Dutch State facing NAM in court over €789 mil. bill for Groningen earthquake damages

This week, the Dutch State will face NAM in court in two back-to-back lawsuits over a €789 million bill for compensating earthquake damages resulting from gas extraction in Groningen. NAM, the petroleum company owned by Shell and ExxonMobil that operated the Groningen gas field, disagrees with the amount and does not want to cough up the millions, Dagblad van het Noorden reports.

These lawsuits concern costs from 2020 and 2021. The case on Monday and Tuesday will concern the costs incurred for compensating physical damage to homes, with a total amount of €268 million. Wednesday’s case will concern the decline in home values, with a price tag of €521 million.

The heart of these two lawsuits boils down to NAM and the State disagreeing on the calculations for damage compensation and how the law should be applied. In the first case, NAM believes that the government is compensating for physical damages in too large an area. In the second, NAM argues that the decline in home value was compensated too early. According to NAM, home values only started depreciating in 2012.

The government disagrees and argues that the Groningen Mining Damage Institute (IMG), which has been handling the settlement of damage to and depreciation of homes since 2020, used sound calculations and rightly believes that compensation must be assessed on a case-by-case basis. The law also states that, in case of doubt, the ruling goes in favor of the aggrieved party.

Regarding the decline in home value, the government argues that the research the IMG used shows that the depreciation remained constant over the years, and it would have been unfair to make the people of Groningen wait any longer for compensation.

This is the start of what will likely be a courthouse marathon. The court’s rulings could take months, and the losing party will almost certainly appeal.

It is also only part of a long, ongoing dispute. There have been several arbitration cases between NAM and the Dutch State, trying to reach an agreement with the help of an independent expert outside of the court. A currently ongoing one covers the costs between 2018 and 2020. NAM and the government are also fighting it out before the court in public proceedings. In November last year, the court gave an interim ruling that NAM must pay €1.35 billion for the costs of the damages caused in 2024, as well as the reinforcement operations.

The court ruling will have no influence on the settlement of damages for Groningen residents. The question is only whether NAM must pay the State the entire sum of compensation Groningen residents received, or whether the State will foot part of the bill.