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South Africa: Environmentalists win appeal against Shell

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Shell still has another chance to get seismic permit

  • The Supreme Court of Appeal has dismissed an appeal by Shell, Impact Africa and the Ministry of Mineral Resources and Energy to overturn a High Court decision that had halted seismic surveys off the Wild Coast.
  • The court dismissed the application with costs and said community participation was “illusory”.
  • But the court left room for Impact Africa and Shell to go ahead with their third and final attempt to seek renewal of the 2014 exploration licences.
  • However, proper and meaningful consultation must take place with local people who say that seismic surveys will affect their livelihoods.

The Supreme Court of Appeal (SCA) has dismissed, with costs, an appeal by Shell, Impact Africa and the Department of Mineral Resources and Energy (DMRE) seeking to overturn a High Court decision that had halted a marine seismic survey off the Wild Coast.

The judgment establishes the legal right of communities to proper consultation under various South African laws.

However, the court stayed the Makhanda High Court orders which set aside Shell's 2014 exploration rights and DMRE's 2017 and 2021 rights renewal decisions, pending the outcome of a further application filed by Shell in July 2023.

This again opens the way for Shell to seek permission to proceed with exploration, but given the judgments of the Makhanda High Court and the SCA, this will need to be done after taking into account community rights and environmental damage, and after proper consultation with affected communities.

The communities of Amadiba, Qwebe, Hobeni, Port St Johns and Kay Mouth, along with Sustaining the Wild Coast, Natural Justice and Greenpeace Africa, won a victory in the Makhanda High Court in September 2022 when a three-judge bench of the court ruled that the grant of the exploration rights was unlawful.

DMRE and Shell appealed that decision in the SCA, arguing that the public participation process and environmental management program completed before the 2014 entitlement was granted was sufficient for the Minister to decide on its subsequent renewal.

They also argued that there was no need to take into account certain factors such as climate change and heritage rights when making this decision.

Environmentalists filed a cross-appeal, arguing that changes to the law meant Shell needed to obtain environmental approval and carry out an environmental impact assessment before the renewal could be granted.

Read the SCA ruling here

Justice Nathan Ponnan, in his unanimous decision on Monday, said the right to procedurally fair administrative action is enshrined in the Bill of Rights.

“The right to procedural fairness is invoked when administrative action has a significant adverse effect on individual rights. There is little debate that Impact should have engaged in meaningful consultation with the communities and individuals affected by the earthquake blasts.”

He said the Law on Promotion of the Administration of Justice sets out requirements for procedural fairness, including that affected people must be given adequate notice of the measures and a reasonable opportunity to express their views.

The Mineral and Petroleum Resources Development Act also imposed a duty to consult with affected parties.

The general principle under the Act was that interested and affected people must be informed of sufficient detail about the proposed mining activity to enable them to make an informed decision about what representations to make.

Meaningful consultation was also needed.

The judge said the adequacy of the consultation process had come under wide criticism, including that the language used was technical and difficult to understand, and the geographical locations were vague and overly broad.

“But the most scathing criticism so far – and one which the appellants (the ministry and Shell/Impact) cannot escape – is that the notices published in the four newspapers were inaccessible to many residents in the area,” Justice Ponnan said.

“Three of the newspapers were in English and one was in Afrikaans. Very few people in the respondents' communities read English and very few speak Afrikaans. The majority speak isiXhosa or isimpondo.”

“If Impact wanted to build a meaningful relationship with them, they should have prepared notices in their language,” he said, but noted that most in the community do not read newspapers and rely on radio for news.

“The process was more illusion than reality and was manifestly inadequate,” Judge Ponnan said.

The result was that some relevant factors were not taken into account when the ministry considered exploration applications.

These included the potential harmful impacts of the research on spiritual and cultural practices, local community livelihoods (as the sea is their main, and often only, source of nutrition and income), and the requirements of the National Environmental Management and Integrated Coastal Management Act, which sets out specific measures for the protection of coastal zones.

Justice Ponnan said the decision was reviewable but the irregularities had to be dealt with in line with the Constitution.

The High Court “even went so far as to hold that authorising new oil and gas exploration would be incompatible with South Africa's compliance with its international climate change commitments.”

“By any standards, these widespread, unfounded findings, which have sterilizing effects, will not be approved.”

He said the court must be realistic in formulating a just and equitable remedy.

The High Court erred by failing to consider the relevant factors.

These included a delay of almost eight years between the grant of exploration rights and the application for review, and significant financial expenditure of around R1.1 billion.

Two renewals had already been granted and there was only one more opportunity to renew the rights, to be applied for in July 2023. The rights would remain valid until the third renewal application was granted or rejected.