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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Okpabi & Ors v Royal Dutch Shell Plc & Anor (Rev 1)  EWCA Civ 191 (14 February 2018)
Cite as:  WLR(D) 92,  EWCA Civ 191,  Bus LR 1022
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
TECHNOLOGY AND CONSTRUCTION COURT
(The Hon. Mr Justice Fraser)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE SALES
LORD JUSTICE SIMON
| HRH Emere Godwin Bebe Okpabi and others
(suing on behalf of themselves and the people of Ogale Community)
(1) Royal Dutch Shell Plc
(2) Shell Petroleum Development Company of Nigeria Ltd
|Lucky Alame and others
(1) Royal Dutch Shell Plc
(2) Shell Petroleum Development Company of Nigeria Ltd
Lord Goldsmith QC and Ms Sophie Lamb QC (instructed by Debevoise & Plimpton) for the Respondents
Hearing dates: 21 to 23 November 2017
Crown Copyright ©
Lord Justice Simon:
(1) Pursuant to CPR 11(1)(a) the court did not have jurisdiction to try the claims against SPDC because there was no real issue between the claimants and RDS which it was reasonable for the court to hear.
(2) The court had jurisdiction to try the claims against RDS.
(3) However, the claimants' statements of case disclosed no reasonable ground for bringing the claim.
B. The claimants
C. The approach to the issue of jurisdiction
1. Initial observations
82. The first point is that hearings concerning the issue of appropriate forum should not involve masses of documents, long witness statements, detailed analysis of the issues, and long argument. It is self-defeating if, in order to determine whether an action should proceed to trial in this jurisdiction, the parties prepare for and conduct a hearing which approaches the putative trial itself, in terms of effort, time and cost. There is also a real danger that, if the hearing is an expensive and time-consuming exercise, it will be used by a richer party to wear down a poorer party, or by a party with a weak case to prevent, or at least to discourage, a party with a strong case from enforcing its rights.
83. Quite apart from this, it is simply disproportionate for parties to incur costs, often running to hundreds of thousands of pounds each, and to spend many days in court, on such a hearing. The essentially relevant factors should, in the main at any rate, be capable of being identified relatively simply and, in many respects, uncontroversially. There is little point in going into much detail: when determining such applications, the court can only form preliminary views on most of the relevant legal issues and cannot be anything like certain about which issues and what evidence will eventuate if the matter proceeds to trial.
Accordingly, judges should invoke those powers to ensure that the evidence and argument on service out and stay applications are kept within proportionate bounds and do not get out of hand.
2. The practical issues arising on the application and appeal
I am however firmly of the view that the views of Lord Neuberger must be observed. The current approach of parties in litigation such as this is wholly self-defeating, and contrary to cost-efficient conduct of litigation. This case is an ideal example of one with 'masses of documents, long witness statements, detailed analysis of the issues, and long argument' being deployed on both sides. The costs burden upon the parties must be enormous, and this approach is, in my judgment, diametrically opposed to that required under the overriding objective in CPR Part 1. It would be regrettable if the only way that compliance could be ensured were to be by the court imposing a strict limit on the number of witness statements that could be lodged, and also restricting their length. Experienced legal advisers ought not to need such strictures in order to concentrate their minds. However, a fundamental change of approach is required by the parties in cases such as these for applications of this nature.
With those observations, and in particular the last sentence, I entirely agree.
3. The duty of care
83. certain propositions can be derived from these cases which may be material to the question of whether a duty is owed by a parent company to those affected by the operations of a subsidiary. (1) The starting point is the three-part test of foreseeability, proximity and reasonableness. (2) A duty may be owed by a parent company to the employee of a subsidiary, or a party directly affected by the operations of that subsidiary, in certain circumstances. (3) Those circumstances may arise where the parent company (a) has taken direct responsibility for devising a material health and safety policy the adequacy of which is the subject of the claim, or (b) controls the operations which give rise to the claim. (4) Chandler v. Cape Plc and Thompson v. The Renwick Group Plc describe some of the circumstances in which the three-part test may, or may not, be satisfied so as to impose on a parent company responsibility for the health and safety of a subsidiary's employee. (5) The first of the four indicia in Chandler v. Cape Plc , requires not simply that the businesses of the parent and the subsidiary are in the relevant respect the same, but that the parent is well placed, because of its knowledge and expertise to protect the employees of the subsidiary. If both parent and subsidiary have similar knowledge and expertise and they jointly take decisions about mine safety, which the subsidiary implements, both companies may (depending on the circumstances) owe a duty of care to those affected by those decisions. (6) Such a duty may be owed in analogous situations, not only to employees of the subsidiary but to those affected by the operations of the subsidiary. (7) The evidence sufficient to establish the duty may not be available at the early stages of the case. Much will depend on whether, in the words of Wright J (in Connelly v. RTZ Corporation Plc  C.C.C 533), the pleading represents the actuality.
