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London High Court rules that Shell Nigeria could be legally liable for bunkering

Liability for maintenance and security of oil pipelines in Nigeria under consideration in High Court

Posted on 20 June 2014

In a groundbreaking legal ruling, the London High Court today decided that Shell Nigeria 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 Nigerian 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 in front of Mr Justice Akenhead, the 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 they can show Shell was guilty of neglect in failing to ‘protect, maintain or repair’ the pipeline.

They argued that Shell has duty of care to take reasonable steps to protect their pipelines and that they could do much more to prevent the spillage of oil when their pipelines are drilled into by criminal gangs.

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.”

Thousands of oil spills have occurred over the 50 years of Shell’s operations; many have never been cleaned up adequately.  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.

However, according to Leigh Day, Shell continues to under report the severity of oil spills in Nigeria and blames the bunkerers’ for the great majority of them.  They have consistently maintained that they have no legal responsibility for the effects of “bunkered” oil.

Speaking after the hearing, Martyn Day the senior partner at Leigh Day who is representing the Bodo Community, 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 Delta in which it has pumped and spilt oil over at least the last 20 years, not just for operational oil spills.”

The oil devastated the environment surrounding the community of Bodo, in Gokana Local Government Area, Rivers State, Nigeria.

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.