Widow's Contractual Claim against BP Upheld by UK Supreme Court

Abstract

Headquartered in London, British Petroleum (BP) is one of the largest oil companies in the world. It is best known for the Deepwater Horizon disaster: the largest oil spill in history for which the company managed to wriggle its way out of trouble by paying record fines and pleading guilty to charges of eleven counts of manslaughter, two misdemeanors and a felony count of lying to Congress. It is fair to say that BP’s corporate reputation, an important value creating intangible asset and a yardstick for measuring overall trustworthiness, is rather poor indeed. The case of Braganza [2015] UKSC 17 is not related to the environmental catastrophe. Nevertheless, turning on whether the corporate giant ought to have paid death benefits to an employee’s widow, it readily demonstrates that BP lacks corporate social responsibility towards its employees and their family members. Braganza threw up two connected questions of principle: first of all, the meaning of the general requirement that the decision of a contractual fact-finder must be a reasonable one; and secondly, the proper approach of a contractual fact-finder who is considering whether a person may have committed suicide. In 2009, Mr Renford Braganza, whose contract of service precluded payment of death in service benefits in the event death resulted from the employee’s “wilful act”, disappeared while on duty as the chief engineer on the MV British Unity (an oil tanker in the mid-North Atlantic managed by BP with an exclusively Indian crew). Mrs Niloufer Braganza’s claim in contract against BP for death benefits amounted to US$230,265. BP’s internal inquiry about the disappearance identified six factors supportive of suicide and concluded that the most likely scenario was that Braganza jumped overboard deliberately. At first instance, the Admiralty Court upheld the contractual claim but did not make a finding as to the cause of Braganza’s death. However, the Court of Appeal was of the view that Braganza had thrown himself overboard to commit suicide and it overturned the decision and upheld BP’s appeal on the contractual issue. By a majority of 3 to 2 the Supreme Court allowed Mrs Braganza’s appeal with the result that her claim in contract, for the sum of US$230,265 with interest, succeeded. The court held that on the factual matrix of Braganza’s case, the decision-maker should not simply have accepted the view of the inquiry, which was conducted for a different purpose, that suicide was the most likely explanation for Braganza’s disappearance. Lady Hale found no positive indications of suicide and she even made the slippery Durkheimian point that Braganza was a Roman Catholic and for him suicide was a “mortal sin”. Taking the view that “employment law is complicated and demanding in many legal systems, but employers are expected to know it,” her Ladyship dubbed the six factors “straws in the wind”. In the round, the court held that a decision taken by an employer that an employee had committed suicide (an event precluding entitlement to death in service benefits under his contract of employment) was not a rational or reasonable decision unless the employer had had it clearly in mind that suicide was such an improbability that cogent evidence was required to form the positive opinion that it had taken place. As reasonable bystanders, we can only applaud the majority’s decision to allow the appeal because it is totally unethical that a company such as BP – which is best known for destroying the environment and serious bribery and corruption in its tanker division – should be able to exclude payments to an employee’s widow on a summary basis in the absence of any concrete evidence of suicide. Notably, Lord Neuberger would have dismissed the appeal because a combination of sufficiently cogent reasons justified the finding that Braganza took the unusual and tragic course of committing suicide. With the utmost of respect to Lord Neuberger, perhaps his Lordship ought to have made a bit more of Lady Hale’s Durkheimian point!