Suing in England for oil pollution in Nigeria

On 26 January 2017, the High Court gave judgment in His Royal Highness Emere Godwin Bebe Okpabi & Others v Royal Dutch Shell & Shell Petroleum Development Company of Nigeria Ltd [2017] EWHC 89 (TCC).

This judgment considers interesting issues about the jurisdiction of domestic courts and the liability in tort of a parent company for the acts or omissions of a subsidiary. It follows another judgment concerning similar issues in Lungowe and others v Vedanta Resources plc & Konkola Copper Mines plc [2016] EWHC 975 (TCC), which led to a very different outcome. The Okpabi decision raises questions about the readiness of English courts to entertain claims by foreign claimants, relating to conduct outside the United Kingdom.

Jurisdictional challenge

The Okpabi decision relates to two sets of proceedings, being heard together, concerning oil mining operations in Nigeria and, in particular, oil pollution “that has affected wide areas of land across the Niger Delta, the waters of the Delta itself, activities on both land and on water and considerable numbers of people.” [4]

The first Defendant is Royal Dutch Shell plc (“RDS”), the ultimate holding company of the worldwide Shell Group. RDS is incorporated, and has its registered offices, in the United Kingdom. The second Defendant is the Nigerian company that is responsible for Shell’s onshore oil operations in Nigeria, the Shell Petroleum Development Company of Nigeria Ltd (“SPDC”). SPDC is a Nigerian-registered company, incorporated under the laws of the Federal Republic of Nigeria. In both claims, SPDC was served with proceedings outside the jurisdiction.

is this jurisdiction the appropriate forum in which to bring such claims?

The High Court’s ruling concerned four applications filed by the Defendants in which RDS challenged the jurisdiction of the court to try the claims and SPDC applied to have service of the Claim Form outside the jurisdiction set aside, or alternatively to have the proceedings against it stayed [7].

The factual background and list of issues for determination in these proceedings were lengthy and complex. As summarised in the judgment [20], the issues were as follows:

1. Do the claimants have legitimate claims in law against RDS?
2. If so, is this jurisdiction the appropriate forum in which to bring such claims? This issue encompasses an argument by RDS that it is an abuse of EU law for the claimants to seek to conduct proceedings against an anchor defendant in these circumstances.
3. If this jurisdiction is the appropriate forum, are there any grounds for issuing a stay on case management grounds and/or under Article 34 of the Recast Regulation in respect of the claim against RDS, so that the claim against SPDC can (or should) proceed against SPDC in Nigeria?
4. Do the claims against SPDC have a real prospect of success?
5. Do the claims against SPDC fall within the gateway for service out of the jurisdiction under paragraph 3.1(3) of CPR Practice Direction 6B? This issue requires consideration of two separate sub-issues, namely (a) whether the claims against RDS involve a real issue which it is reasonable for the Court to try; and (b) whether SPDC is a necessary or proper party to the claims against RDS.
6. Is England the most appropriate forum for the trial of the claims in the interests of all parties and for the ends of justice?
7. In any event, is there a real risk the Claimants would not obtain substantial justice if they are required to litigate their claims in Nigeria?

Ultimately Fraser J, giving judgment, reached his decision on only issues (1) and (5)(a), namely whether the Claimants have a legitimate claim in law against RDS and/or whether the claims against RDS involve a real issue which it is reasonable for the court to try.

Fraser J accepted the Claimants’ argument that the hurdle that must be overcome at this stage of proceedings is not a high one, and is analogous to the standard that must be reached for a claimant to avoid having his or her claim struck out [71]. Nevertheless, the Court accepted the Defendants’ submissions that RDS owes no duty of care in common law to the Claimants for the acts and/or omissions that led to the situation in the Niger Delta [70-72]. This conclusion was based on the three ingredients of foreseeability, proximity and reasonableness established in the leading English authority of Caparo Industries Plc v Dickman [1990] 2 AC 605.

the hurdle that must be overcome at this stage of proceedings is not a high one

This was an interesting conclusion, given that it appears to differ from the approach taken by Coulson J in Vedanta, who concluded in relation to similar claims that the parent company did owe a common law duty of care to the claimants and that the claims could properly be heard in this jurisdiction. However, Fraser J stressed that the correct approach was not “slavishly to follow” the decision in Vedanta, noting the differences between the claims in both sets of proceedings [48]. Further, Coulson J’s judgment in Vedanta is the subject of an appeal.

