Supreme Court rules in favour of Shell in Nigerian 'Bonga Oil Spill' case


Continuing nuisance: the Supreme Court decision in Jalla v Shell

In a recent legal win for Shell, the Supreme Court unanimously rejected arguments put forward by two Nigerian landowners in respect of the continuing impact of one of the largest oil spills in Nigerian oil exploration.

The decision, which centred on a limitation point, will no doubt be welcomed by others in the sector. But will it deter claimants, whose land is affected by similar environmental disasters, from bringing similar claims? In this article we explore the Supreme Court's decision and the impact it may have.

Factual Background

On 20 December 2011, during a cargo operation at an offshore installation in the Bonga oil field (located approximately 120 km off the coast of Nigeria), a pipe transporting crude oil burst, resulting in a spill of the equivalent of over 40,000 barrels of oil into the ocean. The oil leak, now known as 'the Bonga Spill', lasted about six hours and is said to be the largest spill in the Niger Delta for at least 20 years.

Two Nigerian landowners commenced legal proceedings in England against Shell International Ltd and Shell Nigeria Exploration and Production Co Ltd, two companies within the Shell group.  

The landowners alleged that oil from the spill migrated from the offshore Bonga oil field to reach the Nigerian Atlantic shoreline and caused significant damage to their land. Their claim, under the tort of private nuisance, was that the oil pollution from 'the Bonga Spill' caused undue interference with the use and enjoyment of land owned by them. 

The issue before the Supreme Court

Under section 2 of the Limitation Act 1980 "an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued".

The claimants issued their claim form on 13 December 2017, just under six years after the spill occurred. However, in April 2018 (i.e. over six years after the spill), the claimants purported to amend the claim form to change one of the defendants (from Shell International Ltd to Shell International Trading and Shipping Co Ltd). Subsequently, in April, June and October 2019, the claimants issued a series of applications to amend their claim form and particulars of claim.

The defendants argued that the amendments were sought after the expiry of the limitation period and should not be allowed. The Nigerian landowners submitted that since, on their case, the oil spill had not been removed or cleaned up, and there was still oil present on their land, this constituted a continuing nuisance and a continuing cause of action. Since the date of accrual of the cause of action is the date from which the limitation period starts to run, establishing a continuing nuisance would mean that the limitation period would run afresh from day to day. In turn, the claimants' applications to amend would still be within the limitation period.

The issue for the Supreme Court was whether the continued presence of oil from an earlier spill, having not been removed or cleaned up, would constitute a continuing nuisance.

What is a continuing nuisance?

In the Supreme Court judgment, Lord Burrows defined a continuing nuisance as a situation where "outside the claimant’s land and usually on the defendant’s land, there is repeated activity by the defendant or an ongoing state of affairs for which the defendant is responsible which causes continuing undue interference with the use and enjoyment of the claimant’s land".

In considering the claimants' arguments, Lord Burrows referred to the case of Delaware Mansions Ltd v Westminster City Council (“Delaware Mansions”) [2001] UKHL 55, [2002] 1 AC 321 as "a good example of a continuing nuisance".

In that case the roots of a tree on the pavement adjoining a block of flats had caused cracks in the structure of the flats. When the defendant highway authority (Westminster City Council) refused to remove the tree, the claimant, Flecksun Ltd (who owned the block of flats), carried out the necessary underpinning works to protect its property at a cost of £570,734.98.

Flecksun brought a claim for private nuisance and sought to claim the cost from Westminster City Council as damages. The House of Lords held that there was a continuing nuisance in that instance and Flecksun was entitled to the damages claimed. Lord Cooke, giving the leading judgment, commented that "the encroachment of the roots was causing continuing damage to the land by dehydrating the soil and inhibiting rehydration….cracking in the building was consequential".

Was there a continuing nuisance in this case?

The Supreme Court considered that, in the instant case, there was neither repeated activity by the defendants nor an ongoing state of affairs for which the defendants were responsible that was causing continuing undue interference with the use and enjoyment of the claimants’ land.

Rather, it was the court's view that "the leak was a one-off event or an isolated escape" based on the fact that, after six hours, the oil pipe was no longer leaking. This was quite different to the facts in Delaware Mansions, where the living tree and its roots constituted an ongoing state of affairs outside the claimant’s land, which caused continuing undue interference with the use and enjoyment of its land.

In the judgment, Lord Burrows drew an analogy with flooded land. If the claimants' submissions were correct in respect of the oil spill, it would be the same as saying that, where land was flooded by an isolated escape, there would be a continuing nuisance, and importantly, a fresh cause of action accruing every day so long as floodwater remained on the land. The effect of the court accepting the claimants' submissions would be to extend the limitation period indefinitely until the land is restored and, therefore, impliedly convert the tort of nuisance into a failure by a defendant to restore a claimant's land.

On the basis of the above analysis, the Supreme Court rejected the claimants' submission and upheld the reasoning of the lower courts.

Looking ahead

The Supreme Court's decision will be a blow for the claimant landowners and for others whose land is affected by 'man-made' environmental disasters, in particular where defendants deny the damage caused or fail to clean up.

It also provides a clear reminder of the care that claimants need to take to ensure that claims are brought, and any amendments to those claims made, within the relevant limitation period. Specifically in nuisance claims, even in cases where the damage caused is ongoing, this will not constitute a continuing nuisance in the legal sense if it has been caused by a one-off incident that has since ended. 

From Shell's point of view, the decision is clearly a win. However, it is unlikely to stem the flow of claims faced by the company. The Supreme Court's judgment doesn’t prevent potential claimants from bringing similar claims, so long as those claims are brought in a timely manner within the limitation period. Environmental and other ESG related litigation has increased considerably in recent years and it's likely that claimants will continue looking for novel arguments to use against defendants on the 'wrong' side of these issues. 

You may also be interested in the article here exploring trends in climate change-related litigation and recent actions against Shell.

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Environmental and other ESG related litigation has increased considerably in recent years and it's likely that claimants will continue looking for novel arguments to use against defendants on the 'wrong' side of these issues.

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