The Bodo Community & Ors v The Shell Petroleum Development Company of Nigeria Ltd, Court of Appeal - Technology and Construction Court, June 20, 2014, [2014] EWHC 1973 (TCC)

Resolution Date:June 20, 2014
Issuing Organization:Technology and Construction Court
Actores:The Bodo Community & Ors v The Shell Petroleum Development Company of Nigeria Ltd

Case Nos: HT-13-295 and HT-13-339 to 350Neutral Citation Number: [2014] EWHC 1973 (TCC)IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISION TECHNOLOGY AND CONSTRUCTION COURTRoyal Courts of JusticeStrand, London, WC2A 2LLDate: 20th June 2014 Before:MR JUSTICE AKENHEAD- - - - - - - - - - - - - - - - - - - - -Between:- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - Richard Hermer QC, Jonathan Glasson QC, Justine Thornton and Andrew Scott (instructed by Leigh Day) for the ClaimantsCharles Gibson QC, Adrian Briggs, Toby Riley-Smith and Abigail Cohen (instructed by Hogan Lovells) for the DefendantHearing date: 29-30 April and 1, 6-7 May 2014- - - - - - - - - - - - - - - - - - - - -JUDGMENTMr Justice Akenhead: Introduction1. In this Group litigation, the many Claimants, numbering some 15,000 or more and including several representative type claimants and claims on behalf of children, seek damages at common law and statutory compensation under the law of Nigeria in relation to oil spills from pipelines said to have been caused by Shell Petroleum Development Company of Nigeria (``Shell'' or ``SPDC'') in the Niger Delta and said to affect people living in or with connections to neighbouring areas known as Bodo and Gokana. Preliminary issues have been ordered and the Court has heard evidence of Nigerian law from two former Supreme Court judges, Justices Oguntade and Ayoola for the Claimants and Shell respectively, to whom, albeit that they disagreed on much, I am indebted. The Background2. Before what is now known as Nigeria became a unified country, there were different tribal areas, including Hausa, Yoruba, Fulani, Igbo and Ogoni, the latter in the eastern Niger delta area. Well before the 19th Century, the territories which now make up Nigeria had systems of administration of justice. The northern area was strongly influenced by Muslim law, principally of the Maliki School, whilst the southern areas had systems of customary law. In 1862, the British established Lagos as a colony, indeed setting up a court there and English law was introduced by Ordinance the following year. In 1874, a separate government was set up for Lagos (and the Gold Coast) and the Supreme Court was established two years later over the areas in which the British Government had jurisdiction. A protectorate having been established by the British for much of the northern part of what is now Nigeria, in 1914 the Colony and Protectorate of Southern Nigeria and the Protectorate of Northern Nigeria were amalgamated. There were three tiers of court, the Supreme Court, provincial courts and native courts. By the Nigeria (Constitution) Order in Council 1954, a federal constitution was recognised with effect from 1 October 1954; the federation comprised the Northern, Western and Eastern Regions and a federal territory, Lagos. The 1954 Constitution established the Federal Supreme Court. Nigeria became independent on 1 October 1960.3. Following a long period of oil exploration, oil was discovered in January 1956 for the first time in Nigeria apparently in commercial quantities at one field in Oloibiri in the Niger Delta. At that time, Shell-BP had been the only or main concessionaire. It is clear that the Federal Government considered that it was necessary to provide a statutory framework for the creation of an oil industry, in particular for the transmission of any oil discovered. It relatively speedily introduced a bill which became the Oil Pipelines Act 1956 (``OPA'') which came into effect on 4 October 1956. At the second reading of the bill on 2 August 1956, the Minister of Land, Mines and Power, Mr Muhammadu Ribadu, told the House of Representatives:``Mr Speaker, Sir, hon. Members will be aware that large oil companies are energetically exploring Nigeria for oil. Wells have been bored in a number of localities and traces of oil found, but unfortunately it is as yet too early to say whether it has been found in commercial quantities. But if, though I would much prefer to say when, it is found in such quantities it is essential that the company finding it should have facilities to convey the oil easily and cheaply to a place of shipment or to its place of utilisation". He went on:"The Bill now before the house is designed, in view of the extremely heavy capital investment required before oil can be found, to give the discoverer of oil in commercial quantities the right to facilities for the installation of a pipeline for the conveyance of the oil. But though its right is granted, the actual route over which the pipeline will run must be approved by the Minister, and before it is so approved full opportunity must be given for the lodging and hearing of objections, the safeguarding of the rights of other interested parties and the payment of compensation.... The grant