Court rules that Niger Delta communities can sue Shell in England

The UK Supreme Court has ruled that communities in the Niger Delta, which have been negatively affected by alleged environmental damage caused by Royal Dutch Shell (RDSB), can sue the oil major in in English courts. The judgement overturns a Court of Appeal ruling and follows a lengthy legal campaign by indigenous communities from the oil-rich area.

The appellants, represented by law firm Leigh Day, charged that Shell had manifestly failed to follow a common law duty of care to individuals who had suffered harm from repeated safety and environmental failings by one of Shell’s local subsidiaries. (Shell has also been subject to allegations relating to human rights abuses in the region.)

The judgement came on the heels of a separate legal setback in a Dutch court and in the same week that the group outlined, in rather broad terms, its plans to transition towards net zero carbon emissions. It also came as the Anglo-Dutch group is seeking to tighten its belt, with job cuts already announced in the Netherlands, the UK and Malaysia and a second round of voluntary redundancies now under way.

The litigation, brought by members of Nigeria’s Ogale and Bille communities, stands as something of a test case, as it will provide a legal precedent as to whether corporations can be sued in England for the activities of foreign subsidiaries. Shell's lawyers had originally attempted to halt proceedings by arguing that UK courts had no jurisdiction, but that was successfully rebutted.

It is too early to gauge the possible financial implications for the group, although the outcome in the Supreme Court would hardly have been welcomed at a time when the group is trying to bolster its ESG credentials. However, the decision could pave the way for further actions by local communities against other large multinationals, so it is unlikely to be the culmination of the matter. At 1,300p, sell.

Last IC view: Sell, 1,284p, 11 Feb 2021