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Legal Change in Africa: evidence from oil-related litigation in Nigeria

  • Jedrzej George Frynas

Extract

There has been a significant rise in litigation between oil companies and those affected by oil operations in Nigerian courts. In the period 1981–86, 24 compensation claims against Shell went to court in Nigeria. In early 1998, Shell was reportedly involved in over 500 pending court cases in Nigeria, out of which 70 per cent, or roughly 350 cases, dealt with oil spills, the other 30 per cent, or 150 cases, dealt mostly with other types of damage from oil operations, contracts, employment and taxation. In the whole of the 1980s, Chevron reportedly had only up to c. 50 court cases in Nigeria. In early 1998, Chevron was involved in over 200 cases, of which 80–90 per cent, or roughly 160–180 cases, dealt with oil spills, other types of damage from oil operations or land acquisition for oil operations. This substantial increase cannot be solely ascribed to expanding oil operations. There are various indications that an increase in the quantity of oil-related litigation was accompanied by legal change. In the 1990s, a number of high profile cases have been won by the local people in the oil-producing areas, notably Shell v. Farah, in which c. 4.6 million Naira (c. US$210,000 according to the official exchange rate) was awarded as damages to the plaintiffs.

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1 Adewale, Ombolaji. “Oil spill compensation claims in Nigeria: Principles, guidelines and criteria”, (1989) 33(1) J.A.L. 91 at 93.

2 Personal interview with Odeleye, J. A., Legal Manager and Company Secretary of Shell Nigeria (Lagos, 02 1998).

3 Personal interview with Ned, Temi Mojuetan, Attorney at the Law & Contracts Department of Chevron Nigeria (Lagos, 03 1998).

4 (1995) 3 NWLR (Pt. 382) 148.

5 The official exchange rates in this article were derived from the IMF International Financial Statistics Yearbook, various years. The unofficial real exchange rates are considerably higher than the official exchange rate but the IMF figures, which go back to the early years of Nigeria's independence, allow for greater consistency in the comparison of damages awarded in Nigerian courts over time.

6 See, for instance, Adewale, Ombolaji, “Rylands v. Fletcher and the Nigerian petroleum industry”, (1987/1988) 8 & 9 Journal of Private and Property Law 37; Adewale, “Oil spill compensation claims Nigeria: Principles, guidelines and criteria”, op. cit.; and Adewale, , “Some legal aspects of community relations m the petroleum industry”, in Soremekun, Kayode (ed.), Perspectives on the Nigerian Oil Industry, Lagos, 1995.

7 Okonmah, Patrick D., “Right to a clean environment: The case for the people of oil-producing communities in the Nigerian Delta”. (1997) 41 J.A.L. 43 at 43.

9 (1995) 3 NWLR (Pt. 382) 148.

10 (1994) 6 NWLR (Pt. 350) 258.

11 Unreported Suit No. W/89/71 in the Warri High Court.

12 (1974) 2 RSLR 1.

13 Personal interview with Odeleye, J. A., SPDC's Legal Manager and Company Secretary (Lagos, 02 1998).

14 While the imposition of injunctions against oil companies is not a realistic option in Nigeria, the substantial quantity of litigation continues to constitute a problem for the oil industry and entails financial costs for the companies. As a way of avoiding litigation, oil companies could introduce less harmful practices. This would ultimately reduce the quantity of litigation because potential plaintiffs would have fewer legal grounds on which to sue. But oil companies have largely failed to change their harmful practices despite environmental legislation. See Frynas, Jedrzej George, Oil in Nigeria: Conflict and Litigation between Oil Companies and Village Communities. Forthcoming book, Münster/ Hamburg, 1999, chs. 3 and 5.

15 (1993) 7 NWLR 203.

16 On negligence and duty of care, see e.g. Percy, R. A., Charlesworth & Percy on Negligence (7th ed) London, 1983, 1015.

17 (1993) 7 NWLR 203.

