We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Tuesday, 11 March 14
HOLD HARMLESS CLAUSES ARE NOT ALWAYS MUTUAL! - ITIC
 KNOWLEDGE TO ELEVATE
ITIC provides an insurance related contract review service to all of its members. As the leading professional indemnity insurer for the offshore and hydrographic sector, we are often asked to review contracts which contain a mutual hold harmless or knock for knock clause. We are usually told that the presence of this clause in a contract means the risk of a claim is either significantly reduced or even non-existent! No contract is completely risk free. However, if the clause is worded carefully, and is balanced between both contracting parties, it is good contractual risk management and can help to reduce the chance of a successful claim of negligence against you.
A mutual hold harmless indemnity regime provides that each party to the contract agrees to take responsibility for, and to indemnify the other, against injury and loss to its own personnel and property and its own ‘consequential losses’. This is intended to be effective even if the accident and related losses are caused by negligence.
The mutual hold harmless clause in the LOGIC standard form contracts, does seek to create balance. However, in many of the contracts we review, the party with the greater bargaining power will naturally seek to swing the balance back to their favour. Consequently, there are a number of pitfalls to consider. We shall provide a few of these below. This shall be viewed from an English law and a professional indemnity insurance perspective.
Insurance
First, when asked to review contracts with a mutual hold harmless clause, ITIC would suggest that your other insurers are notified. Potentially you are signing away the recovery rights of both your property and employers’ liability insurer. Therefore, you should seek authority from them before signing a contract containing a mutual hold harmless clause.
They may not be mutual
It is staggering how often we see contracts where “the consultant shall indemnify the company against any and all losses,” but there is no reciprocal benefit to the consultant. Furthermore, the clause can be more beneficial to one party, as one side may be carrying out all of the work, using only their employees and property. The clause should be read carefully to ensure there is a mutual provision.
Third party damage
The mutual hold harmless clauses seen by ITIC, although setting out the losses suffered to the property or employees of the contracting parties, will often leave the distribution of third party liabilities unclear. If, for example, you act as a hydrographic consultant on a survey vessel, you should be protected from third party claims arising from the operation of the vessel. The consultant should not be responsible for potentially multi-million dollar pollution liabilities, or collision damages to third party property. These should fall upon the party who has insurance for these liabilities, such as the vessel’s protection and indemnity or hull and machinery cover.
Gross Negligence
The hold harmless regime provides that neither party shall be liable to the other even where the loss occurred is due to the negligence of one party. However, in some cases we see the clause is amended to state this does not apply in instances of “gross” negligence. Therefore, if one of the parties is found to be grossly negligent they will not be held harmless. This might be fine if the contract was pursuant to Norwegian or US law.
Unfortunately, there is no true concept of gross negligence under English law. You should always operate under the assumption that you are negligent or you are not. Baron Rolfe, in - Wilson v Brett (1843) - stated that he “could see no difference between negligence and gross negligence; that it was the same thing, with the addition of a vituperative epithet.” In other words “gross” did not add anything to the standard negligence test. That being said, if gross negligence is included in a contract, a tribunal will attempt to interpret it. The leading decision comes from Lord Mance in - The Hellespont Ardent (1997) – in which he found that gross negligence: is “conduct so seriously negligent that the defendant should not be entitled to rely on the exemption clause.” He further added that it is “very much a matter of degree and judgment,” and, “all the circumstances must be weighed and balanced.” It should be pointed out that Lord Mance was interpreting a contract pursuant to New York law. Therefore, his words are not binding, and his interpretation on gross negligence may not be followed by subsequent tribunals.
The line between negligence and gross negligence can become blurred, and cases will turn on the facts and expert evidence. Moreover, tribunals may have differing opinions on how to apply the test against the facts, reaching differing decisions. On balance, the inclusion of gross negligence within a hold harmless clause in a contract pursuant to English law can lead to uncertainty and increased litigation costs.
Finally, it is understandable that contracting parties do not want the other to rely on a hold harmless clause, as a shield for reprehensible behaviour, beyond the ordinary test of negligence. However, as the line is blurred between that of negligence and gross negligence, a more delineated position to take, is between that of wilful default/misconduct and negligence.
Indirect damages
A further and final point we see, is how consequential or indirect losses are defined in the mutual hold harmless clause. It is usual that these losses are excluded under contract. However, the distinction between indirect and direct loss can be complicated. The famous case of Hadley v Baxendale [1854] found that direct losses were those which arise naturally from the breach of contract, and is therefore foreseeable and recoverable. Whereas, indirect losses were recoverable, but only if they were reasonably foreseeable by both parties, as a possible result of a breach, at the time of contracting.
A common misconception is that all “loss of profits” are indirect losses. This is wrong. Loss of profits can be either direct or indirect, depending on the facts of the case. The following is taken from the hold harmless clause of a contract we have reviewed recently:
“ The consultant nor the company shall be liable to the other… for any consequential indirect damage, that may be suffered by the other.”
This clause could pose problems in the event of a claim, as it only excludes “consequential indirect damages.” Following Hadley v Baxendale, dependant on the facts, loss of profit can either be a direct or indirect result of the breach. If, for example, a consultant was providing design work for sub-sea equipment and carried out the design negligently, not only could this cause damage to property, but also lost drilling time, leading to lost revenue and profit. In this example, a tribunal could find the loss of profit arose naturally from the breach, and therefore, is a direct loss not excluded under the above hold harmless clause. Taking into account the current day rates of drill rigs, this could form a substantial part of any claim.
The clause should be amended to state loss of profits are excluded, whether direct or indirect.
Conclusion
ITIC’s advice is that you carefully review your hold harmless clauses to ensure that they are actually mutual and of benefit to you.
Source: ITIC / Hellenic Shipping
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
|
|
|
Showing 51 to 55 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Minerals Council of Australia
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Economic Council, Georgia
- White Energy Company Limited
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- The University of Queensland
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
|
| |
| |
|
