Município De Mariana v BHP Group (UK) Ltd & Anor

On 14 November 2025 the court handed down judgment in the Stage 1 Trial of this matter [2025] EWHC 3001 (TCC) (“the Judgment”).

For the reasons set out in the Judgment, the court’s key findings were as follows:

This is the Consequentials Hearing following hand down of the Judgment. The matters that arise for determination by the court concern:

The claimants’ position is that they are the successful parties and, as such, seek an order that the defendants pay their costs of the whole proceedings up to conclusion of the Stage 1 Trial, such costs to be subject to a detailed assessment on the standard basis if not agreed. The claimants’ costs up to conclusion of the Stage 1 Trial are £189 million and a payment on account of such costs is sought in the sum of £113.5 million, together with pre-judgment interest.

The claimants rely on the first witness statement of Alicia Alinia of the claimants’ solicitors dated 9 December 2025 and her second witness statement dated 15 December 2025.

The defendants’ position is that no immediate order in respect of costs should be made until after the Stage 2 Trial, when the question of overall success will be much clearer. If, contrary to their primary case, any order for costs is made, such costs must be limited to the costs of the Stage 1 Trial, there should be a percentage reduction to reflect the parties’ relative success and failure on issues, the level of any payment on account is outrageously high and there is no entitlement to pre-judgment interest on costs.

The defendants rely on the 28^th witness statement of Efstathios Michael of the defendants’ solicitors dated 12 December 2025.

The court has discretion as to whether costs are payable by one party to another, the amount of those costs and when they are to be paid: CPR 44.2(1).

The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, although the court may make a different order: CPR 44.2(2).

CPR 44.2(4) provides that in deciding what (if any) order to make about costs, the court will have regard to all the circumstances, including:

CPR 44.2(5) provides that the conduct of the parties includes:

The court may make an issue-based costs order but, before doing so, will consider whether it is practicable to make an order limiting the costs payable to a proportion of the overall costs: CPR 44.2(6) & (7).

Where there is a split trial, the court is entitled to exercise its discretion to make an immediate order for the payment of costs in respect of the liability trial but may defer the issue of those costs until the final outcome of the litigation, especially if it is unclear whether the successful party will recover more than nominal damages: Weill v Mean Fiddler Holdings Ltd [2003] EWCA Civ 1058, at [31] to [34].

However, as a general rule, costs should follow the issue, regardless of when the issue is determined, particularly in complex disputes, to encourage the parties to adopt a proportionate approach to the litigation by focussing on the significant and meritorious points: Langer v McKeown [2021] EWCA Civ 1792 at [36]-[38]; Illiquidx Ltd v Altana Wealth Ltd [2025] EWHC 1566 (Ch) per Rajah J at [8].

The fact that a party has not won on every issue is not, of itself, a reason for depriving that party of part of its costs. In the absence of unreasonable conduct in pursuing or resisting an issue, the general rule is that the successful party should have their costs and should only suffer a reduction to the extent that the costs were increased by the taking of the issue on which they failed: Sharp v Blank [2020] EWHC 1870 (Ch) per Sir Alistair Norris at [7](a)-(g).

In this case, the claimants have obtained substantial findings of fact and law in their favour against the defendants on key issues of liability. Although there is no certainty as to whether, or to what extent, the Judgment will ultimately result in substantial damages for any specific claimant or group of claimants, the issues determined by the court were identified as the significant issues of liability raised by the claimants and the defendants. In those circumstances, it is appropriate for the court to make an order in respect of the Stage 1 Trial costs.

For the reasons set out in the Judgment, the court found in the claimants’ favour on key issues of liability, namely: strict liability under the Environmental Law; alternatively, fault-based liability under the Civil Code; limitation/prescription; and standing/capacity of the Municipalities. Therefore, the claimants should be regarded as the successful party in the Stage 1 Trial and, as a matter of principle, are entitled to recover their costs against the defendants.

The scope of the costs order is limited to the costs of, and incidental to, the Stage 1 Trial. There is no principled basis on which the court should make an order at this stage in favour of the claimants extending to the overall costs of the litigation to date. That would assume ultimate success in respect of all, or most, of the claimants in circumstances where the claimants have not adduced any evidence from, and the court has not considered, any individual or group claims for damages. Mr Choo-Choy KC, leading counsel for the claimants, submits that the costs of the proceedings, including preparing pleadings by each claimant or group of claimants, were necessary pre-requisites for the claims to go ahead. That is true but it does not follow that the claimants have established an entitlement to the costs of such exercises. Any entitlement to recover the general costs of the claims will be subject to the outcome of the overall litigation.

