BP warns of 'staggering' compensation costs

BP has asked the US Supreme Court to step in after federal courts in New Orleans lifted an injunction blocking the payment of business claims for economic losses under the settlement that the UK oil company agreed for victims of the spill in 2012.

The company on Wednesday filed a request for the Supreme Court to block disputed compensation awards related to the 2010 Deepwater Horizon disaster, warning that it faced "staggering" costs "far exceeding the actual injury caused by the spill" if payments were allowed to go ahead.

BP, which now must resume making compensation payments while it awaits a response to its petition, argued that if the Supreme Court did not overrule the lower courts and support the injunction, the company stood to lose "hundreds of millions" of dollars that would be "irretrievably scattered to claimants that suffered no injury traceable to BP's conduct".

Justice Antonin Scalia, one of the Supreme Court's most conservative members, will decide on BP's request, because he has responsibility for handling such emergency applications relating to the Fifth Circuit. There is no set deadline for Justice Scalia to decide on BP's application.

BP's petition to the Supreme Court follows an earlier request for the court to review the company's substantive argument that businesses were being wrongly awarded compensation for the spill.

BP said that Patrick Juneau, the court-appointed administrator of compensation claims, has misinterpreted the settlement in ways that mean businesses that suffered no loss as a result of the spill have been awarded compensation.

The company said in its filing to the Supreme Court that of the $2bn already paid out to businesses, $76m has gone to "entities whose losses had nothing to do with the spill", and $546m more to claimants "located far from the spill and. . . engaged in businesses whose revenues and profits bear no logical connection to the spill".

It added there was a further $1bn in business claims already accumulated and waiting to be paid out now that the injunction has been lifted.

The company originally estimated the entire settlement would cost it $7.8bn.

Lawyers for the plaintiffs seeking compensation argue the settlement has been interpreted correctly in allowing businesses to make claims without showing detailed evidence of losses caused by the spill, but instead passing a rough and ready "causation test", based in many cases on the pattern of their revenues. They say this was understood and agreed by BP when it signed the deal.

The concerns raised by BP persuaded the Fifth Circuit court last October to order an injunction blocking payments to businesses, but on Wednesday the appeals court directed the district court to lift that injunction, which it did.

The judges on the Fifth Circuit decided by an eight to five majority this month not to allow BP to make its case to the full court "en banc". That left the company with the option only of going to the Supreme Court to continue its legal battle.

BP argued in its filing that the Supreme Court should take the case not only because of the "enormous" potential liability the company faces, but also because it believes other appeals courts in the US would not have upheld the district court's interpretation of the settlement the way the Fifth Circuit has done.

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