Shell files new arbitration against the Netherlands over Groningen gas field closure

SOMO, Both ENDS and the Handel Anders coalition strongly condemn Shell’s decision to launch an investor–state arbitration under the Energy Charter Treaty (ECT). Shell’s move comes on top of an already extensive web of ongoing international and domestic arbitration proceedings involving ExxonMobil and their joint venture, the Nederlandse Aardolie Maatschappij (NAM). 

While the Dutch government keeps insisting that damage repair and home strengthening in the region will continue regardless of these disputes, the legal onslaught itself is draining public resources and undermining public trust in these key recovery operations. Shell’s decision to escalate the conflict internationally marks a new low in a long-running struggle over responsibility, justice, and accountability in Groningen.

Shell follows ExxonMobil into international arbitration

On 23 December 2025, Shell plc initiated arbitration proceedings against the Netherlands at the International Centre for Settlement of Investment Disputes (ICSID). The company claims that the Dutch state has breached the treaty and seeks “full compensation for damages” arising from the closure of the Groningen gas field and the allocation of associated costs, which run into the billions.

The arbitration follows earlier proceedings launched by ExxonMobil via its Belgian subsidiary EMPC and comes after consultations between Shell and the Dutch government failed to yield a settlement. The tribunal is not yet in place.

The case is particularly striking given that Shell, once headquartered in the Netherlands, moved to the United Kingdom in 2022. Now, it is using an investment treaty to sue the Netherlands over policies adopted to address the devastating consequences of gas extraction.

Ironically, the Netherlands and Shell themselves played a key role in shaping the modern investor-state dispute settlement (ISDS) system. Today, ISDS is quite literally coming home – in a deeply cynical way.

Bart-Jaap Verbeek, senior researcher at SOMO: 

“This is exactly why ISDS needs to be abolished. Shell has made more than €32 billion in profits from six decades of gas extraction in Groningen, causing widespread damage and insecurity. The sheer audacity to now claim ‘full compensation for damages’ is a slap in the face of Groningers who are still waiting for repairs, safety, and justice.”

Although the Netherlands formally exited the Energy Charter Treaty on 28 June 2025, existing investments remain protected for another 20 years under the treaty’s sunset clause, allowing Shell and ExxonMobil to continue bringing claims. The Netherlands also has 69 bilateral investment treaties (BITs) with ISDS provisions remaining in place. Unfortunately, recent votes in the Dutch Parliament rejected proposals to terminate these treaties, leaving the legal framework that enables such claims fully intact, despite the growing financial risks for the public.

Fernando Hernández, senior policy officer at Both ENDS:
“As Colombia and the Netherlands prepare to co-host a conference on a just transition away from fossil fuels, Shell suing the Netherlands shows what is fundamentally at stake. You cannot deliver a just and orderly fossil fuel phase-out while companies are empowered to sue states for protecting people and the environment. ISDS locks countries in fossil fuel dependence by shielding corporate profits from democratic decisions. The Netherlands must start developing a sensible and legally sound strategy to exit these 69 legacy treaties.”

Djuna Farjon, coordinator of the Handel Anders coalition:
“Shell’s claim shows exactly why the Netherlands must urgently and decisively break with ISDS. As long as these treaties remain in force, multinational corporations can weaponise them to undermine democratic decisions, climate policy and social justice. Terminating Dutch investment treaties is not radical; it is necessary to ensure that public interests come before corporate profits.”

What is at stake: shifting the burden to taxpayers

Taken together, these legal actions reveal a clear pattern. Even where their requests are rejected, Shell, ExxonMobil and NAM are using litigation to delay payments, increase pressure on the state, and contest their financial responsibility for the damage caused by gas extraction.

The Dutch government itself has warned that suspending or blocking future levies would cause severe disruption to public finances, potentially forcing the state to borrow billions on capital markets, cut spending in other policy areas, or even breach EU budgetary rules. The state has already pre-financed billions in damage repair and building reinforcement and expects to continue doing so.

“These cases are not just about legal technicalities. They are about whether multinational fossil fuel companies can use arbitration to shift billions in costs onto taxpayers, while the people of Groningen continue to live with unsafe homes and ongoing damage,” says Bart-Jaap Verbeek.

NAM has already paid €5.31 billion under protest, but still owes €550 million for building reinforcement, and has refused to contribute further to regional development, while Shell and ExxonMobil still haven’t provided financial guarantees for NAM’s future liabilities. Meanwhile, earthquakes continue – even after production stopped – underscoring that the harm is ongoing.

In addition, NAM, Shell and ExxonMobil are also involved in multiple national arbitrations before the Netherlands Arbitration Institute (NAI), including over the costs of damage compensation and strengthening unsafe buildings, and the overall wind-down of the Groningen gas project. Key rulings in these proceedings have been delayed, with some decisions now expected only in 2026 or later.

Shell’s latest case will only add to an already dense web of litigation around the Groningen gas field, deepening legal uncertainty over key recovery operations, driving up public costs, and prolonging insecurity for residents who are still waiting for lasting safety and redress. The case is at an early stage and is likely to drag on for years.