Shell faces claim over Niger delta spills

By Jane Croft, Law Courts Correspondent, financialtimes

Lawyers representing 11,000 Nigerians will on Friday serve the details of a claim against Royal Dutch Shell at the High Court after negotiations about compensation for two oil spills in the Niger delta fell apart last week.

The lawsuit against Shell relates to two oil spills in 2008, which caused damage to the Bodo community, a rural coastal settlement that consists of 49,000 people who live in 35 villages and are subsistence farmers and fishermen.

Shell Petroleum Development Company of Nigeria (SPDC), a Shell subsidiary, has admitted liability for two spills of about 4,000 barrels caused by operational failures as soon as their cause had been independently verified in late 2008 and early 2009.

Last April, the law firm Leigh Day filed a class-action lawsuit in the High Court on behalf of the Bodo community against SPDC but legal proceedings were later stayed as talks took place between the two sides.

However, negotiations broke down last week and Leigh Day has now recommenced its legal action and will on Friday serve its particulars of claim.

The claim prepared by Leigh Day alleges that the oil spills had a devastating effect on the local land, mangroves and waterways and this has been so bad that the local fishing industry has almost ground to a halt.

It claims that 49,000 Nigerians were affected by the damage – down from its original estimate of 69,000 – and it represents 11,000 Nigerians who say their livelihoods were affected.

Most of those who have brought claims are fishermen and typically earn about £3,000 to £5,000 a year on average. They are seeking compensation for loss of livelihood over the past few years.

Martyn Day, the lawyer leading the action from Leigh Day, said: “We are desperately disappointed that the attempts to negotiate a settlement for all those affected have now failed.

“We had thought that the invitation to sit around the table meant that Shell was taking the impact of the two oil spills seriously. We are now left with the only option of taking the claims through the UK courts to obtain justice for the people of Bodo.”

Shell said that legal proceedings were still ongoing. It said SPDC had always accepted that it would pay compensation for the two operational spills and “the level of compensation would be decided in accordance with Nigerian law”.

In a letter to the Financial Times this week, Mutiu Sunmonu, managing director of SPDC of Nigeria, said it had admitted liability for two spills of 4,000 barrels caused by operational failures.

He wrote: “We always accept liability in such circumstances, pay compensation according to Nigerian law, clean up the oil and restore the land. We are also committed to cleaning up all oil spilt from our facilities, no matter what the cause.”

Mr Sunmonu added in the letter that the Niger delta situation was “highly complex”. He said it was “deeply regrettable” that before and since the two oil spills “much more oil has been spilt as a result of illegal activity, sabotage, illegal refining and theft”, and “the widespread illegal activity which is responsible for the majority of spills, is the real tragedy of the Niger delta”.