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US Court of Appeals compensation verdict could save BP large sums

07 October 2013

BP said it was “extremely pleased” with the ruling on October 2 by the US Court of Appeals for the Fifth Circuit setting aside the claims administrator's interpretation of the business economic loss framework in the settlement agreement BP reached with the Plaintiffs' Steering Committee last year.

Photo: USCG
Photo: USCG

The oil company says the ruling affirms its claim that claimants should not be paid for fictitious or wholly non-existent losses. “We are gratified that the systematic payment of such claims by the claims administrator must now come to an end,” BP said in a statement.

The appeals court yesterday upheld Barbier’s dismissal of BP’s suit against Juneau, while sending back his other rulings. Barbier ruled in March that Juneau was interpreting the contract properly. In April, he dismissed BP’s lawsuit against the administrator and rejected a request to bar certain payments while the company appealed his ruling.

The Court of Appeals in New Orleans has sent the dispute back to the trial judge for further consideration. The appellate panel also ordered US District Judge Carl Barbier to review his interpretation of some of the accord’s terms. The appellate panel ordered Barbier to stop some payments under the settlement until he can sort out who has legitimate claims.

This re-examination of key terms of the 2010 Gulf of Mexico oil-spill settlement could have cost the group billions of dollars in improper payouts. BP said the programme’s administrator, Patrick Juneau, was approving millions of dollars in “fictitious” payments to businesses for economic losses based on what BP called a flawed interpretation of the agreement reached with spill victims’ lawyers in 2012.

BP shares rose following the news

Barbier ordered Juneau to temporarily suspend payments on the disputed categories of business-economic loss claims until he and lawyers for both sides craft the “appropriate narrowly tailored preliminary injunction” required by the appeals court ruling. He asked lawyers to meet with him behind closed doors on October 11 to discuss the case, according to court records.

BP initially valued its economic-loss settlement at $7.8 billion. The company increased its estimate to $9.6 billion in regulatory filings, citing the interpretation by the claims administrator.

The blowout of BP’s deep-water Macondo well off the coast of Louisiana in April 2010 killed 11 people and sent more than 4 million barrels of oil spewing into the Gulf of Mexico. The accident sparked hundreds of lawsuits against BP, as well as Transocean, owner of the Deepwater Horizon drilling rig that burned and sank, and Halliburton, which provided cement services for the well.

BP reached a settlement with most private plaintiffs in March 2012, just before a trial on liability for the incident was to begin.

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