Tata Steel’s two Dutch subsidiaries are facing a €1.4 billion lawsuit in the Netherlands alleging health and property damage caused by emissions from the company’s steelmaking operations, a charge which the Indian conglomerate labelled as “unsubstantiated and speculative”.

Image used for representational purpose only. Photograph: Andrew Yates/Reuters

In an exchange filing, Tata Steel said that environmental group Stichting Frisse Wind.nu (SFW) has served a writ of summons on Tata Steel Nederland BV and Tata Steel IJmuiden BV on December 19.

And the proceedings have begun before the District Court of North Holland in Haarlem under the Dutch Act on Collective Settlement of Mass Claims (WAMCA).

SFW has said that it is acting on behalf of residents living near Tata Steel’s IJmuiden plant.

The lawsuit relates to allegations that emissions of hazardous or harmful substances from Tata Steel’s operations in Velsen-Noord have adversely affected residents’ health and living conditions.

According to the filing, SFW is seeking approximately euro 1.4 billion in compensation, citing increased susceptibility to various health issues and loss of enjoyment of homes.

Justifying the claim, SFW said that average home values in the region lag those in comparable areas due to the impact of Tata Steel’s operations.

On its part, Tata Steel said that SFW has provided no supporting evidence.

The company said its Dutch subsidiaries, collectively referred to as TSN, reject the allegations and consider the claims to be without any basis.

“TSN considers that it has strong arguments to defend against the claims and will vehemently defend itself,” Tata Steel said.

The company also added that, in its assessment, SFW faces considerable challenges in establishing both the admissibility of the case and the merits of its claims.

Under the WAMCA framework, proceedings are conducted in two stages: Admissibility and merits, with each phase expected to take two-three years to conclude.

Tata Steel said that given the nature of the process, a discussion on the quantum of claims is not expected in the coming years thus limiting the likelihood of near term financial implications for the company.

The filing also disclosed that the SFW’s action is being funded by Redbreast Associates NV and Omni Bridgeway SA, both third party litigation funders.

SFW has published a compliance statement outlining the compensation structure for financiers.

It allows them to receive either a multiple of their investment or a share of any recovered amount, capped at 25 per cent.

Tata Steel said health and a clean living environment remain key priorities for its Dutch operations.

The company highlighted that TSN has made substantial investments under its Roadmap+ programme over the past five years to address concerns raised by neighbouring communities.

“TSN consistently ranks among the leading global blast furnace-based steel producers in terms of CO2 efficiency, with performance metrics well below both European and global averages,” it added.

Given these efforts, the company said it believes that SFW’s claim lacks merit.

The company said it is examining the documents received from SFW, consulting legal counsel and assessing potential implications.