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UK oil firm told to pay up for Gulf oil spill

Court rules BP must abide by multi-billion dollar settlement with locals despite its protests that many were not harmed.

Last updated: 11 Jan 2014 03:40
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The offshore oil rig Deepwater Horizon exploded on April 20, 2010 [Getty]

The British oil firm BP has been told that it must abide by the terms of a multi-billion dollar settlement with firms and residents who claim the massive oil spill in the Gulf on Mexico in 2010 cost them money.

In a majority judgment on Saturday, three federal court of appeal judges ruled that BP must adhere to a settlement it agreed last year in a district court but later appealed, saying it would cover many who had suffered no actual harm.

BP argued the deal would force it to pay out billions of dollars in inflated or bogus claims, and asked for the settlement to only include those plaintiffs who could directly link their damages to the oil spill.

Plaintiffs' lawyers have argued that BP simply undervalued the settlement and underestimated how many claimants would be eligible for payments.

"Today's ruling is an enormous victory for the Gulf, and an important step forward in ensuring that every eligible claimant is fully compensated according to the objective, transparent formulas spelled out in the settlement agreement that BP co-authored and agreed to,'' said plaintiffs' lawyers Steve Herman and Jim Roy.

BP said on Saturday that it would "continue to press its position on the proper interpretation of the settlement agreement's provisions requiring a causal nexus between a claimant's injury and the spill".

Millions of gallons of oil were released into the environment after a leak and explosion on the Deepwater Horizon drilling platform in the Gulf in April 2010, in what is considered one of the worst environmental disasters on record.

Legal sources have been quoted in the British media as saying that the effects of the disaster were so great that they could not put a price on the expected cost of litigation.

The US settlement does not have a cap, but BP initially estimated that it would pay roughly $7.8 billion to resolve the claims. As of late October it had boosted that estimate to $9.2 billion, and said this sum could grow "significantly higher".

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