On Thursday (26 Jan), a federal judge said to BP Plc that that company must indemnify Transocean Ltd for their compensatory loss claims over Gulf of Mexico oil spill in the year 2010.

Carl Barbier, the U.S. District Judge, who supervises multistate lawsuit over spill, agreed with the company (Transocean) that Swiss driller wasn’t accountable for compensatory loss as third parties claimed for oil spilled below the ocean surface.

Carl Barbier also ruled that for punitive damages, the London-Based BP need not cover Transocean, also for other civil fines imposed by the U.S. government under the federal Clean Water Act.

The decision revealed on Thursday reduces potential liabilities Transocean faces because of Deep-water Horizon drilling rig explosion on April 20, 2010 that caused eleven deaths and the biggest offshore oil spill in the U.S. history.

The BP shares fell by 0.6% and shares of Transocean rose 8.9 percent.

According to a research note of UBS Securities LLC analyst Angie Sedita “Indemnification from compensatory damages is key for Transocean,” whose litigation exposure is now “materially diminished,”Both firms accepted and judge’s decision.

Transocean spokesman Lou Colasuonno wrote an email, “This confirms that BP is responsible for all economic damages caused by the oil that leaked from its Macondo well, and discredits BP’s ongoing attempts to evade both its contractual and financial obligations.”

Daren Beaudo, BP spokesman said in an emailed statement that the decision “holds Transocean financially responsible for any punitive damages, fines and penalties flowing from its own conduct. As we have said from the beginning, Transocean cannot avoid its responsibility for this accident.”

Judge Barbier did not decide which company would be liable for the civil penalties, punitive damages, or rule on BP’s claim.