How far can UK diplomacy go in providing soft landing for BP over US Gulf Oil spill rulings?

A federal judge in New Orleans recently ruled that BP’s “gross negligence” caused the massive oil spill in the Gulf of Mexico in 2010 and that the company’s “reckless” behavior made it subject to fines of as much as $4,300 a barrel under the Clean Water Act.

The implication of the new ruling means that it could open up the company to fines as much as $18 billion. BP had set aside $3.5 billion for potential Clean Water Act fines and has noted that in previous oil spill cases, the government and the courts have imposed penalties far lower than the maximum.

BP says that it has already spent more than $26 billion in claims payments and spill response in the wake of the disaster, which layered crude oil onto popular beaches and forced the shutdown of fishing industries along the US Gulf coast. It has also commuted $1 billion to fund Gulf restoration projects.

Britain steps up diplomacy

The British government has urged the US Supreme Court to review appeals court rulings against BP over a 2010 Gulf of Mexico oil spill that produced one of the largest class actions in American history.

In a friend of court brief, the UK government said lower court rulings raise grave international concerns by undermining confidence in the “vigorous and fair resolution of disputes.”

The filing said BP, which has “gone to great lengths to restore the Gulf Coast”, was now being required to pay large sums to others who were not injured by the Deepwater Horizon oil spill.

The London-based oil major is appealing lower court decisions within the last year that it believes wrongly require it to compensate claimants who suffered no injuries from the spill.

The British government said treatment meted out to BP undermined the fairness and trust necessary for international commerce.

The United States and Britain conduct more than $200 billion in trade each year, and UK businesses are responsible for 17 percent of all foreign direct investment in the United States, according to the filing.

In a separate statement, BP said the government’s petition emphasizes the importance of fair and consistent application of law.

BP argued that the Fifth Circuit’s decisions, if allowed to stand, will fundamentally alter class action law and discourage companies from settling complex cases.

It also said the decisions will likely discourage companies from investing in the United States “if companies are exposed to liability for losses they did not cause.

Frank Uzuegbunam