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Insights from Alame V Shell on corporate liability for environmental damage 10 Jul 2025

The Niger Delta has, for decades, been the epicentre of persistent environmental degradation, with oil-producing communities securing only limited legal redress. While crude oil remains a vital pillar of Nigeria’s economy, its costs have often been borne by rural communities whose farmlands and water bodies as sources of livelihood have suffered the brunt of pollution. The recent decision in Alame and Others v Shell Plc & SPDC, delivered by the King’s Bench Division of the High Court of Justice, England, on 20 June 2025, rekindles crucial questions about the extent to which Nigerian law holds oil companies accountable for environmental damage, especially where sabotage or third-party interference is invoked as a defence.

The judgment arose from a set of group litigation proceedings consolidating four separate claims relating to the extensive oil pollution in the Bille and Ogale communities in the Niger Delta. Numerous individuals from both communities instituted personal claims against Shell and its Nigerian subsidiary, SPDC (now rebranded as Renaissance). In addition, community-wide claims were brought in representative capacities on behalf of the affected populations.

Initially commenced in 2015 as tort and breach of statutory duty claims, the case took a significant turn in 2023 when the claimants amended their pleadings to introduce claims under the Nigerian Constitution and the African Charter on Human and Peoples’ Rights. These amendments brought fundamental rights issues to the fore. However, the judgment under review does not determine the merits of the substantive claims – that is reserved for the full trial slated for 2027. Instead, it addresses a number of preliminary issues (PIs), including the applicable limitation period for claims under the Oil Pipelines Act (OPA); the extent to which third-party interference (TPI) constitutes a defence under the OPA; and the legal effect of Regulation 26(2) of the Oil Spill Recovery, Clean-Up, Remediation and Damages Assessment Regulations 2011.

A striking feature of the judgment is its effort to determine how the Nigerian Supreme Court would likely resolve each preliminary issue, given the lack of binding Nigerian authority on several points. As the English court itself recognised: “Decisions of foreign, particularly English, courts can perform a useful and persuasive function in Nigeria where there is no known Nigerian decision on the point... The PIs in this case raised a number of matters of law which have not as yet received consideration by the Nigerian Supreme Court.” Thus, the English court – conscious of its interpretive limits – was nonetheless compelled to undertake a rigorous analysis of Nigerian law, leaning on experts. From this judgment, we can assess and highlight areas where legislative or judicial clarification is overdue.

At the heart of the dispute lies Section 11 of the OPA, a statute that remains central to environmental liability despite the repeal of the Petroleum Act 1969 by the Petroleum Industry Act 2021. Specifically, Section 11(5) establishes a compensation regime for injuries resulting from the operation of pipelines. Subsection (5)(b) imposes liability on the licensee for: “damage by reason of any neglect on the part of the holder or his agents, servants or workmen to protect, maintain or repair any work structure or thing executed under the licence.”

The court, building on earlier English authority, interpreted the words “neglect” and “protect” as imposing a “shielding and caring obligation”. While it accepted that it would be unrealistic to expect licensees to physically guard every kilometre of pipeline across difficult and often hostile terrain, it nonetheless emphasised that licensees must take reasonable measures to anticipate and mitigate threats, particularly in areas prone to sabotage.

In contrast, subsection (5)(c) excludes liability for damage caused by “the malicious act of a third party.” This provision has long served as the cornerstone of the TPI defence for oil companies operating in Nigeria.

Shell’s position in the Alame case reflects a consistent strategy in oil spill litigation: the assertion that many spills arise not from negligence or equipment failure but from criminal acts such as sabotage or illegal bunkering – collectively described as third-party interference. Under Section 11(5)(c), this may provide a defence, but crucially, it is not an automatic exoneration. The court clarified that TPI will only serve as a complete defence if the operator can demonstrate that the act was both malicious and unforeseeable, and that the operator took reasonable precautions to prevent it. As the court succinctly observed: “The acts of third parties... will provide SPDC with a defence, save where the particular claimant can show that the interference was foreseeable and of a nature that SPDC should have guarded against.”

This standard introduces key tort concepts – foreseeability, duty of care, and corporate vigilance – into the interpretation of statutory liability, underscoring that environmental responsibility includes prevention, not just response. Where companies operate in regions with well-documented patterns of pipeline interference, the court's approach invites scrutiny of whether those companies have implemented sufficient preventative protocols – such as community engagement, surveillance technology, or rapid response teams – to mitigate foreseeable risks.

The Alame decision also highlights a tension between the OPA and the 2011 Regulations issued by the National Oil Spill Detection and Response Agency (NOSDRA). While Regulation 9(h) of the Oil and Gas Pipeline Regulations 1995 requires licensees to regularly patrol pipeline corridors, Regulation 26(2) of the 2011 Regulations controversially states: “No compensation shall be payable for oil spills resulting from sabotage.”

This blanket exclusion appears to contradict the more nuanced approach under the OPA, which permits liability where sabotage could have been reasonably anticipated and prevented. The court in the Alame case stopped short of reconciling this inconsistency, but it signals an urgent need for regulatory alignment.

The judgment also rejected any notion that a completed remediation process extinguishes liability. Instead, remediation raises a rebuttable presumption of recovery, but affected persons can still demonstrate that damage – whether environmental or economic – persists. This approach helps ensure that operators do not hide behind superficial clean-up efforts certified by regulators.

The Alame case underscores a broader challenge in Nigeria’s oil and gas legal framework: the coexistence of fragmented laws, outdated statutes, and under-enforced regulations. To foster both environmental justice and economic sustainability, several policy actions should be prioritised. It is essential to codify the standard of corporate vigilance expected from license holders. The legislature or regulators, where empowered to make such regulations, should enact clear provisions requiring pipeline operators to undertake regular risk assessments and community-based early warning systems in high-risk areas. 

It is also important to harmonise conflicting legal instruments. NOSDRA’s regulations, including Regulation 26(2), should be harmonised with the OPA to avoid contradictory liability rules that embolden corporate impunity. We must ensure that the TPI Defence should be contingent upon demonstrable compliance with surveillance, maintenance, and community engagement obligations.

These measures, while not exhaustive, would enhance the clarity, coherence, and fairness of Nigeria’s environmental liability regime. The Alame judgment marks a significant moment in the evolving jurisprudence of environmental liability under Nigerian law. It illustrates the judicial willingness – albeit from a foreign court – to interpret Nigerian statutes in a way that balances operational realities with fundamental duties of care.

Yet, the case also exposes persistent legal ambiguities and the overreliance on the third-party interference defence as a shield against corporate accountability. In a region where oil spills are often routine and impunity widespread, the law must do more than apportion blame – it must incentivise prevention.

A modern, rights-sensitive, and ecologically conscious legal order must insist that responsibility in high-risk extractive sectors begins long before the oil starts flowing – and that it does not end with a clean-up report. The work of refining that order lies with Nigeria’s courts, lawmakers, regulators, and civil society – working in tandem to ensure that the law protects both investment and the communities that live with its consequences.

Funmilayo Odude is Partner at Commercial and Energy Law Practice (CANDELP).