Fletcher in the News

Shell Oil Verdict Could Deter Foreign Investment in Nigeria: Prof. Trachtman

The New York Times

Joel Trachtman, Professor at The Fletcher School, Tufts University

In a legal dispute that had been closely watched by multinational companies and environmental organizations, a Dutch court Wednesday dismissed most of the claims brought by Nigerian farmers seeking to hold Royal Dutch Shell accountable for damage by oil spilled from its pipelines. …

… In the case decided Wednesday, which was filed in 2008, four Nigerian farmers and fishermen, working with the environmentalist group Friends of the Earth, claimed that their livelihoods had been ruined by oil that spilled from Shell pipelines in their villages. …

… The court agreed with Shell in most of those spills, around the villages of Goi and Oruma.

But it held that in one spill, near the village of Ikot Ada Udo, the local subsidiary, Shell Petroleum Development Co. of Nigeria, was liable for damages — as yet unspecified — to one farmer.

In that case, the court said, “sabotage was committed in a very simple way in 2006 and 2007 by opening the overground valves with a monkey wrench,” something that “Shell Nigeria could and should have prevented.”

“I am not surprised at the decision because there was divine intervention in the court,” Reuters quoted the farmer, Friday Akpan, as saying. “The spill damaged 47 fishing ponds, killed all the fish and rendered the ponds useless.”

… Joel Trachtman, a professor of international law at the Fletcher School of Law and Diplomacy in Medford, Massachusetts, said that, in theory, the court’s finding in favor of Mr. Akpan meant that “multinational companies could find their foreign subsidiaries held to a higher standard, higher even than locally owned companies.”

That, he said, “conceivably could deter foreign investment in Nigeria.”

But Mr. Trachtman noted that the court also rejected any liability for the parent company. That limited the implications of the ruling. Mr. Trachtman said that facet of the decision was in keeping with global legal principles. “Usually courts around the world accept the separate existence of a subsidiary corporation,” he said. “They don’t pierce the veil to hold the parent responsible.”

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