BP has been told by a New Orleans court that it must keep to the agreement it originally made with businesses compensated for the losses sustained in the oil-spill disaster of 2010. The oil giant tried to argue that some of the subsequent loss claims were excessive and over-estimated, saying that a flawed calculation formula for assessing compensation amounts meant that almost 800 firms were able to over-estimate their claims.
BP used a case study of a construction firm located hundreds of miles away from the affected coast which received compensation totalling $13 million after the oil spill. The company argued that it should only have deserved up to $4.8 million. A second case study involved a business selling animal-related products which BP believed was over-paid by up to $14 million. A further fifty business claimants should not, in BP’s opinion, have received compensation for the oil disaster at all.
However, a federal judge, Judge Carl Barbier, decided that BP did not have a case in a ruling last week. His latest finding has prevented BP from attempting to curb its liabilities following the oil spill. These are now coming up to the $50 billion mark.
Some weeks ago, Mr Barbier agreed that the calculation formula for any future compensation payouts could be changed, but he ruled this week that the original deal must stand when it came to money already paid out to claimants in the case. Within the terms of that deal, claimants receiving compensation agreed not to sue BP, and the oil company agreed that payments could not be changed later down the line with court action.
Geoff Morrell, the spokesman for BP, said that the company disagreed with the latest ruling and were planning to appeal it.
Judge Barbier has said that he will decide on a ruling later about the issue of compensatory payouts for the spillage clean-up workers who later developed chronic medical issues. Some of these workers didn’t receive a medical diagnosis until the cut-off date under the deal had expired. The settlement, up to this point of 16 April, 2012, meant that workers suffering from chronic medical conditions such as breathing difficulties and skin rashes could receive a compensation payment of $60,700 maximum if the symptoms were first identified in the days following the spillage clean-up operation.
An analyst for energy consultancy Raymond James, Pavel Molchanov, explained that BP’s financial pressures meant that it was now willing to forgo goodwill if it meant reducing their monetary liabilities. Immediately following the spill, the company’s primary motivation was to minimise legal risks, but its share price dropped by over 50pc in the months following the disaster. It put $42 billion aside to cover payments, believing that this would be adequate, but subsequent legal processes have brought uncertainty to this situation. Since it was found guilty of wilful misconduct and gross negligence, uncertainty relating to the company’s ultimate spill-related financial obligations has seen its stock value slashed by $9 billion in just one day.
As of last week, the claims office confirmed that it had paid out $4.1 billion to over 50,700 business and individual claimants, with more to follow.Last updated on 01:09PM - 02/10/14