It had been dubbed the trial of the century, aimed at dealing with the consequences of the massive BP oil spill known as the Deepwater Horizon disaster in the Gulf of Mexico two years ago. But now the trial is off - at least for the time being - after BP announced an eleventh-hour settlement worth 7.8 billion dollars with 116,000 claimants including fishermen, hoteliers and seafood outlets whose livelihoods were wiped out by the spill in April 2010.
A complex trial, involving 72 million documents and the best brains in commercial law, had been due to start under Federal Judge Carl Barbier, a renowned expert in maritime law, in New Orleans on Monday. It is still likely to go ahead at a later date to establish the blame between BP and its co-defendants.
At BP headquarters in London Saturday, there was palpable relief at the outcome of the lengthy and highly secretive settlement talks - and a sense that other outstanding claims could perhaps be dealt with in a similar manner. The company described it as a "significant" step in the legal wranglings. "In the early hours of this morning, BP took a big and expensive step towards finalising the financial bill it will face from its 2010 oil spill," the BBC commented.
The company still faces two cases launched by the US government and the Department of Justice (DoJ), and five US coastal states, which are all seeking damages and penalties under the Oil Pollution and the Clean Water Act. But Friday's settlement has already saved BP massive legal costs, estimated at 1.7 billion dollars and has reduced the complexity of the litigation.
The US government is entitled to demand compensation of 1,100 dollars for each of the 5 million barrels of crude oil spilled, according to the Clean Water Act. If gross negligence is proved in court - a charge BP denies - BP and associated companies could be liable for up to 4,300 dollars per barrel, amounting to 17.6 billion dollars for water pollution alone.
BP lawyers are expected to use the indefinite trial delay to investigate whether it will be possible to settle the remaining claims for penalties and damages from the five states and the US federal government. Their priority is to avoid any cost that would leave the company structurally weakened, as total costs exceeding the 40 billion dollars already set aside for the disaster could constrain the company's long-term growth, analysts said.
"Though all sides have said they are ready to go to trial, the incentives to settle have been enormous," the New York Times commented Saturday. "BP really needs to reach a settlement with the government," it said, which could extract "many more billions" from the company in civil and criminal proceedings.
However, while it may be possible that the coastal states would settle, the DoJ was less likely to do so, said the BBC. For people outside of the litigation, particularly representatives of environmental groups, quick and comprehensive compensation remains the key goal, said the New York Times.
"Our goal is money to the Gulf, as quickly as possible," it quoted Courtney Taylor, policy director of the Mississippi River Delta programme at the Environmental Defence Fund, as saying. Despite the massive costs and the remaining financial risk attached to the oil spill, BP has recently been upbeat about the future. "We are on the right path," said chief executive Bob Dudley, announcing that BP had returned to profitability in 2011, after posting a loss of 4.9 billion dollars in 2010. "Everyone at the company knows that its ability to invest in future growth depends on securing the best possible result from the Deepwater Horizon case," said the Financial Times.
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