Looking down the (oil) barrel of a class action?

Abstract

Class actions against oil and gas companies are nothing new. More than 15 years ago, Esso settled the action against it by businesses suffering property damage and economic loss from that damage following the Longford gas explosion for $A32.5 million. There have been other class actions following oil spills, and others by shareholders for alleged breaches of continuous disclosure obligations. With the focus of investors increasingly on climate change disclosure, and some courts now finding expanded duties of care owed in relation to climate change, oil and gas companies can expect to see more actions in the future, including claims of ‘greenwashing’, like the one issued by a shareholder against Santos in August 2021 relating to statements made in Santos’ 2020 annual report. This paper provides some practical tips for companies facing class action proceedings, including preparatory steps which can be taken, such as establishing internal and external teams, dealing with insurers, as well as preserving and locating relevant documents. It provides recommendations about appropriate internal and external communication about the claim so as to avoid issues like waiver of legal professional privilege and PR problems, and it addresses some enquiries which should be made about opponents, as well as the judge assigned to the matter. Specific considerations arise in funded class actions, in light of recent regulatory changes. Early checks should be made as to whether the litigation funder holds an Australian Financial Services Licence and whether the funding arrangement has been properly established as a managed investment scheme.