London | BHP is looking to persuade judges to throw out a 5 billion ($9 billion) lawsuit over the 2015 Samarco dam disaster in Brazil, which begins in a Manchester courtroom on Wednesday (Thursday AEST). The class action, brought by international law firm PGMBM, aggregates the grievances of more than 200,000 individuals alongside municipal councils, businesses, churches and Indigenous groups, who say the reparations mechanism set up in Brazil is inadequate. "It has been five years since the disaster and very little has been done for the municipalities," said Duarte Eustaquio Junior, mayor of Mariana, the town at the centre of the disaster, who travelled to Britain for the hearing. BHP and its 50-50 joint venture partner Vale are still dealing with the fallout from the tailings dam collapse that killed 19 people and left hundreds homeless, and wreaked environmental and infrastructure damage that extended across two states. The Renova Foundation was set up to carry out reparation and compensation work, worth about 7.4 billion reals ($2 billion) so far, but locals are frustrated with the pace and extent of the measures. "The model implemented by Renova is not working. The only way to help the people and repair the damage is through this action in the UK," said Silverio da Luz, mayor of Rio Doce, who is also in Britain this week. The claimants aim to establish BHP's culpability and liability for the disaster, which they say will usher in the kind of compensation they are not getting from BHP's Brazilian subsidiary and the local justice system. "The public companies at the top of the BHP group structure, which we firmly believe bear ultimate responsibility for the disaster, have until now been insulated from its consequences within the Brazilian legal system," PGMBM lawyer Tom Goodhead said. The eight-day hearing will not determine whether BHP is liable, but will hear the arguments as to whether there is any basis for conducting a lawsuit in Britain. "BHP's position is that the proceedings do not belong in the UK. This action in the UK is based on Brazilian law and duplicates matters which are covered by the existing and ongoing work of the Renova Foundation and are the subject of ongoing legal proceedings in Brazil," a UK-based BHP spokesman said. "BHP is fully committed to doing the right thing for the victims of the Fundao dam failure and remains committed to supporting the ongoing remediation and compensation efforts of the Renova Foundation." The company has provisioned $US1.7 billion ($2.4 billion) to fund Renova's work to December, matched by a similar amount from Vale. There is some expectation further provisioning could yet be required. A ruling is not expected for several months. If the judges flash the green light to proceed to litigation proper, it is unclear if the parties might settle or if the claimants want their day in court. A class action in the United States has settled, and BHP is also defending a shareholder class action in Australia.

QUESTION:

Explain the statement "The company has provisioned $US1.7 billion ($2.4 billion) to fund Renova's work to December." Discuss the difference between provision and contingent liability from an accounting perspective.