Piling Pelion on Ossa

Then the omnipotent Father with his thunder made Olympus tremble, and from Ossa hurled Pelion.

-Ovid

Channelling the spirit of Trafigura, is an interesting case decided by Mr Justice Turner by way of strike out application in the latter months of last year, that of In the matter of the Fundao Dam Disaster [2020] EWHC 2930 (TCC). In the last few days, the judge has refused permission to appeal and his judgment on that application can be found here: In the Matter of the Fundao Dam Disaster [2021] EWHC 146 (TCC)

Although it remains to be seen what the Court of Appeal, will make of any renewed application for permission to appeal, the case is worth considering as another example of the problems that large scale group litigation can run into, and how a particular issue, in this case, that of forum (as well as the complicating factor of parallel litigation overseas) can derail litigation which otherwise would appear to have a good degree of promise.

The facts of the case are indeed Olympian in proportion. As noted by the court:

1. On 5 November 2015, the Fundão dam in south eastern Brazil collapsed and over 40 million cubic metres of iron ore mine tailings were released into the Doce River. The consequences were catastrophic.

2. The polluting waste eventually found its way to the Atlantic Ocean over 400 miles away. It destroyed, damaged or contaminated everything in its path. Nineteen people died. Hundreds of thousands suffered loss. Entire villages were obliterated.

3. In these proceedings, about 202,600 individual, corporate and institutional claimants contend that the defendants are liable to compensate them for losses sustained as a result of the disaster.

4. The defendants not only deny liability but now seek to persuade the court, on four distinct grounds, that the case against them should be allowed to proceed no further. This judgment is my determination of those issues.

The principal issue was an allegation that the English proceedings were an abuse of process, due to parallel, though not identical proceedings in Brazil. Many of the claimants in the English proceedings, had already taken part, or were taking part in the Brazilian proceedings. These Brazilian proceedings thus raised a spectre which will be familiar to any lawyer: multiple proceedings before different judges, adjudicating upon the same facts and reaching different conclusions.

The volume of material deployed for the purposes of the application was huge: this is a perennial theme of large scale litigation. How often large scale cases truly require large scale deployment of material be that evidence or argument is an interesting debate.

Undoubtedly, fear of not taking a point, which might prove to be decisive can be part of the process, or a belief that it is possible to overcome a claim or defence, by a creeping forensic artillery barrage, so intense, that it must succeed.

But conversely, often the best arguments are the simplest, as a truly simple point can be almost impossible to gainsay. All lawyers ideally seek simplicity in formulating their case, though often it proves illusive. In the event, one gains the impression from the judgment that a lot of material and argument proved unhelpful to the court: 

5. The amount of documentary material which has been deployed by the parties to date is vast.

6. In particular, much of the evidence relates to the question of whether full and timely redress is available to these claimants in Brazil and what impediments stand in their way of achieving it. The following factors, among others, have played a part in explaining (but not wholly excusing) the quantity of material which the parties have chosen to deploy:

(i) The huge number of claimants;

(ii) The disparate nature of the claims which they bring;

(iii) The significant contrasts between Brazilian procedural law and the English Civil Procedure Rules;

(iv) The complex history of proceedings to date in Brazil and competing predictions as to their likely future.

7. These features, however, go only some way towards justifying the accumulation of huge swathes of documentation. The trial bundles comprise 2,085 items set out in 30,015 pages which have been “distilled” into no fewer than five core bundles. There are nine further bundles containing 127 authorities. The defendants’ skeleton argument was 187 pages long and was the product of the collective endeavours of three leading and four junior counsel. The claimants, not to be outdone, deployed a skeleton argument which was 211 pages long and, by the end of the hearing, had been supplemented incrementally by no fewer than 22 appendices the steady flow of which gave rise to a growing frisson of resentment on the part of the defendants. Submissions lasted for eight full days and have been recorded in a transcript which is about 1,200 pages in length. 

The judge gave himself the following direction on the law relevant to abuse of process:

76. From the above, I derive the following non-exhaustive propositions of particular relevance to this case:

(i) The hallmark of an abuse of process is a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process;

(ii) Although plainly a relevant factor, bad faith on the part of the party against whom the point is taken is neither a necessary nor sufficient condition for the finding of an abuse of process;

(iii) Litigants should not be denied the right to bring a genuine subject of
litigation before the court save upon a scrupulous examination of all the circumstances which leads the court to the conclusion that the claim should, nevertheless, be struck out;

(iv) Cases in which a claimant has already taken (or forgone) the opportunity to bring her claim in other proceedings may, depending very much upon the facts, properly be categorised as giving rise to an abuse of court whether as a standalone consideration or when taken into account with other material factors;

(v) The court is entitled (and indeed duty bound) to take into consideration the likely impact upon the business of the courts themselves in the event that the claims were permitted to go ahead;

(vi) The court must take a two stage approach. Firstly, it must address the question of whether or not an abuse has been clearly proved. If it has not, then, subject to its residual, free-standing case management powers, that is an end of the matter. If it has, then it must thereafter exercise its discretion in determining what, if any, procedural consequences should follow. There may be some cases in which it is plain that striking out is the only appropriate response.

