The Shell Petroleum Development Company of Nigeria (SPDC) and the Bodo community in Gokana Local Government Area of Rivers State have separately claimed victory in a compensation case filed against the company in a London High Court.
A London-based senior High Court had delivered its ruling on the Bodo preliminary issues trial brought against SPDC in a United Kingdom court.
The SPDC claimed that the senior judge, Mr Justice Akenhead had ruled that the interpretation of Nigerian law by SPDC is correct in all the crucial points argued before the court.
Shell claimed that Akenhead accepted that the Nigerian Oil Pipelines Act provides a comprehensive and complete regime for compensation for oil spills, adding that the judge’s decision limits the scope of the litigation to an assessment of actual damages sustained as a result of the operational spills.
The company said the judge dismissed attempts by the Bodo community’s UK legal representatives to add a range of additional claims over and above the compensation due under the clear Nigerian statutory regime.
It also said that the court addressed the perennial issue of liability for environmental damage caused by oil theft and criminality, and found that the Oil Pipelines Act does not hold pipeline operators responsible for damage caused by oil theft.
He identified rare, “theoretical” but “difficult to prove” exceptions, for example in the event a pipeline operator knew the time and location of a planned attack by criminals and decided not to inform the police, and also accepted that no compensation is payable for oil spilled as a result of illegal oil refining, the company said.
The Judge further recognised the significant jurisdictional problems that arise when claims relating to Nigerian land are brought in England rather than in the Nigerian courts that have jurisdiction in relation to such land.
The Tide gathered that these issues will need to be addressed during the main trial next year.
Managing Director of SPDC, Mutiu Sunmonu said: “From the outset, we’ve accepted responsibility for the two deeply regrettable operational spills in Bodo.
“We want to compensate fairly and quickly those who have been genuinely affected and to clean up all areas where oil has been spilled from our facilities, including the many parts of Bodo which have been severely impacted by oil theft, illegal refining and sabotage activities.
“We hope the community will now direct their UK legal representatives to stop wasting even more time pursuing enormously exaggerated claims and consider sensible and fair compensation offers”, he said.
He added: “We’ve consistently maintained that the Bodo community’s UK legal representatives have a fundamental misunderstanding of Nigerian law, and today, the Judge has agreed with us. It’s disappointing that we’ve had to go through this process, which has involved a significant amount of wasted time and legal expense.”
But in contrast to the Shell position, the Bodo community argued that the groundbreaking legal ruling means that SPDC could be legally liable for illegal bunkering of its pipelines, if it failed to take reasonable steps to protect its infrastructure.
The judgment follows a ‘preliminary issues hearing’, which took place in May this year, which considered a range of complex legal arguments prior to a full trial in 2015.
The central issue being argued was whether Shell should take reasonable steps to protect its infrastructure given the foreseeable risk of bunkering, illegal hacking into pipelines to steal the oil.
This is the first time Shell has had to face formal court proceedings in the UK for its environmental record in the Niger Delta, following two massive oil spills in 2008 and 2009 which resulted in the largest loss of mangrove habitat ever caused by an oil spill.
The legal action is being taken by London law firm, Leigh Day, which is representing 15,000 Ogoni fishermen and the Bodo community, which was devastated by the oil spills, in one of the largest environmental law cases ever brought.
At the hearing, President of the Technological and Construction Court, Leigh Day, argued that under the Nigerian Oil Pipelines Act, anyone who suffered damage can claim compensation if he can show evidence that Shell was guilty of neglect in failing to ‘protect, maintain or repair’ the pipeline.
The people argued that Shell has duty of care to take reasonable steps to protect its pipelines and that it could do much more to prevent the spillage of oil when its pipelines are drilled into by criminal gangs.
However, in the ruling, the judge found that whilst Shell did not have an obligation to provide policing or military defence (which is the function of the state), it could be legally liable if it has failed to take other reasonable steps to protect the pipeline such as the use of appropriate technology (leak detection systems), a system of effective surveillance and reporting to the police and the provision of anti-tamper equipment.
At paragraph 92(g) the Court held: “Short of a policing or military or paramilitary defence of the pipelines, it is my judgment that the protection requirement within Section 11(5)(b) involves a general shielding and caring obligation. An example falling within this would be the receipt by the licencee of information that malicious third parties are planning to break into the pipeline at an approximately definable time and place; protection could well usually involve informing the police of this and possibly facilitating access for the police, if requested. Other examples may also fall within the maintenance requirement such as renewing protective coatings on the pipeline or, with the advent of new and reliable technology, the provision of updated anti-tamper equipment which might give early and actionable warning of tampering with the pipeline.”
According to the United Nations Development Programme (UNDP), more than 6,800 spills were recorded between 1976 and 2001. The number of spills has significantly increased in recent years and Shell recorded 3,000 spills between 2007 and 2012.
Speaking after the hearing, Martyn Day, the senior partner at Leigh Day, said: “This is a highly significant judgment. For years, Shell has argued that they are only legally liable for oil spills which are caused by operational failure of their pipelines and that they have no liability for the devastation caused by bunkered oil.
“This judgment entirely undermines that defence and states in clear terms that Shell does have potential liability, if it fails to take reasonable steps to protect its pipelines.
“This will have broad implications since Shell is now potentially liable for the mass pollution of the Niger Delta in which it has pumped and spilt oil over, at least, the last 20 years, not just for operational oil spills.”
The Bodo community is a rural coastal settlement consisting of 31,000 people who live in 35 villages. The majority of its inhabitants are subsistence fishermen and farmers.
Bodo community claims that 1,000 hectares of mangroves have been destroyed by the spills and a further 5,000 hectares have been impacted.
In 2011, Shell admitted liability for the spills but continues to dispute the amount of oil spilled and the extent of the damage caused.
Leigh Day began the multi-million pound legal action at the High Court in March, 2012, after talks broke down over compensation and a cleanup package for the community.
According to the claimants’ lawyers, the spills have destroyed the fishing industry, just as they claim that Shell has failed to speedily compensate the people of Bodo and have prevaricated for years.
The United Nations Environment Programme’s Environmental Assessment of Ogoniland 2011 backed up these findings. It surveyed pipelines and visited all oil spill sites, including the Bodo creek.
The UNEP report found hydrocarbon contamination in water in some sites to be 1,000 times higher than permitted under Nigerian drinking water standards, and recommended a comprehensive clean up of Ogoniland.
However, three years after the UNEP report, Shell said more than half of the polluted sites in Ogoni has been cleaned up and remediated while the few remaining ones are being progressed.
Other measures, including emergency water provision to affected communities, and the implementation of integrated water infrastructure projects, with one in Eleme already commissioned by the Rivers State Government.