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14 Jan 2022

Peter Leon, Ernst Muller & Mandy Hattingh, Daily Maverick (South Africa)

Commentary: Shell judgment adds to growing body of decisions that companies must take rights of communities seriously

"Shell judgment adds to growing body of decisions that companies must take rights of communities seriously", 10 Jan 2022

As 2021 ended, the Eastern Cape high court granted local communities’ request for an urgent interim injunction prohibiting Shell Exploration and Production South Africa BV, Impact Africa Limited and BG International Limited (Shell) from conducting any seismic exploration activities off the coast of South Africa’s Eastern Cape province.

In support of its decision, the court found that there was a reasonable likelihood that the proposed exploration activities would violate the applicants’ (and the communities whom they represent) rights to an environment that is not harmful to their health and wellbeing, to participate in and enjoy the cultural life of their choice, as well as to just administrative action.

In response to the order, Shell terminated the contract with the company responsible for conducting the seismic survey…

This judgment forms part of a series of significant South African and international decisions (including the Baleni, Maledu, and Okpabi) which confirms that companies — particularly those in the extractives sector — must take the rights of communities seriously or risk the chance of suffering significant financial loss.

The decision should, however, not be seen as an assault on the private sector, but rather as guidance on the approach that extractive companies ought to follow when intending to undertake any exploration and production activities...

While consultation does not mean negotiation, companies should show that they properly considered the response which the communities provided during the consultation process. Where necessary, companies must also provide an adequate response to this. This may include adapting the proposed activities in response to these concerns.