will be one of an oil pipeline licence, which, I would stress, would convey no title to the land itself. The license will be held for any period up to 99 years, or during the currency of the relevant oil prospecting licence or oil mining lease, and will enable mineral oils, natural gas, their derivatives and components, and steam and water so far as that is incidental to the main purpose, to be conveyed. The licensee will be responsible for compensating not only those whose lands or interests in lands are dangerously affected, but also for damage suffered by any innocent persons by any breakage or leakage of the pipe, unless maliciously caused by a third party.The main principle behind the bill is not a new one. There are already examples in Nigerian law of rights to run electric cables or water mains across land not owned by the power or water authorities which control the cables or pipes. It is not only logical to extend this principle of oil pipelines but essential if Nigeria is to obtain the full benefit of any oil under her soil. Sir, the objects and reasons at the end of the bill clearly explain its various clauses, and honourable members will not wish it to go into further details at this stage." Later in the debate, the Minister said:``I point out that mineral resources are a national asset in the hands of the Federation and that the Company which extracts these resources pay royalties which are paid to the region of origin in full and pays company tax to the Federation. ...Mr Speaker, Sir, I must make it clear to hon. Members that facilities must be given to these people who spend millions of pounds in order to find oil in our country, which in turn will go a long way to assist the economy of our country.''4. There have been some amendments to the OPA. A Petroleum Act was passed in 1969 which amongst other things vested the ownership and control of all petroleum in the state. 5. Shell from the start was and continues to be the single most dominant of the independent oil companies who have exploited the oil resources of Nigeria, much of it in the Niger delta area. There are thousands of kilometres of crude oil pipelines criss-crossing the delta region as well as numerous oil extraction areas and well heads. There are a number of refineries, the best known perhaps being that at Port Harcourt. It is clear that, over the more than 50 years since 1956, there have been a large number of oil spills, some at least of which have been the consequence of what is known as illegal bunkering which has involved criminal gangs who drill or otherwise break into the pipelines and extract crude oil with a view to refining it themselves and then selling it unofficially. Over the years, there have been numerous court proceedings in relation to oil spills against oil companies, in which Shell seem to appear often as defendant. These have been mostly proceedings by individuals, communities and other representative bodies for damages for nuisance, negligence and under the rule in Rylands v Fletcher as well as under the compensation provisions of the OPA. A substantial number of the cases have proceeded to appeals including to the Supreme Court of Nigeria.6. The Bodo community occupies an area south east of Port Harcourt, between it and the sea. It is in the Gokana Local Government Area in Rivers State. Much of the area is mangrove swamp and it is said to border a river known locally as the Bonny River; it may well be tidal and numerous rivers and streams bisect the area. There are some disputes as to the full geographical scope of the Bodo community area and as to who has what land rights. It is said that the area extends to some 9,230 hectares or about 35-36 square miles. There are 24'' and 28'' crude oil pipelines which run across the area. 7. The claims in these proceedings relate to two crude oil spills from the 24'' pipeline in the Bodo area said to have occurred between 28 August and 7 November 2008 and 7 December 2008 and 19 February 2009; the full extent of the spillages and their timing is in dispute. Subject to such disputes Shell admit liability under the OPA for these spillages. 8. By agreement between the parties but subject to some jurisdictional reservations, these 13 sets of proceedings have been brought in the English Court, initially in the Queen's Bench Division but latterly transferred to the TCC. Various but not all related proceedings in the Nigerian Courts have been issued and I was told that some may have been suspended pending the decisions of this Court.9. Extensive pleadings have been served in the various sets of proceedings. In essence, the various Claimants base their claims on private and public nuisance, negligence, Rylands v Fletcher and under the OPA. Preliminary issues have been ordered, albeit by consent:Issue 1: Whether the Claimants are only entitled to claim compensation in respect of the 2008 spills under the OPA?Issue 2: Whether SPDC can be liable under Section 11(5)(b) of the OPA 1990 to pay just compensation for damage caused by oil from its pipelines that has been released as the result of illegal...

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