Page 334 - Annual Report 2020

for collective moral damages in relation to the suspension of Criminal charges
the water supply of the Municipality of Colatina as a result of the On 20 October 2016, the Federal Prosecutors’ Office filed criminal
Samarco dam failure. As part of the public civil claim, the State charges against BHP Brasil, Vale and Samarco and certain employees
Prosecutors’ Office sought a number of injunctions, including and former employees of BHP Brasil (Affected Individuals) in the
an order to freeze R$2 billion (approximately US$366 million) Federal Court of Ponte Nova, Minas Gerais. On 3 March 2017, BHP
in the defendants’ bank accounts in order to secure the requested Brasil and the Affected Individuals filed their preliminary defences.
compensation. On 11 February 2016, the Court denied all of The Federal Court granted Habeas Corpus petitions in favour of
the injunction requests made by the State Prosecutors’ Office. eight of the Affected Individuals terminating the charges against
The State Prosecutors’ Office appealed the decision and on those individuals. The Federal Prosecutors’ Office appealed seven
2 August 2016 the State Court of Appeal decided to remit the of the decisions. BHP Brasil rejects outright the charges against
case to the 12th Federal Court in Belo Horizonte. This public BHP Brasil and the Affected Individuals and will defend the charges
civil claim is suspended. and fully support each of the Affected Individuals in their defence
Public civil claim commenced by the state of Espírito Santo of the charges.
On 8 January 2016, the state of Espírito Santo filed a public civil United States class action complaint – bondholders
claim against BHP Brasil, Vale and Samarco before the State On 14 November 2016, a putative class action complaint
Court in Colatina (later remitted to the 12th Federal Court in Belo (Bondholder Complaint) was filed in the U.S. District Court for the
Horizonte) seeking the remediation and restoration of the water Southern District of New York on behalf of purchasers of Samarco’s
supply of the residents of Baixo Guandu, Linhares, Colatina and 10-year bond notes due 2022–2024 between 31 October 2012 and
Marilândia. In addition, the claim sought injunctions ordering, 30 November 2015. The Bondholder Complaint was initially filed
among other things, the execution of several works and against Samarco and the former chief executive officer of Samarco.
improvements in public equipment in order to repair and upgrade The Complaint asserted claims under the U.S. federal securities
the sewerage system and water network in Colatina and Linhares, laws and indicated that the plaintiff will seek certification to
and an order to freeze R$1 billion (approximately US$185 million) proceed as a class action.
of the defendants’ assets. On 4 February 2016, the Court ordered
Samarco to deposit approximately R$7 million (approximately The Bondholder Complaint was subsequently amended to include
US$1.3 million) in a fund of the state of Espírito Santo to be created BHP Group Limited, BHP Group Plc, BHP Billiton Brasil Ltda, Vale
and granted certain injunctions relating to remediation measures. S.A. and officers of Samarco, including four of Vale S.A. and BHP
At the same time it denied the injunction request to freeze assets Billiton Brasil Ltda’s nominees to the Samarco Board. On 5 April
of R$1 billion (approximately US$185 million). On 6 April 2016, 2017, the Plaintiff discontinued its claims against the individual
the Court of Appeals suspended the injunctions granted. BHP defendants. The amount of damages sought by the putative
Brasil, Vale and Samarco filed their defences in March 2016 class is unspecified.
and also requested the suspension of this public civil claim. On 7 March 2018, the District Court granted a joint motion from
On 16 July 2019, the case was formally received by the 12th Federal the remaining corporate defendants to dismiss the Bondholder
Court of Belo Horizonte. The 12th Federal Court has not made Complaint. A second amended Bondholder Complaint was also
a decision regarding the suspension of this public civil claim. dismissed by the Court on 18 June 2019. On 9 July 2019, the plaintiff
Public civil claim commenced by the Association for the Defense filed a motion for reconsideration of that decision or for leave
of Collective Interests – ADIC to file a third amended complaint. On 30 October 2019, the Court
On 17 November 2015, ADIC, a non-governmental organisation denied the plaintiff’s motion for reconsideration and for leave
to amend its complaint. The plaintiff has filed a notice of appeal
(NGO) in Brazil, filed a public civil claim solely against Samarco of both of those orders. This appeal remains pending before the
before the 12th Federal Court in Belo Horizonte claiming at least Court of Appeals.
