The Bonga oil spill: limitation bars and ongoing liability – an international perspective

Posted: 19/05/2023

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Introduction

The Supreme Court recently handed down its decision in the case of Jalla and or v Shell International Trading and Shipping Co Ltd and or [2023] UKSC 16. That case concerned a limitation period for the tort of a continuing private nuisance in the context of an oil spill that took place in 2011 off the coast of Nigeria. The merits of the underlying alleged act and any liability were not addressed by the court as it was only charged with determining the limitation issue.

That said, the case is illuminating for those in the energy sector, not simply because of the oil spill, but because of increased attention to the activities of energy companies, especially from an ESG and energy trilemma perspective. This article will consider the Jalla decision, but moreover, juxtapose it with regard to certain foreign laws and how policy makers have sought to address the enduring and/or delayed adverse effects of energy projects.

The Jalla case     

The claim had been brought by two coastal landowners in respect of alleged oil pollution of land, including waterways, caused by an oil spill which occurred off the coast of Nigeria in December 2011, known as ‘the Bonga spill’. The Bonga spill resulted from a rupture in a flexible flowline connecting the Bonga oil field FPSO (floating production storage and offloading) to a single point mooring buoy. The leak occurred overnight during a cargo operation when crude oil was being transferred from the Bonga FPSO through the single point mooring buoy and onwards onto a waiting oil tanker, MV Northia. The leak was stopped after about six hours. As a result, an estimated 40,000 barrels of crude oil leaked into the ocean.

The claimants alleged that the oil migrated from the offshore Bonga oil field to reach the Nigerian Atlantic shoreline, where they claim it has had a devastating impact on two affected states in the Niger Delta – the Delta and Bayelsa States. They also alleged that the oil has not been removed or cleaned up; the defendants denied this and maintained that the spill was successfully contained and dispersed offshore and did not impact the shoreline.

Nevertheless, they accepted that, for the purposes of determining the limitation issue in the appeal, it should be assumed that some quantity of oil from the Bonga Spill reached the Nigerian Atlantic shoreline.

The claimants submitted that there is a continuing cause of action because there was a continuing nuisance, so the limitation period runs afresh from day to day. The claimants needed to succeed with this formulation of their case in private nuisance, as their claims would otherwise be time-barred.

The court considered the tort of private nuisance[1], having regard to its decision in Fearn and ors v Board of Trustees of the Tate Gallery [2023] UKSC 4, the headlines being:

• The tort of private nuisance is a property tort and is concerned with the wrongful interference with the claimant’s enjoyment of rights over land; only a person with a legal interest in the land can sue.
• Nuisance can be caused by any means and does not require a physical invasion.
• The interference must be substantial and must be an interference with the ordinary use of the claimant’s land.
• One must have regard to the character of the locality.
• Coming to a nuisance is no defence, nor is that the activity is carried on by the defendant for public benefit.

In ascertaining what constitutes a continuing nuisance, the court held that in principle, and in general terms, a continuing nuisance is one where, outside the claimant’s land and usually on the defendant’s land, there is repeated activity by the defendant or an ongoing state of affairs for which the defendant is responsible, which causes continuing undue interference with the use and enjoyment of the claimant’s land.

For a continuing nuisance, the interference may be similar on each occasion, but the important point is that it is continuing day after day or on another regular basis. The cause of action therefore accrues afresh on a continuing basis. The court also added that:

• a continuing nuisance is in principle no different from any other continuing tort or civil wrong;
• it follows logically from the concept of a continuing cause of action that, if the limitation period is one of six years from the accrual of the cause of action, damages at common law for a continuing nuisance cannot be recovered for causes of action (ie for past occurrences of the continuing nuisance) that accrued more than six years before the claim was commenced;
• a defendant who has not created the nuisance will be liable for it (if damage is caused to the claimant) where, with actual or presumed knowledge of the continued state of affairs, the defendant does not take reasonable steps to end it; and
• it is not a necessary requirement that the defendant has continuing control of the land and be able to prevent the continuation of the nuisance.

