This morning (12 February 2021) the UK Supreme Court handed down judgment in Okpabi & others v Royal Dutch Shell (“Okpabi”), a case concerning mass oil pollution in the Niger Delta. Judgment is in favour of the claimants, communities representing over 40,000 affected citizens of Nigeria, whose claim against oil conglomerate Shell and its Nigerian subsidiary can now be heard in the English courts.
Kingsley Napley acted jointly for international human rights interveners, the Corporate Responsibility (CORE) Coalition and the International Commission of Jurists, who supported the claimants’ case. Below we give our analysis of the Supreme Court’s judgment which overturned the decision of the Court of Appeal. We analyse in particular the judgment’s import for victims of overseas environmental or human rights abuses who seek recourse in the UK courts, where the matters complained of are connected to a UK-based parent company.
Facts of Okpabi
In Okpabi the Ogale and Bille communities seek damages and remedial works in respect of oil spills emanating from pipelines operated partly by the Shell Petroleum Company of Nigeria (“SPDC”). SPDC is the Nigerian subsidiary of UK-based Royal Dutch Shell (“RDS”). The claims were brought in 2016 stemming from decades of oil pollution in the Niger Delta argued to have contaminated the local environment such that water sources cannot be used for drinking, agriculture or washing. Satellite imagery referenced at the Supreme Court hearing was said to show irreparable damage to areas of mangrove forests twice the size of Manhattan.
The claimants’ case to have the matter heard in the UK, when the relevant events occurred in the Niger Delta, raised complex legal issues regarding jurisdiction (primarily pursuant to CPR PD 6B Rule 3.1 and the Brussels Regulation (Recast)). In essence the claimants had to show that UK-based RDS owed an arguable duty of care in tort towards them in respect of SPDC’s alleged failures in Nigeria, in order to bring the case against both Shell entities in the English courts. Both the High Court and Court of Appeal in Okpabi ruled against the claimants finding that this was not shown.
The Supreme Court’s judgment in Vedanta
When the Court of Appeal gave judgement in Okpabi it did not have the benefit of the Supreme Court’s ruling in a similar case which post-dated it. In Lungowe v Vedanta (2019) (“Vedanta”) nearly 2,000 affected citizens of Zambia brought UK proceedings against mining company Vedanta and its Zambian subsidiary. The jurisdiction issue in Vedanta was analogous to Okpabi: the claimants had to show that Vedanta owed an arguable duty of care in respect of personal injury and property damage emanating from the operation of Vedanta’s Zambian copper mine, for the claim to proceed in the UK.
The Supreme Court in Vedanta clarified the legal principles shaping the circumstances in which UK-based parent companies owe an arguable duty of care in respect of overseas subsidiaries. It stated that this duty is shaped by ordinary principles of tortious negligence; corporate parents and their responsibility in respect of subsidiaries in their group is no special category. What is key is “the extent to [and the way in] which…the parent availed itself of the opportunity to take over, intervene in, control, supervise or advise the [subsidiary]” (Lord Briggs). Crucially, the Supreme Court also found that publicly-available corporate group policies and standards in which parent companies profess control and supervision in their structure, irrespective of whether these are adopted in practice, support the finding of an arguable duty of care from the parent company towards others in its group.
This provided vital context for the Supreme Court in Okpabi.
Okpabi - the evidential threshold at jurisdiction stage
Returning, to Okpabi, the Supreme Court restated principles from Vedanta about proportionality in civil litigation that is at jurisdiction stage. Importantly, “[m]ini-trials” to determine whether the English courts have jurisdiction must be avoided (para 21). Lord Hamblen’s judgment restates that judicial restraint should be observed:
“the analytical focus [in jurisdiction challenges] should be on the particulars of claim and whether, on the basis that the facts there alleged are true, the cause of action asserted has a real prospect of success.” (para 22)
The claimants had made very extensive assertions of fact relating to RDS’ control over SPDC, including from group-wide policies, specific policies regarding RDS’ role in the event of oil spills and from evidence of three former RDS employees. Lord Hamblen continued that unless the alleged facts are “demonstrably untrue or unsupportable”, generally it is inappropriate for “a defendant to dispute the facts alleged through evidence of its own”. Indeed, “[d]oing so may well just show that there is a triable issue” (also para 22).
