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BP Waives Liability Cap on Certain Economic Damage Claims

Posted on 20 Oct 2010

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BP informed a US federal judge that the company is waiving a 75 million US dollar cap on its liability for certain economic damage claims spawned by the massive Gulf oil spill.

In a court filing, BP lawyers said the company is waiving the statutory limitation on liability under the 1990 Oil Pollution Act even though it denies engaging in any gross negligence in connection with the April 20 explosion on the Deepwater Horizon rig and resulting spill.

"BP consistently has said it would pay all legitimate claims, regardless of the OPA statutory limit of liability," company lawyers wrote.

Tony Hayward, then BP's chief executive officer, said in May that the cap was largely irrelevant and all legitimate claims would be honoured.

Claims filed under the Oil Pollution Act include those filed by hotels and other tourism-driven businesses that say they lost revenue in the spill's aftermath.

Many similar claims are being paid through a $20 billion fund administered by Kenneth Feinberg.

During a hearing last Friday, US District Judge Carl Barbier gave a BP lawyer a week to state in writing whether the company will agree to waive the liability cap.

Plaintiffs' lawyers expressed concern that the company was sending mixed signals on the cap. Ervin Gonzalez, a lead plaintiffs' attorney, said the filing satisfies his concerns.

"It sounds definitive," he said. "They can't get around that language."

Mr Gonzalez said the company's denial of gross negligence is an attempt to avoid potential punitive damage awards.