Shell Subsidiary in Nigeria Must Compensate Farmers, Dutch Court Rules

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An appeals court said a small group of farmers in the Niger Delta region whose livelihoods were affected by oil spills in 2006 and 2007 should receive payouts.

A Dutch court ruled on Friday that a subsidiary of the British-Dutch multinational Royal Dutch Shell was liable for oil spills in the Niger Delta in Nigeria in 2006 and 2007, ordering the company to compensate a small group of residents in the region and to start purifying contaminated waters within weeks.

The subsidiary, Shell Petroleum Development Company, acted unlawfully by allowing the leaks to occur and by failing to clean up the area that had been contaminated, the Court of Appeal in The Hague found. The delta, in southern Nigeria, is the heart of the country’s prolific oil industry.

The decision was the latest development in a yearslong judicial saga that pitted four Nigerian farmers against the company, and it could pave the way for more cases against the oil company in the region.

Although the court ruled that the Shell subsidiary in Nigeria should provide compensation, it did not hold Royal Dutch Shell itself responsible. The decision can be appealed to the Dutch Supreme Court.

Oil spills damage the environment in the Niger Delta every year, affecting the livelihoods of people living there, who argue that faulty maintenance and poor security measures by oil companies are responsible.

The farmers, along with the Dutch branch of the environmental group Friends of the Earth, sued Shell in 2008, arguing that the oil spills in 2006 and 2007 had ruined the workers’ livelihoods by polluting the agricultural land and ponds they rely on.

Shell, which is headquartered in The Hague, has long been accused by local populations and environmental organizations of causing serious environmental problems and human rights abuses through its activities in the Niger Delta region.

While the existence of the spills in 2006 and 2007 was not in dispute, the company argued that almost all such accidents reported in the region were the result of sabotage.

The ruling on Friday overturned a decision by the District Court of The Hague in 2013, which agreed with Shell that the company was not responsible for the spills. While the Court of Appeal assumed in its decision that “the leaks were the result of unauthorized opening of the valves” of oil wellheads, it ruled that Shell’s subsidiary in Nigeria was negligent and had failed to protect its activities from sabotage. It also ordered Shell and its Nigerian subsidiary to build better warning systems so that future leaks could be quickly detected.

The leaks on pipelines affected fishing ponds and lands in two villages, Oruma and Goi, and residents are still affected by the spills 15 years later, according to environmental groups.

Nigeria is Africa’s largest oil producer, and Shell, through its Nigerian subsidiary, began exporting from fields in the Niger Delta in the late 1950s. It manages around 50 oil fields, five gas plants, and more than 3,000 miles of pipelines, according to the company.

Yet its activities have also been damaging in terms of reputation, and Shell and other oil firms, like the Italian company Eni, have long been dogged by accusations of pollution in the region. In 1994, Bopp Van Dessel, the head of environmental studies for Shell Nigeria, resigned, arguing that he felt unable to defend the company’s environmental record “without losing his personal integrity.”

“Any Shell site that I saw was polluted,” Mr. Van Dessel later said on British television. “It was clear to me that Shell was devastating the area.”

In 2008, a U.S. cable released by WikiLeaks revealed that three-quarters of pipelines in Nigeria were more than a decade overdue for replacement, with some that had a life expectancy of 15 years still in operation after 30.

Shell and Eni have argued that most of the leaks have been caused by sabotage. Nonetheless, under Nigerian law, oil companies are responsible for ensuring effective safety and practice standards.

“Sabotage, crude-oil theft and illegal refining are a major challenge in the Niger Delta,” Bamidele Odugbesan, a spokesman for Shell’s subsidiary in Nigeria, said in an emailed statement. “Regardless of cause, we clean up and remediate, as we have done with the spills in this case.”

One of the plaintiffs, Eric Dooh, welcomed the decision on Friday, although he called the ruling a bittersweet victory since two of the three other plaintiffs had died since the case began, including his father.

“Finally, there is some justice for the Nigerian people suffering the consequences of Shell’s oil,” Mr. Dooh said.

Chima Williams, a lawyer for Friends of the Earth Nigeria, said the ruling should serve as a reminder for oil companies.

“Now the oil companies will know that they cannot continue to act with impunity,” Mr. Williams said. “And that a day will come when they will be held accountable for their misdeeds.”

Stanley Reed and Ruth McLean contributed reporting.

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