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12 Jan 2015

Elodie Aba, Legal Researcher, Business & Human Rights Resource Centre

Shell & the Bodo community – settlement vs. litigation

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 “When multinationals own up to their responsibilities, it is good for the people" - Bemene Tanene, member of the Bodo community

On 7 January 2015, Niger Delta communities and business and human rights activists welcomed news that Shell had agreed to an out of court settlement of £55 million with the Bodo community affected by oil spills in Nigeria.  This agreement brings to an end a six year journey seeking justice for these residents of the Niger Delta. It is a ground-breaking settlement – despite so much damage, no multinational oil company has ever directly compensated individuals harmed in the Niger Delta for the destruction of the environment on which so much of their livelihoods depends.  

In 2008 and 2009, two oil spills from the Bomu-Bonny pipeline occurred in the Niger Delta affecting the health, livelihoods and land of the Bodo community.  Villagers brought legal action in English court after Shell was said to have initially offered £4000 to compensate the whole community.  The villagers claimed that the spills were the result of poorly maintained 50 year-old pipelines.  Shell subsequently admitted that its Nigerian subsidiary, the Shell Petroleum Development Company (SPDC), was liable for the spills.  However, it denied the allegations of the plaintiffs and argued that the cause of the oil spills was oil theft and sabotage.

Victims of human rights abuse often struggle to hold companies accountable in their own country because their courts are too often clogged with cases, under-resourced, or stymied by corruption.  The lucky few who find international lawyers therefore seek redress in the country where the company is headquartered.  In the Bodo case, Celestine Akpobari of Social Action explains that in Nigeria, people would not have had individual and fair compensation and courts tend to side with companies.  Martyn Day of Leigh Day, the leading firm taking on transnational corporate human rights cases in English courts also stressed that:  “We brought the case to London on the basis that we could show that Shell HQ had a significant role to play...”

But victims of corporate human rights abuse face increasing challenges in accessing judicial remedy outside their own country.  In the US, the Supreme Court’s decision in Kiobel v. Shell has put a severe legal "chill" on existing and new cases; while in the UK, the Legal Aid, Sentencing and Punishment of Offenders Acts 2012 (LASPO) changed the way “no-win, no-fee” arrangements operate, making it more difficult for lawyers to fund this work. 

Shell’s settlement with the Bodo community means the Nigerian victims will receive compensation without needing to endure a potentially lengthy legal process – something we have frequently seen in other lawsuits of this type.  However, had the plaintiffs continued to trial, it could have potentially set an important legal precedent and clarified the position of English courts for future corporate human rights lawsuits.  But, as noted by the plaintiffs’ lawyer, a trial involves an uncertain outcome, and the legal process could be made even longer with subsequent appeals.  In this case, each of the 15,600 plaintiffs agreed to the settlement.  Christian Kpandei, a Bodo fisherman, stressed in an interview that the compensation, while greatly welcome, is not that substantial considering the health, economic and environmental impacts of the leaks for the community.  However, since no multinational oil company has ever directly compensated individuals in the Niger Delta, he felt that accepting this settlement was the only means of redress for the community. 

Nevertheless, it took a very long time for this case to be resolved as Audrey Gaughran, Director of Global Issues at Amnesty International, notes: “While the pay-out is a long awaited victory for the thousands of people who lost their livelihoods in Bodo, it shouldn’t have taken six years to get anything close to fair compensation.”  The way in which the Bodo case ended has echoes with the Wiwa v. Shell case, where the plaintiffs alleged that Shell was complicit in the summary execution of a group of Nigerian Ogoni activists.  This lawsuit ended in a settlement after a lengthy legal battle, although here have been difficulties in the distribution of the compensation funds.  Perhaps the confluence of the reputational risk for Shell from a public legal battle with the certainty of compensation for the victims, contributed to an out-of-court settlement in each of these cases.  In its press release, Shell notes that its Nigerian subsidiary, SPDC, will deliver the settlement.  Although the company accepts “responsibility for the two deeply regrettable operational spills in Bodo”, it highlights that “unless real action is taken to end the scourge of oil theft and illegal refining, which remains the main cause of environmental pollution and is the real tragedy of the Niger Delta, areas that are cleaned up will simply become re-impacted through these illegal activities.”

This settlement provides welcome support to a community blighted by oil spills. The company has finally agreed to clean-up the mess and compensate those whose lives have been damaged.  This can only help Shell in the medium term in terms of trust with local communities and its social license to operate. The declaration of Chief Sylvester Kogbara, Chairman of the Bodo Council of Chiefs and Elders summarises the situation well: “…The hope is that this will forge a good relationship with Shell for the future, not only with the Bodo people but with all the Niger Delta communities that have been impacted in the same way as us…”  The hope must be that this settlement sends a message to so many other companies embroiled in long legal cases around extensive environmental damage to communities.