(Reuters) — A divided U.S. appeals court
on Monday rejected BP Plc's bid to block businesses from recovering
money over the 2010 Gulf of Mexico oil spill, even if they could not
trace their economic losses to the disaster.
By a 2-1 vote, the 5th U.S. Circuit Court of Appeals in New
Orleans upheld a December 24 ruling by U.S. District Judge Carl
Barbier in New Orleans, authorizing the payments on so-called
business economic loss claims. It also said an injunction preventing
payments should be lifted.
BP said on Tuesday it was considering its options in the wake of the
decision which it said would improperly allow for the payment of
losses with no connection to the spill.
The appeals court decision is a setback for BP's effort to limit
payments over the April 20, 2010, explosion of the Deepwater Horizon
drilling rig and rupture of BP's Macondo oil well.
The disaster killed 11 people and triggered the largest U.S.
offshore oil spill.
BP has settled criminal proceedings but spill litigation in the form
of a civil trial continues to hang over the company. It is two
phases into a three-stage civil case, and could face fines of over
It has so far provisioned $42.7 billion to pay for cleanup,
compensation, legal and other costs related to the spill.
The business economic loss claims linked to the current U.S. appeal
court ruling are a comparatively lesser financial issue — disputed
claims totaled around $1 billion at the time of BP's last financial
update in February.
"We would note that the dispute over business claims is a smaller
issue in the wider context of the trial. Each $1 billion extra on
claims equates to just 2 pence per share for BP," Investec analysts
said in a note.
BP shares traded up 0.1 percent at 493.3 pence at 1108, lagging
Britain's bluechip index which was up 1.5 percent.
U.S. District Judge Barbier had ruled that BP would have to live
with its earlier interpretation of a multi-billion dollar settlement
agreement over the spill, in which certain businesses claiming
losses were presumed to have suffered harm.
The company argued that this would allow businesses to recover for
fictitious losses, but the 5th Circuit rejected its appeal.
"The settlement agreement does not require a claimant to submit
evidence that the claim arose as a result of the oil spill," Circuit
Judge Leslie Southwick wrote for the majority.
Terms of the settlement "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," the judge added.
The 5th Circuit also said claims administrator Patrick Juneau
retained the authority to root out bogus claims, without having to
perform the "gatekeeping" function that BP sought.
Circuit Judge Edith Brown Clement dissented, saying the decision
wrongly helps claimants whose losses had "absolutely nothing to do
with Deepwater Horizon or BP's conduct."
BP spokesman Geoff Morrell said the company would consider a further
appeal against Monday's ruling. It has already sought an appeal
against a separate 5th Court decision which upheld the validity of
the settlement earlier in January.
Steve Herman and Jim Roy, who represent the business claimants, said
in a joint statement: "Today's ruling makes clear that BP can't
rewrite the deal it agreed to."
A spokesman for Juneau did not immediately respond to a request for
BP originally projected that its settlement with businesses and
individuals harmed by the spill would cost $7.8 billion. As of
February 4, it had boosted this estimate to $9.2 billion, and said
this sum could grow "significantly higher."
As of Monday, about $3.84 billion had been paid out to 42,272
claimants, according to Juneau's
The case is In re: Deepwater Horizon, 5th U.S. Circuit Court of
Appeals, Nos. 13-30315 and 13-30329.
(Reporting by Jonathan Stempel in New York;
additional reporting by
Sarah Young in London, Mica Rosenberg; editing by Miral Fahmy and