Mr Sloboda KC, leading counsel for the defendants, submits that any order as to costs should reflect the claimants’ loss and the defendants’ success in respect of particular issues determined in the Stage 1 Trial, namely: (i) Article 927 (sole paragraph); (ii) Articles 116 and 117 of the Corporate Law; (iii) releases/settlements; and (iv) post-collapse conduct.

The claimants lost the issue of strict liability based on Article 927 (sole paragraph) of the Civil Code. This was advanced as an alternative to strict liability under the Environmental Law. Having succeeded on the Environmental Law basis of claim, it was unnecessary for them to succeed under Article 927 (sole paragraph). However, the court rejected this alternative claim as not applicable, regardless of the outcome of the Environmental Law claim. It is not necessary for the defendants to show that it was unreasonable for the claimants to pursue this alternative. It is sufficient that this was a discrete issue on which Brazilian legal expert evidence was adduced by both sides, relying on bodies of case law and academic law materials that would not otherwise have been necessary, occupying approximately one day of cross-examination.

The claimants failed in establishing any liability under Articles 116 and 117 of the Corporate Law. This was advanced as an alternative basis for fault-based liability under the Civil Code. Having succeeded on strict liability under the Environmental Law and, in the alternative, on fault-based liability under the Civil Code, it was unnecessary for the claimants to succeed under the Corporate Law. However, the court rejected this alternative claim on its merits. It is acknowledged that the defendants relied on certain aspects of the Corporate Law by way of defence to the Civil Code claims and that those defences failed. But that formed a minor part of the substantive Corporate Law issues addressed by the experts in their written reports, which required a week of oral evidence at the trial. On the key issue as to whether there was any independent cause of action under the Corporate Law, the defendants were successful.

The outcome of the issues concerning waivers and releases (for costs purposes) is not straightforward. The court was asked to determine certain questions of principle and construction in respect of sample settlement agreements/releases. It was common ground that the pleaded disputes concerning validity, enforceability and scope of individual agreements/releases could not be resolved finally until the Stage 2 Trial. However, the defendants succeeded on specific issues, such as the non-applicability of the Consumer Defence Code and strong (but rebuttable) presumptions in the defendants’ favour regarding the construction and enforceability of releases. These matters were dealt with in the expert reports and occupied approximately one day of cross-examination.

I discount the issue of post-collapse conduct as relevant to the question of any costs order. This pleaded point by the claimants was relied on as an additional allegation of liability but, as for a number of other peripheral points on both sides, the court did not consider it necessary or helpful to deal with it in the Judgment. Almost no time was spent on it at the hearing and it is negligible in terms of the costs incurred in respect of the Stage 1 Trial.

Having considered the time and effort taken by the above issues in pleadings, reports, oral evidence and submissions, my view is that a fair and proportionate reduction to the claimants’ recoverable costs of the Stage 1 Trial would be 10%.

Therefore, I determine that the defendants should pay 90% of the claimants’ costs of the Stage 1 Trial.

It is agreed that the claimants’ costs should be subject to a detailed assessment on the standard basis.

The claimants seek to recover costs that total approximately £189 million. The claimants seeks a payment on account of their costs of 60%, a sum of £113.5 million.

The defendants accept that, if the court decides that a costs order in respect of the Stage 1 Trial should not be deferred, the claimants are entitled to a reasonable amount as a payment on account. But they submit that the amount is shockingly excessive (the claimants’ costs are nearly twice the defendants’ costs) and the claimants have produced inadequate evidence in support of the costs claimed.

CPR 44.2(8) provides that where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.

Where the amount of costs is to be assessed on the standard basis:

In assessing the reasonableness of the incidence and amount of the costs incurred, the court will have regard to all the circumstances, including the conduct of the parties, the value of the claim, the importance of the matter to the parties, the complexity of the issue, and the skill, time and effort spent on the litigation: CPR 44.4.

The court has discretion as to the amount of any order on account of costs. What amounts to a reasonable sum will depend on all the circumstances of the case, taking into account factors such as those identified in Excalibur Ventures v Texas Keystone [2015] EWHC 566 (Comm) per Clarke LJ:

“[23] What is a reasonable amount will depend on the circumstances, the chief of which is that there will, by definition, have been no detailed assessment and thus an element of uncertainty, the extent of which may differ widely from case to case as to what will be allowed on detailed assessment. Any sum will have to be an estimate. A reasonable sum would often be one that was an estimate of the likely level of recovery subject, as the costs claimants accept, to an appropriate margin to allow for error in the estimation. This can be done by taking the lowest figure in a likely range or making a deduction from a single estimated figure or perhaps from the lowest figure in the range if the range itself is not very broad.

