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Okpabi judgment in the Supreme Court - expert comment

The Supreme Court has published its judgement in the case of Okpabi and others (Appellants) v Royal Dutch Shell Plc and another (Respondents), heard in June 2020.

The appellants are citizens of Nigeria who are seeking to bring a prosecution over the damage allegedly caused to their environment by oil leaks from pipelines and other infrastructure associated with oil extraction in the Niger Delta.

Dr Stephen Connelly, Associate Professor, Warwick School of Law and Co-Director of the Centre for Law, Regulation & Governance of the Global Economy (GLOBE), comments on the case and the legal principles at stake:-

“Today’s Okpabi judgment is an important confirmation that there is no general principle that parent companies should be able to escape liability for the acts of their subsidiaries. Moreover, it strikes a blow against attempts to use pre-trial procedures to stifle meritorious litigation.

"First, the Supreme Court shut down attempts to narrow the law of negligence applicable to companies to a very limited set of factual circumstances, declaring rather that the general principles of negligence apply to all such cases that are brought before the court.

"Second, the Supreme Court was fully aware of the evidential imbalance that exists when a claimant is seeking to establish the existence of internal corporate communications, especially in pre-trial applications. The Supreme Court chastised the Court of Appeal for conducting a ‘mini-trial’ in which the corporation’s witnesses could present their view of the evidence without the claimants either being able properly review this evidence or cross-examine the witnesses.

"The case now proceeds to full trial, with Royal Dutch Shell required to make disclosure of evidence and defend against claims that it too is responsible for harming the peoples of the Niger Delta.

"The Okpabi litigation concerns oil extraction and pipelines in the Niger Delta of Nigeria, and the alleged environmental, personal and social harm caused by oil spills resulting from these activities. Broadly speaking, the appellant and those he represents claim that not only is the Royal Dutch Shell plc (RDS) subsidiary in the country directly responsible for this damage, but also that RDS as parent company is responsible. This, they argue, follows from the now established principle that a parent company may be responsible for a subsidiary’s wrongs where the parent has been sufficiently involved with the subsidiary in the surrounding events.

"RDS denies liability. The claimants seek to sue RDS because as is often the case with multinational corporate groups, while parent companies reap the profits of subsidiary activities, these companies hope that UK law will aid them to place those profits beyond the reach of those who ultimately pay.

"This judgment does not concern whether RDS is liable. Rather, it concerns a procedural application by RDS asking the court to shut down the claim before it proceeds to full trial. While this is a right of any defendant, in cases where often poor claimants from outside the UK seek justice against wealthy and well-represented multinationals, who often hold most of the cards in terms of evidence of a parent company’s involvement, use of these procedures can be interpreted as an attempt to deny justice. RDS must now submit to the full light of evidential disclosure.”

DR STEPHEN CONNELLY

Associate Professor, Warwick School of Law

Co-Director of the Centre for Law, Regulation & Governance of the Global Economy

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