Lessons from UK Court’s Judgment on N’Delta Oil Spills


The recent judgment by the UK Appeal Court on the dispute between Shell and two Niger Delta communities underscores the need for people of the environmentally-polluted region to seek redress in disputes that do not require international arbitration within Nigeria’s judicial system, writes Ejiofor Alike

Some communities in the Niger Delta and other interest groups in the region have expressed frustration with the recent judgment of the Court of Appeal in London, which ruled that two Nigerian communities cannot pursue Royal Dutch Shell in English courts over oil spills in Nigeria’s Delta region.

The court delivered the landmark judgment, which was, however, described in some circles as a revalidation of Nigeria’s undisputed sovereignty.
In May 2015, UK solicitors, Leigh Day, brought oil spill claims in a UK court against the Shell Petroleum Development Company (SPDC) on behalf of the Ogale and Bille communities in Rivers State.

The communities also sued Royal Dutch Shell (RDS) as an “anchor defendant” to bring the claims in England.
RDS and SPDC contested the jurisdiction of the English court over these claims and, in a judgment handed down on January 26, 2017, the court dismissed the claims against both RDS and SPDC in England.

Leigh Day argued that SPDC owes a duty of care to Nigerian communities impacted by massive crude theft and the resultant pollution, and that RDS owes a similar direct duty of care to prevent oil spilled as a result of intentional third-party interference from damaging Niger Delta communities.

SPDC and RDS responded that an English court has no jurisdiction over these claims. Rather, claims by Nigerians against a Nigerian company about events in Nigeria, governed by Nigerian law, should be heard in a Nigerian court.

The judge rejected Leigh Day’s claim that RDS owed a duty of care to the Nigerian claimants allegedly impacted by SPDC, and consequently there is no anchor defendant for the case against SPDC to be brought in England.
Leigh Day appealed the decision and the appeal hearing took place November 21-23, 2017. On February 14, 2018, the Court of Appeal handed down its judgment, dismissing the appeal.

Indeed, 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.
Ogale is in Ogoni land, where SPDC has produced no oil or gas since 1993, as access to the area has been limited following a rise in violence, threats to staff and attacks on facilities.

Court verdict
The High Court ruled that RDS had no legal responsibility for harm to the communities in the Niger Delta caused by criminal interference with the operations of a joint venture in which the Nigerian government owns a majority interest.

Ruling on Royal Dutch Shell duty of care, the High Court judgment concluded: that “there is simply no connection whatsoever between this jurisdiction and the claims brought by the claimants, who are Nigerian citizens, for breaches of statutory duty and/or in common law for acts and omissions in Nigeria, by a Nigeria company.”

“RDS is not operating the same business as SPDC. RDS is the ultimate holding company, and does not operate any business other than holding shares, and dealing with the financial matters that affect it as the ultimate holding company,” the court added.

On Leigh Day’s allegations about RDS control over SPDC’s operations, the court ruled that “the evidence on the part of the claimants that is relied upon to found a claim against RDS (rather than SPDC) is extremely thin, bordering on sketchy, and in a great many instances simply not evidence at all.”

On February 14, the court of appeal dismissed the claimants’ appeals and affirmed the lower court’s decision that the claims against RDS were bound to fail and should be dismissed. This means that SPDC does not come into the jurisdiction of the English court, so the case against both RDS and SPDC should not proceed in England.

Shell’s position
Responding to the Appeal Court ruling, the General Manager, External Relations for The Shell Petroleum Development Company of Nigeria Limited (SPDC), Igo Weli, said the Court of Appeal was right to have upheld the earlier decision that the case should not proceed in the English courts.

“Nigeria has a well-developed justice system that is capable of dealing with these claims. 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. Litigation in courts unfamiliar with the law and realities on the ground ultimately does nothing to address the issue of criminal interference in the operations of Nigerian company. SPDC works with a range of stakeholders, supporting the industry’s search for solutions to these complex issues,” Weli explained.

From Shell’s response, it is evident that SPDC and the parent company are not contesting the rights of Nigerian communities to seek justice in a court of law.
However, their argument is that Nigerian courts are fully capable of hearing any case brought by Nigerians about a Nigerian company in respect of events in Nigeria.

