BHP (ASX:BHP) share price slides as $9b class action resurfaces

The mining company share price is edging lower today.

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The BHP Group Ltd (ASX: BHP) share price has edged lower today, as the resources giant faces new challenges regarding the Samarco dam disaster that occurred in 2015.

BHP shares have dipped 2.3% into the red today after reports surfaced that an English court has overturned a prior ruling regarding the $9 billion class action lawsuit on the fiasco.

Here we cover all of the moving parts in this development for BHP.

Prior judgement overturned

Recall that in 2015, the Fundao iron-ore tailings dam collapsed in Brazil, which ended up killing 19 people, left hundreds homeless, and caused widespread environmental destruction.

As part of the original resolution, BHP and partner Vale were forced to pay AUD$5.2 billion to set up the “Renova Foundation” for the purpose to compensate individuals and fix the damage caused.

However, according to a report from today’s Australian Financial Review, the Brazilian claimants “won the Court of Appeal’s approval for a fresh hearing” on Tuesday.

Although the case was seemingly “buried in March” by a High Court judge, the appeal was filed by a syndicate of Brazilian constituents, including “businesses, churches, municipalities, utility companies and individuals”.

The development comes after an English judge ruled back in November that the “case should not be heard, because it would be too complex and costly”, amongst other issues. The decision was then upheld by an appeals judge in March.

However, law firm PGMBM, which is representing the syndicate, was able to “invoke an exceptional appeals procedure” on Tuesday.

Such an appeal is granted when the court recognises there is a “risk of real injustice”.

This saw the appeals court recognise the importance of a redress on the case, on the grounds that the “appeal has a real prospect of success”.

It’s important to note that this outcome does not stipulate a change in the overall outcome of the case, instead it will only determine if the case can be successfully heard in England.

BHP argues that “the proceedings do not belong in the UK”, and that “issues brought by the claimants are already covered” under the Renova Foundation procurement.

Foolish takeaway

This fiasco is unlikely to go away anytime soon for BHP, particularly as litigation is still ongoing in Brazil itself.

Tuesday’s outcome will provide further colour on whether the full case can be heard in the UK.

In any sense, BHP continues to rigorously fight the matter at hand, advocating to keep litigation out of the UK.

The news comes as the BHP share price hit its all-time high on Tuesday, given outperformance from its exposure to a soaring commodities market.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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