Debate over liability cap in BP oil spill

Now into its sixth week, BP are poised to try another method for containing the huge oil leak off the Gulf of Mexico. Whilst the company’s engineers tackle that, BP’s professional indemnity team are fending off legal action from all sides as the US Congress debates the amount in damages they will have to pay.

The BP CEO Tony Hayward has pledged that his company will deal with all legitimate claims related to environmental damage and economic loss. This alone could cost up to £15 billion, but the fact that oil has still not stopped leaking into the Gulf of Mexico leaves the overall cost of the spill for BP’s legal team open to speculation. Whilst BP initially said that around 1,000 – 5,000 barrels a day were leaking into the water, wilder speculation has put the figure at up to 100,000 barrels a day.

Legislation passed through the House of Representatives and the US Senate has already removed the £75 million liability cap for this kind of disaster, with much debate now ensuing over whether it should be raised to as much as $10 billion.

BP will only pay for damages for direct economic and environmental damage if it is proven that their negligence caused the spill. Also in the firing line are Transocean Ltd (owners of the rig) and drilling company Halliburton Co.

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