Município de Mariana & Ors v BHP Group (UK) Ltd & Anor

On an application under section 9 of the Arbitration Act 1996, the applicant must establish that the respondent is bound by a concluded arbitration agreement and that the disputed matters fall within its scope. A non-signatory is bound only where the evidence shows that it was, in substance, a true party to the arbitration clause from the outset. The court must identify the substance of the dispute, including reasonably foreseeable defences, and assess whether each substantial and legally relevant matter falls within the clause. A reference to technical matters in a shareholders agreement may be confined to contractual deadlock-resolution machinery. Claims concerning a later industrial disaster do not thereby become technical deadlock matters. Artificial references to contractual breach do not make such breach an essential matter in the proceedings.

The claimants brought extensive Brazilian-law claims against BHP following the collapse of the Fundão Dam in Brazil. BHP brought Part 20 proceedings against Vale seeking contribution if BHP were held liable. Vale applied under section 9 of the Arbitration Act 1996 for a stay, relying on an arbitration clause in a shareholders agreement between Vale, BHP Brasil and Samarco. BHP was not a signatory. Vale argued that BHP was bound under Brazilian law and that the Part 20 issues concerned technical matters or breaches of the shareholders agreement. BHP disputed both propositions and alleged abuse of process. The central issues were whether BHP was bound, what the essential matters in the Part 20 proceedings were, and whether those matters fell within clause 11.1.

1. Application dismissed. Vale’s application was not an abuse of process, but failed on the merits.
2. Under section 9(1) of the Arbitration Act 1996, the applicant had to prove, on the balance of probabilities, that BHP was party to, or otherwise bound by, an arbitration agreement covering the matters in issue. The question whether BHP was bound belonged under section 9(1), not section 9(4). Lifestyle Equities v Hornby Street [2022] EWCA 51 did not decide that issue and, in any event, its reasoning was displaced by Mozambique v Privinvest [2023] UKSC 32.
3. The court had to identify the substance of the disputes, considering the pleadings, defences and reasonably foreseeable defences, and then determine whether each substantial and legally relevant matter fell within the arbitration clause.
4. Under Brazilian law, the four Brazilian authorities relied upon involved highly exceptional circumstances in which the alleged non-signatory had participated actively in negotiating and performing the contract and was, in reality, a true party to the arbitration clause. BHP’s involvement through BHP Brasil did not satisfy that test. BHP was not bound by clause 11.1.
5. Even assuming BHP was bound, clause 11.1 did not cover technical matters in the abstract. Its reference to technical matters concerned deadlocks within the shareholders agreement’s governance machinery. The Dam collapse and the alleged causes of the resulting damage were not such matters. Breach of the shareholders agreement was not an essential or substantial matter in the main or Part 20 proceedings. Vale’s references to implied good faith duties and operational independence were artificial attempts to engage the clause.
6. The jurisdiction decision and a section 9 application involved different inquiries. Vale’s delay was a case-management matter and did not amount to abuse of process under Hunter v Chief Constable of the West Midlands [1982] AC 529.

This was a first-instance application. Mrs Justice O’Farrell had dismissed Vale’s jurisdiction application on 7 August 2023. Coulson and Laing LJJ refused permission to appeal on 24 November 2023. Those decisions did not determine the section 9 application.