[24] In determining whether to order any payment and its amount, account needs to be taken of all relevant factors including the likelihood (if it can be assessed) of the claimants being awarded the costs that they seek or a lesser and if so what proportion of them; the difficulty, if any, that may be faced in recovering those costs; the likelihood of a successful appeal; the means of the parties; the imminence of any assessment; any relevant delay and whether the paying party will have any difficulty in recovery in the case of any overpayment.”

In this case, there has been no costs budgeting for the Stage 1 Trial (although costs budgets have been ordered for the Stage 2 Trial). The statement of costs prepared by the claimants contains a very high-level overview of the general categories and amounts incurred. It is at Annex 1 to Ms Alinia’s first witness statement and comprises:

From those items, a sum of approximately £24 million has been deducted for costs incurred during the period 2019 to 2022 to ensure that no jurisdictional issue costs are included.

Ms Alinia explains in her first witness statement that the total of £189 million excludes specific categories of costs, including those identified as relating to the jurisdictional challenges, interlocutory costs orders not in favour of the claimants, and the Stage 2 costs.

The rates, hours and total sums are tabulated for each fee earner for the period from 2018 to 2025 but there is no link to the tasks carried out by those individuals or the dates on which work was carried out. There is a table setting out the total profit costs incurred in each month from 2018 to 2025 but they are not linked to individual fee earners or workstreams. The fees for counsel are identified as lump sums for each individual for the whole period up to 2025. There is a breakdown of disbursements with brief descriptions against each item, including the fees for each expert witness.

Annex 2 to Ms Alinia’s first witness statement contains a summary of the workstreams underlying Pogust Goodhead’s profit costs. A description is provided for various workstreams throughout the period 2018 to 2025 but they are at a very high level and not cross-referenced to the individuals or the sums set out in Annex 1. This presents great difficulty for the court in ascertaining the costs associated with any phase of the litigation, particularly the rates and hours claimed as profit costs in respect of any identified element of the work.

I start by acknowledging that this is very complex litigation, it has required dedicated work by many lawyers and experts for over 7 years and there have been significant challenges for the disparate groups of claimants, many of whom live in rural areas of Brazil, in pursuing these claims in this jurisdiction. Notwithstanding those difficulties, the costs are extraordinarily high and the level of detail provided very limited. It is noted that the costs will be subject to a detailed assessment in due course but the paucity of information available to the court at this stage indicates that a very cautious approach should be taken to the broad-brush assessment of the likely level of recovery of these costs for the purpose of determining a payment on account.

In his 28^th witness statement, Mr Michael draws a comparison between the level of the claimants’ costs of £189 million and the level of the defendants’ costs of £125 million prior to any reduction (now slightly higher) for the Stage 1 Trial, despite the defendants bearing the greater burden of disclosure and factual witness evidence. I accept that the claimants have been required to review such disclosure and evidence; further they have been required to carry out their own investigations in various jurisdictions to obtain relevant evidence. Nonetheless, there is a huge disparity between the costs incurred on each side. More significantly, the overall level of costs raises concern as to the reasonableness and proportionality of the same.

The claimants’ evidence indicates that substantial costs have been incurred in signing up the claimants to these proceedings, processing claimant details and taking instructions. Annex 1 and Annex 2 demonstrate that the cost of these operations is £44 million (walk-in centre and call centre fee costs) plus £73 million (Brazilian legal teams undertaking sign-up work and legal advice). I do not consider that these costs are recoverable as part of the Stage 1 Trial costs. Before considering any questions of reasonableness and proportionality, it would be necessary to separate the sign-up and other collateral costs from subsequent legal advice and assistance - see: Motto v Trafigura Ltd [2011] EWCA Civ 1150 at [104]-[114]; Weaver v British Airways plc [2021] EWHC 217 per Saini J at [41]-[51]. But, if recoverable at all, they form part of the costs of the overall proceedings, rather than the Stage 1 Trial.

