LONDON, June 26 (Reuters) - BHP faces a full

contempt of court hearing in Britain for funding litigation to

try to prevent some Brazilian municipalities suing the mining

giant over one of Brazil's worst environmental disasters,

London's High Court ruled on Thursday.

Thursday's ruling is the latest development in long-running

litigation over the collapse in 2015 of the Mariana dam in

southeastern Brazil that was owned and operated by BHP and

Vale's Samarco joint venture.

Judge Adam Constable said it was arguable that BHP, the

world's biggest miner by market value, funded Brazilian

litigation to stop the municipalities suing in London "with the

purpose ... of interfering with the administration of justice".

It is not yet known when the contempt hearing will take

place.

BHP, meanwhile, awaits judgment in a London lawsuit that the

claimants' lawyers have valued at up to 36 billion pounds ($49.3

billion).

A BHP spokesperson said the ruling did not determine the

merits of the contempt application made by the municipalities

that it "will continue to vigorously defend".

Lawyers representing the claimants suing BHP - which include

more than 600,000 Brazilians, 46 local governments and around

2,000 businesses - welcomed the decision as "a significant step

forward in holding BHP to account".

The dam burst and unleashed a wave of toxic sludge that

killed 19 people, left thousands homeless, flooded forests,

polluted the length of the Doce River - and led to one of the

largest lawsuits in English legal history.

The trial began in October and finished in March. Judgment

on whether BHP can be held liable for the collapse is pending.

BHP denies liability and says the case duplicates legal

proceedings and reparation and repair programs in Brazil. In the

trial's first week, Brazil signed a 170 billion reais ($30.6

billion) compensation agreement with BHP, Vale and Samarco.