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Royal Dutch Shell to pay $83.5 million settlement for Nigeria spill

Royal Dutch Shell will pay an $83.5 million settlement to a Nigerian fishing community for the country's worst oil spill. The settlement ends a three-year legal battle in Britain over two spills in 2008. 

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Men walk in an oil slick covering a creek near Bodo City in the oil-rich Niger Delta region of Nigeria in 2010. Oil giant Royal Dutch Shell has agreed to pay the Nigerian Bodo fishing community a total if around $83.5 million in an unprecedented settlement.

Sunday Alamba/AP/File

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Oil giant Shell has agreed to pay a Nigerian fishing community 55 million pounds (about $83.5 million) for the worst oil spill in Nigeria, an unprecedented settlement that experts say could open a floodgate of litigation there and abroad.

Wednesday's agreement ends a three-year legal battle in Britain over two spills in 2008 that destroyed thousands of hectares (acres) of mangroves and the fish and shellfish that sustained villagers of the Bodo community in Nigeria's southern Niger Delta.

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It "is thought to be one of the largest payouts to an entire community following environmental damage," said Martyn Day of the claimants' London lawyers, Leigh Day & Co.

"We hope that in future Shell will properly consider claims such as these from the outset and that this method of compensation, with each affected individual being compensated, will act as a template for Shell in future cases" in Nigeria and elsewhere. Shell Nigeria is 55 percent owned by the Nigerian government.

George Frynas, who has researched and published for 20 years about community conflict and litigation, said the agreement has "enormous importance" that "may open the floodgates for other communities around the world to sue companies."

Lawyers around the world will be watching closely and looking for ways to bring more cases to U.S. and U.K. courts because the amounts involved are so huge, he said.

The last precedent-setting case saw Shell paying compensation of just over $300,000 in Nigeria in 1994. Frynas is a professor at Britain's Middlesex University Business School.

Murtala Touray of IHS Country Risk said Nigerian courts could now be inundated with similar compensation litigation.

Nigeria's oil-rich southern Niger Delta suffers hundreds of oil spills every year and villagers have been in conflict with oil companies for decades. Typically, victims spend years battling a corrupt Nigerian court system only to come away with a pittance, Frynas said.

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Touray called Wednesday's agreement a significant and precedent-setting development that "will create huge expectations among the communities of instant transformation of their lives from poverty to opulence."

Bodo community leader Chief Sylvester Kogbara described more modest aspirations.

He told The Associated Press that villagers are discussing setting up as petty traders and other small businesses until their environment is restored. Under the agreement, some 15,600 fishermen and farmers get 2,200 pounds ($3,340) in a country where the minimum monthly wage is less than $100.

About $30.4 million awarded to the community in the settlement will be used to provide needed basic services, Kogbara said.

"We have no health facilities, our schools are very basic, there's no clean water supply," he said.

Villagers began receiving payouts on Tuesday, according to Pastor Christian Kpandei of the Center for Environment, Human Rights and Development in the Niger Delta.

Shell also has agreed to a long-overdue cleanup, but a U.N. report has said it could take 30 years to properly restore the ruined mangrove swamps.