" Wading through the (polluted) mud: the Hague Court of Appeals rules on Shell in Nigeria", 2 February 2021

On 29 January, the Court of Appeals (Gerechtshof) of The Hague delivered its judgments in the case of Four Nigerian Farmers and Milieudefensie v. Shell. These judgments are of seminal importance for improving accountability of transnationally operating businesses for violations of human and environmental rights. This is because it is the first appeals case in Europe that resulted in a victory on the merits for the victims, but also the first case to hold that a parent company was under a duty of care with regard to foreign claimants. In this blog...[the author] will summarize the judgment, address some key points and analyse its potential impact on future litigation...

Even the court’s finding of a parental duty of care, while significant, should be approached with some caution. It is of course only relevant for cases where the applicable law is the common law and English precedent can be applied. The way the court then applies that precedent is arguably problematic, specifically where it sides with Shell in holding that the subsidiary must itself have committed a tort before the parent can incur a duty of care. This does not follow directly from the English cases cited by the court, nor does the court clarify why finding that SPDC [ Shell Nigeria ] was subject to strict liability with regard to oil spills precludes a duty of care for RDS [ Royal Dutch Shell ]. Where it does find a duty of care, that finding stems from RDS’ specific interventions in SPDC’s operations after 2010, rather than from its central position of authority in the corporate group. I have argued on this blog before that finding a duty of care based on actual interventions of the parent, rather than its capacity to intervene, could create an incentive for parent companies not to interfere with their foreign subsidiaries (or only very generally), as this could potentially lead to liability later...