Judicial Deep Water: BP, Law & Politics
It is self-evident that if judges are dishonest, if the judiciary can be bribed or suborned, the rule of law will be fatally undermined. If judges break the law, what possible hope is there that anyone else will bother to observe it? Similarly, competence and fairness are essential requirements of a judge. An incompetent or unfair judge is almost as much of a contradiction in terms as a dishonest judge. Competence is a prerequisite for judicial office. So is fairness, which involves judges making sure that the law is applied equally and in the same way irrespective of the means, gender, age and other characteristics. It is why justice is traditionally portrayed in western art as blind.
Lord Neuberger address to the Hong Kong Foreign Correspondents Club
Deepwater Horizon Disaster
At around 9:45pm on the evening of Tuesday April 2010 there was an explosion on the Deepwater Horizon drilling rig, which was situated just over 41 miles off the Louisiana Coast of the United States of America.
The consequences were profound. Eleven people were killed. The spillage, which gushed for almost 3 months, is widely thought of as being the largest accidental marine oil spill in history. Millions of gallons of oil were discharged. The impact on the environment was catastrophic. Even now, there is disagreement as to whether the clean up has been a success.
On Thursday 4th September 2014 a Judge in New Orleans ruled that BP Exploration and Production (“BP”) was subject to enhanced civil penalties under the Clean Water Act, as the discharge of oil was the result of its gross negligence and wilful misconduct.
The ruling leaves BP facing a possible fine of $17.6 billion.
Playing the Man and Not the Ball
The day after the ruling UK business leaders and politicians provided their take on the affair.
The Institute of Directors opined that BP was:
being vilified by an egregious US justice system significantly shaped by hostile public opinion
and warned that foreign investment could be scared off. Its Director General was reported as saying that
This is the latest signal that US courts are sometimes prepared to squeeze a non-US business for as much as they can get away with.
Lord Jones, a business leader and former Trade Minister was reported to have said that Judge Barbier had been influenced by hostile US public opinion against BP and even questioned whether the decision would have been the same had BP been an American company.
Other politicians joined in too. Lord Tebbit a former Trade Secretary took things even further and called on the UK government to retaliate by making life difficult for US companies.
A central point made was that Judge Barbier had placed too much of the blame on BP whereas US based entities had been found to be less culpable.
So in a nutshell, the Judge was being accused of being biased. It would be interesting to hear how many of those making such serious accusations had actually read the judgement.
Judicial Decision Making
In the age of the Internet and Social Media there is a growing trend for judicial decisions to come under ever-closer scrutiny. That is to be commended.
In his Hong Kong speech, Lord Neuberger also said,
“The rule of law also requires the honest, fair, efficient and open dispensation of justice. And therefore there is no hope for the rule of law unless we have judges who are independent, honest, fair, and competent, and who are seen to be independent, honest, fair, and competent.”
Transparency is a good thing. It allows for better and more informed decision-making. Judgements placed online allow an objective reader to understand the law, the facts behind the case and the actual process of judicial decision- making.
Accusations made against Judge Barbier clearly suggest that he has been biased, dishonest and unfair. If true, his accusers will have rightly made a point worth making.
If, however, there is no substance to the accusations, then it may be regarded as a classic case of playing the man and not the ball.
Putting aside the wisdom of such instantaneous and inflammatory opinions, with the consequence of undermining the independence of the Judiciary, let alone respect for the rule of law, are such comments merited?
What does the ruling actually say and, on careful analysis, are there things that we might learn?
The ruling is an important one for all corporate entities and lawyers engaged in industry and regulatory work. It sets out the US approach to gross negligence and is a timely reminder as to the importance of proper processes and the sometimes-devastating consequences when systems break down. Proper adherence to legal requirements is essential for any corporation. The ruling should be required reading for any organisation serious about its legal responsibilities.
Moreover, if one can get behind the headline grabbing sound bites, an actual reading of the judgement provides a devastating account of what was a very serious incident with consequences far and wide.
The ruling was a forceful one and one that surprised some well informed observers.
Whatever, the ultimate decision reached by any appellate Court, this ruling deserves more than an attack upon the referee. It deserves careful and close analysis. I would venture to suggest that this might provide more light upon what was a very serious disaster with far reaching consequences.
The Judgement extends to 153 pages. For lawyers working in a digital age, the form of the ruling is an interesting one. It is detailed, heavily cross Ðreferenced and seeks to explain the background and mechanics of the ruling in way that differs from those found in English Judgements. The opening paragraph begins with a coloured illustration of the Deepwater Horizon and an explanation that this and other illustrations are merely explanatory aides and do not constitute actual findings.
The scale of the litigation is enormous:
It was not long after the initial explosions that the first lawsuits were filed. Since that time, approximately 3,000 cases, with over 100,000 named claimants, have been filed in federal and state courts across the nation. These suits asserted a wide array of claims including wrongful death and personal injury due to the explosion and fire, post-incident personal injury resulting from exposure to oil and/or the chemical dispersants used during the oil spill response, damage to property or natural resources, and economic losses resulting from the oil spill. (Paragraph 8).
