BP gets settlement dispute win

BP Deepwater Horizon03 October 2013 – BP has convinced an appeals court that a painstakingly negotiated settlement agreement with Macondo spill plaintiffs warrants a second look as the UK supermajor aims to stem a flood of payouts and investigate fraud.
BP has made other requests – and been rebuffed – to revist the multibillion-dollar settlement reached in 2012, claiming Judge Carl Barbier and court-appointed claims administrator Paul Juneau misinterpreted the terms of the agreement.

But late Wednesday US Fifth Circuit Court of Appeals in New Orleans sided with BP, instructing Barbier to quickly craft an tailored order allowing for “deliberate reconsideration of these significant issues”.

The plaintiffs face a lower burden of proof that the spill caused them harm than an individual lawsuit would require, the court said.

Claimants’ interests “are not outweighed by the potential loss to a company and its public shareholders of hundreds of millions of dollars of unrecoverable awards”, Judge Edith Clement of the Fifth Circuit stated.

Investment bank Tudor Pickering Holt called the decision a “big sentiment win” for BP and said a revised agreement may halt claims for as long as a year and ultimately cut the approval rate by 25%.

Following the news, shares jumped Thursday morning and were trading up 0.61% early afternoon in New York.

BP said the ruling affirmed its assessment 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,” the company stated.

The ruling focused on complex accounting issues with the plaintiffs’ lawyers arguing that BP had undervalued the settlement and underestimated how many claimants would qualify for payments.

The settlement does not have a cap but according to media reports, BP had initially estimated it would pay $7.8 billion to resolve the private claims. Later, the company said it could no longer give a reliable estimate for how much the deal would cost.
*Danica Newnham & Kathrine Schmidt, Upstreamonline

About the Author