BP finally plugs flow of compensation following spill

A US court has ordered tighter rules to try and halt spurious compensation claims over 2011's Deepwater Horizon disaster.

by Gabriella Griffith
Last Updated: 24 Sep 2015
BP is celebrating a victory today after the US appeals court agreed to tighten the rules around compensation and halt certain payments to 'victims' of the Deepwater Horizon disaster  – potentially saving the oil giant billions of dollars.
 
The Fifth Circuit appeals court in New Orleans approved an injunction last night to stop payments in dubious cases that had not ‘experienced actual injury traceable to loss’. The win follows two unsuccessful attempts by the oil giant to plug the flow of compensation.
 
BP thought it had settled the issue of Deepwater Horizon compensation payouts in March 2012, when it set aside $7.8bn to cover the total bill. But the oil giant soon found the flood of compensation claims too much to handle, with questionable claims flowing in at a rate of 1,000 a month.

The court ruled that some claimants were reaping recoveries due to ‘an inappropriate interpretation of the settlement agreement.’
 
‘There is no need to secure peace with those with whom one is not at war,’ Judge Edith Brown told Reuters.

‘The district court had no authority to approve the settlement of a class that included members that had not sustained losses at all, or had sustained losses unrelated to the oil spill, as BP alleges. If the administrator is interpreting the settlement to include such claimants, the settlement is unlawful,’ she added.
 
The firm had feared the total bill would soon reach double the amount put aside, having reached $9.6bn already – it was on course to hit $15bn. BP has already stumped up an estimated $42.4bn in charges to parties including, the US department of Justice, since the disaster.
 
In May, the British oil company reached out to David Cameron for help, asking him to have a quiet word with the US government at the G8, hoping to stop the gush of civil cases and class actions from local businesses and townspeople claiming to have been affected by the spill.
 
Shares in BP rose slightly this morning thanks to the court ruling, up 0.9% to 436.2p – but are still trading well below the level they were at before the disaster.
 
BP said it was ‘extremely pleased’ with the ruling.

‘It affirms what BP has been saying since the beginning: claimants should not be paid for fictitious or wholly non-existent losses,’ it said in a statement.
 
‘We are gratified that the systematic payment of such claims by the claims administrator must now come to an end.’
 
We can hear the corks popping from here.

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