Nigerian oil spill case to proceed to UK trial as ‘nuisance’ law refined

Katie Hancock of Pinsent Masons was commenting after the High Court in London threw out some third party interference (TPI) claims rooted in the law of nuisance that were raised against Shell and its former subsidiary, The Shell Petroleum Development Company of Nigeria (SPDC).

The High Court was ruling (102-page / 820KB PDF) on a series of preliminary issues in a case where claims have been raised against Shell and SPDC by members of two communities in Nigeria. The people behind the claims are members of the Bille and Ogale communities in the Niger Delta. The area has been affected by oil pollution. The residents seek compensation from Shell and SPDC over losses they say they have sustained.

The various claims raised by the Nigerian claimants are rooted in different parts of Nigerian law – the law which governs the dispute – from statutory provisions and Constitutional rights to common law torts, such as negligence, trespass or nuisance.

Mrs Justice May put herself into the shoes of the Nigerian Supreme Court to determine the various preliminary issues, which included whether various claims should be dismissed or proceed for consideration at trial. Some of the claims survived the preliminary determination and are now expected to be argued at trial, due to take place in 2027.

Among the many issues the judge considered was the scope for claims to be raised in respect of damage caused by oil removed from SPDC’s infrastructure by TPI and subsequently used in illegal oil refining by third parties.

While the High Court considered the claims from the perspective of Nigerian law, not the law of England and Wales, it said Nigerian law is the same as English law in respect of the acts of third parties causing a nuisance.

Taking this into account, the judge held that these TPI claims against SPDC could not succeed as nuisance claims.

Mrs Justice May said: “Nuisance is a tort designed to regulate relationships between neighbours, being essentially concerned with the impact of a defendant’s activities on their land affecting a nearby claimant’s enjoyment of theirs. It is not SPDC’s activity which itself interferes with a claimant’s land where oil is spilled from an illegal refinery, whether those refineries are near to or far from the site of the theft. The persons causing the nuisance are the third-party refiners. On the assumed facts, they are nothing to do with SPDC.”

The judge made the same finding regarding an attempt to bring the claim under the so-called Rylands v Fletcher rule, which she described as “a sub-species of nuisance”.

Mrs Justice May said: “Neither of these torts [of nuisance or the Rylands v Fletcher rule] is apt to cover oil being stolen and taken from SPDC’s property to another place away from SPDC’s control where the oil is then subjected to an illegal process after which it (or its refined by-product) is spilled from the refinery by third parties.”

In relation to whether a claim relating to illegal refining could be rooted in the law of negligence, the court carried out a detailed analysis of English case law and held that it would be highly persuasive to the Nigeria Supreme Court. The judge held that there were “significant legal barriers to be overcome before any claimant could make good a claim in negligence to recover for loss arising from illegal refining of stolen oil” but declined to give a definitive answer on the point pending evidence at trial.

Hancock said, “This decision identifies the limitations of a claim in nuisance as it relates to the actions of third parties. It recognises that the tort of nuisance is concerned with the impact of a defendant’s activities on its land affecting a claimant’s enjoyment of theirs. This part of the decision related to the possibility of a recovery in respect of damage arising from spills from illegal refineries, on third party land, using oil stolen from SPDC. In the event those facts are established, the court found that SDPC could not be considered to have caused the nuisance. Instead, the court held that the cause of the nuisance in this scenario would be ‘nothing to do with’ SPDC. The decision provides helpful guidance on what a court would regard as essential ingredients of a nuisance claim.”

Earlier in her ruling, Mrs Justice May had addressed other preliminary issues concerning whether the various claims pursued by the Nigerian residents were brought in time.

The judge considered that the limitation period applicable to the claims under Nigerian law is five years. When that period starts to run depends on which cause of action applies – for claims rooted in the law of trespass, which does not require damage to be proved, the limitation clock was considered to start running when oil enters a claimant’s land, and a new cause of action arises for each day that oil remains on the claimant’s land. For all other causes of action, the limitation clock runs from the date on which any oil first causes damage to the particular claimant.

This claim in trespass produces a different limitation outcome to that in the earlier case of Jalla v Shell International Trading and Shipping Co Ltd, which was heard in the UK Supreme Court. The claim in the Jalla case, brought in nuisance rather than in trespass, also related to an oil spill. That spill was stopped within six hours. The Supreme Court held that the cause of action accrued and was complete once the claimants’ land was affected and that there was no continuing cause of action even if the oil remained on the land. As a result, the claim in the Jalla case was time barred.

Unlike in the Jalla case, in this case one of the actions the Nigerian residents have brought is under the law of trespass. This paves the way for the claimants to bring claims in respect of oil spills which took place more than five years ago but were not cleaned up.

Hancock said: “This decision does not change the law on limitation and continuing torts: the judge made clear her finding that the Nigerian courts would apply the principles governing the doctrine of continuing torts set out and discussed by the UK Supreme Court in Jalla. However, this decision does recognise that the pleading of different causes of action may produce different limitation outcomes. In Jalla, the claim was time barred because the Supreme Court held that the continuing presence of oil on the claimants’ land did not of itself create a continuing nuisance. The finding here was different because the issue before the court concerned a claim in trespass.”

The common law claims could therefore proceed on their individual facts based on this approach to limitation periods.

Climate and sustainability adviser Michael Watson of Pinsent Masons said: “The complexity of this case illustrates the range of legal remedies that those who suffer environmental harm can deploy but equally that the courts will take care to ensure those remedies are typically not misused. It leaves open individual causes of action. Over the last 24 months there has been a significant rise in climate- and environmental-related cases and this is likely to continue. This will be an increasing factor impacting transition plans and corporate strategy.”

The UK Supreme Court previously determined that the courts of England and Wales had jurisdiction to consider the claims in this case, despite the fact they are governed by Nigerian law. It is established case law that the English courts can bring their own knowledge to bear in relation to resolving disputes pertaining to foreign law matters where cases in that other jurisdiction are decided in English and on the basis of the same legal principles. Nigeria’s common law system is based on the legal system in England and Wales.