A court in London will decide in coming weeks whether Royal Dutch Shell can face trial in the UK over oil spill allegations in Nigeria, a decision some legal experts predict could attract more cases against multinationals in Britain.
The High Court will judge whether members from two communities, Bille and Ogale in Nigeria's oil-rich Delta region, can sue the Anglo-Dutch company in British courts.
The communities say Nigerian courts are unfit to hear the case against Shell subsidiary Shell Petroleum Development Company of Nigeria (SPDC). Shell says the case should be heard in Nigeria because the matter is “uniquely a Nigerian problem”.
Shell also denies responsibility for the spills, which it says were due to sabotage and illegal refining.
If the High Court rules in favour of the communities, some legal experts say other claimants against British-based multinationals would be emboldened to pursue legal action through the British courts. Some legal experts also warned that a victory by the communities could encourage unscrupulous residents to let oil spills worsen at remote sites by denying clean-up access, as payouts are often linked to the scale of the damage.
"This case brings home the message that multinationals may increasingly face claims in the English courts arising from disputes which have little or no connection to England," said Tom Cummins, a partner at law firm Ashurst.
The Bille and Ogale groups launched their claim just months after Shell agreed a 55 million pound ($68 million) settlement in 2015 with another Nigerian group, the Bodo community.
That case covered two pipeline leaks in 2008, which Shell accepted were its fault due to corrosion, and marked the largest ever out-of-court settlement relating to Nigerian oil spills. Law firm Leigh Day, which is representing the Bille and Ogale communities and also brought the Bodo case in London against Shell, says Nigeria's court system is not robust enough to give a fair ruling in reasonable time.
Leigh Day, which is licensed only to practise in Britain, has also raised concerns over whether companies will conduct clean-up operations properly without international pressure. "You've got a dual problem: the systemic ineffectiveness of the courts and the fact that people (in local communities) just can't get the evidence together or even representation to take on these companies," said Daniel Leader, partner at Leigh Day.
For its part, the Nigerian government’s National Oil Spill Detection and Response Agency defended the effectiveness of the Nigerian court system, saying it had successfully sanctioned and sued several companies locally, including SPDC.
Shell said it settled the Bodo case in part because it admitted responsibility for the spill, but never agreed that the case should be tried in London. It said it would fight to stem a potential landslide of cases from groups whose lands Shell says were spoiled by sabotage, oil theft and illegal refining that are endemic across the Delta.
"We fully intend to have this (jurisdictional issue) decided by a trial judge, to determine the issue once and for all," said Gaurav Sharma, senior legal counsel for Shell's global litigation team.
Shell said 92 percent of all oil spilled from SPDC facilities in 2009-13 was a result of theft, sabotage or illegal refining. In part due to such attacks, the oil major is divesting pipelines and other onshore assets after more than 50 years of operations in Nigeria.
The Bodo case was hailed by some as a victory for communities, but more than eight years after the spill, the clean-up has not yet begun. Shell paid the agreed damages, but said the community denied it access in August 2015 when work was set to begin – asking instead for cash to do it themselves.
Barisi Kkabe, a Bodo youth leader, said the community was unhappy with the contractor picked by Shell, and "out of fear that [the clean-up fund] may be misappropriated, decided that ... they should share it among the people". An SPDC spokesman said the company was unable to meet the Bodo community’s request to distribute clean-up work to local contractors because it was “not procedurally correct”.
A United Nations Environmental Programme report into oil pollution in Nigeria’s Ogoniland said communities should avoid protracted negotiations over access to spill sites as delays result in far greater environmental damage.
"Communities deserve compensation for damages when it's Shell's fault," said Aaron Sayne of the Natural Resource Governance Institute, a non-profit group that advises nations on how to manage oil, gas and mineral resources without financial links to the oil industry. "But I don't think it's going to be easy for a foreign court to get its head around how complicated it is."