BP Can’t Collect Part of Gulf Spill Costs From Transocean

Bloomberg News issues breaking news that in the case of In Re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico, U.S. District Judge Carl Barbier in New Orleans ruled yesterday that BP Plc ("BP") cannot collect from Transocean Ltd. ('Transocean") part of the $40 billion in cleanup costs and economic losses caused by the 2010 DEEPWATER HORIZON oil well blowout and Gulf of Mexico spill.

Readers of this Blog and who attended my seminar in London on this tragedy will recall that London-based BP sued Transocean in April to recover a share of its damages and costs from the spill. BP said that the contract required indemnification even if there was gross negligence and obviously, BP disagreed.

Judge Barbier wrote in his decision: “BP is required to indemnify Transocean for compensatory damages asserted by third parties against Transocean related to pollution that did not originate on or above the surface of the water, even if the claim is the result of Transocean’s strict liability” or negligence or gross negligence." However, Barbier deferred ruling on “BP’s arguments that Transocean breached the drilling contract or committed an act that materially increased BP’s risk or prejudiced its rights.” As a result, BP must indemnify Transocean for pollution-related economic damage claims under its drilling contract, but any awards for punitive damages against Transocean or civil penalties under the U.S. Clean Water Act will not be covered by BP, the judge added.

You can view the complete Bloomberg News at this address => http://www.linkedin.com/news?viewArticle=&articleID=5568437867421630472&gid=3058724&type=member&item=91509288&articleURL=http%3A%2F%2Fwww%2Ebloomberg%2Ecom%2Fnews%2F2012-01-26%2Fbp-must-indemnify-transocean-for-some-damages-in-gulf-of-mexico-oil-spill%2Ehtml&urlhash=4yJi&goback=%2Egde_3058724_member_91509288.

Thus, the decision leaves Transocean at risk for Clean Water Act penalties and possible punitive damages. If you are interested in contacting me, you may do so at miamipandi@comcast.net.

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