority or an agent of a legal entity in the exercise of its public
power duties”. The case was not concerned with any alleged breach of Art 116. The Court
relied upon the reference to employees in Art 116 to find that employees should have
standing for their public law claim, but it was not part of its reasoning that Art 116 gave rise
to autonomous rights to employees, which is the salient point for present purposes (as to
this decision, see Trindade 2, §§128-131 {C19/1/29}). As to the cases involving BHP Brasil,
these were only interim decisions concerning a temporary injunction and addressing
shareholders’ standing (not determining liability). The TRF-1 decision only upheld the
decision made at first instance by Judge Machado in the context of the 20bn CPA. The
nature of the decision, made at preliminary stage, meant its scope was limited and did not
involve full consideration of the law and evidence. Further the reasoning behind this
decision was manifestly erroneous in saying that a controlling shareholder is “jointly liable for
the decisions taken by the controlled entity, under Article 116”: see Trindade 1, §§167-169
{C8/1/48}, Trindade 2, §127 fn 34 {C19/1/29}, and {C2/3.2T/966}. In the Minas Gerais
State Court of Appeals case, the discussion of BHP Brasil’s position related exclusively to
standing, and this case contains similarly scant reasoning and is also clearly erroneous since
it considers that Art 116 involved “the theory of disregard of the legal personality of the controlled
company”: see {C2/3.4T/1563}. Notably, even Prof Muller Prado has been at pains to
explain that Art 116 does not have the effect of making a controlling shareholder liable for
the company’s obligations: Muller Prado 2, §§11-12 {C14/1T/6}, §29 {C14/1T/10}.
I1.3 What is the scope of the duties owed under Arts 116 and 117?
I1.3.1 Common ground and key sub-issues
496. The following is common ground:
496.1. The list of scenarios in Art 117 is not an exhaustive list of what constitutes abuse
of power under the Corporate Law (Corporate JES, Issue 26(e) {C1/6T/11});
496.2. Liability for breach of Art 117 is fault-based (Corporate JES, Issue 26(f)
{C1/6T/14});
496.3. The Corporate Law does not provide any specific test for causation, and the same
test for causation applies as under Art 403 CC (Corporate JES, Issue 26(g)
{C1/6T/15}).
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497. In addition to the matters discussed in the course of addressing the previous issue, two key
further sub-issues arise as to the scope of Arts 116 and 117:
497.1. First, does Art 116 give rise to a proactive duty to identify and minimise risk, which
can be breached by omission (as per Cs)? Or is it to be understood as placing a limit
on exercises of controlling power (as per BHP)?
497.2. Second, what is the scope of liability under Art 117, and in particular under Art
117(1)(a) and (g) (see further the specific issues at §502 below)?
I1.3.2 First sub-issue on scope of Arts 116 and 117: does Art 116 impose a proactive duty
to minimise risk?
498. Prof Trindade addresses the scope of Art 116 principally at Trindade 1, §§144-170
{C8/1/42} and Trindade 2, §§179-202 {C19/1/41}. His position is that Art 116 is intended
to apply when a controlling shareholder chooses to exercise its controlling power; it is only
in exceptional cases (where there is a duty specifically imposed by law) that a controlling
shareholder may be required to act and could be liable for failing to do so: see Trindade 2,
§43 {C19/1/10} and also Trindade 1, §176 re Art 117 {C8/1/50}.126 The effect of Art 116
is to limit the exercise of controlling power, guiding and restricting it. A controlling
shareholder must pursue the “corporate purpose” when acting as such; otherwise, by improper
use of its power, it could “divert the company from the corporate purpose, for its own and improper
benefit, without formally amending the by-laws”: Trindade 1, §151 {C8/1/44}. It must also pursue
the company’s “social function”, which means “to create and distribute wealth”: §164 {C8/1/47}.
It should not direct the company to harm the interests of the community “and therein lies the
limit imposed on him by Article 116, sole paragraph, when it refers to respect and address the
community’s interests”: §162 {C8/1/47}.
499. Prof Trindade notes that Art 116 makes no reference to any “duty to oversee the management, or
to a duty of care”. To impose a proactive duty to oversee management or a duty of care to the
company distorts the structure of corporate governance in Brazil in which distinct duties
are placed on managers to manage the company subject to a duty of care (see Arts 153-
126 “Additionally, in cases of an alleged omission giving rise to a breach of Article 117, it would be necessary to demonstrate that the
shareholders composing the controlling group jointly and intentionally omitted themselves in fulfilling some duty specifically imposed by law,
such as approving the financial statements, which could harm the company towards third parties.” Examples are identified at Trindade
2 §43, fn13 {C19/1/10}, e.g. the duties referred to at Trindade 1 §95 {C8/1/29} (a shareholders agreement can be the
source of relevant duties); §176 {C8/1/50} (duty to approve financial statements - see Corporate Law Arts 122 III
and 132 I {C19/2T/90}).
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155), and in which (by contrast) such duties have not been expressly imposed on
shareholders by the Corporate Law: Trindade 1, §166 {C8/1/48}, Trindade 2, §§179-202
{C19/1/41}. In this regard, among other things, Prof Trindade:
499.1. Criticises Prof Muller Prado’s description of the controlling shareholder as the
“supreme manager” of a company, a styling which reflects that distortion;
499.2. Refers to Art 117(3), which provides that a controlling shareholder that is also a
manager will also owe a manager’s duties – clearly showing that they do not
ordinarily owe such duties, and that the duties of the two should not be conflated.
499.3. Refers to the EMAE case relied upon heavily by Prof Muller Prado (see §§500-501
below), noting that even where the CVM has “analyzed accusations against controlling
shareholders based on intentional omission that could cause harm to the company, there was a clear
concern to ensure that management responsibilities and powers (or any breach [thereof]) were not
attributed to the controlling shareholder” {C8/1/56}. He notes the statement in EMAE
at §34 that it “does not seem common” to characterise a controlling shareholder’s
omission as a breach, where primary responsibility for management falls on
managers {C8/1/9}.127
500. For her part, Prof Muller Prado addresses the scope of Art 116 principally at Muller Prado
1, §§359-430 {C2/1T/141}, with a summary of the alleged “elements” at §§391-396
{C2/1T/156}, and Muller Prado 2, §§118-137 {C14/1T/37}. She considers that it is a duty
of means rather than result; that the duty to accomplish the company’s “social function”
involves recognising and addressing the effects of a company’s activities on third parties;
that Art 116 requires a controlling shareholder to be proactive, to identify and minimise risk
(including by “the implementation of effective policies, processes, procedures, governance structures, and
communication channels to ensure that these risks are duly identified, monitored, managed, and mitigated”
- Muller Prado 2, §134 {C14/1T/41}); and accordingly that it is a duty which can be
breached by omission (for a further summary of her position see esp Muller Prado 1, §§403,
419 {C2/1T/160}, {C2/1T/165}). Prof Muller Prado’s arguments are based on extracts
from a limited number of cases and the work of certain authors, which can be addressed in
127See Trindade 1, §195 {C8/1/56}. Indeed, it appears to be highly relevant that in the EMAE case: (a) the controlling
shareholder was asked by management to intervene; (b) in circumstances where (due to its control of Sabesp) it had a
special ability to assist; (c) it failed to do so; (d) this had effect of furthering its own interests (in Sabesp); and (e) was
to the detriment of EMAE.
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due course. At this stage, it is noted that her argument that a controlling shareholder “has a
duty to be proactive in pursuing the duties imposed by law and, consequently, may be held liable for an
omission” (Muller Prado 1, §394 {C2/1T/157}) is said to be based on two CVM decisions :
the EMAE Case and the Petrobras case.128 It is accordingly worthwhile noting the specific
and unusual facts of EMAE, in which the CVM found a breach of Art 116 due to an
omission. In the EMAE case, the State of São Paulo was the controlling shareholder of
both EMAE, a hydroelectric power company, and Sabesp, a water supply and sewerage
undertaking. A practice had developed whereby Sabesp would take water from EMAE’s
reservoirs without paying compensation. As summarised in Petrobras (where no liability by
omission was found) in the opinion of Reporting Commissioner Moreira, §75:
“the State of São Paulo was sentenced for having failed to act in relation to transactions between EMAE
and Sabesp. EMAE did not receive any amount in compensation for the use of water, and the controller,
despite provocations from EMAE’s management and the company’s prolonged financial fragility,
maintained an intentionally passive stance in relation to the duty provided for in article 116, sole
paragraph”. {C2/3.3T/1018}.
501. The narrow bounds within which the CVM has contemplated liability for omission are also
apparent from Commissioner Renteria’s concurring opinion in Petrobras at §4, saying that
he would only have found the Government (an owner of two controlled entities, as in
EMAE) liable “if at least deliberately active or passive behaviour was proven”, for the purpose of
“accepting and perpetuating” the problematic situation or “privileging…its own interest to the
detriment” of the controlled entity {C2/3.3T/1019}.
I1.3.3 Second sub-issue on scope of Arts 116 and 117: what is the scope of liability under
Art 117?
502. There are four main areas of disagreement: (a) what standard of fault is required?; (b) what
is the relevance of Art 187 CC? (c) what qualifies as directing a company “towards an
objective…harmful to national interest” under Art 117(1)(a)?; (d) does Art 117(1)(g) only apply
to accounting irregularities?
128EMAE: CVM, Administrative Sanctioning Proceeding No. RJ2012/1131, Reporting Commissioner Luciana Dias,
judged on 26 May 2015 {C2/3.2T/901-935}; Petrobras: CVM, Administrative Sanctioning Proceeding No.
RJ2015/10677, Reporting Commissioner Henrique Balduino Machado Moreira, judged on 7 February 2017
{C2/3.3T/995-1021}.
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I1.3.3.1 Fault
503. The experts agree that liability under Art 117 is “fault-based”: Corporate JES, Issue 26(f)
{C1/6T/14}. However, it has emerged that they understand this differently. Prof Trindade
considers that a breach of Arts 116 and 117 requires an act to be “intentional, i.e. negligence,
recklessness or lack of skill will not suffice”: Trindade 1, §§171-178 {C8/1/49}, Trindade 2, §10
{C19/1/3}.129 Prof Muller Prado considers that not only “wilful misconduct” but also “culpable
conduct” will suffice for breach of both Arts 116 and 117, with culpability being based on
the standards that could be expected “of an average person in the defendant’s position…of a
controlling shareholder”: Muller Prado 1, §§28-30 {C2/1T/23}, §33 {C2/1T/24}, §467-469
{C2/1T/180}, Muller Prado 2, §§193-194 {C14/1T/55}.
I1.3.3.2 Relevance of Art 187 CC
504. Art 187 CC is a provision of the CC which addresses abuse of rights.130 Prof Trindade
considers that Art 187 CC is irrelevant to the meaning of Art 117. It is Art 116 that sets the
limits of what is lawful. The concern of Art 117 is to identify exemplar acts that are, by
exceeding the limits set forth in Art 116, unlawful (in the context of the duties of a
controlling shareholder) – whereas Art 187 CC is concerned with acts that are (but for Art
187 CC itself) lawful: Trindade 1, §§172-174 {C8/1/49}. Prof Tepedino’s evidence also
confirms and explains the irrelevance of Art 187 CC in this context of Arts 116 and 117,
with Art 117 and Art 187 CC regulating "distinct and autonomous hypotheses”: Tepedino 2, §§62-
64 {C18/1T/28}. By contrast, Prof Muller Prado considers that Art 187 CC (which
concerns abuses of right generally) “serves as a guide on what other actions may constitute an abuse
of controlling power”: Muller Prado 1, §§35-36 {C2/1T/25}, §43 {C2/1T/26}, §440
{C2/1T/170}, §§445-449 {C2/1T/173}, Muller Prado 2, §§189 {C14/1T/55}, §194
{C14/1T/56}, §198 {C14/1T/58}.
I1.3.3.3 Art 117(1)(a) – acting contrary to the national interest
505. Prof Trindade considers that Art 117(1)(a) “only applies when the controlling shareholder directs the
company to violate a statute that expressly protects the national interest”, citing Professor Lamy:
Trindade 1, §§181-183 {C8/1/51}. Prof Muller Prado’s position is, with respect, unclear.
129 This reflects that Arts 116 and 117 are concerned with abusive conduct, and protecting a company against the
“selfish interest” of its controller: see §492.2 above.
130 It provides: “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}As to Art 187 CC, see Tepedino 2, §§59-64 {C18/1T/27}.
173
She says that the meaning of ““national interest” must be filled in the analysis of the specific case”,
and refers (vaguely) to the term being interpreted in accordance with the meaning of that
term provided for in the FC and with “other norms defining the constitutional economic
order”: Muller Prado 1, §§473-477 {C2/1T/182}, Muller Prado 2, §§199-200
{C14/1T/58}.
I1.3.3.4 Art 117(1)(g) – irregularities
506. Prof Trindade considers that Art 117(1)(g) is limited to accounting irregularities of the kind
actually referred to in the provision itself, and Prof Muller Prado’s broader view of the
provision (see below) conflates the duties of managers and controlling shareholders:
Trindade 1, §§184-196 {C8/1/53-58}. Prof Muller Prado considers that Art 117(1)(g) refers
to any “management irregularities that are known or should have been known”, reflecting a duty “to
investigate all reports that raise well-founded suspicions or which they know or should know to be true”:
Muller Prado 1, §§478-486 {C2/1T/184}, Muller Prado 2, §§201-203 {C14/1T/58}.
507. There is a specific dispute over the Lava Jato decision of the STF, on which Prof Muller
Prado relies, stating that the “[STF] recognised the controlling company’s duty to monitor and have
mechanisms to detect and prevent irregularities”: Muller Prado 1, §§483-485 {C2/1T/185}. As Prof
Trindade explains, the case does not, on analysis, support Prof Muller Prado’s position. The
extracts she has cited are in fact not from the STF’s own decision, but a decision of the
TCU, an administrative body that can impose administrative penalties on those managing
state resources. The TCU does not have any competence to assess the civil liability of a
controlling shareholder, and that was not the issue before it. The subject matter of the STF’s
decision was whether to grant a writ of mandamus requested by a controlling shareholder
against the TCU to challenge its decision to pierce the corporate veil (for administrative
purposes) as a precursor to finding it liable for a controlled entity’s acts – and the decision
is therefore not relevant to the issues that arise here: Trindade 2, §§132-139 {C19/1/30},
§197 {C19/1/45}.
I2. Application to the facts
I2.1 Controlling shareholder?
508. At MPOC, §284 {A1/1/130}, Cs allege that BHP are controlling shareholders of Samarco
for the purposes of Art 116. The precise basis of Cs’ allegations is unclear. But it is apparent
nonetheless that this assertion is wrong.
174
509. Cs first assert that they will “rely on the matters pleaded in Sections B and C above”, namely MPOC,
§§36-260 {A1/1/20}. That is an omnibus reference to nearly 100 pages of pleading. It is
assumed that Cs rely, in fact, only on the matters identified “in particular” in the sub-
paragraphs of MPOC, §284 {A1/1/130}.
510. At MPOC, §284.1 {A1/1/130}, Cs state that where “shareholders in a company jointly control the
company pursuant to an agreement governing such control, each of them is to be treated as a controlling
shareholder”. They say that this is “illustrated” by Judge Machado’s decision saying that BHP
Brasil and Vale were controlling shareholders of Samarco.131 As to this:
510.1. Cs’ position is incorrect as a matter of law, for the reasons explained at §§486-488
above. The correct position is that those who jointly have the power to, and in
practice do, exercise control over a company pursuant to a control agreement (i.e.
a CG) are together treated as a controlling shareholder. Cs’ position, that each
member of a controlling group individually has a status as a controlling shareholder,
wrong. Under Art 116, controlling power is indivisible, so there can only ever be
one controlling shareholder. In situations of joint control, that is the CG itself, not
each of its members considered individually. Furthermore, liability under Arts 116
and 117 requires the exercise (or breach of a specific legal duty to exercise) the
controlling power, which must necessarily be a joint exercise in the case of a CG.
510.2. Judge Machado’s decision does not “illustrate” that BHP Brasil and Vale are
controlling shareholders of Samarco. That was an interim decision, on an
application for a temporary injunction. Its reasoning was also wrong: see §495
above. It is correct that BHP Brasil and Vale together constitute a CG in respect of
Samarco, in light of their control agreement (the SHA) and appointment of board
members. But that does not of itself make either of them individually a controlling
shareholder of Samarco (in respect of any given matter, or generally) for the
purposes of Art 116 (still less liable in respect of any particular matter).
511. At MPOC, §284.2 {A1/1/130}, Cs contend that BHP are controlling shareholders due to
indirect control of Samarco (through control of BHP Brasil), relying on Art 243(2) of the
Corporate Law. Reliance upon ‘indirect control’ is a necessary part of Cs’ case because BHP
are not themselves shareholders of Samarco. This argument is also erroneous. It is common
131See the appeal from that decision at {C2/3.2T/958}, which is one of the interim decisions referred to at §§494-
495above
175
ground that Art 116 encompasses indirect control. But Prof Trindade has explained that
this still requires the conditions of Art 116 to be satisfied at the base of the chain, and that
having control over a member of a controlling group of shareholders is not sufficient. BHP
Australia is not a controlling shareholder, because it does not control a shareholder with
controlling power (BHP Brasil does not, itself, have such power). BHP UK has no stake in
Samarco at all.
512. At MPOC, §284.3, Cs state that MPOC, §§271-278 {A1/1/114-117} are repeated (i.e. the
Environmental Law case – addressed above). Those paragraphs in turn cross-refer to
another 150 paragraphs of the MPOC. This compendious plea does not assist at all in
explaining Cs’ case as to why it is alleged that BHP are a controlling shareholder of Samarco
(still less as to how it is alleged that controlling power was actually used). Accordingly:
512.1. If Cs mean by this to allege on the facts that BHP Brasil and Vale are a CG in
respect of Samarco, and that BHP Australia ultimately can control BHP Brasil, that
is uncontroversial, but insufficient to make BHP a controlling shareholder (see
above).
512.2. If Cs mean to allege that BHP exercised control in practice over Samarco alone or
together with Vale in relation to the specific matters relied upon for their case on
breach, based on the facts and matters at MPOC, §§271-278 {A1/1/114-117}, that
is incorrect.132 There is nothing in Cs’ allegations that demonstrates BHP acted in
practice to control Samarco – alone or jointly with Vale – and the detail of those
paragraphs is addressed at Sections H2.2.1-H2.2.3 above (in the context of Cs’
Environmental law case). For the reasons set out above, Cs are wrong to allege that
BHP were a controlling shareholder of Samarco at all, or exercised control in
relation to any relevant specific matters.
I2.2 Allegations of duty and breach
513. At MPOC, §285-287 {A1/1/131}, Cs set out their allegations as to the duties owed under
Arts 116 and 117 and the alleged breaches by BHP. These claims fail for the reasons already
discussed. In brief:
132 And still insufficient, where BHP is not a controlling shareholder.
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513.1. BHP was not capable of being, and was not, a controlling shareholder, as discussed
above, nor have Cs shown any joint exercise of the controlling power.
513.2. As a matter of principle, Arts 116 and 117 do not give rise to claims vesting in third
parties.
513.3. None of Cs’ claims allege deliberate and intentional breach, which is what liability
under these provisions would require.
I2.2.1 Alleged breach of Art 116
514. Further, at MPOC, §286 {A1/1/131}, Cs allege that “BHP failed to ensure that Samarco carried
out its activities in a manner which minimised the risk of damage to the community”. That also fails as
a matter of law, since it is premised on an incorrect understanding of the scope of the duty
imposed by Art 116: see §§498-499 above. Controlling shareholders are not obliged so to
act. Indeed, Arts 116 and 117 cannot be breached by omission (save, exceptionally, where
there is a specific legal duty to act through use of the controlling power, which is not alleged
and cannot be established);133 nor is there a general duty to investigate and manage risks to
community members or to implement “effective policies, processes, procedures, governance structures
and communication channels to ensure that these risks are properly identified, monitored, managed and
mitigated” (as alleged at Muller Prado 2, §134 {C14/1T/41}).
515. Because this alleged duty is one of Cs’ invention (Prof Trindade describes as “de lege
ferenda”),134 rather than reflecting the language of Art 116 or established case law, it is not at
all clear what its scope is meant to be, or to what standard Cs are actually trying to hold
BHP in the present case. As to the facts, Cs assert, barely, that there was a breach of this
alleged duty “as pleaded in paragraph 282 above”. That paragraph does not in fact plead a breach
of this duty, but rather is pleaded as part of Cs’ case on Art 186 CC, and thus is addressed
below.
516. It accordingly suffices to state here that BHP did not act in any way unreasonably; it did
not have (and had no reason to have, or seek out) knowledge that the safety of the Dam
had been compromised; and its conduct did not fall below the standard (which Cs say
133 See e.g. the examples identified above at fn126.

134 Trindade 2, §18 {C19/1/4}, §193 {C19/1/44} “that is, statements that constitute Professor Muller Prado’s personal view on
what she believes the content of the Corporate Law should be, and how she believes it should be interpreted, but which, in reality, do not
correspond to the actual content and current interpretation of that statute.”
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applies) to be expected of an “average” controlling shareholder in BHP’s position (assuming
that BHP were a controlling shareholder, which they were not, and assuming that this were
the applicable test, which it is not); and it is not alleged that this was an intentional omission
by BHP (intention being the standard in fact applicable). The contention that BHP
breached any duty it allegedly owed to “ensure” that Samarco acted so as to “minimise” the
risk of damage to the community is unsustainable.
517. Further, Cs’ claim also fails as a matter of causation. As is common ground, the test is the
one in Art 403 CC. As already noted at §374 above and discussed further below at §534.2
and 570-573, that required a direct and immediate link between the alleged act or omission
and the damage. For the reasons given at §429 above and §§611-617 below, causation
cannot be made out. Indeed, causation can only be the more difficult to prove in this
context where Cs’ own case is that BHP’s duty was one of means and not of result. To
make good their case, Cs must show that if BHP, several steps removed, and without
themselves having any controlling power over Samarco (being an indirect 50% shareholder,
in the case of BHP Australia), had done more to oversee and guide Samarco’s activities, it
would have made all the difference. Such an argument is unreal.
518. For these reasons, Cs’ allegation of breach of Art 116 must fail.
I2.2.2 Alleged breach of Art 117
519. At MPOC, §287 {A1/1/131}, Cs allege “abuse of power” by BHP contrary to Art 117. The
sub-paragraphs are addressed below, after the following preliminary matters:
519.1. Cs refer to Art 187 CC, but that is irrelevant as a matter of law, for reasons
explained by reference to Prof Trindade’s evidence at §504 above.
519.2. Cs’ case must fail because, as with Art 116, Art 117 cannot be breached by
omission, save where (exceptionally) there is a specific legal duty to exercise the
controlling power (which there is not) (see §498 above), and Cs’ case is based on
allegations of omission rather than commission.
519.3. As with Cs’ case on Art 116, Cs are unable to establish fault (either on Cs’ lower
threshold of the standards of the average controlling shareholder, or the true
standard of intention), or causation, and their claims therefore fail.
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520. As to MPOC, §287.1 {A1/1/132}, Cs contend that merely “permitting the dam to be constructed
as an upstream dam and repeatedly increased in height” (as per MPOC, §§160-162 {A1/1/69})
involving a significant risk of catastrophic damage, was “harmful to national interest” and an
“abuse of power” contrary to Art 117(1)(a):
520.1. As a matter of law (following Prof Trindade’s evidence) Art 117(1)(a) “only applies
when the controlling shareholder directs the company to violate a statute that expressly protects a
‘national interest’” (see §505 above), which is not Cs’ case.
520.2. The suggestion that merely allowing a subsidiary to engage in a lawful (indeed
licensed) business activity such as operating or expanding a tailings dam could be
an “abuse of power” or “harmful to national interest” would require such a broad meaning
of Art 117(1)(a) that it cannot be correct (it is tantamount to saying that, in such
cases, a controlling shareholder will always be liable for harm caused by a
subsidiary’s acts or omissions).
520.3. Cs seek to rely on Arts 225, 231, and 232 of the FC {C19/2T/19-21}. This is
unexplained and does not make sense. The general constitutional rights relating to
the environment and indigenous people do not make the operation of a tailings
dam “contrary to the national interest” (indeed, the Brazilian authorities license such
operations, as they did for Samarco itself).
520.4. It is not right to say that BHP “permitted” the dam to be constructed as an upstream
dam and increased in height. Cs have not addressed how that is said to be the case.
The relevant (operational) decisions were taken by Samarco itself through its
independent management, as explained above.
521. At MPOC, §287.2 {A1/1/132}, Cs contend that BHP repeatedly failed to take action to
investigate or respond to warnings that the Dam’s safety had been compromised, in breach
of Art 117(1)(g) (or “by analogy” with that provision):
521.1. Art 117(1)(g) applies only to accounting irregularities; it is therefore inapplicable.
521.2. The alleged “analogy” is inappropriate on the facts. There is nothing akin to an
accounting irregularity here, and there is no specific legal duty for a shareholder to
investigate or respond to warnings about dam safety. In reality, the “analogy” Cs
seek to apply would necessarily amount to a general duty to investigate any
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suspicions of “irregularity” of any sort, which Art 117(1)(g) could have set out
expressly if that had been intended. A failure to investigate suspicions of any kind
can hardly be described as an abuse of power.
521.3. As for the facts, BHP did not fail to take account of any warnings, nor (if it be
alleged) can it fairly be said that BHP ought to have known more or investigated
further (as an indirect non-majority shareholder in a non-operated joint venture in
the case of BHP Australia, and a person with no stake in Samarco at all in the case
of BHP UK): see especially below at §§604, and generally Section E above regarding
BHP’s alleged knowledge.
522. At MPOC, §287.3 {A1/1/132}, Cs rely upon the breach of Art 116 alleged at MPOC, §286
{A1/1/131} as also amounting to a breach of Art 117. The reference to Art 117 cannot
further Cs’ case: as a matter of law, such conduct cannot amount to a breach of Art 117
where it does not amount to a breach of Art 116 (see §504 above). In any event, failing
proactively to minimise risk cannot be said to be an abuse of controlling power. It bears no
resemblance to the matters specified in Art 117(1).
523. At §287.4 {A1/1/132}, Cs cross-refer to MPOC, §176C {A1/1/73}. It is not explained: that
paragraph contains no allegation of breach. MPOC, §176C is addressed above in Section
C.
524. For all these reasons, Cs’ allegations of breach of Art 117 fail.
525. As for MPOC, §288 {A1/1/132}, Cs contend that the above matters make BHP liable to
indemnify Cs pursuant to Arts 116 and 117 of the Corporate Law and/or also Arts 186,
927, head para and 942 CC. As to this: (a) Cs’ claims under Arts 116 and 117 fail for the
reasons set out above; (b) Arts 116 and 117 cannot be relied upon to found a claim under
these CC provisions (see §489 above); (c) Cs’ allegations of liability under the CC are
addressed below.
J. CIVIL CODE CLAIMS
J1. Article 186 claim
526. BHP are not liable under the CC because, contrary to Cs’ case (MPOC, §282 {A1/1/123}),
BHP did not cause the Collapse by their culpable voluntary act or omission within the
meaning of Art 186 CC. Cs’ case is misconceived because it involves an attempt to make
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BHP liable in respect of Samarco’s operations. The requirements of Art 186 CC are not
satisfied because (a) BHP did not commit an unlawful act, or an unlawful omission in breach
of a specific legal duty to act, (b) BHP did not breach any standard of care or duty (if there
was one, which there was not) and (c) in any event Cs cannot establish the “necessary”
causal link between the alleged acts / omissions and the Collapse.
J1.1 Article 186 Claim: Brazilian law issues
J1.1.1 Civil Law experts
527. The Civil Law experts are Prof Tepedino (for BHP) and Prof Rosenvald (for Cs): see further
§§11-13 of Annex 4.
528. Liability under Art 186 CC is dealt with in Issue 5 of the LOI. See Civil JES at {C1/2T};
Prof Tepedino’s reports ({C7/1T} and {C18/1T}) and Prof Rosenvald’s reports ({C3/1T}
and {C16/1T}). The main areas of disagreements are: (a) can a shareholder be liable for the
company’s acts / omissions under Art 186? (b) what is the content of the requirement of
unlawfulness and, in relation to omissions, is there a (specific) duty requirement? (c) if so,
what gives rise to a relevant duty? (d) what is the test for fault? (e) what is the test for
causation? We address these in turn below.
J1.1.2 Art 186 CC
529. Art 186 CC provides that:
A person who, by voluntary act or omission, negligence or imprudence, violates rights and causes
damage to another, even though damage is exclusively moral, commits an illicit act. {I1/2/12}
530. Art 186 is read together with Art 927, head para, CC:
Anyone who, through an illicit act (Articles 186 and 187) causes harm to another is obliged to repair
it. {I1/2/35}
531. These provisions involve four requirements: (a) unlawful act / omission; (b) fault; (c)
damage; and (d) causal link. See Tepedino 1, §90 {C7/1T/48}; JES, Issue 5 {C1/2T/2};
Tepedino 1, §90 {C7/1T/48}; Rosenvald 2, §38 {C16/1T/18}. The unlawful act /
omission must be voluntary, i.e. resulting from the free will of the author: Tepedino 1, §166
181
{C7/1T/69}; Rosenvald 1, §91 {C3/1T/41}. BHP contend that none of the requirements
are satisfied and that therefore BHP are not liable.
J1.1.3 Shareholder liability pursuant to Art 186
532. Cs’ case is, in effect, that BHP are liable for acts that “encouraged” or “brought about” Samarco’s
acts, or that they failed to prevent Samarco’s activities: see, e.g. Reply, §§128, 130
{A1/3/99}. BHP’s position is that Cs’ claim is not available under Brazilian law: Art 186
CC establishes liability in respect of the defendant’s own conduct.
533. First, most of Cs’ allegations refer to the conduct of Samarco. Such conduct does not
constitute acts or omissions of BHP and cannot found a claim against BHP. Cs’ pleaded
case frequently conflates the two: e.g. MPOC, §205A.9 {A1/1/88}, where it is pleaded that
“the Samarco Board approved the first phase of Project 940” and that thereby “BHP approved and
funded a course of action …”.
534. Second, insofar as Cs point to acts and omissions of BHP (as to which, see §§577 below),
there are two key legal problems to bringing such a claim under Art 186 CC:
534.1. A shareholder does not owe duties to third parties, so has no duty owed to third
parties (such as Cs) in relation to the activities of the subsidiary (see §§490-495
above, and e.g., Tepedino 2, §116 {C18/1T/48}).
534.2. Applying the “direct and immediate” or “necessary” causation test in Art 403 CC, there
is not a sufficient causal link between a shareholder’s acts/omissions which are said
to have led to, or failed to prevent, acts of the company, and damage caused by the
company’s own actions: Tepedino 1, §§148-149 {C7/1T/64}, §§155-156
{C7/1T/66}, §208 {C7/1T/84}.
535. The conclusion that a shareholder is not liable under Art 186 CC for the consequences of
the company’s acts and omissions is supported by two further relevant principles:
535.1. First, liability in such circumstances would threaten separate legal personality:
Tepedino 1, §§151 {C7/1T/66}, 208 {C7/1T/84}, 273 {C7/1T/102}; Tepedino
2, §§203-210 {C18/1T/82}. The company is responsible for and liable for the
consequences of its conduct. Exceptionally, separate legal personality can be
disregarded in Brazilian law, but only where the requirements of veil piercing in Art
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50 CC or Art 4 Law 9605/98 are met: {I1/2/4}, {I1/19T/1}. No such claim is
made (and see Reply, §44F {A1/3/32}).
535.2. Second, the shareholder’s acts and omissions vis-à-vis the company are regulated
by the Corporate Law in particular, insofar as is relevant for Cs’ claims, Arts 116,
117, 246 (see above). The (controlling) shareholder’s duties under those provisions
are owed to, and actionable by, the company and minority shareholders (only).
There is no room for the application of the general principle of fault-based liability
in Art 186 CC because the relevant matter is exhaustively regulated by the
Corporate Law (principle of specialty): “third parties cannot avail themselves of art. 186,
Civil Code, to claim compensation directly against the controlling shareholders for acts practiced in
the exercise of the power of control”: Tepedino 2, §§41 {C18/1T/21} and §§35-43
{C18/1T/18}; §§85-92 {C18/1T/35}; Tepedino 1, §§136-158 {C7/1T/61}. The
civil liability provisions under the Civil Code are not applicable to the context of
duties and liabilities of controlling shareholders under Corporate Law (as this
context is governed by Corporate Law).
536. The above considerations point in the same direction: no shareholder liability under Art
186 CC for damage caused by the company’s activities. Rather, the Brazilian legal system
provides for civil liability as follows: (a) direct liability of the company for its acts and
omissions to third parties under Art 186 CC; (b) liability of the controlling shareholder to
the company under the Corporate Law; and, exceptionally, (c) the assets of the shareholder
are made available to satisfy the company’s debts via veil piercing. Cs’ Art 186 CC claims
seek to subvert that system: Tepedino 1, §§136-158 {C7/1T/61}; Tepedino 2, §§40-43
{C18/1T/20-22}; §92 {C18/1T/37}; §§203-210 {C18/1T/82-84}.
537. Profs Rosenvald and Muller Prado state that shareholders can be liable under Art 186 CC
and/or under Art 186 CC in combination with Art 116 Corporate Law: see Rosenvald 1,
§100 {C3/1T/44-45}; Rosenvald 2, §§85-99 {C16/1T/41-45}; §§143-149 {C16/1T/63-
64}; Muller Prado 1, §§348-351 {C2/1T/136}, §§425-433 {C2/1T/167-169}. The core of
their argument is that a shareholder, like anyone else, can be liable in respect of its own acts
and omissions. But this fails to grapple with the concrete issue, which is whether a
shareholder can be liable for the consequences of the company’s conduct via a chain of
indirect causation back to the shareholders’ own acts / omissions.
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J1.1.4 Unlawful act / omission
538. The first requirement of liability under Art 186 CC is the defendant’s unlawful (or illicit) act
or omission: Tepedino 1, §§93-96 {C7/1T/49}; Tepedino 2, §§69-72 {C18/1T/30};
Rosenvald 1, §88 {C3/1T/40}. The experts disagree: (a) in relation to the requirement of
“unlawfulness” generally; and (b) in relation to the need for a specific legal duty to act in
relation to liability for omissions.
J1.1.4.1 Unlawfulness
539. BHP’s position is that the requirement of unlawfulness requires the claimant to establish
that the relevant act or omission was contrary to the legal system: Tepedino 1, §§93-100
{C7/1T/49}; Tepedino 2, §58 {C18/1T/26}, §73 {C18/1T/31}.
540. Prof Rosenvald contends that unlawfulness can be established by violation of “principles”
(Rosenvald 1, §§87-88 {C3/1T/40}; Rosenvald 2, §43 {C16/1T/20}) or violation of
“socially expected” behaviour (Rosenvald 1, §90 {C3/1T/40-41}). Prof Tepedino disagrees
with this: Tepedino 2, 58 {C18/1T/26}. Prof Rosenvald’s view may relate to his opinion
that a relevant duty can be established by prior conduct or assumption of responsibility
which is addressed below at §§557-560.
J1.1.4.2 (Unlawful) acts and omissions
541. The requirement of unlawfulness applies in relation to acts and omissions. It is “always
necessary to demonstrate a conduct contrary to the legal system for [a] certain author to the held liable under
civil law” (Tepedino 1 § 96 {C7/1T/49}}. Despite this, it is necessary to distinguish between
acts and omissions, as explained below.
542. In relation to acts, “the illicit act is configured when the author, through a negligent, imprudent or lack
of skill act, violates the right, causing damage to others”: see Tepedino 2, §71 {C18/1T/31};
Tepedino 1, §§97, 98 {C7/1T/50}. Prof Tepedino gives the example of B, who opens a
pharmacy next to A’s pharmacy and explains that, despite the likely damage caused to A’s
pharmacy, there will be no liability because B’s “conduct complies with the legal norms that preserve
free competition” (Tepedino 1 §§96-99{C7/1T/49}; and also see §183 {C7/1T/76}).
543. In relation to omissions, it is always necessary to demonstrate breach of a pre-existing

