JURIST - Paper Chase: Russia court orders BP to pay $3.1 billion in damages

[JURIST] Russia's Federal Arbitration Court in Tyumen on Friday ordered British Petroleum (BP) to pay 100 billion rubles (US$3.1 billion) in damages to TNK-BP, BP's 50-50 joint venture with Alfa Access Renova (AAR) [corporate websites], a consortium representing four Russian billionaire tycoons. Minority shareholders of TNK-BP brought a lawsuit against BP alleging that the venture suffered financial losses [AFP report] when it was excluded from a $16 billion share-swap and joint exploration venture deal between BP and state-own oil giant Rosneft [corporate websites] last year. The case was dismissed in November but reopened after BP announced last month that it would seek to sell its share in TNK-BP, Rosneft being one of the first bidders [BP press release]. The AAR tycoons are pursuing a separate lawsuit under UK law [Reuters report] that would enable them to sue BP for damages in international courts over last year's failed Rosneft deal, which AAR blocked in a European court of arbitration by arguing that under the shareholders' agreement TNK-BP has priority rights to any operations BP would like to conduct across Russia. TNK-BP, the third largest oil company in Russia and one of the ten largest oil companies in the world, was created in 2003 through a $15 billion merger of BP's Russian oil and gas assets and those of the AAR Consortium.

The Tyumen Federal Arbitration Court ordered a new hearing for the rejected lawsuit [JURIST report] in June. The minority shareholders were originally seeking damages of USD $12.5 billion. That figure was later cut to $8.8 billion, nearly three times the damages actually awarded by the court. BP has faced numerous lawsuits and is still involved in litigation, especially in the wake of the 2010 Deepwater Horizon oil spill [BBC backgrounder; JURIST news archive] in the Gulf of Mexico. In May the US District Court for the Eastern District of Louisiana [official website] signed a case management order [JURIST report] for the upcoming trial between BP and the oil spill victims in 2013. In April the judge accepted the terms of a settlement reached in March [JURIST reports] between BP and the plaintiffs, in which BP is required to pay around $7.8 billion in two separate arrangements, one to resolve economic loss claims and another to resolve medical claims.