Supreme Court allows appeal against Shell and Nigerian subsidiary

The Supreme Court in Okpabi & Others v Royal Dutch Shell Plc & another [2021] UKSC 3 has clarified the limited scope courts have when determining whether a claimant has an arguable case. Save in exceptional circumstances where demonstrably untrue, factual statements set out in the pleadings should be accepted as putting forward an arguable case. Where a court does not focus on the pleadings, it risks conducting an inappropriate mini trial, evaluating the weight of available evidence and ultimately, exercising judgment on that basis. 

It was also held that there is no special doctrine of legal responsibility on a parent company in relation to the activities of its subsidiary. Generalised assumptions regarding a duty of care owed by a parent in relation to the activities of the subsidiary are wrong. A parent does not have to take direct or substantial control of its subsidiary’s operations to establish a duty of care in favour of any person/class of persons affected by the subsidiary’s activities.


Approximately 42,000 residents from two Nigerian communities brought proceedings in England against Royal Dutch Shell Plc, domiciled in the UK (Shell) and its subsidiary, the Shell Petroleum Development Company of Nigeria Ltd, incorporated in Nigeria (SPDC”). The claims alleged environmental damage from oil spills caused by SPDC’s negligence, as the operator of the relevant pipelines. It was also alleged that Shell exercised significant control over SPDC’s operations in Nigeria and/or assumed such responsibility that it established a duty of care on Shell in favour of the communities affected by SPDC’s activities.

The High Court[1] initially found that it was “not reasonably arguable that there is any duty of care upon [Shell]” meaning that, as there was no issue between the claimants and Shell, the English court lacked jurisdiction to try the claims against the foreign defendant, SPDC. The Court of Appeal[2] reached the same conclusion, rejecting the claimants’ arguments that Shell sufficiently controlled SPDC’s operations such as to establish proximity to the claimants. According to the Court of Appeal, the fact that Shell had issued mandatory policies, standards, and manuals to its subsidiaries, including SPDC, could not mean that it assumed a duty of care to anyone affected by the operations of all its subsidiaries.

After the Claimants obtained permission to appeal the Court of Appeal’s judgment, Hausfeld’s client Corner House intervened in the case and brought new evidence to the Supreme Court’s attention on the issue of corporate control. Having been mired in disputes around the world, Shell faced several charges of bribery and corruption in relation to its activities. Corner House identified documents in one set of such proceedings in Italy and highlighted these to the Supreme Court to show that Shell controlled - and was ultimately responsible - for its Nigerian subsidiary’s activities.


In a unanimous decision delivered by Lord Hamblen, the Supreme Court allowed the claimants’ appeal, finding that the lower courts had erred in law in their approach to determining whether a claim is arguable at an interlocutory stage. In assessing what constitutes an arguable case, the Court of Appeal conducted a mini-trial, which led it to adopt an inappropriate approach to factual issues and to the relevance and significance of documentary evidence.

The Supreme Court affirmed that where a claim is challenged on the grounds that a claimant has no arguable case, and where there are written pleadings, that issue should ordinarily be addressed by reference to the pleadings. When focusing on the pleaded case at an interlocutory stage, facts set out in the pleadings in support of the claim should be accepted, “unless, exceptionally, they are demonstrably untrue or unsupportable”. In the court’s view, this case was not so exceptional.  

The assertion by the Court of Appeal that it was subjecting evidence to critical analysis was rebutted by the Supreme Court. Conducting a mini-trial led to the Court of Appeal reaching conclusions based on an evaluation of the weight of contested factual and documentary evidence. The Court of Appeal accepted disputed witness evidence from Shell and SPDC, notwithstanding that there had been no cross-examination or disclosure. As a result the Court of Appeal effectively reached conclusions on the documentary evidence “that the prospect of there being further relevant evidence on disclosure could and should be discounted”. In cases such as this, where the question of a parent’s operational control of its subsidiary is at issue, that is most likely to be revealed by documents relating to operational matters which are yet to be disclosed.

The claimants’ case as set out in the pleadings, bolstered by the contents of internal Shell documents obtained during the appeal, and the real prospect of disclosure being provided, establish that there are real issues to be tried against Shell.

No special doctrine on parent company liability

Despite the anticipation, the Supreme Court’s primary focus was not on the issue of parent company liability or the framework for determining whether a duty of care exists in cases of this type. The court did accept however that there were errors in law in how these issues were approached by the Court of Appeal. Whilst it chose not to determine how material these issues were to the Court of Appeal’s decision, the Supreme Court did confirm:

  1. The dissemination by a parent of group-wide policies or standards can give rise to a duty of care.
  2. A duty of care may arise regardless of the exercise of control, where the parent holds out that it exercises a particular degree of supervision or control over its subsidiary.
  3. The liability of parent companies in relation to the activities of their subsidiaries is not, of itself, a distinct category of liability in common law negligence. Therefore, no added level of rigorous analysis is required beyond what is appropriate to any summary judgment application.


This decision demonstrates the importance of claimants fully particularising their case as early as possible. Particulars of claim should also be updated as and when claimants become aware of additional relevant facts. Where an interlocutory challenge to the prospects of a particularised claim is made, the parties can avoid problems of lack of proportionality by following the prescribed review of the pleadings only. The reaffirmation that factual statements made in support of a claim should be accepted is welcomed news to claimants who may otherwise be deterred by the prospect of lengthy and costly satellite litigation.


[1] [2017] EWHC 89 (TCC)

[2] [2018] EWCA Civ 191

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