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UK Government Lends Support to BP in Supreme Court Fight

The British government has lent support to BP plc in its U.S. Supreme Court fight over who and what should get paid to claimants in the 2010 Macondo well blowout.

In an amicus brief to the U.S. Supreme Court, the UK government last week said decisions to authorize payments to people not injured by the oil spill raise "grave international comity concerns by undermining confidence in the vigorous and fair resolution of disputes."

BP is headquartered in the United Kingdom and last year earned $396.2 billion in revenues. The company in early August asked the Supreme Court to intervene in its battle over the Macondo class action lawsuit that it settled with the Plaintiffs Steering Committee in December 2012 for $7.8 billion (see Daily GPIAug. 4). BP has asked the court to enforce requirements that claimants prove they are eligible to join the settlement class because it said many fraudulent claims are paid with no substantiation. Some fraudulent claims have been substantiated.

The U.S. District Court for the Eastern District of Louisiana ruled against BP because of the way the settlement was worded. The U.S. Court of Appeals for the Fifth Circuit issued split decisions (see Daily GPIMay 21).

In its friend of the court brief dated Sept. 4, the UK government  said the lower courts' rulings "have dramatically expanded" BP's "scope of liability far beyond anything that would seem to be appropriate under our shared common-law traditions or that anyone would reasonably expect" (BP Exploration & Production Inc. et. al. v Lake Eugenie Land Develop Development Inc. et. al., No. 14-123). The previous rulings, it stated, may weaken efforts to encourage corporate responsibility by limiting incentives for companies to enter voluntary settlement agreements.

"If a business can show that it suffered a loss from some unrelated event, such as a fire that occurred a year before the spill, and the business alleges that the spill caused its loss," then BP is required to pay the claim, the brief noted. Affirming that interpretation of the settlement "raise grave international comity concerns by undermining confidence in the vigorous and fair resolutions of disputes."

The Supreme Court should "articulate fair and uniform national rules that everyone, including international companies and foreign governments, may rely on in making investment and other decisions."

The brief noted that the U.S. and UK governments conduct more than $200 billion in trade every year, and UK businesses are responsible for 17% of all foreign direct investment in the United States, more than any other nation.

"Such strong international economic relationships depend on trust and confidence that each country's nationals and companies will be treated equitably under the law," the brief stated. "Her Majesty's government understands the importance of a fair and predictable legal climate...It notes that the combination of rulings now before this court has produced an untenable and exceptionally important result."

BP "has gone to great lengths to restore the Gulf Coast, and to substantially and swiftly compensate those who were adversely affected by the Deepwater Horizon oil spill." However, the company "is now being required to pay large sums to others who were not injured by the spill." Claimants under the lower courts' standards only have to pass certain tests, such as whether they incurred losses and resided in geographic zones along the Gulf Coast before and after the spill. Those decisions run counter to the shared legal tradition of the United States and the UK.

BP has asked District Court Judge Carl Barbier, who is overseeing the multidistrict litigation, to remove claims administrator Patrick Juneau, who to date has paid out more than $4 billion to claimants (see Daily GPISept. 4).

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