Case - United Kingdom - Okpabi v Royal Dutch Shell

Okpabi v Royal Dutch Shell

Summary of facts

The claims are brought individually by over 13,000 Ogale and Bille residents, and jointly on behalf of their two affected communities in the Niger Delta (with more than 40,000 residents) in the English courts against Royal Dutch Shell (“RDS”) and one of its Nigerian subsidiaries, Shell Petroleum Development Company of Nigeria Ltd ("SPDC"). They allege that oil spills and pollution from pipelines operated by SPDC caused widespread environmental damage including serious water and ground contamination, with the result that natural water sources cannot safely be used for drinking, fishing, agriculture or washing.

The Nigerian communities argue that SPDC negligently caused the oil spills. The parent company RDS should be held liable because it exercised significant control over SPDC’s operations and/or assumed responsibility for SDPC by adopting group-wide policies. By doing so, RDS owed the communities a duty of care which it had breached by failing to prevent or remedy the extensive foreseeable damage to their environment and community.

The case went back to the High Court after a Supreme Court ruling on the duty of care. In November 2023, the High Court found that the villagers could rely on the right to a clean environment under the Nigerian Constitution and the African Charter and that those rights are directly enforceable against companies like Shell. The case is still ongoing.

Timeline

2021 UK Supreme Court

Jurisdiction

Yes

Applicable Law

Nigerian common law, which is considered virtually the same as English common law for this case.

Legal issues

Whether the Court of Appeal materially erred in law in its analysis of
- (1) the principles of parent company liability,
- (2) the procedure through which the arguability of the claim was judged at an interlocutory (pre-trial) stage, and
- (3) the reliance on the Caparo test in judging whether a duty of care exists.
Whether the Court of Appeal was subsequently wrong to decide that there is not an arguable case that RDS owed a duty of care to the claimants.

Ruling / Outcome

The Supreme Court allowed the claimants’ appeal.

Main findings: The High Court and Court of Appeal were wrong to make findings about the evidence at an interlocutory stage where only the arguability of a case should be assessed. It conducted a ‘mini trial’. The early dismissal prevented the claimants from obtaining internal documentation on disclosure which could prove their case [103]-[140],
The Court reaffirmed the landmark case Vedanta.
- (1) the promulgation of group-wide policies or standards can in itself give rise to a duty of care [143]-[145],
- (2) to establish a duty of care, the issue is the extent to which the parent company took over or shared in the management of a relevant activity, not the exercise of control specifically [146]-[148],
- (3) there should be no general presumptions as there is no limit to the models of management or control in multinational groups [149]-[150],
- (4) it is wrong to use the Caparo test, as this is no distinct category of liability [151].

Effect: the claimants have an arguable case and the claims against both RDS and SPDC can proceed in the English High Court.

2018 Court of Appeal (Civil Division)

Jurisdiction

Yes

Applicable Law

Nigerian common law, which is considered virtually the same as English common law for this case.

Legal issues

Whether there is an arguable case that RDS owed a duty of care to the Nigerian claimants. The claimants appealed the High Court’s judgement based on its treatment of the evidence.

Ruling / Outcome

The Court ruled against the claimants.

While the High Court made some mistakes in its approach to the evidence, the Court reviewed all evidence (including new evidence) again and found that there was no arguable case that RDS owed the claimants a duty of care.
Lord Justice Sales gave a dissenting opinion stating that there was an arguable case of RDS owing a duty of care.

2017 High Court of Justice – Technology and Construction Court

Jurisdiction

Yes

Applicable Law

Nigerian common law, which is considered virtually the same as English common law for this case.

Legal issues

Tort of negligence: Claimants allege that SPDC, a subsidiary of RDS negligently caused oil spills leading to widespread environmental damage.
Tort of negligence: Claimants allege that RDS owed a duty of care towards the Nigerian communities and negligently breached it by failing to prevent foreseeable damage.
Interlocutory jurisdiction challenge by SPDC and RDS: For SPDC (incorporated in Nigeria) to be added as a defendant to the claim, the claim against RDS (anchor defendant incorporated in the UK) must be a real issue to be tried - there needs to be an arguable case that RDS owes a duty of care to the claimants.

Ruling / Outcome

The Court dismissed the case.

The Court ruled against the claimants at this stage saying that it is “not reasonably arguable that there is any duty of care upon RDS” using the test established in Caparo Instudries v Dickman. It ruled that there is neither a relationship of sufficient proximity between RDS and the claimants nor would it be ‘fair, just and reasonable’ to impose a duty of care.
Without a reasonably arguable case against RDS, the Court does not have jurisdiction to try SPDC.

Documentation

Court case