Ninety-five Colombian farmers are suing the oil company BP in the high court in London for allegedly causing serious damage to their land, crops and animals.

In the first case of its kind, the farmers are claiming that BP Exploration Company (Colombia) Ltd, which joined forces with Colombia's national oil company and four foreign multinational corporations in a consortium to construct the 450-mile (720km) Ocensa pipeline, caused landslides and damage to soil and groundwater, causing crops to fail, livestock to perish, contaminating water supplies and making fish ponds unsustainable.

The farmers are claiming damages against BP for breach of contract and negligence. If the court accepts the evidence of environmental damage caused by the project it could open the way for similar claims by other communities in developing countries who say they have been adversely affected by oil pipelines.

In 1988 and 1992 BP discovered two oilfields in Colombia and in 1995 it began construction of a pipeline to transport crude oil to an exportation terminal 515 miles away. The pipeline crossed 192 villages and most of the land was owned by small-scale peasant farmers. It has a capacity to transport 620,000 barrels of crude oil a day.

According to the claim lodged by the farmers' lawyers, an environmental impact assessment conducted by BP prior to construction of the pipeline acknowledged significant and widespread risks of damage to the land, but the farmers, most of them illiterate, were not informed of these risks. BP promised compensation to the farmers for damage that might occur but said there would be no long-term environmental damage.

"BP, part of one of the largest oil companies in the world with world-class expertise, should have known the possible effects," the lawyers state.

Pedro Florez, one of the farmers suing BP, said: "Now that my land has been destroyed I realise that the money I was paid for the pipeline to be built across my farm was a mere pittance and that BP took advantage of my inability to read and write and my lack of understanding of technical language. I can no longer keep the same number of animals or crops, or fish in the local lake, because of the poor quality of the water. It is now very hard to survive on the income that the farm produces."

The farmers claim that during construction of the pipeline natural vegetation that protected the soil from sun, wind and rain was removed and replaced with vegetation that did not protect the soil. They say there has been significant soil erosion and that sediment flowing towards lower ground has altered the land and aquatic ecosystem, silting up water sources including reservoirs. Because the land was not stabilised after construction of the pipeline it is susceptible to landslides.

"The region has been profoundly and adversely affected causing many farms to close or drastically reduce production and causing some farmers to leave the land," the court documents state.

The farmers say BP has failed to compensate them for all of the damage caused to their farms, including the long-term damage, failed to ensure an adequate water supply for farming and domestic use and failed to provide equitable compensation for the damage caused. The company is negligent and in breach of a duty of care to the farmers, they conclude.

A group of Colombian farmers previously reached an out-of-court settlement with BP for alleged environmental damage caused by the pipeline. BP did not admit liability in this settlement and avoided a costly and potentially embarrassing court case in London. Now the company has decided to change tack and fight the farmers' claims in court. It declined to comment on the reasons for this.

BP denies that it acted negligently and that the construction of the pipeline has caused long-term damage to the farmers' property. It argues that the main cause of soil erosion and sedimentation is the removal of forests by farmers for cattle grazing. The farmers' solicitors have lodged further papers in court disputing BP's defence. No date has yet been set for the court hearing.

The area where the pipeline was laid – from the Cusiana-Cupiagua oilfields, in the region of Casanare, to the port of Covenas – has been plagued by paramilitary activity. Farmers say they have experienced harassment and intimidation meted out by Colombian paramilitaries employed by the government to guard the pipeline.

Colombian lawyers who tried to help the farmers claimed they faced intimidation by local paramilitary groups. Marta Hinestroza, one of the farmers' lawyers, fled Colombia for Britain when she discovered that her name was on a paramilitary hit list. In November 2002 the UK government granted her asylum on the basis of the risks she faced because of her work in the area.

Paul Dowling, of Leigh Day & Co, a solicitor for the farmers, said: "The construction of this pipeline has destroyed the livelihoods of many poor families living in an often violent area of Colombia. Unfortunately BP has forced them into a position where they have had to issue legal proceedings in a distant country to seek fair compensation for the hardship they have suffered. They intend to fight for as long as it takes to ensure that justice is done."

A BP spokesman said that as the legal action was ongoing, the company would not comment on the case beyond the defence lodged in the high court.