A Dutch Appeals Court at The Hague has ruled that Shell Nigeria, a subsidiary of the Royal Dutch Shell PLC, must pay compensation to farmers in two Nigerian villages, for damages caused by underground oil leaks in 2004 and 2005.
The landmark ruling on 29th January could have potential huge ramifications for how international corporations are held responsible for their subsidiaries. A statement from Donald Pols, the Director for Friends of the Earth Netherlands, which had been assisting the plaintiffs, said: “From this moment on, Dutch multinationals will be held accountable for their activities and their actions in developing countries. And that’s an enormous victory for the rights of law globally.” The Hague Court held that Shell Nigeria was liable for two particular leaks, affecting over 100 acres of farmland. In its ruling, the Court stated that Shell had not been able to establish “beyond a reasonable doubt” that the leaks were a result of sabotage – a fact that, if it had been proven, would have relieved the corporation of any liability under Nigerian law. Eric Dooh, one of the farmers, claimed the victory “for the entire Niger Delta region… for the Ogoni people. Victory for all that stood by our side, both Blacks and whites.” He also lamented the “bittersweet” nature of the victory; two of the plaintiffs, including Dooh’s own father, didn’t live to see the culmination of the 13-year legal battle.
Shell responded with disappointment to the ruling, saying in a written statement that “sabotage, crude oil theft and illegal refining are a major challenge in the Niger Delta. Indeed, in 2019 around 95% of spill incidents from our operations there were due to such criminal acts. Regardless of cause, we clean up and remediate, as we have done with the spills in this case.” These claims were contended strongly by the farmers and their lawyers; according to the Washington Post, Friends of the Earth lawyers told the court that “leaking pipes are caused by poor maintenance and inadequate security,” and that Shell was not doing enough to clean up spills. The Court appeared to side with the plaintiffs on these facts, as they also ordered Royal Dutch Shell to fit a leak detection system to one of the pipelines at fault.
This ruling, thirteen years in the making, could have far-reaching implications for how much responsibility multinational corporations bear for the actions – or inaction – of their subsidiaries. While this is not the first settlement Shell have been required to pay – in 2005 they agreed to a £60m ($84m) deal with fishermen in the Bodo community after an oil spill devastated the area – this will be the first time such a compensation order has been made to individual farmers. The 2005 payout was ordered on behalf of the entire Bodo community; as such, individual members saw very little in the way of personal financial compensation. The January 29th ruling now opens the door for communities and individuals to bring multinational corporations to court for the actions of their regional subsidiaries, a key victory for environmental and community groups alike.
While it is still possible for Shell to appeal the ruling, it may be unwise before a decision is made on how much they must pay in compensation. The company has faced considerable criticism for their heavy involvement in exploiting Nigerian oil since the late 1950s, and for their links to government and military figures. As popular opinion in recent years has turned against fossil fuels, and the rapacious nature of such companies, Shell must work to balance public opinion in the face of growing opposition, as they presumably begin to look beyond a reliance on dirty energy. If they want to play a role in the inevitable clean energy world envisioned by young leaders like Greta Thunberg, accepting their losses and committing to making their existing pipelines safer would be an important step. For the farmers, this is a well-deserved victory over those who have sought, as their representative Kentebbe Ebiarido put it, to cheat them “environmentally and economically.”