18 Cap. 350, Laws of the Federation of Nigeria, 1990.

19 In a number of oil-related cases in Nigeria, the plaintiff won by inferring negligence without proving it. Adhemove v. Shell-BP Unreported Suit No. UHC 12/70 in the Ughelli High Court is an example of such an instance. In that case, waste from an oil waste pit escaped and spread over the plaintiff's property destroying a fish pond and killing a substantial number of fish. It is not clear if the principle res ipsa loquitur was applied in this case (see the subsequent discussion of the rule). Unless res ipsa loquitur is evoked in a negligence case, the plaintiff must prove negligence. In those eases, in which a plaintiff won by inferring negligence without proving it and res ipsa loquitur could not be invoked, the judge did not appear to follow the correct legal procedure under the Common Law and, technically, the cases should have been dismissed. According to Percy (op. eit., 15) “any failure to prove any one of these component elements [duty of care, breach of duty and resulting damage] must result in the plaintiff's action for damages being dismissed” (my emphasis).

20 (19701972) 1 RSLR 71.

21 (19701972) 1 RSLR 71.

22 In order to rely on the principle, three conditions must be fulfilled. First, the plaintiff must prove that the accident occurred. Second, he/she must prove that the occurrence would not have happened “in the ordinary course of things without negligence on the part of somebody other than the plaintiff’. Third, the facts suggest that the defendant rather than the plaintiff was negligent. In line with the last condition, the plaintiff must usually show that the thing causing the damage was “in the management and control of the defendant” (Percy, op. cit., 350). An oil spill fulfils all three conditions of the principle res ipsa loquitur, as long as the plaintiff can show that the spill actually happened. An oil spill does not happen in the ordinary course of things and the oil installation is in the management of the oil company.

23 (1993) 7 NWLR 203.

24 It is also difficult to prove negligence as a result of gas flaring, see Chinda v. Shell-BP (1974) 2 RSLR 1.

25 (19701972) 1 RSLR 71.

26 Res ipsa loquitur was successfully applied in a number of more recent cases involving oil spills, for instance, in Shell v. Enoch (1992) 8 NWLR 335.

27 The defendant can cause an interference through vibrations, flooding, fire, noise or other forms of invasion. Nuisance is slightly different from negligence, although it can also result from negligence. The plaintiff'does not generally have to prove a duty of care, but he must show that the defendant's interference was unreasonable and that the interference was serious. On the most basic level, the court may ask the question “Is it reasonable that the plaintiff should have to put up with this interference?”. This is different from negligence where the question is asked about the duty of care. On nuisance, see e.g. Baker, G. D., Tort (5th ed), London, 1991, ch. 15.

28 (1974) All NLR 95.

29 4 ECSLR 486.

30 (1974) All NLR 95.

31 4 ECSLR 486.

32 Constitution of the Federal Republic of Nigeria 1979, s. 6(6)(b).

33 4 ECSLR 486.

34 The legal rule was expressed by the House of Lords in Rylands v. Fletcher (1868) I.R. 3 H.L. 330 as follows:

“We think that the true rule of law is, that the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and if he does not do so is prima facie answerable for all the damage which is the natural consequence of its escape.”

The judgment in Rylands v. Fletcher laid down the rule for strict liability. Four conditions must be fulfilled for the rule to apply. First, the defendant must have brought the thing on his land for his/ her own use. Second, the thing must be likely to cause harm if it escapes. Third, the defendant's use of the land must be non-natural, for instance, sewage or gas come under the rule, while weeds or flood water are natural things and do not come under the rule. Fourth, the bmg must actually escape. On the principles of strict liability, see Baker, op. cit., ch. 16. An escape of crude oil or oily waste fulfils all the above four conditions. Accordingly, any dangerous incident involving crude oil can be potentially prosecuted. The defendant is strictly liable for damage, which removes the plaintiff's burden of proof. It is not necessary for the plaintiff to prove any negligence or breach of duty of care.

35 (1975) 9–11 SC 155.

36 This insight was assisted by a discussion of the Umudje case in Kodilinye, Gilbert, The Nigerian Law of Torts. Ibadan, 1982, 116117.

