BP: Bankrupt Petroleum

British Petroleum,, BP as is now popularly known, may soon become Bankrupt Petroleum.

Now that the top kill method used by BP to stem the gush of oil in the Gulf of Mexico has proven to be a failure, the Petroleum giant is running out of options and pretty soon might be running out of resources too.  Already, the Obama administration has expressed support to lift the liability cap for the disaster which is currently pegged at US$75 Million.  The media is also abuzz with news of Congress possibly enacting a bill which would have a retroactive effect to get BP to pick up the tab for the expenses caused by the oilspill beyond the current cap.



The oil spill in the Gulf of Mexico has become more than an environmental disaster, it has become a political battle and an epitome of the old government-versus-private-capitalist debate.  I will not dabble on the political side nor go on a rant about the environmental costs lurking behind every oil drilling - whether offshore or inland.  This post has one simple purpose: to air out some questions I have in my mind and some theories in my thoughts.

I am all for holding BP liable even beyond the US$75 million cap, after all it is their fault, that is, their drilling is the proximate cause of the catastrophe we are experiencing.  However, let us remember that BP is a corporation*.  As such, BP - and it's stakeholders - are protected by the Corporation code, which limits their liability only up to their capitalization. Moreover, just like any other company, BP can always file for bankruptcy.  My point is, no matter how high we raise the cap in terms of liability the bottom line is -- BP's liability is still limited and so is BP's insurance company.  So the question is what is the recourse of the affected parties? Can it be the government?  In this case, I think the government of the US can probably pick up the bill. Good for the victims, at least.  Prospectively, however; how about those countries, like the Philippines for example, who do not have the resources nor the political will to muster a move that would compensate the affected parties.

One year ago, during the time the UNCLOS ratification of the Philippines was being debated, my professor in International Law mentioned that for Nuclear disasters there is the Vienna Convention on Civil Liability for Nuclear Damage  which would clearly - as clear as it can be perhaps - outlines civil liability for the disaster. Unfortunately, for oil spills there is no similar international agreement.  Talk about the US Congress enacting a retroactive bill to make BP liable beyond US$75 million is already on talks, however; as any freshman law student would tell you ex-post facto bills are not allowed - another debate on whether or not it may be considered a punishment is of course another matter - as being in contravention of the right to due process.

So what now? I don't know. I am just hoping that if anything comes out of this disaster it is the nations coming together to enact an international agreement akin to an international insurance that would insure that the victims are compensated.

*a am just a law student whose brain is still on vacation mode, apologies for any errors.