specific legal duty to act. There is no liability for mere omissions: Tepedino 1, §§96-108
{C7/1T/49}, Tepedino 2, §74 {C18/1T/31}. The reason for the requirement is to avoid
184
the unchecked proliferation of liability for omissions: Tepedino 1, §101 {C7/1T/50}. A
specific legal duty to act is a duty to give or to do: Tepedino 2, §85 {C18/1T/35}. As to
Prof Rosenvald’s position:
543.1. Prof Rosenvald accepts that: “it can be said that liability for omissions … presupposes the
existence of a pre-existing duty to act, and only when there is a duty to prevent the occurrence of
the damage that the omission will be equivalent to an act” (Rosenvald 1, §338 {C3/1T/135-
136}); he describes this approach as “conceptually correct” (Rosenvald 1, §336
{C3/1T/135}). Also: Rosenvald 2, §154 {C16/1T/65}; JES, 5c {C1/2T/4}.
543.2. Despite this, Prof Rosenvald’s evidence is that “in reality” the Brazilian Courts apply
a different principle, so that: “omissions are enforceable in the same terms as negligent acts,
regardless of whether or not there is a pre-existing duty to act” (Rosenvald 1, §97
{C3/1T/43}). And Rosenvald 1, §95 {C3/1T/43}, Rosenvald 2, §§57-67
{C16/1T/25-31}).
543.3. Prof Rosenvald’s position is confusing. It is unclear to what extent there is a serious
disagreement as to the content of Brazilian law, considering his express agreement
that, conceptually, there is a requirement of a pre-existing duty to act. In any event:
Prof Tepedino has analysed the decisions of the Brazilian Courts on which Prof
Rosenvald has built his “reality” approach and explains that they do not stand for
the proposition that omissions can give rise to liability absent a specific duty to act:
Tepedino 2, §§75-84 {C18/1T/32}.
J1.1.4.3 Source of duty to act
544. Cs plead that BHP was subject to duties to act on four bases: (a) Art 225 FC {I1/1/27}; (b)
Art 116 Corporate Law {I1/4/4}; (c) assumption of responsibility and/or creation of or
contribution to risk (MPOC, §282 {A1/1/123}); and (d) the “legal duty of safety” pleaded in
the Reply (§126 {A1/3/97}) BHP will submit that none of these give rise to a specific duty
to act, such as to give rise to liability for omissions under Art 186 CC.
J1.1.4.4 Art 225 FC
545. Cs plead that “BHP (i) by virtue of their ultimate control (together with Vale) of Samarco, owed duties
both (a) to protect the environment (under Article 225 of the Constitution …)”: MPOC, §282.1
{A1/1/124}. Art 225 FC is set out at §379 above.
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546. BHP did not “control” Samarco: see Sections H2.2.1 and I2.2 above. This is a complete
answer to Cs’ reliance on Art 225. Further, for the purposes of Art 186 CC, Art 225 FC
does not give rise to a specific duty to act. The reasons for this are explained by Prof
Tepedino (Tepedino 1, §§121-136 {C7/1T/56-61}; Tepedino 2, §§9-11 {C18/1T/8-9}, 93-
101 {C18/1T/38-42}). Also see Milaré 1, §74 {C5/1T/27}. In brief:
546.1. First, Art 225 FC is a constitutional principle of “relative effectiveness”. It binds and
guides public authorities (e.g. in their rule making powers). In addition, though it
can be said that Art 225 FC imposes a general and abstract duty on everyone to
defend the environment, this is so in a particular, and limited, sense. A failure to
comply with the duty in Art 225 FC in and of itself does not give rise to liability.
Rather, a claim would always be based on Art 225 FC and an infra-constitutional
provision.
546.2. Second, Art 225 FC is a general duty, not a specific duty to act. Specific duties are
found in infra-constitutional laws (that provide for a specific duty). Therefore, Art
225 FC and Art 186 CC do not combine to give rise to liability for omitting to
protect the environment.
547. Reflecting this position, there are no precedents in the Brazilian Courts that recognise
liability based on Art 225 FC without also the breach of an infra-constitutional law (whether
or not combined with Art 186 CC): Tepedino 1, §§131-132 {C7/1T/60}.
548. Prof Rosenvald states, in the conclusion of his first report, that: “failure to comply with the duty
to protect the environment provided for in article 225 … is also subject to action by omission under article
186 of the Civil Code (see paragraphs 101 to 106)”: §343 {C3/1T/136-137}. However, the
foundation for this conclusion is not clear. Neither his first report (§§101-106 {C3/1T/45-
47}), nor his second report (§§75-79 {C16/1T/35-38}) explains, let alone supports by
reference to case law or doctrine, the conclusion in §343 of the first report {C3/1T/136-
137}. The cases relied on by Prof Rosenvald (§§101-106 {C3/1T/45-47}) are not concerned
with Art 186 CC or liability for omissions; instead, they are consistent with Prof Tepedino’s
explanation, namely that Art 225 FC is neither applied autonomously, nor in conjunction
with Art 186 CC, but rather together with specific infra-constitutional legislation. See
Tepedino 2, §98 {C18/1T/40}.
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549. In short: BHP will submit that Art 225 FC does not give rise to a duty to act, breach of
which could give rise to a claim under Art 186 CC based on a failure to act.
J1.1.4.5 Art 116 Corporate Law
550. Cs plead that “by virtue of their ultimate control … of Samarco”, BHP “owed duties … (b) to the
communities liable to be affected by Samarco’s activities (under Article 116 of the Corporate Law …)”:
MPOC, §282.1 {A1/1/124}. Art 116 is set out at §473 above.
551. BHP are not a controlling shareholder of Samarco (BHP Brasil not being, by itself, a
controlling shareholder), such that BHP were not subject to Art 116 Corporate Law: see
§§508-512 above. Cs’ premise is wrong.
552. If, contrary to the above, BHP are found to be controlling shareholders and therefore
subject to Art 116 Corporate Law, then this would not assist Cs in their claim based on Art
186 CC.
553. First, the specific regime in Arts 116, 117, and 246 Corporate Law, excludes the possibility
of the controlling shareholder’s liability under Art 186 CC: see §535.2 above.
554. Second, Art 116 Corporate Law does not give rise to a specific duty to act, such as to give
rise to liability for omissions under Art 186 CC: see Tepedino 1, §§137-158 {C7/1T/61}
(in particular, §§152-158 {C7/1T/66}), Tepedino 2, §§85-92 {C18/1T/35}. In brief:
554.1. First, the duty in Art 116 Corporate Law is not owed to third parties: Tepedino 1,
§§153-156 {C7/1T/66}; Tepedino 2, §92 {C18/1T/37}; and §§490-495 above (in
relation to the corporate law issues).
554.2. Second, Art 116, sole para, Corporate Law does not contain a specific duty. Rather,
it regulates the exercise of the controlling shareholder’s powers in general terms;
and while it refers to “duties”, it does not specify their content. Art 116 is not a duty
to give or to do: Tepedino 1, §§153-154 {C7/1T/66}, 158 {C7/1T/68}; Tepedino
2, §§85-91 {C18/1T/35}.
554.3. Third, as explained in the Corporate Law section, Art 116 Corporate Law can only
very exceptionally be breached by an omission in any event: §§498-501 above.
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555. Prof Rosenvald and Prof Muller Prado opine that a breach by a controlling shareholder of
Art 116 Corporate Law can provide the necessary element of unlawfulness for a claim under
Art 186 CC: Rosenvald 1, §100 {C3/1T/44-45}, §343 {C3/1T/136-137}; Rosenvald 2, §80-
99 {C16/1T/39-45}; Muller Prado 1, §§348-358 {C2/1T/136}. That view is built on a
number of premises, all of which would need to be shown to be right, including that: (a)
BHP owe duties under Art 116; (b) a controlling shareholder is subject to the general liability
regime in Art 186 CC, despite the special self-contained regime in the Corporate Law; (c)
the duty in Art 116 is owed to third parties; and (d) the duty in Art 116 is a specific duty.
BHP will contend that none of those premises are correct. Notably, there is no case law or
doctrine which supports Cs’ position: see Tepedino 1, §158 {C7/1T/68}; Tepedino 2, §92
{C18/1T/37}, §98 {C18/1T/40}.135
556. In short, Art 116 Corporate Law does not give rise to an actionable duty for the purposes
of an Art 186 CC claim.
J1.1.4.6 Creation of, or contribution to, risk and/or assumption of responsibility for risk
557. Cs plead that BHP had “a duty to act to prevent damage occurring from Samarco’s activities” “by reason
of having created or contributed to the risk of damage occurring from Samarco’s activities … and/or having
assumed a responsibility for risks arising from Samarco’s activities”: MPOC, §282.1 {A1/1/124}. Prof
Rosenvald contends that a duty to act can derive from “previous commissive conduct, by creating
or contributing to the risk or previously assuming liability for it”: JES, Issue 5(b) {C1/2T/4}.
558. Assumption of responsibility (or liability) / creation of risk do not give rise to a duty to act
for the purposes of Brazilian tort law: Tepedino 2, §102 {C18/1T/42}; Tepedino 1, §§159-
165 {C7/1T/68}. There is no support in any statutory language for the concepts invoked
by Prof Rosenvald.
559. Instead, Prof Rosenvald relies on certain Brazilian Court decisions: Rosenvald 1, §§98
{C3/1T/43-44}, 107-114 {C3/1T/47-52}; Rosenvald 2, §§68-74 {C16/1T/31-34}. These
cases can be explored in due course. However, Prof Tepedino has analysed these decisions
in Tepedino 2, §§102-119 {C16/1T/45-51}. They do not support Prof Rosenvald’s
proposition. Rather, these decisions can (and should) all be explained by reference to
conventional principles: in brief, they (a) are either omission cases involving a specific duty
The single case mentioned in the context of Art 116 Corporate Law by Prof Rosenvald (Rosenvald 1, §§105-106
135
{C3/1T/46-47}) is not concerned with Art 186 CC: {C3/3.1T/397}.
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to act (e.g., the Hospital Escapee case at Rosenvald 1, §92 {C3/1T/41-42}, Tepedino 2,
§76 {C18/1T/32}); or they (b) concern liability for actions (e.g., the HIV case at Rosenvald
1, §93 {C3/1T/42}, Tepedino 2, §77 {C18/1T/32}).
J1.1.4.7 Legal duty of safety
560. In the Reply, §126 {A1/3/97}, §129 {A1/3/99}, Cs allege that BHP had a “legal duty of safety
and environmental care”. It is assumed that Cs have pleaded this because “legal duty of safety” is
the relevant concept for Environmental Law. In any event, there is no “legal duty of safety”
which gives rise to a duty to act for the purposes of Art 186 CC:
560.1. The “legal duty of safety” is alleged to arise from the duties pleaded in the MPOC (i.e.
Arts 116 Corporate Law {I1/4/4}, 225 FC {I1/1/27} and creation of
risk/assumption of responsibility), which are dealt with above. Additionally, Cs say
that this new duty arises from “the matters relied on in paragraphs 124-127 [Reply]”. The
mechanism by which these matters are said to give rise to a duty is unexplained.
560.2. BHP will contend that these matters do not give rise to a duty to act for the
purposes of Art 186 CC. Reply, §§124-127 {A1/3/95} seems to consist of Cs’ case
as to the standard of conduct applicable to a person in BHP’s position, to which
Cs have simply attached the label “legal duty”. There is no basis in law for this. It is
noted that Prof Rosenvald’s discussion of possible sources of a duty to act only
refers to (a) express legal provisions (Rosenvald 1, §99 {C3/1T/44}) and (b)
creation of risk / assumption of responsibility (Rosenvald 1, §§107, 108
{C3/1T/47-48}).
J1.1.5 Fault
561. The fault requirement can be met through negligence, imprudence or “lack of skill” which
means professionally negligent behaviour: Tepedino 1, §§170-186 {C7/1T/70}; Tepedino
2, §§120-126 {C18/1T/50}; JES, Issue 5(a) {C1/2T/2}.
562. Though the experts express themselves in different terms, there appears to be broad
agreement as to what is meant by those terms: see Tepedino 1, §§172-174 {C7/1T/70};
and Rosenvald 1, §§118-120 {C3/1T/54}. The yardstick of fault under these concepts is
whether the defendant’s conduct met the specific standard of conduct required in the
circumstances of the case. According to Prof Tepedino: the standard of conduct is set
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according to the “activity carried out by the author and the circumstances of the specific case. The judge
must verify how another person, in those same circumstances, exercising the same activity as the author,
would act”: Tepedino 1, §176 {C7/1T/73}; Tepedino 2, §120 {C18/1T/50}; and see
Rosenvald 2, §47 {C16/1T/21}.
563. The main legal issue in relation to this requirement is whether there is (what Prof Rosenvald
terms) a “subjective element”: Rosenvald 1, §124 {C3/1T/55-56}. In brief:
563.1. First, Prof Rosenvald contends that, in setting the standard of care, regard would
be had to “personal characteristics” of the defendant, e.g. level of education or age.
Prof Tepedino explains that this suggestion is wrong: e.g. “in traffic, the same standard
of diligence … is required of the newly qualified young driver … and of the formula 1 driver.”
See Tepedino 2, §§121-122 {C18/1T/50}, §125 {C18/1T/51}.
563.2. Second, Prof Rosenvald contends that fault has a “subjective” element, namely
whether: “the average person in the defendant’s position [would] have foreseen the risk that their
conduct would cause harm (subjective element)”: Rosenvald 1, §124 {C3/1T/55-56}. The
description of this element as “subjective” is confusing, given the reference to the
average person. Prof Tepedino’s position is that foreseeability of harm does not
form a part of the assessment of fault: rather, the fault test is determined by asking
whether the defendant’s conduct complied with the expected standard of care:
Tepedino 1, §§179-180 {C7/1T/75}. Prof Tepedino also highlights that it is not
sufficient to establish fault and ultimately liability to say that the “author has foreseen
the risk of damage and has not acted to avoid it …” (because foreseeability of harm does
not create a duty to act): Tepedino 2, §§123-125 {C18/1T/51}.
564. Prof Tepedino has given consideration to how fault would be assessed in the context of a
shareholder/company relationship (on the assumption that shareholder liability under Art
186 CC is plausible, contrary to his primary position). The main point he makes (specifically
in relation to the fault requirement) is to emphasise the importance of concentrating on the
assessment of the acts and omissions of the particular defendant, i.e. the shareholder:
Tepedino 1, §§181-184 {C7/1T/75}. Prof Rosenvald states that “[f]ault is assessed based on
the behaviour of a prudent and diligent controlling shareholder …”: Rosenvald 2, §86 {C16/1T/41}.
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J1.1.6 Damage and causation
565. (Recoverable) damage and a causal link between the defendant’s culpable act / omission
and the damage are essential ingredients of a claim under Art 186 CC {I1/2/12}.
566. The question of what types of damage are recoverable under Brazilian law is not for this
trial. However, the question of whether there was a sufficient causal link between BHP’s
acts/omissions and the Dam failure is a threshold liability question for this trial.
567. BHP’s position is that causation is governed by Art 403 CC, which appears in a chapter
concerned with contractual liability, but the STJ has confirmed that it applies to non-
contractual liability (e.g., Special Appeal 1.307.032/PR): Tepedino 1, §§200-202
{C7/1T/81}.
568. Cs’ pleaded position on this topic was unclear: see MPOC, §295 {A1/1/134} and Reply,
§123.1 {A1/3/95}. But it is now understood to be common ground between the experts
that Art 403 CC governs causation for the purposes of the Civil Code claims: see JES Issue
5(g) (Rosenvald: “many theories have been adopted to explain causation under article 403 of the Civil
Code”) {C1/2T/7}; Rosenvald 1, §134 {C3/1T/58-60}.
569. Art 403 CC provides that “losses and damages only include effective losses and lost profit that are the
direct and immediate effect of non-performance”: {I1/2/40}. So the issue is whether the Collapse
was the “direct and immediate effect” of BHP’s culpable acts / omissions (if Cs can establish
any). Importantly, as noted already in the context of Environmental Law, it is common
ground that “but for” causation is not enough: e.g., Rosenvald 1, §134 {C3/1T/58-60}.
570. Whilst there is therefore a considerable measure of agreement, three issues have arisen
between the experts. The first issue relates to the applicable “theory of causation”:
570.1. Prof Tepedino’s view is that Brazilian law adopts the “necessary causation” theory,
which requires that the culpable act/omission was “decisive to the occurrence of the
damage”, i.e. that the damage is the “necessary” consequence of the act/omission:
Tepedino 1, §§200-208 {C7/1T/81}.
570.2. Prof Rosenvald argues in favour of the “adequate causation” theory: the question is
“which of the possible causes is the most adequate for the occurrence of a certain damage”:
Tepedino 1, §211 {C7/1T/85}; see Rosenvald 1, §§134-150 {C3/1T/58-69}. But
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Prof Rosenvald states that “in the substance” the tests of necessary causation and
adequate causation are the same: Rosenvald 2, §104 {C16/1T/45-46}.
570.3. The difference between these two theories appears to be relatively narrow, the key
point being that no one is contending for mere “but for” causation. The only
difference, according to Prof Rosenvald, is that his preferred theory requires the
judge to apply “the test abstractly, that is, without reference to the specific facts of the case”,
whereas the theory of necessary causation is applied “to the specific case, evaluating only
the context in which the parties were located to conclude whether the damage is necessarily justified
by the actor’s behaviour, that is, whether it was a certain consequence of the illicit act”: Rosenvald
2, §104 {C16/1T/45-46}.
570.4. BHP will contend that, should it matter, Prof Tepedino’s analysis is the right one:
(a) it is very difficult to see the justification for conducting the causal analysis at an
“abstract” level, without reference to the specific facts of the case; and (b) Prof
Tepedino’s preference for the “necessary” theory is well-supported in the authorities,
including a recent STF decision: see Tepedino 2, §136 {C18/1T/55}.
571. The second issue relates to Prof Rosenvald’s suggestions that causation may be established
by application of a “mix of criteria” (Rosenvald 1, §149 {C3/1T/69}), or that causation may
be established by reference to “probabilistic analysis” (JES, Issue 5f {C1/2T/7}, Rosenvald 2,
§106 {C16/1T/46-47}). These points appear to be made in aid of a general attempt to
“relax” the requirement of the causal link (e.g., see JES, Issue 5f {C1/2T/7}; Rosenvald 2,
§109 {C16/1T/48-49}). Prof Tepedino explains that there is no support for this attempt:
Tepedino 1, §§216-223 {C7/1T/87}; Tepedino 2, §138 {C18/1T/56}.
572. The third issue concerns the implications of the necessary causation test for shareholder
liability. That issue has already been raised in §534.2 above: Prof Tepedino states that “in
the case of a corporate group, there is no necessary causation between the damage caused by the subsidiary’s
actions or omissions, and the acts of the controlling company”: Tepedino 1, §208 {C7/1T/84}; §§148-
149 {C7/1T/64}, §§155-156 {C7/1T/66}. Prof Rosenvald’s response to this point is that
“the liability of the … shareholders is direct and personal” but this does not explain how causation
could be established: Rosenvald 2, §108 {C16/1T/48}.
573. In summary, as a matter of Brazilian law, Cs need to establish a direct and immediate, i.e.
necessary, causal link between BHP’s alleged acts and omissions and the failure of the Dam.
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J1.2 Article 186 Claim: application to the facts
574. As to whether Cs can establish an Art 186 CC claim against BHP on the facts, Cs’ pleaded
case is not easy to follow:
574.1. In the MPOC, Cs plead their case under Art 186 CC in a single long paragraph
(§282 {A1/1/123}) but incorporate by reference tens of paragraphs developed
elsewhere. E.g. §§276A-278 {A1/1/117}, which are particulars of the
Environmental Law case and themselves refer to tens of paragraphs elsewhere in
the MPOC, are “repeated” in §282.2 {A1/1/124}. But nothing is said about what
those paragraphs go to for the purposes of the Art 186 CC claim (i.e. whether they
are relevant to duty, act, omission, or breach). Further, the Court will note what
appears to be an ‘omissions’ case in §§282.4-282.8 {A1/1/124}, which is almost
entirely unparticularised (i.e. what ‘action’ should BHP have taken?). Nothing is
said (anywhere in the MPOC) about which specific acts/omissions of BHP should
be taken into consideration, the applicable standards of conduct, nor why and how
BHP’s acts/omissions breached a specific legal duty and any applicable standards
of conduct. Cs’ causation case is that the acts and/or omissions in §282 caused the
Collapse (§282.10 {A1/1/129}), but nothing is said about which acts and which
omissions are alleged to have caused the Collapse, nor how. E.g., how did BHP’s
alleged failure to take (unspecified) action in relation to the Prístino report (§282.6
{A1/1/125}) cause the Collapse, when that report’s content was concerned with
risks that never eventuated (see §§257-269 above)?
574.2. Cs’ case in the Reply, §§121A-132 {A1/3/93-100} suffers from many of the same
faults, but the Reply does at least contain allegations about the applicable standard
of conduct (§124 {A1/3/95}), and a somewhat more precise case about the
acts/omissions relied on (§130 {A1/3/99}) and a related new causation case (§131
{A1/3/100}). The Reply is “repeated” in, i.e. added to, the MPOC: MPOC, §282.8A
{A1/1/129}.
575. This lack of particularity matters because, contrary to the approach taken in Cs’ pleadings,
it is important to be precise about each element of Art 186 CC: which acts or omissions do
Cs rely on; and why do they say those matters were culpable; and caused the Collapse? We
proceed under the following headings:
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575.1. Acts / omissions and duty. Which acts or omissions are relied on? Are the acts
relied on BHP’s acts? So far as concerns omissions, did BHP have a duty to act?
575.2. Breach. Did BHP breach the expected standards of conduct and/or any duty?
575.3. Causation. Did any of the alleged acts or omissions cause the Collapse?
J1.2.1 Acts, omissions and duty
576. The acts and omissions relied on by Cs are all acts and omissions BHP are said to have
performed as (controlling) shareholder of Samarco, e.g., by approving and thereby
authorising Samarco’s activities (MPOC, §282.2 {A1/1/124}), or encouraging and
approving increases in Samarco’s production (through the BHP Brasil appointed directors
on Samarco’s Board): Reply, §130 {A1/3/99}. There is a specific legal provision that
governs the liability of (controlling) shareholders: see Art 116 Corporate Law {I1/4/4}.
The existence of that regime excludes the possibility of applying Art 186 CC to such alleged
acts / omissions: see §§532-537 above. BHP’s submission as to the Cs’ ability to satisfy the
requirements of Art 186 are without prejudice to that fundamental point.
J1.2.1.1 Acts
577. MPOC. Cs contend that BHP brought about Samarco’s activities because they “approved
and thereby authorised the implementation” of P3P, the P4P Project, and Project 940
(emphases added): MPOC, §282.2 {A1/1/124}, §276A-278 {A1/1/117}, §282.8A
{A1/1/129}, §205A {A1/1/85}. This is a repetition of the case advanced under
Environmental Law in MPOC, §276A, which has been addressed at §§446-449 above.
These allegations fare no better under Art 186.136
578. Reply. Cs allege BHP “encouraged and approved increases in production” “through their
representatives” on Samarco’s Board at certain Samarco Board Meetings (Reply, §130
{A1/3/99}). Cs do not even allege (nor could they) that BHP had any role in the relevant
approvals, other than “through their representatives” on the Samarco Board, which is simply to
confirm that, to the extent decisions were made, they were made by the Samarco Board,
136MPOC, §282.2 also refers to §278, which is an allegation that BHP “participated and/or was involved in the activities
and/or management of Samarco” {A1/1/117}. It is unclear whether this is relied on as a separate ‘act’ of BHP. In any event,
insofar as §278 refers to conduct at all, it repeats the points about approvals/authorisation of P4P and Project 940
(MPOC, §§278.1, 278.5 {A1/1/117}, {A1/1/118}), which have been addressed above: §§450-452.
194
not BHP. BHP did not have “representatives” on the Samarco Board; rather, BHP Brasil
appointed two of the four directors, and the appointed directors were directors of Samarco
and acted as such and owed their duties to Samarco: see §§44, 88and 436 above. The detail
of what was discussed at these meetings has been addressed above in §§196-197.
579. Cs’ reliance on alleged ‘acts’ of BHP for their Art 186 claim is therefore very thin:
579.1. The acts relied on are not BHP’s acts. Rather, the allegations either do not involve
any acts by BHP (e.g., approval of Project 940) or, to the extent there was any act
of BHP (e.g., BHP’s approval of notional capital expenditure for P4P), it is an
allegation that BHP had some involvement in activities of Samarco and is,
therefore, to be regarded as liable for the consequences of Samarco’s activities.
Such a claim is misconceived under Art 186: see §§532-537 above.
579.2. Even if that were wrong, when it comes to considering the elements of the cause
of action under Art 186 CC, it is crucial to concentrate on these pleaded acts: : (a)
Cs’ case on what made these alleged acts unlawful (see §539 above) is entirely
unclear; to the extent Cs say that the requirement of an act contrary to the legal
system is satisfied because of BHP’s alleged breaches of Arts 116 Corporate Law,
Art 225 FC and/or an assumption of responsibility, those matters are addressed
below in the context of Cs’ omissions case; Cs’ case on (b) fault and (c) causation
is addressed from J1.2.2. below. For all these purposes, it is critical to focus on any
alleged BHP approvals and encouragements (i.e. the pleaded acts), which are on any
view distinct from (a) Samarco’s decision to go ahead with the alleged matters, (b)
Samarco’s design and development of those matters, and (c) the operation and
implementation of those matters.
J1.2.1.2 Omissions and duties
580. MPOC. Cs’ ‘omissions’ case appears to be that “notwithstanding its controlling position in
Samarco”, BHP “disregarded the advice and warnings, from a variety of sources” regarding the safety
of the Dam and failed to “take any or any sufficient or satisfactory action”: MPOC, §§282.4-282.8
{A1/1/124}, §278.2 {A1/1/118}. As to this:
580.1. Cs’ case is put on the false premise that BHP “controlled” Samarco: see §§434-445
above.
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580.2. The alleged warnings relied on by Cs (at MPOC, §§282.4-.8 {A1/1/124}), namely
(a) “advice and recommendations” from Pimenta, (b) concerns alleged to have been
raised to the Samarco Board and Operations Committee and (c) concerns raised in
the Prístino Report, were all directed at, and matters for, Samarco: §§268-276.
Tellingly, Cs do not even attempt in this section of their pleading to particularise
what they say BHP could/should have done in response to these alleged
warnings/advice (which in any event did not amount to warnings, or, in the case of
(a) and (c) were not received by BHP or any Named Individual).
581. Cs further allege that “BHP failed to intervene to halt the continued rise of the Setback when BHP
knew or ought to have known of the increasing risk to the stability of the Dam”: MPOC, §282.8A
{A1/1/129} and §205A {A1/1/85}. However, any action to be taken by BHP (even if it
were for BHP to take, which is not accepted) was to be determined by the nature of the
information. None of the information provided to BHP in relation to Samarco suggested
that the safety of the Dam had been or was being compromised (as detailed in §§147-181
and 260 above).
582. Reply. Cs allege that BHP failed, through its “representatives” on the Samarco Board to
ensure that (a) the Dam was not raised further pending certain investigations; and (b) full
disclosure of certain matters was made to Supram: Reply, §128 {A1/3/99}. Thus, Cs’
‘omissions’ case in the Reply is also premised on BHP’s alleged control of Samarco and
misconceived for the same reasons. These matters were all concerned with the operation
of the Dam. If the steps pleaded in Reply, §128 should have been taken, they were for
Samarco to take.
583. Thus, Cs’ ‘omissions’ case, like Cs’ ‘acts’ case, conflates Samarco with BHP, ignoring their
distinct legal personalities. On Prof Tepedino’s analysis of Art 186 CC, this type of
omissions case cannot get off the ground. This is because: (a) liability for an omission
depends on the existence of a prior specific legal duty to act; and (b) shareholders (whether
controlling or not) do not owe duties in respect of the activities of companies in which they
hold shares.
584. On Cs’ case, there is no need to ask whether the defendant owed a specific legal ‘duty’; the
only relevant question is whether BHP failed to act in accordance with the requisite standard
of care. That case is addressed further below at §§589-610. But Cs in any event contend
that BHP did owe them duties, on the following four bases: MPOC, §282.1 {A1/1/124}.
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585. (1) Arts 225 FC and 116 Corporate Law (MPOC, §282.1 {A1/1/124}). BHP did not owe
Cs actionable and specific legal duties under Arts 225 FC and 116 Corporate Law: see
§§545-556 above and the Environmental and Corporate Law Sections.
586. (2) Creation of, or contribution to, risk (MPOC, §§282.1, 276A {A1/1/124},
{A1/1/117}). In civil law, a contribution to or creation of a risk does not give rise to a duty
to act: see §§557-559 above. Cs allege that BHP created and/or contributed to the risk that
Samarco’s activities would cause environmental damage by approving P3P, P4P, and
Project 940 (the same matters also relied on in Cs’ ‘acts’ case). These matters have been
extensively addressed and they are the only particulars of the allegations that BHP “brought
about the activities of Samarco” or created or contributed to the relevant risk. BHP did not. See
§§182-204, 215-231, 235-236, and 446-449 above.
587. (3) Assumption of responsibility (MPOC, §282.3 {A1/1/124}). The suggestion that an
assumption of responsibility can give rise to a duty to act for the purposes of Art 186 CC
is wrong in law: §§557-559 above. In any event, on the facts, BHP deny that they assumed
a responsibility:
587.1. Cs rely on a statement made in BHP’s 2012 Report137 regarding the importance of
health and safety in relation to its subsidiaries: MPOC, §282.3 {A1/1/124}.
Samarco is not a subsidiary of BHP, but in any event, it is implausible to suggest
that, by this statement, BHP assumed responsibility, so as to make BHP potentially
liable in respect of all its subsidiaries’ activities.
587.2. Cs assert that BHP involved “itself in the assessment, management and oversight” of risks
arising from Samarco’s activities because of the matters pleaded in MPOC, §205A
{A1/1/85} (see MPOC, §282.3 {A1/1/124}) and the matters pleaded in Reply,
§§105A-105M {A1/1/67} (see Reply, §123B {A1/3/95}), which have been
addressed in §§147-181, 260 and 277-326 above. BHP will say that these allegations,
even if made out, fall (far) short of an assumption of responsibility on BHP’s part
for the risks arising from Samarco’s activities. As detailed in §§38-44 and 278-285
above, Samarco had its own corporate governance structures and substantial
operational teams, including a risk management function and processes. It is
difficult to speculate what an ‘assumption of responsibility’ would entail under
137 The relevant quotation appears in BHP’s 2014 Annual Report, not 2012: Def 319(3A) {A1/2/202}; {F15/198/4}.
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Brazilian civil law (since the concept does not exist), one would expect it to require,
at the very least, some outward act or statement that demonstrates the assumption.
588. (4) “Legal duty of safety and environmental care” (Reply, §§126, 129 {A1/3/97},
{A1/3/99}). As noted above, this appears just a regurgitation of the (flawed)
Environmental Law case. There was no such duty on BHP: see §560 and §§424-430 above.
J1.2.2 Breach
589. In BHP’s submission, Cs’ Art 186 case therefore does not get over the first hurdle, whether
in respect of acts (because the acts relied on are not BHP’s acts and/or were not unlawful
acts) or omissions (because, in the case of omissions, BHP did not owe any specific legal
duty to Cs). If that is wrong, the next question is whether the alleged acts and/or omissions
were in breach of the applicable standard of care and/or any duty (if Cs establish one).
J1.2.2.1 Standards of conduct and content of duties
590. The parties’ respective cases on the applicable standard of conduct may be summarised as
follows.
590.1. BHP contend that their (alleged) acts/omissions must be assessed against a
standard that recognises: (a) Samarco was an NOJV, (b) BHP Australia had an
indirect equity investment in Samarco, (c) Samarco was managed by an independent
Executive Board and the management and operation of the Dam was its
responsibility, and (d) BHP did not know, nor was there a reason BHP should have
known, that the safety of the Dam was being compromised: see Sections B-E
above. As to (c), the Court will be invited to bear in mind that the Samarco Board
was responsible for setting Samarco’s general policies, but was not responsible for
managing Samarco and its operations: see Section B3 above.
590.2. Cs plead in Reply, §124 {A1/3/95} that the following matters are relevant: (a)
BHP’s status as the largest mining group in the world, (b) the DLC structure, (c)
BHP’s alleged control of Samarco, (d) the design, construction and history of the
Dam, (e) BHP’s alleged knowledge and involvement in the events leading to the
Collapse, and (f) the fact that, if the Dam failed, there would be catastrophic
consequences.
198
591. On either party’s case, two matters seem to be relevant: BHP’s (a) role / alleged control of
Samarco; and (b) knowledge.
591.1. As to BHP’s role/alleged control of Samarco, BHP did not control Samarco: see
§§434-445 above. Cs’ case conflates BHP and Samarco and attempts, in effect, to
make BHP responsible for the operation of the Dam. E.g., the reference to the
design, construction and history of the Dam: BHP did not design, and was not
involved in the construction of, the Dam.
591.2. As to knowledge, BHP submit that the relevant question for the Court is whether
or not BHP knew, or should have known, that the safety of the Dam had been or
was being compromised. As set out in Sections D and E above, BHP did not.
Knowledge of matters other than those that are implicated in the causes of the
Collapse is irrelevant.
592. The Reply introduces a further point (§§125, 126 {A1/3/96}, {A1/3/97}): because of Cs’
alleged relevant standard of care (or “legal duty of safety”), BHP should have insisted on the
establishment of procedures in relation to the governance of Samarco and BHP such as
would ensure all matters significantly affecting the safety of the Dam were promptly
identified and brought to the attention of BHP and the Samarco Board. The relevance of
this allegation appears to be only to the further allegation that, had BHP insisted on such
processes, it would have known certain matters about the Dam. As to this:
592.1. BHP disagree that any applicable standard of conduct or duty required it to put in
place the alleged processes. The establishment of procedures to monitor the safety
of the Dam was, fundamentally, a matter for Samarco’s management of the Dam.
592.2. In any event, any applicable standard/duty was met as a result of the following
processes that were in place.
592.3. Samarco: (a) an appropriately qualified geotechnical team which was advised by
external consultants, including e.g., Dr Robertson, Pimenta, VOGBR; (b) from
2009, an ITRB which monitored the Dam and provided recommendations which
were tracked and acted on: §§38, 174-180 above; (c) routine monitoring and
inspections of the Dam including producing weekly reports, monthly geotechnical
monitoring reports, monthly geotechnical inspection reports and monthly
instrumentation reports: §§99-103 above; §89 of Annex 3; (d) its own risk
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management function, which conducted annual risk assessments of the Dam and
monthly monitoring in relation to the status of any improvement actions: §§278-
285 above; (e) business and technical audits of Samarco, conducted by BHP (and
Vale) at the request of Samarco, which were presented to the Samarco Board; (f)
appropriate reporting lines, between operational staff to the Executive Board,
which in turn reported to the Samarco CEO: §§38-44 above.
592.4. BHP: (a) Iron Ore Risk Management Reports provided by Iron Ore CSG for Iron
Ore RAC twice a year: §§286-294 above; (b) risk-related reporting within BHP,
through Group Risk Profiles provided to the GMC, Group RAC and/or SusCO:
§§295-296 above; (c) business and technical audits of Samarco as described above
the results of which were summarised at Iron Ore RAC meetings, with a summary
of key internal audit findings prepared every six months for Group RAC meetings:
§§297-298 above.
J1.2.2.2 Breach of standard / duty
593. Cs’ case as to breach is set out in the Reply in §§128-130 {A1/3/99}. BHP understand Cs’
case to be that BHP breached the relevant standard/duty by their alleged acts or omissions
because they knew or ought to have known certain matters about the Dam. Thus,
knowledge is central to Cs’ Art 186 CC case.
594. Cs’ allegations as to what BHP knew, or should have known, about the Dam have been
addressed in detail at Sections D and E above. In summary:
594.1. The BHP Board, board committees and the GMC received limited information
regarding Samarco, and nothing in the information relayed to the BHP Board
and/or the GMC suggested that the safety of the Dam was being or had been
compromised: §§29-33 above.
594.2. Cs’ sprawling allegations of matters which BHP knew or should have known have
been addressed in detail in Sections D and E above. The detail in those sections
illustrates that neither BHP, nor any Named Individual knew or had any reason to
know that the safety of the Dam was being or had been compromised.
594.3. In relation to the six factors identified by Cs as causes of the Collapse, whether on
BHP’s case or on Cs’ case as to attribution, BHP’s knowledge of any of the alleged
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causes or contributing factors was very limited, and did not include knowledge that
they posed a threat to the stability of the Dam: §§232-233 above.
595. In light of the foregoing, BHP will submit that none of the acts or omissions relied on by
Cs were in breach of any required standards of conduct and/or any legal duty.
J1.2.2.3 Acts
596. So far as concerns the acts relied on by Cs, as explained above at §§577-579, these relate to
the alleged approval and implementation of P3P, P4P and Project 940. As above, the
decision to proceed in each case was that of the Samarco Board, and not BHP: §579 above.
The Samarco Board itself was a governance body that acted in the interests of Samarco,
and reasonably relied on information from Samarco’s executive management regarding
these projects. Neither BHP nor any Named Individual was informed that any of these
projects could not be safely implemented, let alone that they could create a risk of collapse:
§§198-204, 220-225, 233 and 235-236 above.
597. Further, BHP’s alleged approvals cannot in any event be said to be contrary to any requisite
standard of conduct / duty because BHP did not actually know that any of the matters
allegedly “approved” by BHP would in any way compromise the safety of the Dam. No
such information existed.
598. P3P (MPOC, §276A.1 {A1/1/117}): Cs do not say that BHP knew or ought to have known
about any particular concerns in relation to P3P, or the construction of the Dam. Indeed,
Cs do not even identify any such concerns. To the extent that “approval” of P3P is part of
Cs’ negligence case, it is implausible.
599. P4P (MPOC, §276A.2 {A1/1/117}): Cs allege that BHP either were, or should have been,
aware of “the substantial increase in production and therefore in tailings deposits which would and did
arise from the decision to proceed with the P4P project” and “encouraged and approved increases in
production and the further raising of the height of the Dam to accommodate the consequential increased
volume of tailings”: Reply §§127.5, 130 {A1/3/98}. BHP’s case as to knowledge at that time
is set out above at §§198-204. As explained there, in summary:
599.1. Whilst the BHP Board was informed that the P4P Project would increase Samarco’s
pellet production by c. 37%, there was no suggestion that the project might increase
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the risk of the Dam collapsing or that the project gave rise to any concerns about
the integrity of the Dam at all: see §199 above.
599.2. Nor was any such information received by the Samarco Board. The focus of
discussions regarding tailings disposal at Samarco Board level was on whether
Samarco’s existing structures had sufficient storage capacity for the P4P Project.
599.3. Further and in any event, there was no increase in the rate of rise of the height of
the Dam as a result of the P4P Project; and the increase in tailings leading to an
increase in absolute elevation of the Dam, did not cause the Collapse: §§184-189
above.
600. Project 940 (MPOC, §§276A.3 {A1/1/117}, 205A {A1/1/85}). Cs allege that BHP
“approved” Project 940, even though BHP knew or should have known various matters set
out in §205A {A1/1/85}, and Reply, §§105A-105N {A1/3/67} relating to the Setback and
that Project 940 would result in substantial delay in infilling of the Setback.138 As already
addressed above: BHP did not “approve” Project 940; Samarco did. BHP’s alleged knowledge
of various matters relied upon by Cs has been addressed in detail above at §§154-181 and
220-231. In summary:
600.1. Cs’ case relies on matters allegedly raised to the Samarco Board or alleged to be
known by other Named Individuals. Their knowledge cannot be attributed to BHP:
§§61-93 and 220-231 above.
600.2. Even if BHP knew about the existence of the Setback, or that the Setback should
be infilled as soon as possible (if that was so), whilst the ITRB recommended that
the Setback be filled in, it subsequently acknowledged that the installation of the
El.860m Blanket Drain would be prioritised over the infilling work, and noted the
importance of not missing the opportunity to install drainage at that elevation (and
the Geotech experts agree that the drainage at the left abutment was required before
the Setback could safely be infilled): §219 above.
600.3. In any event, the presentations for the Samarco Board and the minutes of their
meetings do not contain any statement that Project 940 could not be, or was not
138BHP’s case is that the approval of Project 940 did not have any impact on the continued raising of the Dam on the
axis of the Setback: see §219 above.
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being, implemented safely: §§226-231 above. Nor did any of the information
available to BHP from its risk reporting and audits of Samarco indicate that Project
940 could not be, or was not being, implemented safely.
600.4. Even if it were the case that Project 940 could not be or was not being implemented
safely, it is denied that is something BHP should have realised. BHP were fully
entitled to rely on the fact that Samarco had its own Board, and Executive Board,
and Dams operations team, none of whom raised such a concern. Samarco
operated independently.
601. Encouragement and approval of increases in production. This leaves the disparate
allegation that BHP “encouraged and approved” increases in production and/or increases in the
elevation of the Dam at five Samarco board meetings in 2014/2015, despite knowing the
matters in Reply, §127 {A1/3/97}; Reply, §130 {A1/3/99}. BHP’s case as to what
happened at each of these meetings is at §§196-197 above. Neither the knowledge nor the
acts of the Samarco Board, or its members, can be attributed to BHP. In any case, as detailed
above in Sections D and E, there was no statement indicating that the safety of the Dam
was being or had been compromised as a result of the decisions made at those Board
meetings; indeed, the Samarco Board received reports at these meetings that the safety of
the Dam was considered ‘well-controlled’, and that the Dam was (at a minimum) operating
at an adequate level of safety: §181 above.
602. None of the acts relied on by Cs, even if properly attributable to BHP, were in breach of
any applicable standard of conduct or legal duty.
J1.2.2.4 Omissions
603. The omissions case fares no better.
604. MPOC case: advice and warnings. Cs allege that BHP disregarded and failed to take
“sufficient action” in response to warnings and advice: MPOC, §§282.4-.8 {A1/1/124-128}.
BHP’s case as to the content of the “advice” and “warnings” relied on in MPOC, §§282.5-.8
{A1/1/125-128}, what was done in response to them and who received them, and whether
BHP had knowledge of them, is set out above at §§259-277 above. BHP submit that they
did not fail to act, and thereby breach any standard of conduct or duty to take sufficient
action in response to those matters:
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604.1. None of the alleged advice / warnings relied on in §282.5-.8 were matters for BHP.
BHP were not in a “controlling position” vis-à-vis Samarco (MPOC §282.4
{A1/1/124}) and were not able to direct Samarco or themselves to take “sufficient
action” in relation to Samarco’s operations. No standard of conduct (or any duty)
would or did require this of a person in the position of BHP. Nor did BHP have
reason to believe that any of the matters were not addressed appropriately, if they
were not.
604.2. Nor did any of the alleged advice / warnings relied on in §§282.5-.8 suggest that
the Dam was at risk of Collapse. Many of the matters relied on by Cs have self-
evidently nothing to do with the causes of the Collapse: e.g., the Prístino Report
(MPOC §282.6 {A1/1/125}; see §§257 and 269 above) and the resettlement
discussions (MPOC §282.7.2 {A1/1/126}; see §272 above).
604.3. To the extent that any of the matters raised by the alleged advice / warnings
required action, it was for Samarco to address those matters (see §§270-275 above).
604.4. If any of the matters addressed in the alleged advice / warnings were not adequately
addressed (which BHP do not accept was the case), there is no indication in the
documents that the Samarco Board were informed that those matters gave rise to
a risk of Collapse: §§270-275 above.
605. Rise of the Setback. Cs allege that, following the approval of Project 940, BHP “failed to
intervene to halt the continued rise of the Setback when BHP knew or ought to have known of the increasing
risk to the stability of the Dam” (MPOC, §§205A.11; 208.8A {A1/1/90}). As to this:
605.1. The ongoing elevation of the Dam / Setback was purely an operational matter: it
increased because more tailings were added. That was an operational matter for
Samarco. BHP could not direct Samarco and its operations. No standard of
conduct (or any duty) would or did require this of a person in the position of BHP.
605.2. Cs’ case is that BHP learned (or ought to have learned) a number of things in the
months following the approval of Project 940, such that BHP knew or ought to
have known about the risk to the stability of the Dam (MPOC, §205A.10
{A1/1/89}). These matters are addressed above at §§154-181. As detailed there, (a)
it does not follow from any of those matters that anyone at BHP knew or should
have known that the safety of the Dam was being compromised and (b) all of those
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matters were (also) known to Samarco: if any of the alleged matters required action,
it was for Samarco to take. Further, the overarching message in the materials
provided to the Samarco Board, Operations and Performance Management
subcommittees was that Dam management was well controlled and operating, at a
minimum, at an adequate level of safety: see §181 above.
606. Reply case: failure to insist on certain matters through “representatives”. As regards
the allegation in the Reply that BHP failed to insist through its “representatives” on the
Samarco Board that (a) further raising of the Dam should not proceed pending (among
other things) “full and detailed evaluations and geotechnical reports by independent experts into the effect
of the modifications to the Dam”; and (b) full and proper disclosure was made to Supram (Reply,
§128 {A1/3/99}):
606.1. This is an allegation similar to the allegation that BHP should have “intervened” to
halt the continuing rise of the Setback. Both matters identified in Reply §128 are
operational, except insofar as authorisation from Samarco’s Board was needed (i.e.
for Project 940) in which case the matter was still a matter for Samarco’s Board.
No standard of conduct (or legal duty) would or did require an indirect shareholder,
like BHP Australia, and/or a person in the position of BHP UK, to step in to
intervene in operational issues.
606.2. BHP Brasil’s appointees to the Samarco Board were not “representatives” of BHP.
BHP Brasil appointed half of Samarco’s Board of Directors and the appointed
directors were directors of Samarco. BHP could not direct Samarco (which is what
must be meant by the allegation that BHP should insist) to take these steps: see
§§38-44 and 436 above.
607. In any event, as detailed elsewhere (see §§99-103 above and §§65-69 of Annex 3), the Dam
was the subject of some form of review or consideration by a large number of geotechnical
engineer and specialists, independent of Samarco, who produced reports and analyses
regarding the Dam. Those reports and investigations indicated that the total proposed
increase in height of the Dam, to El.940m, was achievable, although additional measures
particularly around drainage (which were subsequently implemented by Samarco) may be
required. The suggestion that BHP were duty bound (whether by a standard of conduct or
legal duty) to ‘step in’ and “halt” the raising of the Dam (below El.920m) and insist on
further reports is wrong.
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608. As for Cs’ allegations regarding disclosure to Supram, these allegations are addressed in
Section K below. In any case, BHP were not responsible for disclosing relevant information
to Supram; that was a matter for Samarco (which it carried out properly and in accordance
with its obligations. Further, to the extent relevant, BHP was entitled to rely on the licenses
as issued.
609. Further and in any event, this part of Cs’ case, too, is dependent on Cs’ knowledge case, i.e.
on the allegation in Reply, §127 {A1/3/97} that BHP knew the matters there alleged. The
allegation must, in effect, be that BHP did or should have realised that the elevation of the
Dam should be halted immediately. But nobody realised that, and the suggestion that BHP
should have is very difficult to understand. BHP’s overall response to the knowledge case
is set out at Sections E2-E4 above. In summary: BHP did not know that the safety of the
Dam was at risk.
610. In short: none of the acts/omissions relied on were contrary to any requisite standard of
conduct and/or legal duty of safety (etc.).
J1.2.3 Causation
611. There was no causation between any failure of BHP to comply with any standard of care
or legal duty and the Collapse. Cs’ claim fails for this reason too.
612. The applicable test is the test under Art 403 CC. Nothing BHP is alleged to have done, or
is alleged to have failed to do, is the direct and immediate, i.e. necessary (Tepedino) or
adequate (Rosenvald) cause of the Collapse. As noted above, there seems to be little
substantive difference between the “necessary” and “adequate” tests and BHP will submit that,
on either test, the requirements of Art 403 are not satisfied.
613. First, the alleged acts / omissions are all based on an argument that BHP brought about or
failed to prevent an act or activity of Samarco which is said to have caused the Collapse.
This type of causation argument does not satisfy the requirements of Art 403 CC. BHP’s
acts / omissions were not the direct and immediate cause of the Collapse:
613.1. For example, assuming for a moment that it is right to say that the P4P Project was
a cause of the Collapse, as Cs contend and as BHP deny, BHP’s “approval” (of BHP
Brasil’s notional share of capital expenditure) of this project was not the direct and
immediate cause of the Collapse; rather, the decision of Samarco and the
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implementation of the project by Samarco were the direct and immediate cause of
the Collapse. BHP’s approval was – at most – a “but for” cause.
613.2. As Prof Tepedino has explained, in the case of a corporate group the necessary
causation test will not be satisfied by reference to the acts of the controlling parent
company, where the damage is caused by the operating company’s acts or
omissions: §§532-537 above.
614. Second, further, Cs’ case as to how the acts / omissions relied on in the MPOC (§282.10
{A1/1/129}) satisfies causation is unexplained and in any event wrong.
615. As for the acts relied on:
615.1. BHP’s “approval” of P3P does not satisfy the causation test. Cs’ case must be that
“had the Dam never been built, it would never have collapsed”, but that sort of causal analysis
is not accepted by either expert (or any sensible legal system).
615.2. Nor did BHP’s “approval” of the P4P Project cause the Collapse: (a) there is no
direct and immediate causal relation between BHP’s alleged “approval” of P4P and
the Collapse: see §613.1 above; (b) Cs’ argument that P4P was a “major contributing
factor to the Collapse” (MPOC, §276A.2 {A1/1/117}) is wrong in fact: see §§184-189
above.
615.3. The same points fall to be made in relation to Project 940: (a) there is no direct
and immediate causal relation between BHP’s alleged approval and the Collapse;
and, in any event, (b) Project 940 had no impact on the continued raising of the
Dam on the axis of the Setback and was not a cause of the Collapse: see §219 above.
616. The omissions case also does not meet the causation test.
616.1. The “warnings/advice” case (in MPOC, §282.4-.8 {A1/1/124-128}, 282.10

