Nigerian Court Orders Shell to Pay $1.5 Billion

In what could turn out to be a very important ruling, a Nigerian court in Port Harcourt has ordered Royal Dutch Shell to pay $1.5 billion for the environmental damage its oil-refining activities have caused in the southern Niger delta region. CorpWatch:

Local residents began to experience health problems soon after Shell Oil company injected a million litres of a waste into an abandoned oil well in Erovie two years ago. Many who consumed crops or drank water from swamps in the area complained of vomiting, dizziness, stomach ache and cough. Within two months 93 people had died from this mysterious illness. Independent tests by two Nigerian universities and three other laboratories, conducted in the year after the health problems emerged, indicate that the substance was toxic. All the tests confirmed poisonous concentrations of lead, zinc and mercury in the dumped substance.

"The presence of heavy metals at above acceptable limits and the unusually high concentration of ions make the substance toxic. Therefore, if these substances were to infiltrate the underground water or aquifer, it would have serious environmental and health implications," says one of the reports.

The suit was filed by an group of local Ijaws after Shell ignored an order from the Nigerian senate to pay the money to the impoverished Ijaw community. Shell, which made a net profit in 2005 of $22.94 billion -- the highest full-year profit in British corporate history -- has appealed "on, among other grounds, the strength of independent expert advice, which demonstrates that there is no evidence to support the claims of the group." The company contends that the environmental damage was caused by sabotage of its oil refineries, relieving it of legal responsibility for the damage.

Shell is clearly fighting an uphill battle. Its sabotage claim is complicated not only by the senate order and by the recent decision ordering it to pay damages, but also by an earlier federal court decision that ordered it to immediately cease gas flaring. The earlier decision, issued by a federal court in Benin City, concluded that the flaring was a "violation of fundamental rights and dignity which was guaranteed under the constitution." Shell appealed the ruling and continued gas flaring, provoking a group of Ijaw locals suffering from severe respiratory ailments to file a second lawsuit last December.

UPDATE: Make sure to read Roger Alford's more detailed post on the decision here.