Two Nigerian communities, hard hit through the devastation of their environment by oil spills, have won a legal victory in the UK supreme court that could have wide-reaching effects not only on their own situation, but in similar cases in future. The communities have been trying to sue Royal Dutch Shell for alleged negligence in Nigeria that has led to the severe pollution of their traditional lands. Overturning a court of appeal decision, the supreme court judges held that the appeal court was mistaken in finding that a parent company could never incur a duty of care in respect of the activities of a subsidiary, merely because the parent company maintained ‘group-wide policies and guidelines’. Rather, the issue was how far the parent took over or shared management of the dispute activity, with the subsidiary. The most immediate consequence of the judgment is that it will allow the Nigerian claimants to litigate their negligence case in the UK courts.
Given all that has been written about the plight of the Niger delta communities overwhelmed with pollution caused by more than 50 years of oil operations, it is hard to choose the best - or worst - example to illustrate the disaster’s scale, and thus show why the new judgment is so important.
But try this information, from a 2017 report by the United Nations Environment Programme (Unep), detailing the findings of scientists who carried out extensive research into the impact of pollution in the delta area.
In one part of the Niger Delta researchers found families drinking water from wells contaminated by benzine, a substance long proven to be cancer-forming. The level of benzine in the wells was more than 900 times higher than World Health Organisation guidelines. Scientists from Unep also found an eight cm layer of ‘refined oil floating on the groundwater’ that serves the wells, the result of a spill more than six years earlier.
Records kept by Shell, the oldest and largest oil company in the region, list at least 40 spills since 1989, each of them adding a further layer of catastrophic pollution.
For many years, families in the worst-hit region have tried to bring legal action against Shell, wanting to force a proper clean-up as well as strict measures to prevent further spills. But they have run into a series of legal problems.
Then, last week, the highest court in the United Kingdom delivered a judgment with a positive outcome for the almost 50 000 litigants intent on forcing Shell’s parent company, Royal Dutch Shell, to take responsibility for the consequences of its oil production.
The good news for them came in the form of a judgment by the supreme court overturning a decision of the appeal court that had, in turn, upheld a decision of the high court. One of the questions causing this sharp division among the judges was where the dispute should be heard. Shell argued that the Nigerian courts were the most appropriate forum for the case; the litigants wanted the matter heard in the UK.
The answer to the question – the supreme court said it could be heard in the UK – is of enormous significance at many levels. In a judgment two years ago, that has become a crucial precedent – the Vedanta decision about a community in Zambia seeking compensation for pollution from copper mining – the supreme court focused on the question of adequate funding and proper representation and the difficulty of satisfying those two needs if the case were to be argued in Zambia rather than in the UK.
The same considerations apply for the Nigerians too: with the better funding and high-level legal representation that would more easily be available if the case were to be argued in the UK, a court decision allowing litigation in London is a major step forward.
'Good, arguable case'
And it might be more than just one step forward. Following the Vedanta decision allowing the dispute to be litigated in the UK, the matter was never actually argued. Instead, an out of court settlement was reached – one that presumably satisfied members of the Zambian community involved in the case, having been advised by their worldly-wise UK legal representatives.
It is still too early to tell whether the case brought by the Nigerian community against Shell will be resolved in the same way. But the expectation is that the supreme court’s decision result will prove more painful and more expensive for the petrochemical giant – and more fair for the Nigerian community.
The judgment overturned the court of appeal on a second crucial question as well, finding, contrary to the split appeal court, that there was a ‘good, arguable’ case to be made on the question of Shell’s liability for the systemic pollution of the communities, another finding that will lift the spirits of the Nigerian communities and their lawyers.
Shell calls the decision ‘disappointing’. It says most oil spills can be attributed to local sabotage and argued that the dispute should be heard in the Nigerian courts as the judges there have a ‘better understanding’ of the local situation.
Leigh Day, the legal firm representing the affected Nigerian community, pointed out that Shell did not dispute key elements, namely that the communities were severely polluted by Shell’s oil and that Shell had not yet carried out an adequate clean up of the pollution. Instead, Shell had argued that the Shell parent company ‘could not be legally responsible for the harm the communities had suffered and so the cases should not be heard in England.’
Daniel Leader, a partner at Leigh Day, said that there was now some ‘real hope’ that Shell will finally take action. However, he described the outcome as having broader consequences. ‘It 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.’
Among others to comment on the decision was the International Commission of Jurists which jointly intervened in the matter before the supreme court, along with the Corporate Responsibility Coalition UK (Core). They predicted that the decision would impact on similar matters in the future and said the message to multinationals like Shell was clear: ‘You have a duty of care and you will be held to account for human rights abuses and environmental damage caused by subsidiaries you control.’
Amnesty International’s global issues programme director, Mark Dummett, commented, ‘This … could spell the end of a long chapter of impunity for Shell, and for other multinationals who commit human rights abuses overseas. Until now, Shell has managed to avoid cleaning up or paying compensation by maintaining that it is not responsible for the actions of its Nigerian subsidiary – which it owns in full. [This ruling] has shaken the foundations of a business model based on shirking responsibility.’