The Court of Appeal has thrown out a challenge by mining giant BHP to part of a costs order made against it in the long-running Mariana dam litigation. The company, which is defending a claim brought in London on behalf of 450,000 individuals and organisations affected by the 2015 collapse of a tailings dam, was found 'strictly liable as polluters' under Brazilian law in January this year.

A Stage 2 trial to deal with damages is listed for next year. In the meantime, Mrs Justice Farrell ordered BHP to pay 90% of the claimants' Stage 1 trial costs plus interest on their costs from August 2023 to January 2026 at 1 percentage point above the UK base rate, with £43 million on account.

BHP appealed the interest portion of the order, arguing it can be awarded only where claimants were ‘out of pocket or had borrowed money to fund their costs’. The claimants' case is funded through conditional fee agreements with claims firm Pogust Goodhead. Its operating expenses are in turn supported by a $552.5 million debt facility from US-based emerging markets funder Gramercy.

In lead judgment, Sir Geoffrey Vos, master of the rolls, with whom Lord Justice Zacaroli and Lady Justice Cockerill agreed, found the judge had been correct in making her order.

Read more

The master of the rolls said: ‘An award of pre-judgment interest on costs is self-evidently about compensating one party for the loss of the time value of money.' Civil Procedure Rule Part 44 'provides a broad discretion' to compensate for such a loss.

He continued: ‘On the facts in this case, the claimants can bring themselves within the scope of the power in CPR Part 44.2(6)(g) because they are under a liability, albeit through the mechanism of a success fee, to compensate their solicitors for the fact that they have provided the claimants with their services without payment.’

The judgment noted the court had ‘somewhat unusually’ been shown only indirect evidence of the claimants’ funding arrangements but the court was ‘able to assume that the success fees in this case are intended, at least in part, to compensate the claimants’ solicitors for the funding costs they have incurred in providing legal services to the claimants without cost’.

Dismissing the appeal, the master of the rolls emphasised that the award of pre-judgment interest on costs 'is entirely distinct and separate from the recoverability of success fees'.