Shell, ExxonMobil and the Netherlands: Arbitration Battles over Groningen’s Closure and Earthquake Legacy

The Groningen gas field in the Netherlands — once Europe’s largest — now at the centre of arbitration cases by Shell, ExxonMobil and NAM against the Dutch state over closure terms and compensation rights.

The long-running saga over the Netherlands’ Groningen gas field — once Europe’s largest — has entered a new, highly contested legal phase: multiple arbitration cases by energy majors Shell plc and ExxonMobil against the Dutch government and state-linked entities. These disputes touch on issues ranging from contractual interpretation and reputational risk to international investment law and public policy. The unfolding legal fight raises important questions about accountability, investor-state dispute settlement (ISDS), and the shifting balance between profit rights and public interest in the energy transition.

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Background: Groningen — From Fuel of a Nation to Earthquake Epicentre

The Groningen gas field was discovered in 1959 and became central to the Netherlands’ energy supply and economic development. Decades of extensive production helped fuel Dutch post-war growth and gas export revenues. However, gas extraction also induced thousands of earthquakes across the region, causing structural damage to homes, economic stress, and years of social unrest. Production limits were introduced from 2014, and by October 2023 gas extraction ceased after decades of seismic impacts. 

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What Are the Arbitration Cases About?

1. Multiple Arbitration Proceedings (2022–2025)

Between 2022 and 2024, Shell, ExxonMobil, and their joint venture Nederlandse Aardolie Maatschappij (NAM) — a 50/50 JV between Shell and ExxonMobil that operated the Groningen field — initiated at least four partially overlapping arbitration claims against the Dutch state. These primarily fall into two categories: investor-state dispute settlement claims and contractual arbitration. 

A. Contractual Arbitration Before the Netherlands Arbitration Institute (NAI)

Shell and ExxonMobil — both through NAM and as separate parties — have filed arbitration claims with the Netherlands Arbitration Institute (NAI) concerning:

• levies for damage compensation and home reinforcement, and

• the terms and implementation of the Groningen phase-out arrangements originally envisaged under the 2018 Heads of Agreement and the 2019 Interim Agreement with the Dutch state. 

These cases hinge on the interpretation and compliance of contractual arrangements about how the wind-down of gas extraction was to proceed and who bears financial responsibility for related costs. Shell has stated that arbitration is part of standard contract mechanisms to resolve such disagreements, and that it still seeks a final, all-encompassing settled judgment on the terms agreed with the government. 

B. Energy Charter Treaty (ECT) Arbitration

ExxonMobil has also brought a claim under the Energy Charter Treaty (ECT) — a controversial investor-state treaty that allows corporations to seek compensation when public policy actions are alleged to harm their investments. In ExxonMobil’s case, this assertion challenges the Dutch government’s decision to halt gas production as a breach of investment protection standards under the ECT. 

That claim was filed via a Belgian subsidiary — a tactic known as “treaty shopping”, which routes claims through jurisdictions with favourable bilateral investment treaties — a move that has attracted legal and political scrutiny given EU law debates on the ECT’s compatibility with European energy and climate policy. 

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Why These Legal Actions Matter

1. Compensation for “Lost Future Profit” and Damage Liability

The companies are asserting that:

• they are entitled to compensation for lost future gas production profits due to the accelerated shut-down, and

• they are contesting their financial liabilities for ongoing earthquake-related damages, despite decades of revenue from the field (reportedly more than €60 billion). 

In contrast, the Dutch government has estimated €22 billion in public commitments to repair and redevelopment plans for the region, and some commentators argue that diverting public funds toward arbitration awards could undermine these efforts and delay compensation for affected residents. 

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2. Interim Arbitration Decisions and Public Oversight Concerns

An interim ruling by an NAI tribunal in early 2025 granted Shell and ExxonMobil enhanced access to audits and government reporting connected to damage claims — a development that has raised concerns about corporate influence over damage assessment mechanisms at a time when the companies remain financially responsible for ongoing reinforcement and claims settlement. 

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3. ISDS and Investor-State Law Controversies

Invoking the Energy Charter Treaty has drawn criticism because of broader political movements to reform or abandon ISDS mechanisms, particularly in the context of climate policy and energy transitions. The European Union is in the process of withdrawing from the ECT, in part because such treaties can be used to challenge government environmental policy decisions in private tribunals. 

Civil society groups and policy analysts have argued that these arbitration strategies — often conducted in private tribunals rather than domestic courts — can undermine public accountability and obstruct governments’ ability to pursue environmental protections. 

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Public and Political Reactions

The arbitration battles have not taken place in a vacuum. A major Dutch parliamentary inquiry in 2023 concluded that the state and energy companies had historically prioritised economic gain over public safety, leading to a “debt of honour” owed to residents of Groningen for decades of damage and insecurity. 

Critics argue that redirecting public resources to settle arbitration claims could jeopardise long-term recovery plans for the region, while supporters of arbitration maintain that contractual and investment protections should be respected, and that judicial remedies may not provide adequate or neutral resolution mechanisms.

How This Fits into Broader Trends in Energy and Arbitration

The Groningen litigation sits at the intersection of several larger policy tensions:

• the use of ISDS and treaty arbitration in climate and energy disputes,

• the ethics and legality of “treaty shopping” in intra-EU contexts,

• and the broader trend of fossil fuel companies using investor-state mechanisms to challenge national public policy decisions that affect their business models. 

This pattern has implications well beyond the Netherlands, sending signals to other countries considering aggressive climate or public safety policies that may affect incumbent energy investments.

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Conclusion: A Legal Aftershock with Long-Term Implications

The Groningen arbitration disputes involving Shell, ExxonMobil, NAM, and the Dutch government reflect deep tensions between corporate profit protection and public governance prerogatives — particularly in the energy transition era. These cases demonstrate:

• how decades-old extractive agreements continue to shape modern energy policy,

• how international arbitration mechanisms can be used by multinationals to seek compensation for policy changes, and

• how public accountability and national legal forums intersect with private dispute settlement.

Regardless of how the tribunals ultimately rule, the legal battle underscores the complexity of managing legacy energy infrastructure, earth-science consequences, and shifting public expectations in an era where climate policy and investor rights increasingly collide.

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Disclaimer

This article is based on publicly available reporting and arbitration case references. It does not provide legal advice and distinguishes documented developments from interpretation. Arbitration cases may evolve as proceedings continue.

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