BP has suffered a decisive setback in its court battle to limit the cost of its settlement for victims of the 2010 Deepwater Horizon disaster, leaving it with the option only of going to the U.S. Supreme Court as a last chance to avoid billions of dollars of additional liabilities.
The Fifth Circuit appeals court in New Orleans on Monday rejected BP's request for a full review of the company's case, as it seeks to establish that the compensation settlement it agreed with plaintiffs' lawyers in 2012 is being interpreted unfairly.
The ruling means BP has now nearly run out of road in its attempt to stop the cost of the settlement soaring far above the $7.8 billion that it originally predicted.
The company said in a statement it was "disappointed" by the decision and was considering its options.
In the ruling, eight of the 13 judges said they agreed with earlier panel decisions that had rejected most of BP's arguments, and declined the company's call for what is known as an "en banc" review by the entire court.
However, in a strongly worded dissent backed by two other judges, Judge Edith Clement argued that previous court rulings would "funnel BP's cash into the pockets of undeserving non-victims" of the 2010 spill in the Gulf of Mexico.
She added that the appeals court had made itself "party to this fraud" by rejecting BP's arguments.
The company now has 90 days to decide whether it will try to persuade the Supreme Court to hear the case.
BP argues that Patrick Juneau, the court-appointed administrator of claims under the settlement, has been misinterpreting it in ways that have allowed businesses that suffered no losses as a result of the spill to be awarded compensation.
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The company has cited what it sees as particularly egregious examples of claimants, including a mobile phone shop that was closed by a fire, and a mobile home park that was foreclosed on by its lenders before the spill. BP argues that if the interpretation of the settlement results in compensation going to those and similar businesses unaffected by the spill, it is illegal and should be struck down by the courts.
Lawyers for the plaintiffs have countered that such apparently anomalous awards were an inevitable result of the broadly defined rules that established eligibility for compensation, which were agreed to by BP when it signed the settlement agreement. The U.S. District Court in New Orleans and now the higher Fifth Circuit court have repeatedly backed that argument.
Steve Herman and Jim Roy, the two chairmen of the steering committee of plaintiffs' lawyers who agreed the settlement, said in a statement they were "pleased that the court of appeals agreed that BP must honor its contract."
The contentious claims for alleged economic losses suffered by businesses have been suspended under an injunction since last October, but could now restart after seven days, unless BP decides to try to persuade the Supreme Court to hear the case.
BP most recently estimated the quantifiable cost of the settlement at $9.2 billion – already $1.4 billion more than its original estimate – but said the final charge would end up being significantly more than that.