Senior Advocate of Nigeria, Mr Mohammed Ndarani, has filed a claim against Shell Petroleum Development Company (Shell) for allegedly breaching a court order related to the sale of its onshore assets in Nigeria’s Niger Delta region.
The lawsuit is an example of ongoing tensions between local communities and multinational corporations operating in Nigeria, particularly concerning environmental and economic justice.
Context of the Legal Action
In January 2024, Shell announced its plans to exit Nigeria’s onshore oil and gas sector. It had reached an agreement with five Nigerian firms, which included ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.
This divestment follows Shell’s longstanding operations in Nigeria. Over time, Shell’s operations have faced scrutiny over environmental damage caused by oil spills, which Shell claims are due to theft and pipeline vandalism, a claim contested by many local advocates.
Following Shell’s announcement, in February 2024, Mr. Mohammed Ndarani had already cautioned unsuspecting potential investors and organisations about the plans of Shell to sell off assets while legal disputes are ongoing. He said: “This warning became imperative in view of the desperate moves by Shell to circumvent an already subsisting Federal High Court ruling obtained by Ugbo-Ilaje community […]”.
Since Shell’s announcement, several local and international organisations, including Amnesty International Nigeria and SOMO, have warned of the potential implications if the company proceeded with its divestment. These organisations condemned Shell’s actions and called on the Nigerian government to halt the sale until the company addresses its environmental responsibilities.
SOMO asserted that Shell’s divestment must be halted until it addresses its toxic legacy of pollution. As SOMO noted, “Shell cannot be allowed to divest from the onshore oil industry in the Niger Delta before it takes responsibility for its toxic legacy of pollution and the safe decommissioning of abandoned oil infrastructure”.
SOMO further emphasised the dire consequences for local communities, stating, “Shell is leaving behind petroleum-contaminated rivers and streams and large areas of polluted land and that have devastated the lives and livelihoods of millions of people living in the Niger Delta”.
Allegations of Breach and Damages
According to Reuters, court documents reflect that Shell allegedly proceeded with the asset sale, “when the plaintiffs and the host of their community members have remained in perpetual suffering over the failure of the defendants to obey the preservative orders of a competent court”.
The affected communities are claiming 505 billion naira (approximately $310 million) in damages. They argue that Shell’s recent agreement to divest its onshore operations, valued at $2.4 billion, violates the September 2023 court ruling that imposed a moratorium on asset sales pending the resolution of a related compensation lawsuit.
The lawsuit cites the ‘Mareva injunction’ issued by the Federal High Court in Akure on September 28, 2023. The Mareva injunction is used under Nigerian law to prevent a prospective judgment debtor from removing assets from the jurisdiction, to ensure that the creditor can enforce future judgment, pending the resolution of the underlying dispute.
In this case, the Mareva injunction specifically prohibited Shell from disposing of its assets in Nigeria until the related legal proceedings were involved. The plaintiffs now argue that Shell’s actions constitute a clear violation of this injunction and seek both an immediate halt to the sale and financial reparations for the damages they have endured.
The plaintiffs, over 1,200 representatives from the Ilaje communities, have requested the Federal High Court in Abuja to issue an injunction halting Shell’s asset sale. They argue that Shell is disregarding legal mandates meant to protect their interests.
In addition to the damages sought, they are also asking for a perpetual injunction to prevent Shell and its new commercial partners, as well as any future investors, from proceeding with negotiations related to the sale of disputed assets.