Recently we reported [link] on judgments in two commercial environment cases decided in January 2018. Below we report on two further judgments in February 2018. Again, at face value these two cases could hardly be further apart but they have some common (albeit indirect) features. Both cases are ultimately about commercial compensation and legal routes to such compensation. Both cases also contained cautions from the judiciary that environment cases will not be given a softer ride just because they relate to the environment.

Each case could be said to arise from rare circumstances. On their particular facts, this might be right. Nonetheless because of the potential scope, nature and size of foreseeable environment disputes the underlying principles are likely to reappear, be further tested and indeed perhaps morph under different circumstances. Otherwise both cases are fascinating in many respects.

Okpabi and others (Ogale community) v Royal Dutch Shell Plc (“RDS”) and Shell Petroleum Development Company of Nigeria Ltd (“SPDC”).

Whilst the underlying case concerns claims for damages allegedly suffered by the many Nigerian claimants from oil pollution in Nigeria (Niger delta) from Shell oil pipelines and related infrastructure, this particular judgment relates to a dispute over jurisdiction, namely whether the case could be tried in the English Courts. From the claimants’ perspective it would be hugely beneficial if the case was heard and was successful in the English courts.

SPDC is an oil exploration and production company incorporated in Nigeria and is the operator of an oil joint venture with others in Nigeria. The oil pipelines and infrastructure in question were vested in SPDC via this joint venture. RDS is incorporated in the UK and is the parent company of SPDC. The claimants allege that under the tort of negligence both RDS and SPDC are liable for the damages that they have suffered from pollution. Before the first instance judge, RDS successfully challenged, the jurisdiction of the English courts to try the case. The claimants appealed to the Court of Appeal. They lost in a majority judgment (2:1). The Court of Appeal held again in favour of RDS.

The claim against RDS was brought in negligence, namely that RDS owed the claimants a duty of care (which it allegedly breached) either because it controlled the operation of the oil pipelines and related infrastructure in Nigeria or because it had assumed a direct responsibility to protect the claimants from the environment damage caused by oil leaks.

The hearing into this jurisdiction issue involved lengthy evidence (and the court was very critical about the volume of such evidence). The Court of Appeal judgements are themselves lengthy involving a deep dive into the relationship between RDS and SPDC (too lengthy to report on in this article). In some respects these factors tend to demonstrate the commercial importance attached by the parties to having the case decided/not decided by the English courts.

The majority of the Court of Appeal decided that the claimants in this case could not demonstrate a properly arguable case that RDS owed them a duty of care and therefore dismissed the appeal. Having said this it is to be noted that the dissenting judge (Lord Justice Sales) was persuaded by the evidence (including its nature and timing) that the claimants had made out a good arguable case. He considered that there was a real possibility of documents emerging on disclosure supporting the claimants’ case. It is understood that the claimants are considering appealing again to the Supreme Court. If this occurs it will be interesting to follow that appeal.

R (on the application of Mott) v Environment Agency [2018] UKSC 10

This Supreme Court case arises out of a conflict between historic commercial fishing rights and fish conservation. The five Supreme Court judges unanimously held in favour of the claimant (Mr Mott).

This judgment arises from a judicial review by Mr Mott of a decision by the Environment Agency (“Agency”) to restrict his annual catch of salmon from his “putcher rank” (an old fishing technique using conical baskets) in the Severn Estuary. Rights to operate these ranks were traced back to 1866. Mr Mott has fished via these ranks since 1975. He did this under successive leases with his current 20-year lease expiring in March this year. Aside from the necessary lease, this fishing also requires an annual licence from the Agency (under the Salmon and Freshwater Fisheries Act 1975 (“SFFA”)). Mr Mott’s evidence was that this fishing was his full time occupation and that prior to 2011 he caught approximately 600 salmon per year giving him annual earnings of approximately £60,000.

(Albeit disputed) the Agency’s position was that the salmon in the Severn Estuary were “mixed stock”, i.e. the salmon being destined to return to several rivers to spawn (rivers Severn, Wye, Usk, Rhymney, Taff, Ely and others). Government policy has been to phase out gradually such “mixed stock” salmon fishing and limit fishing as far as possible to places where the salmon stock would be from a single river. Many related parts of this aquatic ecosystem were protected conservation areas (the river Wye being a Special Area of Conservation (“SAC”)) and part of the Severn Estuary European Marine Site for which salmon is a qualifying feature.

