The UK Supreme Court has ruled that oil-polluted Nigerian communities can sue Shell in English courts.
The decision is a victory for the communities after a five-year battle, and overturns a Court of Appeal ruling.
The Niger Delta communities of more than 40,000 people say decades of pollution have severely affected their lives, health and local environment.
The oil giant had argued it was only a holding company for a firm that should be judged under Nigerian law.
Shell described the legal ruling as disappointing.
The Supreme Court, the UK’s final appeal court for civil cases, ruled that the cases brought by the Bille community and the Ogale people of Ogoniland against Royal Dutch Shell were arguable and could proceed in the English courts.
Royal Dutch Shell did not dispute that pollution had been caused, but argued it could not be held legally responsible for its Nigerian subsidiary. Shell is responsible for about 50% of the delta’s oil production.
Last year the Court of Appeal agreed with the company, but the Supreme Court said on Friday that that decision was flawed.
The communities, represented by law firm Leigh Day, argued Shell owed a common law duty of care to individuals who had suffered serious harm as a result of the systemic health, safety and environmental failings of one of its overseas subsidiaries.