{A1/1/129}) is unparticularised.
616.2. The questions raised by this contention are: (a) what advice / warnings were
provided to BHP; (b) to what extent did the advice / warnings relate to the causes
of the Collapse; (c) what was done in response to any relevant advice / warnings;
(d) what else (if anything) should have been done (by BHP) and (e) was any failure
to do those things a “direct and immediate” cause of the Collapse?
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616.3. BHP’s case on (a) and (b) is set out at §§270-275 above. Ultimately, what matters
is question (d), but until Cs explain their case in (c) one does not even get to it, and
Cs have not pleaded a case either as to (c) or critically in this context (d): so the
causation plea at MPOC, §282.9-10 is difficult to understand and no more than a
bare assertion.
616.4. Similarly, the allegation that BHP failed to halt the continued rise of the Setback
(MPOC, §§282.8A, 205A), is also unclear. In any event, BHP will submit that no
omission by BHP (if there was a relevant, culpable omission, which is denied) was
the direct and immediate cause of the Collapse
617. Cs’ causation case in the Reply at §§131, 132 {A1/3/100} is also wrong.
617.1. First, Cs’ case in §131 is that the Collapse would not have occurred ‘had BHP not
done something’ (encourage and approve production and Dam elevation) or ‘had
BHP done something’ (insist on halting elevation, insist on investigations, and
report to Supram). That is a pleading of ‘but for’ causation, not a pleading that any
act of BHP or omission of BHP directly and immediately caused the Collapse
(which is what is required under Art 403 CC).
617.2. Second, further, in relation to the case at §131.1, any approvals by BHP (let alone
mere “encouragements”) are not direct and immediate causes of the Collapse. The
relevant increases in production and raising of the Dam were not directly caused
by BHP (rather, on Cs’ case: BHP only “encouraged and approved” those things). These
were all matters for Samarco: Samarco’s Board decided to go ahead with these
projects, and Samarco implemented them. In any event, the increase in tailings and
increase in Dam’s elevation that BHP are said to have encouraged or approved did
not cause the Collapse: see §§184-189 above.
617.3. Third, the case at §131.2, is that BHP should have insisted on evaluations and
reports which it is said would have been “highly likely” to recommend no further
raising of the Dam or the removal of the Setback. Clearly, BHP’s alleged failure to
insist on such evaluations / reports was not a direct and immediate cause of the
Collapse. Rather, the alleged omission (failure to insist on reports etc) is the first
step in a line of (alleged) events – (a) production of the reports/evaluations – (b)
reports/evaluations reaching certain views about the Dam – (c) reports/evaluations
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making particular recommendations – (d) Samarco acting on those
recommendations in a particular way. This does not satisfy the causation test.
617.4. Further, the factual premise of this part of Cs’ case is that the putative reports would
have reached these conclusions, but this premise is not explained. Cs’ case does not
grapple with the investigations / reports that were produced and the extensive
ongoing monitoring of the safety of the Dam (as explained in Annex 3), which did
not make such recommendations; nor does it grapple with the uncertainties (which
it is apparent from the existing reports/ongoing monitoring would have existed) in
relation to the inputs into the putative evaluations/reports, the analyses that would
have been conducted, the significance that would have been attached to any
identified risk, and the remedial work that would have been recommended.
617.5. Fourth, in §131.3, Cs say that “if full and proper disclosure had been made to Supram”, (a)
Supram would have required further detailed evaluations and geotechnical reports
to be carried out, and (b) that in light of such reports, Supram would have either
refused the licence or would have required Samarco to enter into a TAC in relation
to the safety of the Dam or imposed additional conditions on the renewal of
Samarco’s operating licence, and that it is unlikely that continued elevation of the
Dam on the alignment of the Setback would have been permitted: Reply, §131.3
{A1/3/100}, §89.6 {A1/3/58} and §91.3 {A1/3/60}. Again, that sort of causation
chain will not meet the “direct and immediate” causation test; rather, this case is
another (rather tenuous) ‘but for’ causation case. BHP’s alleged omission is even
further removed from the Collapse than the case in §131.2 {A1/3/100}. Further,
and in any event, as detailed in Section K below, BHP deny (a) that Samarco
breached any Supram requirements and/or that (b) Supram would have required
further independent investigations or evaluations and that any such investigation
or evaluation would have recommended that the Dam not be raised further, or the
removal of the Setback pending further raising; the allegation to the contrary is
speculative (including as to what Supram would have done and what would then
have happened).
J2. Article 927 Claim
618. Cs’ Art 927, sole para claim is the Environmental Law claim under a different guise: see
MPOC, §282A.4 {A1/1/129}; Reply, §132 {A1/3/100}. BHP are not liable under Art 927,
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sole para, because they are not the “author of the damage” caused by the activity in question,
namely Samarco’s mining activities. The matters relied on by Cs are not risk activities
carried out by BHP that caused the Collapse.
J2.1 Art 927, sole para Claim: Brazilian law issues
619. The experts for this part of the case are the same as under Art 186 CC. The experts have
addressed LOI, Issue 15 {A2/1/10}.
620. Article 927 (sole paragraph) provides:
The obligation to compensate the damage will exist, regardless of fault, in the cases specified by law or when
the activity normally carried out by the author of the damage entails, by its nature, risk to the rights of
others. {I1/2/35}
621. In summary, the following issues arise: (a) what is the relationship between the cases of
strict liability “specified by law” and the cases of strict liability arising from risk activities; (b)
what constitutes a risk activity? (c) who is the “author of the damage”? and (d) what is the
causation requirement? We consider each in turn.
J2.1.1 Specific legal provisions
622. The first part of Art 927, sole para is concerned with “cases specified by law”.
623. As the Court has seen, the Environmental Law specifically provides for strict liability of
polluters in the case of environmental damage.
624. The Court will hear evidence on whether such a specific legal provision can co-exist with
the general clause in Art 927, sole para, or whether the fact that a situation is governed by
a specific regime excludes the application of the general regime.
625. Prof Tepedino’s view is that, pursuant to the principle of specialty, which has already been
referred to, there is no room for simultaneous application of the Environmental Law and
the general clause of Art 927, sole para in cases of civil liability for environmental damage:
Tepedino 2, §39 {C18/1T/20}, §161 {C18/1T/65}. This was also Prof Sarlet’s view in his
first report, where he opined that there are “situations in which the general objective civil liability
regime (enshrined in Article 927, sole paragraph, of the Civil Code) will no longer be applied in view of the
incidence of others when specified by law…” and “when there is a case “specified in law”, that is, a regime
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already established in law, the specialised regime, and not the test prescribed in article 927, sole paragraph,
applies. The environmental civil liability regime is specified by law. Therefore, the special regime applies”
(Sarlet 1, §204 {C4/1T/95}), although Prof Rosenvald appears to take the contrary view:
JES, Issue 5(e) {C1/2T/6}. Confusingly, it therefore appears to be agreed – at least between
Profs Tepedino and Sarlet – that Art 927, sole para cannot apply to Cs claims. Nevertheless,
we address the claim below.
J2.1.2 Risk activity
626. The following matters are agreed: the activity must be normally or usually carried out, i.e.
Art 927 sole para is not concerned with “momentary or sporadic” acts: Tepedino 1, §235
{C7/1T/91}; Rosenvald 1, §207 {C3/1T/89}. (b) The activity must pose a risk to the rights
of others: Tepedino 1, §236 {C7/1T/91}; Rosenvald 1, §§222-225 {C3/1T/94-95}; and(c)
The activity must be inherently risky: Tepedino 1, §236 {C7/1T/91}; Rosenvald 1, §213
{C3/1T/91-92}.
627. The activities of BHP were not risk activities. The matters Cs rely on are the same matters
as are relied on in the Environmental Law case, i.e. BHP’s alleged (a) control of Samarco;
(b) bringing about of Samarco’s activities and/or contributing to the risks of Samarco’s
activities; (c) participation / involvement in Samarco’s activities; (d) funding Samarco’s
activities; and/or (e) benefitting from Samarco’s activities. These were self-evidently not
risk activities. And it is not Cs’ case that they were. Rather, their case is, because BHP
(allegedly) did the things pleaded in §282A.4, liability for Samarco’s mining activity can be
“imputed” to BHP, even though that activity was not carried out by BHP. But BHP are not
liable for activities carried out by Samarco.
J2.1.3 Author of the damage
628. It is common ground that the “author of the damage” is the person with the obligation to
compensate under Art 927, sole para. The dispute is about the meaning of that phrase. BHP
contend it is helpful to think about the “author of the damage” in terms of the “perpetrator” of
the damage: i.e. the person who did it.
629. Art 927, sole para states that the obligation to compensate damage caused by the activity
will exist “when the activity normally carried out by the author of the damage” is a risk activity (and
has caused damage).
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630. BHP’s position is therefore that only the person who normally carried out the activity is
capable of being the author of the damage.
631. Prof Tepedino explains that “The author of the damage is … the one responsible for the activity, that
is, the one who carries out the operational activity from which the damage arises” (Tepedino 1, §240
{C7/1T/93}); “The author of the damage is the person who performs the high-risk activity that causes
the damage”: Tepedino 2, §165 {C18/1T/66}.
632. The concept of “authorship” is related to causation. In civil liability (whether strict or fault-
based) liability is attributed only to persons whose acts or omissions have caused the
damage. Thus, “the Author of the damage is the one who causes the damage through its activity”:
Tepedino 1, §252 {C7/1T/97}. Causation is further addressed below.
633. Where a company carries out a high-risk activity, it is that company that is the author of
any damage: “The shareholders… are not the authors of the damage”. They (a) “did not carry out the
high risk-activity” (Tepedino 1, §242 {C7/1T/93}); and (b) “holding equity interests does not
constitute a risky activity” (Tepedino 2, §166 {C18/1T/66}). Any contrary view is not
consistent with Art 927, sole para; and, also violates the principle of separate legal
personality because it would make the shareholder liable in respect of the subsidiary’s
activities. The “disregard doctrine” (i.e. veil piercing) would in effect be otiose: Tepedino 2,
§166{C18/1T/66}, §210 {C18/1T/84}.
634. Cs, and Prof Rosenvald, seek to expand the “author of the damage” to those who are able to
avoid a risk, or to mitigate it, and persons who direct, organise, introduce, control or benefit
from the activity: Rosenvald 1, §227 {C3/1T/96}. This seems to be Prof Sarlet’s
“multifactorial” approach under another guise. Notably, none of these concepts are explained
in Rosenvald 1 or 2, nor are their limits clear: is an individual shareholder of BHP liable on
the ground of “benefit”? The lack of a way to determine a dividing line between liability and
non-liability is a powerful indicator that Prof Rosenvald’s expansive concept of authorship
is wrong.
635. Prof Tepedino disagrees with Prof Rosenvald’s expanded concept of authorship: Tepedino
1, §§243-246 {C7/1T/94}; Tepedino 2, §§165-175 {C18/1T/66}.
636. There are three main elements to Prof Rosenvald’s opinion on this issue. They are
introduced below as well as Prof Tepedino’s responses.
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637. First, Prof Rosenvald seeks to separate the author of the damage from the person who has
caused the damage by carrying out the activity: he contends that the only causal link required
is between the activity and the damage, and then liability may be “imputed” to persons related
to the activity in the manner described by him: Rosenvald 1, §§65-72 {C3/1T/34-36}, §227
{C3/1T/96}, §235 {C3/1T/98}. Prof Tepedino considers this approach to be mistaken
and has criticised Prof Rosenvald’s expansive conception of the author of the damage on
that very basis, i.e. that it would expand liability to “those who did not cause the damage”:
Tepedino 1, §243 {C7/1T/94}; §252 {C7/1T/97}; Tepedino 2, §§51-56 {C18/1T/24};
176-182 {C18/1T/73}.
638. Second, Prof Rosenvald’s understanding of how liability may be “imputed” to certain
persons is built on a lengthy discussion of “risk theories”: see Rosenvald 1, §§165-181
{C3/1T/76-81}; §§226-227 {C3/1T/95-96}; §§361-364 {C3/1T/141}. He says that the
“author of the damage” is a “conclusive label that is attributed to the person who must be considered legally
responsible for carrying out the risky activity. This question is answered with reference to … risk theory”:
§361. He states that the “risk benefit” theory justifies attributing liability to all those who
“benefit” from the activity; and the “risk created” theory justifies attributing liability to the
wide group of persons related to the activity.139 Prof Tepedino regards this exercise as
misconceived. The author of the damage is the person who carried out the activity and by
their activity caused the damage; risk theories are not of practical relevance to this analysis:
Tepedino 2, §143 {C18/1T/58}. It can be said that Art 927, sole para reflects the risk
created theory, precisely because it provides that the person who carries out the activity and
thereby creates the risk is the person who is liable: Tepedino 1, §236 {C7/1T/91}; Tepedino
2, §§141-160 {C18/1T/57}. In any case, properly understood, no risk theory could justify
expanding liability to persons who did not, by their acts or omissions, cause the damage:
Tepedino 2, §§141-160 {C18/1T/57}.
639. Third, Prof Rosenvald relies on five decisions of the Brazilian Courts in support of his
expansive reading of authorship: Rosenvald 1, §§228-234 {C3/1T/96-98}. Prof Tepedino
has analysed these in Tepedino 2, §§167-175 {C18/1T/67} and states that they are not good
authority for Prof Rosenvald’s expansive conception of authorship. These cases will be
explored in cross-examination and BHP will make detailed submissions in due course.
Prof Rosenvald also mentions the professional risk theory, the development risk theory and the integral risk theory.
139
But none of these seem to be of practical relevance to his views on the correct interpretation of Art 927, sole para.
Prof Tepedino’s response to these matters is at Tepedino 2, §§141-160 {C18/1T/57-64}.
213
640. In summary, BHP will submit that the “author of the damage” is the person who carried out
the activity that has caused the damage.
J2.1.4 Damage and causation
641. The Brazilian law experts agree that causation under Art 927, sole para is governed by Art
403 CC (as in relation to liability under Art 186 CC): so the causal link has to be “direct and
immediate”, i.e. “necessary” (Tepedino) or “adequate” (Rosenvald): see §§567-573 above. The
outstanding legal issue in relation to causation is whether the relevant causal link is between
the activity and the damage, or between the acts and omissions of the defendant and the
damage. In a sense, this is a similar debate to that already addressed in Section H in the
context of Environmental Law at §§365-404.
642. On Prof Tepedino’s (correct) approach to Art 927, sole para, this is a distinction without a
difference, because the requirement of causation is related to the concept of authorship. As
Prof Tepedino explains in his first report: “the duty to compensate should only be attributed to the
party whose behaviour or activity necessarily caused the harmful result” (Tepedino 1, §251
{C7/1T/96}); and “…the activity developed by the author of the damage must cause the damage with a
necessary causal link. The Author of the damage is the one who causes the damage through its activity”
(Tepedino 1, §252 {C7/1T/97}; also Tepedino 2, §176 {C18/1T/73}). On this approach
the causal link between the (defendant’s) activity and the damage is also a causal link
between the defendant’s acts and omissions and the damage.
643. The issue identified in §641 above arises only on Prof Rosenvald’s approach, which is to
expand authorship (beyond the person carrying out the activity) and to separate it from
causation. His position is that the only causal link that needs to be demonstrated is between
the activity and the damage, and that authorship (of the damage) is unrelated to causation,
but rather is determined by the multifactorial test already summarised above (i.e. control,
benefit, risk management etc.): Rosenvald 1,§§ 235-237 {C3/1T/98-99}; Rosenvald 2,
§§130-135 {C16/1T/58-60}. This is in aid of an argument that liability under Art 927, sole
para extends to those “who did not directly cause the damage”: Rosenvald 1, §235 {C3/1T/98}.
644. Prof Rosenvald refers to half a paragraph in Tepedino 1 (§240 {C7/1T/93}) and JES (Issue
15b {C1/2T/10}) to suggest that Prof Tepedino should be taken to agree with Prof
Rosenvald’s position that “the link between the author of the damage and risk of the activity is
‘responsibility’, while the link between the damage and the activity is causal”: Rosenvald 2, §135
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{C16/1T/59-60}. This is incorrect. Prof Tepedino has been clear that there must be a
causal link between the activity carried out by the defendant and the damage: see §642 above
and Tepedino 2, §176 {C18/1T/73}.
645. Prof Tepedino addresses Prof Rosenvald’s causation analysis in Tepedino 2, §§51-56
{C18/1T/24}; §§155-160 {C18/1T/62}; §§176-182 {C18/1T/73}. He explains that Prof
Rosenvald’s attempt to separate out authorship from causation is misconceived: in all cases
of civil liability, whether strict or fault-based, only those who by their acts or omissions (or,
which is the same thing, by an activity carried out by them) have caused the damage can be
liable. This is strongly supported by several important decisions of the STJ, including the
Mangroves and Vicuña cases, which the Court has already seen (see Tepedino 2, §§159, 160
{C18/1T/63}; see §376 above). Two (STJ) cases cited by Prof Rosenvald himself at
Rosenvald 1, §187 {C3/1T/83}, §233 {C3/1T/98} in terms repeat that: “for the
characterization of civil liability, first and foremost, the causal link between the harmful event and the
commissive or omissive act of the author must exist …”: Tepedino 2, §147 {C18/1T/59}, §174
{C18/1T/72}.
646. In short, BHP’s position is that a causal link must be demonstrated between the activity
carried out by the defendant and the damage. As to the nature of that link, as submitted in
relation to Art 186 CC at §§567-573 above, the damage must be the “direct and immediate”
i.e. “necessary” consequence of the defendant’s activity.
J2.2 Art 927, sole para claim: application to the facts
J2.2.1 On BHP’s legal case as to author of damage
647. If Prof Tepedino’s opinion as to the proper meaning of Art 927, sole para is accepted, then
Cs’ claim under that provision is misconceived for two reasons.
648. First, because there is a specific legal provision that governs the strict liability of polluters,
BHP are either liable under that specific legal provision, or not: see §§622-625 above.
649. Second and alternatively, BHP cannot be liable under Art 927, sole para for damage caused
by Samarco’s mining activities because they were not carrying out that activity. The “author”
of any damage caused by such activity (if it was risky) is Samarco. Cs’ case – that BHP is to
be treated as the “author of the damage” for various reasons that fall short of an allegation
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that BHP carried on Samarco’s mining activities – is therefore wrong as a matter of law. It
is nonetheless addressed below.
J2.2.2 On Cs’ legal case as to author of damage
650. On Cs’ case as to “authorship”, the following issues arise:
650.1. Was Samarco’s mining activity a risk activity?
650.2. Is BHP the “author of the damage” caused by the mining activities because of the
matters listed in §282A.4?
650.3. If so, is the relevant test of causation satisfied?
651. The first issue – whether Samarco’s mining activities were a “risk activity” – has already been
addressed: §§626-627 above. It is simply the wrong question. Presumably some of
Samarco’s activities (e.g. operating the mine or Dam) would qualify as a “risk activity”. But
those are obviously not BHP’s activities – and Cs do not suggest they were. We address the
other two issues (at §650 above) immediately below.
J2.2.2.1 “Author of the damage”?
652. Based on Prof Rosenvald’s wider (and incorrect) conception of authorship, Cs allege that
liability for Samarco’s mining activities can be imputed to BHP “by reason of the matters referred
to in paragraphs [271]-[276A], [278] and [280]” (MPOC §282A.4 {A1/1/129}).
653. This is a repetition of the Environmental Law claim and, as with that claim, Cs’ Art 927,
sole para case is based on the notion that BHP are responsible for the activity carried out
by Samarco in four ways:140 (a) control; (b) creation of the risk; (c) participation and
engaging in risk activity; and (d) benefit from the risk activity. As the Court will
appreciate – these are just the same points made under Prof Sarlet’s alleged “multifactorial”
test for Environmental Law. They have been addressed above at §§431-470.
654. It is unhelpful that Cs have not said how they say these allegations (which are all part of the
Environmental Law case) meet Prof Rosenvald’s test under Art 927, sole para. In any event,
BHP submit that:
140 “Funding” (MPOC, §279 {A1/1/118}) is – oddly – not relied on.
216
654.1. For the reasons given in response to the Environmental Law claim at §§434-445
above, BHP did not “undertake, direct, organise, introduce, or control” (Rosenvald 1, §227
{C3/1T/96}) Samarco’s mining activities.
654.2. The other element of the Rosenvald test applies to any person who “is in a position
to avoid or mitigate the risk in an efficient manner”: Rosenvald 1, §227 {C3/1T/96}. Prof
Rosenvald has not expanded on the meaning of this test, and Cs have not explained
how it is alleged to be satisfied. BHP submit that (a) the test is wrong in law, (b)
but even if the test existed, it could not be satisfied in the circumstances of this
case: Samarco was the entity to avoid or mitigate the risks of the mining activity in
an efficient manner. To hold otherwise is to undermine separate legal personality.
655. In short, for the reasons given above, which mirror BHP’s response to the Environmental
Law claim, Cs do not have a viable claim under Art 927, sole para.
J2.2.2.2 Is the test of causation satisfied?
656. As noted above in §§567-573, there is an issue between Cs and BHP (and Profs Rosenvald
and Tepedino) as to the applicable test of causation for liability to be established under Art
927, sole para.
657. On Cs’ case, there is no additional causation issue: Cs’ case is that it is sufficient that (a)
BHP were connected to Samarco’s activities in the ways pleaded and (b) Samarco’s activity
caused the Collapse. This case is mistaken for the reasons given above.
658. On BHP’s causation case, even if the Court were to adopt a wider approach to authorship,
as put forward by Cs, such that a person who directs, organises, introduces, controls or
benefits from the activity, or is in a position to mitigate the risks of the activity, is capable
of being an “author of the damage” under Art 927, sole para then it would be necessary to
establish a causal link (as provided for in Art 403 CC) between the alleged acts and/or
omissions and the damage.
659. In that regard, even if Cs make out their allegations referred to in §653 above, none of those
allegations would satisfy the test of necessary causation: see §§611-617 above.
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J3. Articles 932(III) and 933 Claim
660. Cs allege that BHP are strictly liable in respect of the conduct of the Named Individuals
both under Arts. 186 and 927, pursuant to Arts. 932(III) and 933 CC {I1/2/37}: MPOC,
§282B {A1/1/130}. BHP deny that they are liable in respect of the conduct of any of the
Named Individuals: Def, §325C {A1/2/211}.
661. In any case, in light of both Cs’ and BHP’s expert evidence, it is clear that Arts. 932(III)
and 933 are only relevant to establish vicarious liability of the employer/principal. As Prof
Rosenvald explains: “to establish the strict liability of the employer/representative under the terms of
articles 932 and 933, it is necessary to demonstrate that the employee/representative has committed a
wrongful offense, under the terms of article 186 of the Civil Code.”: Rosenvald 1, §262 {C3/1T/108}.
Prof Tepedino agrees with this understanding of Arts 932(III) and 933: Tepedino 2, §192
{C18/1T/78}.
662. Cs do not allege that any of the Named Individuals committed any acts and/or omissions
for which they (i.e. the individuals) are liable under Art 186 CC. Accordingly, Cs’ reliance
on Arts 932(III) and 933 is difficult to understand and, in any event, cannot be maintained
in light of their own expert evidence.
J4. Article 942
663. The Court will have seen reference in the pleadings and in Issue 2 on the List of Issues
(which concerns fault based liability under Art 186 CC) to liability under Art 942 CC.
664. Art 942 CC provides {I1/2/39}:
“Art 942 The property of the person responsible for an 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.
Sole paragraph: All those who committed the offence are jointly and severally liable; the persons
designated in Article 932 are also jointly and severally liable with those who committed the offence.”
665. However, no separate issue arises under Art 942 CC. This is because it is common ground
between the experts that Art 942 is not a separate basis for liability; rather, its effect is to
establish joint and several liability of defendants against whom liability (e.g., under Art 186
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CC or 927, sole para CC) has been established: Tepedino 1, §§263-268 {C7/1T/100};
Rosenvald 1, §§306-320 {C3/1T/126-130} .
666. If liability were established against BHP (on the basis of any of the pleaded causes of action),
then it is accepted (by BHP and Cs) that BHP’s liability is joint and several with Vale, BHP
Brasil and Samarco (which is relevant in relation to the limitation and waivers analysis).
Note, however, the submissions in relation to Environmental Law (at §§405-408 above):
under that regime, if BHP were liable, then whilst BHP’s liability would be joint and several,
it would be subsidiary to that of Samarco.
K. LICENSING
667. Cs contend that “in connection with the renewal of Samarco’s operating licence and its further application
for a licence to raise the Dam to an elevation of 940 metres, the matters referred to in [Reply §§89.2 and
91.2 {A1/3/58} {A1/3/59}] were required to be disclosed to Supram, but had not been disclosed” by
Samarco: Reply, §127.10 {A1/3/98}, and MPOC, §282.8A {A1/1/129} referring to the
matters pleaded at Reply, §§124-131 {A1/3/95} as part of Cs’ case on Art 186 CC. This is
part of one of Cs’ grounds for alleging a breach of Art 186 CC; it is unclear whether this
allegation also has a role in relation to Environmental and Corporate Law. Cs contend that
a person in BHP’s position “should have been expected to insist, through [their] representatives on the
Board of Samarco…that full and proper disclosure was made to Supram of the matters set out in [Reply
§§89.2 and 91.2]” {A1/3/58} {A1/3/59} (Reply, §128) {A1/3/99}, and that BHP breached
the standards of conduct expected of them by encouraging and approving increases in
production of iron ore and further raising the height of the Dam, which (Cs say) caused the
Collapse (Reply, §130-131) {A1/3/99}.
668. There are three matters allegedly not disclosed in two documents, and relied upon by Cs in
this regard:
669. Reply §89.2 {A1/3/58}: “Substantial modifications”. In Samarco’s application for

