By Emily Gosden, energy editor: 19 NOVEMBER 2016
Royal Dutch Shell is facing a High Court battle over alleged environmental damage from its oil pipelines in Nigeria, in a test case that could open the floodgates to more multinationals being sued in London courts.
The oil giant and its subsidiary, the Shell Petroleum Development Company of Nigeria (SPDC), are both being sued by two Nigerian communities, who are seeking about £100m in compensation after suffering repeated oil spills they claim came from SPDC pipelines in the Niger Delta.
A four-day hearing this week is due to consider whether the claims, brought by law firm Leigh Day on behalf of the Bille and Ogale communities, can be heard in the UK, where Royal Dutch Shell is incorporated.
Shell has long faced criticism over its record in the Niger Delta, which has been ravaged by oil spills. The Anglo-Dutch energy giant has blamed sabotage and theft for much of the damage.
Two key points of dispute in this week’s hearing centre on what responsibility Royal Dutch Shell has for the activities of its subsidiaries, and whether the affected communities could get access to justice in Nigeria.
Leigh Day argues that Royal Dutch Shell exercises substantial control over SPDC, and has a duty to ensure that its operations do not result in pollution. It also suggests the Nigerian legal system is too fraught with difficulties to deliver justice.
But Shell counters that “allegations concerning Nigerian plaintiffs in dispute with a Nigerian company, over issues which took place in Nigeria, should be heard in Nigeria”.
It argues that Royal Dutch Shell is “an Anglo-Dutch-domiciled holding company without any employees” and a separate legal entity that should not be held liable for all the activities of more than 1,000 subsidiary companies worldwide.
It is understood Shell will claim that allowing the Nigerians’ case against Royal Dutch Shell to proceed in the UK will open the floodgates to a wave of litigation against it and other multinationals. It is also expected to argue that any ruling that justice cannot be done in Nigeria risks being a damaging colonialist judgment on the country’s legal system.
The court could take several months to issue its verdict.
If it rules that the claims can proceed in London, the case itself would then test whether Shell can be held responsible for spills caused by sabotage to its pipelines, rather than by its own operational mistakes.
Leigh Day is arguing that Shell should be liable for failing to adequately protect its pipelines to prevent criminal damage. Daniel Leader, partner at the law firm, said: “It is clear to the claimants that Royal Dutch Shell is ultimately responsible for failing to ensure that its Nigerian subsidiary operates without causing environmental devastation.”
A spokesman for SPDC said: “Both Bille and Ogale are areas heavily impacted by crude oil theft, pipeline sabotage and illegal refining which remain the main sources of pollution across the Niger Delta.
“We are contesting the jurisdiction of the English court over these claims.”