Photo: Wildervank Station at the Groningen gas field. Peter Heeling; Skitterphoto, via Wikimedia Commons

For about 60 years, ExxonMobil and Shell extracted and sold natural gas from the Groningen gas field in northeastern Netherlands. It was the largest natural gas field in Europe and in its early days, it had a monopolistic hold over the continent’s gas market. Both ExxonMobil and Shell made billions in profits. The lion’s share, however, went to the Dutch government, filling the national treasury and underpinning the welfare state.

Meanwhile the residents of Groningen reeled under financial and mental distress when their homes were repeatedly struck by earthquakes related to gas extraction. Some estimates peg the number of earthquakes over the years at about 1,600.

“I fear I must disappoint you in your wish to speak with residents,” said Coert Fossen, a resident of Groningen who has lived through earthquakes. Fossen is also the Chairman of the Groningen Earth Movement, an association of residents affected by gas extraction from the Groningen gas field. “People here have become tired over the past ten years, and more, of microphones, cameras and politicians coming to ask them to tell their stories.”

Last year, following years of public outcry, the Dutch government closed the Groningen gas field. And just as reparations for public damage were underway, ExxonMobil and Shell filed a quasi-legal claim called an “investor-state dispute,” against the Dutch government. The companies challenged everything from bills to pay for home repairs to the closure of the gas field itself.

These claims arise all over the world thanks to arbitration clauses in contracts and bilateral investment treaties that bind governments to the Investor-State Dispute Settlement (ISDS) process. It is a secretive system whereby companies can allege that a move by the government has caused them financial harm, and demand that the government pay damages. The claims are vetted in proceedings that are nearly always held behind closed doors, overseen by three arbitration experts (not judges), one of which is selected by the company, the other by the state, and the third arbitrarily. Because the process itself is expensive, the system is increasingly seen as having a chilling effect on human rights and as a looming obstacle to action on climate change, with oil companies routinely filing claims when governments move to decommission fossil fuel assets, decline or revoke permits for fossil infrastructure, pass environmental regulation, or even, as in the case of Ecuador and Chevron, when their courts rule against oil majors.

In total, there are four ISDS claims surrounding Groningen. Details about the claims are hard to come by because the tribunals hold arbitration proceedings privately. And no residents have been called to give testimony.

‘People of Groningen structurally ignored’

Over the years, ExxonMobil and Shell—via a joint venture named ‘Nederlandse Aardolie Maatschappij’ (NAM) for extraction and distribution of gas from Groningen—earned about 64.7 billion euros while the Dutch state earned 363.7 billion euros. These numbers were a heavily guarded secret until a Dutch parliamentary inquiry report in 2023 made them public, alongside other details. The inquiry concluded that the interests of the people of Groningen were “structurally ignored” during gas extraction and also that the problems in Groningen were "consistently underestimated” for decades.

“People were ignored for many, many years because the company [NAM] and the government shared the revenue from the gas extraction,” Fossen said.

Then in 2021, the Dutch parliament began an inquiry to understand linkages between gas extraction and earthquakes and take decisions on damaged homes and compensation.

Natural earthquakes occur at depths of about 10-100 kilometers. In Groningen, the gas extraction-induced earthquakes occur at about 3 kilometers, allowing the energy to reverberate on the surface a lot more. This means that the impacts of an earthquake measuring 3.5 on the Richter scale in Groningen are often worse than in regions where earthquakes occur naturally.

“In the 1980s, a geography teacher in a school [in Groningen] said there would be earthquakes from gas extraction because the sub-soil is rocky. Cracks and tension in the sub-soil because of gas extraction can cause earthquakes. But this was also ignored.” Fossen explained.

Gas extraction also causes soil subsidence, a gradual sinking of the land’s surface. But such subsidence risks were ignored because these are slow processes that take place more evenly.

A report in 2013 by the State Supervision of Mines, a Dutch regulatory body that oversees mineral extraction, had concluded that the number of gas-extraction-related earthquakes have increased over time and called for scaling-down production.

The parliamentary inquiry notes reactions from Shell and ExxonMobil ever since the report by the State Supervision of Mines was released. The companies viewed the possibility of scaling-down production as an “anchorless quagmire”. Once lower production levels are considered safer, where would it end? they asked. The Dutch finance ministry too resisted calls for production cuts, citing budgetary implications.

Noting more than 267,000 reports of damage, of which 85,000 cases concerned more than one incidence of damage, the parliamentary inquiry said “The days when this was only about ‘cups tinkling in the cabinet’ are long past. What is involved is the real concern about whether the baby can be put to bed upstairs safely in a home that used to be considered safe, but has since been declared unsafe. It is the stress and the enormous mental threshold of having to check the house for cracks again after the umpteenth quake – residents know how much effort and energy it costs to get damage repaired.”

The Dutch government then set up a programme for home repairs and reinforcements in Groningen, and also a long-term vision for socio-economic recovery. A part of the bill—running into billions of euros—was supposed to be borne by NAM, the joint venture by Shell and ExxonMobil.