From 2003 to 2011 there were periods of restricted fishing agreed between the Agency and the putcher rank fishers, about which the Agency paid some compensation. However nothing permanent could be agreed. In 2012 the Agency under its SFFA powers sought, without compensation, to restrict Mr Mott’s catch to 30 salmon for 2012, 23 for 2013 and 24 for 2014. Effectively this was a 95% reduction from pre-2011 levels. The catch restriction was fixed by the Agency by reference to the lowest catch (from such historic putcher installations) for the preceding 10 years. Mr Mott maintained that such low catches were from mere hobby fisherman and that in effect the heaviest burden of the policy was falling on him and he relied on this fishing for his living. He said this made his putcher rank fishery wholly uneconomic and his lease worthless.

Mr Mott judicially reviewed the Agency’s limitations on 2012 – 2014 catches. He claimed irrationality in the limits set by Agency (this part of the dispute involved expert evidence) and, if lawful, the Agency nonetheless breached his human rights (Article 1 Protocol 1 of the European Convention on Human Rights) as he was not paid compensation. He won on both counts before the court at first instance. The Agency appealed to the Court of Appeal where it was partially successful. It defeated Mr Mott on the ground of irrationality but failed to overturn the ruling on breach of human rights.

The Agency appealed again to the Supreme Court, seeking to the overturn human rights ruling. It lost. Thus all three courts held against Agency on this human rights ground.

It was agreed by the parties that Mr Mott’s fishing right under his lease was a “possession” for the purposes of human rights. Argument took place over whether the Agency’s restriction amounted to control over, or de facto expropriation of, this possession. If the restriction amounted to control, consideration then was given to whether compensation was required (as part of the “fair balance” in such instances) and, if it amounted to expropriation the consideration centred on whether there were exceptional circumstances justifying the absence of compensation. The Supreme Court held firmly in favour of Mr Mott that his human rights had been infringed and that he was entitled to compensation. Lord Carnworth, delivering the judgment for the Supreme Court, stated “I am unable to fault the judge’s analysis of the applicable legal principles in this case. ……he did not find it necessary to categorise the measure as either expropriation or control. It was enough that it “eliminated at least 95% of the benefit of the right”, thus making it “closer to deprivation than mere control”. This was clearly relevant to “fair balance”. Yet the Agency had given no consideration to the particular impact on his livelihood. The impact was exacerbated because the method chosen meant that by far the greatest impact fell on him, as compared to others whose use may have been only for leisure purposes”.

Cautions

In the Shell case, one of the majority judges, Sir Geoffrey Vos, Chancellor of the High Court made useful observations relating to the role of the courts in cases of this kind. In opening his judgment he made the point that the judgments concentrated on the legal foundations of the claims. However, in doing so he stressed that this was not to be taken as any depreciation of the gravity of the alleged pollution, which he expressly recognised. In closing his judgment he said “I thought throughout the hearing of the appeal that the court had a responsibility in a case of this kind not to strive to find a reason to allow jurisdiction. I became increasingly convinced as the argument progressed that the ultimate claim against RDS could simply never succeed. These thoughts may not be relevant to our decision, but they do endorse, I think, the correctness of the legal conclusion that we and the judge have ultimately reached”.

In the Mott case, Lord Carnworth ended his judgment with the following passage “…I would emphasise that this was an exceptional case on the facts, because of the severity and the disproportion (as compared to others) of the impact on Mr Mott…..the national authorities have a wide margin of discretion in the imposition of necessary environmental controls and [Article 1 Protocol 1] gives no general expectation of compensation for adverse effects”.

Comment

These cases (and the cases we previously reported) help to demonstrate the developing scope of environment commercial cases. This scope and the number of cases will only increase over the next years as environment commercial disputes come of age. It is however worth noting the above cautions from two of our most senior judges. We take these to mean that just because a claim might be worthy in environment terms, they must still meet the legal case and will not be treated any softer by the courts.