renewal of its operating licence on or around 5 April 2013, the accompanying
Environmental Performance Assessment Report (the “April 2013 RADA”) stated that
there had been no modifications to the Dam during the lifetime of the then current licence
(i.e. since September 2008). Cs say that this was false because there had been “substantial
modifications” in association with a succession of drainage issues: sealing the Main
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Underdrain, construction of the Blanket Drain and Dyke 1A, the proposed change of axis
in 2011, the sealing of the Main and Secondary Galleries and the creation of the Setback.141
670. Reply §91.2 {A1/3/59}: Vale/Alegria and matters arising between April 2013 and
2015. In connection with Samarco’s application in October 2013 for a licence to raise the
Dam to 940m, and specifically in the accompanying Environmental Impact Study
(“October 2013 EIA”), Cs say Samarco should have disclosed, but failed to disclose (a)
actual and proposed use of the Dam to dispose of tailings from the Alegria mine; and (b)
the matters arising between April 2013 and April 2015 (as per MPOC, §§148-159
{A1/1/64-69}), in particular the cracking at the Setback in August 2014 and the attempts
to stabilise the slope thereafter.142
671. Cs say that if Supram had been informed of these matters, it would have required further
evaluations and geotechnical reports on the effect of the modifications and their impact on
the risk of an accident. They further contend that Samarco would likely have been refused
a licence, or made subject to a “Conduct Adjustment Term” as a condition of a licence, which
would have prohibited Samarco from continuing to raise the Dam upon the alignment of
the Setback (Reply, §89.6 {A1/3/58}, as to the information at §89.2 {A1/3/58}) or without
first removing the Setback (Reply, §91.3 {A1/3/60}, as to the information at §91.2
{A1/3/59}). There is notably (and rightly), no allegation that BHP themselves owed (or
breached) any duties under the licensing regime.
672. BHP rejects Cs’ allegations. Samarco did not breach the licensing regime. The matters relied
upon by Cs were not required to be disclosed to Supram, because they did not give rise to
any new or additional environmental impacts from Samarco’s operations. The licensing
experts have explained and agreed that issues in relation to safety and stability arising out
of modifications fall within the remit of another body, namely the Department of Mineral
Production (“DNPM”) (see §678.3 below) not Supram. Nor would further disclosure - as
(speculatively) contended for by Cs - have led to Supram preventing Samarco from raising
141 Cs also say, at Reply, §§89.3-89.4 {A1/3/58}, that Supram should have been consulted on these matters before
they were carried out, and that Samarco was obliged to disclose the use of the Dam to dispose of tailings from the
Alegria mine to Supram, but these matters are not ultimately relied upon in support of Cs’ case on Art 186 CC (or
under other laws).
142 Cs also refer at Reply, §91.1 {A1/3/59} to other matters allegedly not disclosed in the October 2013 EIA, namely
the failure of the Main Underdrain, the plugging of the Main and Secondary Galleries, the Setback and that the beach
width had been below 200m. However, these are not relied upon by Cs as part of its case under Art 186 (or under
other laws).
220
the Dam, the axis of the Setback, or requiring Samarco to remove the Setback (and Cs have
not led any evidence from Supram on this point). In any event, Cs have not identified any
or any adequate basis for saying that BHP knew or ought to have been aware of any breach,
nor explained how this can be relevant to Art 186 CC (or any other claim), where
compliance with any licensing obligations was a matter for Samarco rather than BHP (and
where BHP were entitled to rely on the adequacy and outcome of the licensing process).
673. Cs have also made certain allegations regarding a failure by Samarco to comply with two
conditions of its operating licence. However, these allegations are not relied upon as any
part of Cs’ case on breach and so their relevance (if any) is unclear. Nevertheless, for
completeness, they are addressed in Annex 7 - Breach of Licensing Conditions.
674. Cs’ allegations regarding omissions from submissions made to Supram are premised on the
nature of the Brazilian licensing regime, Samarco’s alleged non-compliance with that
regime, and BHP’s knowledge of both the regime and the alleged non-compliance. The
Brazilian licensing regime and law are addressed first, at §§675-678 below, and then the
facts, at §§679-687 below.
K1. Brazilian licensing regime and law
675. The Brazilian licensing regime and law have been addressed by experts: Prof Walter Senise
for Cs, and Prof Talden Farias for BHP. Following meetings on 16 dates between 19
January 2024 and 31 May 2024, the experts agreed a joint statement dated 31 May 2024 (the
“Licensing JES”, {E1/1T}).
676. In the Licensing JES, the experts expressed agreement on all issues, the key points of which
are summarised below. Cs were unhappy with that agreed statement, presumably because it
did not support their case. Even before the Licensing JES was finalised, Cs pushed to have
further allegedly clarificatory questions put to the experts, proposing an expansive list,
framed in partisan terms. In the interests of cooperation, BHP agreed that the experts could
be asked a shorter (and neutrally framed) list, which (with minor amendments) Cs agreed
following the PTR. This was sent to the experts on 29 July 2024.
677. On 19 August 2024, Profs Senise and Farias provided answers to these questions, again
agreeing on all points. Their responses are referred to below as the “Licensing
Responses” {E1/2T}. The experts did not seek to alter the substance of their existing
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evidence, but rather supplemented it in certain limited respects (together with some minor
corrections).
678. In relation to the issues identified at §668 above, the experts’ agreed evidence in the
Licensing JES and Licensing Responses is as follows (references to an “Issue” being to the
JES, and a “Response” to the Responses):
678.1. Supram is the agency responsible for environmental licensing of activity in Minas
Gerais State (where the Dam was). The construction and operation of a mining
tailings dam is subject to its environmental licensing regime: Issue 1, §1.
{E1/1T/3}.
678.2. A key concept in the context of environmental licensing is whether a proposed new
activity, or change to an activity that is already licensed, installed or in operation,
“could generate new or additional socially relevant environmental impacts” (“NASREI”).
Accordingly, when “applying for a (i) licence to operate, or (ii) the renewal of a licence to
operate, or (iii) a licence to modify a tailings dam” an operator is required to inform Supram
of “any issues resulting or that could result” in NASREI, and to consult Supram in
advance of such changes: Issue 3, §1 {E1/1T/4}; Issue 1, §5 {E1/1T/3}.143
678.3. However, another body, the DNPM, is responsible for regulating the safety and
stability of upstream tailing dams. Accordingly: “[a] change which could affect safety and
stability would be subject to the competence of the DNPM only”. That is because the DNPM
“would have the technical capacity to consider, evaluate and analyze such change”, whereas
Supram “had no expertise to consider, analyze and evaluate the safety and stability of mining
dams and would not have had the technical capacity to do so”. It would therefore be a matter
for a dam operator’s “discretion” whether to “communicate changes on safety or stability to
SUPRAM…but there is no express legal requirement to do so”: Issue 1, §§3-4 {E1/1T/3};
and see also Issue 7, §4 {E1/1T/6}; and Response 1(a)(i), §§2-3 {E1/2T/2}.
678.4. Accordingly, it is possible that a modification to a tailings dam could, by reason of

having a potential effect on the dam’s safety and stability, amount to a change in an
activity giving rise to NASREI. If so, it would require to be reported to Supram.
However, given the different roles and competencies of Supram and the DNPM
143 The basis for this is the legislation identified at Issue 2 {E1/1T/3} (and especially the specific provisions identified
at Issue 3, §3 {E1/1T/4}; and Response 2).
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the practical reality is that Supram would have to “assess the viability of licensing
modifications (with the potential to affect the safety and stability of the dam)” based on material
provided from a separate process between the operator with the DNPM
{PO/3032/1}. If that showed a risk of collapse, that would entail socially relevant
environmental impacts, which would be a matter within SUPRAM’s competency.
However, the experts do not say that a risk of collapse necessarily creates new or
additional such impacts (i.e. NASREI): Response 1(a)(i), esp at §§4-5 {E1/2T/2-
3}; Response 1(b) §2 and the following “summary” {E1/2T/3}.
678.5. The question whether issues relating to the “use, condition or changes of the drainage
system or dam geometry could result in” NASREI, is something which the experts were
“not able to determine”: Issue 3, §2 {E1/1T/4}; confirmed in Response 1(a)(ii), saying
that the impact of safety and stability of a modification is a matter for “the Expert
in the technical area” {E1/2T/3}.
678.6. EIAs did not require any stability analysis to be submitted; such analyses being a
matter for the DNPM: Issue 7 {E1/1T/6}, and see above. The experts could not
say whether disclosure of information about beach width history was required in
an EIA, or had the potential to generate NASREI (which is within Supram’s
purview): Issue 9 {E1/1T/7}. It is for the DNPM to assess “operational issues” such
as “the history of modifications and operations of the dam beach”. An EIA is not concerned
with such operational issues, but rather with related environmental issues. What an
EIA had to consider was any environmental issues arising out of the DNPM’s
assessment regarding the Dam’s safety, including its assessment of operational
issues: Response 4 {E1/2T/3}.
678.7. A range of responses are available to Supram in relation to disclosures made,

including the imposition of conditions and, if irregularity is found, imposing a
Conduct Adjustment Agreement. However, the prospect of Supram actually
refusing a licence application is “very remote because of the possibility of regularization, which
exists when the project is environmentally viable”: Issue 10, §2 {E1/1T/8}; and see also
Issue 12(b), §3-4 and §12(c) {E1/1T/9-10}. The imposition of conditions by
Supram would depend on a causal link being shown between the enterprise and the
possible environmental impacts identified in the relevant assessments: Issue 12(d)
{E1/1T/10}. If the DNPM did an assessment that indicated a potential risk to the
safety and stability of the dam, in practice Supram “should suspend the licensing of the
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modification until there were adjustments (recommended by the DNPM) to avoid said risk”
(emphasis added): Response 1(b) §1 {E1/2T/3}. In other words, Supram would
not impose additional conditions, but only ensure that specific DNPM
recommendations for addressing risk were implemented.
K2. Factual issues
K2.1 April 2013 RADA
679. It is common ground that on or around 5 April 2013, Samarco submitted to Supram an
application for renewal of its operating licence, accompanied by the April 2013 RADA. The
specific statement with which Cs take issue arises out of question 6.7. Under the heading
“Expansion / modification of the development”, question 6.7 (a) ({E2/9/8}; {E2/9T/8};
{E2/9CT}) was as follows: “Was there an increase in production capacity or modification of processes
during the validity period of LO vicenda [i.e. the operating licence that was about to expire]”. In
response, Samarco crossed the space for “no” and stated “NOTE: Regarding the development of
this RADA (Fundão Dam) there was no increase in capacity or modification of the project”: {E2/9/8};
{E2/9T/8}; {E2/9CT}. Supram granted the licence on 29 October 2013.144
680. Cs assert (Reply, §89.2 {A1/3/58}) that Samarco’s response was false because Samarco
took steps to deal with drainage issues (such as sealing the Main Underdrain and creating
the Setback – see §669 above). The details of the drainage issues and steps taken in response
are addressed above at Section D. Samarco’s statement was not false. None of the matters
referred to by Cs gave rise to any NASREI, which would require disclosure to Supram: see
§678.2 above. They therefore did not require to be disclosed as a “modification of processes”
(or, obviously, as an “increase in production capacity”) in response to this question, or
otherwise.145 Cs also assert (Reply §89.4 {A1/3/58}) that Samarco was obliged to disclose
to Supram “Vale’s actual and proposed use of the Dam to dump tailings from its Alegria mine”. Cs do
not explain the alleged source of that obligation, nor the relevance of the origin of the
tailings. Samarco informed Supram of the total volume of the Dam (see {E2/9T/12),
which was sufficient for Supram’s purposes.
144 The Copam decision on 29 October 2013, at the 69th Ordinary Meeting, granted the revalidation of the LO
(operating licence) No. 168 ({E2/17}; {E2/17CT}).
145 Further, Supram was informed through Samarco’s EIA of December 2012 that (a) works had been carried out to
address drainage issues: see the report by Geostavel dated August 2012 (Annex 6 to the EIA), which identifies the
sealing of the Main Underdrain and installation of the Blanket Drain {F5/29.3T/597}.
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681. In the light of the above, Cs’ case in relation to the April 2013 RADA fails. There was no
duty to disclose to Supram (and accordingly, engage in prior consultation with Supram
about) the matters alleged. The expert evidence does not support any allegation that the
matters relied upon by Cs constituted a NASREI requiring disclosure.
682. Indeed, the expert evidence reveals a fundamental mismatch between Cs’ pleaded
allegations and the true nature of the Brazilian regulatory process. Cs’ position appears to
be that the alleged matters had to be disclosed to Supram because they gave rise to issues
with the safety and stability of the Dam and, in consequence, NASREI. But the evidence
shows that such matters in fact fell within the competence of the DNPM rather than
Supram, and in relation to such matters all that was required to be disclosed to Supram by
a dam operator was the DNPM’s assessment of a tailings dam’s safety and stability. Cs have
made no allegation of any failure by Samarco to disclose relevant matters to the DNPM, or
to disclose the DNPM’s assessment to Supram (or of relevant knowledge on the part of
BHP). That is sufficient to dispose of Cs’ case.
K2.2 October 2013 EIA
683. It is common ground that Samarco submitted an application to Supram in October 2013
for a licence to (among other things) raise the Dam to 940m, which was accompanied by
the October 2013 EIA. Supram granted the Licence in June 2015 ({E2/26}; {E2/26CT}).
684. Cs’ complaint is that the October 2013 EIA did not identify the matters referred to at Reply,
§91.2 {A1/3/59}, namely use of the Dam to dispose of tailings from the Alegria mine, and
matters arising between April 2013 and April 2015 – in particular cracking at the Setback in
August 2014 and attempts thereafter to stabilise the slope. As to this:
684.1. It was not necessary for Samarco to inform Supram about Vale’s use of the Dam.
It was sufficient to disclose the total volume of tailings to be contained in the Dam,
which Samarco did: see §680 above.
684.2. Similarly, it was not necessary to disclose to Supram the cracking at the Setback and
attempts to stabilise the slope thereafter. These matters did not give rise to any
NASREI, and so were not the concern of Supram. Cs’ generic reference to other
“matters arising” over a two-year period is too vague for BHP to be able to address,
and it is assumed that Cs intend to rely only upon the cracking at the Setback and
the response.
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685. Cs also refer at Reply, §91.1 {A1/3/59} to other matters which were not disclosed. These
do not appear to be relevant to Cs’ allegations of breach, but are addressed below for
completeness: see §670 above. As to this:
685.1. Cs accept that Samarco informed Supram about the installation of the Blanket
Drain. This was recorded in Chapter 4.2.2 of the October 2013 EIA (see p.18)
{E2/13T/39}. This statement did not refer specifically to other matters identified
by Cs, namely the failure of the Main Underdrain, plugging of the Main and
Secondary Galleries, or the Setback. However, the EIA made clear (at p.18) that
“This structure [i.e. the Fundão Dam] has undergone some changes in its construction process”:
see Reply §91.1 {A1/3/59}, second sentence and Rej §55(2) {A1/5/57}. Had
Supram wanted further information, it could have asked for it.146
685.2. Cs say that Chapter 4.3.2.2 (see p.45) {E2/13T/45} referred to a stability evaluation
of the Dam from June 2012, which was conducted prior to the creation of the
Setback “although the Operations Manual required stability analyses to be revised if the geometry
of the Dam was modified”. The evaluation was indeed done prior to the creation of the
Setback but the Operations Manual did not “require” a stability analysis in the
circumstances: such a review was only recommended (see Manual at
{D7/61T/41}). In any event, the relevance of the Manual has not been explained.
The key fact is that the evaluation certified the stability of the Dam, and was
adequate for the EIA’s purposes. Further, section 4.4.5 {E2/13T/52} and Annex
7 {E2/13.1T/292} presented the results of percolation and stability analyses for 12
different scenarios relating to the proposed raising of the Dam to 940m, which
showed that for every scenario the required safety factor was met or exceeded
(p.52). Further, VogBR conducted further annual audits of the Dam’s stability on
Samarco’s instruction (in at least August 2013, August 2014 and July 2015), all of
which indicated that that Dam was stable.147 (See Reply, §91.1 {A1/3/59}, third
sentence and Rej, §55(3) {A1/5/57}).
685.3. Cs say that the October 2013 EIA “repeatedly” stated that the beach width would be
kept to a minimum of 200m, without disclosing that this requirement had been
repeatedly violated (referring to MPOC §115). The history of the beach width, so
146 See CONAMA Resolution 237/97, Art 15 {E3/8T}, and Complementary Law 140/2011, Art 14 {E3/14T}.
147 See Stability Declaration for 2013 {D7/91T}; 2014 {D7/115T}; and 2015 {D7/142T}.
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far as may be relevant, is addressed above at Section D3.2. In fact, the EIA made
just two references to the goal of maintaining this beach width (see at Chapter
4.4.8.3 {E2/13T/77} and 4.4.8.5 {E2/13T/78}). These statements concerned
future goals (See Reply §91.1 {A1/3/59}, fourth sentence and Rej §55(4))
{A1/5/59-60}. In any event, Supram had previously been informed that the beach
width had not always been maintained at 200m.148
685.4. Insofar as Cs might seek to rely on any of these matters, the short answer is that
there was no misrepresentation in the October 2013 EIA and no requirement or
failure to disclose these matters. They did not give rise to any NASREI and were
not relevant for Supram’s purposes.
686. For all these reasons, Cs’ allegations with regard to the October 2013 EIA fail. The expert
evidence does not provide any support for any allegation that the matters relied upon by Cs
constituted a NASREI requiring disclosure.
687. Moreover, once again, there is a fundamental mismatch between Cs’ pleaded allegations
and the Brazilian regulatory process. Again, that alone is sufficient to dispose of Cs’ case.
K2.3 Response of Supram
688. Cs’ case also depends upon proving that, if the specific matters allegedly not disclosed (in
Reply, §§89.2 and 91.2 {A1/3/58} {A1/3/59-60}) had been disclosed to Supram, Supram
would have demanded further evaluations and geotechnical reports and would not have
permitted the Dam to be raised on the axis of the Setback. However, the expert evidence
provides no support for that contention. There can be (and has been) no suggestion that
the Dam or proposed raising of the Dam to 940m were not fundamentally environmentally
viable, and no basis for saying that Supram would have demanded evaluations or reports or
refused a licence or imposed conditions as alleged.
K2.4 Knowledge of BHP
689. Licensing was a matter for Samarco; not for BHP. Cs have not identified any evidence to
show that BHP was aware of the detail of Samarco’s licensing obligations and disclosures
to Supram, still less that Samarco was in breach of those obligations (which in any event, it
148See the Declaration of Stability for the Year 2012 of July 2012 at Annex 5 to the December 2012 EIA (stating that
the beach width was 149.87m) {F5/29.3T/575}.
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was not). Indeed, Cs have not identified any evidence that Samarco was aware of any
shortcomings in its licensing applications. Cs assert that BHP should have been aware of
the alleged shortcomings, but the basis for that is unclear (and is not apparent from Reply,
§§124-127 {A1/3/95-99} – addressed in the Civil Law section below – particularly since
§125 makes no reference to BHP having a duty to oversee licensing issues). No doubt that
is because there is no sensible basis that Cs can articulate for why BHP – an indirect
shareholder (in the case of BHP Australia) should have known about the granular detail of
Samarco’s licensing applications, or the licensing regime, which are plainly a matter for
Samarco’s executive bodies; and particularly where Cs have identified no evidence of any
knowledge of shortcomings in the licensing process on the part of Samarco. On the
contrary, BHP was entitled to rely on the adequacy and outcome of the licensing process
conducted by Samarco.
L. LIMITATION
690. It is common ground that (a) Brazilian Law governs matters of limitation 149 (Def, §37
{A1/2/19}; Reply, §20.2 {A1/3/18} but note that there is a dispute as to applicable law in
relation to the Insufficient Info Defence: see §§693-708 below); (b) Art 189 CC provides
that the violation of a right creates a claim in the holder of the right, which is extinguished
by prescription on expiry of the time periods referred to in Arts 205 and 206 (Reply, §21
{A1/3/18}; Rej, §10 {A1/5/16}). and (c) subject to Cs’ arguments that certain special
provisions or circumstances apply (addressed at §§709-776 below), the limitation period
applicable to Cs’ causes of action is three years pursuant to Art 206(3)(V) CC (Reply, §23
{A1/3/18-19}, Rej, §12 {A1/5/16-18}).
691. BHP raise two limitation defences to Cs’ claims: Def, §41 {A1/2/20-21}:
691.1. The first defence applies to all four original claim forms.150 BHP submit that none
of those claim forms contained sufficient information, as a matter of Brazilian law,
to stop time from running (“Insufficient Info Defence”). Even if the
MPOC/APOCs together contained sufficient information they were all served
after 5 November 2018 and therefore, on BHP’s case (since BHP contends that the
149 Pursuant to Art 15(h) of Rome II {E3/8T}. There is a dispute, addressed in the Insufficient Info Defenceat Section
L1 below, as to whether Brazilian law or English law is applicable to the question of whether pleadings contain
sufficient information to stop limitation.
150 HT-2019-LIV-000005, HT-2023-000304, HT-2019-LV-000005 and HT-2023-000058 {PB/5}, {PB/7}.
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applicable limitation period is three years) they are all out of time. (We note that
the Court may find that BHP are correct that, as a matter of Brazilian law, time can
only be stopped by a document that contains all the information required by
Brazilian law but that the Cs are correct that some other, longer, limitation period
applied. In that case the Court would need to analyse the MPOC/APOCs in
question to see whether the content satisfied the requirements of Brazilian law and
whether they were brought in time by reference to that longer period. That analysis
would be a matter for Stage Two of these proceedings151.)
691.2. BHP’s second defence is that any claims added to the proceedings after 5
November 2018 are time-barred because they were brought after the expiry of the
three-year limitation period (“the 3Yr Defence”). The premise for this defence is
that BHP has failed on the Insufficient Info Defence and that the relevant date for
limitation purposes is as set out in the Reply, §31 {A1/3/22}: namely that the claims
were commenced on 2 November 2018; 5 November 2018; 3 May 2019 and 24
February 2023. The 3Yr Defence applies to the 2019 and 2023 Claim Forms152.They
are time-barred because they were issued after the relevant limitation deadline of 5
November 2018. The 2019 Claim Form sought to join approximately 33,000 Cs.
The 2023 Claim Form sought to join c. 423,000 Cs. If those claims are time-barred,
as BHP contend, then that will dramatically reduce the number of Cs.
691.3. A flowchart is included as Annex 8 which, it is hoped, may be of assistance as the

Court considers the issues raised in relation to limitation. It aims to illustrate how
the various limitation issues interconnect and their effects. It is based on the
pleaded cases and expert evidence as presently understood and may require
refinement as the trial progresses.
692. There is a further relevant distinction between the claims brought against BHP UK and the
claims brought against BHP Australia. The 2018 Claim Forms were brought against BHP
UK but not BHP Australia. The 2019 Claim Form had the effect of adding BHP Australia
as a Defendant to the existing claims in the 2018 Claim Forms. It is common ground on
the expert evidence that where limitation is interrupted against one party, then limitation is
151 It would not have been proportionate to attempt such an exercise at Stage One given the size and cost of the task
and the possibility that the court’s findings on the Insufficient Info Defence or certain of the other limitation disputes
render the exercise unnecessary.
152 HT-2019-LIV-000005 and HT-2023-000058 {PB/7} & {PB/5}.
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also interrupted against any person jointly and severally liable with that party. BHP UK
accept that if they are liable, their liability will be joint and several with BHP Australia as
well as Samarco, BHP Brasil and Vale.119 If BHP UK is not held to be liable however there
can be no joint and several liability with BHP Australia. In that event even if BHP Australia
is held to be liable, any claim brought against BHP UK will not interrupt limitation against
BHP Australia. Thus given that claims against BHP Australia were only brought by way of
the 2019 and 2023 Claim Forms, if BHP UK is not found to be liable and the relevant
limitation period is three years then all claims brought against BHP Australia are out of
time.153
L1. Insufficient Info Defence
693. BHP contend that none of the claim forms contained the information required by Brazilian
law in order to validly commence a claim and thus stop limitation; that the information was
only provided, and thus limitation only stopped, upon service of a complete Additional
Particulars of Claim (“APOC”); and that this only occurred after the expiry of the applicable
limitation periods. Accordingly, all of the claim forms are time-barred: Def, §§38-39, 41(1)
{A1/2/19}.
694. There is, first, a dispute as to applicable law: LOI, Issue 52(a). {A2/1/22}
694.1. Cs say that the question of whether, and if so on what date, the claims in these
proceedings have been commenced so as to interrupt the limitation period (and
thus rules governing the essential content of the documents whereby proceedings
are commenced) is a matter of “procedure” to which Rome II does not apply: Art
1(3) of Rome II: Reply, §20.3 {A1/3/18}. Accordingly, English law applies. In the
alternative, if Brazilian law does apply, the rules applicable to the deemed date of
commencement must nevertheless be “adapted by reference to the relevant English
procedural framework”: Reply, §20.4 {A1/3/18}. This alternative point is however not
developed by Cs or explained; BHP will respond in due course if it is.
694.2. BHP contends that Brazilian law applies Rej, §9(2) {A1/5/15-16}. The question
whether the limitation period applicable to these claims has been interrupted falls
within Art 15 Rome II which sets out a non-exhaustive number of matters which
153Even if BHP UK is held liable then the 2018 Claim Forms could only interrupt limitation in respect of the Claims
against BHP Australia brought by the Cs included in those Claim Forms.
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must be determined in accordance with the law applicable to noncontractual
obligations pursuant to the Regulation (and which, accordingly, cannot constitute
matters of “procedure” under Art 1(3)). These include: “(h) the manner in which an
obligation may be extinguished and rules of prescription and limitation, including rules relating to
the commencement, interruption and suspension of a period of prescription or limitation”.
694.3. Art 15 is non-exhaustive and is to be “construed widely” whereas Art 1(3) (as an
“exception to general rule set out in Art 4”) should be “construed narrowly”: per Tipples J,
in Pandya v Intersalonika General Insurance Co SA [2020] EWHC 273 (QB) at §28
{J2/15/7}. On the facts of Pandya, the requirement under Greek law that the claim
form must be both issued and served was not a matter of “procedure”, but was a
matter falling with Art 15(h) (at §40). Permission to appeal the decision in Pandya
to the Court of Appeal was refused by Lord Justice Stuart-Smith on the basis that
“it is not reasonably arguable that the requirement to serve a copy on the Defendant is merely a
procedural requirement and therefore excluded from the ambit of Article 15(h). The effect of [the
relevant Greek law] is that both requirements [viz. issue/filing and service] are substantive pre-
requisites to the interruption of the period of limitation.” (emphasis added, as recorded in
Johnson v Berentzen [2021] EWHC 1042 (QB) {J2/17}, applying Pandya). In Vilca
v Xstrata [2018] EWHC 27 (QB), a claim governed by Peruvian law, both parties
preceded on the basis that the question of whether the Claim Form and Particulars
of Claim contained sufficient information to interrupt limitation was a matter
falling with Art. 15(h) and thus also subject to Peruvian law: see §§51-54
{J2/14/18}.
694.4. Applying the above principles in this case: (a) Brazilian law specifies, at Art 319
CPC, certain matters that must be included in a statement of claim in order that it
can be validly commenced and stop time; (b) that is a matter pertaining to the
conditions necessary for the limitation period to be interrupted. It is thus a
“substantive pre-requisite to the interruption of the period of limitation” and falls within Art
15(h). Accordingly, Brazilian law applies to the question of whether the claim form
contained sufficient information for the purposes of limitation.
694.5. If Rome II does not apply then BHP accepts that the lexi fori (English law) would
apply, pursuant to s.1(3) 1984 Act: see Barros Mattos Jnr v MacDaniels Ltd [2005]
EWHC 1323 (Ch.), [2005] I.L.Pr. 45, at §131 {J2/7/38}. Further, if English law
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applies, then BHP accepts that the issuing of the Claim Forms in each case was
sufficient to stop limitation.
695. The experts agree on the following relevant principles of Brazilian law:
695.1. Only an action validly commenced before the end of the limitation period has the
force to interrupt limitation: Tepedino 1 §313 {C7/1T/123}; Rosenvald 1 §414
{C3/1T/154-155}.
695.2. Art 319 CPC, provides that a complaint “shall” include (relevantly) the “factual and
legal grounds of the claim”; “the request for relief and its specifications” and “the value of the
claim” {I1/3/4}.
695.3. Art 321 CPC provides that “The judge, upon ascertaining that the statement of claim does
not fulfil the requirements set forth in articles 319 and 320 or contains defects or errors capable
of hindering a judgment on the merits, shall determine that the plaintiff correct or complete it within
fifteen (15) days, stating precisely what needs to be corrected or completed” {I1/3/4}.
696. The disagreement between the experts concerns whether and in what circumstances the
absence of any of the information set out in Art 319 means that the claim has not been
validly commenced for the purposes of limitation.
697. Prof Tepedino explains as follows (Tepedino 1, §§282, 313-329, 530 {C7/1T/111},
{C7/1T/123-128}, {C7/1T/193}):
697.1. A statement of claim that does not meet the mandatory requirements of Arts 319
and 320 CPC is defective and cannot interrupt limitation: Tepedino 1, §317
{C7/1T/124}.
697.2. If a claimant corrects any deficiencies pursuant to Art 320, limitation can be
interrupted only if an amended and compliant statement of case is filed and if
subsequently the Judge makes an order for service: Tepedino 1, §§324, 328
{C7/1T/127}.
697.3. In that scenario: if the relevant defects are minor, such that they do not prejudice
the judgment on the merits of the case nor the possibility for the defendant to
exercise the right of defence, then the date of interruption retroacts to the date the
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original statement of claim was filed (pursuant to Art 240(I)): Tepedino 1, §326
{C7/1T/127}.
697.4. If the defect is substantial such that it could compromise (a) the “very understanding
of what is being discussed and/or the requests made”; or (b) the “defendant’s right to
contradictory and full defence”; or (c) the “continuation of the lawsuit, as it is directed to the
wrong defendant” then the interruption of limitation occurs (following order of
service by the Judge) as at the date of the amendment to the statement of claim:
Tepedino 1, §326 {C7/1T/127}.
698. Prof Rosenvald’s views, in summary are (Rosenvald 1, §§414-420 {C3/1T/154-159};

