Transocean Files Motion for Summary Judgment in U.S. Federal Court to\r Compel BP to Honor Its Contractual Indemnity Obligations
ZUG, SWITZERLAND, Nov 01, 2011 (MARKETWIRE via COMTEX) --
Transocean Offshore Deepwater Drilling Inc. (TODDI), a subsidiaryof Transocean Ltd. (NYSE: RIG) (SIX: RIGN), today filed a motion forsummary judgment in the United States District Court for the EasternDistrict of Louisiana requesting the court to compel BP to honor itscontractual obligation to defend, indemnify and hold harmlessTransocean for damages associated with BP's failure to contain flowfrom its Macondo well in the Gulf of Mexico in 2010.
The contract between BP and Transocean for the Deepwater Horizondrilling rig contains industry-standard reciprocal indemnityprovisions that apportion risk and quantify liabilities between thetwo companies. In the contract, which was signed in 1998 and extendedseveral times including in 2009, BP agreed to \"defend, release,protect, indemnify and hold harmless\" Transocean for any and allfines, penalties and damages associated with environmental pollutionoriginating from the well \"without limit and without regard to thecause or causes\" including negligence, \"whether such negligence besole, joint, active passive or gross.\"
Despite these clear and unambiguous terms, BP has refused to honorits contractual obligations to Transocean stemming from the Macondowell incident in April of 2010. In fact, contrary to its promise to\"defend\" and \"indemnify\" Transocean, BP instead filed suit againstTransocean on the one-year anniversary of the incident, alleging thatTransocean personnel -- including those who lost their lives in theincident -- had willful and callous disregard for the welfare oftheir colleagues and the environment. Transocean has honored itscontractual indemnity obligations to BP nonetheless.
\"BP's posture in this matter is not only offensive to the thousandsof men and women who work together at Transocean, but it constitutesa direct threat to the sanctity of contracts and to the economicunderpinnings of an industry that employs hundreds of thousands ofpeople in the United States alone,\" said Nick Deeming, Senior VicePresident and General Counsel of Transocean. \"This motion is aboutmore than just two companies,\" Deeming continued. \"It is about thefuture of the contract drilling industry at large. If BP trulyintends to make things right, it must either voluntarily or by theorder of the court honor all of its contracts - not just the onesthat serve its convenience or financial purposes.\"
According to the filed motion, BP has cited \"ongoing investigations\"and BP's own \"allegations\" of gross negligence on the part ofTransocean as justification for BP's refusal to honor its contractualpromises. The motion also asserts that after months of discovery andmore than 200 witness depositions, it is clear that no evidence ofgross negligence by Transocean exists. In fact, as outlined in themotion, BP oversaw, audited and commended the Deepwater Horizon rigand her crew before the incident, and every BP witness deposed aspart of the litigation in New Orleans has stated under oath that therig was fit for purpose and was operated by a safety-conscious crew.
Key excerpts from the brief -- which is available online atwww.deepwater.com -- are as follow:
-- Transocean respectfully requests that the Court require BP tohonor its contractual promises. Transocean requests that its motionfor partial summary judgment be granted, specifically that:
-- The express indemnity promises made by BP in the Drilling Contractoverride any alleged rights of BP to contribution;
-- The indemnity provisions agreed to by BP in the Drilling Contractare valid and enforceable against the OPA statutory backdrop,including indemnity for the uncapped liability that arises upon afinding that an incident resulted from gross negligence;
-- BP's contribution claims are barred by BP's contractual promise todefend Transocean, and BP must defend Transocean againstenvironmental wellhead pollution claims pending against it that arisefrom the Macondo blowout;
-- BP cannot avoid its contractual promise by alleging thatTransocean breached the Drilling Contract or that the DeepwaterHorizon was unseaworthy;
-- BP cannot avoid its contractual promise by alleging thatTransocean or its employees were grossly negligent;
-- BP is required to honor its promise to indemnify Transocean forClean Water Act (CWA) and any other civil penalties;
-- BP is required to honor its promise to pay the unpaid charter hirefor the Deepwater Horizon;
-- As a result of BP's failure to honor its promises in each of theabove areas, BP be required to reimburse Transocean its attorneys'fees, costs, and expenses incurred in defending environmental claimsfor which BP is contractually obligated and those incurred in forcingBP to honor its contractual promises.
To read the Deepwater Horizon contract with BP, see the company's10-Q Quarterly Report for the Second Quarter 2010 dated August 4,2010 or at:http://www.sec.gov/Archives/edgar/data/1451505/000145150510000069/exhibit10_1.pdf
Transocean is the world's largest offshore drilling contractor andthe leading provider of drilling management services worldwide. Witha fleet of 135 mobile offshore drilling units, excluding twoUltra-Deepwater Drillships and four High-Specification Jackups underconstruction, Transocean's fleet is considered one of the most modernand versatile in the world due to its emphasis on technicallydemanding segments of the offshore drilling business. Transocean ownsor operates a contract drilling fleet of 50 High-SpecificationFloaters (Ultra-Deepwater, Deepwater and Harsh-Environmentsemisubmersibles and drillships), 25 Midwater Floaters, nineHigh-Specification Jackups, 50 Standard Jackups and one swamp barge.
For more information about Transocean, please visit our website atwww.deepwater.com.
SOURCE: Transocean Ltd.