NU Online News Service

Transocean Ltd. has filed a petition under the federal Limitation of Shipowner's Liability Act of 1851 to limit its liability for the Deepwater Horizon oil rig explosion to less than $26.8 million.

Transocean, which owns the rig, filed the petition in the U.S. District Court for the Southern District of Texas in Houston, under the federal Limitation of the Shipowner's Liability Act.

The act stipulates that liability for the owner of a vessel cannot exceed the amount of the vessel "and her freight then pending."

Transocean's complaint asks that liability be limited to the value of Transocean companies' interest in the Deepwater Horizon rig and its freight, including the accounts receivable and accrued accounts receivable as of April 28, 2010. Transocean said the entire value of its interest does not exceed $26.7 million.

In a statement, Transocean said, "[O]ne of the primary goals of this filing is to consolidate in a single court many of the lawsuits that have been filed following the Deepwater Horizon casualty to initiate an orderly process for these lawsuits and claims before a single, impartial federal judge. The filing also would establish a single fund from which legitimate claims may be paid."

Transocean said it and its subsidiaries currently face more than 100 lawsuits filed in multiple states and courts. The company, in its petition, asks the Texas federal court to issue an injunction restraining certain lawsuits underway against its companies in any jurisdiction other than the Southern District of Texas.

The company noted that the filing does not impact lawsuits filed under the Oil Pollution Act of 1990.

John Nevius, an expert in environmental insurance coverage at the law firm of Anderson Kill & Olick in New York, said Transocean appears to be attempting to "take the offense" in an attempt to control its liability. He said the company is facing a situation that could involve whether it and its subsidiaries are viable going into the future.

Speaking to the likely success of limiting liability under the Limitation of Shipowner's Liability Act, Mr. Nevius said, "It strikes me as an uphill battle."

He added, however, that regardless of whether Transocean is successful, this process may result in claims against the company being consolidated under one Texas court. Streamlining claims in this manner, Nevius said, may be more important than getting statutory relief from liability.

He said consolidating the claims may allow Transocean to "get a handle on the process."

Nevius also noted that Transocean's actions seem to be at the urging of its insurers. Indeed, the company said in its statement that it is acting on instruction of its insurers, "and in order to preserve insurance coverage."

Special Reports /

Transocean Seeks To Limit Oil Rig&#039;s Liability

Related Stories

Recommended For You

Transocean Seeks To Limit Oil Rig's Liability