On this issue, of the proper threshold for the claimants to meet to show that the UK courts could have jurisdiction, the Court of Appeal in Okpabi erred in law. The Supreme Court found that the Court of Appeal was drawn into an inquiry weighing the evidence. It made determinations connected to contested evidence that were not appropriate at jurisdiction; that was a matter for the substantive trial. To resolve whether the UK court has jurisdiction the court should ordinarily resolve matters by reference to the pleaded case, not by making “findings” from the evaluation of disputed evidence (paras 103 - 109).
The importance of disclosure
A claimants’ access to disclosure from a defendant is extremely limited at jurisdiction stage. Because the High Court and Court of Appeal in Okpabi permitted a mini-trial, they discounted the value of future disclosure (para 126). In fairness, neither had the benefit of Lord Briggs’ comments on disclosure in Vedanta. Lord Briggs was clear that the court cannot ignore reasonable grounds, at jurisdiction stage, that further disclosure or evidence will assist the court in due course (from para 45 of Vedanta)).
In Okpabi the claimants had access to two key RDS documents at the Court of Appeal that they had not at the High Court trial. One was released by a whistleblower and never disclosed by RDS; the other was disclosed by RDS at the final day of the Court of Appeal hearing following a court order. Both documents showed RDS’s corporate structures and indicated control and supervision by RDS over SPDC. Neither were addressed “meaningfully” by Shell’s witnesses at the High Court (para 135). The claimants also pointed to extensive documentation that could assist their case disclosed in the Netherlands in parallel proceedings against RDS, that it had not yet been required to disclose in the UK.
Importantly in Okpabi, the Supreme Court was at pains to emphasise the importance of internal corporate documents in disputes relating to parent company liability, both generally and in the case before it (from para 129).
Other Vedanta clarifications
The Supreme Court additionally clarified points (obiter) emanating from its Vedanta judgment:
- A parent company’s issuance of group wide policies or standards can, of itself in some circumstances, give rise to a duty of care. The Court of Appeal in Okpabi erred when it indicated otherwise.
- The exercise of control by a parent company is merely a starting point, when considering whether the parent took over or shared management of the relevant activity with the subsidiary.
- Generalised assumptions should not be made when considering the tortious liability of a parent company to those affected; this can be determined under general principles requiring no more “rigorous analysis beyond that appropriate to any summary [jurisdiction] judgment application in a relatively complex case” (para 60).
The judgment in Okpabi is a major step forward for those seeking access to justice for corporate human rights abuses.
In warning against the conduct of “mini-trials” and against defendants taking extensive disputes on fact at jurisdiction stage, the Supreme Court has helped clarify and to some extent lower the hurdles that claimants must meet. It also sends an important signal to the lower courts that they must take into account that disclosure obligations triggered at trial stage may well assist claimants which weighs in favour of allowing jurisdiction: this is especially so since both internal and publicly-available corporate documents, showing the parent’s commitments in practice and principle to its group, are key to such disputes.
As noted by Carlos Lopez, Senior Legal Advisor at the ICJ:
“The emphasis of the Supreme Court on the relevance of evidence from internal company documents is of utmost importance for the proper assessment of whether the parent company intervened, advised or controlled the relevant activities of its subsidiary that caused harm, including notably human rights abuses and environmental destruction.”
Significant questions, however, do remain. It is credit to the claimants’ tenacity that they pursued essential disclosure that the ordinary jurisdiction framework under the CPRs did not grant them. Had they not been assisted by a whistleblower, and high-profile proceedings in the Netherlands, they would have been forced to plead partly in the dark. Additionally, the primary test in this area remains Lord Briggs’ Vedanta test regarding the parent’s advice, control or supervision over its subsidiary, for which there are no set industry practices or standards, notwithstanding the UN Guiding Principles on Human Rights and the OECD’s mandatory due diligence guidelines.
Mark Dearn, Director of CORE, considers:
“It’s now crucial that governments step up to the plate to create new corporate accountability laws so that businesses know exactly what is expected of them.”
At Kingsley Napley we have argued elsewhere for the need for a corporate accountability framework which provides for mandatory human rights due diligence laws and a regulatory enforcement mechanism.
The clients’ press release is available here.