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Judge Rules Halliburton Not Liable For Civil Damages

NEW ORLEANS, LA – On Tuesday, January 31, 2012, a Federal Judge ruled in the civil case involving BP, Plc and Halliburton, the company that provided the cement that was supposed to seal off the Macondo well head in the Gulf Oil Spill disaster in April, 2010.

The amount of damages that has been awarded in the aftermath of the Gulf Oil Spill has amounted to $40 billion for cleanup costs, damage claims and economic losses. BP has filed a lawsuit against Halliburton to recover some of the damages that arose out of the disaster.

U.S. District Judge Carl Barbier, who is presiding over the case, ruled in a New Orleans Federal court Tuesday that Halliburton will not have to pay BP because of a contractual obligation between BP and Halliburton.

According to the drilling contract, BP agreed to indemnify Halliburton “for any and all claims related to a blowout or uncontrolled well condition and for any and all claims relating to pollution and/or contamination from the reservoir.”

An article in the Bloomberg News website reported on this story:
Judge Barbier wrote in his ruling:
BP is required to indemnify Halliburton for third-party compensatory claims that arise from pollution or contamination that did not originate from the property or equipment of Halliburton located above the surface of the land or water, even if Halliburton’s gross negligence caused the pollution
Tuesday’s ruling follows a similar ruling that Judge Barbier made earlier where it was determined that BP must indemnify Transocean Ltd., who owned the Deepwater Horizon oil drilling rig that exploded and sank in April, 2010.

Neither of these two rulings addressed the subject of punitive damages which Transocean or Halliburton still may be found liable. In addition to punitive damages, which could be substantial, there is also the matter of fines levied for violations of the Clean Water Act.

A nonjury trial has been scheduled by Judge Barbier to begin on February 27, 2012 which will determine who was at fault for the explosion. So far, no trials have been scheduled to determine punitive damages in these cases.

One important factor which could change the outcome of Tuesday’s ruling is whether or not there was any fraud involved on Halliburton’s part. If it is later determined that the company fraudulently concealed material information about the cement tests, then it could place them in a position to be liable for civil damages.

A finding of fraud on Halliburton’s part would, in effect, render the indemnification in the drilling contract null and void. BP stated that the amount it has paid in claims, advances and other payments to government, businesses and individuals to date has added up to over $7.8 billion.

In a Dec. 21 filing BP also describes Halliburton’s motion for indemnity to be “fatally premature.” BP stated that Halliburton’s conduct still remained “to be resolved at trial,” and that the issue needed to be settled as to whether or not Halliburton “was grossly negligent or committed fraud by making false statements and concealing test results before it used a defective cement slurry on the Macondo well.”

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