Shell in court, again: a short comparison of the Okpabi and Milieudefensie judgments

Dr. Lucas Roorda


With the recent decisions of the UK Supreme Court and the Hague Court of Appeal in Okpabi v. Shell and Milieudefensie v. Shell respectively, common law duties of care on parent companies have gone from a distant hypothetical to a very real possibility – in the latter case, even a certainty.

This is of course good news for the victims hoping to achieve remedies for their harms, but also in general for those arguing for more accountability for parent companies of transnational corporate groups. Nevertheless, for all the (justified) optimism following these cases, there are still areas where there is significant work to be done. I will highlight some of these core issues regarding the liability of parent company RDS, and also discuss some jurisdictional implications of the decision.

The cases are similar in a number of aspects: they concern the same defendants, similar facts and broadly similar substantive legal arguments. I have discussed the details of the Dutch case in another blog post here, and the English case in a blog post here, but for the purposes of this post I will focus on how they compare on parent company liability and jurisdiction.

A legitimate claim: negligence

The lynchpin of cases like these is having a legitimate claim (‘arguable case’ in English terminology) against the parent company, over which courts of its state of domicile (the UK and the Netherlands in these cases) will ordinarily have jurisdiction. If there is indeed an arguable case, it is then possible to argue – under English or Dutch procedural law, but this rule also exists in the procedural law of other EU states – that the claim against the subsidiary is so similar to the ‘main’ claim against the parent that they should be jointly adjudicated.

The reason behind this rule is that joint treatment would avoid potential conflicting judgments, and/or be more expedient than separate procedures. Conversely, without an arguable case against a parent company, there is often little to no ground on which the court can assert jurisdiction over a foreign subsidiary.

In the Okpabi and Milieudefensie cases, the claimants based their case against parent company RDS on the tort of negligence. They argued that parent company RDS had significant control over its subsidiaries, by setting group-wide operational, safety and environmental standards, monitoring those standards and actively intervening with SPDC’s activities in particular. It thereby incurred a duty of care towards the communities affected by SPDC’s operations and breached that duty by not exercising adequate oversight.

On the merits vs a mistaken ‘mini-trial’

Part of what makes the Dutch Court of Appeals judgment in Milieudefensie so important, is that it is actually the first decision on the merits to accept that a parent duty had indeed incurred such a duty of care – if only a very limited one, to ensure that a leak detection system (LDS) is installed in one of the pipelines. All cases concerning transnational human rights or environmental harms, and where a duty of care was argued, have been dismissed, settled or like the Okpabi case, are still ongoing.

While this a clear and obvious step forward, it is regrettable that the Court of Appeal did make some legal errors in applying the relevant English case law. The court applied the wrong test to whether RDS incurred a duty of care, namely the stringent threefold test of Caparo v. Dickman rather than the broader guidance as outlined by the UK Supreme Court in Vedanta v. Lungowe. It also held that a parent can only incur a duty of care if the subsidiary acted wrongfully, which is not part of the Caparo test and certainly not mentioned in Vedanta. Whether the court would have found a broader duty of care for RDS had it applied the correct approach is uncertain, but not excluded.

That correct approach was confirmed in the UKSC’s decision in the Okpabi case of last Friday. The UKSC reiterated its finding in Vedanta that there is nothing new or special about duties of care on parent companies, and that they should be assessed through ordinary principles of tort law, referring to the Vedanta decision for possible circumstances under which a duty of care can be incurred.

Moreover, it strongly criticized the lower courts for overly scrutinizing the evidence provided by the claimants in an early stage of the proceedings, which effectively amounted to a ‘mini-trial’. Instead, the Court held that the claimants had provided more than sufficient evidence for them to have an arguable case against RDS, and reversed the dismissal.

Such mini-trials, with a detailed examination of the evidence before jurisdiction can even be established, have been less of an issue in the Dutch Milieudefensie litigation. Under Dutch procedural law, it is on the defendant to show that the claimant committed abuse of process by filing a frivolous suit, designed only to anchor jurisdiction over a foreign co-defendant. This shifts the burden of proof to the defendant, a burden that is also relatively high.

Indeed, the Dutch Court of Appeal had already concluded in an interlocutory decision of 2015 that the claimants’ case against RDS was not frivolous and did not amount to abuse of process. In the same decision, it also held that SPDC was a proper co-defendant to the case, and that it could thus exercise jurisdiction over the claims against SPDC as well.

Jurisdiction – more litigation to come?

Jurisdiction may still become an issue in the Okpabi case. While the UKSC determined that the claims against RDS raise a sufficiently triable issue, it specifically reserved the decision on jurisdiction for the High Court now that the case is remitted. The High Court cannot dismiss jurisdiction over RDS – mandatory jurisdiction pursuant to art. 4(1) of the Brussels I bis Regulation likely still applies to the claim – but it can stay the claims against SPDC on forum non conveniens grounds, in favour of Nigerian courts.

In previous cases, courts had assumed that the risk of irreconcilable judgments meant joint litigation should always proceed before English courts, if at least one defendant was within English jurisdiction. This ‘magic bullet’ was however rejected by the UKSC in Vedanta, in a holding that I discussed in this blog post.

The claimants in Okpabi may thus have to demonstrate that there is no fair trial possible in Nigeria for the case against SPDC to proceed in English courts, something the defendant companies will likely dispute. This means that unless a settlement is reached, it is possible that the Okpabi case will produce another round of lengthy procedural litigation, this time on jurisdiction.

Brexit – the need for a broader judicial framework

When taken together and compared, it is clear that the Dutch and English litigation take significant steps towards more accountability of parent companies, but that perhaps some cross-pollination is needed to ensure remaining barriers to successful litigation are lowered and courts learn from each other’s decisions.

It is clear that the respective courts are aware of each other’s decisions and considerations and that some sort of judicial dialogue is ongoing, so one may hope that this cross-pollination will continue in future litigation and a broader judicial framework of corporate accountability emerges. With Brexit and the UK’s departure from EU private international law hanging over these cases, it is absolutely needed.


Dr. Lucas Roorda is assistant professor at Utrecht University law school, and researcher at the Utrecht Centre for Accountability and Liability Law

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