BP directors object to conditions of suit transfer to England

Steve Korris Nov. 7, 2011, 3:59pm


HOUSTON � BP directors who won a court order sending shareholder suits to England have rejected conditions that shareholders wanted to impose before crossing the sea.

On Oct. 31, the directors urged U. S. District Judge Keith Ellison not to insert the conditions into his order favoring English jurisdiction for the English company.

"Plaintiffs do not explain why any of their proposed additional conditions are necessary or appropriate here," lawyers for the directors wrote.

In September, Ellison dismissed claims of New Orleans city and Louisiana police pension funds, Southeast Pennsylvania Transportation Authority and seven individuals.

They sued the directors under Britain's Companies Act last year, claiming investment losses due to safety lapses including the Deepwater Horizon explosion.

The directors argued for an English forum, and Ellison granted it.

He wrote that the Companies Act expressly permits litigation of shareholder derivative claims before the English High Court.

Most of the relevant documents, Ellison wrote, were at BP headquarters in London and BP directors meet in England and maintain their records there.

"The primary concern of this derivative litigation is the internal affairs of an English corporation, and the suit seeks to recover damages for the benefit of BP only," he wrote.

"Accordingly, England has a greater interest in the resolution of this dispute."

He made the order conditional on the directors submitting to British jurisdiction.

They did so on Oct. 3, but shareholders resisted.

Dona Szak of Houston moved to amend the order on Oct. 12, writing that shareholders were assessing the feasibility of heeding the court's advice.

She asked Ellison for 60 days, "to investigate and assess the potential risks and benefits of pursuing this important derivative suits in the courts of England without having the burden of simultaneously pursuing an appeal in the federal court system."

She proposed changes that would blur the line between American and English justice.

Szak asked Ellison to require the directors to waive statute of limitation defenses and to require that they can't object to admission of discovery from Ellison's court and separate multi district Deepwater Horizon proceedings in New Orleans.

She asked him to require them to conduct discovery in the United States in accordance with federal rules of procedure, to submit employees based in the United States to United Kingdom jurisdiction for discovery without subpoena and to satisfy in the United States any judgment the English court might render.

In response, lawyers for the directors branded the motion as untimely and meritless.

They wrote that they never raised a limitation defense.

They wrote that shareholders didn't explain the necessity of admitting into England discovery taken in the United States.

"This court should not attempt to dictate what evidence will be admissible in an English court," they wrote. "To impose American rules of procedure on discovery taken in an English proceeding would be inconsistent with the reasoning of the court's order."

The attorneys wrote that shareholders offered no justification for submitting American employees to British jurisdiction for discovery purposes and didn't identify which directors have assets in the United States that could satisfy a damages award against them in an English proceeding.

"It also would make no sense to require such a condition on defendants who may not be subject to personal jurisdiction in this court and, indeed, in any U. S. court," they wrote.

Thomas Taylor, of Andrews Kurth in Houston, signed the brief.

Daryl Libow and Bruce Hickey, of Sullivan and Cromwell in Washington, D.C., worked on the brief, as did Richard Pepperman and Marc De Leeuw, of the same firm in New York.

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