Another blow for Shell in South Africa – but not game over

 ·3 Jun 2024

Shell, which recently announced it would sell its downstream business in South Africa as part of a global restructuring, has received mixed results in a legal battle over its upstream business.

Supreme Court of Appeal (SCA) has dismissed an appeal by Shell, Impact Africa and the Department of Mineral Resources and Energy over a Makhanda High Court judgment which set aside the exploration right and subsequent renewals given to Shell to operate oil and gas exploration off the Wild Coast.

The High Court said that the right was granted unlawfully because the affected communities were not notified and consulted. This meant that considerations, such as the right to food and livelihoods from the ocean and their spiritual and cultural rights, were overlooked.

The Court also found that Minister Gwede Mantashe failed to follow the Integrated Coastal Management Act requirements.

The SCA upheld this decision, arguing that Impact Africa and Shell’s consultation process for applying for and renewing the exploration right was inadequate and that the choice of print media in English and Afrikaans language newspapers was “more illusory than real.”

Not all bad for the oil giant

Despite agreeing with the High Court’s findings, Judge Ponnan of the SCA did not set aside the right and renewal decisions in their entirety, preferring a more “pragmatic” approach to crafting a just and equitable remedy.

Environmental law experts and respondents in the case Natural Justice said that the SCA highlighted its concern about the possible consequences of decreased foreign investment.

Thus, the exploration right granted unlawfully may be granted a renewal.

For a third renewal application, the SCA said that “a further public participation process be conducted to cure the identified defects in the process already undertaken, especially as the parties who claim to have an interest in the matter have now been identified….”

“Shell respects the court’s decision to dismiss the appeal,” said its spokesperson Pam Ntaka to GroundUp.

“However, we welcome the court’s direction that the exploration right remains valid, subject to further public consultation and the renewal application.”

“We are examining the ruling in detail and considering our next steps”.

Natural Justice said that it is ambiguous how a renewal process can remedy the flaws in the original exploration right.

In addition, the SCA seemed to dismiss the idea that authorising more oil and gas exploration is inconsistent with South Africa’s attempts to comply with the international global warning obligations, arguing that it cannot endorse “such a far-reaching finding, which has a sterilising effect.”

“Shell is refocusing its business on opening new oil and gas fields that will fuel catastrophic climate change and threaten the lives and human rights of millions of people, particularly in Africa,” said Cormac Cullinan from Cullinan & Associates 

“There is a tragic irony in the SCA using its constitutional powers to grant ‘a just and equitable remedy’ not to protect the human rights of current and future generations, but to preserve Shell’s application to renew its exploration right.”

The communities and supporting organisations are thus planning to appeal at the Constitutional Court. 

The SCA ruling can be found below (mobile users can click here):

With reporting from GroundUP

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