Environmental litigation against Shell to be managed as “global” claims
In a recent decision, the English High Court has declined to strike out an environmental contamination group claim against Shell, highlighting that this would be draconian. In light of the basis of the claim, the decision required that the group litigation move forward at this stage on the basis of ‘global’ claims.
Background
This group litigation arises out of oil contamination affecting two areas in the Niger Delta. The defendants are Shell plc and its Nigerian subsidiary (together, “Shell”).
There are four related sets of proceedings: two brought by local residents and two brought by local community leaders (together, the “Claimants").
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.
Although the claims were issued over 8 years ago, they are still at an early stage in the litigation process. 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).
The parties held a case management conference to deal with 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" for the purposes of case management.
“Events-based” claims or “global” claims?
In event-based claims, the claimant must prove a causal link between its loss and a specific event or events that is said to be the responsibility of the defendant. In contrast, a “global” claim is a claim for a loss arising from a number of causes, all of which are said to be attributable to the defendant. The latter is most commonly seen in construction litigation and is considered very difficult to prove and unattractive for claimants.
For the vast majority of cases, the Claimants had not identified, for each claimant, the specific oil spill or spills alleged to have caused them loss and damage. The Claimants alleged that Shell held the necessary information (e.g. overflight material, satellite images and pipeline pressure data) that would enable them to establish which oil spill or spills caused the relevant loss. They said the case would be developed for each of the lead claimants after disclosure had been provided and expert evidence obtained.
Shell disputed this and said the Claimants’ approach was to “put the cart before the horse”. Shell said that the Claimants had access to a great deal of information already, in the form of local reports, photos, videos and publicly available material, including satellite pictures. Shell’s position was that if that information had not enabled the Claimants to plead the case with the required specificity, then there must be a doubt as to whether that could ever be done.
Shell also argued that allowing the case to proceed as events-based claim in such circumstances was unworkable from a case management perspective because, amongst other things: (i) the court did not know the full scope of the case; (ii) it was not possible to organise the individual claims in any logical way; (iii) there was no rational basis to select lead claimants for trial; and (iv) it imposed an enormous burden on court resources in conducting what would effectively be a wide-ranging enquiry into oil pollution.
In light of the above, Shell submitted that the claims should be struck out for want of particularity, or alternatively treated as a global claim.
Decision
The High Court refused to strike out the claim and said doing so would be a “draconian and unwarranted” exercise of its powers. However, the Court said it remained “very concerned at the current state of the pleaded case” and if each individual claimant was making an events-based claim, not a global, all-or-nothing case, then “it is apparent that as regards the vast majority of Claimants the essential element of causation is at best sketchy and at worst missing altogether”.
The Court also noted that, “as an events-based claim, the Claimants' cases are not at present sufficiently underpinned by information which enables the court or the parties to link the event(s) to breach and breach to loss, even by inference”.
As a result, the Court saw no practical alternative but to view the cases of all but five claimants as global claims, unless or until they were particularised further.
Comment
The High Court’s refusal to strike out the claim despite the current challenges noted in relation to causation is an important reminder that the English courts will not lightly undertake striking out. In this case the Court noted the importance of the context of “thousands of claims made against the backdrop of well-known, widely reported, catastrophically environmentally damaging oil pollution in the Niger Delta”.
The decision is also an interesting example of the concept of global claims being applied outside of the context of construction. Establishing a causal link between a specific event and each individual’s loss can be challenging in environmental pollution claims. This case illustrates that where it is clear that claimants cannot particularise their case on causation with the required specificity, their case may only be able to proceed as a global claim.
The Court in this case will hear further submissions from the parties as to the case management implications of its decision. How the Court deals with disclosure and other case management issues in the context of a global claim will be of interest to practitioners in this area.