Is Royal Dutch Shell responsible for irresponsible operations of Shell Nigeria?

14th February 2013

Child on oil-polluted river banks in goi. Image courtesy of Marten van Dijl/Milieudefensie.

Child on oil-polluted river banks in Goi. Image courtesy of Marten van Dijl/Milieudefensie.

With the aid of Friends of the Earth Netherlands, Nigerian farmers whose lives and livelihoods were impacted by oil spilled from Shell pipelines took Shell Nigeria and its parent company Royal Dutch Shell to court.

Historic Ruling

After a procedure lasting over four years, the court held British-Dutch oil giant Shell responsible for pollution in the case of only one farmer, dismissing claims brought by farmers in two other villages, where leaking underground pipelines caused the spills. 

The court ruled that as the oil giant didn’t do enough to protect its pipelines from sabotage, it will have to pay damages to the farmer - Elder Friday Akpan; the extent of the damage will be assessed in a separate procedure. The plaintiffs were also successful in establishing the jurisdiction of Dutch courts over both Shell’s parent company and the Nigerian subsidiary. This sets a positive precedent for foreign victims of abuse by Dutch multinational companies.

History of Pollution

Oil pollution has ravaged large swathes of the Niger Delta, situated in the south of Nigeria - which exports nearly two million barrels a day, and is the world's eighth-largest oil producer.  The biggest oil company operating in the region is Shell, which has been active there since the 1950's.  It now has a 7000 km pipeline system, and its operations have resulted in substantial ecological damage to the Delta’s vulnerable ecosystem.  

Besides oil spills, environmental damage has been caused by the pollution from drilling sludge, and the construction of roads, dams and canals to facilitate the industry’s infrastructure.  The result is an ecological disaster.  Despair over the situation – as well as concerns about the unfair distribution of oil money – has fuelled protests and conflicts.

Disaster Delta

The desperate situation in the Niger Delta came to international attention in 1995 when the Nigerian state executed poet and Ogoni leader Ken Saro Wiwa, who had campaigned for justice in the delta.  Although this shameful event increased pressure on oil companies to operate responsibly, the oil spills continued – with hundreds occurring every year. 

From Shell’s Delta operations alone, oil spills have averaged almost one a week over the past three years.  Many spills result from pipelines’ poor condition, but some happen because Shell is unable to protect its pipeline system against saboteurs and oil thieves. 

In 2011, following a two-year scientific assessment of oil pollution in the Niger Delta’s Ogoniland, serious and systemic problems with Shell’s clean-up of oil pollution were exposed by the UN.  Its report said “post-oil spill clean-up of contamination does not achieve environmental standards according with Nigerian legislation, or indeed [Shell’s] own standards.” 

The net effect is that many communities in the Niger Delta have seen their fishing and farming livelihoods destroyed or severely damaged.  The delta is still green but under the canopy of tropical trees, the soil is often black and animal life has disappeared.

Shell’s response: the sabotage defence

While sabotage of oil pipelines in the Niger Delta is one cause of pollution, it’s not nearly such a major issue as promoted by Shell’s public relations machine.  Many spills are caused by leaks from pipelines that are old and poorly maintained, and Shell’s claims about the extent to which sabotage causes pollution have been strongly challenged by communities and NGOs, including Amnesty International.

The court ruling in the Netherlands means Shell can no longer hide behind the sabotage defence, as if the company was not responsible for the oil pollution problem; this should have wider ramifications for Shell’s Nigeria operations.  However, the ruling was a blow for the three farmers whose claims were dismissed, and exposes the formidable obstacles facing the Niger Delta’s people in their ongoing struggle to get justice after more than half a century of pollution.

All of the plaintiffs were faced with an almost impossible task in proving their cases. They alleged the oil spills were the result of operational failure, and not sabotage - a crucial distinction for determining the extent of the company’s liability. But in considering the four farmers’ claims, the Dutch court had to rely on Shell’s own oil spill investigation reports.

Research by Amnesty International has exposed serious flaws in the oil spill investigation process in Nigeria.  Shell itself leads all investigations into spills from its facilities, creating an obvious conflict of interest.  In theory, community members are part of the investigation process. However, in practice if they disagree with the oil company’s assessment, Shell simply overrides them. Nigerian communities have no access to independent assessments of the cause of oil spills or the associated environmental damage.

While the farmers involved in the Dutch case were able to present some evidence that cast doubt on Shell’s sabotage claims, this was deemed insufficient to meet the evidence threshold.

Failing Regulations

Shell holds most of the data on oil spills and related measures. The plaintiffs in this case had requested access to company-held documents, which they believed would have helped support their claims.  However, their request for key documents was denied.

When one party holds all the cards, restrictive disclosure rules can be an obstacle to justice; they can mean that deep power inequalities are perpetuated.  It’s time courts began to recognise the significant inequality in such cases and interpret and apply the rules in a way that redresses the imbalances.

The Dutch court’s decision also raises concerns about serious limitations in Nigerian law (which was the law applied in this case).  Friends of the Earth Netherlands, who were given standing in the case, argued that Shell should be liable for inadequate response to oil spills. The court found that under Nigerian law there is liability for the consequences of a spill but not for failure of the company to respond adequately.

Parent liability – Multinationals benefit from double standards

The bottom line is that a company such as Royal Dutch Shell is not ashamed to use the fact that corporate responsibility and technological standards in Nigeria are much lower than in its home countries - The Netherlands and the UK.  Simultaneously, in glossy and global PR campaigns, it prides itself on being a top class integrated energy company working for the benefit of humanity. 

The court made a troubling statement of principle on the duty of care of RDS.  It stated that, in its view, a parent company’s duty of care ended with the subsidiary’s workforce, and would not extend to the communities impacted by the operations of the subsidiary. This view is inconsistent with recent developments in the field of corporate accountability.  

Both environmental and human rights groups will continue to strongly challenge such overly restrictive views of parent company liability, which only encourage multinational companies to operate with double standards.

Friends of the Earth and the Nigerian farmers are appealing the court ruling. More news from The Hague is to be expected in about a year.

This article was written by the following authors:

Audrey Gaughran, Director Global Thematic Issues, Amnesty International

Alex van den Heuvel, Research and Adviser on Corporate Accountability Amnesty International

Geert Ritsema, International Campaigns Coordinator Friends of the Earth Netherlands

Evert Hassink, Oil and Mining Campaigner Friends of the Earth Netherlands