British Court orders Shell to pay $410 million damages over Oil Spills

Listen to article

In the first case of its kind, a British High Court in London has ordered the oil major, Royal Dutch Shell to pay compensation of potentially more than £250m ($410m) after the Anglo-Dutch oil group admitted liability for two spills in Nigeria following a class-action lawsuit brought in England by the Bodo Community in the Niger Delta.    Martyn day of the London based law firm Leigh Day & Co represented the Bodo Community and brought the legal claim for damages against Royal Dutch Shell plc. (RDS); and its subsidiary, Shell Petroleum Development Company (Nigeria) ltd (SPDC). It was the first time these companies have faced claims in England for damages resulting from their operations in Nigeria. The lawsuit was filed in England in April this year over two oil leaks in 2008 and 2009 that caused devastating damage to the environment and the waterways in particular to the fishing community of the Bodo community.   

Shell said it was informed of the first leak in early October 2008, but the Bodo community ountered that the leak by then had already been pumping oil for some six weeks. Even then it took Shell over a month to repair the weld defect in one of its pipelines, which had resulted in oil pumping out of the pipeline into the local community at an estimated rate of 2,000 bpd.  

The oil spill caused massive contamination in the creek, rivers and waterways in the Bodo area, as well as the areas' mangroves, causing devastating pollution to the entire Bodo creek. The damage is estimated to have affected an area of 20 km2 in the Gokana Local Government Area of Rivers State in Nigeria. A further spill occurred in December 2008 and was also the result of equipment failure.   It was not capped until February 2009 during which time even greater damage was inflicted upon the creek as tens of thousands of barrels of crude oil pumped into the rivers and creeks.  

The amount of oil spilt is estimated to be as large as the spill following the Exxon Valdez disaster in Alaska in 1989 and that the amount of coastline affected is equivalent to the damage done following the BP Deepwater Horizon disaster in the Gulf of Mexico in 2010. The total amount of oil spilt was approximately 20% of the amount that leaked into the Gulf of Mexico following British Petroleum (BP's) disaster last year. In the face of the overwhelming evidence of their culpability in the spills, it took Shell barely four months to accept liability, rather than go through an expensive litigation, which they will inevitably lose.  

Barrister Martyn Day, of the law firm Leigh Day which held brief for the Nigerians, told the press   he was pleased Shell had admitted liability relatively early and also agreed to concede to the English jurisdiction and court system, over what he described as "one of the most devastating oil spills the world has ever seen." 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 brought claims are fishermen who typically earn about $4000 to $7000 a year on average.  

Mr. Day's office told in an e-mail that the money awarded will compensate the Niger Delta residents 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. Mr. Day added there was an increasing trend for these types 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. "The Nigerian courts have found it very difficult to deal with these cases speedily and the claimants have rarely received compensation as a result," he added.  

Mr. Day welcomed the approach taken by Shell: 'This is one of the most devastating oil spills the world has ever seen and yet it had gone almost unnoticed until we received instructions to bring about a claim against Shell in this country. I am pleased that having been notified of the claims Shell has been acting speedily to put right the terrible damage that has resulted. I would hope that we will see urgent work being carried out to remediate the local environment. 'The Bodo people are a fishing community surrounded by water. What was the source of their livelihood now cannot sustain even the smallest of fish. The spills have caused severe poverty amongst the community. We will be pressing Shell to provide them with adequate compensation immediately.' was made to understand that the Niger Delta victims were able to file the case thanks to the 2005 European Court of Justice ruling that 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.  

On its part, the Shell Petroleum Development Company (SPDC) said it "has alwaysacknowledged 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.". Shell said the majority of spills in the Niger Delta were not due to operational failures but resulted 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.