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Shell battles Nigerian communities in high-stakes London lawsuit

Fri, 06th Jan 2017 11:34

* Nigerian communities say domestic courts unfit to try case

* Shell says case is "uniquely" Nigerian issue

* Ruling may trigger other London cases unrelated to UK -lawyer

* Shell rules out settlement, denies spill responsibility

* Bodo clean-up has not started over eight years after spill

By Karolin Schaps and Libby George

LONDON, Jan 6 (Reuters) - A court in London will decide incoming weeks whether Royal Dutch Shell can face trialin the UK over oil spill allegations in Nigeria, a decision somelegal experts predict could attract more cases againstmultinationals in Britain.

The High Court will judge whether members from twocommunities, Bille and Ogale in Nigeria's oil-rich Delta region,can sue the Anglo-Dutch company in British courts.

The communities say Nigerian courts are unfit to hear thecase against Shell subsidiary Shell Petroleum DevelopmentCompany of Nigeria (SPDC). Shell says the case should be heardin Nigeria because the matter is "uniquely a Nigerian problem".

Shell also denies responsibility for the spills, which itsays were due to sabotage and illegal refining.

If the High Court rules in favour of the communities, somelegal experts say other claimants against British-basedmultinationals would be emboldened to pursue legal actionthrough the British courts.

Some legal experts also warned that a victory by thecommunities could encourage unscrupulous residents to let oilspills worsen at remote sites by denying clean-up access, aspayouts are often linked to the scale of the damage.

"This case brings home the message that multinationals mayincreasingly face claims in the English courts arising fromdisputes which have little or no connection to England," saidTom Cummins, a partner at law firm Ashurst.

The Bille and Ogale groups launched their claim just monthsafter Shell agreed a 55 million pound ($68 million) settlementin 2015 with another Nigerian group, the Bodo community.

That case covered two pipeline leaks in 2008, which Shellaccepted were its fault due to corrosion, and marked the largestever out-of-court settlement relating to Nigerian oil spills. [http://reut.rs/2hTxctf]

Law firm Leigh Day, which is representing the Bille andOgale communities and also brought the Bodo case in Londonagainst Shell, says Nigeria's court system is not robust enoughto give a fair ruling in reasonable time.

Leigh Day, which is licensed only to practise in Britain,has also raised concerns over whether companies will conductclean-up operations properly without international pressure.

"You've got a dual problem: the systemic ineffectiveness ofthe courts and the fact that people (in local communities) justcan't get the evidence together or even representation to takeon these companies," Daniel Leader, partner at Leigh Day, toldReuters.

For its part, the Nigerian government's National Oil SpillDetection and Response Agency defended the effectiveness of theNigerian court system, saying it had successfully sanctioned andsued several companies locally, including SPDC.

Shell said it settled the Bodo case in part because itadmitted responsibility for the spill, but never agreed that thecase should be tried in London.

It said it would fight to stem a potential landslide ofcases from groups whose lands Shell says were spoiled bysabotage, oil theft and illegal refining that are endemic acrossthe Delta.

"We fully intend to have this (jurisdictional issue) decidedby a trial judge, to determine the issue once and for all," saidGaurav Sharma, senior legal counsel for Shell's globallitigation team.

Shell said 92 percent of all oil spilled from SPDCfacilities in 2009-13 was a result of theft, sabotage or illegalrefining.

In part due to such attacks, the oil major is divestingpipelines and other onshore assets after more than 50 years ofoperations in Nigeria. [http://reut.rs/2iXsRDV]

FEW GOOD SOLUTIONS

The Bodo case was hailed by some as a victory forcommunities, but more than eight years after the spill, theclean-up has not yet begun.

Shell paid the agreed damages, but said the community deniedit access in August 2015 when work was set to begin - askinginstead for cash to do it themselves.

Barisi Kkabe, a Bodo youth leader, told Reuters thecommunity was unhappy with the contractor picked by Shell, and"out of fear that (the clean-up fund) may be misappropriated,decided that ... they should share it among the people".

An SPDC spokesman said the company was unable to meet theBodo community's request to distribute clean-up work to localcontractors because it was "not procedurally correct".

A United Nations Environmental Programme report into oilpollution in Nigeria's Ogoniland said communities should avoidprotracted negotiations over access to spill sites as delaysresult in far greater environmental damage.

"Communities deserve compensation for damages when it'sShell's fault," said Aaron Sayne of the Natural ResourceGovernance Institute, a non-profit group that advises nations onhow to manage oil, gas and mineral resources without financiallinks to the oil industry.

"But I don't think it's going to be easy for a foreign courtto get its head around how complicated it is." (Additional reporting by Anamesere Igboeroteonwu in Onitsha,Nigeria; Editing by Dale Hudson)

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