Wednesday, January 12, 2011

(Versión Original) FT.com / Companies / Oil & Gas - BP likely to face criminal charges:

The BP (British Petroleum) world famous for its oil spill last year (2010) has been one of the most harassed non-financial companies in recent months.

Definitely, something or someone caused the spill that happened, however, the degree of lack of diligence or negligence attributable to the company is not yet clarified. The company even managed to find a person willing to take the blame for all the events relating to the spill and offered the necessary public apologies.

However, investigations continue and the new path is the criminal one, namely, the withdrawal by the commission of crimes against the environment, among others.

It seems odd, because American jurisprudence seems to require a relatively low level of negligence on the author or authors to establish criminal responsibility in a crime of this nature, as opposed to civil liability, in which case the degree of negligence and liability are proportional to the damages.

Several American lawyers have said the U.S. administration's new legal strategy in which the criminal charges seems appropriate measure to supplement the civil compensation for damages that, according to some specialists, has been inadequate, despite being one thousand to four thousand dollars per barrel spilled.

However, it sometimes seems to be forgotten the principle of "ultima ratio" (“last resort”) of criminal law, which stand that should not be used to increase penalties to an overall responsibility of author, but only when they have violated the protected legal rights, with the very restrictive criminal law requirements.

It looks contradictory to think about the sustainability of and U.S. jurisprudence that says that the level of negligence required for criminal punishment is lesser than negligence required in civil actions, unless it’s a minor crime.

Moreover, there are some additional requirements typical of criminal law, as is the identification and “individualization” (eventually) of the authors, either executive or supervisory directors, unless they try to continue with a corporate responsibility path. However, it cannot be left aside the clear intention of the guilty or the degree of willfulness of the authors, as well as their staff negligence.

Indeed, perhaps the announcement of this kind of money on legal strategy to punish BP may seem morally right, in practice it’s still difficult to apply, so, unless there are procedural irregularities or a miracle, we won’t observe any offenders sentenced to effective jail time in the short term.

On the other hand, it's interesting to read the point of view of Dr. John Coffee, from Columbia Law School, which indicates this upgrade in the strategy may serve as a deterrent at the time of negotiation liability, particularly to increase the amount of compensation. In this regard, the main advantage of the announcement of criminal prosecution is to allow renegotiation of a higher compensation instead of finding a real penalty of imprisonment for those responsible.

Thus, the increased bargaining power by adjusting the legal strategy may allow lawyers actors in a process to maximize the amount of compensation expected, virtually ignoring non-monetary effects of a reprehensible act, which are not useful to fund Social Security nor Health Care, by contrast, it will generate a cost to the Government and taxpayers.

Does this seem a departure from what is morally right in front of what is economically viable? Not really, because it would be a solution of "second best", that is, given the difficulty (or impossibility) of finding the best possible solution (the optimal) that would punish responsible directly to all possible legal actions, to pick for a another kind of solution, perhaps less fair to the general society, but at least with some additional monetary compensation.

And it is not fair to point (or invent) someone of being responsible of something when he’s not, no matter how serious the crime is. Therefore, “the second best solution” can diminish or disappear this potential injustice by punishing with a higher amount of compensation to the company in general. In the near future, it will be very interesting to evaluate the "good will" or intangible value of this uncertainty and the greater value compensation, as these are so typical procedural aspects of U.S. jurisprudence.

José-Manuel Martin Coronado
Main Partner
ESTUDIO MARTIN ABOGADOS
(Lima-Perú)

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