The essence of the appellant’s submission was that there is a continuing nuisance because (on the assumed facts of the case) the oil is still present on the claimant’s land and has not been removed or cleaned up. To that end, they sought to rely on cases including Delaware Mansions Ltd v Westminster City Council [2001] UKHL 55, [2002] 1 AC 321 as authority for the proposition that failure to remediate the consequences of a single event can be a continuing nuisance. The Supreme Court unanimously rejected this for several reasons, namely:

• accepting the appellant’s submission would result in extending the running of the limitation period indefinitely until the land is restored, which would undermine the law on limitations of actions which is based on a number of important policies principally to protect defendants;
• it might produce difficulties for the assessment of damages, which are, in general, to be assessed once and for all; and
• there was no repeated activity by the defendants or an ongoing state of affairs for which they were responsible that was causing continuing undue interference with the use and enjoyment of the claimant’s land. The leak was a one-off event or an isolated escape.

The Supreme Court acknowledged that one can naturally describe the oil still being on the claimant’s land as a continuing nuisance. However, this is misleading when trying to clarify the meaning of a continuing nuisance in the legal sense. A continuing nuisance is one where, outside the claimant’s land and usually on the defendant’s land, there is repeated activity by the defendant or an ongoing state of affairs for which the defendant is responsible which causes continuing undue interference with the use and enjoyment of the claimant’s land.

The appeal was dismissed.

Juxtaposing the Jalla case

The issue of statute barred legal claims and ongoing liabilities arising out of energy-environmental issues is nothing new. But it is useful to consider broader jurisprudence to demonstrate how other jurisdictions have approached this issue. The following are a few examples to help illustrate the point, but the examples mentioned are by no means exhaustive.

Western Australia: The Limitation Act and asbestosis

Whereas the Jalla case concerned time barring a private nuisance tort, latent personal injury as a result of energy related activities, especially mining, was addressed by the Western Australian government in the early 1980s.

The driver of this change was the number of asbestosis and mesothelioma claims being brought, and subsequently dismissed for being time barred (mesothelioma has a long latency period, the interval between first exposure and the development of symptoms varying between 25 and 50 years with an average of 33 years). By way of background, in the 1950s and 1960s, the town of Wittenoom in Western Australia was Australia’s only producer of mined blue asbestos. In 1966, due to unprofitability and health concerns the mine was closed. The declared contaminated mine site at Wittenoom comprises 50,000 hectares (120,000 acres), making it the largest contaminated site in the southern hemisphere. Numerous personal injury claims followed in the decades following the mine’s closure.

In 1983, the Limitation Act 1935 (WA) was amended to allow asbestosis and mesothelioma sufferers to avoid the six-year limitation period for industrial diseases with long latency periods[2]. Whereas personal injury claims in Western Australia have a three-year limitation period[3], a different rule relates to asbestos related diseases, and the right to sue in relation to asbestos related diseases accrues when the person has knowledge of the relevant facts[4].

USA: Clean Water Act and the doctrine of continuing violation

On the subject of a ‘continuing’ act as raised in the Jalla case and its implications for limitation periods, the USA provides some useful Federal laws that seek to address this. For example, the Clean Water Act’s[5] (CWA) objective is to restore and maintain the chemical, physical, and biological integrity of the nation's water. 

The CWA reformed existing US federal laws which had failed to clean up direct discharges of untreated wastewater from industries and municipalities nationwide; the driver was the League of Women Voters in Ohio and the Great Lakes region, whose members were tired of how bad local streams and rivers were[6].

The CWA contains a civil suit provision[7] that enables any citizen to commence a civil action on his/her own against any person who is alleged to be in violation of certain provisions of the CWA. However, in response to certain short comings in the CWA, many US courts have applied the ‘doctrine of continuing violation’ which extends the statute of limitations, prolongs jurisdiction over citizen suits, and compounds penalties on a daily basis.

While that doctrine is not expressly nor impliedly authorised in the CWA[8], the Supreme Court decision of Gwaltney v Chesapeake[9] established that a citizen plaintiff must make a good faith allegation of an ongoing violation to bring an enforcement action on the CWA[10]. Relevantly, the plaintiff cannot bring a citizen suit for wholly past violations. This doctrine has since found favour in the US Oil Pollution Act of 1990 which provides a defence where the defendant took reasonable steps to stop any continuing discharge[11].

