Brazil Court Reversal on Samarco May Help Giant Civil Case

(Bloomberg) -- A Brazilian court suspended a previous judicial endorsement of the Samarco dam spill settlement package in a ruling that may help a $48 billion civil suit against the mine and its owners Vale SA and BHP Billiton Ltd.

Brazil's Superior Court issued an interim order on Thursday suspending the Federal Court of Appeal's ratification of the compensation and restoration deal. The ruling, posted on a Brazilian judicial website, cited jurisdictional conflicts with the endorsement coming from a judge in Brasilia rather than in Minas Gerais state, where the accident happened.

Officially, Thursday's decision reinstates a 20 billion-real ($6.2 billion) claim by authorities that was filed before the settlement was signed in March. But it also helps the cause of a much larger civil claim filed by a group of prosecutors alleging the settlement was rushed and is incomplete, one of them said. Seeking 155 billion reais ($48 billion), they appealed the settlement's ratification handed down in May.

“Any ratification should be done here in Minas Gerais, not Brasilia,” Jorge Munhos, who was part of the task force behind the 155 billion-real suit, said by telephone on Friday. “Clearly a judge with a greater proximity to those affected by the disaster would never have ratified an agreement like that.”

The November dam collapse unleashed billions of gallons of mining waste, leaving as many as 19 people dead and hundreds more homeless. Samarco said last month that the possibility of operations restarting this year is becoming more remote and that it is yet to secure necessary licenses.

Appealing Suspension

Under the March settlement, Samarco and its owners agreed to pay about 12 billion reais over 15 years to clean up damage and assist victims. Vale said in a statement Friday that the agreement remains valid and that the parties will continue fulfilling their duties.

Minas Gerais Attorney General Onofre Batista, who was part of the legal team behind the initial 20 billion-real claim, said on Friday that he's confident the courts will reaffirm the settlement. Samarco and its owners have appealed the suspension.

Munhos said his team will help fight those appeals and expects a Minas Gerais court to rule on the 155 billion-real claim “at any moment.”

His group's lawsuit, which was disclosed in early April, makes reference to preliminary studies that had used costs in BP Plc's 2010 oil spill in the Gulf of Mexico.

Prosecutors in Brazil have a history of demanding large reparations for environmental damage that are then reduced. Chevron Corp. was targeted by multibillion-dollar suits for 2011-2012 offshore oil spills, and eventually settled for a fraction of that amount.

--With assistance from David Stringer To contact the reporter on this story: R.T. Watson in Rio de Janeiro at rwatson71@bloomberg.net. To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Anne Riley