Court orders ExxonMobil to pay $4.5bn for Valdez oil spill

Disaster Prevention and Management

ISSN: 0965-3562

Article publication date: 1 July 2004



(2004), "Court orders ExxonMobil to pay $4.5bn for Valdez oil spill", Disaster Prevention and Management, Vol. 13 No. 3.



Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited

Court orders ExxonMobil to pay $4.5bn for Valdez oil spill

Court orders ExxonMobil to pay $4.5bn for Valdez oil spill

OIL giant ExxonMobil has been ordered to pay punitive damages of $4.5bn in the latest round of a long running legal battle over the 1989 Exxon Valdez oil spill. ExxonMobil said it would be appealing the latest decision by Judge Russel Holland in the Alaskan federal court to set punitive damages at $4.5bn plus interest.


The original $5bn punitive award was reduced to $4bn in 2002. Last year the US Ninth Circuit Court of Appeals referred the award back to the Alaskan courts in the light of a recent Supreme Court decision capping the amount of punitive damages in proportion to actual damages. However, Judge Holland did not accept that the new award was out of kilter with existing legislation.

“The Ninth Circuit Court of Appeals has twice vacated Judge Holland’s decisions in this matter”, ExxonMobil general counsel Charles Matthews said. “This is exactly why ExxonMobil argued before the Ninth Circuit last year that the case should not be remanded to Judge Holland. We said it would result in future serious delays and would be sending the case back to a court that has already made numerous mistakes with regard to the punitive damages issue”. Legal representatives of Alaskan fishermen and plaintiffs in the case estimate that interest owed on the award amounts to around $2.25bn.


Exxon was ordered to pay compensation of $287m for actual damages by an Alaskan court in 1994. The company says that it has paid $300m in compensation to individuals and businesses affected by the spill as well as $2.2bn for the clean-up of Prince William Sound after the spill and a further $1bn in settlements to the state and federal governments.

According to Bloomburg, ExxonMobil obtained a $4.8bn letter of credit last year to delay payment of the damages pending an appeal. In 2002, the US Court of Appeal for the Ninth Circuit upheld a ban from letting the Exxon Valdez enter Prince William sound, which had been contested by the tanker’s owners on constitutional grounds.

Meanwhile, ExxonMobil Corp has unveiled a 63 per cent increase in fourth quarter net income thanks largely to higher energy prices and a tax settlement with the US government. Net income rose to $6.65bn, or $1.01 a share, from $4.09bn, or 60¢, in the corresponding period of 2002. Excluding merger effects, discontinued operations and special items, earnings increased by 14.2 per cent to $4.42bn from $3.79bn. Deutsche Bank said “clean” net income was “a full 15 per cent ahead of our expectations”.

“The major positive in these results came in the chemicals businesses, where earnings reached $476m, compared to the third quarter’s $230m, which is a surprisingly positive result, given the more cautious commentary from the company’s peers.

(Sandra Speares, and Tony Gray, Lloyd’s List Editorial, Lloyd’s Casualty Week, 30 January 2004)

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