The oil spill in the Gulf of Mexico is said to have harmed the livelihoods of at least 37,000 Americans. Most will claim compensation. How on earth is that going to be possible?
Poor BP. As well as wrestling with that confounded oil flow it has to wrestle with how to fathom the loss and expense compensation claims it is creating. There is already a 20 mile queue of folk waving claim documents. Some are waving because they are drowning. Some are waving because loved ones were killed. BP has $6bn (£4bn) in the bank. The “stakeholder fund” it has set up will receive $3bn at once, $2bn in November then $1.25bn a quarter until $20bn has been paid in. This cash is for cleaning up the oil, then paying for a plethora of consequential losses, all to be proven, to ordinary folk who’ve lost out as a result of the spill. There are 37,000 hands held out, palm upwards. And did you note I said, “All to be proven”. How? In what way? Through litigation? These American claimants don’t have our super-fast claims system, so they have been wrestling with how to do it.
It sounds a neat solution. It’s not. High-speed adjudication is sometimes void, expensive and the wrong device. And I tell you this: it would not at all be a surprise if ICF adjudicators end up in the pillory
On 28 May, BP said it would “appoint an independent mediator” to ensure a fair and timely claims process. Tony Hayward, the company’s chief executive, said: “We are absolutely committed to a simple, fair claims process that gets funds to people who have been hurt by this disaster as quickly as possible.” Barack Obama, America’s chief executive, said on 16 June: “Oh no you don’t.” He wants an Independent Claims Facility (ICF). Its job will be to decided whether the man running a seafront bagel bar in Alabama, Mississippi or Florida is right or wrong to challenge BP for offer of compensation. That, Mr President, sounds almost the same as UK construction’s adjudication process.
Much like our adjudicators, the ICF will move at high speed. I can’t find out what that is. It has to be no more than 28 days or else it will be frowned on. The adjudicator’s decision is then binding on BP and the amount awarded, if any, flows out of the stakeholder fund forthwith. BP can’t appeal. For the firm, that’s that. But the claimant can appeal. The president has appointed a lawyer called Kenneth Feinberg who managed the 9/11 claims, together with three judges to hear appeals. And one other thing: much like the system here, nobody has to use the ICF system. They can go to the US courts instead. And if a person wishes to mediate, so be it.
It sounds a neat solution. It’s not.
High-speed adjudication is sometimes void, sometimes expensive and sometimes the wrong device. And I tell you this: it would not at all be a surprise if ICF adjudicators end up in the pillory. The first difficulty is the uncomfortable relationship between a judicial system and a high-speed, binding decision. I would not be surprised if we hear complaints that decisions are said to be unfair and void because they were reached too fast - in breach of natural justice. Lawyers in America, like lawyers everywhere, are not weaned on short cuts. Every stone, even those smothered in crude oil, will be said to require lifting, sniffing, arguing over. Here in the UK we made our high-speed adjudication system binding, but only for now. Either party can later go to court or arbitration. So it is open to BP to argue that any process that shuts out a “proper” trial of claims altogether is so flawed as to be void. Nothing in America, or the UK for that matter, shuts out fair play. Nor can anyone stop BP from going to court to challenge a system that is no system at all. Mr President, don’t shut BP out of an appeal to the three judges.
Go further: Mr Feinberg and his judges and his adjudicators at first instance should come to the UK and listen. They will learn how we have learnt how to manage the adjudication process … when a meeting is necessary, when a documents-only approach is unsatisfactory, when to say to the parties enough is enough, how to deal with bullies. Come and see us please. We will share our learning with you.
And if I were the man running the bagel shack, I would work hard to avoid a dispute arising at all. I would go to the BP corner shop in Mississippi or Alabama or Florida or London and talk and talk … I would take a measured view, bring the evidence, and bring the heartache. Negotiate a deal. For its part, BP ought to set up a Dispute Avoidance Panel instead of a Dispute Resolution Panel. That would do the job, I guarantee.
Tony Bingham is a barrister and arbitrator at
3 Paper Buildings Temple