Rosenvald 2, §§178-192 {C16/1T/70-77}):
698.1. Prof Rosenvald asserts that Art 319 CPC is not relevant to prescription (Rosenvald
1, §414 {C3/1T/154-155}) and that pursuant to Art 202(I) CC “interruption of the
prescription occurs with the order for process, regardless of whether or not the statement of claim
complies with the requirements of Articles 319 and 320” (Rosenvald 2, §181 {C16/1T/71-
72}).
698.2. However he goes on to assert that the effect of Art 321 (providing for the ability
to remedy defects) implies that the prescription will be interrupted by the service
of process even if the initial petition contains defects, “provided that these faults are
cured within the established period”: Rosenvald 2, §182 {C16/1T/72-73}.
698.3. Prof Rosenvald, agrees that where the default is minor and remedied that the date
of the interruption of limitation is retroactive to the date of filing of the action:
Rosenvald 2, §184 {C16/1T/73}.
698.4. He further accepts that were the default “irregularity of the statement of claim that prevents
the valid and regular development of the proceeding” and is not remedied that “can affect
the interruptive effect”: Rosenvald 2 §185 {C16/1T/73-74}.
698.5. Where the default is substantial but the default is remedied, it appears that Prof
Rosenvald agrees with Prof Tepedino (as evidenced by his citation of the passage
from STJ, No. 1527154/PR at Rosenvald 1, §420(c) {C3/1T/158-159}) that the
STJ case law establishes that the date of interruption runs from the date of the
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amendment, and when the complaint “meets the conditions for the procedure to initiate”:
Rosenvald 2, §§185-186 {C16/1T/73-74}.
699. BHP contend that none of the Claim Forms included the information required by Brazilian
law in order to interrupt limitation. Nor did the MPOC. These defaults were substantial and
were not remedied until (at the earliest) the service of the APOCs. BHPs case in this regard
is substantially similar to that successfully advanced by the Defendants in Vilca. In that case,
Stuart-Smith J (as he then was) found by way of a preliminary issue that the Claim Form
and Particulars of Claim did not contain the information necessary to interrupt limitation
under Peruvian law, and thus held that the claim was time-barred: see §§105-106.
Specifically, and similarly to the instant case, it was determined that the pleadings did not
contain (as per the relevant Peruvian law) sufficient information as to the relief or “request”
(the ‘petitorio’), the “facts on which the request is grounded” or “the legal grounds for the request”
(collectively the ‘causa petendi’): see §§21,22. In support of this finding, Stuart-Smith J
referred in particular to the public policy imperative, equally applicable in this case, that the
Defendant “should know and be able to defend himself against the claim to which he is to be exposed”:
§76 and see §83, §99.
700. The relevant chronology regarding Cs’ claims forms and pleadings, and BHP’s position, is
as follows.
701. Claim forms E50LV008 and E50LV010 were issued (against BHP UK) on 2 November
2018. BHP’s case is that those Claim Forms were not compliant with Art 319 CPC, in that
they did not (or did not sufficiently) specify:
701.1. The “factual and legal grounds of the claim”: the Claim Forms are brief and generic. They
do not explain the grounds for the defendants’ alleged liability, the alleged conduct
which is alleged to have caused damage, nor what that damage is said to be. They
list various provisions of Brazilian law without providing any explanation for how
they relate to the facts. In short, they do not provide a sufficient basis upon which
the Defendants could understand the case against them.
701.2. The “request for relief and its specifications”: the Claim Forms do not specify the damage
allegedly suffered by each C and thus the relief sought. They only make generic
reference to “patrimonial damages, moral damages and diffuse damages”.
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701.3. The “value of the claim”: the Claim Forms do not state the value of the claim. They
contain only a statement that the value is “Unlimited”.
702. Cs made amendments to the above claim forms prior to their service on BHP UK (on 1
and 5 March 2019, respectively) and subsequently on 3 May 2019, including adding to the
list of provisions of Brazilian law relied upon and amending names, addresses and other
details of certain Cs. By then, the limitation period had expired (in November 2018). In any
event these amendments did not remedy the deficiencies identified above. Those defects
were serious in that they did not permit BHP to understand and thus respond to the claims
set out therein: Tepedino 1, §§326-327 {C7/1T/127}.
703. Claim form HT-2019-LIV-000005 was issued on 3 May 2019. That Claim Form had the
same deficiencies as those in Claims E50LV008 and E50LV010, save that the reference to
the damages suffered was even less specific, referring only to “damages and other relief”.
704. The MPOC in respect of each of the Claim Forms set out above, were served on 7 May
2019. The MPOC alone did not remedy those deficiencies. In particular they did not identify
the particular claim and particular relief claimed by each Claimant.
705. The majority of the Additional Particulars of Claim relating to all three CFs, particularising
specific Claimants' claims, were also served with the MPOC on 7 May 2019. A further
tranche of approximately 20,000 APOCs was served on 10 July 2019. The question of
whether each APOC (the first of which were served on 7 May 2019) finally remedied the
deficiencies is to be determined by reference to the terms of each of those documents.
706. Claim form HT-2023-000058 was issued on 24 February 2023 (and subsequently
consolidated under HT-2022-00304) and appended the MPOC. This claim form was
amended on 16 June 2023 and 8 September 2023. Both in its original and amended forms,
the Claim Form in HT-2023-000058 (with the appended MPOC) was deficient in light of
the matters that were missing from the MPOC, as set out in §704 above.
707. Further APOCs (relating to the 2023 CF) were served in tranches during 2023 (16 June
2023, 14 July 2023, 27 July 2023, 11 August 2023, 8 September 2023, 15 September 2023,
6 October 2023, 3 November 2023) and the last tranche served on 1 March 2024.
708. Limitation was thus interrupted, at the earliest (and in respect only of those Cs whose
APOCs remedied the deficiencies) on 7 May 2019.
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L2. 3Yr Defence
709. As noted at §690 above, it is common ground that subject to Cs’ arguments that certain
special provisions or circumstances apply (addressed below), the limitation period
applicable to Cs’ causes of action is three years pursuant to Art 206(3)(V) CC: Reply, §23
{A1/5/23}, Rej, §12 {A1/5/16}.
710. BHP say that none of the special provisions or circumstances apply and that the relevant
limitation period accordingly expired three years after the Collapse on 5 November 2018.154
This means that if BHP succeed on this defence (only, and not the Insufficient Info
Defence) then c. 456,000 claims (i.e. the claim forms issued in 2019 and 2023) fall away. If
BHP succeed on both defences all four claim forms (c. 623,000 claims) fall away155
711. Cs arguments in response to the 3Yr Defence broadly fall into four categories: (a) that
certain claims have a longer (or no) limitation period (addressed at §§712-737 below); (b)
that time began to run later than the date of the Collapse (addressed at §§738-742 below);
(c) that limitation was interrupted by the filing of certain proceedings and protests in Brazil
(which were not filed against BHP; addressed at §§743-765 below); and (d) that limitation
was suspended by either criminal proceedings in Brazil; certain claimants lacking capacity
and/or legislation pertaining to the Covid pandemic (addressed at §§766-776 below). All of
these arguments are unmeritorious.
L3. The Applicable Limitation Period
L3.1 The Consumer Defence Code
712. Cs’ case is that a five-year limitation period applies to their claims pursuant to Art 27 of the
Consumer Defence Code (Law 8078/1990) (the “CDC”) on the basis that the Collapse was
a consumer “event” pursuant to Art 17 CDC in respect of which Cs are entitled to claim as
bystander “victims”: Reply, §34 {A1/3/23}. BHP deny this. The Collapse was not a
consumer “event” and the CDC has no application to Cs claims: Rej, §23 {A1/5/23}.
713. The CDC provides in relevant part, as follows (emphases added):
154 Two claim forms were issued within three-years E50LV008 and E50LV010 (on 2 November 2018 {PB/1} &
{PB/2}).
155 HT-2019-LIV-000005 was issued on 3 May 2019 {PB/5}, and Claim form HT-2023-000058 was issued on 24
February 2023 {PB/7}.
236
713.1. Art 27 provides for a five-year limitation period “for the claim for compensation for
damage caused by a defective product or service provided for in Section II of [Chapter IV], with
the period beginning to run from the date of which the damage and its authorship is known”
(emphasis added) {I1/7/8}.
713.2. Section II of Chapter IV concerns “Product and Service liability”. Art 12 of Section
II provides for strict liability for defective products: “Domestic or foreign manufacturers,
producers, builders and importers are liable, regardless of fault, for repairing damages caused to
consumers due to defects resulting from the design, manufacture, construction, assembly, formulas,
manipulation, presentation or packaging of their products, as well as insufficient or inadequate
information about their use and risks.”156 {I1/7/3}
713.3. Art 2 defines a “consumer” as “any natural person or legal entity who acquires or uses products
or services as the final ruser”. Art 2 sole para. then states “Will be deemed as consumer the
groups of persons, even if they cannot be determined, who may have intervened in consumer
relations” {I1/7/1}. This latter para. is a reference to the concept of a “bystander”
addressed further in Art 17 (and below).
713.4. Art 3 defines a “supplier” as any natural or legal person which carries out “activities of
production, assembly, creation, construction, transformation, import, export, distribution or
commercialization of products or rendering of services”. {I1/7/1}.
713.5. Art 17 (of Chapter IV) provides: “For the purposes of this Section [i.e. Section II of Chapter
IV], all victims of the event are deemed consumers” {I1/7/4} (referred to by the experts,
and below, as “bystanders” or “consumers by equivalence”).
714. Cs do not contend that they are “consumers” pursuant to Art 2; only that they are bystanders
of an “event” pursuant to Art 17.
715. It is, first, apparent from the plain terms of Art. 27 that the five year limitation period only
applies in the case of a “claim for compensation for damage caused by a defective product or service
provided for in Section II of [Chapter IV]” (emphasis added) – that is, a claim brought under
Arts. 12 or 14. It does not apply to claims brought under Art. 186 CC (as in this case):
Tepedino 2, §274 {C18/1T/112}.
156 Art 14 CDC provides for equivalent strict liability for provision of defective services to consumers {I1/7/4}.
237
716. There is in any event a further dispute between the experts as to whether Art 17, and thus
Art 27, only applies if the “event” (of which the bystander is a victim) occurs in the context
of a consumer relationship (being a relationship between a “supplier” and a “consumer”, as
defined). Prof Tepedino explains that this “base consumer relationship” is required: Tepedino
1, §421 {C7/1T/159}157. Prof Rosenvald considers that the application of Art 17 is not
limited to where there is an underlying consumer relationship: Rosenvald 2, §233
{C16/1T/93-94}, §254 {C16/1T/105}. He argues that the effect of recent STJ case-law is
that “environmental accidents… are consumer accidents” (or events) for the purposes of Art 17:
Rosenvald 1, §§452-456 {C3/1T/170-173}.
717. BHP will contend that Prof Tepedino’s analysis is the right one. The purpose of the CDC
is to protect consumers: Tepedino 1, §400 {C7/1T/151}. It was drafted on the premise
that there is an informational imbalance between the consumer and the supplier/service
provider in relation to the relevant product/service. It would be surprising if provisions
pertaining to limitation of claims contained in a consumer protection statute were intended
to apply to claims in which there was no underlying consumer relationship at all. Moreover,
the need for an underlying consumer relationship is apparent from the proper construction
of the CDC:
717.1. Art. 27 expressly only applies to claims for damage caused “by a defective product or
service provided for in Section II of this Chapter” (i.e. Art 12, or Art 14).
717.2. Further, for the purposes of establishing whether a person is entitled to claim as a
‘bystander’, the “event” (in Art 17), is the ‘consumer accident’ arising from the
relevant defective product or service (i.e. Art 12 or Art. 14).
717.3. Art 12 is engaged when a “supplier” (specifically, in the case of Art 12, “[d]omestic or
foreign manufacturer, producers, builders” or “importers”) is liable for damage caused to
“consumers” by a product defect.
717.4. Accordingly, a claim only concerns “a defective product or service” (Art 27) and only
arises from an “event” (Art. 17) where a product has been provided by a
157 The example he gives is “of a person hit by the explosion of a television”. Since the television is provided by a supplier to
a consumer, a bystander victim that is harmed by the explosion may benefit from Art. 27 notwithstanding that “the
victim was not the purchaser, consumer of the television”: Tepedino 1, §423 {C7/1T/160}.
238
“manufacturer, producer, builder” or “importer” to a “consumer” (as defined). In other
words, in the context of a consumer relationship.
717.5. This is further supported by the main para. of Art 3, which, in line with the concept
of the ‘bystander’ in Art 17, states that “the collective of people, even if unidentifiable, who
intervenes in consumer relationships shall be considered equivalent to consumer” (emphasis
added).
718. As to the applicable case law, the authorities cited by the experts are not entirely consistent.
The lack of consistency is evidenced in part by the fact that a Repetitive Claims Resolution
Motion (“IRDR”)158 has been filed in the Minas Gerais State Appeal Court (“TJMG”)
pursuant to Arts 976 to 987 CPA. It has been filed in the context of the collapse of the
Brumadinho dam and should provide guidance binding on that court as to whether Art 17
and thus Art 27 applies in that context. That IRDR is still outstanding. However, for the
three reasons given below, the weight of existing, relevant authority supports the need for
an underlying consumer relationship.
719. First, a number of cases have expressly established such a requirement:
719.1. In a series of cases before the TJMG between 2009 and 2012 regarding the collapse
of the São Francisco Dam159 the TJMG held that “Once the characterization of a consumer
relationship is rejected, there cannot be a bystander”.160
719.2. To the same effect, in a case before the STJ in 2020 concerning a person run over
by a public bus,161 the STJ held that where an accident occurs “in a context in which
the transport is not of consumers”, this “would rule out the application of the [CDC], as there is
undoubtedly no relationship regulated by the [CDC], a consumer relationship”.
719.3. A similar finding was reached by the TJMG in cases concerning the Collapse itself
in August 2022, as addressed in §721 below.
158 An IRDR “allows for the determination of common issues of law to serve as a binding decision for the resolution of cases involving the
same matter of law”: Tepedino 2, §69 {C18/1T/30}.
159 See cases cited in Tepedino 1, 428, fn 249-250. {C7/1T/161}
160 TJMG, Interlocutory Appeal 1.0439.07.072267-3/001: Tepedino 1, §434. {C7/1T/165}
161 STJ, Special Appeal (Resp) 1.787.318/RJ: Tepedino 1, § 421 {C7/1T/159}, §443 {C7/1T/168}.
239
720. Secondly, when properly analysed, most cases relied upon by Prof. Rosenvald in which Art
17 has been found to be engaged in cases of environmental harm are premised on the
existence of a base consumer relationship:
720.1. In the cases before the STJ in 2013 and 2014 concerning water contamination
resulting from the manufacture of electricity poles, the STJ identified an underlying
consumer relationship arising from the fact that the poles were “intended for the
distribution of electricity to consumers” and “an input necessary for the provision of the service to
the consumer”.162
720.2. In the cases before the STJ in August 2022 regarding pollution caused by poultry
meat production plant,163 a consumer relationship arose from the fact that the
poultry was being produced for sale to consumers.
720.3. In the two cases before the STJ in May 2023 and May 2024 respectively concerning
damages resulting from the activities of a hydroelectric power station164 a base
consumer relationship was also present (being the provision of electricity to
consumers).
721. Thirdly, while those cases that have considered the application of Art 17 in claims arising
out of the Collapse have been subject to conflicting decisions, those relied upon by Prof.
Tepedino are to be preferred:
721.1. Two judgments of the TJMG in August 2022 held that the CDC does not apply to
compensation claims arising from the Collapse.165 In both cases, the possibility of
applying the CDC was discussed and expressly ruled out by the Court on the basis
that there was no base consumer relationship involved.
162 STJ, No. 1354348/RS; STJ, No. 1.365.277/RS {C3/5.1T/104} and {C3/5.2T/746}
163 STJ, No. 2009210/RS; STJ No. 2037255/RS {C3/5.1T/370} and {C3/5.1T/405}
164 STJ, No. 2.018.386/BA and No. STJ 2.084.649/BA {C3/5.2T/516} and {C3/5.2T/593}
165 TJMG, AI 1.0000.22.115036-0/001 (25 August 2022) {C7/4.5T/2303} and TJMG, 1.0000.22.117745-4/001 (25
August 2022) {C7/4.5T/2296}
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721.2. Conversely, a monocractic166 decision of the STJ in August 2023167 and two further
judgments of TJMG in September 2023168 found that the Art 17 did apply. Those
decisions (and a further decision of the TJMG arising from the collapse of the
Brumadinho Dam169) did not however consider, in line with the prior cases set out
above, whether there was a base consumer relationship. They were, in any event,
wrong, given the lack of a consumer relationship in those cases (as considered in
§722 below).
722. Applying the principles set out above, BHP’s case is that the Collapse was not an “event”
and the Cs cannot rely upon Art 27 because there was no base consumer relationship. The
raw materials supplied by Samarco were acquired by legal entities that reintroduced those
materials into the production chain. Those entities did not use the products “as the final user”
and therefore they are not “consumer[s]” (as defined in Art. 2 CDC). Thus the CDC
provisions do not apply to this case.
L3.2 Public Entities
723. Cs contend that the Municipalities’ claims and Utilities’ claims are subject to the five-year
period of prescription which applies to claims brought against public entities, pursuant to
Art 1 of Decree 20,910/1932 (the “1932 Decree”): Reply, §§27 {A1/3/20}, §35
{A1/3/23}. BHP’s position is that Art 1 of the 1932 Decree does not apply and the claims
of these Cs are accordingly subject to the three-year period provided for in Art 206(3)(V)
CC: Rej, §16 {A1/5/19}, §24 {A1/5/24}.
724. The 1932 Decree provides in relevant part as follows:
724.1. Art 1: “The Federal, State and Municipal debts, as well as any right or action against the
Federal, State or Municipal Treasury, of whichever nature, are subject to a five years limitation
period that begins to run from the date of the act or fact of which they originated.” (emphasis
added) {I1/10/2}.
166 One rendered by a single Justice and is subject to appeal to the Panel (of 5 judges) to which the Justice belongs. As
a monocratic decision and may still be reviewed in an in-depth examination of the merits and is still subject to
consideration by the 3rd Panel of the STJ.
167 STJ, No. 1.758.319/ES {C7/4.4T/1971}
168 TJMG, No. 5031710-23.2022.8.13.0105 {C7/4.4T/1964} and No. 1.0000.23.105736-5/001 {C3/5.2T/557}
169 TJMG, No. 1000023069866-4/001 {C3/5.2T/531}
241
724.2. Art 10: “the provisions of the preceding articles do not affect the shorter-term limitation periods,
set forth in legislation and regulations, which remain subject to the very same rules.” {I1/10/3}.
725. The experts agree that Art 1 establishes (expressly) a prescription period of five years for
(among other things) a right of action against the Federal State and Municipal governments:
Tepedino 1, §284 {C7/1T/11}; Rosenvald 1, §474 {C3/1T/181}. The experts disagree as
to whether Art 1 also applies to claims brought by such entities.
726. Prof Rosenvald’s position is that while the 1932 Decree does not expressly provide that
claims brought by public entities are subject to the same prescription period as those
brought against public entities, the STJ has held that the Brazilian law principle of isonomy170
requires that state entities be treated equally with citizens and thus that the 1932 Decree be
applied to such claims: Rosenvald 1, §475 {C3/1T/181}; Rosenvald 2, §288, fn 248
{C16/1T/123}.
727. That analysis is incorrect. As Prof Tepedino explains:
727.1. Fundamentally (and as is common ground) Art 1 of the 1932 Decree does not
expressly provide that claims by public entities are subject to a five-year limitation
period. Conversely, an applicable limitation period is specifically provided for in
Art 206(3)(V) CC: Tepedino 1, §§392, 395, 396 {C7/1T/148}, {C7/1T/149}. Art
10 of the 1932 Decree expressly states that Art 1 does not prevent the application
of any shorter-term limitation periods provided for in other legislation.
727.2. The principle of isonomy is concerned with the protection of citizens and private
entities from unequal treatment by the state: Tepedino 1, §391 {C7/1T/148}. It
does not apply to protect the state from citizens and public entities: Tepedino 1,
§396(b) {C7/1T/150}. The STJ has applied Art 1 of the 1932 Decree to certain
claims brought by public entities against individuals but only where (a) the claim
concerned claims of a public nature (collection of tax or administrative fines) as
opposed to a claim for civil damages, being a distinction drawn in a number of STJ
cases; and (b) it was necessary to apply Art 1 (consistently with the isonomy principle
as correctly understood above) in order to protect the citizen from what would
otherwise have been a longer prescription period: Tepedino 1, §390-391
170 Referred to earlier in Section J (Environmental Law), §§407 and provided for in Art 5, head paragraph, FC.
242
{C7/1T/147}, Tepedino 2, §259 {C18/1T/104}. With one exception,171 each of
the STJ cases cited by Prof Rosenvald in which the 1932 Decree was applied to
claims brought by public entities, were also cases in which the two propositions set
out in the preceding sub-paragraph applied: Tepedino 2, §§260-266 {C18/1T/104}.
728. The Municipalities’ and Utilities’ claims seek civil damages (being a private and not a public
claim) and any application of the 1932 Decree in this case would benefit the state to the
detriment of private entities (BHP). Accordingly the isonomy principle has no effect and Art
1 of the 1932 Decree does not apply.
729. Further or alternatively, the Cs allege that Brazilian case law and jurisprudence establishes
that “claims for recovery of loss caused to public entities in respect of civil wrongdoing are subject to
prescription in 5 years” (Reply, §27 {A1/3/20}). In this regard, Prof Rosenvald relies upon the
evidence of Prof Abboud which, he states, sets out “case law of the Superior Court of Justice that
compensation actions against civil illicit acts are subject to a five-year prescription period” {C16/1T/123}.
The non-binding decisions of the STJ referred to by Prof. Abboud do not, however,
support that conclusion.
L3.3 Environment
730. Cs contend that the Municipalities’ claims for damage to the environment (MPOC §304.2
{A1/1/138}) and separately the Municipalities’ claims regarding damage to cultural heritage,
landscape and tourism, and to the quality of life of the community (MPOC §304.4
{A1/1/138}) are not subject to prescription: Reply, §24.1 {A1/3/19}, §33.1, {A1/3/22}.
BHP deny this: Rej, §21 {A1/5/23}.
731. Prof Rosenvald argues that C’s position follows from the judgment of the Federal Supreme
Court in April 2020 in ‘Theme 999’: Rosenvald 1, §§421-430 {C3/1T/159-165}; Rosenvald
2, §§193-213 {C16/1T/78-86}. This is wrong. As Prof Tepedino explains (Tepedino 1,
§§335-359 {C7/1T/130}; Tepedino 2, §§243-253 {C18/1T/98}:
731.1. Only claims concerned with the repair of the environment itself (claims concerning
the macrobem) are not subject to prescription. Claims for damages suffered by
171 The single exception (STJ, 2218347/SP), being an action by a Municipality against an individual for repayment of
sums overpaid pursuant to a lease agreement, was incorrectly decided. It was based on the misapplication of an earlier
STJ decision and contradicted by all of the decisions that had established the two conditions set out above: Tepedino
2, §263 {C18/1T/106-107}.
243
particular individuals or legal entities which result from environmental damage
(claims concerning the microbem172) are subject to the normal limitation period for
civil claims of three years pursuant to Art 206(3)(V) CC173: Tepedino 1, §§335-338
{C7/1T/130}. This distinction between the macrobem and microbem has been
recognised by the STJ, including in case STJ 1.711.009/MG, a case about the
Collapse: Tepedino 1, §339 {C7/1T/131}.
731.2. Contrary to Rosenvald 2, §§196- 204 {C16/1T/79-83}, this distinction is also

apparent from the Theme 999 case itself (Tepedino 1, §§345-348 {C7/1T/136})
and has also been established by the STJ in subsequent cases: Tepedino 1, §348, fn.
214 {C7/1T/13}. Those subsequent cases cited by Prof Rosenvald as supporting
the argument that claims for environmental damage are not subject to prescription
(Rosenvald 1 §§426, 427 and 435 {C3/1T/161-163}, {C3/1T/166}) all concerned
damage to the macrobem only (Tepedino 2, §§246-248 {C18/1T/98}).
731.3. A claim will be in respect of the macrobem where (a) the cause of action is based on
damage to the environment itself; (b) the relief sought is aimed at reparation of that
damage either directly (for example by way of orders for reforestation, or the
cleaning of rivers) or by way of damages to a fund aimed at environmental
preservation (the Fund for the Defence of Diffuse Rights; “FDD”); and (c) the
claim is brought by way of a CPA or ‘Popular Action’: Tepedino 1, §§340-344
{C7/1T/133}.
732. As for damage to cultural heritage, landscape, environment, tourism and quality of life:
732.1. Prof Rosenvald’s argument that non-prescription of claims in respect of damage to

the environment also extends to claims for harm to cultural heritage is based on a
single judgment of the TJMG: Rosenvald 1, §429 {C3/1T/164}.174 His reliance on
that judgment is misplaced: Tepedino 2, §§250 to 251 {C18/1T/100}.
732.2. Prof Rosenvald’s position that non-prescription of claims in respect of damage to

the environment also extends to claims for harm to tourism, landscape and quality
172 See description of the terms “microbem” and “macrobem” at Tepedino 1, §§337-339 {C7/1T/131}.
173 It is common ground between the experts that “there are two types of environmental damage acknowledged by Brazilian case
law. It is either (a) public and, therefore, its compensation is destined to a Fund (Federal or State) for the direct recovery of the environment;
or (b) private and, for this reason, its compensation is directed to individuals and legal entities, becoming part of their private assets”: JES,
Issue 41 {C1/3T/2}.
174 TJMG, No. 1.0000.22.008196-2/001: Rosenvald 1 §429 {C3/1T/164}.
244
of life is assertion only, not supported in his report by any authority: Rosenvald 1,
§428 {C3/1T/163-164}; Tepedino 2, §252 {C18/1T/101}. These damages are, in
any event, non-environmental and accordingly are not related to macrobem:
Tepedino 2, §354 {C18/1T/148}.
733. Applying those principles to the Municipalities’ claims: it is clear that these pertain only to
the microbem and are thus subject to the ordinary civil period of limitation. The claims have
not been brought by way of a CPA or Popular Action, concern damages allegedly suffered
by the Municipalities themselves (and not the environment) and any monetary relief will be
payable to the Municipal Treasury (and not the FDD).
L3.4 Damage to public property
734. Cs contend that the Municipalities’ claim in respect of damage to “the Municipality’s property”
(MPOC, §304.1 {A1/1/138}) is not subject to any period of prescription: Reply, §§24.4,
33.2 {A1/3/19}. BHP deny this: Rej, §§13(2), 21 {A1/5/19}.
735. Prof Rosenvald considers that the grounds for non-prescription established in ‘Theme 999’
in respect of environment claims, apply equally to claims for damage to “public property”
(defined in Art 99(1) CC as “the assets for the common use of the people, such as rivers, seas, roads,
streets and squares”: {I1/2/6}). This is said to be on the basis that public property, like the
environment, is for the collective good: JES, Rosenvald, Issue 43(b) {C1/3/4}; Rosenvald
1, §§431-435 {C3/1T/165-166}; Rosenvald 2, §§214-221 {C16/1T/86-89}. This is wrong.
As Prof Tepedino explains (Tepedino 1, §§360-381 {C7/1T/139}; Tepedino 2, §§254-258
{C18/1T/102}):
735.1. There is no general principle of non-prescription in respect of claims for

compensation for damage to public property. Those claims are subject to the
ordinary period of limitation applicable to civil claims (Art 206(3)(V)): Tepedino 1,
§366 {C7/1T/141}).
735.2. ‘Theme 999’ does not apply to claims related to damages to public property, and
there is no basis on which to apply it (in effect) by analogy. As set out in §731.3
above, ‘Theme 999’ establishes only that claims in respect of the macrobem are not
subject to limitation: Tepedino 1, §369 {C7/1T/142}.
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735.3. The definition of “public property” in Art 99(1) of the CC incorporates some elements
of the macrobem (rivers and seas) but the remaining elements relate to the microbem,
where damage is not to the environment but merely to the finances of the relevant
Municipality. Such claims are subject to the ordinary limitation period applicable to
civil claims: Tepedino 2, §§254-256 {C18/1T/102}.
L3.5 Indigenous Peoples
736. Cs allege that the claims of the Indigenous and Quilombola Claimants for damage to their
lands, tribal practices, traditions and cultural heritage (MPOC, §§306.1-306.3 {A1/1/138})
are not subject to prescription. They rely on Art 231(4) FC, which provides that “the lands”
that indigenous people “traditionally occupy” are “inalienable and unavailable, and the rights thereto
them are not subject to limitation.” ({I1/1/29}: Reply §§25, 33.3 {A1/3/19}. BHP deny that this
is the effect of Art 231(4) FC: Rej §§14, 25 {A1/5/19}.
737. Prof Rosenvald contends that (a) Art 231(4) should be “read in conjunction with” other
legislation concerning the protection of indigenous persons (Rosenvald 2, §226-229)
{C16/1T/91-92}; (b) the reasoning of ‘Theme 999’, regarding the protection of the
environment, extends to “material and moral damage that affects indigenous lands, cultural practices,
and traditions” (Rosenvald 2, §223 {C16/1T/90}) on the basis that these too are “collective
rights” (Rosenvald 1, §444 {C3/1T/168}); and (c) the “level of vulnerability” of the Indigenous
and Quilombola communities is also a relevant factor in the determination of prescription
(Rosenvald 1, §§446 {C3/1T/168-169}; JES, Issue 43(c) {C1/3T/5}). This is wrong. As
Prof Tepedino explains (Tepedino 1 §§370-381 {C7/1T/143}; Tepedino 2 §§268-273
{C18/1T/109}):
737.1. The claims brought by the Indigenous and Quilombola Claimants are for loss
arising from environmental damage, concern damage to the microbem and are
therefore subject to the normal prescription period under Art 206(3)(V) CC:
Tepedino 1, §§ 371-372, 377 {C7/1T/143}, Tepedino 2, §268 {C18/1T/109}.
737.2. Art 231(4) FC concerns only the rights to ownership of land by indigenous people
and damages to the environmental macrobem over such lands: Tepedino 1 §375
{C7/1T/144}. As explained at §731.3 above, only certain entities (not including the
Indigenous and Quilombola Claimants themselves) have standing to bring claims
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in respect of damage to the macrobem: Tepedino 1, §376 {C7/1T/144}; Tepedino
2, §269 {C18/1T/109}.
737.3. The other legislation cited concerning the protection of, or rights of, indigenous
persons (at Rosenvald 2 §226-229 {C16/1T/91-92}) says nothing about
prescription and Prof Rosenvald does not assert that it does so. The fact that
legislation provides for other rights and protections for Indigenous communities is
irrelevant to the question of prescription.
737.4. As explained in §731 above, Theme 999 concerns only claims for damage to the
macrobem and not the individual claims of indigenous people: Tepedino 1, §379
{C7/1T/144}; Tepedino 2, §§270-271 {C18/1T/109}.
737.5. The relevance of the purported “level of vulnerability” of the Indigenous and
Quilombola communities to prescription is unexplained and, in any event, has no
support in Brazilian law: Tepedino 1, §381 {C7/1T/145}.
L4. Commencement of limitation period
738. The running of time for the purposes of limitation is governed by Art 189 CC, which
provides: “Once the right is violated, a claim arises for holder, which is extinguished by limitation on
expiry of the time periods mentioned in Articles 205 and 206.” {I1/2/15}.
L4.1 Knowledge acquired (or damage suffered) later
739. Cs allege that time does not begin to run until the relevant C had “unequivocal knowledge of the
origin, nature and extent of the damage” and that “some Claimants” did not have such knowledge
of their claims until after the date(s) when they suffered damage (or a type of damage):
Reply, §23.1 {A1/3/18}, §40.2, {A1/3/26}.
740. Prof Rosenvald supports Cs’ case, arguing that STJ case-law has adopted the “theory of
subjective actio nata” for cases of tort liability. Further, Prof Rosenvald points to Art 27 CDC
as having “expressly adopted the theory of subjective actio nata” in that it provides (in relation to
claims to which it applies) that time runs “after the knowledge of the damage and its authorship.”:
Rosenvald 1, §§402-409 {C3/1T/151-153}, §§536-545 {C3/1T/203-208}; Rosenvald 2,
§§340-350 {C16/1T/146-151}.
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741. Prof Tepedino explains that time runs from the date of the violation of the right and while
the STJ has exceptionally held time to run from the date of knowledge of some damage
being caused, such knowledge is to be judged objectively (Tepedino 1, §§279 {C7/1T/111},
§§288-307 {C7/1T/113}, §530 {C7/1T/193}; Tepedino 2, §§218-227 {C18/1T/87}). As
to this:
741.1. The terms of Art 189 are clear that time runs “[o]nce the right is violated”@ {I1/2/15}.
That is the actio nata. There is no knowledge requirement in the written law.
741.2. Where the legislature has deemed it appropriate to include a knowledge

requirement such a requirement has been specifically provided for in the written
law, as in the case of Art 27 CDC. Another example is Art 206(1)(II)(b) CC
(pertaining to insurance claims): Tepedino 1, §§295-6 {C7/1T/116}. The existence
of those express provisions does not support the proposition that a general
knowledge requirement should be read in to Art 189 CC (as Cs suggest). It indicates
the opposite.
741.3. The absence of knowledge as a requirement for the purposes of Art 189 has been
repeatedly stressed by the STJ: Tepedino 1, §§289-290 (and in particular fns. 164-
166) {C7/1T/113}.
741.4. In some cases (including those cited by Prof Rosenvald) the STJ has, exceptionally,
held that (notwithstanding the absence of any statutory provision to this effect)
time should run from the date on which damage is only objectively discoverable by
the victim: Tepedino 2, §220 {C18/1T/88}. This is referred to in the case-law as
“subjective actio nata”, in order to distinguish it from the actio nata which arises simply
on the breach of the relevant right. That term is not however intended to denote
that such knowledge is to be subjectively assessed. Rather such knowledge is to be
objectively assessed. The exception arises only where “circumstances demonstrate that
the holder of the violated right has no possibility of exercising their claim” (emphasis added):
Tepedino 1, §302 {C7/1T/119}175 such as when a medical instrument is left in a
patient’s stomach during surgery and is only discovered when it causes symptoms:
Tepedino 1, §297 {C7/1T/116}.
175 STJ, No. 1.837.425/PR {C7/4.3T/1240}
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741.5. The STJ authorities cited by Prof Rosenvald (Rosenvald 1, §536 {C3/1T/203-
204}) – each of which address the situation where a person suffers long-delayed
physical harm as a result of exposure to toxic substances – do not support the
proposition that the trigger (for time to start running) is the subjective knowledge
of the Claimant: Tepedino 2, §§221-225 {C18/1T/89}. Properly understood those
cases either support an objective test of knowledge or simply did not consider the
question of whether knowledge was to be judged subjectively or objectively (and
therefore do not advance the debate).
741.6. In order for the prescription period to begin, it is sufficient that it is possible for
the victim to objectively know that some damage has occurred, and it is not necessary
to know its extent or authorship: Tepedino 2, §226 {C18/1T/92}.
L4.2 Continuing Damages
742. Some Cs allegedly suffered “continuing damage” (that is: where “the same conduct or event continues
to cause new damages over time”: Rosenvald 1, §§546-551 {C3/1T/208-211}; Rosenvald 2,
§§351-356 {C16/1T/152-154}). Cs contend that the right of action in respect of those
claims and that type of damage did not accrue until the damage ceased, alternatively that it
continued to accrue on a daily basis until it ceased: Reply, §§23.3, 40.3 {A1/3/19},
{A1/3/26}. BHP deny this: Rej, §12.4 {A1/5/17}. The Collapse was a single and not a
continuing violation. Time ran from the date of the Collapse, as Prof Tepedino explains:
742.1. Art 189 provides that time begins to run “[o]nce the right is violated”. Where the
violation of the right is ongoing (e.g. a continuous oil spill) time does not run until
the violation ceases.176 Each of the STJ cases cited by Prof Rosenvald are cases
where the violation of the right was ongoing in this sense: Tepedino 2, §§236-240
{C18/1T/95}.
742.2. Such an ongoing violation is however to be contrasted with the situation of a single
violation that causes damaging effects over time (e.g. a single oil spill that continues
to harm wildlife for a long time). In that instance, applying Art 189, time runs from
176Sometimes referred to as “ongoing damages” (danos continuados) but not because the damage itself is continuous but
rather the event causing it is continuous: Tepedino 1, §309 fn180 {C7/1T/121}.
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the date of the single violation: Tepedino 1, §312 {C7/1T/123}; Tepedino 2, §231
{C18/1T/93}.
742.3. The Collapse was an instance of a single violation and not a case of an ongoing
violation. Accordingly, limitation period will run from the date of the Collapse,
even if the Collapse continued to cause damage after the date of the violation:
Tepedino 2, §§231, 242 {C18/1T/93}, {C18/1T/97}.
742.4. If the damage from the single event did not manifest itself until after the date of
the event then time may not run until the Claimant could have (objectively)
discovered the damage (as addressed in §741.4 above): Tepedino 1, §292
{C7/1T/114}; Tepedino 2, §224 {C18/1T/91}. A single harmful event with
deferred effects in time does not, however, mean there has been an ongoing
violation: Tepedino 2, §231 {C18/1T/93}.
L5. Interruption of the Limitation Period
743. Prescription may be interrupted, once only, by any of the acts listed in Art 202 CC paras I
to VI {I1/2/17}. Once interrupted the full period of prescription begins to run anew, from
the date of the act which interrupted it or from the last act of the proceedings that interrupt
it.
L5.1 CPAs
744. Cs allege that “prescription in respect of all individual claims arising out of the Collapse against all those
who are jointly and severally liable for damage caused by the Collapse has been interrupted” because of
CPAs that have been initiated in Brazil: Reply, §§30, 36 {A1/3/21}. Cs rely on three CPAs
for these purposes: the ADIC CPA,177 the 20bn CPA,178 and the 155bn CPA179 (The 155bn
and 20bn CPA are referred to collectively as the “Umbrella CPAs”).
177 Commenced by the Association for the Defence of Collective Interests (“ADIC”) against Samarco on 17 November
2015 in the 12th Federal Court of Belo Horizonte (the “12th Federal Court”),
178 Commenced on 30 November 2015, by the Federal Government, the States of Minas Gerais and Espírito Santo
and various other public entities against Samarco, BHP Brasil and Vale in the 3rd Federal Court of the Federal District,
Brasilia
179 Commenced on 2 May 2016, by the Federal Public Prosecutor (“MPF”) against Samarco, BHP Brasil, Vale, the
Federal Government, the States of Minas Gerais and Espírito Santo and various other public entities in the 12th
Federal Court.
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745. On 27 March 2017, the ADIC CPA was suspended due to the connection of the case to
the Umbrella CPAs: Reply, §36.4 {A1/3/24}; Rej, §25(4)(a) {A1/5/25}. The parties to the
Umbrella CPAs and others entered into an agreement known as the TAC Governance
(“GTAC”) which, on 8 August 2018, was judicially ratified and which caused the merits
phase of the 20bn CPA to be terminated.
746. As regards CPAs and their impact on limitation, the experts agree that:
746.1. Where a defendant is responsible for an event causing damage to multiple victims,
a CPA may be commenced against the defendant by a body with standing to do so
in respect of the violation of: the rights of the community as a whole (“diffuse
rights”); the collective rights of a group of persons connected by a legal
relationship (“collective rights”) and/or the private rights of the individual victims
of the same event (“homogenous individual rights”): JES Issue 47(a) {C1/3/8}.
746.2. The commencement of a CPA against a defendant in respect of the violation of

diffuse and/or collective rights arising out of an event can interrupt prescription in
respect of certain claims in respect of the violation of homogenous individual rights
arising out of the same event pursuant to Art 202(I): Tepedino 1, §483
{C7/1T/180}; Rosenvald 1, §503 {C3/1T/191-192}.
746.3. For a party to benefit from the interruption of the statute of limitations, the ‘cause
of action’ of the CPA must be the same as that of the individual actions: JES Issue
47(a) {C1/3/8}.
746.4. The interruption can only occur once and is affected by the judge ordering service
of process (Art 202(I) CC {I1/2/17}180), or by the voluntary appearance of the
defendant. The limitation date is then retroactive so that it is taken from the date
the claim was filed (Art 204(1) CC {I1/2/18}): Tepedino 1, §§479, 486
{C7/1T/179}, {C7/1T/182}; Rosenvald 1, §§498- 499 {C3/1T/190-191};
Rosenvald 2, §303 {C16/1T/129-130}.
746.5. Any interruption applies to individual claims against the defendants to the CPA and
any joint and several debtor and their heirs (Art 204(1) CC): JES, Issue 47(a)
180Art 202 CC (I) provides: “The interruption of the statute of limitations, which can only occur once, will occur: I - by order of the
judge, even if lacking jurisdiction, who orders the summons, if the interested party promotes it within the time limit and according to procedural
law”.
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{C1/3/8}; Tepedino 1, §480 {C7/1T/180}; Rosenvald 1, §515 {C3/1T/196};
Rosenvald 2, §§321, 325 {C16/1T/138-139}, {C16/1T/140}.
746.6. The interrupted prescription period shall run again from the date of the final
decision in the relevant CPA (when the decision becomes res judicata) (sole
paragraph of Art 202 CC): Tepedino 1, §483, 487-488 {C7/1T/180},
{C7/1T/183}; Rosenvald 1, §515 {C3/1T/196}; Rosenvald 2, §321-322
{C16/1T/138-139}.
747. There is disagreement between the experts on the following points of principle.
748. First, what is meant by the CPA and individual claim having the same ‘cause of action’ (in
relation to the point at §746.3 above).181
748.1. Prof Rosenvald’s position, in summary, is that it is only necessary that “the legally
relevant facts, such as the unlawful act, discussed in both actions” are the same such that “all
individual actions related to the same fact” may benefit from the suspension of limitation:
Rosenvald 1, §511 {C3/1T/195}; Rosenvald 2, §§304 {C16/1T/130}, §§307-308
{C16/1T/131-132}, §§312-315 {C16/1T/134-135}.
748.2. Prof Tepedino, however, explains that the reference to the same “cause of action” as
used in the relevant authorities means the same “facts and legal grounds”: Tepedino 2,
§§319, 321, 326, {C18/1T/131}.182 If the lawsuits have only partially identical
causes of action, the interruption of the limitation period by the CPA will operate
only in relation to the matters in which the overlap of causes of actions occurs (i.e.
the same facts and legal grounds) and it is possible to interrupt the prescription
only for part of the claims in which there is overlapping of claims: Tepedino 1,
§482(2) {C7/1T/180}; Tepedino 2, §326 {C18/1T/134}.
749. Second, there is a dispute as to who may benefit from the interruption of the limitation
period by reason of a CPA (in relation to the point at §746.5 above). Prof Rosenvald
contends that a CPA will interrupt limitation for all “victims” of the relevant event:
Rosenvald 1, §497 {C3/1T/190}. Prof Tepedino’s view is that it is necessary that the
181 And thus the degree of connection required between the issues in the CPA and the issues in the individual claim in
order for prescription to be interrupted in respect of the individual claim.
182 This is referred to by Prof Tepedino and the STJ as the “subject matter” of the claim: Tepedino 1, §§480-481
{C7/1T/180}, Tepedino 2, §319 {C18/1T/130}.
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individuals who filed the individual lawsuits belong to the same group or “collective” covered
by the CPA (for example, an association of fishermen and the fisherman as an individual):
Tepedino 1, §482(1) {C7/1T/180}; Tepedino 2, §316 {C18/1T/129}.
750. Third, there is a dispute as to the necessary formalities (in relation to the point at §746.5
above):
750.1. Prof Tepedino contends that: (a) when an individual brings an individual lawsuit,
they must request the suspension of the process, through a simple petition
addressed to the judge, in order to benefit from the interruption of the limitation
period caused by the CPA (Tepedino 1 §484 {C7/1T/181}; Tepedino 2 §319
{C18/1T/130});183 and (b) a claimant cannot benefit from the CPA as an
interrupting event if the claimant files their own individual claim whilst the CPA is
ongoing and does not request a stay of their individual claim pending determination
of the CPA: Tepedino 1, §484 {C18/1T/181}; Tepedino 2, §323 {C18/1T/132}.184
750.2. Prof Rosenvald disagrees and seek to distinguish the cases cited by Prof Tepedino
on the unmeritorious basis that they are said to be specific to social security claims:
Rosenvald 2, §§316-320 {C16/1T/136-138}.
751. Fourth, in the situation when multiple CPAs regarding the same cause of action are filed
at different times, there is a dispute as to which CPA interrupts limitation in respect of the
individual claims. Prof Rosenvald says that prescription is interrupted by the CPA which is
filed first, in light of the fact that the interruptive effect will be retroactive to the date of
filing of the actions: Rosenvald 2, §312 {C16/1T/134}. Prof Tepedino’s view is that when
more than one CPA has been commenced in respect of the same event, limitation will be
interrupted by the CPA in relation to which service of proceedings (or a voluntary
appearance) first occurred. That follows from (a) Art 202(I) CC, which provides that the
limitation period is interrupted by “order of the judge […] who orders the summons” {I1/2/17}and
(b) the head paragraph of Art 202 CC provides that prescription can only be interrupted
once: Tepedino 1, §§485-486 {C7/1T/182}.
752. Cs allege that the ADIC CPA interrupted prescription in respect of all individual claims
arising out of the Collapse against Samarco and against BHP UK and BHP Australia as
183 STJ in No. 1.754.902/SP (20 September 2018).

