Dutch Court Orders Shell Nigeria to Pay Damages from Oil Pipeline Leaks

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A Dutch court has ordered Royal Dutch Shell Plc’s Nigerian unit to compensate for oil spills in two villages over 13 years ago.

Shell Nigeria is liable for damages from pipeline leaks in the villages of Oruma and Goi, the Hague Court of Appeals said in a ruling Friday. The amount of compensation will be decided later. The court also ordered the Nigerian unit and its Hague-headquartered parent company to build better warning systems so future leaks can be quickly detected.

The case is the first in which a company and its foreign subsidiary have been tried in the Netherlands for allegedly breaching duty of care abroad, and it could have far-reaching implications for future suits brought against oil firms. The ruling sets a precedent for where such case can be heard and potentially increases the number of court cases taking place in oil companies’ home countries, rather than those where alleged pollution is happening.

“We continue to believe that the spills in Oruma and Goi were the result of sabotage. We are therefore disappointed that this court has made a different finding on the cause of these spills and in its finding that” Shell’s Nigeria unit is liable, Shell said in a statement. “Sabotage, crude oil theft and illegal refining are a major challenge in the Niger Delta.”

The court also said that a case over whether Shell was liable for an oil leak in the village of Ikot Ada Udo would continue. The court established that the spill was a result of sabotage, but is seeking to determine whether the pollution has spread and if it still needs to be cleaned.

Shell has other legal woes to contend with. In a separate action brought by Milieudefensie, the Dutch arm of Friends of the Earth, a court in The Hague will determine in May whether Shell is violating human rights by extracting fossil fuels. While in the U.K., thousands of Nigerians are asking British legal authorities for permission to sue the company for environmental damages caused in the Niger Delta.

After Friday’s ruling, the only possible future legal avenue left to either party, would be to appeal at the Netherlands’ highest court.