NEW ORLEANS (AP) — A federal appeals court reversed course Thursday on its earlier ruling favoring BP in a multimillion-dollar insurance dispute, handing at least a temporary setback to the energy giant as it seeks to defray some of the enormous costs associated with the huge 2010 Gulf oil spill.
BP has argued that it is entitled to a portion of $750 million in coverage from a drilling contractor's insurance policies to help the London-based multinational help pay pollution-related costs following the explosion, fire and spill in the Gulf of Mexico.
BP leased the drilling rig that exploded from Transocean Ltd. and required by contract that the Swiss-based drilling company maintain minimum insurance coverage for BP's benefit. Transocean's policy with Ranger Insurance Ltd. provided at least $50 million in coverage, while its policies with several "excess liability" insurers added at least another $700 million in coverage.
BP contends it is entitled to coverage under those Transocean policies as an "additional insured" party, but U.S. District Judge Carl Barbier rejected the company's interpretation of the policy language in a November 2010 ruling. Then the 5th U.S. Circuit Court of Appeals in New Orleans reversed Barbier's ruling on March 1 in a decision favoring BP.