1 March 2021 by

The Hague Court docket of Enchantment has not too long ago handed down a ruling that’s of profound significance to environmental attorneys. It’s not solely the primary case on the appellate stage in Europe that has resulted in a victory on the deserves for the victims, but in addition the primary case to carry {that a} mother or father firm was below an obligation of care with regard to overseas claimants. I’ll try and summarise one of many judgments within the following paragraphs, however readers would do properly to take a look at the detailed evaluation of the case by  Dr Lucas Roorda on the Rights as Usual weblog: “Wading by means of the (polluted) mud: the Hague Court docket of Appeals guidelines on Shell in Nigeria”.

David Hart QC will comply with up my put up with a chunk on  the UK Supreme Court docket resolution in Okpabi v Shell on 12 February 2021.

There are actually three judgments on this case 4 Nigerian Farmers and Milieudefensie v. Shell; as Dr Roorda says,

The primary (‘Cases A and B’) considerations an oil spill from an underground pipeline close to Oruma in 2005; the second (‘Cases C and D’) considerations an oil spill from an underground pipeline close to Goi in 2004; the third (‘Cases E and F’) considerations an oil spill from a wellhead close to Ikot Ada Udo. 

All three circumstances contain the identical authorized points, completely different claimants and barely completely different details. Dr Roorda focusses on Instances C and D in her put up. To keep away from pointless overlap, I can be referring to Instances E and F, Milieudefensie v Royal Dutch Shell plc (1) and Shell Petroleum Development Company of Nigeria Ltd (E), and Shell Petroleum Company of Nigeria Ltd v Friday Alfred Akpan (F) . Milieudefensie is the Netherlands department of the NGO Pals of the Earth, who supported the entire circumstances.

The claims all involved oil spills which triggered extreme injury to native farmlands and fishing grounds. The claimants affected had been Nigerian fish farmers, who held each Shell Nigeria (SPDC) and its mother or father firm Royal Dutch Shell (RDS) responsible for negligent upkeep of the pipelines and wellhead, insufficient response to the spills and inadequate clean-up, thereby inflicting that injury. As Dr Roorda says, they didn’t have a lot success earlier than the The District Court of the Hague in 2013 , which initially solely upheld one declare from Instances E and F, that of Friday Alfred Akpan (discussed here). Nevertheless it dismissed all different claims, accepting Shell’s defence that the respective spills had been doubtless brought on by sabotage, and rejecting legal responsibility of mother or father firm RDS. That courtroom additionally concluded that

mother or father corporations like RDS generally don’t have any obligation below Nigerian legislation to stop their (sub-)subsidiaries similar to SPDC from inflicting injury on others by means of their enterprise operations’ (para. 4.26). 

However in January 2021 the Hague Court docket of Enchantment reversed these findings. It held the native firm SPDC responsible for injury brought on by oil spills in Instances A to D and ordered cost of damages to the claimants, the quantity to be decided in a separate listening to (schadestaatprocedure). It additionally ordered each SPDC and RDS to put in a leak detection system (LDS) within the pipeline central to Instances A and B. In Instances E and F, the courtroom issued an interlocutory resolution ruling that these spills had been brought on by sabotage, however requested further data from the events on the extent of the injury and subsequent clean-up actions.

The claimants had primarily argued their case on the premise of the federal Oil Pipelines Act (OPA), which outlines obligations for operators of oil infrastructure; and on frequent legislation torts, particularly the torts of negligence, nuisance and trespass to chattel. To find out the legal responsibility of SPDC for each spills, the courtroom appeared primarily on the OPA, as SPDC was the operator of the pipelines for the needs of OPA.

Background details and legislation

The dispute in circumstances E and F arose from two spills from an oil properly close to the village of Ikot Ada Udo in Akwa Ibom State, Nigeria. This oil properly, often known as Ibibio-1, was drilled there in 1959 by SPDC’s predecessor in title, however was by no means used for oil manufacturing; it remained an exploration properly, the wellhead of which was sealed above floor with a so-called “Christmas tree”. It is a strong metal development with a variety of hole pipes and metal valves fitted with handwheels.

Two main leakages occurred in 2006 and 2007. Milieudefensie blamed the injury the leakages triggered to close by agricultural lands and fish ponds on the SPDC as operator of the oil properly, but in addition on RDS as the pinnacle of the Shell group.

The events agreed that this declare needed to be judged below Nigerian legislation, additionally insofar because it was instituted in opposition to the mother or father firm RDS. The query of which sanctions needs to be imposed was additionally one to be decided below Nigerian legislation, which carefully resembles the frequent legislation of England and the doctrines of fairness. English precedents aren’t formally binding on Nigerian courts however have persuasive impact. The important thing tort of nuisance is in fact from the 19th century case of Rylands and Fletcher (Home of Lords 17 July 1868 (LR three HL 330).

