BP wins reprieve over Gulf of Mexico oil spill payouts

Oil giant BP's attempts to limit claims over the 2010 Gulf of Mexico oil spill have been given a boost after a US appeals court ruled in its favour.

The court voted for an injunction to suspend any further payments to firms that had not suffered losses as a result of the disaster.

BP had argued that the settlement deal it agreed last year was being misinterpreted, allowing firms that had not suffered harm to claim losses.

The court voted 2-1 for the injunction.

In its ruling it said that "the district court erred" by not properly taking into account the question of whether losses were caused by the spill.

The ruling means that payments to any business that cannot directly trace its losses back to the spill, will now be suspended temporarily.

BP victory

A BP spokesman said the decision supported its views that the court-appointed administrator was misinterpreting the language of the oil-spill settlement.

"If properly implemented by the district court, the Fifth Circuit's order will help return the settlement to its original, intended and lawful function - the compensation of claimants who sustained actual losses that are traceable to the Deepwater Horizon accident," said BP's head of US communications and external affairs, Geoff Morrell.

In 2012, BP agreed to make payments to those who suffered economic losses as a result of the largest US offshore oil spill.

However, it complained that the payout formula worked out by court-appointed claims administrator Patrick Juneau was too generous and meant that people and businesses were being paid huge sums for false claims.

Compensation awards for business losses have slowed since an initial appeals court ruling in October halted some payments, according to Mr Juneau.

Rising claims

However, BP warned last week that unless the stronger injunction was granted, it expected payments to pick up again.

BP originally projected that the settlement would cost $7.8bn (£4.8bn), but in July increased its estimate to $9.6bn. As of Monday, about $3.78bn has been paid out, according to Mr Juneau.

BP has faced about $42.4bn in criminal and civil charges since the disaster aboard the Deepwater Horizon drilling rig, which triggered the worst offshore oil spill in US history.

The blast killed 11 workers and released an estimated four million barrels of oil into the gulf.