How Did Shell Get Off the Hook for These Spills?

A court case that rejected the claims of several Nigerian farmers over Royal Dutch Shell (NYSE:RDS.A) oil spills that affected their land could set precedent for how affected parties are able to challenge multinational companies in court.

Early last year, a group of Nigerian farmers and fishermen from the Niger Delta area went to the Netherlands to take on Royal Dutch Shell over oil spills that had damaged their lands and livelihoods. The group of plaintiffs made five claims against Royal Dutch Shell.

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If the courts had accepted the plaintiff group’s claims against Shell, the case could have had a far-reaching impact on the way multinationals are held accountable for incidents around the globe. Environmental groups had hoped the plaintiffs would have success and make it possible for similar claims to go through…

However, the Dutch courts rejected the group’s claims against Royal Dutch Shell. According to judge Henk Wien, Nigerian law has it that “a parent company in principle is not obliged to prevent its subsidiaries from harming third parties abroad.” Thus, Royal Dutch Shell could not be tried for the oil damages, but rather Shell Nigeria would be faced with the plaintiffs’ claims.

While the burden fell from Royal Dutch Shell to Shell Nigeria, very little stuck, as Shell Nigeria was only sentenced to pay for damages in one of the five cases brought against Royal Dutch Shell.

The ruling has a significant impact for both the people living near Shell’s oil infrastructure in Nigeria and other countries, as well as for Shell and other multinationals. For Nigeria, which had over 200 oil spills in the Niger Delta last year, the ruling drastically limits the people’s ability to seek compensation in court. For Shell and multinational corporations — at least those based in the Netherlands — the case shows that they are somewhat protected from the actions of their subsidiaries abroad.

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