• Wed. Feb 28th, 2024

Environmental campaign group loses High Court battle with Shell directors

Environmental campaign group loses High Court battle with Shell directors
Client fights with Earth Shell

An environmental campaign group has lost another round of High Court battle with directors of oil giant Shell.

ClientEarth, a shareholder in Shell, raised concerns about Shell’s “climate change strategy” and wanted to bring a “breach” of duty action against the directors.

A High Court judge in May refused to allow client Earth to proceed with the claim after considering written arguments.

Client Earth has now failed in its bid to persuade Justice Trower to reconsider his decision.

The judge ruled against client Earth for the second time on Monday after hearing oral arguments at a recent High Court hearing at the Rolls Building in central London.

He concluded that ClientEarth’s application should be dismissed.

“I find that Client Earth’s application and the evidence in support of it do not disclose a prima facie case for allowing the claim to proceed,” Justice Trower said in a written judgment.

“In light of the fact that the matter has now been reconsidered at the oral hearing, I would make an order dismissing the claim.”

The Shell directors had argued that ClientEarth’s review application should be dismissed.

Justice Trower had published a judgment in May after considering the written arguments.

He said in the May ruling that to pursue its claim, Client Earth had to show that a director or directors had committed “an actual or alleged act or omission involving negligence, default, breach of duty or breach of trust”.

Client fights with Earth Shell
Lawyers for ClientEarth argued that the tactics adopted by oil giant Shell’s directors were a ‘breach of their duties’ (Yui Mok/PA).

The judge dismissed the application after concluding that insufficient evidence had been presented to support the charity’s claim.

Barristers representing ClientEarth later outlined the “premise” of the charity’s case at a hearing.

She said Shell directors “already recognize” climate change risk as a “material factor” that “affects their mandate” to promote the company’s long-term commercial success.

The lawyers argued that the company’s long-term success required an “effective and actionable” climate change strategy, and the plans adopted by Shell directors were “illogical”.

They argued that the tactics adopted by the directors were “in breach of their duties” and allowed ClientEarth’s claim to proceed.

Lawyers representing Shell argued Justice Trower’s May ruling was “appealable”.

She said ClientEarth received “little support” from shareholders and argued the judge should “stand by” his decision.

In Monday’s ruling, Justice Trower said ClientEarth “holds only 27 shares in the shell” and that “a very small proportion of the total shareholder constituency” supports the charity’s claim.

He said the “whole constituency” should carry a lot of weight with their “views” when determining how Shell can “best manage the risk of climate change”.

Lawyers representing Shell had argued that Client Earth’s motivation was not in the company’s “best interests”.

Justice Trower said there was “substance” in that argument.

“In my view, ClientEarth is the owner of 27 shares in Shell, which however suggests that it is entitled to seek relief on behalf of Shell on a claim of such considerable size, complexity and importance (which would be very expensive and time-consuming). its members as a whole,” the judge said.

“In short, there is substance in Shell’s submission that ClientEarth’s motivation is driven by something quite different from a balanced consideration of how to implement the various factors that directors must take into account when assessing what is in Shell’s best interests.”

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