Asymmetry of information, "global claims" and "lead cases": the Court of Appeal's decision in the Alame v Shell group action

The Court of Appeal's decision in Alame 3 demonstrates the English Courts' pragmatism and willingness to deal with case management challenges and the inequality of arms inherent to much group litigation. The Court's rejection of the claims proceeding as a "global claim" is particularly significant, as it emphasises the right of a litigant to decide how to bring and prove their claim. The Court also supported the use of "lead claimants" as a way to help resolve a procedural impasse in this litigation (namely that the Claimants required more information from the Defendants to detail their case, and the Defendants demanded more detailed claims before providing such information) and to stay aligned with the Court's overriding objective to deal with cases justly and proportionately.

As covered in our previous briefing, the claims arose out of oil spills in the Bille and Ogale regions of the Niger Delta. Pipelines in the area are operated by Shell Petroleum Development Company of Nigeria Limited, the subsidiary of Royal Dutch Shell plc, a UK-domiciled company (together "Shell").^[1] 

The Claimants allege that Shell failed to prevent, mitigate, or remediate oil contamination resulting from spills from its pipelines and associated infrastructure, and is liable for damage arising as a result of that contamination.^[2] In response, Shell contends inter alia that major sources of oil pollution arise from events for which it is not liable, including spills resulting from oil theft and illegal refining by third parties.^[3]

Although some Claimants have been able to identify a particular oil spill or event leading to the contamination alleged to have caused them loss, the majority have identified a number of oil spillages, and described the damage suffered as a result of consequential contamination of the land and waterways, without pleading any causal nexus between each oil spill and the damage suffered by each individual claimant.^[4]

The Court of Appeal recognised two major inequalities in favour of the Defendants: (1) access to information; and (2) access to financial resources.  Whilst the Court of Appeal noted it is for the High Court to make case management decisions it offered three guiding principes for the future management of the litigation:

(i) The Court should strive to ensure that the parties are on an equal footing in relation to access to relevant information;

(ii) Lead cases should be selected by a collaborative process, with the Court being involved as necessary; and

(iii) Once the Claimants are in possession of a sufficiency of relevant information they should be required to refine and set out the nature of their cases (by reference to the lead cases or otherwise) so that the Defendants have a fair understanding of the case that they have to meet and a fair opportunity to meet it at trial.^[5] 

Claimants' Appeal - Global Claim Issue 

In Alame 1, the Court decided that all claims for which no causal nexus had been pleaded would need to proceed as a "global claim" until the Claimants were able to provide the causal connections between each oil spill and the damage suffered by each individual claimant. The Court did not see any "practical alternative" to this approach until a more "particular case [was] identified" by the Claimants.^[6]

The Claimants appealed this decision on the basis that, although they recognised that they could not currently particularise their case, the necessary information needed to prove their case on the grounds of the conventional principles of causation existed and would become available to them through disclosure. 

The Court allowed this appeal stating that "no judge or court is entitled to require a party to establish their case by a particular method. A party should be permitted to formulate their claims as they wish…. [and] it will be for the trial judge to determine whether the party can establish their claim."^[7]

The Judge acknowledged that the Courts have powers over how a party brings their claim e.g. by way of summary judgment and strike out orders, but that neither of these applied to this case. Therefore, although difficult for the Claimants to prove a causal link between their loss and the damage allegedly caused by the Defendants, it did not mean that they were pursuing a global claim, and the Court made clear that they were "entitled to maintain" the case they wished to bring.^[8]

Claimants' Appeal - Lead Cases

A central issue before the Court was how the claims could practically move forward in circumstances where the Claimants' pleaded claims remained unparticularised in key respects.  The Claimants asserted that they required more information from the Defendants in order to particularise their case, and the Defendants demanded more detailed claims before providing such information.  This procedural impasse was described by the Court of Appeal as "the circular procedural wrangle".

At first instance, the High Court had concluded that the "lack of pleaded detail on causation, precludes any sensible identification of lead individuals".  It therefore refused the Claimants' request that the litigation proceed by reference to selected "lead claimants".^[9]

By contrast, the Court of Appeal allowed the Claimants' appeal on this point, describing the dispute as "a paradigm example of a case which can only be progressed by reference to lead cases", given the practical impossibility of dealing with each claim on an individualised basis, and that the use of lead claimants was an essential step  "to break the circularity of the present impasse".^[10] The Court of Appeal considered that selecting lead cases would assist in concentrating the minds of the parties on the real issues of the dispute and allow a wide range of issues to be dealt with in a proportionate manner.

Defendants' Appeal - Additional Spills and Third Party Interference Amendments

In Alame 1, the Judge allowed the Claimants to amend their original pleadings to (i) include reference to a further 85 oil spills in addition to the 10 originally pleaded; and (ii) plead expressly that some of the damage caused by the oil spills were a direct result of TPI. The decision was made pursuant to CPR 17.4, which allows amendments to statements of case after the end of a relevant limitation period, if they arise out of the same or substantially the same facts that are already in issue. 

The Defendants appealed this decision on the basis that (i) each new spill would give rise to its own set of facts regarding time, place, effect, cause and volume of oil spill; and (ii) the duty of care as originally pleaded was limited specifically to oil spills from assets operated by Shell, and not by reference to damage caused by TPI in the form of illegal refining.

The Defendants' appeal was dismissed on the basis that the claim as originally pleaded was for "damage caused in and around Bille by the 2011-2013 oil spills emanating from the Defendants' oil pipelines and associated infrastructure," and covered "published and unpublished spills".^[11] The Court found that the original claim was broad enough to include the additional 85 spills and relevant spills caused by TPI, and that the Claimants had already sufficiently pleaded that TPI was a foreseeable consequence of Shell's failure to comply with its duties under Nigerian Law.  As a result, the Court considered these amendments to be a "further particularisation of the case" as already pleaded, in circumstances where these "new" spills arose out of the same or substantially the same facts that were already in issue.^[12]

What are the take-aways for group actions in respect of environmental damage?

1. The Court of Appeal's decision will be welcomed by Claimants to group litigation, as it emphasises the importance of claimant autonomy to "formulate their claims as they wish", and the need to equalise asymmetry of information.  Stuart-Smith LJ agreed that in cases involving a significant asymmetry of information, the process of disclosure is one of the most powerful tools available for achieving justice.
2. Unless claimants in group litigation opt in to bring claims on a "global claims" basis, they cannot be ordered to do so.
3. Wherever possible, group litigation should proceed by way of lead claimants to try and narrow the issues in dispute and pave the way for future decisions and settlement discussions.
4. Amendments to pleadings will be accepted by the Court where it can be shown that the amendments arise out of the same or substantially the same facts that are already in issue. 

You can read the full judgment here.