Brazilian miners raise concerns about local litigation reaching foreign courts

Mining companies with operations in Brazil are concerned about lawsuits involving local cases being decided in international courts.

Such concerns were primarily triggered by litigation related to the 2015 Mariana disaster, when a tailings dam operated by iron ore pellet maker Samarco, a Vale-BHP joint venture, collapsed, killing 19 people and causing the country’s biggest environmental tragedy, with mining waste polluting rivers and reaching the Atlantic Ocean.

The attorney general’s office and representatives of Minas Gerais and Espírito Santo, the two states affected by the incident, have been negotiating with Samarco, Vale and BHP, eyeing record compensation of 140 billion reais (US$25bn).

However, after allegations emerged that local courts were slow-walking the case, UK law firm Pogust Goodhead filed lawsuits in the UK and the Netherlands on behalf of dozens of affected municipalities, representing some 700,000 people. Pogust Goodhead is demanding 230bn reais in compensation.

"It is an unprecedented aggression in our recent history, the intention of submitting Brazilian sovereignty to extraterritoriality and British justice, as in the times of colonial Brazil, a setback that will never be accepted by our institutions," mining association Ibram said in a statement.

Supported by litigation-focused investment funds, Pogust Goodhead reinforced its structure, also hiring lawyers in Brazil, and encouraged local municipalities and individuals to join as interested parties.

In light of what it calls a speculative attack, Ibram asked Brazil's supreme court to prohibit municipalities and citizens from accessing international courts to resolve national issues.

Ibram also warns that the dispute represents an unprecedented risk, since Pogust Goodhead has lawsuits in European courts against other companies in Brazil, including Hydro and Braskem.

However, some analysts deem Ibram's warnings overblown.

"This legal dispute generates exaggerations on all sides. The mining companies don't want the case to be judged outside Brazil, perhaps foreseeing greater punishment, while on the side of the people affected, it also seems to me that the number of people who say they were affected by what happened is much higher than the actual number of people who were affected," mining consultant Pedro Galdi told BNamericas. 

According to Galdi, the dispute involving mining companies is not the first emblematic Brazilian case reaching international justice.

"During the Lava Jato anti-corruption probe, we saw several lawsuits in the US by investors who felt harmed by the corruption in [federal oil firm] Petrobras' contracts, trying to have losses reimbursed," he added.