In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, MDL No. 2179 (E.D. LA. July 2011) (Rec. Doc. 2169), decides a motion to stay litigation between Anadarko and BP on the basis of the international agreement titled “Macondo Well Joint Operating Agreement” (JOA). The Court grants a stay and in the brief opinion discusses the important question whether and under what circumstances a party’s participation in litigation has the effect of waiving its right to insist on arbitrating.

For reasons unexplained in the Court’s decision, BP had issued written discovery requests and participated in depositions against Anadarko; BP had taken the position with respect to another party (Transocean) that by participating in MDL discovery the right to arbitrate had been lost; and BP had waited a “substantial” months to assert its right to arbitrate. On the other hand, BP had filed no affirmative pleadings against Anadarko; had noticed no depositions itself (merely participated in depositions noticed by others); and had tried to condition the discovery it took on the motion to compel arbitration being denied.

The Court determined that the arbitration clause of the JOA was broad enough to cover the disputes between the parties. It also placed a “heavy burden” of showing waiver on the party seeking to avoid arbitration given “the strong presumption in favor of arbitration”.

The Court found no waiver since “BP did not substantially invoke the judicial process by its limited actions”. With respect to whether delay in seeking arbitration was sufficient to constitute a waiver, the Court found that delays of up to eight to 13 months had been found not to constitute a waiver (the decision is not clear on how long BP waited). Key to the decision is that BP “had not filed claims against Anadarko nor has it asked the Court to make any judicial determinations about the relationship between BP and Anadarko”.

Rather than dismissing the case, the Court stayed it, pending the arbitration.