A Nigerian court yesterday ordered Royal Dutch Shell to pay $1.5bn (£858m) in damages for polluting the Niger delta, a fresh blow to the company which was already reeling from a kidnap crisis and a wave of sabotage against its installations.

Militants wearing black masks, military fatigues and carrying Kalashnikov assault rifles and rocket-propelled grenade launchers patrol the creeks of the Niger Delta area of Nigeria, Friday, Feb. 24, 2006.Armed militants holding nine foreign oil workers hostage in Nigeria showed one of them to reporters for the first time Friday, a 68-year-old American who said he and his colleagues were being treated well. Three Americans, two Egyptians, two Thais, one Briton and one Filipino have been missing since they were kidnapped Feb. 18 by militants who stormed a barge belonging to a U.S. oil company in the Niger Delta"s Forcados estuary. The kidnappers are demanding that people in the country"s south receive a greater share of their region"s oil wealth. (AP Photo/George Osodi)

A federal high court in Port Harcourt, the heart of the country"s oil industry, ruled that Shell must compensate communities in Bayelsa state for degrading their creeks and spoiling crops and fishing. The decision was a major victory for the Ijaw people - who have campaigned for compensation for more than a decade - and one of Shell"s worst legal setbacks.

The ruling came on the same day that news emerged of the nine employees of a US subcontractor kidnapped on February 18. The kidnappers of the nine - a Briton, three Americans, two Egyptians, two Thais and a Filipino - are demanding that people in the country"s south receive a greater share of the region"s oil wealth. The kidnappers have released what they call "pictures of our hostages with a section of the unit that secured their capture".

Yesterday they also brought one of the Americans along the Niger delta by boat to speak to journalists. Identifying himself as Macon Hawkins, from Texas, he said: "We"re being treated quite well. Just let"s hope it ends well."

Communities have repeatedly accused Shell of letting its oil spill into the rivers of the Niger delta, degrading the environment, spoiling crops and poisoning fish. Shell says most spills are caused by saboteurs trying to steal the oil for sale by international criminal syndicates on the world market.

As well as the court ruling and the kidnapping, this week has also seen militants blowing up pipelines and storming a loading platform, crippling Shell"s output.

Justice Okechukwu Okeke"s ruling in Port Harcourt yesterday upheld a vote by Nigeria"s senate in August 2004 to fine Shell $1.5bn. Shell had argued that the parliamentary committee that made the original order in 2000 did not have the power to require payment. But the judge ruled that since both sides agreed to go before parliament, the order was binding.

Shell in London said the company would not comment in detail until it had received the text of the judgment; "however, we believe that we will have strong grounds to appeal as independent expert advice demonstrates that there is no evidence to support the claims".

It added that it remained committed to dialogue with the Ijaw people - a claim rejected by Ijaw leaders. Chief Malla Sasime, the ruler of the Ijaw Epie kingdom in Bayelsa, said: "Our people have gone through due process to get the judgment."

"They must pay the money or be ready to leave our land." Another Ijaw leader, Ngo Nac-Eteli, said Shell would be prevented from operating on Ijaw territory if it tried to buy time by appealing against the judgment.

Militant groups in the Niger delta have fought the government and the oil industry for 15 years, demanding a greater share of oil revenues and compensation for environmental damage. In 1995 the writer and campaigner Ken Saro-Wiwa was executed after leading a peaceful uprising of the Ogoni in opposition to Shell.