UK court ruling on Shell good news for India

Making multinationals accountable where it hurts

Business

February 16, 2021

/ By / New Delhi

UK court ruling on Shell good news for India

United Kingdom Supreme Court last week held petroleum giant Royal Dutch Shell responsible for the actions of its subsidiary in Nigeria (Photo Credit: icir.org)

Last week, British courts passed a landmark judgment allowing Nigerian farmers to sue oil major Shell in the United Kingdom for pollution caused in Africa. This ruling, though not the first of its kind, could be significant for Indians seeking justice from the mighty multinationals whose operations in India often violate all their principles and rules they follow back home.

Though it is not directly connected, a ruling by the United Kingdom Supreme Court last week holding petroleum giant Royal Dutch Shell responsible for the actions of its subsidiary in Nigeria could open a pandora’s box for subsidiaries of hundreds of large multinationals who have been operating, often with impunity, in India or for that matter across the developing world.

The case involved a group of fishermen and farmers from Nigeria who have been fighting Shell’s subsidiary in Nigeria over the pollution caused by repeated oil spills for past several decades from Shell’s operations in the Niger Delta. The pollution due to the spills has contaminated land, swamps and water in the region and that the company had failed to do anything to either stop the pollution or begin cleanup or even pay for it.

Five judges of the top court in London held that Shell may owe a duty of care to the Nigerian petitioners over the actions of its subsidiary. The ruling actually overturns a judgement against two communities of the delta region who had sought compensation and reimbursement of cleanup costs from Shell.

The British judges agreed with the Nigerians’ plea that they were unlikely to get justice in a Nigerian court and hence the case against Shell and its subsidiary, the Shell Petroleum Development Company of Nigeria (SPDC), should be heard in London. They said the lower court had materially erred in law and the case had a real prospect of success.

One of the lawyers representing the farmers hailed the decision as a watershed moment. “Increasingly, impoverished communities are seeking to hold powerful corporate actors to account and this judgment will significantly increase their ability to do so,” he said.

Holding multinationals to account

Indeed, the ruling in the UK is a significant win for millions of people around the world who have suffered due to hypocritical attitude of companies, especially the behemoth multinationals, that resolutely refuse to apply their best practices around the world equally.

This is more so true for India than for perhaps any other country due to the large and historical presence of multinationals. Thousands of Indian communities have been fighting big companies, including several top firms, for pollution, environmental degradation, exploitation and even deaths due to irresponsible behaviour, often becoming criminal.

Getting justice in India against the subsidiaries of these large businesses is a nightmarish prospect for many reasons, least of which is the abysmal pace at which cases progress on the judicial treadmill in India. Secondly, many companies bank of the lax implementation of laws governing environmental protection or compensation for damage in India and thus escape justice with a rap on their knuckles in the worst case.

There are several glaring examples. The biggest and most tragic case is, of course, the Bhopal Gas Tragedy of 1984 which killed thousands when methyl isocyanate, a fatally toxic gas, leaked from the plant of Union Carbide, an American giant, in the capital of Madhya Pradesh. Even though pretty soon it was evident that the leak had occurred due to criminal negligence in the maintenance of the plant, the victims were made to run to a wide variety of courts and government offices before any admission of responsibility even came from the company or its managers. Unfortunately, the American CEO of Union Carbide’s Indian operations was allowed to leave India even as the trial had to begin and he, of course, never returned to face justice.

The case for compensation itself was entirely mishandled by the government, leaving them thousands of survivors and next of kin who had died with ridiculous amounts of payments for the sufferings which continue even up to today. Activists have been trying to get to reopen the compensation issue, due to the long-term effects of the gas leak that continue to be felt even today, nearly four decades later.

The activists claim that the impact of Covid-19 was severely more in gas affected people, saying that the death rate of those who had inhaled the gas was 6.5 times that of those people not exposed to the poisonous gas. They call Carbide’s claim that 93 pc of those exposed to the gas had only temporary effects.

While Carbide case was the biggest industrial disaster, there have been hundreds of other cases of negligence or more often a violation of laws by multinationals operating in India. Take Coca Cola for instance. It has been fighting with residents of a village in Kerala where it has a bottling plant. The case that began in 2003 is yet open and without any compensation to the villagers for the destruction of groundwater resources of the village and neighbouring areas. This despite the order of a committee formed by the government that recommended compensation of USD 48 million for damage to the environment. The case has been stuck in Supreme Court since November 2005.

Another stellar example is Vedanta fought for 13 years with tribals from Odisha’s Niyamgiri hills to start a bauxite mining and alumina smelting project which the tribals objected to on the grounds that it would destroy their way of life and the environment. The company tried all the tricks it could to start the project and kept the pressure on the Niyamgiri’s Dongria Kondh tribals, amongst the poorest communities in the country, for well over 13 years, before finally, the Supreme Court of the country upheld a ban imposed by the Indian environment ministry on mining in the area.

Though the case is closed now, a ruling against Vedanta by another British court in 2017 for its operations in Zambia could pave the way for compensation for the tribals. The decision allowed nearly 2,000 Zambian villagers to sue Vedanta in the UK for alleged pollution in Africa. Vedanta ultimately settled out of court.

These cases represent important precedents for communities and activist groups in India fighting the multi-billion-dollar muscle of large firms. Such rulings could also serve as very powerful deterrents for companies not to choose profit over responsibility and respect the same conditions for environmental preservation and community relationships with the weakest communities in the poorest countries around the world as they would for the strongest community in the richest nations.

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