NEW ORLEANS — With billions of dollars in the balance, BP asked a U.S. appeals court Monday to reject a claims administrator's interpretation of the company's partial settlement over the 2010 Gulf of Mexico oil spill.
The administrator, Patrick Juneau, is approving millions of dollars in "fictitious" payments for business losses based on what BP believes is a flawed interpretation of the agreement reached with victims' lawyers in 2012, according to BP.
"Stop the hemorrhaging of cash," Theodore Olson, a BP lawyer, told a three-judge panel of the U.S. Court of Appeals in New Orleans, urging the judges to reverse a lower-court ruling and rein in Juneau. "Irreparable injuries are taking place, and monies are being dispensed to parties from whom it will unlikely be recoverable."
The company has already been forced to add hundreds of millions of dollars to the estimated $7.8 billion cost of the settlement and have to pay billions more than expected, BP said in court papers.
The panel didn't indicate when it will rule.
An attorney for the plaintiffs, Samuel Issacharoff, said BP was aware as early as April 2012 of the method that would be used and the likely results.
Both sides conducted tests of the business economic loss framework in the settlement in June 2012 and "the parties came up with virtually the same results," he said.
BP underestimated the price tag, Issacharoff told the judges. "They costed it out in a way we thought was erroneous from the very beginning."
Peter Hutton, an analyst at RBC Capital Markets in London, said the London-based company "feels aggrieved, and this is their last shot."
"If they can't get what they see as due process, it will have implications for their confidence doing business in the States," Hutton said before Monday's oral arguments.
U.S. District Judge Carl Barbier in New Orleans in March ruled that Juneau is interpreting the contract properly. He dismissed BP's lawsuit against Juneau in April and rejected a request for an injunction barring certain payments while the company appealed.
An adverse appeals court ruling would have financial implications, Hutton said. If BP has to pay billions more than expected "it would take up much of their contingency funds and leave them little to spare," he said in an interview.
"We are asking the Fifth Circuit to follow established legal principles of contract law and interpret the agreement as written and intended: paying only those claimants who suffered actual losses," Geoff Morrell, a BP spokesperson, said in a statement before Monday's hearing, referring to the appeals court.
"Not only is the claims administrator's misinterpretation contrary to the plain language of the settlement agreement and the intent of the parties, but it has ignited a feeding frenzy among trial lawyers attempting to secure money for themselves and their clients that neither deserves," Morrell said. Continue reading BP Presentations