When the JV goes wrong: what the £36 billion dam case tells every board about corporate structure and accountability

Joint ventures are often designed to do one thing above all else: contain risk. Carefully layered shareholdings, nominee directors, and governance rights are intended to create legal distance between parent companies and operational liabilities. For many boards, that architecture brings a degree of reassurance and the hope that potential exposure has been managed by structure.

The High Court’s decision in Município de Mariana v BHP Group forces a reassessment of that comfort. The case is not merely about environmental harm or mass litigation. At its core, it is a corporate governance decision and one that asks a difficult question of every JV partner: what happens when things go wrong?

Background

In November 2015, the Fundão dam in Brazil collapsed. This has been considered the worst environmental disaster in Brazil's history. More than 620,000 Brazilian individuals, businesses, municipalities, and other private entities advanced claims, with an estimated value of £36 billion. It is in fact, the largest mass tort claim ever brought in UK legal history.

The claim

The Fundão dam was owned and operated by Samarco Mineração S.A. ("Samarco"), a Brazilian mining company. Samarco was a joint venture vehicle, with its shares held equally between two corporate groups on a 50/50 basis.

The defendant in these proceedings was BHP Group plc ("BHP Group"), an English-incorporated company and the ultimate holding company of the BHP corporate group. BHP Group held its 50% interest in Samarco indirectly, through its wholly owned Brazilian subsidiary, BHP Billiton Brasil Ltda ("BHP Brasil"). The remaining 50% was held by Vale S.A. ("Vale"), an entirely separate Brazilian mining company.

The entire dispute turned on what that layered structure meant for BHP Group's liability as the ultimate parent. Although it was BHP Brasil, not BHP Group, that was the direct legal shareholder in Samarco, the claimants argued that BHP Group itself had assumed responsibility for, and exercised control over, Samarco's operations. The case therefore critically assessed where the "directing mind" of Samarco actually sat: with Samarco's own management, or with its JV partners further up the corporate chain. This is the JV/corporate structure question at its purest.

The litigation's path to trial was far from straightforward. In 2020, the High Court struck out the claim entirely, citing the formidable practical obstacles inherent in proceedings of this magnitude, not least that every material event had occurred on Brazilian soil. Permission to appeal was refused at first instance and again by the Court of Appeal. Only on an exceptional basis was the door reopened, and in July 2022 the strike-out decision was overturned. The trial of liability ultimately proceeded, running from October 2024 to March 2025.

BHP Group’s defence rested fundamentally on corporate separateness: Samarco operated the dam, not BHP Group. The Court disagreed comprehensively. The court found that Samarco was "controlled and operated by BHP and Vale" and that BHP Group was Samarco's "directing mind," participating in Samarco's activities "at every level" from "strategic decisions" to "detailed operational matters" and had assumed responsibility for the assessment, control and management of risks associated with the dam.

Moreover, Mrs Justice O’Farrell concluded that despite BHP Group not being the direct legal owner of the dam, they were still held as directly or indirectly liable for the polluting activity and, therefore, were strictly liable as “polluters” under Brazilian law.

Impact

This case offers a vital lesson in corporate practice: at times JV structures do not protect you, but just make you feel protected. In this instance the Court heavily scrutinised parent company control and the responsibility for subsidiaries. To hold BHP Group liable as “polluters” under Brazilian Law, the Court scrupulously assessed the question of whether, and to what extent, BHP Group did have control over Samarco. The Court analysed Samarco’s corporate structure, BHP Group’s input in Samarco’s long-term strategy, day-to-day operations and Mrs Justice O’Farrell specifically referred to the major funding given to Samarco by BHP Group’s in order to run large-scale projects.

To accomplish this, the Court sifted through extensive materials as part of the disclosure exercise and cited these documents as proof of BHP Group’s control in the operations of Samarco, thus finding them strictly liable for the disaster.

This case illustrates perfectly that corporate structures are not a shield if you do, in fact, exercise substantive control. The JV vehicle gave BHP Group legal distance from Samarco, but what it could not disguise was the daily running of the company and BHP Group’s influence in that.

Alongside reflecting the English Court’s ability and appetite for seizing jurisdiction over mass litigation arising from foreign shores, this case demonstrates that corporate architecture will not insulate a parent or JV partner from liability where, in reality, it exercises decisive control over operations and risk. Although Samarco was the formal owner and operator of the Fundão dam, the court looked beyond the legal structure to the operational reality and found that BHP Group participated “at every level” of Samarco’s business. That intimate level of involvement ultimately led the Court to conclude that BHP Group formed part of Samarco’s “directing mind” and could be held directly or indirectly liable for the pollution under Brazilian law, notwithstanding the absence of direct legal ownership.