Royal Dutch Shell has been ordered to pay damages to farmers after an appeals court in The Hague found the energy major’s Nigerian subsidiary liable for oil spills in the Niger Delta more than a decade ago.
The decision, the latest in a long-running civil case, marks an advance in the Netherlands’ ability to hold multinationals to account for the actions of their overseas subsidiaries. Procedural aspects of the decision can still be appealed in the Dutch Supreme Court.
The judge held Shell Nigeria liable for two pipeline spills that took place in the villages of Oruma and Goi between 2004 and 2005. The court has yet to make a decision on a third in 2007 from a wellhead, and has requested more evidence on the extent of the leak and clean-up.
Shell, which argued that the spills were caused by sabotage and that it should not be held accountable for the dealings of a foreign subsidiary, said on Friday it was “disappointed that this court has made a different finding”.
The court said Shell had been unable to fully prove the cause of the spills. The amount the company must pay in damages will be decided at a later date.
The judge also ordered Shell to fit a leak detection system on one of the pipelines.
Establishing a “duty of care” on the parent company in this aspect of the case could break new legal ground and have implications on where future cases are brought, with more companies facing action where they are headquartered rather than where alleged pollution has taken place.
Milieudefensie, the Dutch arm of environmental group Friends of the Earth, has supported the Nigerian farmers in their legal battle. Since it began 13 years ago, two of the four farmers involved have died.
The group argued that Shell was to blame for the poor maintenance and security of the pipes. Milieudefensie also said Shell was responsible for the failure to clean up the pollution.
However, Shell insisted that “regardless of cause, we clean up and remediate, as we have done with the spills in this case”.
Donald Pols, head of Milieudefensie, said: “We are extremely happy. This will change how multinationals can be held to account and how they operate globally.”
Nigeria is Africa’s biggest oil producer, pumping out about 1.8m barrels a day. The industry generates more than half of government revenues and almost all of its foreign exchange.
Shell first set up a Nigerian venture in the 1930s but has repeatedly come under fire over spills in the delta, oil theft and sabotage of its assets.
The region bears little sign that some of the biggest and richest companies in the world have operated there, extracting billions of dollars in oil each year, beyond pollution and hazardous air quality.
Idayat Hassan, head of the Abuja-based Centre for Development and Democracy, said: “Justice may have been delayed but it is also served.”
“The judgment will have a snowball effect as other aggrieved persons will bring up more cases in foreign jurisdictions, particularly the Netherlands.”
Local groups have agitated for greater compensation from Shell, the industry and the government for years — first for their oil and now for the pollution left behind after extraction.
Shell has been subject to a number of international lawsuits brought by farmers across the delta over oil spills and pollution, including a case brought by the Ogale and Bille people heard by the UK Supreme Court last year.
Writer and activist Ken Saro-Wiwa led non-violent protests in the 1990s seeking environmental justice for the Ogoni people. The government responded with a brutal crackdown and in 1995 executed Mr Saro-Wiwa and eight others. Shell closed its Ogoniland operations in 1993.
The oil major is funding, along with Nigeria’s national oil company, the billion-dollar clean-up of Ogoniland. But the project is mired in allegations of fraud and corruption.
International oil majors have largely moved offshore, while indigenous companies produce most of the country’s onshore oil.
Shell faces another Dutch legal suit backed by Milieudefensie demanding that it shift its business away from fossil fuels as its corporate strategy goes against global climate goals.