the postulate of a simple duty to avoid any harm that is, with hindsight, reasonably capable of being foreseen becomes untenable without the imposition of some intelligible limits to keep the law of negligence within the bounds of common sense and practicality. Those limits have been found by the requirement of what has been called a 'relationship of proximity' between plaintiff and defendant and by the imposition of a further requirement that the attachment of liability for harm which has occurred be 'just and reasonable.' But although the cases in which the courts have imposed or withheld liability are capable of an approximate categorisation, one looks in vain for some common denominator by which the existence of the essential relationship can be tested. Indeed it is difficult to resist a conclusion that what have been treated as three separate requirements are, at least in most cases, in fact merely facets of the same thing, for in some cases the degree of foreseeability is such that it is from that alone that the requisite proximity can be deduced, whilst in others the absence of that essential relationship can most rationally be attributed simply to the court's view that it would not be fair and reasonable to hold the defendant responsible. 'Proximity' is, no doubt, a convenient expression so long as it is realised that it is no more than a label which embraces not a definable concept but merely a description of circumstances from which, pragmatically, the courts conclude that a duty of care exists.
4. The standard required
the action is not properly brought against D1 if it is bound to fail: The Brabo  AC 326, 338-9, per Lord Porter. He also put the point (echoing Witted v. Galbraith  1 QB 577) on the basis that leave will not be granted if the lack of a plausible cause of action against D1 shows that the presence of D1 in the jurisdiction is being used as a device to bring in D2. See also Multinational Gas and Petrochemical Co. v Multinational Gas and Petrochemical Services Ltd.  Ch 258, 268, 273-274.
81. A question of law can arise on an application in connection with service out of the jurisdiction, and, if the question of law goes to the existence of jurisdiction, the court will normally decide it, rather than treating it as a question of whether there is a good arguable case: Hutton (EF) & Co (London) Ltd. v Mofarrij  1 WLR 488, 495 (CA); Chellaram v Chellaram (No 2)  EWHC 632 (Ch),  3 All ER 17, .
82. Because this appeal is concerned with the 'necessary or proper party' provision, the question of the merits of the claims is relevant to the question of whether the claim against D1 is 'bound to fail' and to the question whether there is a 'serious issue to be tried' in relation to the claim against D2. There is no practical difference between the two tests, and they in turn are the same as the test for summary judgment.
84. The general rule is that it is not normally appropriate in a summary procedure (such as an application to strike out or for summary judgment) to decide a controversial question of law in a developing area, particularly because it is desirable that the facts should be found so that any further development of the law should be on the basis of actual and not hypothetical facts: e.g. Lonrho Plc. v. Fayed  1 A.C. 448 , 469 (approving Dyson v Att-Gen  1 KB 410, 414: summary procedure 'ought not to be applied to an action involving serious investigation of ancient law and questions of general importance ..'); X (Minors) v Bedfordshire County Council  2 AC 633 at 741 ('Where the law is not settled but is in a state of development it is normally inappropriate to decide novel questions on hypothetical facts'); Barrett v Enfield London BC  2 AC 550, 557 (strike out cases); Home and Overseas Insurance Co. Ltd. v Mentor Insurance Co. (U.K.) Ltd.  1 WLR 153 (summary judgment). In the context of interlocutory injunctions, in the famous case of American Cyanamid Co v Ethicon Ltd  AC 396, 407 it was held that the court must be satisfied that the claim is not frivolous or vexatious, in other words, that there is a serious question to be tried. It was no part of the court's function to decide difficult questions of law which call for detailed argument and mature consideration.