The nub of the decision, was that the judge considered that as proceedings were already well established in Brazil, which would inevitably overlap substantially with any proceedings in England, in terms of the issues and remedies which would apply, the English proceedings were aptly to be described as an abuse of process:

86. Having closely considered the evidence relating to the issues likely to be adjudicated upon in both Brazil and England, I am satisfied that the risk of inconsistent judgments would be acute in this case in the event that these proceedings were permitted to go ahead in England.

89. The wasted time, costs and duplication of effort involved in advancing the same case simultaneously in the two jurisdictions would be considerable and liable to give rise to incompossible findings. It would take little creative imagination to foresee many similar issues arising of which this is only one example. This is a matter to which I will return in due course with respect to the Article 34 issue.

90. Furthermore, the prospect of attempting to manage the claims of over 200,000 claimants where such a high proportion of them are taking (or have taken, or reserve the right to take) steps to achieve compensation in Brazil for the same losses as those in respect of which they wish to establish a right to damages against the defendants in England is nothing short of alarming.

91. By early 2019, no fewer than 154,766 of claimants in this case disclosed that they had already received money from Renova or had brought their own private proceedings. Significantly, although they concede that they must give credit for compensation already received, they have not, with one exception, relinquished their right to pursue further any claims they may have in Brazil. In an FAQ sheet distributed to potential claimants by the claimants’ solicitors is to be found the following:

“Can the clients file lawsuits in Brazil and in England?  Yes. Customers will not be at a disadvantage in pursuing claims in England and Brazil. Customers cannot be compensated twice. If clients receive compensation in England, the judge in Brazil will probably take this into account when awarding compensation in the same way a judge in England will take into account the compensation granted in Brazil.”

92. It can safely be predicted that this unremitting cross-contamination of proceedings would lead to utter chaos in the conduct of litigation in both jurisdictions the procedural position of each of which would be in a near constant state of flux. In particular, the utility of the selection of lead cases would be seriously imperilled by the risk that the issues to which they were directed would, as the litigation progressed, be undermined, made redundant or transmogrified by developments in Brazil.

93. The task facing the managing judge in England would, I predict, be akin to trying to build a house of cards in a wind tunnel.

Such trenchant criticism pointed to the likely disposal of the case. However the judge went onto record some other factors which are of interest:

116. On the face of it, these factors might lead the casual observer to wonder what perceived advantages could lure 202,600 claimants into agreeing to participate in  proceedings in England. The defendants claim that much of their enthusiasm is likely to have been kindled by misunderstandings arising from over-optimistic claims made either by their solicitors or those purporting to speak on their behalf.

117. It has been reported, for example, that suggestions have been made that awards of damages will be very much more generous in England than in Brazil. This is notwithstanding the fact that the damages would, in fact, be calculated here by the application of Brazilian law. It has also been said that, conveniently, the English judge would come to sit in a hotel in Minas Gerais to hear evidence from claimants and witnesses when, as an encroachment on national sovereignty, this is simply not permissible under Brazilian law.

And then tongue, firmly in cheek, he referenced the urban myth that claimants tend to do rather better in the Republic of Liverpool, than they do elsewhere in the jurisdiction:

118. It has even been suggested (but on what possible basis I know not) that, in general, claimants are likely to get a more sympathetic hearing in Liverpool than in London.

The claims, more than 200,000 of them, were then struck out.

120. It follows that I am satisfied that it has been clearly proved that these claims amount to an abuse of the process of the court. In the words of Lord Bingham in Barker, they amount to “a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process”.

The case has a number of lessons or practice points for the interested lawyer, contemplating large scale environmental litigation. The first point is that there is no benefit to be derived from coming late to the party. Once litigation had been embarked upon in Brazil, and was at an advanced stage, the rationale for starting another tranche of litigation in England and Wales was undermined, fatally so, in this case. Ideally a law firm wants to have sole control of the litigation, but at the very least there must be only one set of proceedings.

The second point, is, as per the Mau Mau case I have discussed elsewhere on this blog, the practical problems of running international litigation cannot be underestimated. Leaving aside the issue of abuse of process, the judgment notes that an extraordinary figure of tens of thousands of claimants, having signed up to the action, had actually changed their minds or otherwise parted company with their legal representatives. There can be little doubt that the geographical disconnect will have played a part in this, as well as the difficulties of communicating with clients who will have no grasp of English.

The final point however, is to note the fatal lure of this case was its potential profitability, which goes a long way to explain the vigour with which it was prosecuted. The damages would have run into billions of pounds. The claimant’s lawyers were reported as having a 30% stake in that sum, as their share for their fees. When the case was struck out, the defendant’s own costs exceeded £16 million, and an interim payment of £8 million was ordered. There is no more bitter exercise in life, than considering what might have been.