Nigerian farmers to sue Shell in the Netherlands. Can they do that?

A Dutch court ruled Friday companies with headquarters in the Netherlands can be sued for violations that occur in other countries, which could have implications for a number of international companies.

Peter Dejong/AP
A flag bearing the company logo of Royal Dutch Shell, an Anglo-Dutch oil and gas company, flies outside the head office in The Hague, Netherlands. Because Shell's headquarters are in the Netherlands, cases from other countries against it can be tried in Dutch courts.

A lawsuit brought by Nigerian farmers against Royal Dutch Shell over leaky oil pipes that damaged crops and fields in the African nation can proceed in the Netherlands, a Dutch court ruled Friday.

The appeals court based its ruling on the premise that the case's defendant, an international oil company, has its headquarters in the Netherlands.

This marks a shift as Dutch courts assert authority to prosecute companies accused of human rights or other violations even if they occur elsewhere. This ruling could implicate not just Shell, but also other companies with ties in the Netherlands that work abroad.

Shell had argued Nigerians cannot sue it in the Netherlands, especially because the company has an affiliate – Shell Nigeria – in the African country.

"We believe allegations concerning Nigerian plaintiffs in dispute with a Nigerian company, over issues which took place within Nigeria, should be heard in Nigeria," Shell wrote in a statement, according to The Associated Press.

But the appeals court said the current evidence could not establish that.

"It cannot be established in advance that the parent company is not liable for possible negligence of the Nigerian operating company," the Hague Appeals Court stated, according to the AP.

A regular court can now decide the outcome of the case between Shell Nigeria and the plaintiffs, who accuse Shell of polluting through oil spills. More broadly, the case can offer a hearing in a European court in the Netherlands for anyone with a lawsuit against an international company headquartered in the Netherlands.

The Netherlands is a popular location for international businesses because of its tax system and existing international climate, reported the Dutch Daily News.

In 2014, 66 North American companies established offices in Amsterdam, as did 42 companies from Europe and 30 from Asia. Although Amsterdam has tried to establish itself as a good home base for international companies, the Friday court ruling could mean companies with Dutch headquarters face additional liability.

Global companies with Dutch headquarters include Schlumberger, Heineken, and Unilever, according to Forbes. International operations for the Boston-based company Staples are also in Amsterdam, reported the AP.

"There is now jurisprudence that means victims of human rights violations or pollution can sue Dutch multinationals in the Netherlands," Geert Ritsema with the environmental group Friends of the Earth, which is involved with the suit, told the AP.

The Dutch appeals court rejected the January 2013 ruling by a lower court, which had agreed with Shell that leaky pipes were caused by sabotage and theft through organized crime rings in Nigeria. The only punishment Shell received then was an order to compensate a village for negligently allowing criminals too much access to the pipes. Even that ruling, however, was a landmark case.

"This is the first time that Shell has been ordered by the court to pay compensation for damage," Mr. Ritsema of Friends of the Earth said at the time, according to the AP. "The Nigerian justice system has never been able to accomplish this."

This report contains material from The Associated Press.

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