Campaigners have welcomed Friday’s Supreme Court ruling on claims brought by the victims of oil pollution in the Niger Delta as a major step forward for those seeking access to justice for corporate abuses.
The Supreme Court decided that two Nigerian communities, of more than 50,000 people combined, can bring their legal claims for clean-up and compensation against Royal Dutch Shell plc (RDS) and its Nigerian subsidiary, the Shell Petroleum Development Company of Nigeria.
The Supreme Court overturned a split decision of the Court of Appeal and held that the cases brought by the Ogale and Bille communities were arguable and could proceed in the English courts.
The claims allege that numerous oil spills have occurred from pipelines and associated infrastructure operated in the vicinity of the communities, causing widespread environmental damage, including serious water and ground contamination, and have not been adequately cleaned up or remediated.
Shell accepts the area has significant problems with oil pollution – but contests both the cause and responsibility – and in any case argued that the claims have nothing to do with England and Wales and should proceed in Nigeria.
The communities, represented by Leigh Day, say they are pursuing their claims through the English courts against RDS because there is no prospect of obtaining justice in Nigeria.
Both Mr Justice Fraser in the High Court and Court of Appeal held there was no jurisdiction to hear the claims in England and Wales, but the Supreme Court held that the latter’s approach was flawed in several ways.
Giving the unanimous ruling, Lord Hamblen found that the Court of Appeal wrongly conducted a mini-trial of the facts at the interlocutory stage of the litigation, prior to disclosure.
How the organisational structure worked was “very much in dispute”, he observed, and it was also an issue “in relation to which proper disclosure is of obvious importance. It clearly raises triable issues”.
The Court of Appeal focused too narrowly on the issue of ‘control’ by RDS of its subsidiary, when in fact parent company liability can arise in a variety of ways, Lord Hamblen said, while it was wrong to hold that group-wide standards, policies and guidelines could never give rise to liability.
Leigh Day partner Daniel Leader said: “This Supreme Court judgment gives real hope to the people of Ogale and Bille who have been asking Shell to clean up their oil for years. We hope that now, finally, Shell will act.
“But it also 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.”
He said the ruling made clear that parent company liability could arise in a variety of ways, including by virtue of the parent company’s public commitments and its global policy framework.
Further, disclosure “is likely to be crucial in parent company liability “cases and it would be rare that such a case could be determined prior to trial in the absence of such disclosure in the future.
The ruling came just two weeks after the Dutch Court of Appeal’s landmark decision against RDS in a case brought by four Nigerian farmers and Friends of the Earth Netherlands, which held it liable for pollution caused by its Nigerian subsidiary and ordered it to improve its pipeline network.
The International Commission of Jurists (ICJ) and The Corporate Responsibility (CORE) Coalition intervened in the Supreme Court and hailed the ruling as “a major step forward for those seeking access to justice for corporate abuses in the Niger Delta and around the world”.
Mark Dearn, director of CORE, said: “This landmark ruling sends a clear message to multinational corporations like Shell – 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.”
Carlos Lopez, senior legal advisor at the ICJ, added: “The emphasis of the Supreme Court on the relevance of evidence from internal company documents is of utmost importance for the proper assessment of whether the parent company intervened, advised or controlled the relevant activities of its subsidiary, including notably human rights abuses and environmental destruction.
“This should have an impact on future similar proceedings before courts in the UK and elsewhere.”
Who acted: for the claimants, Richard Hermer QC, Robert Weir QC and Edward Craven, instructed by Leigh Day; for the defendants, Lord Goldsmith QC, Sophie J Lamb QC, Dr Conway Blake (solicitor-advocate) and Tom Cornell, instructed by Debevoise & Plimpton; for the intervenors ICJ and CORE, Timothy Otty QC, Tim Johnston, Professor Robert McCorquodale and George Molyneaux, instructed by Kingsley Napley; and for the intervenor Corner House Research, Ben Jaffey QC, instructed by Hausfeld.