In September, the Texas Supreme Court heard oral arguments from BP and Transocean Ltd. on two certified questions from the U.S. Court of Appeals for the Fifth Circuit. One of the questions concerns whether a narrow indemnity agreement in a drilling service contract, which excludes liability for underwater pollution, limits the broad language used in an additional insured provision in an insurance policy. In re Deepwater Horizon, 710 F.3d 338 (5th Cir.) opinion withdrawn on rehearing, 728 F.3d 491 (5th Cir. 2013).
In 2010 the Deepwater Horizon oil rig exploded and sank, discharging below the surface of the Gulf of Mexico the largest oil spill in history. Transocean was a party to a drilling contract with BP where Transocean assumed full responsibility for above-surface oil pollution discharges without regard to the negligence of any party, and BP assumed full responsibility for any pollution or contamination without regard to the negligence of any party which was not assumed by Transocean. The contract required that Transocean procure insurance to support the indemnity obligation, and to name BP as an additional insured on its primary and excess insurance policies.
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