"A federal-appeals-court ruling late Monday might spare BP PLC from making hundreds of millions of dollars in compensation payments stemming from its 2010 Gulf of Mexico oil spill.

The Fifth U.S. Circuit Court of Appeals said a lower-court judge in New Orleans must address whether companies seeking payouts from a 2012 settlement actually suffered damage that directly stemmed from the oil spill. That judge, Carl Barbier, had argued he only needed to ensure the court-appointed administrator overseeing the settlement was using proper accounting methods, not whether the firms’ losses were caused by the spill.

The appeals court disagreed. “The district court erred by not considering the arguments on causation,” the appeals court said in a 2-1 decision. “The issue of causation is again remanded for expeditious consideration.”

The appeals-court order also calls for a halt, at least temporarily, on payments to any business that cannot trace its injury directly back to the spill. Those payments could be made at a later date, the ruling said.

A BP spokesman said Monday’s ruling supports what the company has been saying over the past year, both inside and outside the courtroom—that the court-appointed administrator was misinterpreting the language of the oil-spill settlement."