Four Nigerian Farmers and Milieudefensie v. Shell


Date of the Ruling: 
Jan 29 2021
Court of Appeal
Type of Forum: 

These two cases are part of a group of six cases involving Nigerian farmers seeking compensation for the environmental and livelihood damage they suffered as a result of oil leakages from Shell’s pipelines in the villages of Oruma, Goi, and Ikot Ada Udo.

The claimants allege that Shell is liable for the damage caused by the leak in 2005. The claimants allege that Shell violated a duty of care in allowing the leak to occur and reacting insufficiently once the leakage began; the claimants also allege that Shell violated the farmers’ right to a clean living environment under the Nigerian Constitution and the African Charter on Human and Peoples’ Rights.[1]

The District Court dismissed all the claims, holding that 1) the claimants did not sufficiently rebut Shell’s defense that the leak was caused by sabotage; 2) SPDC’s reaction to the leakage cannot be considered inadequate; and 3) the claimants had not established proof of insufficient decontamination.

The claimants appealed to the Court of Appeal for a renewed assessment of the claims on the merits. The Court of Appeal assessed these claims under Nigerian substantive law. The Court quashed the District Court’s ruling and ordered SPDC to compensate the farmers for the damages caused by the leakage and by SPDC’s failure to install a leak detection system (LDS).

Regarding the damage from the leak, the claimants argued that SPDC was strictly liable under Nigeria’s Oil Pipelines Act of 1956, which requires the holder of a license (here, SPDC) to pay compensation to any person whose land or land interest is damaged by the exercise of the license. SPDC argued in its defense that the leakage was caused by third-party sabotage. While the Court acknowledged that sabotage could be considered the most likely explanation for the leakage, SPDC – bearing the burden of proof – did not establish that third-party sabotage was the actual cause beyond a reasonable doubt. Thus, the Court found SPDC strictly liable for the damages incurred as a result of the leakage. The claimants also brought these claims under common law negligence, but because the Court found that sabotage was the most likely explanation for the leakage, the Court held that it could not be assessed whether SPDC’s negligence was the cause of the leakage.

Regarding Shell’s reaction to the leak, the Court found that SPDC violated its duty of care by failing to install a leak detection system prior to the 2005 spill, as SPDC knew that a leakage could occur in Oruma and SPDC’s lack of access to the pipeline was foreseeable. The Court also found that RDS has a duty of care as the parent company “to ensure that an LDS is installed on the Oruma pipeline,” based on findings that LDS decisions are “subject to central involvement” of RDS. As a result, the Court ordered SPDC and RDS to provide the Oruma pipelines with LDSs within one year of the ruling and imposed a €100,000 daily penalty on the parties that they must pay for each day that they do not comply with the order.

Regarding Shell’s decontamination of the impacted environment, the Court held that duty of care violations could not be established against SPDC or the parent companies, as the claimants did not provide sufficient evidence to show inadequate decontamination. However, the Court noted that an obligation to decontaminate the environment in full could potentially be derived from Shell’s obligations related to the occurrence of the leakage and the failure to install an LDS.

Regarding the farmers’ fundamental right to a clean living environment, the Court held that the claims based on this right could not be sustained. While the Court acknowledged that the contamination from the leak was sufficiently serious, the Court found that it was not established that the leakage was caused by the actions of SPDC or the Shell parents. Similarly, the Court held that the claimants did not argue in a sufficiently specific manner how the failure to install an LDS caused this environmental damage. Finally, because the leakage was decontaminated to below the intervention level, the Court held that the contamination did not meet the standard for a violation of the fundamental right to a clean living environment.

[1] The claimants in this ruling are two Nigerian farmers from Oruma, Nigeria, in association with Friends of the Earth Netherlands (‘Vereniging Milieudefensie’), an environmental advocacy organization. The defendants in the first case are Shell Petroleum, headquartered in The Hague, and the Shell Transport & Trading Company; the respondents in the second case are Royal Dutch Shell (RDS) and the Shell Petroleum and Development Company of Nigeria (SPDC). The court refers to the four defendants collectively as Shell and addresses the cases together.

Enforcement of the Decision and Outcomes: 

The Court declared this judgment provisionally enforceable. The damages derived from SPDC’s strict liability for the result of the leakage and failure to install an LDS will be assessed during separate follow-up proceedings or by settlement. As of September 2022, there is no update on the installation of the LDS. The judgment has been partly appealed by both parties to the Dutch Supreme Court. All procedures, including the appeals, are on hold during ongoing negotiations between the parties.

Significance of the Case: 

For the farmers and millions of others suffering from large-scale oil pollution in the Niger Delta, this decision represents a step towards justice. First filed over thirteen years ago, these cases reaffirm the rights that victims of environmental injustice have against transnational corporations exploiting land and resources without respect for human rights. In common law jurisdictions, victims of these actions have brought cases against corporations for breach of duty of care, but this is the first case to be decided on the merits. As such, this decision marks the first time that a court has held a Dutch parent corporation accountable for actions of its foreign subsidiary company against foreign claimants. As such, it puts other corporations on notice.

For their contributions, special thanks to ESCR-Net members: the Program on Human Rights and the Global Economy (PHRGE) at Northeastern University.