Within the Hague Court docket’s courtroom’s description of that case, that rule reads as follows:

The one who for his personal functions brings on his land and collects and retains there something more likely to do mischief if it escapes, should hold it at this peril, and, if he doesn’t accomplish that, is prima facie answerable for all of the injury which is the pure consequence of its escape.

…The Rylands v Fletcher rule locations strict legal responsibility – not limitless, by the way – on the occupier of a land for the injury which happens when the circumstances of this rule are met. The strict legal responsibility of part 11(5)(c) OPA could be seen because the elaboration of this rule for the case of pipeline injury.

Akpan made his dwelling by farming land and working fish ponds within the Akwa Ibom state in Nigera. North of the village is the properly, in the course of which SPDC has unique rights of strategy to assure that they will entry its pipes and installations for upkeep and restore. The wellhead belongs to a three way partnership of which SPDC is the operator. The crude oil extracted by the drilling properly is transported by pipeline to circulation station the place it’s separated from the water and pure gasoline which can be additionally produced by the properly.

The “christmas tree” (see image) by which the wellhead in query was sealed above floor consists of a sequence of compartments that are opened or closed by valves. There was an incident in September 2006 the place the SPDC representatives had been alerted of a spill and “a gaggle of youths used violence in opposition to the SPDC crew” [para 2.4]. The second oil spill, in August 2007, was reported to the SPDC.

Arguments earlier than the Court docket

Within the earlier listening to the District Court docket accepted that the 2 oil spills had been brought on by sabotage. This proof was examined anew by the Court docket of Enchantment. Shell, supporting the allegations of sabotage, recalled the entry downside that additionally existed in 2006, i.e. the obstruction of labor and the acts of violence on the time, in addition to the issue of lastly attending to the wellhead to handle the issues in 2007. Earlier than the Court docket of Enchantment Milieudefensie did acknowledge sabotage, however submitted that the faucets had not been closed correctly or that they’d began leaking over time.

The District Court docket had discovered that SPDC – even when it was sabotage – dedicated a tort of negligence in the direction of Akpan by failing to adequately safe the Ibibio-1 previous to the leakages in 2006 and 2007 in opposition to the sabotage that might then be simply dedicated. SPDC was due to this fact ordered to pay compensation for the injury brought on by the spills, extra exactly the injury ensuing from the contamination of Akpan’s land and fish ponds.

There’s a nice deal extra on the proof equipped to the Hague Court docket of Enchantment which I can’t go in to right here. The salient points in all three circumstances had been as follows.

First, the courtroom examined legal responsibility for inflicting the oil spills. It thought-about that artwork. 11(5)(c) OPA imposes a strict legal responsibility normal for operators of oil pipelines. The operator could be exempt from legal responsibility in circumstances of sabotage, which Shell argued was the most certainly reason for the spills in Oruma and Goi. The courtroom nonetheless held that below Nigerian legislation sabotage needs to be confirmed past cheap doubt, as was argued by the claimants. Whereas the courtroom famous that the accessible knowledgeable studies certainly urged that sabotage was a possible reason for the spills, it determined that this alone didn’t meet the usual of ‘past cheap doubt’. It thus concluded that SPDC couldn’t evade the strict legal responsibility normal of artwork. 11(5)(c) OPA, and that it’s responsible for damages arising out of the spills.

Second, relating to Shell’s response to the oil spills, the courtroom famous that artwork. 11(5)(c) of the OPA was not relevant and that the claims relating to the response needs to be assessed in gentle of frequent legislation torts, particularly negligence. In each circumstances (A and B; and C and D), the courtroom had discovered that SPDC owed an obligation of care to the claimants, and acted negligently in its response to the spills. Within the case of the A and B spill, SPDC was conscious of the chance of spills and potential issues with on-site inspection following a suspected spill, but uncared for to put in a ‘Leak Detection System’ or take different ample measures. This could have allowed a extra fast response to leaks and spills, even when entry to the location was (briefly) unimaginable. Within the case of the C and D spill, the courtroom famous that whereas SPDC did carry out an on-site inspection by helicopter to evaluate the leak, this might have been executed not less than a day earlier. The courtroom moreover ordered that SPDC ought to set up an LDS system within the pipelines in each circumstances.

