“Anadarko’s $100M Coverage Showdown Rattles Energy Cos.”
Oil and gas companies will be watching intently as Anadarko Petroleum Corp. heads to the Texas Supreme Court on Monday to challenge a ruling that insurance doesn’t cover its $100 million defense bill in Deepwater Horizon litigation, in a case that energy industry groups have decried as an egregious example of insurers using courts to rewrite their policies.
…Conversely, Thompson & Knight LLP associate John Atkins, who represents insurers, said Anadarko is essentially trying to have its cake and eat it too. On the one hand, the company is arguing that the energy policy’s terms should be interpreted in its favor because the underwriters wrote the language, but on the other, it has indicated that it was savvy enough in insurance matters to negotiate the deletion of a policy provision.
“In order to advance those positions, Anadarko has to argue that this policy is a contract of adhesion, or at least that there was a significant imbalance at the negotiating table,” Atkins said. “However, they point out that they did get one provision deleted, and [the underwriters argue] that the language of the joint venture provision was negotiated to some extent.”
At the end of the day, though, Atkins said he thinks Anadarko’s contentions regarding the balance of power at the negotiating table amount to nothing more than a distraction.
“These points are a bit of a sideshow, though, and I think the likelihood is that the Texas Supreme Court will try to decide this case on the language of the policy, and will only look to those other arguments if they find that the language is unclear,” he said.
Still, attorneys say if the Texas high court takes a broader approach to the case and weighs some of the fundamental policy interpretation principles cited by Anadarko, its ultimate decision could have a more expansive effect across the insurance landscape in the Lone Star State.
“If the court does consider some of these policy construction principles, it is possible that it may actually set out how all these doctrines relate to one another, and how and when exceptions to these doctrines apply,” Atkins said. “If so, those holdings would not just apply to the energy sector, but to all insurance law in Texas.”