In April 2024, the Dutch government signed into law the permanent closure of the Groningen gas field.

But soon enough, the companies filed multiple ISDS claims against the Dutch government. All of the claims were filed in secretive private tribunals, effectively bypassing state courts and public accountability.

ExxonMobil and Shell use aggressive legal tactics

The damage and compensation claims were challenged by NAM before the Netherlands Arbitration Institute in Rotterdam, based on agreements the company signed with the Dutch government. Shell and ExxonMobil, as separate entities (and not NAM), have also filed a claim before the Netherlands Arbitration Institute regarding the closure of the Groningen gas field, demanding compensation for lost profits.

Then there’s the international arbitration based on the Energy Charter Treaty (ECT) filed by ExxonMobil before the International Centre for Settlement of Investment Disputes. The ECT is an international agreement signed in 1991 that provides a framework to deal with disputes between nation states and energy investors, and primarily fossil fuel investors. Around 50 countries, mostly in Europe, are signatories to the ECT. The treaty has clauses that seek “fair and equitable treatment” for fossil fuel investors and “prompt, adequate and effective compensation” for investors in cases where nation states take over their assets. The Dutch government now faces not only having to foot the entire bill for Groningen damages itself, but also owing the oil majors compensation for lost profits.

“The Netherlands, once a global champion of ISDS, now faces the consequences of the system it helped build… Private arbitration gives wealthy multinationals like Shell and ExxonMobil privileged legal avenues unavailable to citizens, civil society, or affected communities—deepening inequality before the law. Delegating disputes about corporate responsibility and government policy to arbitration sets a dangerous precedent, encouraging other companies to evade regulation and accountability through legal manoeuvring,” notes a July, 2025 report by the Centre for Research on Multinational Corporations, abbreviated as ‘SOMO’ (‘Stichting Onderzoek Multinationale Ondernemingen’ in Dutch).

Titled ‘Aftershock in Groningen’, the report describes how the legal tactics of Shell and ExxonMobil “cast a long shadow over Groningen’s recovery and government efforts to rebuild trust in the region” and “reassign the costs of their exit to the public.”

The report was prepared using details that came out as a result of parliamentary debates and letters, the parliamentary inquiry in 2023 about gas production operations of NAM and associated impacts, negotiations between NAM, Shell and ExxonMobil and the Dutch state, and the ISDS claims.

“When you put together all the cases, it becomes apparent that the companies are using quite an aggressive legal strategy,” Bart-Jaap Verbeek, a senior researcher and author of the SOMO report said. “The arbitration clauses in the contracts the government signed with them allowed them to do this.”

Effectively, Verbeek added, the Dutch government gave the companies a very powerful tool that undermines public interest.

The SOMO report calls for termination of bilateral investment treaties that include ISDS provisions and the non-inclusion of such provisions in future trade and investment agreements. However, these treaties often include statutes of limitations that enable companies to file ISDS claims for several years after a country has pulled out of a treaty.

All four ISDS claims in Groningen have overlapping elements like challenges to compensation claims for home reinforcements. And in February this year, an interim ruling in the claim brought on by Shell and ExxonMobil before the Netherlands Arbitration Institute already granted the companies access to government records on compensation claims.

“When NAM gets more details about the compensation claims, they will go on disputing it. They will argue over every Euro that is spent on every home. Profit maximization and cost reduction is their prime objective,” Fossen said. “The companies consider the gas [from Groningen] as their property. They want compensation for closing the gas field regardless of the impacts on people,” he added.

Drilled emailed NAM, Shell and ExxonMobil seeking details of investor-state claims filed and the relief measures and compensation sought in each of them.

A representative from Shell responded saying the arbitrations are confidential but added that the company “intends to reach a final, all-encompassing settlement with the Dutch government about the wind-down of natural gas production in Groningen.” The representative did not respond to further questions about seeking compensation for loss of profits from taxpayers, including those in Groningen who have suffered for decades from earthquake-related physical, financial and mental stress.

NAM and ExxonMobil did not respond.

Implications from the UN court ruling

Many legal experts are hopeful that the recent advisory opinion by the International Court of Justice (ICJ) on climate change will strengthen nation states’ arguments for climate action against claims filed by fossil fuel investors. In fact, one of the independent declarations made by a judge presiding over the ICJ case noted that states’ climate obligations must inform interpretations of international investment law.

Researchers at the International Institute for Sustainable Development wrote “The ICJ’s opinion reinforces that states have a legal duty—not mere policy discretion—to adopt and maintain ambitious climate measures. This should rule out claims from investors alleging that such climate action violates investment law because they are supposedly arbitrary or unfair.”

Interestingly, Jorge E Vinuales, one of the counsels for Vanuatu in the ICJ case on climate change, was appointed as an arbitrator by the Dutch government in the investor-state dispute brought on by ExxonMobil under ECT. Vinuales did not respond to Drilled’s requests for an interview.

The ISDS claims in Groningen are up for discussion in the European parliament this September.