A landmark legal case is laying the groundwork for communities to sue parent companies for the damages of their subsidiaries
Last modified on Thu 30 Sep 2021 10.34 EDT
Chief Patricia Ogbonnaya walks through her Nigerian farm on a July afternoon, a light drizzle coating her umbrella while she examines what should have been ripe fruit trees and thriving fish ponds. She points to dark stains on tree trunks that stop abruptly at the same level across her land. “That’s how high the oil reached during the flood,” she says touching the bark, her hand coming away with sticky residue.
Last autumn, a Shell pipeline burst and saturated the surrounding area with crude oil. A heavy downpour swept the oil over Ekpeye land, drenching farms and swampland where many of the animals hunted by Ogbonnaya’s community made their home.
Ogbonnaya points to a massive hole in the ground, a fish pond drained of water, where a rainbow sheen at the clay bottom reflects the palm trees above, showing how deep the oil sank. “Nothing is now safe for human consumption … not the air we breathe, the water we use for cooking … nor crops … meat from cows and goats … that feed on these polluted vegetations,” Ogbonnaya wrote to one of the national agencies involved in oil spill investigations, late last year.
If she could, Ogbonnaya might file a lawsuit against Shell’s Nigerian subsidiary, responsible for more than half of the oil extraction in the Niger delta. But she can’t. The subsidiary, named the Shell Petroleum Development Company of Nigeria (SPDC), won’t acknowledge responsibility for the oil spill, so it’s nearly impossible to hold them accountable in Nigerian courts.
The Shell subsidiary said its oil spill response team visited the site with government regulators when reports were first made, but records from federal oil spill agencies say the company was not present when they examined the damages. Yet, the subsidiary continues to argue that its team “found no connection,” between the spill and its own facilities.
Even if the company did admit liability, the community likely wouldn’t receive any compensation for years. The subsidiary is known for filing a merry-go-round of lengthy defence statements, objections and appeals against communities filing for damages. Some cases have taken so long that they are passed down to the next generation, with the original litigants handing over their claims to next-of-kin when they die.
For the first time, a decision from the United Kingdom’s supreme court has given oil-spill victims in the Niger Delta some reason to be cautiously optimistic. In February, the court ruled that in some circumstances communities can sue Shell directly.
Baridilo Deekor, an attorney in Port Harcourt where regional lawsuits against the subsidiary are heard, called the decision a “ray of light.”
“This is the time for Shell International to take responsibility and be accountable for the crimes [that] have been committed,” said Deekor, a general-practice lawyer who has also been navigating oil-related cases for the last 10 years.
Shell’s subsidiary in a comment for this story argued that Nigeria’s justice system is “well developed,” and equipped to handle spill litigation. The company said it “works closely with the regulators, local communities and other stakeholders to address this challenging issue.”
“Irrespective of cause, we clean up and remediate areas affected by spills from our facilities or pipeline network,” the subsidiary said.
The Niger Delta’s story is a familiar one in countries home to oil and gas extraction, where foreign holding companies often absolve themselves of responsibility for damages concerning the health, livelihoods, and environments of communities where their subsidiaries operate. It’s rare to see parent companies held responsible for the damages inflicted by their overseas extensions, but a small body of court decisions is starting to disrupt that status quo, including a 2019 decision in favour of a Zambian community against a copper mine run by a subsidiary but owned by a multinational company.
“There’s a whole range of potential, it doesn’t matter what the industry is,” said Daniel Leader, partner at UK firm Leigh Day, which represented the Nigerian communities involved in the UK court decision this February, and which also brought the Zambian case against the copper mine. Leader anticipates the official trial between the Nigerian communities and Shell will begin in 2023.
“The [supreme court] ruling, in my view, was a watershed moment in the accountability of multinational companies, and which would, in my view, most likely increase the ability of impoverished communities in Africa to hold powerful companies to account,” said Charles Adeogun-Phillips, a former UNwar crimes prosecutor and international legal expert. “I also think that this will mark the beginning of a more regulated global environment in which subsidiary companies will be made responsible for human rights abuses, happening abroad.”
