By Andy Rogers, Associate Director & Mediator, CEDR
Unlike the appalling floods devastating Pakistan, the environmental disaster in the Gulf does have an organisation taking responsibility for it, BP. Which is why Mediator, Kenneth Feinberg, now controls a $20 billion fund, established by BP to manage the compensation for damage caused by the Deepwater Horizon explosion on 20 April 2010.
No doubt the administration of the fund by the new dispute resolution entity, The Gulf Coast Claims Facility (GCCF), will be challenged by scale of their undertaking. On August 23rd BP said it had made 127,000 payments, totalling $399 million, to meet claims (and will continue to handle claims put in by government), however, from this week the GCCF will takeover dealing with claims. This includes 27,000 existing claimants that have filed paperwork but not been paid, whose claims the GCCF will review, evaluate and determine.
Ken Feinberg is no stranger to difficult claims having worked on the September 11th victims’ compensation fund. He is also an experienced Lawyer, with a name made on a number of difficult cases. However, in virtually all the current press coverage it only calls him an “Attorney” or “Lawyer”, ignoring his reputation in Alternative Dispute Resolution and his career as a Mediator! This is perhaps understandable given that most journalists do not fully appreciate the concept of commercial mediation. Yet in not appreciating this fact people may miss a big part of the story.
As one would expect of a good Mediator, Ken Feinberg stresses the value of negotiation over litigation, telling press that he plans to be more generous than any court would be in determining payments. However if claimants don’t like the offer made and believe they can do better, they can file suit — although he doesn’t advise it: “It is not in your interest to tie up you and the courts in years of uncertain, protracted litigation when there is an alternative that has been created”, CNN reports.
There will, in fact, be strong financial incentives, in terms of the settlement received, to reject the litigation process. This has upset some in the legal community but, yet again as one might expect of a mediator, these incentives have been made voluntary.
The claims will not play out in the typical style one might expect your average insurance dispute, they will be fast (so that local businesses do not suffer), they will be independent of the government and BP, and they will attempt to be firm but fair (businesses a long way from the coast may not be eligible).
Commercial mediators around the world will therefore be watching with interest to see how this claim scheme, with its strong ADR influences, performs.