D. The claimants' case
owed a common law duty of care to the claimants to take all reasonable steps to ensure that oil spills from the Pipelines and Infrastructure did not cause foreseeable damage [to community land and other common interests of the community] (§84).
90 [RDS] exerts significant control and oversights over [SPDC's] compliance with its environmental and regulatory obligations and has assumed responsibility for ensuring observance of proper environmental standards by [SPDC] in Nigeria. [RDS] carefully monitors and directs the activities of [SPDC] and has the power and authority to intervene if [SPDC] fails to comply with the Shell Group's global standards and/or Nigerian law.
in appropriate circumstances the law may impose on a parent company responsibility for the health and safety of its subsidiary's employees. Those circumstances include a situation where, as in the present case, (1) the businesses of the parent and subsidiary are in a relevant respect the same; (2) the parent has, or ought to have, superior knowledge on some relevant aspect of health and safety in the particular industry; (3) the subsidiary's system of work is unsafe as the parent company knew, or ought to have known; and (4) the parent knew or ought to have foreseen that the subsidiary or its employees would rely on its using that superior knowledge for the employees' protection. For the purposes of (4) it is not necessary to show that the parent is in the practice of intervening in the health and safety policies of the subsidiary. The court will look at the relationship between the companies more widely. The court may find that element (4) is established where the evidence shows that the parent has a practice of intervening in the trading operations of the subsidiary, for example production and funding issue.
E. The Judge's findings
10. RDS, as the ultimate holding company of the Shell Group of companies, carries out activities commensurate with this role, including holding shares in its subsidiaries and investments and setting the overall strategy and business principles for the Shell Group of companies. RDS reports on the consolidated performance of the Shell Group of companies, makes appropriate disclosures to the markets, and maintains relationships with investors. It is also responsible for approving changes to the capital and corporate structure of the Shell Group of companies.
11. RDS is a holding company. It is not an operating company. As a holding company, it does not have any employees. A limited range of corporate services are provided by individuals employed elsewhere in the Shell Group of companies from time to time seconded to RDS ...
12. RDS does not involve itself or otherwise intervene in the operational activities of its many hundreds of subsidiaries. As a holding company, it does not have the expertise or capacity to do so each operating company is autonomous, with its own properly constituted board of directors, its own management, its own business purpose, its own assets and its own employees appropriate for that purpose. Its board and management take the operational decisions necessary to run its business. Each operating company is responsible and accountable for its operational performance including its Health, Safety, Security, the Environment and Social Performance compliance and performance.
the evidence on the part of the claimants that is relied upon to found a claim against RDS (rather than SPDC) is extremely thin, bordering on sketchy, and in a great many instances simply not evidence at all. I take it at its highest for the claimants due to the early stage of the proceedings. However, upon analysis it can be seen that it is very strong on assertion and considerably weak on actual evidence.
I disagree with the approach taken by Mr Leader Events prior to 2005 on a different corporate structure when RDS was a shelf company are simply not relevant to these claims against RDS. Part of Mr Leader's evidence relies upon the view of Professor Siegel, for which no permission was given and in any event which relates to matters pre-2005
The evidence from those at SPDC is to the effect that it is that company, rather than RDS, that takes all operational decisions in Nigeria, and that there is nothing performed by RDS by way of supervisory direction, specialist activities or knowledge, that would put RDS in any different position than would be expected of an ultimate parent company. Rather to the contrary, it is SPDC that has the specialist knowledge and experience as well as the necessary licence from the Nigerian authorities to perform the relevant activities in Nigeria that form the subject matter of the claim. This paragraph is but a short summary of what is a considerable body of evidence, but in essence it distils that evidence into the necessary points. SPDC is the specialist operating company in Nigeria; SPDC is the entity with the necessary regulatory licence; RDS is the ultimate holding company worldwide and receives reports back from subsidiaries such as SPDC.
