BP wins appeal over Deepwater Horizon compensation payouts

A US appeals court has ordered a review of some of the fines imposed upon oil giant BP over the 2010 Gulf of Mexico oil spill, potentially saving the company billions of dollars.

BP has agreed to pay compensation for the disaster, but argued that the terms of existing settlement included false claims that would mean certain people and businesses would be undeservedly paid huge sums.

The firm has repeatedly complained that the formula for judging claims was too generous, meaning that people who had not actually been affected by the explosion or oil spill were being unfairly compensated.

A federal appeals court has decided that the British company does have grounds to object, and has asked a lower district court to review the wording of the settlement and further examine which claims are legitimate.

The Deepwater Horizon disaster cost the lives of 11 workers and spilled 5m barrels’ worth of oil into the Gulf of Mexico – for which BP was fined £2.8 billion in criminal charges.

The company has appeared in court on numerous occasions relating to the incident, and was ordered to pay compensation to hundreds of businesses and individuals who were affected by the disaster.

BP has been heavily criticised by local residents, who claim that it has done everything within its power to avoid paying up. In August, a hotline for people to report fraudulent claims to the company was hijacked by residents, who accused BP of fraud instead.

However, Judge Brown accepted that under the current agreement, BP might be unfairly paying out hundreds of millions of dollars, money that it would be difficult for the company to recover.

“There is no need to secure peace with those with whom one is not at war,” she said.

“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.”

BP said it was “extremely pleased” with the ruling.

Further reading:

BP returns to US courts over Deepwater Horizon spill

BP plans legal action over ‘inappropriate and unjustified’ US contracts ban

BP Gulf compensation fraud hotline hijacked to accuse oil giant of misbehaviour

BP contests Deepwater Horizon payback scheme amid fears it could run out of money

Oil companies are putting investors’ money at risk