184 STJ in No. 1.754.902/SP (20 September 2018) and 1.641.167/RS (13 March 2018). And see Art 104 CDC.
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entities jointly and/or severally liable for damage caused by the Collapse, and the ADIC
CPA was the “first in time” and interrupted prescription when it was commenced on 17
November 2015: Reply, §§36.1-36.2 {A1/3/23}. Cs further allege that the ADIC CPA has
remained suspended ever since and that the interruption of prescription caused by the
commencement of the ADIC CPA continues: Reply, §36.4 {A1/3/24}.
753. BHP’s case, in summary, is as follows (Rej, §§25(1)-(2), (4) {A1/5/24}):
753.1. BHP are not defendants to ADIC CPA and deny liability to Cs (for the reasons
given in this opening) but as noted already, BHP accept that, if they are found liable,
their liability will be joint and several with Samarco.
753.2. Any interruption of limitation could only benefit the persons who were
contemplated by the ADIC CPA and who have claims for the damage expressly
encompassed by the statement of claim. ADIC CPA was filed on behalf of those
impacted in Minas Gerais and Espirito Santo (so that those Cs who are from
outside those states cannot benefit).
753.3. Those Cs who brought the present claims prior to the conclusion of CPA ADIC -
which on Cs’ own case is all Cs because CPA ADIC has, on Cs’ case, not concluded
- cannot benefit from any interruption in the limitation period caused by that CPA
given that there has been no request for a stay of their individual claim pending
determination of the CPA (see §750 above).
753.4. Further, the 20bn CPA was first in time because service of process was deemed to
have occurred earlier in the 20bn CPA (as to which see further below at §§753.6-
754). The ADIC CPA was commenced on 17 November 2015, however service of
process was not deemed to have occurred until 12 January 2016. Whereas, service
of the 20bn CPA (although commenced after the ADIC CPA) was deemed to have
occurred on 18 December 2015 (when Samarco made an appearance in that CPA):
Rej, §25(1)(c) {A1/5/24}.
753.5. As to the status of the ADIC CPA, BHP do not admit that the CPA has not
concluded but deny that the interruption of prescription caused by the
commencement of the ADIC CPA continues. If and to the extent limitation was
interrupted by the ADIC CPA, the limitation period restarted when the 20bn CPA
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concluded on 24 September 2018,185 alternatively 19 September 2019,186 because of:
(a) the (judicially recognised) overlap between the 20bn CPA / 155 bn CPA and
the ADIC CPA; (b) the (ratified) GTAC which provides for the termination of
ADIC CPA reflecting the fact that CPA ADIC has in effect concluded; (c) those
Cs contemplated by the ADIC CPA can bring enforcement proceedings already.
753.6. Cs say alternatively that limitation was interrupted by the Umbrella CPAs, on the
dates of their commencement, and such interruption continues. Insofar as
interrupted by the 20bn CPA, such interruption continues notwithstanding the
termination of the merits phase of the 20bn CPA, because that termination
(pursuant to the judicial ratification of the GTAC) was on the basis that, if it were
necessary to determine the liability of the defendants arising out of the Collapse, it
would be determined in the merits phase of the 155bn CPA rather than in the 20bn
CPA. Thus, Cs say that the 20bn CPA was “effectively absorbed” within the 155bn
CPA: Reply, §§36.4, 36.5 {A1/3/24}. It is common ground that the 155bn CPA
has not concluded.
754. BHP’s case in summary is as follows (Rej, §§25(5) {A1/5/26}):
754.1. Any interruption of limitation could not benefit the ‘58’ Cs (i.e. municipality, large
business, faith-based institutions and utility entities) because the Umbrella CPAs
do not seek specific relief in relation to them (see §749 above).
754.2. Even if (as Cs contend) the 20bn CPA was ongoing at the time of the issuance of
these claims, Cs in the present proceedings cannot benefit from any interruption in
the limitation period caused by that CPA (or the 155bn CPA to the extent relevant)
given that there has been no request for a stay of their individual claim pending
determination of the CPA (see §750 above).
754.3. Any interruption of limitation by the 20bn CPA came to an end when the 20bn
CPA was terminated (on 24 September 2018, alternatively 19 September 2019).
185 When the chapter of the judgment ratifying the GTAC and terminating the 20bn CPA was certified as being res
judicata: Rej, §25(4)(b)(i) {A1/5/25}; {I3/25T}.
186 When the Federal Prosecutor and certain other entities withdrew certain motions of clarification filed in respect of
aspects of decisions of the 12th Federal Court dated 8 August 2018: {I3/27.5.1T/1}.
255
754.4. In any event, all of the claims brought by Claim Form HT-2023-000058 were issued
on 24 February 2023 and therefore more than three years after the termination of
the 20bn CPA. They are therefore out of time.
754.5. As for Cs’ argument that the 20bn CPA was “effectively absorbed” within the 155bn
CPA: there is no support for it in the written law, case law or Rosenvald. The 20bn
CPA is at an end and pursuant to the CC, any interruption caused by the 20bn CPA
restarted upon its termination.
L5.2 Individual claims in England and Wales or Brazil
755. Cs say, pursuant to Art 204(I) CC, (a) that those Cs who brought claims in Brazil against
Samarco, BHP Brasil and/or Vale (before the prescription period for those claims expired)
thereby interrupted prescription of their claims against BHP UK and BHP Australia in
respect of the same damage (Reply, §37 {A1/3/25}); and (b) that those Cs who brought
claims against BHP UK in these proceedings (before the prescription period for those
claims expired) thereby interrupted prescription of their claims against BHP Australia
(Reply, §39 {A1/3/26}).
756. BHP deny that there has been any interruption of prescription because limitation would
only be interrupted by individual claims in Brazil if and to the extent that those claims same
cause of action and sought compensation for the same damages caused by the same event.
BHP does not admit that any such claims have been brought in Brazil.
757. The experts agree that the same principles apply regarding the effect on prescription of
claims whether issued in Brazil or in England and Wales: JES, Issue 47(d) {C1/3T/11-12}.
Further, the experts agree that:
757.1. Art 202(I) CC, provides that order of the judge ordering service of process in the
first claim (whether in England or Brazil) interrupts the limitation period in the
second claim: Rosenvald 1, §516 {C3/1T/196}, Tepedino 1, §315 {C7/1T/123}.
757.2. By Art 204(I) CC, the interruption of limitation by a claim by a creditor against a
debtor in the first claim will not interrupt limitation in respect of a second claim
against a co-debtor unless they are jointly and severally liable: JES, Issue 47(d)
{C1/3/11}, Rosenvald 1, §518 {C3/1T/197}, Tepedino 2 §320 {C18/1T/131}.
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757.3. By Art 202 CC, sole paragraph, limitation (once interrupted) will restart with the
final and unappealable decision of the first claim: JES, Issue 47(d) {C1/3/11},
Rosenvald 1, §518 {C3/1T/197}, Tepedino 2 §320 {C18/1T/131}.
757.4. The first claim only interrupts the limitation period in respect of a second claim
brought by the same claimant: Tepedino 1, §492 {C7/1T/184}. Tepedino 2, §320
{C18/1T/131}, Rosenvald 1, §516 {C3/1T/196}.
758. There is one relevant dispute of principle between the experts, being materially the same as
the first issue set out in respect of the CPA (see §748 above), namely the necessary
commonality of issues between the first and second claims. Prof Rosenvald considers that
it is necessary that both “arise from the same factual circumstances” such that “the facts that give rise
to the right to claim must be the same, ensuring that the matter discussed in court is identical in both
proceedings” but that the actions do not need to have the same legal basis: Rosenvald 1, §517
{C3/1T/196-197}; Rosenvald 2, §§330 to 331 {C16/1T/142}. Whereas Prof Tepedino’s
view is that limitation will only be interrupted if the first claim had the same cause of action
and sought compensation for the same damages caused by the same event as the second
claim: Tepedino 1, §§493-494 {C7/1T/185}, Tepedino 2, §321 {C18/1T/13}.
L5.3 Protests
759. Cs contend that those Cs who filed protests in Brazil against either of BHP UK or BHP
Australia, or Samarco, BHP Brasil and/or Vale before the prescription period for those
claims expired thereby interrupted prescription of their claims against them: Reply, §38
{A1/3/25-26}. BHP’s case is that in order to interrupt limitation, the protest needs to
expressly declare that its objective is to interrupt the limitation, be validly filed and then
served on the relevant defendant and be in respect of the same claim as is that advanced
subsequently. BHP Australia and BHP UK are not aware of having been validly served with
any protests in Brazil. As for protests against Samarco, BHP Brasil and/or Vale, BHP do
not admit that such protest was validly served or covered the same claims as are now being
advanced: Rej, §27 {A1/5/27-28}.
760. The experts agree on the following matters of principle (JES, Issue 47(c) {C1/3T/11};
Rosenvald 1, §520 {C3/1T/197-198}; Tepedino 1, §498 {C7/1T/186}):
760.1. Art 202(II) CC provides for the interruption of limitation “by protest, under the
conditions of [Art 202(I)]”, namely “by order of the judge, even if lacking jurisdiction, who
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orders the summons, if the interested party promotes it within the time limit and according to
procedural law” {I1/2/17}. The interruption takes effect from the date on which the
protest is made.
760.2. A “protest” in this context is the judicial protest, provided for in Art 726 CPC, which
provides: “Whoever has an interest in manifesting his or her will to another regarding a legally
relevant subject may notify persons who participate in the same legal relationship in order to make
them aware of his or her intention” {I1/3/12}.
760.3. Any such interruption would only apply to claims against debtors not cited in the
protest if they are jointly and severally liable pursuant to Art 204(I) {I1/2/18}.
761. The experts disagree, however, as to what is required by way of the protest in order to
interrupt prescription:
761.1. Prof Tepedino considers that it is necessary for the creditor to state explicitly in the
judicial protest that its purpose is to interrupt the prescription period and for the
protest to set out the grounds and “subject matter” of the intended claim to which
the protest applies (being a “certain claim arising from a certain fact”): Tepedino 2, §328
{C18/1T/136}. Only in respect of that claim shall the prescription period be
interrupted. This follows from Art 202(II) CC which provides that a protest must
be under the same conditions as the filing of an actual claim under Art 202(I) CC.
761.2. Prof Rosenvald states that the protest is not required to “specify in detail which claims
are being considered” (Rosenvald 1, §522 {C3/1T/198}) or to “objectively define, in detail,
the intentions to interrupt prescription” (Rosenvald 2, §329 {C16/1T/141}) but does not
explain what level of detail is required.
L5.4 Instrument of Commitment
762. Cs contend that the Instrument of Commitment dated 26 October 2018 between Samarco,
BHP Brasil, Vale and (amongst others) the MPF (the “Instrument of Commitment”)
interrupted prescription in respect of individual claims arising out of the Collapse
(notwithstanding that BHP are not parties to that instrument) by virtue of Arts 202(VI) and
204(1) CC, and BHP deny this: Reply, §38A {A1/3/25-26}; Rej, §27A {A1/5/27-28}.
763. The experts are agreed as to the applicable principles (Tepedino 2, §329 {C18/1T/136}):
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763.1. Parties cannot agree to alter the limitation periods (that being expressly provided
in Art 192 CC): Tepedino 1, §504 {C7/1T/187}; Rosenvald 2, §337
{C16/1T/145}.
763.2. Art 202(VI) provides for the interruption of limitation “by any unequivocal act, even if
extrajudicial, that implies recognition of the right by the debtor”, i.e. where a debt is
acknowledged unequivocally: {I1/2/17}; Tepedino 1, §509 {C7/1T/188};
Rosenvald 1, §335 {C3/1T/135}.
763.3. Any such interruption would apply to joint and several debtors pursuant to Art
204(I): Rosenvald 1, §530 {C3/1T/201-202}; Tepedino 2, §329 {C18/1T/136}.
763.4. As to the approach to construing the Instrument, this requires an analysis of the
text of the document, in its context and a consideration of the common purpose
of the parties: Rosenvald 1, §531 {C3/1T/202}; Tepedino 2, §329 {C18/1T/136}).
764. The Instrument of Commitment {I3/27T/2} provides in relevant part:
764.1. In its “recitals” (i) the commitment of Samarco, Vale and BHP Brasil to fully
compensate all damages resulting from the Collapse; and (ii) that, at the time, “the
date of the 3rd (third) anniversary of the COLLAPSE OF THE FUNDÃO DAM” was
imminent;
764.2. By Art 1(1) that “[t]here shall be no deterioration of rights and intentions of the affected people,
based on the statute of limitations, on 5 November 2018”, that is, three years after the
accident; and
764.3. By Art 2 that, the provisions set under Art 1 apply only within Brazil’s jurisdiction.
765. Cs appear to contend that the Instrument of Commitment is an acknowledgment of a right

pursuant to Art 202(VI), but this is incorrect: (a) the document contains no express
acknowledgment of a right; (b) at a minimum, any such recognition is plainly not
“unequivocal” (Prof. Rosenvald repeatedly asserts that an ”unusual document” that will require
“contextual understanding”: Rosenvald 1, §561 {C3/1T/215} ; Rosenvald 2, §333
{C16/1T/143}); and (c) by Art 2, its terms would not apply outside of Brazil and therefore
it cannot function as an unequivocal recognition of a right exercisable in England and
Wales: Tepedino 1, §505 {C7/1T/187}.
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L6. Suspension of the Limitation Period
766. It is common ground between the parties that Brazilian law provides for limitation periods
to be suspended in certain circumstances. Where prescription is suspended, upon the lifting
of the suspension the period of prescription resumes from the point it had reached when it
was suspended: Reply, §28.3 {A1/3/20}; Rej, §§17(3)-(4) {A1/5/21}.
L6.1 Capacity
767. Cs contend that some Cs lacked capacity due to being minors or “other reasons” and that, as
a result, limitation periods for those Cs were suspended for the period of their incapacity:
Reply, §§28.1, 40.4 {A1/3/20}.
768. The experts agree that: (a) time does not run against minors under age of sixteen who are
deemed in the written law to be “absolutely incapable” (Art 198(1) CC {I1/2/16}, read with
Art 3 {I1/2/1}), in respect of whom time does not run until they reach sixteen (Tepedino
1, §468 {C7/1T/175}; Rosenvald 1, §552 {C3/1T/212}; (b) time also does not run against
those over sixteen but whom, by reason of disability, do not have the discernment necessary
to perform acts of civil life: that being the effect of certain judgments of the STJ (Rosenvald
1, §§533-555 {C3/1T/202-213}; Tepedino 1, §471 {C7/1T/176}; Tepedino 2, §318
{C18/1T/130}).
769. There remains dispute as to whether time starts running again for individuals in the latter
category in certain circumstances. Prof Tepedino’s view is that time will start running again
when the individual either appoints a legal representative or the court appoints a curator
pursuant to the process of interdiction set out in Art 747 to 758 CC: Tepedino 1, §§466-
471, 530 {C7/1T/174}; Tepedino 2, §318 {C18/1T/130}. Prof Rosenvald suggests, by
contrast, that “Even with the investiture of a guardian, the interruption of the prescription will depend on
the way in which the judgment describes the level of loss of autonomy of the person with a mental or intellectual
disability”: Rosenvald 2, §358 {C16/1T/154-155}, see also Rosenvald 1, §§552-555
{C3/1T/212-213}; Rosenvald 2, §§357-360 {C16/1T/154-155}. Prof Rosenvald does not,
however, refer to any authority in support of his contention.
L6.2 Criminal Proceedings
770. Cs contend that, by Art 200 CC, (a) prescription is suspended in respect of all claims because
the Collapse is an event which has been and remains the subject of a criminal investigation
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and criminal proceedings; and (b) that impediment/suspension began (at the latest) on 11
November 2015 when the principal criminal investigation into the Collapse187 commenced
and will continue until final judgment is given in the criminal proceedings:188 Reply, §§28.2,
35A {A1/3/20}, {A1/3/23}.
771. BHP’s case is that a criminal investigation/proceeding can only suspend the prescription
period for a civil claim if that claim depends on the assessment of authorship and material
facts by a criminal court. Cs’ claims do not depend on the assessment of any such facts in
the criminal investigation/proceeding.
772. Art 200 CC provides: “When an action originates in an event that should be determined in the criminal
courts, prescription does not run before final judgement by the criminal courts.” {I1/2/16} The experts
disagree as to the connection (referred to in the case-law as “prejudicial relationship”) required
between the criminal and civil proceedings in order to suspend prescription.
773. Prof Rosenvald’s views are as follows. (Rosenvald 1, §§479-494 {C3/1T/183-189};

Rosenvald 2, §§291-302 {C16/1T/124-129}.
773.1. There is “no fixed and consistent definition” of the relationship between the civil and
criminal proceedings that is required for Art 200 to be engaged thus “leaving it to the
discretion of each jurist or judge to identify this relationship” and that as a result the case law
“is not very cohesive”: Rosenvald 1, §482 {C3/1T/183-184}.
773.2. Nevertheless, the STJ has now established that a prejudicial relationship will exist
“if a police investigation has been initiated and/or a criminal action has been filed regarding the
relevant event”: Rosenvald 1, §482 {C3/1T/183-184}. Thus, all that is required is that
there is a criminal investigation or action in respect of the same “event” as the subject
of the civil proceedings.
773.3. Liability can extend to parties that are not defendants to the criminal proceedings.
Prof. Rosenvald relies in this regard upon cases of the STJ where prescription has
been interrupted as against both an individual and his employer: Rosenvald 2,
§§298-299 {C16/1T/127-128}.
187 IPL 1843/2015 – 3066- 75.2015.4.01.3822

188 Subsection of Ponte Nova (Case No. 000272515.2016.4.01.38222)
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774. Prof Tepedino’s view, is as follows: (Tepedino 1, §§454-462, 530 {C7/1T/171-174};
Tepedino 2, §§299-317 {C18/1T/121-130}:
774.1. Art 200 is an exception to the general rule, established by Art 935 CC {I1/2/38},
that “[c]ivil liability is independent from criminal liability” which applies only where there
is a “prejudicial relationship” between the criminal and civil proceedings, meaning
where the civil claim is dependent upon the prior finding of criminal liability (and
specifically the finding that the crime took place (“materiality”) and that a particular
person or entity was responsible (“authorship”): Tepedino 1, §§454-457
{C7/1T/171}; Tepedino 2, §299 {C18/1T/122}.
774.2. This is clear from the express language of Art 200 {I1/2/16}: the cause of action
is one whose existence (“arises from”) is dependent upon a fact that can only be
determined in criminal court (“must be”).
774.3. It is also established in the case law: see Tepedino 1, §458, fn. 265 {C7/1T/172};
Tepedino 2, §304 {C7/1T/122}. The cases cited by Prof Rosenvald do not support
his understanding of the meaning of “prejudicial relationship”, and it is notable that
none of the passages quoted by Prof Rosenvald’s reports (at Rosenvald 1, §§483-
485 {C3/1T/184-185}) are to that effect. To the contrary each of those cases are
consistent with Prof Tepedino’s view. Each concern a circumstance where the civil
claim was a follow-on claim for compensation which arose only in the event of a
criminal conviction.189
774.4. The suspension of limitation under Art 200 is limited to the civil claims against the
defendants in the criminal action (Tepedino 1, §460-461 {C7/1T/173}) and those
who are vicariously liable (“objectively liable”) for the acts of the criminal Defendant
by virtue of Art 932 CC190 (including employers) or Art 37(6) of the Constitution:191
see Tepedino 2, §315 {C18/1T/138}.
189 Including a civil claim for compensation arising from the offence of racial and religious injury; a civil claim for
damages arising from the offence of death by dangerous driving; and civil claims for emotional distress from the crime
of sexual abuse.
190 Which provides “The following are also responsible for civil reparations: I – parents, for minor children who are under their authority
and in their company; […] III - the employer or principal, for his employees, servants and agents, in the performance of the work given to
them, or by reason of that work.”
191 Which provides “Public legal entities and private legal entities rendering public services shall be liable for damages that any of their
agents, acting as such, cause to third parties, ensuring the right of recourse against the liable agent in cases of malice or fault.”
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775. The criminal investigation relied upon by Cs in this case does not satisfy the relevant criteria
as set out by Prof. Tepedino above. The causes of action relied upon by Cs are not
dependent on a finding of criminal liability.
L6.3 The Covid Law
776. Art 3 of Law No.14.010/2020 (the “Covid Law”) provides that any limitation periods that
had not expired by the 12 June 2020 were suspended until 30 October 2020. Save for a
minor dispute as to whether the start date for the suspension was 10 June or 12 June 2020
(which makes no difference to the limitation position here), this is common ground: Reply,
§§39A {A1/3/26}; Rej, §§28A {A1/5/28}; Tepedino 1, §465 {C7/1T/174}; Rosenvald 1,
§535 {C3/1T/202-203}.
M. RELEASES
777. BHP’s expert on this topic is Prof Tepedino who deals with these points in Tepedino 1,
Part V(C) {C7/1T/212} and Tepedino 2, Part V(C) {C18/1T/137}. Cs’ expert on this issue
is Prof Rosenvald who deals with these points in Rosenvald 1, Part E {C3/1T/215} and
Rosenvald 2, Part D {C16/1T/156}.192
778. As indicated above, a significant number of Cs have received compensation from Renova
through optional processes supervised and/or mandated by the Brazilian courts, and
through these processes agreed settlement agreements containing releases discharging
claims arising from the Collapse; many others have already settled litigation against Renova,
Samarco, BHP Brasil, and/or Vale. BHP’s case is that where Cs have already entered into
settlement agreements relating to the Collapse which contain releases then, any claims that
fall within the scope of those releases are barred and should be dismissed: Def, §§42
{A1/2/21}. Cs plead that the settlement agreements are: (a) void and/or voidable;193 and/or
(b) properly interpreted do not prevent those Cs from pursuing their claims: Reply, §§44-
44D {A1/3/28-30}. BHP’s case is that the settlement agreements are contracts, which are
governed by, and interpreted in accordance with, the relevant rules in the CC. Cs’ case is
that (a) the principal applicable legal regime is not the CC, but the CDC, in particular
Chapter VI which deals with abusive consumer contracts, and that (b) the settlement
192 It should be noted that the term used for settlement agreements in Brazilian Portuguese is transação, which may be
translated as “transactions”.
193 The terminology Prof Tepedino uses is “nullity” and “annullibility”: Tepedino 1, §§591-592 {C7/1T/234}.
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agreements are subject to the Brazilian law rules (in the CDC and the CC) on “adhesion
contracts”.
779. The section below addresses:
779.1. First, the two threshold issues on Cs’ case: (a) application of the CDC: Section M1.1
below; and (b) whether the settlement agreements are adhesion contracts: Section
M1.2 below.
779.2. Second, the effect of the settlement agreements: the parties’ experts agree that the
effect of discharge clauses in settlement agreements will have binding force to
prevent or extinguish litigation within the scope of the release: Section M1.3 below.
779.3. Third, the grounds Cs rely on for the allegation that the settlement agreements are
void and/or voidable: Sections M1.4-M1.5 below.
779.4. Fourth, interpretation. There is some common ground as to the applicable

principles of contractual interpretation. See Section M1.6 below.
779.5. Fifth, the Court will be invited to determine certain issues relating to the validity
and proper meaning of the settlement agreements raised above by determining
those issues in respect of 14 Settlement Agreements (the “Sample Agreements”).
See Section M2 below.
M1. Relevant Brazilian law
780. LOI, Issue 59 {A2/1/24-25} addresses the principles of Brazilian law governing the scope,
effect, validity, enforceability and proper interpretation of settlement agreements.
M1.1 Application of the CDC to the Settlement Agreements
781. Cs’ case is that the validity and proper meaning of the settlement agreement is regulated by
the CDC, in particular Chapter VI, which is concerned with abusive practices in consumer
contracts. They say that the releases contained in the settlement agreements are either void
(Arts 51(I), 51(IV) CDC), not binding (Art 46 CDC),194 or are to be construed in favour of
the consumer (Art 47 CDC): Reply, §44A {A1/3/29}.
194 Where a release is considered non-binding under the CDC, the result would be the same as if it were void.
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782. BHP’s case, supported by Prof Tepedino, is that the CDC does not apply; rather, the
settlement agreements are only regulated by the CC: Rej, §§23 {A1/5/23-24} & 38A(1)
{A1/5/32-35}; Tepedino 1, §§659-668 {C7/1T/254}; Tepedino 2, §§375-397
{C18/1T/153}. BHP’s position is that the CDC applies only to consumer relationships
(see Section L3.1 above) and there is no consumer relationship between the parties to the
settlement agreements.
783. As explained earlier (Section L3.1), the CDC applies to “consumers”. However, Cs accept
that they are not “consumers”: they did not buy any products or services (Art 2 CDC). So,
Cs’ pleaded case on Chapter VI CDC (similar to their case on limitation) is that they are
“equivalent consumers”195 by reason of Art. 17 and/or Art. 29 CDC: Reply, §44A.1 {A1/3/29}.
But this is not correct.
M1.1.1 Article 17
784. Art 17 CDC. Art 17 CDC has already been discussed in Section L3.1 above. Whether Art
17 is engaged will depend on whether the Collapse of the Dam can be regarded as a
consumer accident. BHP submit that it cannot: see §§716-722 above.
785. Further, or alternatively, as Prof Tepedino explains, even if the Collapse was a “consumer
accident” for the purposes of Art 17, the protection given by Chapter VI is not available to
Cs by way of Art 17: Tepedino 1, §666 {C7/1T/256}. As he explains:
785.1. The effect of Art 17 is (in terms) to extend the provisions of Chapter IV, Section
II, i.e. liability for defective products / services, beyond consumers to all victims of
consumer accidents.
785.2. Chapter VI CDC is not concerned with liability for defective products / services.
Rather, it is concerned with abusive practices in consumer contracts. Applicability
of Chapter VI CDC to non-consumers is governed by Art 29 CDC. See: Tepedino
1, §§660, & 662-664 {C7/1T/254}; Tepedino 2, §§375 {C18/1T/153}, 377
{C18/1T/154}, 392 {C18/1T/158}.
195 As to “consumer by equivalence” generally, and in particular under Art. 17 CDC, see Section L3.1.
265
786. In short: Art 17 deals with consumer accidents and Art 29 deals with a consumer by
equivalence in contractual relations involving the effects of commercial practices used in
commercial relations.196
787. Prof Rosenvald contends that Art 17 CDC, “gives access to all CDC protections”: Rosenvald 1,
§644 {C3/1T/248}; Rosenvald 2, §388 {C16/1T/167}.197 Not only is this view contrary to
the terms of Art 17 CDC (which states that it only applies to Chapter IV, Section II, CDC)
but Prof Rosenvald’s reliance on STJ decision (2009210/RS) on this point (Rosenvald 1,
§644 {C3/1T/248}) is misplaced, because that decision does not suggest that contracts
entered by victims of consumer accidents (i.e. equivalent consumers under Art. 17) are
automatically subject to the provisions of Chapter VI. Nor does he explain why victims of
consumers accidents (Art. 17) should automatically also be subject to the provisions of
Chapter VI of the CDC, which deals with a different topic, namely abusive consumer
relationships.
M1.1.2 Article 29
788. Art 29 CDC. BHP’s case is that the only possible route by which Chapter VI, CDC can
apply to Cs is via Art 29 CDC. Art 29 CDC provides that all people or legal entities exposed
to the practices within Chapters V and VI, CDC, are equivalent to consumers for the
purpose of those Chapters.
789. Art 29 CDC is not engaged in this case. As Prof Tepedino explains, in order for Art 29 to
be engaged, there needs to be an underlying consumer relationship; there is no such
consumer relationship in these settlement agreements given that the counterparties
(Renova, Samarco, Vale, BHP Brasil) do not engage in commercial practices with
consumers: Tepedino 1, §§660, 667-668 {C7/1T/254}; Tepedino 2, §391 {C18/1T/158}.
790. Prof Rosenvald says very little on whether Art 29 CDC is satisfied:
790.1. He does not directly engage with Prof Tepedino’s point that Art 29 can only apply
if there is an underlying consumer relationship and that there is no such relationship
196 An example of Art 29 CDC applying is where a loan agreement is offered to a company – which is not a consumer
– at abusive interest rates: Tepedino 2, §378 {C18/1T/154}.
197 Prof Rosenvald says the same for Arts. 29 and 2 (sole paragraph) (discussed below). In support, he states that the
only reason that there are multiple references to consumers by equivalence in the CDC is “political purposes”: Rosenvald
1, §647 {C3/1T/250}. Prof Tepedino disagrees and notes that “it being certain that the qualification of the species of consumer
by equivalence is relevant for the identification of the CDC provisions that applies…”: Tepedino 2, §375 {C18/1T/153}.
266
here. Instead, Prof Rosenvald argues that Art 12 CDC suggests that liability under
the CDC can extend to all entities within a supply chain: Rosenvald 2, §401
{C16/1T/172-173}. The relevance of Art 12 CDC is unclear (it is not a part of Cs’
pleaded case), but in any event it does not follow from Prof Rosenvald’s reliance
on Art 12 that there is a consumer relationship between Cs and Renova, Samarco,
Vale and/or BHP Brasil (i.e. the counterparties to the waivers).
790.2. Rosenvald 1, §645 {C3/1T/248-249}, suggests that a violation of Art 51 CDC,

which is within Chapter VI CDC and is discussed at §814 and ff below, itself would
trigger the application of Art 29 CDC. The consequence of Prof Rosenvald’s view
seems to be that every contract (including settlement agreements) would necessarily
attract the regulatory supervision of the CDC. That seems highly unlikely.
M1.1.3 Arts 2 and 6
791. Prof Rosenvald refers to two other provisions of the CDC (which are not part of Cs’
pleaded case) to suggest that Chapter VI applies to settlement agreements.
792. He states that an equivalent consumer can be established under Art 2, sole para, CDC:
Rosenvald 1, §§456-458 {C3/1T/172-173} & 634-635 {C3/1T/243-244}. Art 2, sole para,
CDC states “Groups of persons, even if they cannot be determined, who may have intervened in consumer
relations will be deemed to be consumers.” {I1/7/1}. Notably, Prof Rosenvald does not explain
whether, let alone why, the language in Art 2, sole para applies to Cs, nor does he identify
a decision where a party was deemed a consumer by equivalence through Art 2, sole para,
CDC. Prof Tepedino states that Art 2, sole para is merely a reference to Arts 17 and 29 of
the CDC and therefore a person is only a consumer by equivalence if Art 17 or Art 29 is
satisfied as explained above. The Art 2 point therefore adds nothing (other than to clarify
that a collection of individuals may be deemed consumers by equivalence if they satisfy Arts
17 or 29): Tepedino 1, §409 {C7/1T/154} & §418 {C7/1T/158}.
793. In his second Report, Prof Rosenvald refers to Art. 6(IV) CDC, which provides that basic
consumer rights include “protection against misleading and abusive advertising, coercive or unfair
commercial methods, as well as against abusive or imposed practices and clauses in the supply of products
and services”: Rosenvald 2, §§389-390 {C16/1T/167-168}. The relevance of this (if any) is
unclear. For example it is unclear if Prof Rosenvald’s position is that Chapter VI of the
CDC can apply by virtue of Art 6 CDC. If so then that would be wrong: whether Chapter
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VI applies to equivalent consumers is governed by Art 29 CDC. For these reasons BHP
will submit that the CDC does not apply to regulate the Sample Agreements or any other
settlement agreements. This being so, the provisions in Chapter VI CDC which are
concerned with the validity and/or interpretation of consumer contracts are not applicable
to the settlement agreements.
M1.2 Adhesion Contracts
794. Cs contend that the settlement agreements are all “adhesion contracts”: Reply, §§44A.4 & 44B
{A1/3/29-30}. BHP disagree: Rej, §38A(4)(b) {A1/5/33} & §38B {A1/5/35}.
795. Before turning to this issue and the expert evidence, it may be helpful to explain the
implications of this point, which are (relatively) limited. First, if, as submitted above, the
CDC does not apply, the only relevance of this point is that the CC contains a specific rule
of interpretation (similar to contra proferentem) which is applicable to ambiguous or
contradictory clauses in adhesion contracts.198 Secondly, if the CDC applies, it contains a
similar rule in relation to the interpretation of such contracts, and there are additional
requirements for the validity of such contracts. These matters are considered at §§828-833
below.
796. Adhesion contracts are not defined under the CC. Art 54 CDC defines adhesion contracts
as where the “clauses have been approved by the competent authority or have been established unilaterally
by the supplier of goods or services, without the consumer being able to discuss or substantially modify its
contents”. The experts agree that an adhesion contract is characterised by standard terms that
are unilaterally stipulated by one of the parties: Tepedino 1, §644 {C7/1T/250}; Rosenvald
1, §752 {C3/1T/291-292}. Prof Tepedino explains that terms are unilaterally stipulated
where there is no negotiation. The key point of disagreement between the experts is a point
of principle:
796.1. Prof Tepedino states that settlement agreements cannot be adhesion contracts
because there is always the option of bringing a claim. As a result, when there is a
settlement, that agreement constitutes reciprocal concessions of rights, and so there
198As explained below, settlement agreements are to be interpreted restrictively in any event, so the addition of an
interpretive rule similar to contra proferentem is of little, if any, importance.
268
is always a negotiation, whether in fact or by way of implication.199 This is distinct
from adhesion contracts where a customer has no choice but to agree to an
imposed contract in order to obtain the desired goods or services (for example,
compulsory car insurance).200
796.2. Prof Rosenvald says that it is irrelevant to the analysis that legal action can be taken:
Rosenvald 2, §419 {C16/1T/181}, §453 {C16/1T/197}.201
797. The experts also disagree on the criteria by which an adhesion contract is identified:
797.1. Prof Tepedino identifies three factors: (a) the unilateral imposition of the
contractual content on the adherent; (b) the absence of negotiation in relation to
any of its clauses; and (c) the absence of an alternative for the acquisition of the
intended product or service: Tepedino 2, §374 {C18/1T/152}.
797.2. Prof Rosenvald says that there are four criteria which define adhesion contracts:
uniformity, predetermination, rigidity of the general clauses, and indeterminacy of
the adherents: Rosenvald 1, §§597-598 {C3/1T/229-230} & §§673-674
{C3/1T/260}. The factors listed by Prof Rosenvald appear to be insufficient to
determine that an agreement is an adhesion contract – they could equally describe
a mere “standard contract” which would only constitute an adhesion contract where
the counterparty “has merely adhered to the instrument, without actually accepting its clauses”:
STJ decision (1.988.894/SP) (NR-1C/285 {C3/7.1T/285}, 290 {C3/7.1T/290}
& 309 {C3/7.1T/309}).202
199 Tepedino 1, §648 {C7/1T/251}: “…reciprocal concessions are an essential characteristic of settlement agreements, the result of
which presupposes that each signatory gives up part of its claim, the success of which is uncertain. Thus, both parties freely waive rights, in
order to reach a negotiated solution that seems more advantageous than the continuation of the lawsuit (or the filing of lawsuit). For this
reason, considering the settlement agreement as an adhesion contract constitutes a contradiction in terms…”. See also Tepedino 1, §§647
& 650 {C7/1T/250}; Tepedino 2, §§366-368 {C18/1T/150} & §§372-373 {C18/1T/152}. Prof Rosenvald agrees “in
theory” that settlement agreements arise from the result of mutual concessions: Rosenvald 2, §370 {C16/1T/158-159}.
200 Tepedino 2, §§371-372 {C18/1T/151}.
201 In response to Prof Tepedino’s position Prof Rosenvald also refers to an STJ decision (1.319.111/RS) which he
says refers to a settlement agreement as an adhesion contract (Rosenvald 1 at §717 {C3/1T/278-279}). But the
decision did not in fact make any finding that the agreement constituted an adhesion contract for the purposes of
either the CC or the CDC. Indeed, if it had, it could have invoked Art. 423 CC (relating to the interpretation of
adhesion contracts), which it did not do.
202 See also NR-1C/309 {C3/7.1T/309}: “The fact that the contract is materialised by a form and the existence of
standardised clauses does not imply the necessary conclusion that it is a contract of adhesion”.
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M1.3 Effect of Settlement Agreements
798. It is common ground that settlement agreements are in principle valid and effective. Art
840 CC provides: “It is licit for interested parties to prevent or terminate litigation through mutual
concessions” {I1/2/32}. Arts 840-850 (Chapter XIX) CC contain specific provisions
regulating settlement agreements but (as explained at §§863-870 below) the general
contractual rules in the CC also apply.
799. The effect of settlement agreements is also common ground, namely discharge of the
relevant obligation. Further:
799.1. A discharge in a settlement agreement recognises the fulfilment of an obligation by

