Shell
The highest court in Africa's largest economy allowed an application made by Shell's local unit and its joint venture partner. Image Credit: Bloomberg

Nigeria’s Supreme Court said a Shell Plc subsidiary can appeal rulings in a dispute over a judgment directing the company to pay compensation over alleged pollution as the standoff holds up the oil giant’s efforts to sell assets in the West African country.

On Friday, the highest court in Africa’s largest economy allowed an application made by Shell’s local unit and its joint venture partner, the state-owned Nigerian National Petroleum Co. They are challenging a November 2020 ruling by a federal court ordering the Shell subsidiary to pay 800 billion naira ($1.8 billion) to residents of the crude-rich Niger Delta over an alleged oil spill.

“We believe in the merits of our case and are encouraged that the Nigerian Supreme Court is hearing this matter,” a spokeswoman for the Shell subsidiary said by email. “We look forward to the hearing of our main appeal.”

An appeal court ruled in March that Shell cannot sell onshore and shallow water oil blocks it is trying to offload until its appeal against the compensation order is determined. The London-based oil major announced it was pausing the divestment process in June pending the outcome of the Supreme Court case.

Shell is first challenging the appeal court’s injunction restraining the sale of its permits and its order for the subsidiary to pay the judgment amount into a court-controlled bank account while the underlying dispute is resolved. The plaintiff’s lawyer unsuccessfully claimed the Supreme Court lacked jurisdiction to hear Shell’s application.

The two sides have 30 days to exchange briefs of argument for the two appeals.

While a federal judge accepted that an abandoned flow line operated by the Shell unit leaked a “large volume of crude oil” in September 2019, the company and NNPC deny the spills occurred.