The three-fold test therefore requires the following elements to be satisfied:
1. The damage should be foreseeable;
2. There should exist between the party owing the duty and the party to whom it is owed a relationship of proximity or neighbourhood;
3. The situation should be one in which it is 'fair, just and reasonable' to impose a duty of a given scope upon the one party for the benefit of the other.
F. The claimants' three preliminary criticisms
There is simply no evidence of such high level of oversight or high degree of control and direction, or indeed of any appreciable level of oversight or control either.
G. The claimants' witness statement evidence before the Judge
18. The special treatment granted to this Regional Manager was because SPDC was seen as a particularly risky country (sic) and so attracted particular attention from Malcolm Brinded. This Regional Manager could also go directly to the head of SPDC and tell him what the Executive Committee wanted to see happen, so there was a two-way connection between the Executive Committee and SPDC.
23. When I was working for the Shell Group, [ExCo] considered Nigeria and Iraq to be the highest risk countries in the Group portfolio For example, I know that intelligence about the security situation in Nigeria was regularly provided to senior executives in the Shell Group, including those on [ExCo].
27. There was definitely interaction and consultation between SPDC and the Hague, leading all the way to [ExCo], in particular when it came to significant issues in Nigeria, such as HSE, security, government affairs and ensuring that SPDC retained its licence to operate. These issues in Nigeria were all firmly on the agenda of the E&P [ExCo] member. I had less exposure to operational or financial issues, so could not comment with certainty on the nature or extent of the interaction and oversight in these areas.
Thus, it is likely that even comparatively minor events (a small to medium oil spillage for example) will be immediately reported so that the best remedial action, based on Shell's global experience, can be taken.
H. New evidence relied on in the Court of Appeal
I. Whether the claimants can establish the existence of a properly arguable duty of care owed by RDS to the claimants?
(1) Mandatory policies, standards and manuals
Each business and facility is responsible for complying with Shell's safety, environmental and social requirements. They must also set out to achieve targets measured against their industry peers.
Specialist teams responsible for supporting the business in implementing company-wide standards and requirements. They share industry best practice, integrate external learning into our approach and monitor performance.
We manage oil spill response capability on a global scale. Shell ensures that adequate resources are maintained for managing regional and local spills in countries where national oil spill response plans are in place, our plans and those of Shell operating companies and other companies refer to them where necessary For response to larger spills we use global resources and mobilise Shell staff from around the world.
Shell internally organises its activities principally along Business and Function lines. It transacts its business through Legal Entities.
(p.4) Where major risks are present that require common treatment across the Shell Group, the risk response may be to define Standards as mandatory rules. Manuals provide more detailed mandatory instructions on how to implement Standards or other parts of the Shell Control Framework. A risk response, typical for routine risks, is for Businesses and Functions to design and operate Controls. Controls help to assure that risks are managed in a fit-for-purpose manner and objectives are achieved.
(p.6) 'Group Standards are adopted for matters that present significant Group-level risks They apply across all of Shell's activities and are mandatory for all Shell companies.
Operating Standards define mandatory rules that are needed in addition to the Group Standards, to manage significant risks encountered in specific business activities
Manuals provide more detailed instructions on how to implement Group or Operating Standards
In the technical area, the Technical Practices establish requirements for all design engineering and construction activities as well as for the operation of assets and wells. The Technical Practices are approved by the relevant Technical Function Head or Global Discipline Head.
Technical requirements related to Process Safety are mandatory for all projects, well activities and asset operations. Any derogation from a SHALL [PS] or SHALL [WELLS] requirement must follow the derogation process and shall be approved by the relevant Technical Authority.
The application of all other Technical Practices is optional unless the Project Manager or Asset Manager mandates their use for a specific project, activity or operation.
(p.10) Independent Assurance. The Process Safety and HSSE & SP Controls Assurance team, through its mandate from the Corporate and Social Responsibility Committee, provides independent assurances as to the effectiveness of the HSSE & SP Controls including Process Safety Controls.'
Our standards are established by our [HSSE & SP] Executive team, chaired by our CEO which shapes, drives and assesses how we manage our performance in these areas Our standards set out in our HSSE & SP Control Framework are supported by a number of guidance documents. They apply to every Shell company, including all employees and contractors, and to Shell operated joint ventures
and under the heading 'HSSE & SP Assurance:
The process safety and HSSE&SP assurance team with a mandate from the CSRC, provides independent assurance on the effectiveness of the HSSE & SP Control Framework and reviewing the effectiveness of other assurance activities operating within Shell.