What follows is an analytical and rigorous study of what went wrong and why. The attention to detail is clear. It is also clear that the Judgement can be read by those unfamiliar with the oil industry and the various statutory and regulatory requirements that fall upon those entities engaged in this field.
By way of example, an important issue in the case was whether BP had carried out what is known as a Cement Bond Log. This is how it is described:
After a cement job is pumped, a cement evaluation technique such as a cement bond log (CBL) can be used to evaluate whether zonal isolation was achieved. A CBL uses acoustic signals and associated software to derive a representation of the integrity of a cement job. (Paragraph 180)
The court stated that BP was responsible for deciding whether or not to run a CBL. Its internal best practices stated that it should have done so. It did not. The Court accepted that a CBL was not always carried out and there may be good reason for that. However, it concluded:
The Court finds that a prudent well operator in BPs position, knowing what BP knew at the time, would have run a CBL, even if its decision tree concluded otherwise and its drilling and cement contractors did not tell it to do so. The fact that BP did not opt for the CBL when the necessary people and equipment were already on location leads the Court to believe BPs decision was primarily driven by a desire to save time and money, rather than ensuring that the well was secure.”
If BP had performed the CBL, it would have shown that the top of the cement was not where it should have been, which would have given clear indication that the cement was placed improperly and extremely unlikely to provide a barrier to flow. At that point BP could have attempted to remediate the cement job before proceeding any further with the temporary abandonment. Accordingly, the Court finds that BPs decision to not run the CBL was a substantial cause of the blowout, explosion, and oil spill. (Paragraphs 195 and 196)
Evidence of Bias?
It is important to note that although damning of BP, the Judgement did not find against BP in every respect and an objective reader might be forgiven for thinking that the decision was evidence based rather one based upon nationalities. By way of example, on the important issue of process safety management:
There was much evidence and testimony at trial concerning process safety.
Process safety management is a disciplined, highly organized set of approaches and strategies designed to prevent catastrophic failures involving complex engineered, human- based systems. It attempts to prevent, control, and mitigate major accidents, including fires and explosions, and the uncontrolled release of toxic chemicals or hydrocarbons. A proper process safety management system includes components dedicated to hazard identification, risk analysis, and risk management. Whereas personal safety focuses on preventing injuries to individuals from slips, trips, and falls, and is more synonymous with occupational safety, process safety relates to hazards that can cause or contribute to major accidents.
Having considered the evidence, the Court finds that BP had a process safety management system in place on April 20, 2010 and that it applied to the Macondo well and the DEEPWATER HORIZON, even if it applied to the HORIZON by virtue of adopting and bridging the contractors safety management system. It may not have been perfect, but the evidence has not shown that it was defective or a cause of the blowout, explosion, and fire.
It is hard to discern much bias, either express or implied in those paragraphs
In its detailed verdict, the Court decision included the finding that BPXP had committed a series of negligent acts or omissions that resulted in the discharge of oil, which together amounted to gross negligence and wilful misconduct under the Clean Water Act, BPXPs negligent acts that caused the blowout, explosion, and oil spill included:
- drilling the final 100 feet of the well with little or no margin,
- running the production casing with the float collar in unconverted mode and without a shoe filter,
- failing to verify whether the float collar converted by reverse circulating the well,
- not conducting a CBL,
- using LCM as a spacer for the displacement and negative pressure test,
- misinterpreting the negative pressure test,
- allowing simultaneous operations to occur during displacement, and
- failing to provide a displacement schedule to the Transocean drill crew.
The Court added:
Notably, the decisions regarding drilling the final 100 feet, the CBL, and LCM-spacer were profit-driven decisions.
These instances of negligence, taken together, evince an extreme deviation from the standard of care and a conscious disregard of known risks.
BP has indicated that it will appeal the ruling. It may well be that those engaged in the case can find grounds upon which to appeal.
However, the attacks upon the Judge by business and political leaders contain no evidence of bias nor do they address any of the factual or legal complexities involved in the case. Would UK business leaders and politicians have done so, had the decision gone the other way? And how many of them have taken the time to read Judge Barbiers 153-page dissection of a mountain of evidence? If they had read, digested and formulated a view within 24 hours of the ruling, (when they were expressing such firm views), then they are to be commended for their ability to read at speed and their in-depth knowledge of American law.
Whatever, the reality of that, it might be thought that responsible leaders (either in politics or business) might be better advised to actually read the decision. If and only if, they disagree with what he ruled, then go on the attack, but attack the ball rather than the man.
If they accuse Judges of being biased, without citing any evidence to support such a serious claim, what hope is there for the general public to accept the rule of law?
The law is best served by honest, competent and fair Judges applying the law to the facts. The rule of law is not at all served by politicians and business leaders making knee-jerk comments without any evidence to substantiate them.