Court of Appeal in Shell oil spill case: restoring the right route on causation
As explained in our previous blog post, this group litigation in the UK arises out of oil contamination affecting two areas in the Niger Delta. The defendants are Shell plc and its Nigerian subsidiary (together, “Shell”). The Claimants' case is that Shell failed to prevent, mitigate or remediate oil contamination resulting from spills and thefts from Shell's pipelines and associated infrastructure operated in or near to the two regions.
It is alleged that the failures have caused loss and damage to the Claimants, for which Shell is liable to compensate them. Shell's defence is that major sources of oil pollution in the areas concerned are crude oil theft (bunkering) and related oil spills, illegal artisanal refining by third parties and oil spills from equipment operated by those third parties, being matters for which Shell is not responsible.
The claims are still an early stage. Shell issued a jurisdiction challenge, which was eventually resolved in favour of the Claimants by the Supreme Court. The claims are now being managed under a group litigation order (GLO).
High Court decision
In July 2023, a case management conference took place to address a number of procedural issues, including Shell's proposal, based on the state of the Claimants' pleaded case, that the court regard the claims as "global claims" rather than “events based” claims for the purposes of case management. The concept of “global claims” derives from construction cases. Global claims are generally regarded as difficult to prove and unattractive to claimants.
The usual course in this type of group litigation is to identify “lead” claimants and then the litigation progresses from there. In November 2023, the High Court ruled that the lack of pleaded detail on causation precluded any sensible identification of lead claimants at this stage. The Court said the necessary causal link between event(s) and breach and breach and loss had not been identified. Therefore, the claims had to proceed as “global” claims rather than “events-based” claims, unless the claimants were able to plead causation in more detail, including which oil spills caused each claimant’s loss (see Alame v Shell Plc [2023] EWHC 2961).
A further hearing subsequently took place which considered case management and disclosure issues following the November 2023 judgment: Alame v Shell Plc [2024] EWHC 510 (KB).
Appeal
The Claimants appealed against the High Court's ruling that the claims must proceed as “global” claims. The Court of Appeal granted the appeal, overturning that element of the High Court’s judgment. Stuart-Smith LJ noted that generally a party should be allowed to construct their claims “as they wish”. The Claimants had expressed no indication that they wish to pursue a “global claim”, and no court or defendant should force a party “into a straitjacket” of how their claim should be run: “unless and until the point is reached where a claim is to be dismissed or stayed, the right of a litigant to bring the claim and the freedom to determine how it intends to prove its claim should be respected in all normal circumstances.”
Stuart Smith LJ went on to highlight the asymmetry of information between the parties, acknowledging that the Claimants lack the relevant information needed to further particularize their claims. This imbalance was found to result in a “circular procedural wrangle” where the Claimants argue that they cannot provide more specificity to their claim until more information is disclosed by the Defendants; and the Defendants counter that they cannot be forced to disclose further information unless the Claimants can establish their claims in greater detail.
In such circumstances, the Court should be guided by the overriding objective and, in particular, “the Court’s obligation to ensure that the parties are on an equal footing and can participate fully in the proceedings”. In cases where there is a significant asymmetry of information between a claimant and a defendant, disclosure can act as “one of the most powerful tools available for achieving justice”. To that end, Stuart-Smith LJ ruled that “further disclosure is required” by the Defendants in this matter, in order for the claim to proceed fairly.
Comment
In cases of environmental contamination, it can often be difficult to particularise at an early stage which individual pollution event has caused each individual loss. From the claimants’ perspective, there is often an information imbalance; for example, the Claimants in the Shell case alleged that Shell held the necessary information (e.g. overflight material, satellite images and pipeline pressure data) that would enable the Claimants to establish which oil spill or spills caused the relevant loss. Claimants in complex litigation with wide-ranging factual and legal issues are likely to welcome the Court of Appeal’s decision. In cases such as this, where there is substantial inequality of arms and significant asymmetry of information, claimants are entitled to disclosure to help them plead their case with sufficient particularity. Furthermore, the court’s rejection of the “global claims” approach means that claimants in environmental actions can pursue complex environmental cases involving multiple pollution events without needing to prove total responsibility by a single polluter.
With thanks to Paralegal Erica Wheatley for her assistance with this piece.