Lastly, the courtroom mentioned the clean-up undertaken by Shell after the spills. Right here, the courtroom discovered that whereas there was nonetheless some air pollution in each areas, the obligation of care Shell had to make sure ample clean-up didn’t lengthen past the actions it had already undertaken, as assessed by relevant trade requirements. The courtroom additionally dismissed the claimants’ arguments that the remaining air pollution constituted a violation of the farmers’ proper to a clear surroundings, leaving apart whether or not such a proper might be horizontally invoked below Nigerian legislation.

Legal responsibility of RDS

The courtroom examined whether or not Royal Dutch Shell, mother or father firm of the Shell group, was additionally responsible for the oil spills. Such legal responsibility might be based mostly on English precedent, which the courtroom famous has persuasive authority in Nigeria’s frequent legislation system. The query was then whether or not the mother or father firm additionally owed an obligation of care to the claimants. An obligation of care could be incurred if the corporate is in ample proximity to the claimants, for instance by intervening in its subsidiary’s operations, and if imposing that obligation is ‘truthful, simply and cheap’. The Court docket noticed that the UK Supreme Court docket had confirmed in Vedanta v. Lungowe that mother or father corporations can owe an obligation of care to individuals affected by dangerous actions of overseas subsidiaries.

The claimants had argued that RDS, by means of its place within the Shell group and interventions with its Nigerian subsidiary, had incurred an obligation of care, however the courtroom dismissed this argument with regard to inflicting the spills. It famous that for a mother or father to incur an obligation of care, the subsidiary will need to have acted wrongfully. However in all three circumstances the truth that the subsidiary had not acted wrongfully made no distinction; the SPDC incurred strict legal responsibility as an operator below the OPA. With regard to the response to the spill, the courtroom discovered a restricted obligation of care- albeit restricted.

Remark

Throughout the considerably dry wording of the Court docket of Enchantment could be discovered what Dr Roorde calls

a monumental victory for the victims and their communities, and by extension for Milieudefensie.

This was the primary time {that a} overseas anchor defendant has been discovered liable, resulting in an enforceable resolution on the deserves. The mother or father firm RDS was discovered to owe a standard legislation obligation of care to residents of a 3rd state, one thing of a “huge leap … in the direction of extra company accountability.”

Furthermore, this case is the primary case the place a mother or father firm has been discovered to owe a standard legislation obligation of care to claimants residing in a 3rd state, particularly native communities affected by its subsidiary’s operations. The discovering that there was ample proximity between the mother or father firm and its workers or native communities to incur such an obligation is a crucial first step in establishing actual and enforceable transnational duties of care. As Dr Roorde notes,

English courts had contemplated this risk in Connelly v. RTZ and Lubbe v. Cape, and the UK Supreme Court docket confirmed this in Vedanta v. Lungowe. …. This holding thus staves off the fears that transnational company duties of care are a mere hypothetical, theoretically doable however by no means really occurring in the true world. In my opinion, that is probably essentially the most lasting side of the case.

This doesn’t imply in fact that this types a precedent for all environmental disasters the place the mother or father firm relies overseas. The Hague Court docket of Enchantment stored its findings to the actual guidelines below the OPA and the details of the case.

It does imply that in a special case, say in a special nation with completely different native legal guidelines, regarding a special trade with completely different operational insurance policies, or regarding even barely completely different details, the result could also be fully completely different to this case.

It was important that the relevant legislation in Nigeria is the frequent legislation, which implies that it’s doable to use English precedent, most significantly on this case the rule in Rylands v Fletcher.

Dr Roorde factors out that the way in which the Dutch courtroom utilized that precedent was arguably problematic, particularly the place it sided with Shell in holding that the subsidiary should itself have dedicated a tort earlier than the mother or father can incur an obligation of care.

This doesn’t comply with immediately from the English circumstances cited by the courtroom, nor does the courtroom make clear why discovering that SPDC was topic to strict legal responsibility with regard to grease spills precludes an obligation of take care of RDS. The place it does discover a obligation of care, that discovering stems from RDS’ particular interventions in SPDC’s operations after 2010, moderately than from its central place of authority within the company group. I’ve argued on this blog before that discovering an obligation of care based mostly on precise interventions of the mother or father, moderately than its capability to intervene, might create an incentive for mother or father corporations not to intervene with their overseas subsidiaries (or solely very typically), as this might probably result in legal responsibility later.

[however]

…  not simply by the the victims on this process who waited 13 years for a correct treatment, but in addition within the wider communities of the Niger Delta. As I identified on this weblog, a number of important authorized and sensible questions stay, from the provision of knowledge essential to viably argue a case to the exact extent of parental duties of care. However this end result might properly bolster different victims to convey their circumstances earlier than residence state courts, and push the development in the direction of extra company accountability additional ahead.