a debtor which releases the debtor from that obligation (Arts 319 and 320, CC):
Waivers JES, p 2 {C1/4T/2}. In other words, settlement agreements have binding
force to prevent or extinguish litigation within the scope of the release clause:
Tepedino 1, §586 {C7/1T/231} and §621 {C7/1T/243}; Tepedino 2, §335
{C18/1T/138}; Rosenvald 1, §619 {C3/1T/237-238}; Rosenvald 2, §§369-370
{C16/1T/158}.
799.2. This discharging effect of settlement agreements can benefit non-parties who are
jointly and severally liable with the released party to the settlement agreement: CC
Art 844(3): Tepedino 1, §632 {C7/1T/246}; Rosenvald 1, §631 {C3/1T/243}. As
a result, if BHP are considered joint and severally liable debtors with Vale, BHP
Brasil and Samarco, settlement agreements that discharge those companies will
equally benefit BHP: Tepedino 1, §633 {C7/1T/246}. The same would apply to
any settlement agreement with Renova: Tepedino 1, §§634-637 {C7/1T/246}.
800. The scope of the release clause – and therefore what is extinguished – is a matter of the
construction of the agreement. See §§882-883 below.
801. Settlement agreements, like any contract, are subject to “validity control”, namely an
assessment as to whether a contract is valid and enforceable: Waivers JES, p. 2 {C1/4T/2}.
See next section.
M1.4 Validity Control
802. Cs plead that the settlement agreements (or some of them) are void or voidable pursuant
to provisions in the CC and the CDC: Reply, §§44.4-44.6, 44A.2-44A.4 {A1/3/29-}.
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Certain of Cs’ validity arguments are also premised on the settlement agreements being
adhesion contracts: Reply, §44A.4. BHP’s pleaded position is at Rej, §38, §38A(2)-(4)
{A1/5/31}.
803. Cs’ CC arguments are (a) unparticularised and (b) in any event such that the Court cannot
determine them at a first stage trial, e.g., they require consideration of whether a particular
C was “mistaken” when signing a settlement agreement. However, the Court will be invited
to (a) determine the general principles applicable to the CC arguments (see §§807-811
below); (b) dismiss the arguments based on (i) the CDC and (ii) the premise that the
settlement agreements are adhesion contracts (see §§813-833 below) and (c) rule on the
relevance and impact of certain factors as to the validity of the settlement agreements (see
§§837-862 below).
804. The experts agree on the difference between a court finding a clause to be void (“nulidade”)
as opposed to voidable (“anulabilidade”). The former are deemed to automatically be
ineffective from the outset; the latter will have remained in force until annulled by a court
upon a party’s request. See Tepedino 1, §594 {C7/1T/234}; and Rosenvald 1, §§702
{C3/1T/271-272} & 714 {C3/1T/276}. This is relevant because there is a 4-year
peremptive period applicable to annulment actions: see §§834-836 below.
M1.4.1 Validity Control under the CC
805. Cs plead that the releases (or some of them) are voidable as they were (a) entered on the
basis of substantial mistake (Art 138); (b) as a result of wrongful conduct (such as
misrepresentation as to the effect of the release) (Art 145), or (c) through pressing need or
lack of experience and the transaction of which it formed part was manifestly
disadvantageous to Cs (known as “lesion”) (Art 157): Reply, §§44.4-44.6 {A1/3/29}. These
claims are unparticularised and BHP are unable to plead to these allegations, save it is denied
that the settlement agreements were manifestly disadvantageous under Art. 157 CC: Rej,
§38 {A1/5/31-32}.
806. The experts agree that Arts 138, 145 and 157 are in principle available as grounds of
voidability.203 Their evidence on the scope and requirements of these grounds are at
203Prof Rosenvald also refers to Art. 424 CC which states: “In adhesion contracts, any clauses that stipulating the adhering
party’s early waiver of any right resulting from the nature of the transaction are null and void”: Rosenvald 1, §§669-670 {C3/1T/257-
259}. However, Cs do not plead reliance on this clause: they only rely on Art. 423 (which is about interpretation). Any
271
Tepedino 1, §§591-606 {C7/1T/234}; Tepedino 2, §§349-353 {C18/1T/144}; Rosenvald
1, §§713, 715-716 {C3/1T/276-278}; Rosenvald 2, §§439-440, 444-445 {C16/1T/192-
194}.
807. Resolution of Cs’ allegations in relation to the Sample Agreements are not within the scope
of the LOI. However, the Court can make certain findings to guide the resolution of any
such claims in subsequent Stages, as set out below.
808. Art 138 {I1/2/8} – Mistake: There are three (cumulative) requirements:
808.1. First, a substantial mistake (listed in Art 139 CC) must be present. As for mistakes
of law, a settlement cannot be annulled for mistake of law as to the questions that
were in controversy between the parties: Art 849 CC {I1/2/35}.
808.2. Second, the mistake must be excusable. A mistake which is obvious (“Erro
grosseiro”) is inexcusable.
808.3. Third, the mistake must be recognisable by the counterparty. If the counterparty
is acting in good faith and has been diligent and cannot perceive the mistake, the
transaction will not be annulled.
809. Art 145 – Wilful Misconduct: Wilful misconduct takes place when a person maliciously
induces another to conclude a transaction in substantial error to benefit themselves or a
third party.
810. Art 157 – Lesion: It is necessary to demonstrate an enormous disproportion between the
obligations of the parties (in this case, the amounts paid under the settlement and the claims
which are discharged); and that the party is inexperienced or has performed the act due to
urgent need.
811. In relation to each of these provisions, Cs have the burden of proving the substantial error
or defect of consent: Tepedino 2, §353 {C18/1T/146}; Rosenvald 2, §443 {C16/1T/193}.
such reliance would in any event be misplaced because Art. 424 on its face has no application to an after-the-fact
settlement: Tepedino 1, §§654-658 {C7/1T/252}. Such an agreement is neither an “early waiver” nor does it relate to
the nature of the underlying agreement – indeed there is no underlying transaction/agreement between Cs and the
signatories to the settlement agreements.
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812. Additional findings on validity control under the CC which are sought by BHP are
addressed further at Section M1.5 below.
M1.4.2 Validity Control under the CDC
813. Cs plead that the releases are void based on Arts 51(I), 51(IV) and 51 paras I(I) and (II),
CDC (Reply, §§44A.2-44A.3 {A1/3/29}). BHP’s position is that (Rej, 38A(2)-(3)
{A1/5/32-33}):
813.1. The CDC does not apply at all, as already set out at Section M1.1 above.
813.2. Alternatively, i.e. if the CDC does apply: (a) Art 51 CDC does not apply to the
releases; or, (b) Art 51 CDC is not breached, i.e. it is denied that the releases are
unfair, abusive, or place Cs in an excessively disadvantageous position and/or are
incompatible with the principles of good faith and equity.
814. Art 51 CDC provides in relevant part {I1/7/10}:
“Article 51. Among others, the following contractual clauses relating to the supply of goods and
services, are null and void, if they:
I - render impossible, exonerate or mitigate the supplier's liability for defects of any kind of goods and
services or imply waiver or disposal of rights. In consumer relations between suppliers and consumers
that are legal persons, compensation may be limited in justifiable situations;
(…)
IV – establish obligations considered unfair or abusive, that place the consumer at an exaggerated
disadvantage, or are inconsistent with good faith or equity;
(…)
§1. Among other cases, an advantage is presumed to be exaggerated if it:
I - offends the fundamental principles of the legal system to which it belongs;
II - restricts fundamental rights or obligations inherent to the nature of the contract, in such a manner
that it threatens the contract’s object or balance;”
815. The pleadings raise three points (if the CDC is engaged at all): first, whether Art 51 applies
to settlement agreements at all; second, the approach to assessing whether a contract
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breaches Arts 51(I) and (IV), and third, whether any of the Sample Agreements breach
Arts. 51(I) & (IV). This section will address the expert evidence on the first two points (with
the third point addressed below at §§879-881).
M1.4.2.1 Art 51, CDC does not apply to settlement agreements
816. The experts’ disagreement relates to the words “Among others” in Art. 51.
817. Prof Tepedino states that Art 51 only addresses clauses relating to the supply of goods and
services: Tepedino 1, §681 {C7/1T/261}; Tepedino 2, §419 {C18/1T/167}. He explains
that “Among others” refers to other examples of invalid clauses (relating to the supply of
goods and services) such that the list contained in Art 51 is illustrative (and not exhaustive).
He cites STJ case-law and doctrine in support of his view: Tepedino 2, §419 {C18/1T/167}.
818. Prof Rosenvald says that “Among others” expands the scope of Art 51 from clauses related
to the provision of products/services to “any consumer contract”: Rosenvald 1, §705
{C3/1T/273}. Prof Tepedino describes this view as “surprising” and without “legal, doctrinal
or jurisprudential support”: Tepedino 2, §418 {C18/1T/167}. Prof Rosenvald refers to two
cases in support of his position:
818.1. In his first report, a STJ decision (658858/TO): Rosenvald 1, §666 {C3/1T/255-
256}; Rosenvald 2, §405 {C16/1T/174-175}. However, as Prof Tepedino explains,
this case did not involve the application of Art 51 CDC to a settlement agreement
and does not support Prof Rosenvald’s position. Tepedino 2, §§414-416
{C18/1T/165};
818.2. In his second report, a decision of the Court of Justice of São Paulo: Rosenvald 2,
§405 {C16/1T/174-175}. Prof Tepedino has not yet had the opportunity to give
his view on this judgment; however, it is notable that, in that case, there was a
consumer relationship (the defendant supplied the defective air-conditioning unit
to the claimant); and, further, the Court did not hold that the contract was void
(pursuant to Art 51 or any other provision).
819. Since the settlement agreements in this case are not contracts involving, or even relating to,
the supply of goods and services, Art 51 is not capable of applying to them.
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M1.4.2.2 Article 51(I), CDC
820. If, contrary to the above, Art 51 CDC is capable of applying to the settlement agreements,
then it is necessary to consider whether the settlement agreements violate the terms of Art
51 and, in particular, Art 51(I) and (IV) (on which Cs rely).
821. Cs allege that the releases are void under Art 51(I), CDC (set out at §814 above) “because
they purport to limit the Defendants’ liability to the Claimants and/or to waive the Claimants’ rights in
respect of claims for losses for which full compensation has not been received”: Reply, §44A.2 {A1/3/29}.
Cs’ pleaded case seems to be that any settlement agreement where C is paid less than “full
compensation” is void. Prof Rosenvald does not appear to give evidence that supports Cs’
position on this issue.204
822. Prof Tepedino refers to case law that confirms that Art 51(I) only applies to advance waivers
and not to settlement agreements after the fact: Tepedino 1, §§686-687 {C7/1T/263}. This
is sufficient to conclude that Art 51(I) CDC does not apply, but Prof Tepedino’s evidence
is also that Art 51(I) CDC addresses scenarios where a consumer is not given the possibility
of understanding that, through executing the contract, their rights will be limited. Therefore,
a clause which limits consumer rights will not be void where the consumer is aware of and
understands such a limitation: Tepedino 1, §§683-685 {C7/1T/262}. Prof Rosenvald states
that this position “is very superficial and gives an incomplete understanding” particularly because “It
is easy to conceive of circumstances in an event like this that could lead to settlements being imposed or forced
on victims”: Rosenvald 2, §413 {C16/1T/178}. However, Art 51(1) CDC is not concerned
with situations where agreements are “forced” onto persons and Prof Rosenvald does not
explain how this point relates to the application of Art 51(I), CDC.
823. Therefore, the Court will be invited to reject Cs’ position on Art 51(I), CDC.
M1.4.2.3 Article 51(IV), CDC
824. Cs’ Art 51(IV) CDC claim is unparticularised (save the allegation that the settlement
agreements “restrict the Claimants’ fundamental rights to full compensation” (Reply, §44A.3
204That would be for good reason: if Cs’ pleaded case were accepted that would suggest that any settlement agreement
where a claimant accepts, in the interests of certainty, less than the value of their claim, would be void. That would go
against the very purpose of settlement agreements.
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{A1/3/29})) and so the experts only address this provision (which is set out at §814 above)
in general terms.
825. Prof Tepedino’s evidence is that one cannot define the notions of exaggerated disadvantage
and norms incompatible with good faith and equity in a vacuum: Tepedino 2, §409
{C18/1T/164}. For that reason, he states that Art 51(IV) needs to be considered alongside
Art 46 CDC which refers to the requirement that consumers have the opportunity to
understand the contracts they agree to, failing which they will not be binding205: Tepedino
1, §§693-694 {C7/1T/266}; Tepedino 2, §411 {C18/1T/164}. Based on doctrine he cites,
Prof Rosenvald seems to agree that Arts 46 and 51(IV) CDC should be considered together:
Rosenvald 2, §410 {C16/1T/176-177}.
826. In relation to “excessive disadvantage” (addressed in Tepedino 1, §§690-692 {C7/1T/265}),

Prof Tepedino explains that the fact that the consumer cannot claim any additional
compensation due to the release would not result in the nullity of that release, even if the
amount received is lower than what they would have received in litigation. He notes at §692
{C7/1T/266} that, if there is no defect of consent that justifies the annulment of the
agreement and the consumer has had the opportunity to understand the terms of what was
contracted, there is no basis for nullity. This is supported by Art. 46 CDC (Tepedino 1,
§694 {C7/1T/267}) and Art 54, IV the latter of which provides that “clauses that imply a
limitation of consumer rights must be written prominently, allowing it to be immediately and easily
understood” (Tepedino 1, §684 {C7/1T/263}). That is, “clauses that restrict consumer rights are
valid and effective, provided that they are clearly and unequivocally expressed in the contract…”: Tepedino
2, §§346 {C18/1T/143} & 412 {C18/1T/165}.
827. Prof Rosenvald deals with excessive disadvantage in Rosenvald 1, §§661-666 {C3/1T/254-
256}. He says merely that Art 54(IV) is open-ended and it will be up the judge to adjudicate
the fairness of a clause “in light of the community’s cultural experiences” (which is not further
explained).
205 This provision is discussed further below.
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M1.4.3 Validity Control under the CDC if the settlement agreements are adhesion
contracts
M1.4.3.1 Art 46, CDC
828. Cs plead that, if the release is part of an ‘adhesion contract’ (which BHP deny: see §§794-
797 above), pursuant to Art 46 of the CDC, it will not bind the relevant C because they (a)
did not have prior knowledge of the contents of the contract and/or (b) the contract was
drafted in such a way as to make it difficult for the relevant C to understand its meaning
and scope: Reply, §44A.4 {A1/3/29-30}. BHP deny this: Rej, §38A(4)(d) {A1/5/34}.
829. Art 46, CDC provides that “Contracts that regulate consumer relations shall not bind the consumers,
if they are not given the opportunity of having prior knowledge of its content, or if the respective instruments
are written in a way that it is difficult to understand their meaning and scope.”: {I1/7/9}. The experts
agree on the potential relevance of Art 46 (assuming the CDC applies), but not on the
standard required to comply with it.
830. Prof Rosenvald’s evidence is that “being formally familiar with the contract is not enough; only actual
knowledge is binding”: Rosenvald 1, §707 {C3/1T/273-274}.206 The difference between “being
formally familiar” and “actual knowledge” is unclear. But the terms of Art 46 do not require
knowledge; only the opportunity of knowledge. None of the case law or doctrine he cites
relating to Art. 46 (Rosenvald 2, §§407-409 {C16/1T/175-176}) refers to a distinction
between “formal” and “actual” knowledge.
831. Prof Tepedino states that Art. 46 does not require subjective knowledge so long as the
content of the transaction “is made available for the purpose of knowledge, reflection and deliberation”:
Tepedino 1, §674(c) {C7/1T/259}; Tepedino 2, §400 {C18/1T/161}.
M1.4.3.2 Art 54, CDC
832. Art. 54 CDC provides that adhesion contracts must be written in clear terms, with legible
characters (Art. 54(3)) and any clauses that limit consumer rights must be written
prominently, allowing their immediate and easy understanding (Art. 54(4)). Cs plead that
the releases do not comply with these requirements, but have not particularised that
allegation: Reply, §44A.4 {A1/3/29-30}. BHP deny that the requirements of Art 54 (should
206 Prof Rosenvald does not emphasise this point in his second report, simply noting that “the effectiveness and adequacy of
the content of the information depends on the analysis of the circumstances of the specific case”: Rosenvald 2, §406 {C16/1T/175}.
277
it apply) were not met; in particular, the releases were legible and comprehensible as is
required by Art 54(3) & (4): Rej, §38A(4)(c) {A1/5/34}.
833. The requirements of Arts 54 (3) and (4) appear to be common ground: Tepedino 1, §§701-
702 {C7/1T/268}; Tepedino 2, §424 {C18/1T/168}; Rosenvald 1, §678 {C3/1T/261-262}
& §694 {C3/1T/268-269}; Rosenvald 2, §435 {C16/1T/190-191}.They also agree that if a
clause in an adhesion contract does not comply with these provisions, the consumer will
not be bound by that specific clause: Rosenvald 1, §707 {C3/1T/273-274}; Tepedino 1,
§703 {C7/1T/269}.
M1.4.4 Time limit for annulment of settlement agreements
834. The peremptive period for the annulment of voidable settlement agreements is four years
from the date of the settlement agreement pursuant to Art 178 CC: Rej, §36(5) {A1/5/31}.
This only applies to the grounds of voidability under the CC, since it is common ground
that there is no period of prescription/peremption for void legal transactions (on the Cs’
case under the CDC, the releases in the settlement agreements are void): Tepedino 1, §738
{C7/1T/278}; Rosenvald 1, §744 {C3/1T/289-290}; Rosenvald 2, §472 {C16/1T/206}.207
835. Prof Rosenvald agrees that Art 178 CC provides for a four-year period by which a party
can seek to annul a settlement agreement: Rosenvald 1, §741 {C3/1T/288}.208 However,
he states that the period starts from when an interested party “becomes aware of the defect that
grounds the annulment of the legal transaction”: Rosenvald 1, §741 {C3/1T/288}. Prof Tepedino's
evidence is that this is incorrect and contradicts the express wording of the CC (Tepedino
2, §354 {C18/1T/146}): the four-year period starts from the date of the contract.209
836. It is common ground that the four-year period cannot be interrupted or suspended, as per
Art 207 CC: Tepedino 1, §611 {C7/1T/239}; Rosenvald 1, §743 {C3/1T/289}.
207 Prof Tepedino highlights, however, that any claim to undo the economic effects from a null legal transaction is
subject to a 10 year limitation period as per Art. 205, CC: Tepedino 1, §738 {C7/1T/278}. Prof Rosenvald does not
seem to disagree with this: Rosenvald 2, §473 {C16/1T/206}.
208 Tepedino 1, §610 {C7/1T/239} & §735 {C7/1T/277}.
209 Art. 178(II) of the CC provides that the limitation period for claiming the annulment of a legal transaction is four
years, counted in the case of error or injury from the day on which the legal transaction was carried out.
278
M1.5 Factors affecting the enforceability and setting aside of the settlement agreements
837. LOI Issue 64 {A2/1/25-26} is concerned with various factors which BHP plead are
relevant to an assessment of Cs’ attempts to invalidate the settlement agreements,
including:210 (a) the terms of the settlement agreements reflect judicial decisions; (b) certain
categories of settlement agreement have been declared valid in recent court decisions; (c)
the party seeking to set it aside had the assistance of lawyers when agreeing the settlement
agreement; (d) the party seeking to set it aside has not made a successful application to the
Brazilian Court to have it set aside; and (e) the settlement agreement has been
ratified/homologated by the Brazilian Court. Each of these is considered below.
M1.5.1 The terms of the settlement agreements reflect judicial decisions
838. Cs’ allegations that the settlement agreements are voidable or void are unsustainable in
circumstances where the terms of the settlement agreements (in particular the Novel
System) reflect judicial decisions: Rej, §36(1) {A1/5/30}.
839. So far as concerns the relevant facts:
839.1. The Novel System was established by Judge Mario of the 12th Federal Court on 1
July 2020 in the Baixo Guandu Judgment: CA Judgment, §68 {H2/4/22}. Pursuant
to the Novel System certain categories of individuals (e.g. fishermen, farmers) are
entitled to judicially set amounts of compensation in respect of their losses caused
by the Collapse, based on a damages matrix: CA Judgment, §68(1) {H2/4/22-23}.
839.2. Affected persons making use of the Novel System were required to sign a
settlement agreement. The 12th Federal Court required that this agreement should
include a waiver of any claims abroad because it regarded these claims as
duplicative: {I3/33T/186}.
839.3. In subsequent decisions Judge Mario (a) extended the application of the Novel
System to new areas and (b) amended the damages matrix: CA Judgment, §70
{H2/4/24}.
210 Factor 64(ab) (“The party seeking to set it aside had the option, instead of accepting the settlement terms, of bringing Court proceedings
in respect of their claims”) is addressed in relation to whether the settlement agreements are adhesion contracts: see Section
M1.2 above.
279
840. Prof Tepedino states that if settlement agreements are in accordance with the parameters
established by court rulings, such settlement agreements enjoy a presumption of legality:
Tepedino 1, §§708-709 {C7/1T/270}. This presumption is relevant to Cs’ claims that the
releases are voidable (on the grounds of “lesion”, and specifically the allegation that they
were grossly disadvantageous) and to Cs’ Art. 51 CDC claims (that the releases are void
because they exclude or limit a supplier’s liability for defects and/or are
unfair/disproportionate).
841. Prof Rosenvald contends that the Novel System settlement agreements do not reflect a
judicial decision, i.e. he seeks to attack the premise of BHP’s points:211
841.1. He states that the Baixo Guandu Judgment did not design or set up the Novel
System (Rosenvald 1, §718 {C3/1T/279}) and that it did not specify the detailed
content or structure of the Novel System (Rosenvald 1, §719 {C3/1T/279}). This
is incorrect. As noted by the 4th Federal Court, “The court has outlined parameters for the
operation of the system” and “The decision which institutes the Novel System states a) the damage
caused; b the category of the right holder; c) the tariffed compensation for the specified category”:
Tepedino 1, §713 {C7/1T/271}.212 Moreover, court decisions continued to give
guidance as to how the Novel System should operate.213
841.2. Prof Rosenvald states that the 4th Federal Court issued a decision ordering the
closure of the Novel System: Rosenvald 1, §720(a) {C3/1T/279}. However, this
decision expressly did not affect those who had already entered into settlement
agreements: Tepedino 2, §440 {C18/1T/173}.214
842. Further, Prof Rosenvald states that void legal transactions cannot be confirmed or validated
under Art 169 CC: Rosenvald 1, §722 {C3/1T/280}. This misses the point: Cs’ claims of
nullity based on Art 51 CDC are said to operate on an open-ended standard of fairness. In
211 Prof Rosenvald also highlights a recent decision from 15 May 2024 handed down by the 4 th Federal Court – this is
addressed further below.
212 See also Baixo Guandu Judgment, {I3/33T/184}, which sets out the required structure for the online platform. In
addition, the CoA Decision at §68 {H2/4/22} describes the Baixo Guandu Judgment as “establishing the Novel System”
and states that “Judge Mario created a new and legally unprecedented system of redress available to individual victims”.
213 See e.g. Decision of the 4th Federal Court dated 1 June 2024: “Since its implementation, several court decisions have given
integrative interpretations and guidance on how the analysis should be made by the expert of the court [who deals with appeals under the
Novel System]” {C7/4.6T/2688}.
214 In addition, Prof Tepedino notes that: (a) it was only a first instance decision which is subject to an appeal; and (b)
there are decisions that confirm the validity of the Novel System: Tepedino 2, §440 {C18/1T/172}.
280
those circumstances, the fact that the settlement agreement reflects a legal judgment is
relevant to whether or not the release is void.
843. He also states that decisions establishing guidelines do not confer absolute immunity to
settlement agreements, and are binding “only on the claimant and the defendant making up that
procedural legal relationship”: Rosenvald 2, §471 {C16/1T/205}. But BHP do not argue that
settlement agreements are immune from review. Rather, BHP argue that Cs’ argument (that
the releases are unfair) is unsustainable since they are based on parameters set by the courts
under the Novel System.
844. BHP will invite the Court to conclude that the settlement agreements established by court
rulings, particularly the Novel System, enjoy a presumption of legality, particularly for the
purposes of Art. 157, CC and Arts 51(I) and 51(IV), CDC.
M1.5.2 Court decisions upholding categories of settlement agreements
845. Similarly, settlement agreements enjoy a presumption of legality where they have been
declared valid in court decisions, particularly the Novel System Agreements: Rej, §36(4)
{A1/5/31}.
846. An example of such a decision is a 20224th Federal Court Decision located at

{C7/4.6T/2711}, which rejected an argument that the requirement to sign a full and
definitive settlement agreement under the Novel System was illegal. The Court stated that
“companies need a minimum legal certainty that they will not be compelled to pay the losses resulting from
the accident twice” and that “this is a widely accepted practice” {C7/4.6T/2715}.215
847. The same points as those set out above apply here: a presumption of legality applies to
these settlement agreements (including in response to the claims that the settlement
agreements are: (a) void under the CDC (because they are unfair and/or disproportionate);
and (b) grossly disadvantageous (for the purposes of Art. 157 CC): see §§844 above.216
215 The same was said in relation to a prohibition of compensation claims being made in a foreign country: “There is no
illegality in the decision in this aspect…” {C7/4.6T/2716}. ]
216 See Tepedino 1, §733 {C7/1T/276}. Prof Rosenvald states that such a declaration of validity does not prevent the
compensation agreements from being questioned later: Rosenvald 1, §739 {C3/1T/287-288}. Prof Tepedino does not
disagree with this but indicates this would be in exceptional cases: Tepedino 2, §§443-445 {C18/1T/174}.
281
848. BHP will therefore invite the Court to make a similar finding to §844 above where
settlement agreements have been declared valid in court decisions.
M1.5.3 Legal assistance / advice
849. In response to Cs’ claims that the releases are voidable under the CC and/or void under
the CDC BHP plead that Cs who signed settlement agreements were assisted by lawyers:
Rej, §38(2) {A1/5/32} & §38A(4)(b)(vii) {A1/5/34}.
850. As explained at §352 above, any individuals seeking relief under the Novel System had to
be (and were) assisted by a lawyer: Reply, App. A, §5.1 {A1/4/1}. Moreover, under the PIM
system, many applicants would also have been assisted by lawyers (this became mandatory
when the PIM system moved online).217 The factual issue of which Cs were so assisted is
not for this trial.
M1.5.3.1 Impact on CC voidability arguments
851. Prof Tepedino’s evidence is that where a party is assisted by a lawyer, there is a presumption
of legality, as the assistance would reinforce the absence of a defect of will such that a claim
of error, wilful misconduct or lesion is unlikely to succeed: Tepedino 1, §§576-577
{C7/1T/227}, §608 {C7/1T/239}; Tepedino 2, §445 {C18/1T/174}.218
852. Prof Rosenvald’s response is that a lawyer’s assistance “does not exclude the possibility of defects
of will” while admitting it “can help to avoid defects”: Rosenvald 2, §§448-449 {C16/1T/195-
196}.
M1.5.3.2 Impact on CDC voidness arguments
853. Prof Tepedino states that it is not possible to claim a misunderstanding or ignorance as to
the terms of a settlement where a contracting party is assisted by lawyers: Tepedino 1,
§674(b) {C7/1T/259}; Tepedino 2, §§400-401 {C18/1T/160}. This has implications for
assessing Cs’ claims under Arts 51 and 46, CDC, given that these provisions will not be
217 Reply, Annex A, §7.2 {A1/4/4}.

218 See also Baixo Guandu Judgment {I3/33T/16} (“…following awareness of the damage matrix established in this decision,
the affected party, aided and represented by his/her respective lawyer, can decide whether (or not) to adhere to the new indemnity
system, with all the legal consequences arising from this.” (emphasis in original)) and {I3/33T/185} (“Evidently, the adhesion by
the affected party to the damage matrix established in this decision, despite all the flexibility undertaken, brings legal consequences, hence I
believe to be absolutely essential that such affected party, at the time of adhesion (and throughout Phase 2), be represented/assisted
by a lawyer, for proper legal advice.” (emphasis in original).
282
engaged where a party has the opportunity to understand the terms of the contracts they
agree to: see §§822, 825 and 828-831 above.
854. Prof Rosenvald accepts that a lawyer’s assistance “in theory” can contribute to a party’s better
understanding of the terms: Rosenvald 2, §412 {C16/1T/177-178}.219 However, Prof
Rosenvald also states that there is no case-law or doctrinal support for Prof Tepedino’s
view, emphasising that each situation should be considered on its own facts: Rosenvald 2,
§448 {C16/1T/195}. That is incorrect. For example, as noted in a decision dismissing
various challenges to the Novel System, the presence of a lawyer “aims to preserve the right of
the affected party” in order to provide “the technical and professional clarifications necessary for the
understanding of its exact terms” {I3/40T/6}.220
855. Prof Rosenvald also argues that “it is essential to understand how consumer protection extends to these
agreements, regardless of the presence of a lawyer”: Rosenvald 2, §425 {C16/1T/187}. Prof
Tepedino has not had the opportunity to respond to this point but it is noted that Art 46
CDC deals with providing a consumer the opportunity of having prior knowledge of a
contract’s content and understanding its meaning and scope: if a lawyer assists in achieving
that aim that must be relevant.
856. Prof Rosenvald’s second report refers to a court decision which, in considering Renova’s
framework by which damage to infrastructure would be compensated, rejected the
proposed requirement of the appointment of a lawyer or legal representative before
individual agreements could be executed on the grounds that such a requirement would be
unconstitutional: Rosenvald 2, §451 {C16/1T/196}; NR-2C/177-8 {C16/1T/177}. It
should be noted that in the same decision the public defenders present at the hearing
undertook to ensure that the Public Defender’s Office would be available to those who did
not have their own lawyers (NR-2C/178 {C16/1T/178}), underscoring the value legal
assistance can provide. In any event, the decision does not undermine Prof Tepedino’s
position where lawyers in fact assisted Cs.
857. For the foregoing reasons BHP will invite the Court to conclude that where the settlement
agreements were agreed with the assistance of a legal representative there is a presumption
219 See also Tepedino 1, §608 {C7/1T/239}, where Prof Tepedino states that a party with legal assistance will be “duly
advised and, therefore, informed regarding the content of the settlement”.
220 See also {C3/7.2T/787}: “…the lawyer has knowledge in the legal field and can help [claimants] achieve the most appropriate
compensation possible,.” See further the references in FN 218 above.
283
that: (a) the relevant Cs had an opportunity to understand the terms of the agreement in
accordance with Art. 46, CDC; and (b) the settlement agreements do not breach Arts. 51(I)
or (IV), CDC.
M1.5.4 Party seeking to set it aside has not made a successful application to the Brazilian
Court to have it set aside
858. It appears to be common ground that, if a C has filed a claim to invalidate a settlement
agreement and it was unsuccessful, that decision produces material res judicata effects and
so the same claim cannot be addressed again: Tepedino 1, §719 {C7/1T/273}. This seems
to be agreed by Prof Rosenvald, at least in principle: Rosenvald 1, §728 {C3/1T/282-
283}.221 BHP will invite the Court to make such a finding at this stage.
M1.5.5 Relevance of the settlement agreement having been ratified/homologated by the

Brazilian Court
859. The allegation that settlement agreements can be set aside or said to be void is unsustainable
in circumstances where the settlement agreement has been ratified/homologated by the
Brazilian Court: Rej, §36(3) {A1/5/31}.
860. It is common ground that settlement agreements can be ratified by a judge, pursuant to Art.
487, III, (b) CPC222: Rosenvald 1 §623 {C3/1T/239-240}; Tepedino 1, §546 {C7/1T/217-
218}. All agreements under the Novel System have been ratified by the Brazilian Court; this
is one of the integral features of that system.
861. Prof Tepedino states that a ratified settlement agreement may either produce formal res
judicata (where the judge only carries out a formal review of the regularity of the settlement
agreement) or material res judicata (where the judge examines the merits of the settlement
pursuant to Art. 487III (b) of the CPC). In the case of formal res judicata, the settlement
agreement is presumed to be legal. In the case of material res judicata, the only ground by
which settlement agreement can be challenged is by challenging the judgment ratifying the
agreement by way of Art. 966 of the CPC: Tepedino 1, §§617-618 {C7/1T/242} and §§725-
221 Prof Rosenvald suggests that res judicata would only apply where “the parties and the cause of action” are the same:
Rosenvald 1, §728 {C3/1T/282-283}. However, as already indicated in §799.2 above, the discharging effect of
settlement agreements can benefit non-parties who were jointly and severally liable with one of the signatories;
therefore res judicata would equally apply to any party who were jointly and severally liable with one of the signatories.
222 Art. 487 of the CPC provides in relevant part that “There is resolution on the merits when the judge: […] III. ratifies: […]
(c) waiver of the right to claim put forward in the action or counterclaim.”: {I1/3/7}
284
726 {C7/1T/274}.223 This appears to be common ground: Rosenvald 1, §§730-731
{C3/1T/284}; Rosenvald 2, §375 {C16/1T/160}, §459 {C16/1T/200} & §463
{C16/1T/201-202}.224 Cs do not allege that any decisions ratifying settlement agreements
should be set aside.
862. In the case of formal res judicata, BHP will invite the Court to make a similar finding to
§§847-848 above where settlement agreements have been declared valid in court decisions.
In the case of material res judicata, BHP will invite the Court to make a finding that the
settlement agreements are not open to challenge at all.
M1.6 Interpretation of Settlement Agreements
863. Assuming, as BHP contend, that the settlement agreements are valid, the next question is
to consider their effect. This is a question of interpretation of each (type of) settlement
agreement. Principles governing the proper interpretation of contracts and, specifically,
settlement agreements, are summarised below.
864. As a contract, a settlement agreement is subject to contractual principles, including objective

good faith,225 private autonomy, contractual balance, and social function : JES, p. 2
{C1/4T/2}.226 Prof Tepedino also refers to the principle of the binding force of contracts,
or pacta sunt servanda, which Prof Rosenvald recognises in his second report: Tepedino 1,
223 Art. 966 CPC provides for limited grounds by which a judgment can be vacated. There is a peremptive period of 2
years to do so as per Art. 975 (Tepedino 1, §726 {C7/1T/275}; {I1/3/19}).
224 Prof Rosenvald says, citing STJ case law, that a decision that which merely formally ratifies an agreement is not res
judicata: Rosenvald 1, §§729 {C3/1T/283} & 735 {C3/1T/286}. As to the first case cited, it is clear the court was
referring to material res judicata, and the decision is consistent with Prof Tepedino’s approach: 1.294.290/MS
{C3/7.1T/116} (“Thus, given that the basis of this action for rescission is an offence against res judicata – here considered to be res
judicata in material terms”). As to the second case cited, there is no suggestion in that case that the settlement agreement
was even ratified: 1586386 ES {C3/7.1T/151}.
225 Both Profs Rosenvald and Tepedino refer to the principle of good faith but to emphasise different points. Prof
Tepedino emphasises that for a claimant to bring a claim that has already been settled violates the principle of objective
good faith: Tepedino 1, §638 {C7/1T/248}; Tepedino 2, §347 {C18/1T/143}. Prof Rosenvald acknowledges this
principle in his second report but cautions that a claim that a settlement agreement is void or a claim outside the scope
of the discharge would not violate this principle: Rosenvald 2, §364 {C16/1T/156-157}. Prof Rosenvald emphasises
good faith as an interpretive provision for the purposes of preventing malicious interpretation and abuse: Rosenvald
1, §570 {C3/1T/219-220}; Rosenvald 2, §33 {C16/1T/17}. Prof Rosenvald also refers to Art 478 CC to indicate that
contracts can be terminated if the performance of one of the parties becomes excessively onerous (Rosenvald 1, §570(f)
{C3/1T/220} – however, that would only apply to long-term contracts, which do not apply to the settlement
agreements (Tepedino 2, §§360-361 {C18/1T/147}).
226 As to how these principles are considered together, Prof Rosenvald states in his first report that “…there has been a
qualitative reduction in the autonomy of will in relation to contracts, with the declared purpose of protecting the most vulnerable contracting
parties” (Rosenvald 1, §563 {C3/1T/216}). This observation is made without any supporting authority or examples.
285
§540(i) {C7/1T/214}; Tepedino 2, §330 {C18/1T/136-137}; Rosenvald 2, §362
{C16/1T/156}.
865. These principles are discussed in considerable detail in the reports.227 The Court is invited
to focus on the summary at Tepedino 1, §540 {C7/1T/214-216}228 and the following CC
provisions:
865.1. Art 112: “In declarations of will, more heed shall be given to the intention revealed therein than
to the literal meaning of the text” {I1/2/6};
865.2. Art 113: “Legal transactions shall be interpreted in conformity with good faith and the practice
of the place in which they are made” {I1/2/7};
865.3. Art 421: “contractual freedom shall be performed within the limits of the social purpose of the
contract”. Art. 421-A provides in part that “contractual review will only occur on an
exceptional and limited basis” {I1/2/30}.
866. Literal, systematic, and teleological interpretation methods applied to written laws229 also
apply to the interpretation of contracts: Tepedino 1, §554 {C7/1T/220}.230
M1.6.1 Restrictive interpretation of settlement agreements
867. Pursuant to Arts 114 and 843 CC, waivers and settlement agreements must be interpreted
“restrictively”: Reply, §44C {A1/3/30}; Rej, §38C {A1/5/35}. Prof Tepedino states that a
restrictive interpretation of a settlement agreement means that provisions cannot be
extended to encompass a subject matter different from what was stipulated: Tepedino 1,
§581 {C7/1T/230}. However this does not preclude the effectiveness of a broad discharge
clause: Tepedino 1, §582 {C7/1T/230}.231
868. Prof Rosenvald indicates that as a result of Art 843 “the central points of a transaction are not
allowed to be expanded to include autonomous factors or to attribute thereto any effects unlimited in time”:
227 Tepedino 1, §§550-559 {C7/1T/219}; Tepedino 2, §§340 {C18/1T/144-145}, 342-344 {C18/1T/144-147}, 347
{C18/1T/147-148}, 355-358 [C18/1T]; Rosenvald 1, §§563-596 {C3/1T/216-229}; Rosenvald 2, §§30-34
{C16/1T/16-17}, 362-368 {C16/1T/156-158}.
228 Prof Rosenvald states his agreement “that the principles mentioned by Tepedino… are relevant to contract law in general
terms…”: Rosenvald 2, §368 {C16/1T/158}.

