Local community members and supporters of Sustaining the Wild Coast and Greenpeace celebrating an early court victory against Shell in Makhanda in September 2022. Archive photo: Lucas Nowicki
- The Constitutional Court will hear arguments on 16 September over Shell’s Wild Coast oil exploration right, which the courts found was granted unlawfully in 2014 due to inadequate community consultation.
- The Supreme Court of Appeal agreed the right was unlawful but suspended its invalidity to give Shell a chance to apply to renew the right for a third time, a decision that communities and environmental groups are challenging.
- Wild Coast communities argue the court order perpetuates illegality and violates their constitutional rights to food, livelihoods and cultural practices.
- Shell claims it has spent over R1-billion and was not responsible for consultation failures.
The fate of gas seismic surveys off the Wild Coast and oil exploration rights, granted to Shell and Impact Africa in 2014, will be argued in the Constitutional Court next week, 16 September.
Seismic surveying, which involves controversial airgun blasting towards the seabed, was halted through court action by Wild Coast communities and environmental organisations.
At issue in the Apex Court will be a ruling by the Supreme Court of Appeal (SCA), which agreed with a High Court ruling that the granting of the right was unlawful, but suspended this finding to allow Shell to apply to renew the right for a third time.
Wild Coast communities and environmental organisations believe this order cannot stand. It would, in effect, be perpetuating an illegality because the exploration right had been set aside, they argue.
They say the defects in the Department of Mineral Resources and Energy’s process granting the right cannot be cured in a “narrow” renewal process.
They argue that the SCA order violates the Constitution and does not give effect to communities’ cultural and spiritual rights. The order does not provide any clarity on what Shell and the minister must do to remedy the defects of the earlier processes, they argue.
Defective process
In 2022, the Makhanda High Court ruled that the exploration right had been granted unlawfully because affected communities had not been properly notified and consulted. The court found that the communities’ right to food and livelihoods from the ocean and their spiritual and cultural rights, as well as the climate change impacts, had been ignored.
The court also found that the minister had failed to consider and comply with the requirements of the Integrated Coastal Management Act. It set aside the exploration right entirely.
The SCA, in hearing what became a failed appeal bid by Shell and the minister, agreed with these findings.
But the court said it would be “too harsh” to set aside the exploration right immediately. Instead, it suspended the order of invalidity pending the outcome of a third renewal application by Shell, which the company lodged in 2023.
Impact Africa, Shell and the minister are opposing the application to have this “suspension” set aside. They argue that leave to appeal should not be granted.
In written submissions, lawyers for the minister say the SCA had exercised “true discretion” and “the minister will be guided by the court’s judgment and its order in deciding whether or not to approve the third renewal application, having regard to the historical failures at the participation level”.
Until such time as a decision is made, it is unknown whether there will be further failures in the public participation process. At this point, therefore, there was no “live controversy”.
Shell’s lawyers, in their written submissions, said financial prejudice to Shell and Impact, which had spent more than R1-billion in pursuit of the exploration right, should be avoided if this could be done legally and appropriately.
This was because they were not to blame “in any material sense” for the lack of community consultation, and once the exploration right was granted, they had been entitled to assume that “all was in order”.
Going forward, it was in Shell’s interests to ensure that the process was fair because it may face future litigation if it is not.
Referring to the “chilling effect on investment”, Shell said while it accepted that all persons who could be impacted by commercial development should be consulted prior to approval, this should not morph into a veto on commercial development.
The High Court, by simply setting aside the exploration right, had the potential to discourage investment “by sending the message that even a good faith error … results in an immediate loss of investment”.
“If a more nuanced approach, which preserves the interests on all sides of the debate, may be adopted, then that is clearly preferable.”
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