37 See, for instance, Shell v. Tiebo VII (1996) 4 NWLR 657 and Shell v. Isaiah (1997) 6 NWLR 236.

38 See Kodilinye, op. cit. 117–121. An act of a stranger may also be called an “independent act of a third party” (on limitations of strict liability, see also Percy, op. cit., 855–866).

39 (1990) 6 NWLR (Pt. 159) 693.

40 (1992) 8 NWLR 335.

41 (1997) 6 NWLR 236.

42 This argument has been made in Frynas, , “Political instability and business: focus on Shell in Nigeria”, (1998) 19(3) Third World Quarterly 457 at 465.

43 Cap. 320, Laws of the Federation of Nigeria, 1990.

44 Nigerian National Petroleum Corporation (NNPC) Act, 1977, Cap. 320. Laws of the Federation of Nigeria, 1990, 12(1).

45 (1994) 10 KLR (pt. 22) 68.

46 On statutes of limitation in general, see e.g. Baker, op. cit., 436–437. The six-year period of limitation was confirmed by Koiawolf, J.C.A., in Nwadim v. Shell (1990) 5 NWLR (Pt. 150) 322.

47 The problems of the latency period and scientific uncertainty in relation to court cases invoking environmental damage are briefly explained in general terms in Eggen, Jean Macchiaroli, Toxic Torts in a Nutshell. St Paul, MN, 1995, 58.

48 Problems of barriers to justice in Nigeria were investigated in the context of a survey of 154 legal practitioners in Frynas, Oil in Nigeria: Conflict and Litigation between Oil Companies and Village Communities, op. cit., ch. 5.

49 (1974) 2 RSLR 126.

50 (1990) 6 NWLR (Pt. 159) 693.

51 (1997) 1 NWLR (Pt. 480) 148.

52 This principle was firmly established in Seismograph Service v. Onokpasa (1972) 1 All NLR 347 where the Supreme Court ruled that the correct test for the relevance of the witness's opinion as that of an expert is whether he or she is specially skilled in the particular scientific subject matter.

53 (1990) 6 NWLR (l't. 159) 693.

54 On some problems in the enforcement of locus standi in Nigeria, see Ogowewo, Tunde I., “The problem with standing to sue in Nigeria”. [1995] 39 J.A.L. 1.

55 (1974) 2 RSLR 126.

56 (1992) 8 NWLR 335.

57 BHC/2/83, quoted in Shell v. Enoch (1992) 8 NWLR 335.

58 Chinwuba Obi, S. N., The Ibo Law of Property, London, 1963, 94 and 98.

60 These findings were, to a large extent, confirmed by a personal interview with Belgore, M. B., Chief Justice of the Federal High Court (Lagos, 03 1998).

61 (1991) 9 NWLR (Pt. 214) 155.

62 Ogowewo, op. cit., 18.

63 [1981] 1 All NWLR 1.

64 (1987) 4 NWLR (Pt. 61) 797.

65 In that case, the court had to decide whether the applicant was entitled to apply for mandamus to compel private prosecution of certain persons. The Court of Appeal held that the applicant had no standing to sue as his legal rights had not been infringed. The Supreme Court set the ruling of the Court of Appeal aside and held that the locus standi had been broadened since section 342 of the Criminal Procedure Law of Lagos State vests in every person a right to initiate a private prosecution. Nnamani, J.S.C. stated: “It is my view that in these matters which are so interlined with the criminal law, our interpretation of section 6(6)(b) of the Constitution must be approached with a true liberal spirit in the interest of the society at large. The Appellant has locus standi as any person to make the application he has brought to court, and if all other conditions are fulfilled, to initiate criminal proceedings” (at 855). The controversy on the issue of locus standi has continued. Ogowewo argued that the ruling in Fawehinmi v. Akilu does not broaden the locus standi (Ogowewo, op. cit. 17). Owaboye, on the other hand, averred that the Akilu case broadens the locus standi and should be viewed as the locus classicus on the issue. See Owaboye, Wole, “Denial of justice and concept of locus standi in Nigeria”, in Owaboye, Wole (ed.). Fundamental Legal Issues in Nigeria, Lagos, 1995, 299.

