British Court Ruling Against Oil Company Could Expand Liability for Foreign Accidents

February 19, 2021 by Tom Ramstack

A ruling by Britain’s top court last week that said Royal Dutch Shell oil company could be liable in English courts for pollution by its subsidiary in Nigeria, is likely to expand the company’s potential liability abroad.

The court’s decision also creates a likelihood of liability for other British companies if they fail to protect their foreign employees and contractors from safety and environmental hazards.

“In particular, the Shell group’s vertical corporate structure, with organizational approval generally proceeding corporate approval, allowed for delegation of authority, including in relation to operational safety and environmental responsibility,” a press summary from the Supreme Court of the United Kingdom says.

British companies operate extensively internationally, including 22 corporations on the Fortune 500 list with offices in the United States. They include Prudential insurance company, GlaxoSmithKline pharmaceutical company and banking giant Lloyds Banking Group.

The largest is BP, also known as British Petroleum, which was held liable in U.S. courts for the 2010 Deepwater Horizon oil rig disaster off the coast of Louisiana.

It was the worst spill in American history after dumping an estimated 210 million gallons of oil into the Gulf of Mexico. The gas explosion and fire killed 11 oil workers.

BP reported revenue of $344 billion in 2019 and profits of $16.4 billion. It is based at the Hague in the Netherlands and London in the United Kingdom.

In both the Nigerian case and the Deepwater Horizon disaster, attorneys for the oil company argued the spills were caused by the negligence of foreign operators, which should relieve them of liability. Until now, the British courts largely agreed.

About 42,500 Nigerian citizens in the Niger Delta are claiming their land and water was polluted by Shell’s Nigerian subsidiary. The oil leaked from pipelines operated by Shell Petroleum Company of Nigeria Ltd.

The ruling by the Supreme Court in London overturns two lower court decisions that concluded British courts lack jurisdiction for cases against Shell’s Nigerian unit.

Under Nigerian law, Shell was negligent in its duty of care to safely operate the pipelines and other infrastructure. Shell argued that theft, sabotage and oil refining that violated safety regulations caused the leaks.

Shell said the Nigerian unit suffered from “criminal interference” that was beyond its control.

Shell provides its subsidiaries with guidance on safety procedures but the foreign subsidiaries implement and supervise them alone, the oil company argued. The guidance can be found under a policy document called the Royal Dutch Shell Control Framework.

The British Supreme Court ruling said the lower courts failed to investigate the degree of control Shell could exert over its Nigerian subsidiary. If the company could have exerted reasonable oversight to intervene to stop the oil leaks, it could be liable to the plaintiffs.

“The RDS Control Framework shows that the [top executives] have a wide range of responsibilities, including for the safe condition and environmentally responsible operation of Shell’s facilities and assets,” the ruling said.

The Supreme Court sent the case back to an appellate court for a ruling consistent with its judgment.

Similar issues were raised during the Deepwater Horizon oil spill, leading to a significant international incident.

British politicians and political analysts accused the United States of unfairly blaming BP’s London-based parent company for the negligence of American workers. Some members of Parliament asked then Prime Minister David Cameron to protect British interests in the United States.

They put part of the blame on then President Barack Obama’s public criticisms of BP. Pension fund managers that invest in BP said his statements hurt the company’s market value.

In November 2012, BP settled criminal charges filed by the U.S. Justice Department by pleading guilty to 11 counts of manslaughter, lying to Congress and two misdemeanors. The company agreed to pay $4.5 billion in fines and damages. Cleanup costs and penalties cost the company more than $65 billion by 2018.
The case is Okpabi and others v. Royal Dutch Shell PLC and others, case number UKSC 2018/0068, in the Supreme Court of the United Kingdom.

Energy

Are Biden’s Plans for Electric Vehicles Worth the Money?
Infrastructure
Are Biden’s Plans for Electric Vehicles Worth the Money?
April 14, 2021
by Alexa Hornbeck

WASHINGTON - On Monday, Biden held an infrastructure meeting to work on a compromise between the Democrats and Republicans, but representatives like David Price, D-N.C., told reporters that, “the main obstacle for a bipartisan deal is how to pay for it all.”  The proposed $2 trillion-plus... Read More

U.S. Looks To Support Clean Infrastructure In India, Bangladesh
Geopolitics
U.S. Looks To Support Clean Infrastructure In India, Bangladesh
April 12, 2021
by Daniel Mollenkamp

Last week and over the weekend, U.S. Special Presidential Envoy for Climate John Kerry met with officials from the governments of India and Bangladesh to talk about strategies for improving climate resilience and adapting to climate change. Kerry emphasized recent U.S. aid projects to the two... Read More

MENA and Latin America Rally Behind Climate Change Agenda
Climate
MENA and Latin America Rally Behind Climate Change Agenda
April 7, 2021
by Daniel Mollenkamp

This week, countries in the Persian Gulf expressed commitment to the Paris Agreement and to green infrastructure investments, in a joint statement from the United Arab Emirates Regional Climate meeting at which U.S. Special Envoy for Climate, John Kerry, was present. This meeting--which included envoys from... Read More

Biden Wants to Power 10 Million Homes With Wind Energy
Energy
Biden Wants to Power 10 Million Homes With Wind Energy

WASHINGTON (AP) — The Biden administration is moving to sharply increase offshore wind energy along the East Coast, saying Monday it is taking initial steps toward approving a huge wind farm off the New Jersey coast as part of an effort to generate electricity for more... Read More

Wyoming Sues Administration Over Oil and Gas Leasing Ban
In The States
Wyoming Sues Administration Over Oil and Gas Leasing Ban
March 24, 2021
by TWN Staff

CHEYENNE, Wyo. –  The state of Wyoming sued the Biden administration Wednesday challenging what state lawmakers describe as a "de-facto moratorium on oil and gas leasing" on federal land. The suit, filed in the U.S. District Court in Wyoming, asserts Interior Secretary Deb Haaland’s implementation of the... Read More

Lincoln, Nebraska: Sustainable Pioneer on the Prairie
Cities
Lincoln, Nebraska: Sustainable Pioneer on the Prairie
March 16, 2021
by Dan McCue

For many people, the image of climate change is a coastal event. It’s the more frequent and larger hurricanes being followed by The Weather Channel. And whole tropical nations disappearing into the sea. But what of the plains, the vast expanse and source of so much... Read More

News From The Well
scroll top