Court Of Appeal Upholds Challenge To Jurisdiction Over Nigerian Environmental Claims (Okpabi And Others v. Royal Dutch Shell Plc And Another)

Commercial analysis: Liz Tout and Catherine Gilfedder analyse the Court of Appeal's recent decision in Okpabi and others v. Royal Dutch Shell Plc and Shell Petroleum Development Company of Nigeria Ltd, which confirmed the English courts do not have jurisdiction over claims against a UK parent company and its Nigerian subsidiary for environmental damage in Nigeria. It also addresses the circumstances in which a parent company will be liable for damages arising from actions (including human rights and environmental violations) of its overseas subsidiaries.

Analysis

Okpabi and others (suing on behalf of themselves and the people of Ogale Community) v. Royal Dutch Shell Plc and another; Alame and others v Royal Dutch Shell Plc and another [2018] EWCA Civ 191

What is the case about?

The claimants, citizens of the Niger Delta, seek damages arising as a result of alleged ongoing pollution and environmental damage caused by oil leaks from pipelines and associated infrastructure. They allege that Royal Dutch Shell (RDS) and its local subsidiary, Shell Petroleum Development Company of Nigeria Limited (SPDC), are liable in negligence. The claim against RDS was brought on the basis that RDS owed the claimants a duty of care because it controlled the operation of the pipelines and infrastructure from which the leaks occurred, or because it had assumed a direct responsibility to protect the claimants from the environmental damage caused by the leaks.

At first instance, Fraser J held there was no arguable duty of care owed by RDS to the claimants. Given there was no "real issue to be tried" between the claimants and RDS, the latter also could not be an "anchor defendant" for the purposes of giving the courts jurisdiction over claims against SPDC.

What did the court decide?

A majority of the Court of Appeal (Sales LJ dissenting) agreed the claim should not proceed in the English courts. Simon LJ and Sir Geoffrey Vos considered the claimants had failed to establish an arguable case that RDS controlled SPDC's operations, or that RDS had responsibility for the matters and procedures that allegedly caused the relevant damage.

What principles did the court use for establishing parent company liability?

Both parties accepted the relevant test was as set out in the Court of Appeal's recent judgment in Lungowe and Ors v. Vedanta Resources Plc and Konkola Copper Mines Plc [2017] EWCA Civ 1528, [2017] All ER (D) 102 (Oct), in which the court held the claim should...

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