66 Unreported Suit No. FHC/L/CS/573/96 in the Federal High Court, Lagos division.

67 Unreported Suit No. CA/L/143/97 in the Court of Appeal, Lagos division.

68 (1974) 2 RSLR 1.

69 Several recent high-profile cases by litigants against oil companies from the 1990s can be cited: Geosource v. Biragbara (1997) 5 NWLR 607, Shell v. Tiebo VII (1996) 4 NWLR 657, Shell v. Farah (1995) 3 NWLR (Pt. 382) 148. In all of these cases, plaintiffs sued an oil company in a representative capacity, not as individuals.

70 (1996) 4 NWLR 657.

71 (1974) 2 RSLR 1.

72 (19701972) 1 RSLR 71.

73 (1994) 6 NWLR (Pt. 330) 258.

74 See, in particular, judgments of the Supreme Court in Seismograph Service v. Onokpasa (1972) 1 All NLR (Pt. 1) 347, Seismograph Service v. Akporuovo (1974) All NLR 95 and Seismograph Service v. Ogbeni (1976) 4 SC 85.

75 (1972) 1 All NLR (Pt. 1) 347.

76 (1976)4 SC 85.

77 (1994) 6 NWLR (Pt. 350) 258.

78 See, for instance, Ogiale v. Shell (1997) 1 NWLR (Pt. 480) 148, in which the court relied on the evidence rules in Seismograph Service v. Onokpasa (1972) 1 All NLR (Pt. 1) 347 and Seismograph Service v. Ogbeni (1976) 4 SC 85.

79 (1997) 6 NWLR 236.

80 (1972) 1 All NLR (Pt. 1) 347.

81 (1976) 4 SC 85.

82 (1995) 3 NWLR (Pt. 382) 148.

83 (1975) 9–11 SC 155.

84 On the principle restitutio in integrun, see Percy, op. cit., 251–252 and 588.

85 (1974) 2 RSLR 93.

86 (1995) 3 NWLR (Pt. 382) 148.

87 Based on the IMF figures for Nigerian consumer prices, see IMF International Financial Statistics Yearbook. 1995.

88 2 RSLR (1973) 75.

89 (19701972) 1 RSLR 71.

90 (1978) 2 ANSLR 210.

91 (1996) 4 NWLR 657.

92 (1997) 6 NWLR 236.

93 (1996) 4 NWLR 657.

94 According to plaintiffs’ witnesses, the sum was 50,000 Naira, not 5,500 Naira as Shell's witnesses maintained.

95 Interestingly, the court in the Tiebo VII case did not cite the Farah case as a legal precedent. But Onalaja, J.C.A., who delivered the judgment, was one of the Court of Appeal judges in the Farah case. This would suggest that the Farah case, while important as a legal precedent, is in itself a reflection of a broader shift in judicial attitudes towards higher compensation payments.

96 Personal interview with Belgore, M. B., Chief Justice of the Federal High Court (Lagos, 03 1998). Belgore largely confirmed our speculations that legal change was affected by the three factors: different approach to law by judicial officers, the increased professional ability of legal counsel working for those affected by oil operations, and the influence of changing social attitudes on judges. He also maintained that legal change could also be attributed to the increased frequency of accidents in the oil industry and the resulting legal disputes. It is possible that the increased frequency of litigation has accelerated the process of social learning among judges. But the quantity of litigation cannot explain per se why courts have changed their interpretation of legal rules.

97 Personal interview’ with Belgore, M. B., Chief Justice of the Federal High Court (Lagos, 03 1998). On the shifting attitudes of Nigerian judges in general, see e.g. Nweze, C. C., “A survey of the shifting trends in judicial attitudes to fundamental rights in Nigeria”, in Umezulike, I. A., and Nweze, C. C., (eds.). Perspectives in Law and Justice, Enugu, 1996.

