UK: Court of Appeal gives guidance on navigating complex mass environmental claims in Nigerian Oil Spill case

On 6 December 2024, the Court of Appeal (the “Court”) published its reasons for orders made on 11 October 2024 in favour of the Claimants on procedural points arising out of litigation concerning oil spills in Nigeria.

The judgment sets out reasons for: (a) upholding the High Court’s decision to permit the Claimants’ pleading amendments; and (b) allowing the Claimants’ appeal against declarations of the High Court that the proceedings were to be regarded as “global claims” without a selection of lead claimants. 

Whilst dealing with specific procedural matters, the Judgment provides guidance on how the courts will approach common issues arising in mass claims, including asymmetry of information, inequality of arms and pleading causation. 

Key takeaways 

• The Court upheld the decision to permit the Claimants’ amendments by reference to the standard test for amending statements of case after the end of the relevant limitation period and acknowledged that pleading mass tort claims might be an iterative process since investigations of factual matters are not always possible at the outset of proceedings given the inequality of arms including information asymmetry with defendant companies.
• As a point of general principle, claimants cannot be forced into adopting a particular method of bringing their claims. It is for claimants to decide how to plead their case, even if their claims appear inadequately particularised. In reaching this conclusion, the Court was not required to decide whether a “global claims” approach can apply in environmental claims. 
• The Court stressed the need for a fair balance between the parties in case management decisions including, for example, further disclosure to break an impasse caused by information asymmetry and the selection of lead claimants to concentrate the parties on the real issues in dispute. 

Background 

The proceedings consist of four related claims brought by Nigerian community members alleging that Royal Dutch Shell and its Nigerian subsidiary (together, “Shell”) are liable to pay compensation for environmental damage caused by oil spills in Nigeria. Since proceedings were initiated in 2015, there have been various interlocutory hearings, including a jurisdictional challenge which culminated in a 2021 judgment of the Supreme Court (discussed here) and a Group Litigation Order being made in May 2022 (discussed here).

In this appeal, the Court considered three issues arising from a November 2023 case management decision of Justice May, specifically:  

• whether the Judge erred in permitting the Claimants to amend their pleadings to refer to a further 85 oil spills in Nigeria (the “Additional Spills Amendments”);
• whether the Judge erred in permitting the Claimants to amend their pleadings to reference illegal refining of oil stolen from Shell’s pipelines by third parties (the “Illegal Refining Amendments”); and
• whether, given the lack of specificity about causation (e.g. in establishing that specific oil spills gave rise to specific losses) the Judge erred in determining that the claims should proceed as “global claims” and refusing to direct the selection of lead claimants (the “Global Claims Issue”). 

The Additional Spill Amendments and the Illegal Refining Amendments 

The critical question for the Court was whether the amendments constituted “new causes of action”. The Court asked itself whether the amendments established either a new duty or breach, or otherwise required Shell to investigate matters outside of the ambit of what it might reasonably have been expected to under the original pleading. 

Additional Spills Amendments 

The Court agreed with the High Court that the Additional Spills Amendments should be permitted. The Claimants’ original pleadings covered oil spills between 2011 and 2013 (each of which would give rise to a cause of action) and was framed very widely, such that the new references to specific spills within that period did not expand the causes of action alleged and instead constituted “further particularisation” of existing matters addressed in the pleadings. 

Illegal Refining Amendments 

The Court also upheld the decision to permit the Illegal Refining Amendments. Stuart-Smith LJ observed that the Claimants’ original pleaded case included multiple references to interference by third parties, which could be read as including damage resulting from that interference. The new references to illegal refining therefore constituted particularisation of what was a foreseeable consequence of breaches already pleaded. 

Additionally, Stuart-Smith LJ noted that even if the Illegal Refining Amendments amounted to a new cause of action, the amendments would have been permitted since the amendments arose out of the same facts or substantially the same facts already in issue between the parties as third-party interference had been put at the heart of Shell’s defence. Whilst Males LJ did not agree that the new references to illegal refining clearly fell within the original pleaded case, he agreed with allowing the amendments based on third party interference being a cornerstone of Shell’s defence. 

The Global Claims Issue – managing an “essentially circular procedural wrangle”

The concept of “global claims” originates from English case law on construction disputes. It allows causation to be established for a loss caused by multiple events for which the defendant is solely responsible, even where loss attributable to individual events cannot be identified. One consequence of this approach is that causation will not be established if there is a material contribution to the loss for which the defendant is not responsible. 

There is no precedent for a global claims approach in environmental claims and this route may be unattractive where third-party involvement is a relevant factual issue (which, if established, can undermine claimants’ arguments as to causation). 

The Claimants have therefore consistently asserted that they were not adopting a “global claims” approach. However, the High Court agreed with Shell that the Claimants’ pleadings did not have sufficient particularisation to establish “events-based causation” (e.g. that each particular event or oil spill had caused a particular loss) and therefore fell to be regarded and progressed as “global claims”. 

The Court disagreed. As a basic proposition, Stuart-Smith LJ emphasised that no judge or party is entitled to require a party to establish their case by a particular method. It was for the Claimants to decide how they wished to advance their case, and in doing so, they took the risk that their method might not be successful. The Claimants had chosen to use an events-based approach. Although the Claimants did not currently have sufficient information to substantiate this case, the Court found that they should not be forced into a “cul-de-sac" of global claims against their will. The Claimants were entitled to continue to plead their case by reference to events-based causation if they wished to do so. 

However, the Court noted that this position gave rise to an "essentially circular procedural wrangle"": the Claimants alleged they could not further particularise their case without more information, and Shell in turn argued that they could not be required to provide further information until the Claimants’ case was better particularised. The Court observed that underlying this issue was a fundamental question as to “whether, and if so how, a procedure and structure that is fair to both the Claimants and the Defendants can and should be achieved". 

In considering a fair balance between the parties, the Court made the following points: 

1. there was a two-fold inequality of arms between the parties: first, the information asymmetry in favour of the Shell and second, the Claimants’ inability to fund the litigation themselves and their reliance on lawyers who were acting on Conditional Fee Agreement terms; 
2. the Courts’ approach “should be informed by the overriding objective and, in particular, by the Court’s obligation to ensure that the parties are on an equal footing”;
3. disclosure is an important tool in this context and although the courts should be alert to prevent ‘fishing expeditions’, where the claimants have clearly articulated in their pleadings and associated documents the case they wish to bring, the court should “scrutinise with care” any suggestion that the defendants do not know the nature of the case they have to meet for the purposes of disclosure because the pleadings do not yet have sufficient particularity;
4. the case was a paradigm example of a case which can only be progressed by the selection of lead claimants, which would break the current impasse, and would concentrate the parties on the real issues in dispute; and 
5. once the Claimants are in possession of sufficient relevant information, they should then be required to refine and set out the nature of their case so that Shell have a fair understanding of the case they have to meet and a fair opportunity to do so at trial. It would be for the High Court to decide whether that could be achieved by one further iteration of the pleadings or more.

Next Steps 

The Court left the precise orders and procedure to be adopted going forward for the High Court. However, the Court gave strong indications that: (a) it expected further disclosure would be necessary for the Claimants to refine their case; (b) lead claimants must be settled on quickly (and before disclosure is given): and (c) the proceedings should now move promptly, having been "bogged down for far too long by disputes about jurisdiction, pleadings and disclosure". 

A preliminary issues trial is currently expected in early 2025. 

The Court’s judgment is available here: Alame and others v Shell [2024] EWCA Civ 1500.