R$10 billion (approximately US$1.85 billion) for environmental and
social damages in relation to the Samarco dam failure, in addition Australian class action complaints
to collective moral damages and reparation measures. The NGO BHP Group Limited is named as a defendant in a shareholder
also requested preliminary injunctions ordering the deposit class action in the Federal Court of Australia on behalf of persons
of R$1 billion (approximately US$185 million) and prohibiting who acquired shares in BHP Group Ltd on the Australian Securities
Samarco from distributing dividends to its shareholders. Samarco Exchange or shares in BHP Group Plc on the London Stock
presented its defence on 12 February 2016. The Court did not Exchange and Johannesburg Stock Exchange in periods prior
decide on the injunction request and on 27 March 2017, the to the Samarco dam failure. The amount of damages sought
12th Federal Court suspended this public civil claim. in the consolidated action is unspecified.
Other civil proceedings in Brazil BHP filed an application for a temporary stay of the class action
As noted above, BHP Brasil has been named as a defendant in pending resolution of certain Brazilian criminal proceedings.
numerous other lawsuits. The lawsuits seek various remedies, On 17 March 2020, the Court declined to order the temporary stay.
including rehabilitation costs, compensation to impacted individuals Instead, the Court ordered that interlocutory steps in the class
and families of the deceased, recovery of personal and property action be considered on a case by case basis and allowed to
losses and injunctive relief. In addition, government inquiries and proceed only if any prejudice in connection with the Brazilian
investigations relating to the Samarco dam failure have been criminal proceedings does not outweigh the other interests
commenced by numerous agencies of the Brazilian Government of justice.
and are ongoing, including criminal investigations by the federal On 12 May 2020, BHP Group Ltd filed an application seeking
and state police, and by federal prosecutors. declaratory relief which, if successful, would narrow the group
BHP Brasil’s potential liabilities, if any, resulting from other of claimants in the class action. This application is scheduled
pending and future claims, lawsuits and enforcement actions to be heard on 7-8 September 2020.
relating to the Samarco dam failure, together with the potential United Kingdom group action complaint
cost of implementing remedies sought in the various proceedings, BHP Group Plc and BHP Group Ltd are named as defendants in
cannot be reliably estimated at this time and therefore a provision
has not been recognised and nor has any contingent liability been group action claims for damages that have been filed in the courts
of England. These claims have been filed on behalf of certain
quantified for these matters. Ultimately, these could have a material
adverse impact on BHP’s business, competitive position, cash individuals, governments, businesses and communities in Brazil
allegedly impacted by the Samarco dam failure.
flows, prospects, liquidity and shareholder returns. For more
information on the Samarco dam failure, refer to section 1.8. On 7 August 2019, the BHP parties filed a preliminary application
As at June 2020, Samarco had been named as a defendant in more to strike out or stay this action on jurisdictional and other procedural
than 79,000 small claims for moral damages in which people argue grounds. The application was heard in July 2020. The Court has not
their public water service was interrupted for between five and yet issued its judgment on this application.
10 days. BHP Brasil is a co-defendant in more than 23,000 of these Unresolved tax and royalty matters
cases. More than 270,000 people have received moral damages The Group presently has unresolved tax and royalty matters for
related to the temporary suspension of public water supply which the timing of resolution and potential economic outflow
through settlements reached with Fundação Renova. is uncertain. For details of those matters, refer to note 6 ‘Income
tax expense’ in section 5.1.
332 BHP Annual Report 2020