HOUSTON – BP shareholders suing individual directors over the Deepwater Horizon explosion should have sued in Great Britain, according to the directors.
On March 21, the directors asked U. S. District Judge Keith Ellison to dismiss a suit that would require them to repay the company for damage they caused.
"Courts often have found it appropriate to decline jurisdiction on grounds of international comity when the claims at issue involve the application of novel, complex and developing foreign law," Thomas Taylor of Houston wrote.
He wrote that the controlling English law is new and complex.
"The English High Court should be given the first opportunity to interpret this statute and apply this still developing body of English corporate law to a high profile case involving an important English company," he wrote.
In case international comity doesn't impress Ellison, Taylor challenged his jurisdiction over British citizens and asserted a right to a more convenient forum.
He wrote that 10 of 17 defendants are European nationals, most of them British.
Finally he raised a procedural point, writing that shareholders must demand that directors bring an action before shareholders do it on their own.
The U. S. Judicial Panel on Multi District Litigation consolidated shareholder suits from federal courts and transferred them to Ellison last year.
The panel separately picked U. S. District Judge Carl Barbier of New Orleans to preside over claims of injury and economic loss from the explosion.
Ellison split his claims into two groups seeking relief under securities and pension laws.
In February, lawyers in securities cases filed a verified consolidated amended shareholder derivative complaint warning that one more disaster could spell the end for BP.
They alleged that directors breached fiduciary duties under the U. K. Companies Act of 2006, English common law and U. S. federal and state safety laws.
They proposed a constructive trust for all benefits officers and directors obtained through misconduct, including salaries, bonuses, fees, options and stock sales.
They called for reforms to protect against recurrence of damaging events.
Lead author Thomas Ajamie of Houston wrote that a lawsuit by the Department of Justice under the Clean Water Act and Oil Pollution Act exposes BP to fines from $5 billion to $21 billion.
He wrote that BP's goodwill would be impaired by billions. He wrote that BP's legal costs alone could reach $2 billion.
The complaint sought recovery from five executive directors, 10 directors, BP America president Lamar McKay and previous president Robert Malone.
Thirty other lawyers added their names to the complaint.
Taylor answered with a bid for British jurisdiction, writing that the alleged breaches of duty involved directors of an English corporation headquartered in London and governed by English law.
"As a result, most of the evidence is almost certain to be located in London, and England has the greatest interest in this action," he wrote.
He wrote that the Companies Act requires a shareholder to obtain authorization from the English High Court to pursue derivative claims on behalf of an English company.
"And the Companies Act does not permit a foreign court to substitute itself for the English High Court in determining whether permission to sue on behalf of an English corporation should be granted," he wrote.
"The discovery in this case likely will focus not on the facts and circumstances of the oil spill in the Gulf of Mexico, but rather on the BP directors' exercise of their oversight duties," he wrote. "In any derivative action, the most significant witnesses will be the directors themselves."
"Given that jurisprudence under the Companies Act is still evolving, an English court should be given the opportunity to resolve issues of first impression arising under its own statute as opposed to having an American court untangle problems in conflicts of laws, and in law foreign to itself," he wrote.
He wrote that Ajamie's complaint treated all defendants collectively.
"Such group accusations are insufficient to satisfy the pleading requirements," he wrote.
Lawyers for clients with pension claims plan to file a consolidated complaint on April 15.