One Step Forward, Seismic Steps Back: On the Battle Over South Africa’s Wild Coast
"That Shell Company..." by Adventures of KM&G-Morris is licensed under CC BY-NC-ND 2.0.
The extractive industry was characterised by a systemic disregard for marginalised persons during South Africa’s apartheid and colonial eras. During this time, the extractive industry consistently marginalised vulnerable communities, reflecting broader systemic inequities.
This history makes it a critical sector for assessing the country’s progress in ensuring accountability for administrative decisions. The Sustaining the Wild Coast cases – as heard in the High Court and the Supreme Court of Appeal (SCA) – illustrate judicial efforts to hold oil and gas companies accountable for neglecting the rights and interest of marginalised communities in administrative processes leading to resource extraction.
An Overview of the Courts’ Decisions
The key issue before the High Court was the lawfulness of an oil and gas exploration right granted to Shell and Impact. The exploration right authorised Impact and Shell to conduct a seismic survey off the coast of the Eastern Cape to identify potential oil and gas reserves. It was initially granted to Impact in 2014, and subsequently renewed in 2017 and 2021. A third renewal application was submitted in 2023.
A seismic survey involves bombarding a specific area with sound waves, produced by explosives or vibrators, to detect natural resource reserves. The sounds released during a seismic survey can be fatal or otherwise detrimental to the physical, behavioural and/or anatomic well-being of marine life. As argued and confirmed in the High Court, seismic surveys’ negative impacts can also extend to the economic prospects of communities dependent on the ocean for their livelihoods, as well as their social, spiritual and cultural connection to the sea – primarily affecting black economically disadvantaged communities in this case.
Impact and Shell’s failure to sufficiently consider these environmental and socioeconomic factors, as well as the broader climate change implications of the seismic survey, and their inadequate consultation with affected communities before obtaining the exploration rights, were deemed procedurally unfair. Consequently, the High Court suspended the exploration right and its renewals.
“The SCA’s decision could represent a pivotal moment for the extractive industry, signalling a shift towards more inclusive environmental decision-making processes that impact local communities”.
However, the SCA disagreed with this suspension. While it upheld the High Court’s finding that Shell and Impact’s actions were procedurally unfair, it ruled that the suspension of the exploration right was not appropriate. The SCA argued that a blanket suspension of coastal oil and gas exploration could negatively affect South Africa’s foreign investment prospects. As a result, the suspension was lifted, though the court ordered Impact and Shell to correct their procedural shortcomings by properly consulting with affected communities and considering the relevant factors in the future.
A lifeline for the extractive industry?
In the High Court, Shell and Impact failed to obtain the environmental authorisation to conduct their seismic survey as required by legislation. This oversight may suggest a degree of disregard for legislative compliance, which could explain their failure to comply with the procedural fairness requirements set out in the Promotion of Access to Justice Act – specifically, the consideration of relevant factors and consultation with affected parties.
However, before the SCA, they compiled a 4000-page report detailing relevant considerations and affected parties, possibly indicating a willingness to adhere to the requirement of procedural fairness.
The SCA’s decision could represent a pivotal moment for the extractive industry, signalling a shift towards more inclusive environmental decision-making processes that impact local communities. Furthermore, it might foster greater accountability from corporations acting in an administrative capacity, ensuring they follow procedural fairness.
Conversely, this ruling could herald a future where consultations and considerations regarding communities and the environment become mere formalities—boxes to tick in the pursuit of corporate interests. Compiling exhaustive reports could prove meaningless if the primary aim is to serve corporate goals rather than uphold administrative justice
The decision may also enable powerful corporations, like Shell and Impact, to use the requirements of justice and equitability to seek condonations for their failures in respect of administrative actions, instead of fulfilling the necessary requirements at the outset. In this way, corporations may bypass legislative requirements to expedite the acquisition of certain rights, then later rely on this judgment to retroactively rectify their errors.
Equally worrisome is the reasoning employed by the SCA. The Court found the “chilling effect” that the suspension would have on foreign investments as sufficient reason to set aside the suspension on the exploration right and the renewals thereof. According to the SCA, the High Court’s decision to suspend the exploration right on the grounds that granting new rights would undermine South Africa’s climate change commitments was a “far-reaching finding.”
This reasoning frames corporate interests as oppositional to those of the climate and communities. The SCA separated the High Court’s climate change considerations from its decision, then presented (foreign) corporate interests as the factor that was overlooked. In the process of doing this, however, it failed to reflect on the significance of climate change in the matter. Such reasoning could have serious implications for future judicial decision-making.
Conclusion
Both these cases indicate the judiciary’s willingness to hold corporations, acting in an administrative capacity, accountable. Whether or not this will result in the extractive industry genuinely engaging with and considering the interests of marginalised communities and the environment is presently unclear. It is also unclear how the courts’ reasoning in these rulings will influence climate litigation involving the extractive industry moving forward.
Given that petitions have been filed to appeal the SCA decision in the Constitutional Court and the fact that this matter was flagged as novel in the High Court, the only thing that can be said definitively is that this matter will create significant ripple effects across the extractive industry, the environment, and affected communities.
