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.
|
|
Friday, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
|
|
|
Showing 31 to 35 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Minerals Council of Australia
- Australian Coal Association
- Siam City Cement - Thailand
- MS Steel International - UAE
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- GMR Energy Limited - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
|
| |
| |
|
