Mixed messages from Supreme Court on parent company liability

UK parent companies’ legal liability for human rights abuses and environmental damage overseas has been a high-profile topic throughout 2019. This week the UK Supreme Court gave its decisions regarding Nigerian and Kenyan communities’ requests to appeal in their claims against Shell and Unilever.

In both cases, communities that were seriously harmed as a result of the companies’ actions or negligence – which would have been unimaginable in the UK – have been fighting for remedy and accountability.

While both cases were thrown out by the High Court and the Court of Appeal last year, the Nigerian claimants have now been given permission to appeal to the UK Supreme Court. Unfortunately, the Kenyan claimants have not.

Win for Niger Delta communities in Shell case

In a big win, 40,000 Nigerian farmers and fisherman from two communities in the Niger Delta have been allowed to take their claim against oil giant Shell to the UK Supreme Court.

The communities in Okpabi & Ors v Royal Dutch Shell plc are arguing that Royal Dutch Shell (RDS), headquartered in London, is legally responsible for decades of pollution from oil spills caused by its Nigerian subsidiary, Shell Petroleum Development Company (SPDC).

Seeping into the labyrinthine creeks, swamps and waterways of the Niger Delta, this oil pollution has destroyed crops and wildlife essential to the livelihoods of the Ogale and Bille communities. The effect on Ogale’s water wells was documented by the UN Environment Programme in 2011, which said public health was “seriously threatened” by drinking water contaminated with hydrocarbons. (And this is far from the only damage Shell has caused in the country.)

SPDC says it has produced no oil or gas in the region since 1993. But as a result of spills stretching out over previous decades, communities continue to live with chronic levels of pollution, with no clean-up from the company. In another case, Shell agreed to pay $83.5m in compensation to the Nigerian Bodo community, but it has denied responsibility for the Ogale and Bille spills, claiming they are a result of crude oil theft, pipeline sabotage and illegal refining.

“The English courts are our only hope because we cannot get justice in Nigeria,” said King Okpabi, the ruler of the Ogale community.

Vedanta: a breakthrough for corporate accountability 

Shell has consistently argued that the UK Courts do not have jurisdiction to hear the claim. An earlier High Court judgement (upheld by the Court of Appeal) found that the UK company did not exercise enough control over its subsidiary to consider it responsible for the well-being of those affected by the oil spills.

But in April, in a breakthrough case, the UK Supreme Court ruled that mining giant Vedanta can be sued in the UK for environmental damage caused by its Zambian subsidiary.

The judges stated that published materials in which Vedanta asserted responsibility for “the maintenance of proper standards of environmental control over the activities of its subsidiaries” and the implementation of those standards “by training, monitoring and enforcement” were sufficient to show the parent company intervened in the running of the mine.

This set a new precedent and made it all the more important that the Shell case be allowed to proceed, for the sake of clarity and consistency for both communities and companies.

We’re delighted that the Bille and Ogale communities will be able to appeal their case against Shell at the Supreme Court, and that the Vedanta case can similarly continue.

Challenges remain: Unilever

But this route to justice is closed to many others around the world who have been harmed by corporate malpractice connected to UK firms. A third case we have been following, against Unilever, has not been allowed to proceed to the Supreme Court.

In 2007, following the presidential election, violent mobs invaded a huge Unilever-owned tea plantation in Kericho, Kenya. They attacked hundreds of workers and their families – who were members of minority tribes – with clubs and machetes, killing and injuring large numbers of people.

Unilever had placed these people in a position of particular risk; they were recruited from another part of the country and brought to live and work on the tea estate in a region where they were at heightened risk of ethnic violence, which had occurred during previous elections.

The company has deployed a host of technical legal arguments to avoid proper scrutiny of its conduct, ultimately hiding behind its corporate structure. In 2018 UK Courts dismissed the case.

This month the judges refused to reopen it, denying Kenyan workers and families the chance to appeal. Their lawyers have now announced that they will pursue a different route to justice, filing complaints with the UN Working Group on Business and Human Rights and the OECD.

The inconsistencies in the decisions show that the law needs to make clear what is expected from parent companies in order to protect the communities affected by their operations. We’re arguing that companies should have a legal responsibility to protect the communities and workers whose lives and livelihoods they are putting at risk. Read more here.