A recent ruling by the Court of Appeal in The Hague signals new hope on the horizon for victims seeking a judicial remedy for corporate negligence or human rights abuse. On 18 December 2015, the Dutch court ruled that four Nigerian farmers can bring Shell to court in the Netherlands for the environmental damage caused by leaking oil pipelines in Nigeria. In the momentous ruling, the court assumed international jurisdiction, as well as liability of Dutch parent companies for actions of their subsidiaries abroad.
The case of the Nigerian farmers against Shell is the first in which a Dutch multinational has been brought before a Dutch court to account for environmental damage caused abroad. The four farmers first filed the case in 2008, together with environmental organisation Milieudefensie (Friends of the Earth Netherlands). The farmers want Shell to clean up the oil spills in their villages, take measures to prevent further oil spills, and pay compensation for the economic damage suffered. In finding that the relationship between the Dutch parent company Shell and the Nigerian subsidiary is sufficiently close, the Dutch judiciary was held competent to rule on the merits of the case. As a result, in Spring 2016 the court will determine whether Shell can be held responsible for the environmental damage done to the farmers in the Niger Delta. In last week’s ruling, it also ordered Shell to disclose internal documents that may provide more insight into the cause of the oil spills and the parent company’s awareness of this.
Beyond the Niger Delta, the decision by the Dutch Court of Appeal is of great importance in the area of business and human rights litigation. Victims of corporate misconduct around the world are often left without a remedy, for instance, because they do not have access to an effective and fair court system, especially in countries that want to attract foreign investment but do not have the legal and judicial institutional capacity to adequately regulate these business activities. This has led some victims, often supported by international NGOs, to look for a judicial remedy in the home state of the multinational they hold responsible for the damage. The case of the Nigerian farmers is a clear example of such a lawsuit.
Many of these transnational cases against multinationals, however, have been dismissed because courts refused to take jurisdiction. Judges have often held that the country in which the alleged corporate abuse has taken place is a more appropriate venue for the case, for example, because of the location of the parties, evidence, witnesses and local courts’ familiarity with local law, which often needs to be applied in the case. This argument, also referred to as the forum non conveniens doctrine, has become a key procedural obstacle to access to judicial remedy for victims of corporate human rights violations. The Dutch court has now established that this argumentation does not apply with regard to multinationals based in the Netherlands. More precisely, it stated: “It cannot be established in advance that the parent company is not liable for possible negligence of the Nigerian operating company.”
According to Friends of the Earth Netherlands, the ruling “can pave the way for victims of environmental pollution and human rights abuses worldwide to turn to the Netherlands for legal redress when a Dutch company is involved.” It remains to be seen whether the Dutch court will deem Shell liable for the effects of the oil spills, and thus if the Nigerian farmers will be granted a remedy. Nevertheless, this ruling sets a crucial precedent in determining that parent companies can be held liable in their home states for damage caused within the scope of the activities of their subsidiaries, and forms an important jurisprudential development towards overcoming a fundamental obstacle to access to justice for victims of corporate misconduct around the world.
How has the case been decided? Any updates?
Thanks for your interest! The case is still pending. Updates since the publication of this article: the ruling of 18 December 2015 ordered disclosure of internal documents, which Shell then did, but with large parts of the text blacked out. On 11 October 2016 the Court of Appeals issued an interim decision ordering Shell to explain this. In addition, two pipeline experts are now involved in the case to investigate the leaks, as the farmers and the company disagree about the cause of the oil spills. The NGO claims this was due to negligence in Shell’s maintenance, and Shell claims it was due to damage caused by sabotage.