The transition to net zero and liability

Carbon economy
The energy transition is likely to create a number of novel issues that have not yet been considered by the courts and topics such as ‘ongoing liability’ are likely to be revisited. The developing carbon economy creates one such issue around liability for release of greenhouse gases while they are being transported, processed, utilised or stored as part of the developing carbon capture utilisation and storage (CCUS) sector. 

A CCUS project in the United Kingdom or the European Union will be regulated under the EU Directive 2009/31/EC (the CCUS Directive); that clearly sets off the regulation and liability for leakage of the operator of the storage site in accordance with a storage permit. Once a storage site has been closed, the CCUS Directive provides for the transfer of the storage permit and relevant site back to the competent authority in the member state subject to various conditions (including that the operator has provided for the funding of the ongoing monitoring and maintenance of the site) having been meet.[12]

In other jurisdictions, the laws around CCUS are being developed. For example, Indonesia’s recent CCUS regulation[13] very much mirrors the EU directive in its approach. However, ultimately, both the EU directive and the Indonesia regulations do not fully address the issues around leakage of CO2 and liability. This is especially the case given CO2 will either be piped or transported by sea. What if the leak happened while the CO2 was being transported from outside the EU/UK or Indonesia (Singapore, for example, is looking for CO2 storage options globally)?

How would any claim be addressed for this type of leakage/spill where the relevant vessel was in international waters or transiting through the EEZ, or territorial wates of a third-party state?  If jurisdiction could be established would a Jalla type case be possible? Should this not be regulated at a global level? Do we in fact need a global treaty or an International Maritime Organisation (IMO) global agreement on this type of liability?

Hydrogen economy
Separately, the transition and growth of the hydrogen economy may also create novel situations. With ammonia being viewed as a likely carrier for hydrogen, or indeed used itself as a fuel, the liability regime for ammonia spills (which are potentially very hazardous given the caustic nature of ammonia) has not been developed. Ammonia bunkers for vessels and the increased transportation of ammonia as a fuel source is likely to mean more incidents at sea and in ports. 

Looking at the United Kingdom specifically, while hydrogen is produced, traded and consumed in large quantities, it is not currently clearly regulated as a fuel or as a consumer commodity. In the maritime environment there is a similar issue. The March 2023 report [14] from the GreenVoyage2050 Global Industry Alliance to Support Low Carbon Shipping (the Low Carbon GIA) identified that ammonia, hydrogen, ethane and dimethyl ether are among the ‘alternative’ marine fuels which may need future regulatory work. In the case of hydrogen, there are no external safety standards for hydrogen as a marine fuel. In addition, the International Code of Safety for Ships using Gases or other Low-flashpoint Fuels (IGF Code) does not cover hydrogen as fuel.    

The situation with ammonia is similarly underdeveloped. The report notes that ‘ammonia aqueous’ is assigned to category Y as per the IBC Code, meaning it presents a hazard to either marine resources or human health. MARPOL Annex II requirements do not apply for spill and discharges of ammonia as fuel. Essentially, this means that should a spill or discharge of ammonia occur the courts may well be again falling back to case law such as the Jalla case.

Conclusion

The decision in the Jalla case is interesting to those in the energy sector generally. From a practical perspective, the appellant’s submission that the oil is still present on the appellant’s land appears to have some merit and no doubt many environmentalists would support that view if applied equally to numerous other fossil fuel projects which can often leave environmental ‘scars’ or damage if not properly reclaimed.

However, as the court correctly held, to accept this would have profound consequences for defendants that are founded on broader policy considerations; relevantly that defendants would be liable almost indefinitely with every day giving rise to a new cause of action; that result would be absurd and defeat any sense of the word ‘justice’.

Nonetheless, the case serves as a useful reminder to those in the energy sector to pay particular attention to the environmental impact of their operations and ensure that any uncontrolled ‘leaks’ are properly addressed. Will the Jalla case, however, be a catalyst for legislative change with a view to make energy companies more accountable, especially as the energy transition gathers pace? In the author’s opinion, no. That said, those in the sector should not rest on their laurels.

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