BHP Loses Court of Appeal Challenge Over Interest on Legal Costs in Mariana Dam Case

What did the Court of Appeal decide?

In Município de Mariana and others v BHP Group (UK) Ltd and BHP Group Ltd [2026] EWCA Civ 1319, the Court of Appeal dismissed BHP’s appeal against the High Court’s decision to award pre-judgment interest on the claimants’ Stage 1 costs. The judgment was handed down on 16 October 2026 by Sir Geoffrey Vos, Master of the Rolls, with Lord Justice Zacaroli and Lady Justice Cockerill agreeing.

The High Court had ordered BHP to pay 90% of the claimants’ Stage 1 trial costs on the standard basis, together with interest at 1% above the UK base rate from 1 August 2023 to 26 January 2026. It also ordered £43 million on account of costs. BHP challenged the interest element, arguing that the court lacked power to make the award in circumstances involving conditional fee agreements and success fees.

The Court of Appeal held that the judge had power to award the interest and was right to exercise that discretion in the claimants’ favour.

Why did BHP challenge the interest award?

BHP argued that the claimants had not paid their legal fees upfront or borrowed money to meet them. Their conditional fee agreements meant that they would become liable for their solicitors’ base costs and success fees if their claims succeeded. BHP contended that pre-judgment interest should not be available where the claimants had not themselves been out of pocket.

BHP also relied on section 58A(6) of the Courts and Legal Services Act 1990, as amended by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. That provision prevents a costs order from requiring one party to pay another party’s success fee. BHP submitted that awarding interest in these circumstances would indirectly circumvent that prohibition.

The claimants argued that the interest power was separate from the power to award a success fee. Although they had not paid the costs as the litigation proceeded, they faced a contingent liability to compensate their solicitors for providing legal services without immediate payment.

How does CPR 44.2(6)(g) work?

CPR 44.2(6)(g) allows the court to order interest on costs from or until a specified date, including a date before judgment. The Court of Appeal explained that the provision gives judges a broad discretion aimed at compensating a party for the loss of the time value of money.

The court said that compensation may be appropriate where a party has been kept out of its own money or is liable to compensate another person — such as solicitors, an insurer or a third-party funder — because legal services were provided on credit. The rule does not state that interest can only be awarded where the receiving party has actually paid costs or borrowed money to fund them.

“The power in CPR Part 44.2(6)(g) provides a broad discretion to compensate for the loss of the time value of money.”

— Sir Geoffrey Vos, Master of the Rolls

The court emphasised that a detailed examination of every aspect of a funding arrangement should not normally be necessary. The judge may take a broad view of the circumstances and what is reasonable between the paying and receiving parties.

What about success fees?

The Court of Appeal distinguished an award of pre-judgment interest from an order requiring the losing party to pay a success fee. The interest award compensates for the time value of money; it does not itself award the success fee or calculate the interest by reference to the amount of that fee.

The court considered the Supreme Court’s decision in Hirachand v Hirachand [2024] UKSC 43, which held that a success fee could not be recovered indirectly as part of substantive relief under the Inheritance (Provision for Family and Dependants) Act 1975. The Court of Appeal said that Hirachand had not decided the scope of CPR 44.2(6)(g) or its interaction with section 58A(6).

On the facts of the BHP litigation, the claimants’ contingent liability to pay their solicitors’ success fees was relevant to whether they had to compensate for legal services supplied on credit. It did not convert the interest award into recovery of the success fee itself.

What does the judgment mean for litigation?

The decision confirms that applications for pre-judgment interest on costs must be assessed under the wording and purpose of CPR 44.2(6)(g), with attention to the circumstances of the case. A party’s funding structure may be relevant, but the absence of upfront payments does not automatically rule out an award.

For solicitors advising clients under conditional fee agreements, the judgment is a reminder to consider interest on costs separately from the recoverability of success fees. Any application should explain the relevant funding arrangements and the basis on which interest would compensate for the time value of money.

The ruling concerns the consequential costs order following the Stage 1 trial. The Court of Appeal recorded that permission to appeal the substantive liability decisions had been refused; this appeal addressed the pre-judgment interest award.