Gulf Oil Spill: U.S. government calls limitation request "unconscionable" - Transocean backs down

Posted on June 1, 2010 by Lafcadio Darling

As was previously discussed on our firm website, Transocean--the owner of the oil rig DEEPWATER HORIZON--made waves by filing an action in U.S. federal court seeking to limit its liability for the catastrophic oil spill in the Gulf of Mexico to $26.7 million.

Recently, the U.S. Department of Justice decisively condemned this attempt to limit liability as "unconscionable."  Comparing Transocean to the owners of the infamous ocean liner RMS TITANIC, who also tried to use the Limitation of Liability Act, a letter from the Attorney General's office strongly criticized Transocean's move and sought confirmation from Transocean that it was not trying to limit its liability under the Oil Pollution Act of 1990.

Transocean responded quickly by "clarifying" that it never intended to limit its liability under the OPA through this filing and seemed to hastily retreat from the apparently broad sweep of its original limitation filing.

It seems that Transocean is trying to cover its bases legally, while avoiding too much heat from the authorities or from the general public.  Regardless of whether the limitation action succeeds, this will be a difficult tight-rope for Transocean to walk.

A longer discussion of these recent developments can be found on our website.

 

 

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Transocean files for Limitation of Liability for Gulf Oil Spill damages

Posted on May 16, 2010 by Lafcadio Darling

On May 13, Transocean, owner of the Deepwater Horizon rig that sank and caused the ongoing Gulf oil spill, has filed for limitation of liability under federal maritime law in a Houston court, seeking to limit its liability and stay all pending lawsuits against the company.

Many of the news reports to date have referred to limitation of liability as a "legal loophole" and suggested that it  is some obscure, little-used and out-of-date rule.  Although I am horrified by this disaster like most people, I think we should be wary of condemning the limitation of liability rule so simplistically.  Limitation has a long history and a valuable function.  It should not be abandoned or curtailed on the basis of one case, no matter how disastrous.

More to the point, limitation may well not apply. Many of the media reports do not mention that Transocean will only be able to limit its liability if it can show that the incident occurred without the "privity or knowledge" of the company.  This will be an uphill climb for Transocean, and limitation is far from certain.

While I certainly hope that the victims of this terrible disaster (including the U.S. taxpayer) are able to obtain fair damages from all responsible parties, we should be careful not to "throw the baby out with the bathwater" in our zeal to see wrongdoing punished and harm compensated.

A longer article about this case can be found at our website.

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