UK S’Court Okays Suit against Shell over Oil Spills

The ruling of the United Kingdom Supreme Court yesterday paved the way for a group of 42,500 Nigerian farmers and fishermen to sue Royal Dutch Shell (RDS) in English courts after years of oil spills in the Niger Delta contaminated land and groundwater.

In a major decision that is bound to have far reaching implications for multinationals operations in their host countries, Senior judges said UK-domiciled Shell, one of the world’s biggest energy companies, did have a common law duty of care, in the latest case to test whether multinationals can be held to account for the acts of overseas subsidiaries.

 

 

 

The ruling comes almost two years after a seminal ruling by the Supreme Court in a case involving mining company, Vedanta. The judgment allowed nearly 2,000 Zambian villagers to sue Vedanta in England for alleged pollution in Africa.

That move was seen as a victory for rural communities seeking to hold parent companies accountable for environmental disasters. Vedanta ultimately settled out of court in January.

 

Nigeria’s Ogale and Bille communities of Rivers State allege their lives and health had suffered because repeated oil spills had contaminated the land, swamps, groundwater and waterways and that there had been no adequate cleaning or remediation.

Represented by law firm Leigh Day, they argued that Shell owed them a duty of care because it either had significant control of, and was responsible for, its subsidiary SPDC. Shell countered that the court had no jurisdiction to try the claims.

 

“(The ruling) also represents a watershed moment in the accountability of multinational companies. Increasingly impoverished communities are seeking to hold powerful corporate actors to account and this judgment will significantly increase their ability to do so,” Daniel Leader, partner at Leigh Day, said.

 

SPDC is the operator of oil pipelines in a joint venture between the Nigerian National Petroleum Corporation which holds a 55 per cent stake, Shell which holds 30 per cent, France’s Total with 10 per cent, Italy’s Eni with 5 per cent.

A Shell spokesman said the decision was disappointing.

 

“Regardless of the cause of a spill, SPDC cleans up and remediates. It also works hard to prevent these sabotage spills, by using technology, increasing surveillance and by promoting alternative livelihoods for those who might damage pipes and equipment,” Shell said.

 

Shell has blamed sabotage for oil spills. It said in its annual report published last March that SPDC, which produces around 1 million barrels of oil per day, saw crude oil spills caused by theft or pipeline sabotage surge by 41 per cent in 2019.

Shell CEO Ben van Beurden said last week that the firm would take “another hard look at its onshore oil operations” in the West African country.

 

The ruling is the second judgement against Shell this year regarding claims against its Nigerian operations. In a landmark Dutch ruling two weeks ago, an appeals court held Shell responsible for multiple oil pipeline leaks in the Niger Delta and ordered it to pay unspecified damages to farmers, in a victory for environmentalists.

 

Leigh Day said that the amount of compensation sought would be quantified as the case enters the trial stage.

In 2015, Shell agreed to pay out 55 million pounds ($83.4 million) to the Bodo community in Nigeria in compensation for two oil spills, which was the largest ever out-of-court settlement relating to Nigerian oil spills.