Shell began pumping oil in the Niger delta in 1958, with oil now the most lucrative industry in Nigeria. Oil and gas products are 86 percent of the country’s exports and 65 percent of the federal government’s revenue. Shell halted drilling operations in the Niger delta’s Ogoniland in 1993, in response to protests against the environmental impact of extraction led by the Movement for the Survival of the Ogoni People and activist Ken Saro-Wiwa, who was executed with other activists by the military government two years later. But drilling there could resume under a possible deal for the company to sell its assets to the Nigerian government, according to media reports. And miles of corroded and poorly maintenanced pipelines still transport thousands of barrels of crude oil under the Earth every day – threatening more leaks.
Deekor has been legal counsel on a handful of cases against Shell’s Nigerian subsidiary stemming from a single incident in 2009 in Kegbara Dere. An oil spill and explosion at a storage and separation facility called the Bomu manifold caused a gush of crude oil to spill into the neighbouring forest and fields. The flow didn’t stop for at least two years, according to a UN report in 2011 documenting the impact of oil extraction on Ogoniland.
Shell admits liability for the spill but argues the effect on the community was minimal. But, as in Ekpeye, floods brought the still-flowing oil beyond the manifold spill area to farms, acres of mangroves, and the creeks that sustained most of the river communities of Kegbara Dere.
“You see fish floating, the ones that have already died,” remembered Nukabaroi Gberekpe, a 64-year-old fisher, of the creeks in the days after the initial spill. “Since that time, the oil spoiled the ground, and you can’t see anything [grow] again.”
More than 10 years after the spill, the creek water still clots with oil in some places. While some mangroves have started to recover, many are skeletal reminders of what used to be a thriving ecosystem home to periwinkles, oysters, and other traditional river species. Coming across a lone fisher checking his net, he finds several sections stuck together with viscous crude. There are two or three fish measuring several inches, compared to the healthy yield of well-sized fish that once populated the creeks.
Although evidence in cases like this can seem overwhelming, Nigerian courts are “tilted in favour of” oil companies, Deekor said. Nigerians seeking to hold the industry accountable face personal attacks on their lawyers, arguments that their claims aren’t legitimate and delays in the filing process, according to allegations in court documents.
One 2012 case was stalled for more than a year because of objections from Shell’s subsidiary that the lawsuit named the defendants as “Shell Petroleum Development Company” instead of “The Shell Petroleum Development Company.”
Legal costs are another major barrier, said Erabanabari Kobah, an environmental scientist from Ogoniland who is not a lawyer but is certified to represent the community in the Kegbara Dere case. “The local people don’t have money to actually prosecute the case in Nigerian court and get justice,” Kobah said.
Communities suing Shell have high hopes for achieving justice in the UK, although they still have questions about future court jurisdictions for liability.
That’s because Shell has been gradually selling off its Nigerian oil assets for a decade. Just months after the UK court decision, Shell entered into discussions to sell its claims to oilfields to the Nigerian government. Shell’s stake is estimated to be worth $2.3bn. The government-owned Nigerian Petroleum Development Company just weeks ago announced intentions to resume oil production in Ogoniland for the first time in 28 years.
A Shell spokesperson said that “discussions with the Nigerian government are ongoing on the next steps for our onshore business in Nigeria,” and the company is “reviewing a number of options.”
Shell earned more than $2bn from its Nigerian operations in 2019 alone, but if the federal government buys the oilfields and infrastructure from Shell’s subsidiary, it may also acquire its oil spill liabilities.
Leader, the communities’ lawyer with UK firm Leigh Day, said that while Shell’s subsidiary could transfer its liabilities for past spills, the Dutch parent company won’t have the same option.
“It means for those communities, they have a real prospect of accessing justice, forcing Shell to take their concerns seriously,” Leader said.
If indigenous oil companies take over the liabilities, communities will only be able to sue Shell for past spills, not future ones. Niger deltans worry that would leave them once again contending with Nigerian courts.
“There will be absolute impunity in their activities,’ Kobah said.
Meanwhile, oil spill victims like Moeabe Ibrahim Goodnews Kpai are still waiting for justice – albeit with new hope. His father won the equivalent of $3.5m at today’s exchange rate from Shell’s Nigerian subsidiary in 2015 for the impact of an oil spill that happened in 1994. The company appealed against the decision the same year, and the Kpai family is still waiting for a hearing date to be set. Kpai’s father died earlier this year, at the age of 102, the fight for restitution outlasting his old age.
Kpai believes the pressures of the case were a contributor in his father’s death.
“I’m beginning to face the stress that my father was going through,” he said. “One thing that I’m looking for from the court; justice must prevail,” Kpai said.
