English High Court refuses permission for derivative claim against Shell’s Board of Directors

In February 2023, ClientEarth, a non-profit environmental law organization, had issued proceedings before the English High Court against the board of directors of Shell plc. ClientEarth alleged that Shell’s directors had failed to properly take into account the implications for the company of the economy’s net-zero transition and the resulting risks to the company’s business model, which, ClientEarth alleged, amounted to a breach of some of the directors’ duties under the Companies Act 2006. The claim had been brought by way of a derivative action, whereby ClientEarth sued in its capacity as a shareholder of Shell, in respect of a cause of action vested in Shell and seeking relief on behalf of the company. The High Court refused to grant ClientEarth permission to pursue its claim. Following a hearing on costs, ClientEarth was also ordered to pay the company’s and the directors’ costs in connection with all aspects of the action.