If those costs (less a proportion of the costs incurred between 2019 and 2022 which are not claimed and have already been deducted by the claimants) are removed from the total, the claimants’ costs of the Stage 1 Trial are reduced to approximately £87 million. I accept the defendants’ submission that the disbursements and profit costs should also be reduced to strip out costs concerned with funding and insurer issues but the suggestion of 30% seems excessive. A review of the disbursement items in Annex 1, indicates that a sum in the region of £3 million would be justified as itemised expert fees and logistics costs (such as translation/transcription services and the electronic database). I consider that a more modest reduction of £7 million reflects the balance of the disbursements and an allowance for profit costs associated with the funding and insurer issues. That gives a total of £80 million. As set out above, the claimants would be entitled to 90% of those costs, a sum of approximately £72 million. Adopting a cautious approach to determination of the payment on account, pending a detailed assessment, 60% of this figure gives a sum of about £43 million.

Taking the above matters into account, I consider that a reasonable sum on account of costs is £43 million.

CPR 44.7 provides that a party must comply with an order for the payment of costs within 14 days of the judgment or order, or such other date as the court may specify.

CPR 52.16 provides that unless the appeal court or the lower court orders otherwise, an appeal shall not operate as a stay of any order or decision of the lower court. The court has an inherent power to stay its order until the Court of Appeal has disposed of an appeal or application for permission to appeal.

In Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, Clarke LJ stated at [22] that whether the court should exercise its discretion to grant a stay will depend upon all the circumstances of the case, but the essential question is whether there is a risk of injustice to one or both parties if it grants or refuses a stay.

In this case, the parties are agreed that any order for a payment on account should be stayed pending determination of the application for permission to appeal by this court or the Court of Appeal. On that basis, the court will order that the defendants should pay the claimants the sum of £43 million on account of costs of the Stage 1 Trial, such payment to be made within 30 days of the date on which any application for permission is determined or, if permission is granted, any appeal is finally determined.

The claimants seek interest at the commercial rate of 1% above base rate on the totality of their costs as from 1 August 2023, the date at which half of the fees were incurred.

The defendants’ position is that the claimants are not entitled to any interest on pre-judgment costs because they have not paid any legal fees or disbursements up front and have not explained how they are out of pocket.

CPR 44.2(6)(g) gives the court discretionary power to order a party to pay interest on costs from or until a certain date, including a date before judgment.

In Jones v Secretary of State for Energy and Climate Change [2014] EWCA Civ 363 this rule was explained by Sharp LJ at [17]:

“The purpose of such an award is to compensate a party who has been deprived of the use of his money, or who has had to borrow money to pay for his legal costs. The relevant principles do not materially differ from those applicable to the award of interest on damages under s 35A of the Senior Courts Act 1981. The discretion conferred by the rule in respect of pre-judgment interest is not fettered by the statutory rate of interest, under the Judgments Act 1838, but is at large. Ultimately, the court conducts a general appraisal of the position having regard to what is reasonable for both the paying and the receiving parties. This normally involves an assessment of what is reasonable having regard to the class of litigant to which the relevant party belongs, rather than a minute assessment which it would be inconvenient and disproportionate to undertake. In commercial cases the rate of interest is usually set by reference to the short-term cost of unsecured borrowing for the relevant class of litigant, though it is always possible for a party to displace a “rule of thumb” by adducing evidence, and the rate charged to a recipient who has actually borrowed money may be relevant but is not determinative. See F&C Alternative Investments Ltd v Barthelemy (No. 3) CA [2013] 1 WLR at paras 98, 99 and 102 to 105; Bim Kemi AB v Blackburn Chemicals Ltd [2003] EWCA Civ 889 at 18 and for example, Fiona Trust & Holding Corporation v Privalov [2011] EWHC 664 (Comm).”

In this case, the claimants have not been required to fund the litigation directly and have made no payments in respect of costs. Pogust Goodhead have obtained funding for the litigation and the claimants do not have to pay any costs unless and until any damages are awarded. However, in that eventuality, the claimants will be liable to pay success fees to their legal representatives reflecting the costs of funding the litigation, thereby reducing any damages received. It is a liability for costs, albeit a contingent liability at this stage. As a matter of principle, the claimants should be entitled to compensation in respect of the funding expenses for which they will be indebted out of any damages. The fact that their solicitors and/or funders have accepted the risk that the costs and funding expenses will only be recouped from any damages does not detract from that position.

On balance, I consider that it would be appropriate for the court to exercise its discretion and award pre-judgment interest on costs, at the rate of 1% above base rate, up to the date of the order for costs. The claimants’ submission that the court should adopt the point at which half of the fees were incurred, 1 August 2023, for the purpose of calculating the interest, is a pragmatic and proportionate approach which the court accepts.

