Shell shock for Dutch climate policy
Shell has launched an arbitration claim against the Netherlands under a secretive court system for potentially billions of euros. The British multinational oil and gas company is suing the Dutch government over its decision to close the controversial Groningen gas field which caused multiple earthquakes, economic stress and extensive damage to homes.Since gas production began in 1963 at the site, more than 1,600 earthquakes have damaged tens of thousands of homes, leaving residents in the region with financial stress, safety concerns, and psychological trauma.CompensationCleodie Rickard, trade campaign manager at Global Justice Now, said: “While the people of Groningen continue to live in unsafe homes and with ongoing damage, mega-polluters like Shell are using corporate courts to shift billions in costs onto taxpayers. "Meanwhile, the UK faces its own corporate court cases - raised by the hedge fund behind a condemned coal mine and a sanctioned Russian oligarch. "Besides letting UK-registered companies off the hook for devastating lives abroad, corporate courts now have our own climate and foreign policy in the firing line. To protect public finances, our security and our sovereignty, it’s time to scrap them for good.”The Investor-State Dispute Settlement (ISDS) claim was initiated late last December, with Shell claiming that the Dutch state has breached the Energy Charter Treaty. It is seeking “full compensation for damages” arising from the closure of the Groningen gas field and the allocation of associated costs, which run into billions of euros.TreatiesShell’s claim is the latest in a string of aggressive litigation brought against the Netherlands by fossil fuel companies over the oil field’s closure. Between 2022 and 2024, Shell and ExxonMobil – together with their joint venture NAM, which operated the Groningen field – launched four partially overlapping arbitration cases. ExxonMobil’s claim via its Belgian subsidiary contravenes EU law, according to the European Court of Justice’s Komstroy ruling against intra-EU ISDS claims under the ECT.UK-headquartered Shell is able to raise the claim under the Energy Charter Treaty, an investment agreement specifically protecting investments in the energy sector. It is the most used treaty by fossil fuel companies to challenge climate action. Such treaties contain Investor State Dispute Settlement (ISDS) provisions, which hand corporations the power to sue countries in private, international tribunals over government laws or policies they allege damage their business interests. Previously a Netherlands-based firm, relocating to the UK has enabled Shell to raise an ISDS claim against its former home state.TerminationAlthough both the UK and the Netherlands formally exited the Energy Charter Treaty in 2025, existing investments remain protected for another 20 years under the treaty’s sunset clause, allowing Shell and ExxonMobil to continue bringing claims. The UK’s exit from the Energy Charter Treaty followed years of public campaigning, leading to ministers conceding the treaty’s incompatibility with its climate goals. Amid this latest case, campaigners are reiterating warnings that the UK must also negotiate an inter se agreement with other exiting countries to neutralise the treaty’s sunset clause, to remove the risk of such challenges to climate action. The UK has itself been hit by two ISDS claims last year under different treaties; it is being sued by foreign investors in the quashed Cumbria coal mine and by a sanctioned Russian oligarch. Besides negotiating an agreement around the ECT’s sunset clause, campaigners are calling on the UK government to commit to exclude ISDS from future trade deals and review existing agreements with a view to their renegotiation or termination. This AuthorBrendan Montague is an editor at The Ecologist.
