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UK wades into BP fight over US penalty

Published:Wednesday | September 10, 2014 | 9:00 AM

By Ed Crooks in New York

Britain has for the first time waded in to BP's legal battle over payouts for the Gulf of Mexico oil spill, saying US court rulings against the energy group raise "grave international comity concerns".

In a filing to the US Supreme Court, the UK government said BP had "gone to great lengths to restore the gulf coast" but was being forced to pay large sums to individuals and businesses not affected by the spill.

It warned that the courts' treatment of BP undermined confidence in fairly resolving disputes in the US and the "trust necessary for international commerce".

The UK's arguments have been echoed in filings from business groups, warning that rulings against BP could make the US a less attractive place to invest.

The intervention comes on the heels of protests from France over an US$8.9bn fine levied against BNP, the French bank which fuelled European concerns about US "extraterrito-riality", or the principle of US authorities extending their reach to foreign companies.

The BP filings, known as "amicus briefs", are intended to help persuade the Supreme Court to hear a case that could limit the compensation that BP is forced to pay.

Separate from its battle with the US government over potential penalties of up to US$18bn, the company is disputing the interpretation of its 2012 settlement for victims of the spill. It argues that Patrick Juneau, the administrator of claims under the settlement, misinterpreted the agreement to compensate businesses that did not suffer losses.

Although it achieved some success, its key argument that compensation should not be paid to businesses unaffected by the spill was rejected by the US District Court and the Fifth Circuit appeals court in New Orleans. BP is now trying to persuade the Supreme Court to hear its attempt to overturn the appeals court's decision.

The UK government argues in its filing that it is important for the court to take the case to clarify the "deep confusion" over the legal position in the US because it is the only judicial authority able to "speak with one voice" for the country.

Trade between the UK and the US amounts to US$200bn a year, the filing says, and British companies account for 17 per cent of all foreign direct investment.

"Such strong international economic relationships depend on trust and confidence that each country's nationals and companies will be treated equitably under the law," it says.

It is the first such statement from the UK on BP's dispute over its compensation settlement, although it last year filed a similar amicus brief in an attempt to help lift the ban on the company winning US government contracts.

BP said the amicus briefs "underscore that the issues raised here are of vital interest to all businesses that operate in the United States".

(c) 2014 The Financial Times Limited