The claimants seek an order for the detailed assessment of their Stage 1 costs and the jurisdiction costs ordered by the Court of Appeal forthwith pursuant to CPR 47.1. The defendants’ position is that the court should follow the general rule that costs should not be assessed on a detailed basis at this stage.

CPR 47.1 provides that the general rule is that the costs of any proceedings or any part of the proceedings are not to be assessed by the detailed procedure until the conclusion of the proceedings, but the court may order them to be assessed immediately.

It may be appropriate for the court to order an immediate assessment of costs where discrete issues have been determined and discrete orders for costs made but the court may decline to make such an order where it would be lengthy, costly and disruptive to the proceedings.

In this case, the costs claimed are very high indeed and it is clear that they will be the subject of challenge. As submitted by Mr Sloboda, it is inevitable that the detailed assessment of the claimants’ costs will be complex and protracted. It will include disputes as to the recoverability of heads of cost, the costs attributable to the Stage 1 Trial (as opposed to Stage 2 or the overall proceedings) and issues of proportionality and reasonableness. An immediate detailed assessment would be disruptive to the proceedings at a time when the parties already have the very heavy burden of preparing for the Stage 2 Trial, a task that should not be underestimated.

Any application regarding the timing of assessment of the jurisdiction/strike out costs ordered by the Court of Appeal would have to be made to that court. If this court had jurisdiction to make any order in respect of those costs, it would decline to order an immediate assessment for the reasons set out above.

It is clear to me that this is not a case where there should be any departure from the general order that any detailed assessment should take place at the conclusion of the proceedings.

The defendants seek permission to appeal in respect of the draft grounds of appeal filed on 15 December 2025.

CPR 52.21 provides that the appeal court will allow an appeal where the decision of the lower court was (a) wrong; or (b) unjust because of a serious procedural or other irregularity in the proceedings in the lower court.

The basis of the proposed appeal is that in reaching its decisions on strict liability, fault-based liability, limitation and the standing of Municipalities, the court failed to engage with critical issues in dispute, carry out a judicial evaluation, and provide any, or any proper, reasons why the defendants’ case was rejected. As a result, it is said that those decisions are unjust because of serious procedural irregularity.

The test for permission to appeal is set out in CPR 52.6, namely, where:

Although framed as one ground, summarised in Ground 1, the defendants raise a number of criticisms in Grounds 2 to 9 in respect of which it is said that the court failed to engage with the critical issues in dispute, carry out a judicial evaluation or provide any, or any proper, reasons why the defendants’ case was rejected. That criticism does not have a real prospect of success on a fair reading of the Judgment for the following brief reasons.

As to Ground 2.1, namely, that the court failed to engage with the issue of polluter definition under the Environmental Law:

As to Ground 2.2, that the court failed to engage with the issue of the causation test for the purpose of establishing liability under the Environmental Law:

As to Ground 3, that the court failed to engage with material issues in respect of the application of the Environmental Law to the facts:

As to Ground 4, that the court failed to engage with the defendants’ case on knowledge in relation to the fault-based liability findings:

As to Ground 5, that the court failed to engage with the defendants’ pleading objections, risk management issues and counterfactuals when considering causation for the purpose of Article 186 (fault) liability:

As to Ground 6, that the court failed to engage with issues concerning Article 200 of the Civil Code:

As to Ground 7, that the court failed to engage with a disputed issue as to whether qualification as a bystander under Article 17 of the Consumer Defence Code required that the relevant harm was caused by a product or service provided to the consumer market:

As to Ground 8, that the court failed to engage with the issue whether the 1932 Decree was applicable to claims brought by public entities which were not of a public nature:

As to Ground 9, that the court failed to engage with key evidence regarding the standing of Municipalities:

In summary, despite the clear and careful submissions of Ms Fatima KC, leading counsel for the defendants, the appeal has no real prospect of success.

There is no other compelling reason for the appeal to be heard. Although the Judgment may be of interest to other parties in other jurisdictions, it is a decision on issues of Brazilian law established as fact in this jurisdiction, together with factual and expert evidence.

For the above reasons, permission to appeal is refused.

The defendants are entitled to seek permission to appeal from the Court of Appeal. The court grants an extension of time of 28 days from the date of hand down of this Judgment for making any application for permission to appeal to the Court of Appeal.

The claimants are directed to draw up and seek to agree with the defendants an order to reflect the above rulings within 7 days of the hand down of this Judgment.

Following hand down of this judgment, the hearing will be adjourned to a date to be fixed (or for decision in writing) for the purpose of any applications for permission to appeal or other consequential matters. Therefore, any relevant time limits are extended until the adjourned hearing or further order.