For decades, Shell allowed oil to leak into the Niger Delta, destroying fields, making water undrinkable, and harming local populations. Over the years, there have been numerous cases filed against Shell, related to different aspects of Shell’s destruction of the Niger Delta and associated human rights abuses. (See here, here, and here.)
In December 2022, Shell settled one of these cases – for 15 million Euros – after a Dutch appeals court ordered the company to compensate victims harmed by Shell’s subsidiary, Shell Petroleum Development Company of Nigeria (SPDC). This case had been brought by four Nigerian Farmers and Friends of the Earth Netherlands in 2008 against Shell and its subsidiary for oil leaks that flowed into homes, fields, and fishponds, destroying the environment and forcing villagers to evacuate.
For too long, Shell has been able to avoid liability and responsibility for its actions in the Niger Delta. This settlement shows Shell and other corporations that they can “no longer be able to get away with destructive practices” by hiding behind foreign subsidiaries. Not only is the court requiring Shell to stop further destructive practices, but Shell must also pay large sums to compensate communities. For its part, Shell—court order to compensate notwithstanding—adds that its settlement is “on a no admission of liability basis, and settles all claims and ends all pending litigation related to the spills.”
This blog post first describes the environmental and human rights abuses Shell has caused in the Niger Delta. It then explains Shell’s settlement and discusses the importance of this historic case and the settlement.
Shell has harmed and polluted the Niger Delta since the 1950s
Nigeria is one of the world’s largest producers of crude oil, in large part due to the activities of Shell and its Nigerian subsidiary, the Shell Petroleum Development Company of Nigeria (SPDC). Shell discovered oil in the Niger Delta in the 1950s, and it has held mineral leases since then across the country, earning over $20 billion dollars each year.
Shell has a history of committing human rights and environmental abuses in Nigeria. But one region, the Niger Delta, has borne the brunt of this harm. The region is marred by pipelines that experience frequent and often catastrophic spills, which have decimated the environment, polluting the soil and water. Despite Shell having spent over $1 billion dollars on a clean-up campaign, the situation has only gotten worse, with the clean-up marked by corruption, inefficiency, and incompetence. In fact, after two years of clean up, the United Nations Environmental Program stated that Shell’s efforts made the region “even dirtier.”
These spills have severe effects on the communities in the Niger Delta. The life expectancy in the Niger Delta is ten years lower than the national average and nearly 16,000 babies die annually from the pollution. Oil spills in the region render fields and fishponds unusable, desecrating the communities’ means of living. Shell’s negligence, mismanagement, and corruption in Nigeria has become increasingly expensive. A series of expensive judgments and clean-up efforts have cost the company billions. Yet Shell is still exploring for new wells in the region.
A historic settlement
After over fifteen years of litigation—in which Royal Dutch Shell used every delay tactic imaginable—Shell agreed to pay three of the four plaintiffs and their communities $15 million Euros (about $15.9 USD) as direct compensation for the harm caused.
Friends of the Earth Netherlands and four Nigerian farmers and fisherman initially filed this case in 2008 to fight the oil pollution contaminating the farmland, fishponds, and water sources on which their communities depended. In a decision last year, the Hague Court of Appeal found SPDC responsible for two major oil spills. Additionally, it found that Shell owed a duty to install leak detection systems which would prevent thousands of oil leaks that decimated the environment. In that order, the court determined Shell owed damages to three of the four plaintiffs and their communities.
This case and its settlement are historic for three main reasons:
1. This is the first time that a Dutch parent company was held responsible for the activities of its foreign subsidiary abroad. The court determined parent corporations owe a duty of care—albeit minimal–to supervise its subsidiaries’ activities abroad. Parent companies must intervene when its foreign subsidiary misbehaves. Dutch multinational corporations can no longer “hide behind [their] corporate veil to escape responsibility.” According to the director of Friends of the Earth Netherlands, Donal Pols, this is an “enormous victory for the rights of law globally.”
2. It is one of the first times that damages of this amount have been paid out to individuals whose livelihoods have been lost due to toxic contamination. The 15 million Euro settlement is payable to plaintiffs who represent three villages—Oruma, Goi, and Ikot Ada Udo. This contrasts, with past cases against Shell lumped thousands of residents of the Niger Delta into one settlement, resulting in very small payouts for each victim.
3. It represents justice and a hope for future success against multinationals that act with impunity in emerging economies. Not only must Shell carry out an effective clean-up of the region, including installing a leak detection system that would prevent future spills, but it must also directly compensate individuals and communities. This settlement is a “great relief” to the communities that have been forced to litigate their case for over fifteen years. As plaintiff Eric Dooh has said, this settlement will allow them to “build up our community once again…[and] start to re-invest in our living environment.” We hope that this will not be the only large settlement as other Delta communities litigate their claims against Shell across Europe.
Victims of corporate abuses rarely get their day in court—and even more rarely do they win and obtain just compensation. This case gives us hope that jurisdictions around the world are beginning to recognize the necessity of holding parent companies responsible for human rights abuses perpetrated by their subsidiaries.
Regan Seckel is a Legal Intern at Corporate Accountability Lab.