Bille- Ogale vs Bodo
There has been an attempt to draw parallels between the Bille-Ogale suit and the settlement of a similar case between SPDC and Bodo.

Two oil spills took place in 2008 on the Bomu-Bonny Pipeline in Bodo. Unlike Bille and Ogale spills, which Shell blamed on criminal sabotage, the company had admitted that the two spills were caused by operational failure of the pipelines, and accepted responsibility as soon as the independent Joint Investigation Team determined the cause.

As in all cases of operational spills, Shell also acknowledged responsibility to pay appropriate compensation as required by the provisions of the Nigerian Oil Pipelines Act.
In addition to the payment of compensation, THISDAY gathered that the clean-up of the 2008 operational spills at Bodo restarted in September 2017, with the re-mobilisation of the two international contractors utilising the 400 youths trained for the exercise.

But in the case of Bille-Ogale, Shell argued that Leigh Day did not disclose the identity of their clients and also did not provide any details as to which individual spills are alleged to have caused the environmental degradation or impacted their clients.

Shell’s argument is that while it will clean up and remediate areas impacted by spills from its facilities regardless of cause, it is not liable to pay compensation for damage caused by oil thieves and illegal third party activities.
Shell’s position is that criminal activity of this kind is all too prevalent in places like Bille and Ogale.

Accessing justice in Nigeria
The implication of the UK appeal court ruling is that any compensation actions by the two Nigerian communities affected by oil spills would have to be heard in Nigeria.
However, the two communities believe they can only get “justice” in the UK over what their lawyers have described as “extensive environmental damage caused by oil pollution”.

After the High Court ruling in January last year, the traditional ruler of Ogale community, His Royal Highness Emere Godwin BebeOkpabi, was quoted as saying that there is no hope of justice in the Nigerian courts.”

Some oil industry operators have described this argument as rather strange because the Nigerian courts have delivered some landmark judgments against the international oil companies (IOCs) in several disputes with the oil producing communities and awarded the communities billions of Naira as compensation for oil spills.

The Nigerian courts are in a better position to address any issue of criminality arising from the operations of any foreign company operating in Nigeria unless in cases where the contractual agreements provide for international arbitration.

Despite all the misgivings about Nigeria’s justice system, the country’s justice system is still capable of dealing with these claims in line with Nigeria’s status as a sovereign nation.
Some industry operators have also argued that dragging Shell to UK courts or Chevron and ExxonMobil to the United States’ courts for offences they allegedly committed in Nigeria is akin to dragging MTN to South African courts or Dana Air to Indian courts.

“If that is the case, the Indian courts would have been flooded with litigations from the Nigerian relatives of the victims of the 2012 Dana Air crash,” one of the operators told THISDAY on condition of anonymity.
“This could have questioned Nigeria’s status as a sovereign nation and also serve as a clear vote of no confidence on the Nigerian judicial system,” he added.

It has also been argued that if Nigerians are given free hands to seek redress in the advanced countries for offences committed by the multinationals in Nigeria, it means that poor communities and individuals who do not have the financial capacity to pay for legal fees in dollars, euro and pounds cannot access justice against the oil giants.

Tackling crude theft/oil spills
To minimise litigations, SPDC should continue to sustain its present efforts to prevent and minimise spills caused by theft and sabotage of its facilities in the Niger Delta.

In 2016, it is on record that the company sustained on-ground surveillance efforts on its areas of operations, including its pipeline network, to mitigate incidences of third-party interference and ensure that spills are detected and responded to as quickly as possible.
It has also successfully carried out daily over-flights of the pipeline network areas to identify any new spill incidents or activities.

The company had also announced that it installed state-of-the-art high definition camera to a specialised helicopter that greatly improves the surveillance of its assets and have implemented anti-theft protection mechanisms on key infrastructure.

The industry practice has always been that when a leak is identified, production is suspended and efforts made to contain any spilled oil.
All these remediation practices should be sustained in line with the Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN), Revised Edition 2002 as well as other relevant international standards.