The question now is whether lawyers for both contractors can prevent a bid by BP to invalidate those indemnification clauses. In both of his indemnification rulings, Louisiana federal district court judge Carl Barbier has deferred from ruling on BP’s claims that the actions of Transocean and Halliburton increased the oil giant’s risks in such a way to breach the contracts and invalidate the indemnification guarantees.
In the case of Halliburton, BP has also accused the contractor of fraud, another claim that could eventually cause indemnification to be nixed. BP had asked for a summary judgment finding that Halliburton had made fraudulent statements and concealed information regarding cement tests it conducted for the Deepwater rig in the Gulf of Mexico. As a result of those tests, BP says it allowed Halliburton to pour cement that resulted in the 2010 blowout.
Halliburton denies those allegations. But it may yet face them. Judge Barbier on Tuesday said that he “agrees that fraud could void an indemnity clause on public policy grounds, given that it necessarily includes intentional wrongdoing.” The judge, though, deferred on ruling on that issue as material issues of fact remained.
Still, for now Halliburton and Transocean have dodged any part of the third-party compensatory claims arising from the Deepwater disaster. However, Judge Barbier said that BP does not owe indemnification for punitive damages or civil penalties.
BP has already paid out $7.8 billion in claims, according to a spokesperson. The company has estimated in court filings that the total costs from the litigation and fines could hit $42 billion. A trial is set for February 27 in the first stage of the consolidated litigation.
BP counsel Richard Godfrey of Kirkland & Ellis did not respond to a request for comment, and his co-counsel Mike Brock of Covington & Burling referred us to the company. BP said in a statement, “All official investigations have concluded that Halliburton played a causal role in the accident, and following this ruling, Halliburton is, at a minimum, responsible for any punitive damages as well as civil penalties to the extent that they may apply under the Clean Water Act.” The statement continued, “Moreover, the court determined that if Halliburton is found to have committed fraud, then the indemnity could be void.”
Halliburton counsel Donald Godwin of Godwin Ronquillo did not respond to a request for comment. A spokeswoman for the company said it “agrees with the ruling to the extent that it requires BP to honor its contractual indemnity obligations.”