The US Court of Appeal for the Fifth Circuit has approved an injunction against payments being made to businesses that have not suffered “actual injury traceable to loss” as a result of the Deepwater horizon oil spill in the Gulf of Mexico.
BP had been under threat from being financially overwhelmed by an escalation of compensation payment to businesses claiming to be victims of the disaster, according to BBC News, but the injunction has now significantly lessened that threat.
According to BP, the agreement it signed on paying compensation had meant that a court-appointed claims administrator was paying too much to some victims, while also paying out huge sums to businesses that had not suffered genuine losses. The result was that the costs of the compensation could have doubled BP’s original estimate of $7.8 billion.
Although the news has been welcomed by BP, it is not yet clear how much the ruling will save the company because the method used by the claims administrator for calculating compensation was not removed. BP had previously fought and loss a number of court battles to slow the pace of compensation.
The BBC reports that BP has been sounding out the British government for help in lobbying the US government and authorities due to fears about the potential damage to its business from the size of the compensation it faces paying.
Have a look at the original article here: http://www.bbc.co.uk/news/business-24378861
- BP welcomes US court of appeal ruling on Gulf of Mexico oil spill payouts (theguardian.com)
- BP wins reprieve over Gulf spill payouts: U.S. appeals court (reuters.com)
- BP wins reprieve over Gulf payouts (bbc.co.uk)