Settlement 'a victory'
The complaint alleged that officials from Shell Petroleum Development Company of Nigeria, Shell's Nigerian subsidiary, asked government troops to shoot villagers protesting against the construction of a pipeline that later leaked oil. The officials were also accused of helping to furnish Nigerian police with weapons and joining in security sweeps of the region.
Saro-Wiwa, the leader of the Movement for the Survival of Ogoni People, led rallies against Shell, which he blamed for oil spills and gas fires in the region.
His son, Ken Saro-Wiwa Jr, said on Monday he felt his father "would be happy" with the decision, despite no declaration of wrongdoing on Shell's part.
"The fact that they would have to settle is a victory for us," he said.
Ogon Patterson, the founder of the Ijaw Council for Human Rights which works to protect Niger Delta communities, told Al Jazeera: "This is blood money.
"There are several such cases in the Niger Delta where Shell needs to pay restitution.
"Shell has tried to ... see how it can cover up in thë Ken Saro-Wiwa case and also see if it can buy some peace."
'Violators face account'
Shell, which still operates in Nigeria, said it had agreed to settle the lawsuit in the hope of aiding the "process of reconciliation", but acknowledged no wrongdoing.
"This gesture also acknowledges that, even though Shell had no part in the violence that took place, the plaintiffs and others have suffered,'' Malcolm Brinded, Shell's executive director for exploration and production, said in a statement on Monday.
"Shell should treat us as civilised human beings and not those to be exploited because of our oil"
Movement for the Survical of the Ogoni People
The $15.5m will support initiatives in education, skills development, agriculture, small enterprise development and adult literacy, Shell said.
It will be governed by trustees who will be independent of the plaintiffs and defendants and responsible for delivering the projects.
Lawyers hailed the agreement as a rare and significant success in the field of international human rights and as a precedent for holding Shell and other oil giants responsible for activities in countries with repressive governments.
"We hope that this settlement provides another building block in the efforts to forge a legal system that holds violators accountable wherever they may be and prevents future violations," lawyers for the plaintiffs said in a joint statement.
But Bariara Kpalap, a spokesman for the Movement for the Survival of the Ogoni People, said that Shell still had to address "environmental pollution, neglect and degradation in Ogoniland".
"Shell has inflicted much sufferings on the Ogoni people through its operations. As farmers and fishermen we have been deprived of our means of livelihood through the pollution of our lands," Kpalap said.
"For a lasting peace in the Ogoniland, Shell has to change its attitude towards the people. Shell should treat us as civilised human beings and not those to be exploited because of our oil."
Jenny Green, a lawyer for the Center for Constitutional Rights in New York, who helped file the lawsuit in 1996, said that the agreement would send a message to Shell and other multinationals that operate in developing countries.
"You can't commit human rights violations as a part of doing business," she said.
"A corporation can't act with impunity. And we think there is accountability in this settlement."
Separate challenges are being mounted against Shell in New York and the Netherlands.
Elizabeth Bast, the international programme director for Friends of the Earth US, said Shell "will be dragged from the boardroom to the courthouse, time and again, until the company addresses the injustices at the root of the Niger Delta crisis and put an end to its environmental devastation".