229 See Annex 6 (Brazilian Law Sources and Court System).
230 It is not clear whether Prof Rosenvald disagrees with this approach: see Rosenvald 2, §378 {C16/1T/162}.
231 See also Tepedino 2, §332 {C18/1T/137}. It is agreed that a discharge can be full or partial: JES, p. 2 {C1/4T/2}.
286
Rosenvald 1, §611 {C3/1T/234}. This is unclear. In response Prof Tepedino notes that a
restrictive interpretation under Art 843 does not change the scope of the discharge clause
agreed between the parties: Tepedino 2, §336 {C18/1T/138}.232
869. Prof Rosenvald also indicates that if the damage was not known at the time of the
conclusion of a settlement then the damage cannot be deemed to have been settled, in light
of the restrictive interpretation rule: Rosenvald 1, §619 {C3/1T/237-238}.233 Prof
Tepedino disagrees, noting that a discharge can cover future effects of the same harmful
events, but not new future harmful events which would give rise to separate claims:
Tepedino 2, §341 {C18/1T/140}.
M1.6.2 Interpretation of adhesion contracts
870. Art 423 CC provides that “[w]hen there are ambiguous or contradictory clauses in a contract of adhesion,
the interpretation most favourable to the adhering party shall be adopted”: {I1/2/3}. The more
favourable interpretation is limited to ambiguous or contradictory clauses and does not
extend to all the other clauses in the contract: Tepedino 1, §§652-653 {C7/1T/252}. Prof
Rosenvald says that “if there is any doubt about the scope of a waiver… the clause will be interpreted in
favour of the adhering party”: Rosenvald 1, §604 {C3/1T/232-233}. Prof Tepedino says in
response that it is not sufficient for there to be “some doubt” about the content of a contract
(for example raised by a party in litigation), but effective ambiguity or contradiction:
Tepedino 2, §§363-364 {C18/1T/148}.234
M1.6.3 If the CDC applies
871. If the CDC applies, Art 47 provides that “[c]ontractual clauses shall be interpreted most favourable
to consumers”.
232 That said, Prof Tepedino clarifies that under a restrictive interpretation where a settlement agreement only
discharges claims relating to moral damages, that discharge would not apply to material damages, and vice versa:
Tepedino 2, §§336 & 338 {C7/1T/229-230}.
233 See also Rosenvald 2, §373 {C16/1T/159}. In support of this view Prof Rosenvald highlights a recent decision
from 15 May 2024 handed down by the 4th Federal Court: Rosenvald 1, §721 {C3/1T/280}. To be clear, this is a case
relating to PIM (see {C3/7.2T/770} and merely held that entering into the Novel System did not eliminate entitlement
to compensation under PIM.
234 The implications of this point may be somewhat overstated. As indicated above, the parties already agree that
settlement agreements are to be interpreted restrictively (Art 843 CC). In such circumstances, it is not clear how the
application of Art 423 CC would affect the interpretation of the contract. The experts do not address whether there is
a material distinction between the impacts of Arts 423 and 843 CC on contractual interpretation.
287
872. Prof Tepedino explains that the provision can only apply to ambiguous clauses, as otherwise
the application of Art 47 CDC would have the effect of modifying the agreed upon terms
without limitation: Tepedino 1, §§676-680 {C7/1T/260}; Tepedino 2, §402
{C18/1T/163}. Prof Rosenvald argues Art 47 CDC applies even if there is no ambiguity in
the agreement: JES, Issue 63, p. 7 {C1/4T/7}; Rosenvald 1, §683 {C3/1T/264} & §692
{C3/1T/267]; Rosenvald 2, §§428-429 {C16/1T/188-189}.235
873. Prof Rosenvald fails to explain whether there is a logical limit to his view that contracts
should be interpreted in favour of consumers in all circumstances. Moreover, elsewhere in
his reports Prof Rosenvald approaches Art 47 CDC in a similar manner to Prof Tepedino.236
874. Cs also argue that pursuant to Art 47 CDC releases in the settlement agreements only extend
to “the specific head of damages that has been expressly indemnified by the relevant settlement agreement”:
Reply, §44A.5 {A1/3/30}. There is no doctrinal or jurisprudential support for Cs’ position:
Tepedino 2, §336 {C18/1T/138}. Further, Art 46 CDC does not operate to change the
content of a broad discharge clause.
M2. The effect of the Sample Agreements
875. LOI Issue 65 {A2/1/26} addresses whether any of the claims against BHP are precluded
by reason of Cs having entered into any of the sample settlement agreements with Renova,
Samarco, BHP Brasil, Vale and/or through the Novel System. The Sample Agreements are
set out at {I3/79}, {I3/80T}, {I3/81T}, {I3/82T} and {I3/83T}.
876. This section brings together the principles set out above and summarises BHP’s position
on the proper meaning of the Sample Agreements.
235 Prof Rosenvald adds, “Even in clauses that are well-written, where there are two equally possible meanings, the interpretation will
always be the one more favourable to the consumer…”: Rosenvald 1, §689 {C3/1T/265-266}. This is a bad point: if the clause
is well-written, there will not be “two equally possible meanings”. As Prof Tepedino says, if there are two possible meanings
in a contractual clause, there is ambiguity: Tepedino 2, FN 202 {C18/1T/161}.
236 See Rosenvald 1, §§686 {C3/1T/264-265} (“…when there is a gap or uncertainty in the interpretation of a consumer contract,
the interpretation must be in such a way that benefits the consumer…”) & 696 {C3/1T/269} (“Therefore, in consumer relationships,
‘when in doubt, the clauses of adhesion contracts must be interpreted in the way most favourable to the consumer. This is in line with the
normative statement of Article 47 of the Consumer Defence Code…’”); Rosenvald 2, §437 {C16/1T/191} (“This principle applies
mainly in cases of doubt or ambiguity…”).
288
M2.1 Are the Sample Agreements adhesion contracts?
877. As indicated above at §796.1, Prof Tepedino’s view is that settlement agreements cannot
be adhesion agreements because (a) the concessions granted by the parties are mutual (and
therefore presume negotiation); and (b) Cs could always choose to bring a claim in the
courts so they had the option of whether to enter into the settlement agreement.
878. Prof Rosenvald suggests that the Sample Agreements are “consistent with the elements
characterising an adhesion contract” in that the contracts are “virtually identical” and the clauses
are formulated at a stage prior to negotiation: Rosenvald 1, §682 {C3/1T/263-264};
Rosenvald 2, §412 {C16/1T/177-178}, §§418-419 {C16/1T/180-181} & §§422-423
{C16/1T/185-186}. But:
878.1. this trespasses beyond the limits of proper expert evidence since Prof Rosenvald
purports to give evidence on an issue of mixed law and fact (see LOI Issue 66(b)
& 67 {A2/1/27});
878.2. The Sample Agreements contain language reiterating that Cs entered the contract
out of their own free will and had the full capacity to negotiate and/or
agree/disagree with the terms;237
878.3. As noted in §797.2 above, it is not accepted that satisfaction of Prof Rosenvald’s
criteria are sufficient to determine an adhesion contract. Indeed as noted by the STJ
in 1.988.894/SP the use of standardised clauses only reflects a matter of adhesion
if the party “has merely adhered to the instrument, without actually accepting its clauses”: NR-
1C/285 {C3/7.1T/285}, 290 {C3/7.1T/290} & 309 {C3/7.1T/309}. In
circumstances where (a) agreements under PIM resulted from a mediated outcome;
and (b) signatories to agreements under the Novel System had the benefit of the
assistance of a lawyer to explain all of the terms, the signatory would have actively
accepted the terms of the Sample Agreements such that they are not adhesion
contracts; and
237 See e.g. Agreement #2, §7 {I3/79/18}; Agreement #3, §10 {I3/79/31}. Moreover, the courts administering the
Novel System indicated that participation in the programs administered by Renova is entirely optional: TTAC, §34(1)
{C3/7.2T/521}; Baixo Guando Judgment {I3/33T/16} (“Here we are dealing with… a new indemnification policy, through
which the affected parties – covered by the principle of autonomy of will – can freely decide whether or not they wish to adhere
to it.” (emphasis in original)).
289
878.4. Applying Prof Tepedino’s criteria, these are not adhesion contracts (as there is no
absence of an alternative for the acquisition of the intended product or service,
given that they could always bring a claim).
M2.2 Whether any of the Sample Agreements are void
879. As explained at §803 above, Cs’ allegations that the settlement agreements are voidable
under the CC are not to be addressed in this Stage.
880. As for Cs’ allegations that the settlement agreements are void for contravention of Arts 51
and/or 46 of the CDC, these are unparticularised, both in the pleadings generally and in
relation to the Sample Agreements. BHP will address Cs’ case on the nullity of the Sample
Agreements should it be developed at trial.
881. In any event:
881.1. Chapter VI CDC generally, and Art 51 CDC specifically, do not apply to the Sample
Agreements. See §§781-793 and 816-819 above.
881.2. The Sample Agreements under the Novel System cannot be said to be unfair or
disproportionate given they reflect judicial decisions and/or have been approved
by the courts. See §§838-848 above. This concerns Agreements ##1 {I3/79/1}
and 1A {I3/80T}.
881.3. The Sample Agreements cannot be said to violate Arts 46 and 51 CDC in
circumstances where in both PIM and the Novel System the relevant Cs would be
made aware of the terms prior to execution of the settlement.238
881.4. The Sample Agreements cannot be said to violate Arts 46 and 51 CDC where the
signatories have been advised by lawyers. See §§849-857 above. This reflects
Agreements ## 1 {I3/79/1}, 1A {I3/80T}, 2 {I3/79/12}, 4 {I3/79/37}, 6
{I3/79/52}, 7 {I3/79/60}, 8 {I3/79/78}, 9 {I3/79/91}, 10 {I3/79/102}, 14A
{I3/82T}, and 15A {I3/82T}.
238See e.g. {C16/7T/362}; {C16/7T/364}; {C16/7T/507}; {C16/7T/508}. In addition, under PIM there was a
seven-day cooling-off period ({C16/7T/366}) and for the Novel System a two-day cooling-off period {C16/7T/510}.
Furthermore, one of the Sample Agreements provided for a cooling off period of ten days. See Agreement #7 (§9)
{I3/79/67}.
290
M2.3 Construction of the Sample Agreements
882. The Sample Agreements all contain discharge clauses which vary in their language. They
can be grouped as follows:239
882.1. Broad discharge clauses which expressly waive claims to all damages, losses and/or
claims relating to the Collapse. This applies to Agreements #1 {I3/79/6}, #4 (§§1,
5) {I3/79/40-41}, & #15B (§2) {I3/83T/1} (“Broad Clauses”).
882.2. Discharge clauses similar to the Broad Clauses but with carve-outs (i.e. for future
damages) (“Broad Clauses with Exceptions”). This applies to Agreements #3
(§§1, 7) {I3/79/29-31}, #5 (§4) {I3/79/48}; 1A {I3/80T}.
882.3. Discharge clauses which are expressly limited in scope, e.g. to “the damage indemnified
in this Settlement Instrument” (“Limited Clauses”). This applies to Agreements #2
(§§1 & 5) {I3/79/16-17}, #7 (§§1 & 6) {I3/79/64-66}, #10 (§23) {I3/79/108},
#14A (§§1, 5) {I3/81T/2-5}, #15A (§§1, 6) {I3/82T/2-3}. Agreements ##8 (§6)
{I3/79/81} and 9 (§5) {I3/79/94} also fall into this category because the releases
in those agreements are expressly limited to moral damages.
883. The effect of the Sample Agreements across these categories is straightforward:
883.1. Cs who agreed to the Broad Clauses have waived all claims in this action.
883.2. Cs who agreed to the Broad Clauses with Exceptions have waived all claims save
for the carve-outs contained in the particular release.
883.3. Cs who agreed to the Limited Clauses have only waived claims relating to the heads
of damages which were indemnified under the release.
M3. Conclusion
884. For the foregoing reasons the Court will be invited to determine that: (a) the CDC does not
apply to the settlement agreements (alternatively, the releases in the Sample Agreements are
not void or non-binding under the CDC); (b) the Sample Agreements (or any settlement
239 Agreement #6 {I3/79/52} is the settlement of a lawsuit and provides at §3 {I3/79/52} a “full, general, absolute, and
irrevocable discharge on the subject matter of the request”. The original claim is not in evidence, and in those circumstances the
scope of that release cannot be determined.
291
agreements for that matter) are not adhesion contracts; (c) the principles by which any
arguments that the settlement agreements are voidable under the CC should be considered
are set out in §§808-811, 844, 847-848, 851, 858 and 862 above; and (d) the effect of the
releases in the Sample Agreements are set out in §883 above.
N. MUNICIPALITIES’ STANDING TO SUE
885. Finally, there is the matter of Cs who are Municipalities, whose claims constitute a
significant proportion of the damages sought in these proceedings. 240
886. BHP contend that the Municipalities’ claims should be dismissed as they do not have the
constitutional capacity to bring proceedings abroad: their bringing of these claims in the
Courts of England and Wales constitutes an act exclusive to the Federal Government, as
representative of the Federative Republic of Brazil under Art 21(I), FC, namely a waiver of
immunity from jurisdiction and/or establishing a legal relationship with a foreign State: Def,
§51 {A1/2/23-24}.241
887. Under Brazilian law, Municipalities can only bring claims abroad through or with the
Federal Republic of Brazil. That is what was done in the case of Federal Republic of Brazil
v Durant International Corporation [2015] UKPC 35, [2016] AC 297: see §1 {J2/31/8},
“The effective plaintiff is the Municipality of Sao Paulo… The Federal Republic of Brazil is nominally a
plaintiff because its Constitution requires it to be a party to any action brought outside Brazil by a Brazilian
public authority”.242
888. Cs plead in response that (a) Art 21(I), FC is not engaged (alternatively the Municipalities
can waive immunity from jurisdiction); and (b) the Municipalities have the capacity to
commence proceedings abroad through the express powers and objects set out in Arts 23
& 30 FC and such ancillary powers implied therein: Reply, §45 {A1/3/32}.
240 According to Cs’ solicitors’ own estimates, the Municipalities’ claims are estimated to be worth £7.2 billion:
{PE33/6/421}.
241 BHP are not pursuing their pleaded case that the Municipalities may only submit to a foreign jurisdiction with the
authorisation of the Federal Senate pursuant to Art. 52(V), FC: Def, §51(4). The experts agree that the Federal Senate
does not hold this power: Tepedino 1, §769; Sarlet 1, §457. However, Prof Tepedino explains that: (a) the fact that
Municipalities cannot conduct foreign operations of a financial nature without authorisation of the Federal Senate is
indicative of the constraints faced by Municipalities under the FC (Tepedino 1, §§768-770); and (b) the underlying
rationale of Art. 52(V), FC is to prevent government entities from taking steps that may ultimately result in the waiver
of Brazil’s sovereign rights (Tepedino 1, §771). Prof Sarlet does not respond to these points: Sarlet 2, §138.
242 See also Brazil v Durant [2012] JRC 211, §2 {J2/29}; Brazil v Durant [2013] JCA 071, §1 {J2/30}.
292
889. There appears to be no issue on the pleadings between the parties that this issue turns on
Brazilian law: i.e. if BHP are right about the content of Brazilian law and the Municipalities’
lack of capacity, then their claims fall to be dismissed. Standing is a question for the lex fori,
i.e. in this case English law,243 but where the party is a legal person established under foreign
law, its capacity to bring proceedings is to be determined by that foreign law (in this case
Brazilian law).244
890. On the Brazilian law issue, BHP’s expert is Prof Tepedino who deals with it in Tepedino 1,
Part V(D) {C7/1T/97-100} and Tepedino 2, Part V(D) {C18/1T/172}. Cs’ expert is Prof
Sarlet who deals with it in Sarlet 1, Part 2 {C4/1T/197} and Sarlet 2, Part 2 {C15/1T/42}.
891. BHP’s opening submissions proceed as follows:
891.1. First, a summary of the relevant provisions of the FC.
891.2. Second, the commencement of foreign proceedings constitutes: (a) a waiver of

Brazil’s sovereign immunity; and/or (b) a legal relationship with a foreign State.
891.3. Third, there is nothing in the FC or Brazilian law which grants Municipalities the
capacity to bring claims abroad.
N1. The Constitutional Framework
892. The Federative Republic of Brazil is composed of the Federal Government (known as the
“Union”), States, Municipalities, and the Federal District: Art 18, FC. They are all
understood to be “autonomous” under the FC. Pursuant to Art 41, CC, they are also all
designated as legal entities for the purposes of domestic public law.
893. Each of these entities in Brazil has specific competences assigned to them by the FC:
Tepedino 1, §743 {C7/1T/288}.
894. The Federal Government has exclusive competence to “maintain relations with foreign states and
participate in international organizations”: Art 21(I), FC {I1/1/9}. That power is exercised
exclusively through Brazil’s President: Art 84(VII), FC. The experts agree that these
243 Dicey, Morris & Collins on the Conflict of Laws (16th Ed.) at §4-017 {J2/26}.
244 Bumper Development Corp v Commissioner of Police [1991] 1 WLR 1362 (C.A.) {J2/3}; Ukraine v Law Debenture
Trust Corp Plc [2023] UKSC 11, [2024] A.C. 411 at 443B {J2/19} (“…foreign local government bodies are creations of the law
of the state in question and are therefore subject to that law of their creation.”) and 443C (“It is natural that in each case the law which
has created the entity should be relevant to a determination of its capacity”).
293
provisions reflect that only the Federal Government exercises the Federative Republic’s
rights of sovereignty under international law: Tepedino 1, §§744-745 {C7/1T/289}; Sarlet
1, §429 {C4/1T/198}. Prof Tepedino states that it necessarily follows that the Federal
Government has the exclusive right to waive any such rights: see below.
895. The Municipalities’ powers are in Art 30, FC and include autonomy in legislating upon
matters of local interest and promoting the protection of local historic and cultural heritage.
896. The Federal Government and the Municipalities (along with the states and the Federal
District) also have shared competence over matters provided in Art 23, FC, including
protecting the environment, and preserving the forests, fauna and flora.
897. The experts agree that Municipalities themselves do not have sovereignty: Tepedino 1, §750
{C7/1T/292}; Sarlet 1, §429 {C4/1T/198}.
N2. Waiver of sovereign immunity and/or a legal relationship with a foreign state
N2.1 Waiver of Sovereign Immunity
898. According to Prof Tepedino, Municipalities cannot file legal actions abroad because to do
so would constitute a waiver of Brazil’s sovereign immunity from jurisdiction, in the sense
of subjecting themselves to the powers of the English Courts; because the Municipalities
benefit from, but are not the holders of, Brazil’s sovereign immunity, only the Federative
Republic can waive that immunity: Tepedino 1, §§755-756 {C7/1T/293}.
899. Prof Sarlet raises three arguments on this issue. The first point raised by Prof Sarlet is that
because the Municipalities do not have sovereignty, they do not have sovereign immunity,
and therefore there is nothing to waive: Sarlet 1, §§435-436 {C4/1T/201}; Sarlet 2, §114
{C15/1T/45}.
900. As noted, the experts agree that Municipalities themselves do not have sovereignty: §897
above. However, Prof Tepedino’s response to Prof Sarlet’s first point is that while the
Municipalities themselves are not sovereign, they benefit from the sovereign immunity of the
Federative Republic: Tepedino 1, §755 {C7/1T/293}; Tepedino 2, §455 {C18/1T/176}.245
245“In this way, the States, Municipalities and the Federal District, holders of autonomy, are covered by the Sovereignty of the Federal
Republic, represented by the Federal Union, in relations with other Sovereign States.” As for subnational states, see also: GT1-
294
901. Profs Tiburcio and Barroso (the latter now President of the STF) support Prof Tepedino’s
view in relation to sub-national states (GT-1EN/3732 {C7/4.8T/3732}):
“So, strictly speaking, it is not correct to say that member states [of Brazil] have immunity, because
they are not the holders of this benefit: what happens is that they benefit from the immunity of the
federal state, precisely because they are parts of it.
Thus, if the member state benefits, but is not the holder of the immunity, it cannot waive it246. The
same applies to diplomatic and consular agents, who enjoy immunity from jurisdiction, which cannot
be waived. Only the sovereign entity they represent can do this…”
902. The same logic would apply to Municipalities.
903. Prof Sarlet’s second point is that the Federative Republic itself does not enjoy immunity
from jurisdiction because that immunity does not apply to “acts of management” (or “jus
gestionis”) and the subject matter of this claim relates to acts of management: Sarlet 1, §§437-
442, 444-446 {C4/1T/202}.247
904. However, as Prof Tepedino explains (Tepedino 1, §§763-764 {C7/1T/296}; Tepedino 2,

§§474-475 {C18/1T/183}, the distinction between acts of management and sovereign acts
(“jus imperii”) is irrelevant here.248 That distinction determines whether a state can claim
immunity from jurisdiction when it is being sued: state immunity extends to sovereign acts,
but not acts of management (e.g., a purely commercial arrangement).249 But where a state
EN/3730 {C7/4.8T/3730} (“Immunity from jurisdiction, however, also applies to the political and administrative subdivisions of the
federal state… In Brazil, this statement derives from a constitutional basis: the Member State is an indissoluble part of the Federation
(CF, art. 1, header) and is therefore entitled to the benefit of immunity from jurisdiction.”); IWS-1B/41 {C4/5T/41}; the doctrine
of Clóvis Beviláqua (GT1-EN/3731-3732 {C7/4.8T/3731}); and Sullivan v State of Sao Paulo, 122 F.2d 355 (2d Cir.
1941) whereby the Brazilian Government maintained – and the US government accepted – that the subnational states
of São Paulo and Rio Grande do Sul (defendants to the action) enjoyed immunity from jurisdiction {J2/33}. As for
Municipalities, see GT1-EN/3731 {C7/4.8T/3731} (“In this sense, G.E. do Nascimento e Silva and Hildebrando Accioly teach:
The ‘immunity from jurisdiction also applies to simple political subdivisions of states; states of a federation, provinces, municipalities…”).
246 Here in a footnote the authors cite José Francisco Rezek, Direito Internacional Público [International Public Law], 1991,
p. 174: “Under no circumstances, therefore, does the beneficiary of the immunity have a right to waive it.”
247 Prof Sarlet analyses the matter from the perspective of Brazilian law jurisprudence. Of course, this distinction is
also recognised as a matter of UK law, see State Immunity Act, e.g. ss. 3-4 {J2/22/2-3}. Prof Tepedino for his part
does not disagree that Brazilian law considers the distinction between jus imperii and jus gestionis to determine whether
an act by a State has the protection of sovereign immunity: Tepedino 1, §762 {C7/1T/295}.
248 For the avoidance of doubt, even assuming one could apply the jus imperii/gestionis dichotomy to the subject matter
of claims brought by a State (rather than the orthodox analysis of applying the dichotomy to the actions of the State
for which it is being sued), it is not accepted that the Municipalities’ claims are such that they could be pursued by any
other private party (contra Sarlet 1, §437 {C4/1T/202}). See FN 261 below.
249 James Crawford, Brownlie’s Principles of Public International Law (9 th ed.) at p. 480 {J2/27/4}.
295
(or a part of the state) brings a claim in a foreign court, it necessarily submits to the
jurisdiction of that court, regardless of the subject matter of the claim. So, the issue in this
case is whether (under Brazilian constitutional law) that submission can only be done by
the Federative Republic, or whether it can be done by each entity of the Federal
Government, as representative of the Federative Republic; and that question does not turn
on the subject matter of the claim brought. As Prof Tepedino explains, the issue of the
Municipalities’ standing is the same regardless of the subject matter of the claim brought by
it.
905. Doctrine co-authored by the current President of the STF supports Prof Tepedino’s
position on this point (Tepedino 1, §764 {C7/1T/297}):
“As the Member State [i.e. member state of the Federative Republic of Brazil] cannot waive
immunity, it can never be in court abroad, regardless of whether the matter submitted to judicial review
concerns acts of management or acts of empire. (...) The Member State can never be a claimant before
a foreign judicial authority, whether it concerns matters of empire or management.”
906. There is a simple way to understand this point. But for the commencement of these
proceedings, the Municipalities had no relationship with the Courts of England and Wales.
They were not subject to their jurisdiction at all, whether in relation to the production of
documents, the payment of costs or otherwise. But once proceedings are commenced, they
do have that relationship and are subject to the Courts’ coercive powers. Immunity from
jurisdiction is the right not to be subject to the judicial power of another foreign state:
Tepedino 2, §462 {C18/1T/179}.250 This is lost by bringing proceedings in a foreign state:
Tepedino 2, §463 {C18/1T/180}.251 In such circumstances, the distinction between jus
imperii and jus gestionis of the underlying action does not come into play. The very act of
submission to a foreign jurisdiction is a sovereign act.252
250 See also James Crawford, Brownlie’s Principles of Public International Law (9th ed.) at p. 471 {J2/27/1} (“…state
immunity operates on twin bases. First, as an immunity ratione materiae, it is a direct inference from the equality and independence of
states. If organs of the forum state could decide on core questions pertaining to the functioning of a respondent state without its consent, the
respondent state’s sovereignty would be to that extent impugned.”)
251 See also James Crawford, Brownlie’s Principles of Public International Law (9 th ed.) at p. 479 {J2/27/3} (“Having
submitted to the jurisdiction of the foreign court by instituting proceedings, the state has no immunity from jurisdiction in respect of those
proceedings”); State Immunity Act, ss. 2(1) and 2(3)(a) {J2/22/2}.
252 Tepedino 2, §§464 & 461 {C18/1T/180} & {C18/1T/179}. See also GT-1-EN/3726 {C7/4.8T/3726} “…to submit
to foreign jurisdictional authority is to maintain a relationship with a foreign state and, regardless of the underlying issue in dispute, this in
itself is an act of empire that entails an option for subordination, since it means renouncing immunity, a prerogative inherent to sovereignty.”
296
907. In response to this, Prof Sarlet says that Prof Tepedino’s approach is “too fragile” and “aims
to bring the debate to a purely abstract level”: Sarlet 2, §115 {C15/1T/45}. He also criticises Prof
Tepedino’s approach for starting “from a conceptual definition that does not exist in the majority
scholarship specialising in the matter”: Sarlet 2, §123 {C15/1T/48}. He does not explain these
points further, nor does he actually respond to Prof Tepedino’s argument.
908. Finally, Prof Sarlet argues that the filing of a lawsuit before a foreign court would be a “tacit
waiver”: Sarlet 1, §§445 & 448 {C4/1T/205}. This is an odd point: it is not in dispute that
the effect of the Municipalities bringing these claims is to subject themselves to the
jurisdiction of this Court; the issue is whether they can do this. Prof. Sarlet does not explain
on what basis Municipalities could give such a waiver. As explained by Prof Tepedino,
Municipalities cannot waive what they do not possess: Tepedino 2, §470 {C18/1T/182}.253
N2.2 Filing of lawsuits abroad establishes a legal relationship with foreign States
909. Prof Tepedino also states that the filing of lawsuits abroad establishes a legal relationship
with foreign States, which is in the exclusive competence of the Federal Government, as
representative of the Federative Republic: Tepedino 1, §751 {C7/1T/292}. As explained
by Prof Tepedino, “submission to the foreign court, by itself, implies a relationship with a foreign
country”: Tepedino 2, §462 {C18/1T/179}. This view is supported by doctrine co-authored
by the President of the STF (GT1-EN/3726 {C7/4.8T/3726}): “The thesis that is claimed to
be the best here is that, regardless of the nature of the act discussed, the submission of one state to the
jurisdiction of another is in itself a form of relationship with a foreign state…”.254 It follows that if a
Municipality wishes to bring proceedings abroad it must be represented by the Federal
Government (as happened in the Privy Council case mentioned at §887 above): GT-
1EN/3729 {C7/4.8T/3729}.
910. Prof Sarlet says in response that Art 21(I) only relates to sovereign acts and not acts of
management (Sarlet 1, §451 {C4/1T/207} & §455 {C4/1T/209}) and that an action for
compensation for damages suffered by Municipalities is not a sovereign act (Sarlet 1, §§454-
455 {C4/1T/208}).
253 See further Baccus S.R.L. v Servicio Nacional del Trigo [1957] 1 Q.B. 438 (CA) at 471, 473 {J2/1/34}.
254 See further GT1-EN/3732 {C7/4.8T/3732} (“…submission to foreign jurisdiction, as plaintiff or defendant, is a form of
relationship with a foreign state for which the member state has no jurisdiction.”) and GT2-EN/1223 {C18/4.3T/1223}.
297
911. This point has already been addressed above in relation to the waiver of sovereignty. See
above.
N3. The Municipalities have no legal right to commence proceedings abroad
912. It is common ground that:
912.1. Municipalities are legal entities governed by internal public law: Tepedino 1, §747
{C7/1T/291}; Sarlet 1, §426 {C4/1T/197}; Sarlet 2, §108{C15/1T/43}.
912.2. Municipalities have autonomy: JES Municipalities, p. 2; {C1/1T/2} Tepedino 1,

§750, 758-759 {C7/1T/292}; Tepedino 2, §450 {C18/1T/175}; Sarlet 1, §427
{C4/1T/197}; Sarlet 2, §107 {C15/1T/43}.255
913. Prof Sarlet argues that Municipalities can file indemnity actions against private parties
abroad as this falls within their autonomy: Sarlet 1, §432 {C4/1T/199}. Prof Tepedino
disagrees, stating that the concept of autonomy refers to the acts performed by the relevant
federative entity internally (i.e. domestically, which is within the limits of the internal
division of competences under the FC): Tepedino 1, §753 {C7/1T/293}; Tepedino 2,
§§451-452 {C18/1T/175}. The Municipalities’ competence only has effects at the domestic
level (Tepedino 1, §758 {C7/1T/294}) and external, or international, acts can only be
performed by the Federative Republic of Brazil (Tepedino 1, §753 {C7/1T/293}).
914. Doctrine supports Prof Tepedino’s understanding of autonomy: e.g. Tepedino 1, FN 391
{C7/1T/288}256 & §745 {C7/1T/289}257 and Tepedino 2, FN 216 {C18/1T/175}258. Prof
Sarlet’s articulation of autonomy, that it includes “the exercise of their administrative competences
established in article 23 of the Federal Constitution” (Sarlet 1, §428 {C4/1T/197}) does not add
anything further.
255 This is reflected in Art. 18, FC: “The political-administrative organisation of the Federative Republic of Brazil comprises the
Federal Government, the States, the Federal District and the Municipalities, all autonomous, under the terms of this Constitution.”
256 Quoting Alexandre de Moraes et al., “Autonomy means the power to manage their own affairs within the competencies set by the
Constitution…”.
257 Quoting Carmen Tibúrcio, “…autonomy is a notion of internal law, which unfolds into three sub-concepts: (a) self-organization;
(b) self-government and (c) self-administration” and “…the distinction between sovereignty and autonomy remains clear. …the latter can
be defined as freedom within a pre-traced circle of competencies – defined by the Constitution…”.
258 Quoting Justice Gilmar Mendes of the STF: “The essence of municipal autonomy primarily contains (i) self-administration,
which implies decision-making capacity regarding local interests, without delegation or hierarchical approval; and (ii) self-government,
which determines the election of the head of the Executive Branch and the representatives in the Legislature”.
298
915. It is also common ground that Municipalities have standing to file actions under the CPC
and the CPA Law: Tepedino 1, §§748-749 {C7/1T/289}; Tepedino 2, §451 {C18/1T/170};
Sarlet 1 §433 {C4/1T/200}; Sarlet 2, §108 {C15/1T/43}. These laws are, of course,
necessarily limited to the Brazilian courts. Prof Sarlet does not suggest otherwise (nor could
he). It is also common ground that there are no legal provisions which expressly provide
for Municipalities to be able to commence lawsuits abroad: Sarlet 1, §432 {C4/1T/199};
Tepedino 2, §468 {C18/1T/181}.
916. Prof Sarlet argues that Municipalities can bring claims in foreign courts because there is no
express legislative provisions saying that Municipalities can only bring legal actions
domestically: Sarlet 1, §434 {C4/1T/201}; Sarlet 2, §128 {C15/1T/50}.259 However, this
point is irrelevant where the Municipalities are constitutionally prevented from bringing
foreign claims in the first place.
917. Prof Sarlet also argues that (Sarlet 1, §§430-431 {C4/1T/198}):
917.1. Municipalities have competence (along with the Federal Government, the States,
and the Federal District) to protect the environment, preserve forests, fauna and
flora, and (sole) responsibility to promote the protection of local historical and
cultural heritage.
917.2. Those competences/responsibilities have “no limitation” and as a result they

should be as “broad as possible” including the right to exercise them “before a
foreign justice system, if this is necessary to safeguard its interests and rights.”
918. However, as Prof Tepedino explains, the Municipalities’ competences are not without
limitation. The powers of the Municipalities should be read so as not to conflict with the
exclusive powers of any other branches of Government: Tepedino 2, §453 {C18/1T/177}.
919. In his second report Prof Sarlet emphasises that due to the constitutional competence to
protect the environment, it “makes it even more difficult to justify any limitation imposed on municipal
action” as Municipalities are “indirectly acting in defence of the interests and rights of its citizens” and
“When public resources are spent on repairing the damage caused by the private company, the Municipality
259Prof Sarlet’s reliance on access to justice as the status of a fundamental right (Sarlet 1, §434 {C4/1T/201}), is equally
unavailing. He relies on Art. 5, XXXV, FC which specifically preserves the right to the Judiciary’s review of any injury
or threat to a right: that is, access to the Brazilian Judiciary.
299
will lack the funds to provide basic services to the local population”: Sarlet 2, §112 {C15/1T/45}.260
This point will be explored further in cross-examination, but it should be noted that:
919.1. Prof Sarlet provides no authority as to why these policy interests prescribe a
particular interpretation of the FC that ignores the demarcation of responsibility
under the Constitution.
919.2. The competence to protect the environment is not exclusive to Municipalities, it is

shared with the Federal Government (see §896 above).
920. Finally, Prof Sarlet queries whether it is correct that private persons can litigate in foreign
courts whereas Municipalities cannot: Sarlet 2, §128 {C15/1T/50}. The query is not
understood: Municipalities are legal persons with limited capacity and, further, the actions
of Municipalities, as public actors, have implications for the state as a whole.261
N4. Conclusion
921. Based on the foregoing the Court should dismiss the Municipalities’ claims.
260 See also Sarlet 2, §113 {C15/1T/45}: “Another point to consider is that seeking compensation for damage suffered by the
Municipality in relation to an event that also affected people living or working there, as a community, corresponds to a legitimate local
interest, so that even from this angle the exclusion of the possibility of litigating before courts abroad is unreasonable.” Sarlet 2, §116
{C15/1T/46} is to similar effect.
261 Moreover, there are numerous aspects of the Municipalities’ claim where it is not clear that they are acting as “private”
parties given that they seek indemnification for, inter alia, amounts spent pursuant to their public law obligations as
well as lost tax revenue: MPOC, §§304.5 {A1/1/139} & 304.7-304.8 {A1/1/140}.
300

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IN THE HIGH COURT OF JUSTICE Claim No.

(1) MUNICÍPIO DE MARIANA

And the Claimants identified in the Schedules to the Claim Form

(1) BHP GROUP (UK) LTD

(2) BHP GROUP LTD

BHP’S WRITTEN OPENING FOR TRIAL

Shaheed Fatima KC Daniel Toledano KC

A1. The claims and BHP’s defence ....................................................................... 1

B. BHP, IRON ORE, BHP BRASIL AND SAMARCO ............................................... 9

B1. BHP ................................................................................................................. 10

C. BHP’S KNOWLEDGE: INFERENCE AND ATTRIBUTION .......................... 15

C1. Inferences ....................................................................................................... 15

D. THE DAM FAILURE: CAUSES OF THE COLLAPSE AND BHP’S ALLEGED

D1. Geotechnical Evidence .................................................................................. 32

E. BHP’S INVOLVEMENT IN AND KNOWLEDGE OF THE OPERATIONS

F. FUNDING / FACILITATION OF THE FUNDING OF THE OPERATIONS

F1. Capital Contributions to Samarco as required by Article 10.1 of the

G. RELEVANT DEVELOPMENTS POST-COLLAPSE ....................................... 120

H1. Brazilian Law Issues ................................................................................... 126

I. CORPORATE LAW CLAIM .................................................................................. 157

I1. Brazilian law issues ..................................................................................... 159

J. CIVIL CODE CLAIMS ........................................................................................... 180

J1. Article 186 claim .......................................................................................... 180

K. LICENSING ............................................................................................................ 219

K1. Brazilian licensing regime and law ............................................................ 221

L. LIMITATION ......................................................................................................... 228

L1. Insufficient Info Defence ............................................................................. 230

M. RELEASES .............................................................................................................. 263

M1. Relevant Brazilian law ................................................................................ 264

MUNICIPALITIES’ STANDING TO SUE ......................................................... 292

N1. The Constitutional Framework.................................................................. 293

A1. The claims and BHP’s defence

0.18 on 4 October 2024.

6 Gillespie, §40 {B1/4/14}: Beaven 1, §66 {B1/1/22}.

8 For example, see {F10/35/28}; {F11/221/15}; {F12/399/21}.

18.2. A very substantial number of Cs have compromised their claims by receiving

A2. The Stage 1 trial

10 The Named Individuals are addressed at §61 below.

B. BHP, IRON ORE, BHP BRASIL AND SAMARCO

B2. Iron Ore and BHP Brasil

Samarco Board only three times per year.

C. BHP’S KNOWLEDGE: INFERENCE AND ATTRIBUTION

45. Cs’ case on BHP’s knowledge is put on two bases:

47. There is no basis for any of these inferences.

C2.1 Applicable law

C2.4 Attribution of knowledge and conduct of the Named Individuals

C2.4.1 Whether BHP’s employees were their agents

Ms Torres: Def, §203A(3)(a) {A1/2/104}.

33 Mr Artaud, Mr Cardoso, Mr Corless, Ms Beck, Mr Dow, Mr Fernandes, Mr Fonseca, Ms Hood, Mr Lynch, Mr

C2.4.3 The position in relation to the other Named Individuals

C2.4.4 Attribution of knowledge of the Named Individuals

C2.4.5 Attribution of knowledge of Samarco Board directors and Samarco Board

C2.4.6 Attribution of conduct of the Named Individuals

D. THE DAM FAILURE: CAUSES OF THE COLLAPSE AND BHP’S ALLEGED

103.3. From February 2012 to October 2015, weekly reports;

103.5. From February 2013 to October 2015, monthly instrumentation reports.

D2. The Fundão Dam

D3. The cause of the Collapse

124.1. the failure and subsequent blocking of the Main Underdrain;