This assurance is provided against Shell's broad mandatory requirements which are outlined in the HSSE & SP Control Framework. It applies to all operated [joint ventures] and non-operated areas where agreed. The mandated requirements cover risk areas within health, personal safety, process safety, environment, security and social performance.
We apply consistent standards around the world to which everyone must comply These can be found in the HSSE & SP Control Framework. They describe what is required to maintain the safety of facilities that we operate throughout their life cycle from design, construction and operation to decommissioning ...
and, as part of 'Process Safety':
Process Safety is making sure the right precautions are in place to prevent unplanned releases of hydrocarbons and chemicals. We seek to ensure that our facilities are well designed, inspected, maintained and operated.
Shell has defined global technical safety standards for all projects and facilities. These are based on industry standards as well as best practice. If an incident takes place, we learn from the outcome and embed any new knowledge into our technical safety standards and practices
Our ability to manage oil spills has been enhanced by our global response network that can attend to an oil spill anywhere in the world. We also have a global centre that tests our oil spill response capabilities.
(2) The imposed system of mandatory design and engineering practices
DEP publications reflect the views of [two identified Shell companies] and/or other Shell Service Companies. They are based on the experience acquired during their involvement with the design, construction, operation and maintenance of processing units and facilities, and they are supplemented with the experience of Shell Operating Units. Where appropriate they are based on, or reference is made to, international, regional, national and industry standards.
The objective is to set the recommended standard for good design and engineering practice applied by Shell companies operating an oil refinery oil and gas production facility or any other such facility, and thereby achieve maximum technical and economic benefit from standardisation.
The information set forth in these publications is provided to Shell companies for their consideration and decision to implement The system of DEPs is expected to be sufficiently flexible to allow individual Operating Units to adapt the information set forth in DEPs to their own environmental requirements.
(3) The imposition of a system of supervision and oversight in implementing RDS's standards
with respect to the Shell General Business Principles (including Sustainable Development and HSSE & SP policy), the Shell code of Conduct and to major issues of public concern. [CSRC] also carries out certain oversight functions on behalf of the Board.
- review the standards, policies and conduct of [RDS] relating to HSSE & SP and to the safe condition and environmentally responsible operation of the [RDS's] facilities and assets;
- monitor the effectiveness of the HSSE & SP risk based internal control system and have access to any audit, incident and investigation report it considers relevant;
- review and assess management's response to audit findings and recommendations.
This includes testing the compliance with the HSSE & SP Control Framework This assurance is provided against Shell's broad mandatory requirements which are outlined in the HSSE & SP Control Framework. It applies to all operated JVs [and] risk areas within environment [and] security.
(4) RDS's financial control over SPDC in respects directly relevant to the allegations of negligence
(5) The significance of the level of centralised direction and oversight of SPDC's operations in relation to security.
Pickard has launched both a comprehensive re-organization of [SPDC] and Shell's security apparatus. Among the changes, Pickard wants to make sure her staff in Lagos was fed more security information from their people on the ground in the Delta. Shell security will now report directly to her staff.
Discussing Shell Nigeria's internal operation Pickard outlined two serious re-organization efforts. First, she planned a large-scale re-organization of [SPDC], Shell's flagship joint-venture company, responsible for most Shell production in Nigeria. However, SPDC has not been meeting Shell's international performance benchmarks, and Pickard saw the deficit as being a fillip for substantial organizational reform.
Pickard also discussed challenges in managing Shell's security apparatus. She acknowledged some frustration in dealing with Shell security staff, saying the staff on the ground were well-connected, but somehow much of the valuable information was not reaching her. Pickard pointedly said that she was re-organizing Shell security for 'performance reasons', placing four well-trusted and direct-report expatriates in charge, to ensure that pertinent information gathered on the ground finds its way to her desk.
