Contentious oil spill claims set up BP for long legal battle

Faced with hundreds of damage claims it says are fictitious and inflated, BP must decide whether to dive into a protracted legal battle it had sought to avoid when it settled a class action over the 2010 Gulf of Mexico oil spill.

The British oil giant asked the Fifth US Circuit of Appeals in New Orleans this week to halt the claims. Should its challenge before the three-judge panel fail, BP will face a choice: ask for a hearing by all the court’s judges, appeal to the US Supreme Court, or try picking off individual cases one by one, legal experts say.

BP declined to comment on what its strategy would be.

At issue is how to interpret a 1,000-page settlement document BP negotiated with a committee of lawyers working on behalf of thousands of individuals and businesses affected by the Deepwater Horizon rig explosion. The blast killed 11 men and dumped millions of barrels of oil into the Gulf in one of the country’s worst environmental disasters.

BP estimated the settlement, approved by a US District Court in Louisiana last year, would cost US$7.8 billion (HK$60.5 billion), but the payouts may end up ballooning to billions more.

The company has already paid more than US$2 billion toward the 198,021 claims filed under the agreement. Overall it says it handed out over US$10 billion to those affected by the spill and around US$14 billion in cleanup and response costs.