It was agreed by the parties that a negative finding on these issues would be dispositive of SPDC’s application challenging jurisdiction, as there would be no “anchor defendant” to provide a connection between the claims against SPDC and this jurisdiction [118]. As Fraser J stated, “[a]bsent the existence of proceedings on foot in England against RDS, there is simply no connection whatsoever between this jurisdiction and the claims brought by the claimants, who are Nigerian citizens, for breaches of statutory duty and/or in common law for acts and omissions in Nigeria, by a Nigeria company.” [119]

However, this is not the end of the line for the Claimants, who sought permission to appeal on the basis that Fraser J had applied the wrong standard at a summary stage of proceedings. The Claimants relied on the judgment of Lord Collins of Mapesbury JSC on behalf of the Privy Council in Altimo Holdings and Investment Ltd & others v Kyrgyz Mobil Tel Ltd & others [2012] 1 WLR 1804. In that case, Lord Collins held that:

[t]he general rule is that it is not normally appropriate in a summary procedure (such as an application to strike out or for summary judgment) to decide a controversial question of law in a developing area, particularly because it is desirable that the facts should be found so that any further development of the law should be on the basis of actual and not hypothetical facts…In the context of interlocutory injunctions, in the famous case of American Cyanamid Co v Ethicon Ltd [1975] AC 396, 407 it was held that the court must be satisfied that the claim is not frivolous or vexatious, in other words, that there is a serious question to be tried. It was no part of the court’s function “to decide difficult questions of law which call for detailed argument and mature consideration”. [At §84. See also §116]

Fraser J gave permission for the Claimants to appeal. While not accepting that there was a “real prospect of success”, he found that there were “other compelling reasons” for the Court of Appeal to hear the appeal, including that the Court will be considering similar issues in the case of Vedanta. Watch this space for an update.

While mainly concerned with substantive issues of jurisdiction, Fraser J’s judgment is notable in two other respects.

Service out of the jurisdiction

In relation to service out of the jurisdiction, the Claimants relied on the “necessary or proper party” gateway, set out at paragraph 3.1(3) of Practice Direction 6B, which provides:

Service out of the jurisdiction where permission is required:

3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where –

[…]

(3) A claim is made against a person (‘the defendant’) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and –

(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and

(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.

In other words, the Claimants argued that RDS had been served validly with the proceedings within the jurisdiction, there is a real issue between the Claimants and RDS which is reasonable for the court to try, and that SPDC is a necessary and proper party to the claim [§62].

Fraser J, in agreement with Coulson J in Vedanta, emphasised that the decision of the European Court of Justice in Owusu v Jackson [2005] QB 801 prevents any consideration of the forum non conveniens principle when the defendant, or one of the defendants, is domiciled in the UK [67]. On this basis he held that there is, “simply no scope, in the law of England and Wales, for the application of forum non conveniens, or any remnant thereof, to the claim against RDS, as it is domiciled within the jurisdiction.” [§68]

Observations on case management

Fraser J criticised the “current approach of parties in litigation such as this” as “wholly self-defeating, and contrary to the cost-efficient conduct of litigation.” [10] He emphasised that the views of Lord Neuberger PSC in VTB Capital Plc v Nutritek International Corp [2013] 2 AC 337 must be observed, in which Lord Neuberger held that hearings concerning the issue of appropriate forum:

…should not involve masses of documents, long witness statements, detailed analysis of the issues, and long argument. It is self-defeating if, in order to determine whether an action should proceed to trial in this jurisdiction, the parties prepare for and conduct a hearing which approaches the putative trial itself, in terms of effort, time and cost.

the parties should have the opportunity properly to argue their case.

This is analogous to the test articulated by the Court of Appeal in Swain v Hillman [2001] 1 All ER 91, per Lord Woolf MR, that on an application for summary judgment the Court should not conduct a “mini-trial”. The English courts take a similar approach to applications for summary judgment and to strike out a claim – and by analogy, according to Fraser J’s reasoning, applications such as this: see Independents’ Advantage Insurance Co Ltd v Cook (Personal Representatives) [2003] EWCA Civ 1103; [2004] PNLR 3, [8].

On this basis, Fraser J stated that a “fundamental change of approach is required by parties in cases such as these for applications of this nature.” [10] It could be countered that if the courts are going to determine substantive and dispositive issues at a summary stage of proceedings, as the court did in this case, the parties should have the opportunity properly to argue their case.