Shell judgment adds to growing body of decisions that companies must take rights of communities seriously

As 2021 ended, the Eastern Cape high court granted local communities’ request for an urgent interim injunction prohibiting Shell Exploration and Production South Africa BV, Impact Africa Limited and BG International Limited (Shell) from conducting any seismic exploration activities off the coast of South Africa’s Eastern Cape province.

In support of its decision, the court found that there was a reasonable likelihood that the proposed exploration activities would violate the applicants’ (and the communities whom they represent) rights to an environment that is not harmful to their health and wellbeing, to participate in and enjoy the cultural life of their choice, as well as to just administrative action.

In response to the order, Shell terminated the contract with the company responsible for conducting the seismic survey. The Amazon Warrior, the vessel in question, has since left South Africa’s coastal waters.

This judgment forms part of a series of significant South African and international decisions (including the Baleni, Maledu, and Okpabi) which confirms that companies — particularly those in the extractives sector — must take the rights of communities seriously or risk the chance of suffering significant financial loss.

The decision should, however, not be seen as an assault on the private sector, but rather as guidance on the approach that extractive companies ought to follow when intending to undertake any exploration and production activities. According to the decision, it is critical for companies to consult meaningfully with communities as part of the licence application process. In doing so, companies should apprise communities of the nature and extent of their proposed activities in a form that is easy for the communities to understand.

While consultation does not mean negotiation, companies should show that they properly considered the response which the communities provided during the consultation process. Where necessary, companies must also provide an adequate response to this. This may include adapting the proposed activities in response to these concerns.

History is littered with examples of operations that fail when extractive companies lose their social or societal licence to operate. Owing to the critical role which the extractives sector will play in the transition away from fossil fuels, the world cannot afford any further unnecessary delays. It is therefore important that governments, communities, and the private sector work together to ensure a just transition to a sustainable economy.

In the remainder of this article, we consider the background to the dispute between the Eastern Cape communities, Shell and the South African government as well as some of the key points from the judgment.

In November 2021, civil society organisations initiated a campaign over news that one of Shell’s subsidiaries, Impact Africa Limited, planned to commence a nearly five-month-long seismic survey off the Wild Coast in South Africa’s Eastern Cape.

Soon after the news broke, several non-profit companies, individuals and a communal property association (the Applicants) instituted an application for an urgent injunction in the Eastern Cape high court. The application comprised two parts. Under Part A (which is the subject matter of the recent decision), the Applicants sought an interim injunction against Shell that would prevent it from proceeding with the seismic survey. The injunction would remain in place until Part B of the application is finalised.

Under Part B (which will be argued at a future date), the Applicants requested the court to order a permanent injunction that would prohibit Shell from proceeding with the seismic survey until it obtains the necessary environmental authorisation(s) under the National Environmental Management Act, 1998 (Nema).

The court’s reasoning 

In order to obtain the interim injunction, the Applicants were required to show that there was a reasonable possibility that their rights would be imminently and irreparably harmed unless the injunction was granted. They were also required to show that they did not have access to any alternative relief and that the balance of convenience favoured the grant of the injunction.

A prima facie right

As indicated, the Applicants’ case was based on their right to an environment that is not harmful to their health and wellbeing, to participate in and enjoy the cultural life of their choice, as well as to just administrative action.

The right to just administrative action (which includes procedural fairness) was particularly important in this matter because the Applicants’ case rested on the fact that they were not consulted before the exploration right (under which the seismic activities would be conducted) was granted. This, in their view, amounted to a fatal flaw in the exploration right application process.

The court agreed with the Applicants and held that “meaningful consultation entails providing communities with the necessary information on the proposed activities and affording them an opportunity to make informed representations”. In support of its decision, the court indicated that the consultation process was “inadequate and substantially flawed” for at least the following reasons:

• The consultation notices were only published in English and Afrikaans newspapers which meant that the isiZulu- and isiXhosa-speaking members of the communities were either unaware of the consultation process or unable to read and fully understand the notices;


• The briefing sessions with interested and affected parties were only held in Port Elizabeth (Gqeberha), East London and Port St Johns. Because these venues were far away from the communities, the communities were effectively excluded from these meetings;


• Shell only spoke to the “Kings” of communities on the assumption that they spoke for their people when this was not the case;


• Shell did not follow through with the consultation processes which it proposed in the environmental management programme which accompanied the exploration right application; and


• Shell failed to show what the stakeholder analysis on which it relied during the exploration right application process entailed as well as why the previous studies which it used were adequate.