Conclusion on the issue of proximity
Fair, just and reasonable
Lord Justice Sales:
Assessment of the evidence
i) The judge held that evidence in relation to the way the Shell group organised its affairs and sought to exercise a degree of control over the conduct of SPDC in Nigeria before the re-organisation of the group in 2005 was not relevant to the claimants' case:  and . However, in my opinion, evidence of the position prior to 2005 could not properly be dismissed as irrelevant. The Shell group faced the same practical problems in Nigeria regarding the operation and security of the pipeline before and after 2005 and the claimants' evidence, in particular from Mr Sticco, was that it tightened central control over the group's affairs in Nigeria after 2005. Therefore, in my view, evidence about a high degree of group central control over the conduct of SPDC in Nigeria in the period before 2005 is arguably capable of supporting the claimants' case that after 2005, when the central control became even tighter, RDS did take a sufficient degree of control in relation to the operation and security of the pipeline and facilities as to show that it assumed responsibility for this, giving rise to a duty of care vis-ΰ-vis the claimants.
ii) The judge held that the actions of ExCo (see paras. - above) could not be attributed to RDS:  and [114(3)]. However, from the evidence before us it appears that ExCo was set up by RDS to assist its own officer, the CEO of the group, run the group; and the CEO, who appears to act in that capacity on behalf of RDS (at least, arguably so), decides who is to be on it, according to a functional distribution of responsibilities across the group, according to "Business" and "Function". The claimants therefore have an arguable case that the actions of ExCo are attributable to RDS.
iii) The judge discounted the significance of Shell corporate literature in the public domain, which included statements about the policy of the Shell Group in relation to protection of the environment and health, by reason of a form of words which the judge described as a "disclaimer" which made it clear that the collective expressions "Shell" and "Shell Group" were used in the documents loosely and for convenience, and could not establish the presumption of a duty of care on the part of RDS as parent company for the acts of SPDC as its subsidiary: -. However, when taken with other evidence relied upon by the claimants as tending to show practical assumption of control by central group management on functional lines and identification of Nigeria as an area in which oil spillage and pollution were particular concerns for the group, I do not consider that the Shell corporate literature can be dismissed as a support for the claimants' case in the manner set out by the judge. The corporate literature shows that the group had a strong reason for trying to ensure that the management of the operation and security of the pipeline and facilities was effective, for reputational and business reasons; and since there are several indications in the papers that the group was aware of particularly acute problems in Nigeria, in respect of which it could be inferred that RDS would wish to exert direct central control if SPDC were perceived as being ineffective in managing the risk of oil spills, this is material which is capable of providing more support for an arguable case against RDS than the judge was prepared to allow.
"A controlling interest allows Shell to require the implementation of the Shell Control Framework by the company. In addition, Shell companies which are formally designated as the operator of a joint venture (JV) apply the framework to the operation of the JV" (this covers the position of SPDC as the operator of the joint venture in Nigeria).
Again, therefore, it is arguable that RDS is conscious that it has the practical means of asserting executive power from the centre of the group to control at least some aspects of management of operating companies and that RDS has the will and intention to do so.
i) [114(1)]: RDS does not hold shares in SPDC. This is irrelevant on the claimants' case, since it appears that RDS can and, the claimants say, does exert practical control over SPDC.
ii) [114(2)]: RDS does not conduct any operations. This is irrelevant on the claimants' case, and is a point which in fact depends on the judge's wrongly failing to recognise that the actions of ExCo, which arguably involve executive control over the Business in which SPDC is located, are arguably attributable to RDS. It is consistent with this case that the evidence of Mr Anietie (head of pipeline integrity for SDPC) and Mr Aganmwonyi (head of security for SDPC) says that they have been involved in providing expertise which goes into DEP instructions issued by ExCo. They do not say that they have been fully responsible for the content of all relevant mandatory DEPs which have been issued by ExCo.
iii) [114(3)]: ExCo has a number of high-ranking members of other Shell companies, and the two officers of RDS who sit on it are in a minority. However, ExCo is appointed by and assists the CEO of RDS and the actions of ExCo are arguably attributable to RDS.
