Court of Appeal Decision Threatens to Close Route to Justice

William Meade 01.05.2018

Last week, CORE and 45 civil society organisations from around the world wrote to urge the UK Supreme Court to allow two Nigerian fishing communities to appeal against a ruling that oil giant Shell cannot be held responsible for pipeline spills that have devastated the environment in the Niger Delta.

In February the Court of Appeal ruled (in Okpabi v Shell) that UK-based Royal Dutch Shell (RDS) was not responsible for oil pollution caused by its Nigerian subsidiary. The Court decided that RDS does not exercise enough control over its subsidiary to consider it responsible for the well-being of those affected by the oil spills.

The decision leaves thousands of people in the Niger Delta without remedy for ruined livelihoods, health impacts and severe environmental damage, is likely to have a chilling effect on similar cases, and may encourage further irresponsible business behaviour around the world. The dangerous ruling must be reconsidered in the Supreme Court.

40,000 Nigerian farmers and fishermen brought the case to the UK courts after suffering decades of pollution from Shell’s pipelines. The Ogale and Bille communities rely on the waterways in the Niger Delta for food, water and sanitation, but these have been devastated by endless oil spills dating back as far as 1989.

At the Appeal Court hearing, the Claimants showed that RDS knew about the oil spills and the poor condition of the pipelines and infrastructure, but did nothing about it. Despite this, the Court ruled that there was not enough proof that RDS managers had any control over Shell Nigeria.

This leaves the Nigerian claimants in a bind because the hearing took place before Shell was ordered to disclose relevant documents and so it would have been impossible for the claimants to prove this level of control – all the information relating to Shells internal structures remains hidden.

This case is not a one-off: over the last 24 years, many cases have been brought in the UK relating to harm suffered by people in developing countries as a result of the operations of UK multinationals. These cases have related to allegations of corporate complicity in torture and mistreatment by the Peruvian police; injuries and deaths at a mine in Tanzania; mercury poisoning, mesothelioma, asbestosis and silicosis suffered by workers in South Africa; and the health effects of toxic waste dumping in the Ivory Coast.

It is unfortunately extremely difficult to pursue such cases in the local courts due to corruption, fear of persecution and lack of access to information. Bringing a claim in the UK against the parent company, who seeks to benefit most from the subsidiary’s operations and on whom the subsidiary ultimately relies, offers one of the only routes to justice.

Yet unless the ruling in Okpabi v Shell is overturned in the Supreme Court, the decision threatens to make it near impossible to bring such cases.

In the first place, the high evidential bar the Court imposed on the claimants to prove RDS control over its subsidiary will likely be carried over into future judgments. As already mentioned, this is particularly egregious because the decision was made before Shell was forced to disclose internal documents containing information about its corporate structure.

The Court also decided that international standards on corporate responsibility, widely endorsed by states, business and civil society, are irrelevant to determining whether RDS had a responsibility to those affected by the pollution. Together with the high evidential threshold, this will mean that parent companies will only have a duty of care to those affected by the operations of their subsidiaries when they actively seek to improve standards across their global operations. This will create a perverse incentive for global companies not to improve respect for human rights and the environment throughout their business.

Over the last few decades, the power of multinational companies has increased exponentially. There are only 13 states in the world with a larger annual revenue than Shell. This makes it more important than ever that multinationals are held to account. And whilst civil society has successfully generated increasing acceptance amongst business of the corporate responsibility to respect human rights, this achievement will be undermined if the judgment in Okpabi v Shell is allowed to stand.