Royal Dutch Shell faces having to pay compensation of potentially more than £250m ($410m) after the Anglo-Dutch oil group admitted liability for two spills in Nigeria following a legal claim brought in the UK.
The agreement comes after a class-action lawsuit was brought in the High Court by the Bodo Community in the Niger Delta against Shell and its subsidiary, Shell Petroleum Development Company (SPDC).
Martyn Day, of law firm Leigh Day acting for the Nigerians, said that he was pleased Shell had admitted liability and agreed to concede to the English jurisdiction and court system.
The compensation set to be paid to the 69,000 Nigerians affected by damage caused by the leaks is thought to be in excess of £250m. Most of those who have brought claims are fishermen and typically earn about £3,000 to £5,000 a year on average.
The award compensates them for their loss of livelihood over the past three years and also reflects the fact that it could still take a year or even two years to complete the clean-up during which time they may be unable to fish.
The SPDC said it “has always acknowledged that the two spills which affected the Bodo community, and which are the subject of this legal action, were operational”.
“As such, SPDC will pay compensation in accordance with Nigerian law,” it added.
The case against Shell results from two oil leaks in 2008-09 that caused devastating damage to the environment and the waterways in particular to the fishing community of the Bodo community.
Mr Day called this one of the “most devastating oil spills the world has ever seen” but said it had largely gone unnoticed. The total amount of oil spilt was approximately 20 per cent of the amount that leaked into the Gulf of Mexico following BP’s disaster last year.
Mr Day added there was an increasing trend for these type of compensation claims to be brought in London’s High Court rather than being fought out in local courts where litigation could last for years.
A European Court of Justice ruling in 2005 has made it easier for groups of litigants to launch legal action in the European courts and gives claimants an automatic right to sue in the defendant’s home country.
Mr Day added: “The Nigerian courts have found it very difficult to deal with these cases speedily and the claimants have rarely received compensation as a result.”
The lawsuit was only filed in the High Court in April and so the admissions by Shell have come relatively early on in the litigation process.
Shell says the majority of spills in the Niger Delta are not due to operational failures but result from third-party interference such as theft of equipment and sabotage. In 2011, 13 spills in the Bodo area were caused by illegal activity, it claimed.
Since 2006, Shell has been dealing with an average of 169 oil spills per year, slightly fewer than the 175 average for the 2005-09 period in the Niger Delta.
Last year, the company recorded 32 operational spills in the Niger Delta, down from 37 in 2009.
