BP has been told by a US appeals court it must resume paying compensation to businesses over the Deepwater Horizon disaster -even if they were not directly impacted.
Payouts from the £5.5billion settlement were halted last year after BP claimed the body responsible for awarding compensation had been misinterpreting the terms of the deal.
But last night the US appeals court ruled 2-1 against the British supermajor, and said payments must resume.
“In light of our reading of the settlement agreement we conclude the settlement agreement does not require a claimant to submit evidence that the claim arose as a result of the oil spill,” wrote Judge Leslie Southwick.
BP had been trying to convince appeal judges that the terms of its massive compensation settlement were not legally valid unless victims were required to provide evidence their losses were caused by the Gulf of Mexico spill.
Anyone submitting a claim must attest that the spill caused the damages, which are required to match certain agreed-upon loss patterns defined in the accord, Judge Southwick said, adding that the deal allowed for “suspicious forms” to be investigated for potential fraud.
“These requirements are not as protective of BP’s present concerns as might have been achievable, but they are the protections that were accepted by the parties and approved by the district court,” Southwick wrote.
“There is nothing fundamentally unreasonable about what BP accepted but now wishes it had not.”
In court filings, the victims’ lawyers accused BP of “buyer’s remorse” and of attempting to undermine an accord intended to resolve most private spill-damage claims without litigation.
Steve Herman and Jim Roy, co-lead attorneys for spill victims in the litigation, said that the “ruling makes clear that BP can’t rewrite the deal it agreed to.”
In a dissenting opinion, Judge Edith Brown Clement said the majority’s conclusion that the settlement didn’t require claimants to prove losses were caused by BP’s actions tied to the spill raised constitutional issues about who has standing to receive benefits from the fund.
Clement said “causation was a critical part of the” accord and by expanding the eligible class of claimants “to those who cannot trace their injuries to BP’s conduct,” the majority is improperly “using the powers of the federal courts to enforce obligations unrelated to actual cases or controversies.”
The April 2010 blowout of BP’s deep-water Macondo well off the coast of Louisiana killed 11 people and sent millions of barrels of oil into the Gulf of Mexico.
The oil giant said today it disagreed with the court’s decision.
“BP had asked the court to prevent payments to business economic loss claimants whose alleged injuries are not traceable to the Deepwater Horizon accident and oil spill,” said spoeksman Geoff Morrell.
“BP believes that such claimants are not proper class members under the terms of the settlement and is considering its appellate options.”
In a split decision last year, the three-judge panel that ruled yesterday kicked BP’s appeal back to the lower-court judge in charge of administering the settlement.
The panel instructed U.S. District Judge Carl Barbier to investigate whether BP intended to include only victims with direct ties to the disaster in its accord.
Barbier re-examined the agreement and issued two rulings in December. In one ruling, he agreed with BP that claimants must more closely match revenue and related expenses when submitting claims to prevent distortion of losses.
In the second, Barbier ordered the company to pay victims whose losses fit the numerical formulas spelled out in the accord, regardless of whether they could prove direct links to the spill.
“No case cited by BP or the objectors suggests that a district court must also safeguard the interests of the defendant, which in most settlements can protect its own interests at the negotiating table,” Barbier said.
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