BP Claims Gulf Spill Compensation Victory
BP has won an appeal that could lead to a significant reduction in compensation claims totalling billions of dollars over the Gulf of Mexico oil spill.
A US federal court threw out an interpretation by a lower court that BP had argued effectively allowed anyone to bid for a payout, whether or not it was linked to the devastating accident in 2010.
The panel of three judges decided that US District Judge Carl Barbier's ruling be reconsidered.
The blowout of BP's Macondo well off the Louisiana coast triggered an explosion that killed 11 workers on the Deepwater Horizon drilling rig and led to millions of gallons of oil spilling into the Gulf of Mexico.
It caused severe damage to fishing and tourism businesses along the coast, as well as marine and wildlife habitats.
Shortly after the disaster, BP agreed to create a $20bn compensation fund that was administered at first by the Gulf Coast Claims Facility.
BP argued that Judge Barbier and court-appointed claims administrator Patrick Juneau misinterpreted terms of the settlement that agreed who was entitled to compensation.
The administrator countered that the company had undervalued the settlement and underestimated how many claimants would qualify for payments.
In its majority decision, the appeal court ruled that the judge should ensure claims for losses directly resulting from the Deepwater Horizon disaster continued to be paid but contentious payouts were put off, pending resolution of the judicial process.
BP spokesman Geoff Morrell said the company was "extremely pleased" with the ruling.
He added that it "affirms what BP has been saying since the beginning: claimants should not be paid for fictitious or wholly non-existent losses."
The settlement does not have a cap, but BP initially estimated that it would pay $7.8bn to resolve the private claims before later admitting it could not put an estimate on the final bill.
In July, BP admitted a vast fund set up to cover the bill was about to run out, leaving additional costs to come from profits.
Shares in the London-listed firm rose by 1.2% when the FTSE 100 opened for business on Thursday.