Shell Ordered to Pay Compensation Over Nigerian Oil Spills

By Sarah McFarlane 

LONDON -- Royal Dutch Shell PLC's Nigerian subsidiary has been ordered by a Dutch court to pay compensation for oil spills in two villages, a ruling that some lawyers say could encourage further cases against multinationals for pollution abroad.

The ruling against the energy giant is the latest step in a yearslong legal tussle over the case, which was first lodged in 2008 by four Nigerian farmers and Friends of the Earth Netherlands. They had accused Shell and its Nigerian subsidiary of polluting fields and fish ponds through pipe leaks in the villages of Oruma and Goi.

In its ruling Friday, the Court of Appeal in the Hague also ordered Shell to install equipment to safeguard against future pipeline leaks. The amount of compensation payable related to the leaks, which occurred between 2004 and 2007, is yet to be determined by the court.

The case establishes a "duty of care for the parent company to play a role in the pollution abroad, in this case by having the duty to make sure there is a leak-detection system," said Channa Samkalden, lawyer for the Nigerian farmers and Friends of the Earth Netherlands.

Shell argued that the leaks were caused by sabotage. In a statement following Friday's ruling, the company said it was "disappointed that this court has made a different finding on the cause of these spills." Shell didn't say whether it would appeal against the verdict.

In recent years there have been several cases in U.K. courts related to whether claimants can take matters to a parent company's jurisdiction. In 2019, the U.K. Supreme Court ruled that a case concerning pollution brought by a Zambian community against Vedanta Ltd. in relation to a copper mine could be heard by English courts.

"It established that a parent company can be liable for the actions of the subsidiary depending on the facts," said Martyn Day, partner at law firm Leigh Day, which represented the Zambians.

Friday's case isn't the first legal action Shell has faced related to pollution in Nigeria. In 2014, the company settled a case with over 15,000 Nigerians involved in the fishing industry who said they were affected by two oil spills, after claims were made to the U.K. High Court. Four months before the case was due to go to trial Shell agreed to pay 55 million British pounds, equivalent to $76 million.

Shell is also awaiting a U.K. Supreme Court ruling in a case in which some 42,500 Nigerians alleged the U.K. parent company has a duty of care to individuals affected by oil leaks from pipelines that its subsidiary operates. It isn't clear when the judgement will be made.

Friday's verdict tells oil majors that "when things go wrong they will be held to account and very likely held to account where their parent company is based," said Mr. Day, adding that the ruling could spark more such actions.

Write to Sarah McFarlane at [e-mail]

(END) Dow Jones Newswires

January 29, 2021 13:24 ET (18:24 GMT)

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