98 The case Fawehinmi v. Aminu Unrcported Suit No. FHC/L/CS/54/92 in the Federal High Court, Lagos division, which was adjudicated by Belgore, illustrates that courts have come to interpret legal statutes and legal rules in a less narrow fashion. In that case, a Nigerian legal practitioner sued the Minister of Petroleum Resources Jubril Aminu and other defendants, including the NNPC, over the use of Nigeria's oil revenues in 1990. The NNPC requested the court to discharge them on the grounds that the plaintiff did not give them 30 days statutory notice as required by section 12(2) of the NNPC Act 1977. The judge concluded:

“The right to access to Court should not be impeded by a process giving special advantage t o the defendant for no other reason than that it is an organ or semi-organ of the Government. Any law putting it in such a position is certainly against the Constitution, void and invalid.”

Belgore, therefore, dismissed the NNPC's application and declared the aforementioned section of the NNPC Act, 1977, as unconstitutional.

99 (1974) All NLR 95.

100 (1995) 3 NWLR (Pt. 382) 148.

101 4 ECSLR 486.

102 Under Common Law, statutes of limitation can limit the period within which a lawsuit can be brought to court. But legislation cannot limit the jurisdiction of courts to hear a tort case. Under some circumstances, courts may also override statutory limitations. On limitation of action, see Percy, op. cit., 199–230.

103 (1997) 6 NWLR 236.

104 (1990) 5 NWLR (Pt. 150) 322.

105 (1996) 6 NWLR 483.

106 Personal interview with Belgore, M. B., Chief Justice of the Federal High Court (Lagos, 03 1998).

107 (1974) 2 RSLR 93.

108 (1996) 4 NWLR 657.

109 (1995) 3 NWLR (Ft. 382) 148.

110 (1995) 3 NWLR (Pt. 382) 148.

111 See also Frynas, Oil in Nigeria: Conflict and Litigation between Oil Companies and Village Communities, op. cit., ch. 5.

112 Personal interview with Belgore, M. B., Chief justice of the Federal High Court (Lagos, 03 1998).

113 (1994) 9 NWLR (Pt. 366) 51.

114 (1990) 5 NWLR (Pt. 150) 322.

115 Personal interview with Belgore, M. B., Chief Justice of the Federal High Court (Lagos, 03 1998).

116 Hall, Kermit L., The Magic Mirror: Law in American History. New York, 1989, 245246.

117 In Irou v. Shell-BP Unreported Suit No. W/89/71 in the Warri High Court mentioned earlier, the judge ruled that nothing should be done to disturb the operations of ihe oil industry which “is the main source of this country's revenue”. Such pronouncements in support of the oil industry cannot be found in more recent judgments.

118 A number of general, theoretical problems involved in introducing European legal concepts to Africa have been discussed in Kenneth Nunn, B., “Law as a eurocentric enterprise”, Paper presented at the Critical Legal Conference entitled “Contested Communities: Critical Legal Perspectives”, University of Edinburgh, 810 September, 1995.

119 (1992) 8 NWLR 335.

120 (1991) 9 NWLR(Pt. 214) 155.

121 (1994) 6 NWLR (Pt. 350) 258.

122 (1995) 3 NWLR (Pt. 382) 148.

123 (1996) 4 NWLR 657.

124 (1997) 6 NWLR 236.

125 These arguments received an in-depth treatment in Frynas, Oil in Nigeria: Conflict and Litigation between Oil Companies and Village Communities, op. cit.

126 Allott, Antony N., Essays in African Law. London. 1960, 2425.

127 Writing on the local modification of colonial law in Africa, Allott concluded: “The most important single factor requiring the adaptation of English law is the existence of local African populations, to whom the English law is to be applied. The African populations are living under their own forms of society, having their own customs, own religion, beliefs, social organisation, patterns of marriage and divorce, land law, etc. How can English law be applied to them unadapted?”. Ibid. at 25.

* Much of this article appears in Oil in Nigeria, by Jedrzej George Frynas, published in 1999 by LIT Verlag, Münster/Hamburg. The editors are grateful to the publishers for permission to republish material from the book. Jedrzej George Frynas is at the Dept. of Economics, University of St Andrews, St Andrews KYI6 9AL, e-mail: frynas@hotmail.com.

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Legal Change in Africa: evidence from oil-related litigation in Nigeria

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