His Royal Highness Okpabi v Royal Dutch Shell Plc, Lucky Alame v Royal Dutch Shell Plc [2017] EWHC 89 (TCC); Jurisdiction and international environmental group actions

This post is by Aliyah Akram of 12 King’s Bench Walk. 

The case involved 42,500 residents of the Niger Delta, from two different communities, who sought to bring a claim in the High Court for damages arising from environmental pollution caused by, they alleged, oil spills from the Defendants’ pipelines.

The claim was brought against two defendants.  Shell Petroleum Development Company of Nigeria (“SPDC”), the Shell company responsible for the oil operations and Royal Dutch Shell (“RDS”) its ultimate parent company.  

The jurisdictional challenge

The defendants argued that the claim had nothing to do with this jurisdiction and should have proceeded in Nigeria.  They argued that Royal Dutch Shell, which is domiciled in England and Wales, was being cynically used as an anchor to allow the claimants to reach SPDC.

The claimants’ case was that both defendants are legally responsible and a claim in the English courts is their only realistic chance of recovering damages for their loss.

The claimants served on RDS within the jurisdiction and said that (1) there was a real issue between themselves and RDS which it was reasonable for the court to try and (2) that SPDC is a necessary and proper party to that claim.  The claimants therefore relied on the “necessary and proper party” gateway to establish jurisdiction against SPDC.

In relation to RDS jurisdiction was established because it is domiciled in England and Wales and Owusu v Jackson [2005] QB 801 says, and most recently Lungowe v Vedanta [2016] EWHC 292 (TCC) confirms, that there is no scope for forum conveniens considerations when the Recast Brussels Regulations are applicable.

But, in relation to SPDC the claimants needed to show that there was a real issue against RDS.

Was there a real issue against RDS?

The judge determined whether there was a real issue against RDS under English law.  This was because the parties agreed that if no arguable duty of care on the part of RDS to the claimants could be established under English law, then, because of the similarity of Nigerian common law, there would equally be no cause of action under Nigerian law.

It was at this stage that the claimants were unsuccessful.  Having considered 33 lever arch files of evidence, Fraser J refused to accept that RDS could owe a duty of care to the claimants for SPDC’s acts and omissions.

The judge held that under the principles of Caparo v Dickman [1990] 2 AC 605, RDS and SPDC’s relationship of ultimate parent company and subsidiary was not enough to establish a duty; there was not sufficient proximity and it would not be fair, just and reasonable for RDS to be liable to the claimants.

He also considered the four factors set out by Arden LJ in Chandler v Cape [2012] 1 WLR 3111, a case where a parent company was liable for its subsidiary’s employee’s occupational exposure to asbestos.  On the first he concluded that it was SPDC that had the specialist knowledge of oil operations Nigeria, not RDS.  Secondly, he noted that RDS did not operate the same business as SPDC, so there was not an overlap in operations as had been seen in Chandler and connected to that RDS would only have had superficial knowledge of SPDC’s systems of work.  Lastly, he held that RDS could not be said to have known that SPDC were relying upon it to protect the claimants; there was no assumption of responsibility of RDS’ part.

Without a real issue between the claimants and RDS, the claimants could not establish that SPDC was a necessary and proper party and so the challenge to jurisdiction succeeded.

Analysis

The decision was a very different one to that made by Coulson J only a few months previously in Vedanta, where the anchor defendant was similarly the local company’s holding company.

The key difference between the cases was the corporate structures of the companies, Shell’s was much more tortuous and RDS was further away from its subsidiary than had been the case between the defendants in Vedanta.  Additionally, Coulson J took into account the fact that the claimants could not access CFA type arrangements in Zambia and so would not be able to bring their claims there whereas since CFA type funding is available in Nigeria Fraser J refused to accept that the claimants would face undue difficulties in pursuing their claims in Nigeria.

These decisions will always be fact specific, but this case is perhaps discouraging to claimants who had thought Vedanta heralded a new period of international corporate responsibility in the English courts.

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