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Royal Dutch Shell legal battle ready to roll

Screen Shot 2014-06-21 at 15.33.18Extract from a Motley Fool article by Royston Wild published Friday 18 July 2014 under the headline: The Risks Of Investing In Royal Dutch Shell Plc

Like its industry rival BP, Shell also faces the prospect of being dragged through the courts — and having to incur huge legal penalties — as a result of a major oil catastrophe.

Some 11,000 villagers from the Nigerian village of Bodo are taking action against the business after thefts from the Bomu-Bonny pipeline caused two large oil spills in 2008. Shell had initially offered to compensate claimants to the tune of £30m back in 2011, an offer which it repeated after an initial hearing at the UK High Court in June.

The plaintiffs had been seeking closer to £300m due to the environmental impact of the spills as well as financial implications for local businesses, and again rejected the offer out of hand. Although the court ruled last month that Shell cannot be held accountable under Nigerian law for the damage caused by the thefts, the oil giant may be forced to pay compensation for failing to implement reasonable measures to prevent such criminal activity.

The case is due to be heard in May next year, and Shell could face stiff financial penalties whether settled in or out of court.

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