iv) [114(4)]: RDS is not permitted to conduct operations in Nigeria under the relevant licence. However, the fact that SPDC holds the licence and conducts the management of the pipeline is not inconsistent with the claimants' case that RDS in practice ensures that SPDC behaves in a particular way in carrying out its management responsibilities, thereby either assuming practical (and hence, vis-ΰ-vis the claimants) legal responsibility for that or sharing that practical responsibility with SPDC to a material degree. It has not been demonstrated that it would be unlawful for RDS to behave in such a way.
v) [114(5)]: RDS is not a member of the joint venture. However, it has not been demonstrated that the joint venture agreement prevents RDS from exercising material control over the conduct of SPDC in managing the pipeline.
vi) [114(6)]: in view of the size of the Shell group, the dictum of Cardozo J in Ultramares Corp. v Touche, supra, applies. However, in my view Cardozo J's dictum is not apposite in this case. It may be that RDS will ultimately show that not all the claimants are proximate sufferers of damage, but it is strongly arguable that at least some of them are. The point about the size of the Shell group is misplaced, in my view. Whether RDS owes a duty of care in relation to the operations of subsidiaries will depend upon whether the operations of those subsidiaries arise in the context of affecting a foreseeable and proximate class of claimants (e.g. neighbouring property owners affected by oil spills) and whether on the facts RDS has assumed a material degree of responsibility for how the relevant operations of any particular subsidiary are carried out. It is certainly not enough that RDS, by ExCo, issues some DEPs which have some mandatory instructions, since even in these cases not every mandatory instruction will involve RDS assuming control to a relevant degree. But on the facts of a particular case, the issuing of mandatory instructions combined with close monitoring, intervention and enforcement, may show that there has been a material assumption of responsibility. More generally, I do not think that the simple matter of the sheer size of the Shell group can be an answer to the present claim: why should the parent of a large group escape liability just because of the size of the group, if the criteria for imposing a duty of care are satisfied for a number of companies in the group, while the parent of a smaller group (e.g. with one subsidiary) has a duty of care imposed on it when precisely the same criteria are satisfied in relation to its subsidiary?
vii) [115(1) and (2)]: SPDC is subject to strict liability under the Nigerian statute, so there is no need to impose a duty of care on RDS. In my view, the strict liability of SPDC in some respects is not an answer to the claimants' case against RDS: see para.  above.
viii) [115(3)], [115(4)] and [115(5)]: these points correspond with those made at [114(4)] (the licence point), [114(1)-(3)] (the ExCo attribution point) and [114(4)] above (the joint venture point), and the comments on those sub-paragraphs are also applicable here.
ix) [116(1)]: RDS is not operating the same business as SPDC, but is the ultimate holding company which is not licensed and is not a party to the joint venture. The comments above on the ExCo attribution point, the licence point and the joint venture point above apply here as well.
x) [116(2) and (3)]: RDS does not have superior knowledge compared with SPDC. However, the claimants have a good arguable case that in some respects, at least, RDS does have superior knowledge and expertise than SDPC, since via ExCo RDS recruits its expertise from across the whole Shell group and via group-wide instructions (combined in the case of SPDC with monitoring and enforcement) disseminates that expertise to group companies, including SPDC. The claimants also have a good arguable claim that RDS assumed a material degree of responsibility in relation to the management of the pipeline and facilities according to the criteria in Chandler v Cape Plc and Lungowe v Vedanta Resources.
xi) [116(4)]: RDS could not be said to know that SPDC was relying on it to protect the claimants. However, what is important on the claimants' case is not that RDS thought that SPDC was relying on it to protect the claimants, but that RDS assumed control of an activity (management of the oil pipeline and facilities), largely to promote its own interest, which, if negligently mishandled, would result in damage to them. In my view the claimants have a good arguable case that RDS gave directions to SPDC regarding important aspects of the management of the pipeline and facilities, specifically in relation to controlling the risk of oil spills, which RDS sought to monitor and enforce. It is well arguable that the claimants, or some of them, are in a proximate relationship with whoever controlled the operation of the pipeline and facilities.
Sir Geoffrey Vos, Chancellor of the High Court:
The applicable test
The tensions that exist when applying the appropriate test in this case
Is it appropriate for this court to re-open the decision of Fraser J?
Is there a real issue that RDS owed the claimants a duty of care?