BP suffers new setback in court

Macondo call: BP still on hook for claims payments while it appeals to Supreme Court

BP has suffered another setback in US court proceedings on the 2010 Macondo spill, with a US appeals panel on Monday refusing to halt payments under a compensation system the UK supermajor contends is marred by false information.

A judge for the US Fifth Circuit Court of Appeals in New Orleans denied BP's request for a stay on paying compensation claims while legal proceedings continue.

"BP has applied to the US Supreme Court for an order recalling and staying the Fifth Circuit's mandate that today resulted in the lifting of the injunction suspending the payment of business economic loss claims," BP spokesperson Geoff Morrell said.

"As noted in BP's filing, unless the mandate is recalled and stayed, hundreds of millions of dollars could be irretrievably scattered to claimants that suffered no injury traceable to the spill.

"Separately, BP has announced that it will seek Supreme Court review of the underlying Fifth Circuit decisions concerning the settlement's causal-nexus requirement and class certification."

BP on 19 May said it would apply to the Supreme Court in attempt to overturn the overall claims agreement, its final option to modify the agreement with a wide swath of plaintiffs who claimed harm from the spill.

A US appeals panel earlier this month shot down BP's request to modify the agreement after similar requests had failed in lower courts.

The blowout and resulting fire killed 11 workers and spilled 4.9 million barrels of oil into the Gulf of Mexico.

The court's refusal to stay claims payments is also a blow to BP's push to rein in ballooning settlement costs for the Macondo disaster.

The company has estimated a total $42.7 billion pre-tax charge in connection with the spill that has threatened to run higher.

BP had originally undergone detailed negotiations to hammer out a settlement agreement with a group called the Plaintiff's Steering Committee, which represented fishermen, restaurateurs and business owners who claimed their livelihoods were damaged by the spill.

The deal established a formula to compensate broad groups of claimants but did not require explicit proof the spill caused the harm.

BP has since tried to backpedal on the agreement as its Macondo bill mounted, as the supermajor has presented what it calls "fictitious claims".

But courts, including the latest appellate panel, have refused to let BP off the hook for the compensation model, citing the company's agreement to the deal knowing causation was not a requirement and that some fraud was a possibility.


Become an Upstream member!

Membership includes a subscription to our weekly newspaper providing in-depth news from the energy industry, plus full-access to this site and its archives. Still not convinced? Try our free trial.

Already a member?