Okpabi & Ors v Royal Dutch Shell Plc & Anor (Rev 1)

On a jurisdictional challenge, a claimant must show a real issue which it is reasonable for the court to try. This is equivalent to showing a real prospect of success and that the claim is not bound to fail.

A parent company may owe a duty of care where it has directly assumed responsibility for a material policy or has taken direct or joint control of the relevant subsidiary operations. Group-wide policies, standards and best practice do not alone establish such a duty. There must be evidence of material operational control, implementation, monitoring, intervention or enforcement in relation to risks affecting a particular class.

Jurisdiction applications should be kept proportionate and should not become mini-trials.

The appellants, Nigerian communities and individuals affected by oil pollution, claimed damages against Royal Dutch Shell Plc (RDS) and its Nigerian subsidiary, Shell Petroleum Development Company of Nigeria Ltd (SPDC). RDS was sued as an anchor defendant on the basis that it controlled, or had assumed responsibility for, the operation and security of pipelines and associated infrastructure.

Fraser J held that there was no arguable case that RDS owed a duty of care and made declarations under Civil Procedure Rules 1998 Part 11. The appellants appealed from the decision reported at [2017] EWHC 89 (TCC). The central issue was whether the evidence established a properly arguable parent-company duty of care sufficient to support jurisdiction.

1. Appeals dismissed by a majority. Simon LJ and the Chancellor held that the claims against RDS were bound to fail because the appellants had not shown a properly arguable duty of care. Sales LJ dissented and would have allowed the appeals.
2. The applicable jurisdictional threshold under Civil Procedure Rules 1998 Part 6.37(2) was equivalent to the summary-judgment inquiry under Part 24: whether there was a real issue which it was reasonable for the court to try, or a real prospect of success. The court should normally decide a legal issue going to jurisdiction, but should avoid determining controversial questions in developing areas through summary procedure.
3. The starting point for a parent-company duty remained the three-stage test of foreseeability, proximity, and whether it was fair, just and reasonable to impose the duty. A parent might incur responsibility by assuming direct responsibility for a material policy or by controlling, or sharing control of, the relevant subsidiary operations. The issue was responsibility to particular persons or classes, not abstract moral responsibility for environmental protection.
4. The majority distinguished group-wide standards from operational control. Mandatory policies, engineering practices, centralised expertise, assurance systems, financial oversight and high-level concern did not, individually or cumulatively, establish that RDS controlled SPDC’s operations or had direct responsibility for the alleged failures. The evidence showed standardisation and guidance across the Shell Group rather than material intervention, monitoring or enforcement by RDS. The foreseeability limb was satisfied, but proximity and the fair, just and reasonable limb were not.
5. On fresh evidence, the majority comprising Sales LJ and the Chancellor admitted Ms Sedgwick’s witness statement under the criteria in [1954] 1 WLR 1489, as well as the Shell Control Framework. Simon LJ would have admitted only the Framework. The additional material nevertheless did not alter the majority’s conclusion on duty of care.
6. Sales LJ considered that the evidence showed a good arguable case of practical or shared control, and that strict liability under Nigerian law or Rylands v Fletcher did not exclude a concurrent negligence duty. Those conclusions were dissenting.

• Court of Appeal (Civil Division) — appeals dismissed by a majority: [2018] EWCA Civ 191 .
• High Court of Justice, Technology and Construction Court — Fraser J held that there was no arguable duty of care owed by RDS and made declarations under Part 11: [2017] EWHC 89 (TCC).