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Shell, human rights and corporate accountability

by Richard Welford [email protected]

The implications of the settlement of damage claims against Shell, based on the allegation that it was complicit in the executions of Ken Saro-Wiwa and the other “Ogoni 9” in 1995, as well as numerous other human rights violations, has been underestimated in my view. It is not only the end of a legal battle but it confirms that large multinational corporations and others have a clear responsibility to protect human rights within their operations, and, perhaps even more significantly, within their sphere of influence. It also helps us better understand the notion of complicity in human rights abuses. This is an important development in an emerging system of accountability for international human rights violations and helps us to define corporate accountability.

The case began in 1996 not long after the Ogoni 9 were executed by the military dictatorship of Sane Abacha. Ogoni is one of the oil-producing areas of the oil-rich Niger Delta. It has a population of a little more than half a million people. Shell’s influence was therefore significant and their operations impacted almost every aspect of Ogoni life. Oil operations contributed to the destruction of the environment, it was alleged, and impacted on the rights and freedoms of the people. The Ogoni has always been a land of great poverty and few resources and it remains that way despite the billions of dollars of oil removed from it and other parts of the delta. The benefits of operations in the region have had a net negative impact on the environment and the people there according to many commentators.

Shell was alleged to be responsible for the human rights violations suffered by the plaintiffs in the case because it actively assisted the military regime in a wide variety of ways. The public settlement provided $10.5 million to the plaintiffs and the estates they represented, including the fees and costs of litigation. In addition, the plaintiffs created a trust with an initial $5 million contribution for the benefit of the Ogoni people. Perhaps more importantly however, the settlement (although not huge in terms of Shell’s turnover) demonstrates the need for much greater transparency and accountability in developing countries where issues of human rights are concerned. It means that any company exposed to potential human rights violations is going to have to look long and hard at its own operations and how they might be impacting people and the environment.

Of course, the consequence of the settlement is that neither side will get to tell their full story to us and in many ways that would have been useful. The plaintiffs alleged that Shell was complicit (under principles of conspiracy, joint venture, and agency law) in the Nigerian military regime’s repression of the Ogoni region, culminating in the hanging of Ken Saro-Wiwa and his colleagues involved a peaceful protest movement against environmental degradation and social injustice. Among the incidents that the trial lawyers planned to reveal was the allegation that Shell paid for the forces who murdered a plaintiff near the village of Korokoro.

Shell depicted itself as the victim of a movement based on extortion that advocated violence and secession, forced Shell to permanently withdraw from Ogoni, and purposely incited the military to violence. Shell characterized the Korokoro killing as part of a well-justified and restrained rescue mission, and maintained that the Korokoro raid was the only example of any limited cooperation between the company and the military. All testimony implicating Shell in bribery or extortion was dismissed as pure fabrication.

Shell tried hard to avoid reaching a settlement and strenuously continued to deny many of the allegations made. But, we should actually be thankful to Shell since their actions in the court room have actually helped to shape our understanding of corporate accountability. Interestingly over the thirteen year duration of the case, it was twice dismissed, only to be reinstated by the Court of Appeals, setting important precedents. The Alien Tort Statute used in this case now applies only to the most egregious human rights violations and only when plaintiffs can demonstrate that the corporations in question played a significant role in bringing about the violations. That has huge implications for the notion of complicity and essentially challenges the notion of silent complicity where companies are said to be liable for human rights abuses simply by remaining silent. But in the case, Chief Judge Kimba Wood rejected all of Shell’s efforts to have the case dismissed and the case was set to be tried before a New York jury when the settlement was reached.

Shell’s response to the settlement was put eloquently by Shell executive director of exploration and production Malcolm Brinded saying “Shell has always maintained the allegations were false. While we were prepared to go to court to clear our name, we believe the right way forward is to focus on the future for Ogoni people, which is important for peace and stability in the region.”

Most importantly though, the Shell case has allowed us to understand more about accountability and despite Shell’s attempts to thwart the Alien Tort Statute litigation we now have to recognise that it does offer those damaged by human rights violations a degree of accountability for violations of the most fundamental human rights norms. Every settlement makes it harder for major corporations to ignore the prospect of legal accountability in US courts if they refuse to distance themselves from such human rights crimes. And we have seen other corporate alien tort settlements. Beyond Shell and Unocal, there have been confidential settlements in Doe v. Gap (2002), Doe v. Reddy (2004), and Xiaoning v. Yahoo! (2007). Every settlement advances the principles of human rights law.

Large multinational corporations working in locations or in industries where there is a risk of human rights abuses are going to have to be careful to prevent human rights violations directly they will have to ensure that they are not complicit in major human rights abuses. The large number of cases still sitting in US courts are also more likely to settle now and further litigation under the statute will inspire more actions of this kind in the future.

In the future, due diligence with respect to human rights will mean that companies will have to conscientiously and methodologically consider the actual and possible negative impacts of their activities, and manage these with a view to minimizing or avoiding the risk of social or environmental harm. They are going to have to carefully consider the country context and the human rights impact of the organisation and other entities. They should develop a human rights policy and assess how existing and proposed activities impact human rights. Most importantly there will be a need to integrate the human rights policy throughout the organisation, along the supply chain and track performance over time.

As the Shell case demonstrates, companies will have to be particularly careful when dealing with situations characterised by conflict or political instability. But, with the impacts of climate change looming large, this will include situations of poverty, drought, extreme health challenges and natural disasters, in the future.

Any companies involved in or dependent on extractive industries that might significantly affect natural resources and disrupt communities are going to have to undertake comprehensive risk assessments and consider their activities in the proximity of operations to communities of indigenous peoples.

Where there are complex supply chains involving work performed without legal protection (as there is in many countries in Asia) should base any decision on respecting, promoting and defending human rights.

The various rulings in the case also make it clear that direct complicity (when the organization knowingly assists in a violation of human rights) is going to be considered as a human rights violation. Beneficial complicity when an organization benefits directly from human rights abuses committed by someone else still poses huge risks as well.

The settlement has been a long time coming and could have happened a decade ago. Nevertheless, the process and outcome has been useful and companies not dealing with human rights issues would do well to learn some lessons from the case and start thinking hard about the real risks involved.

SOURCE ARTICLE and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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