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.
|
|
Wednesday, 04 June 14
SKULD: DIVERSIFICATION AND A ROBUST BOTTOM LINE
In February, I was delighted to ring in the new policy year with the Skuld team following a solid renewal round and a strong year. 2013 was, in man ...
Monday, 02 June 14
SUB-BIT FOB INDONESIA COAL SWAPS LOST GROUND THIS WEEK
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports re ...
Monday, 02 June 14
SOUTH CHINA COAL SWAP WAS SHOWING A POSITIVE MOVE IN Q4, INSTEAD OF THIS WEEK'S WEAK TREND
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 3.39 percent month on month and closed at US$ 72.65 per mt as on F ...
Sunday, 01 June 14
INDO - INDIA SUPRMAX FREIGHT RATES CONTINUED TO DOWN THIS WEEK
COALspot.com: The freight market was soft this past week as all sectors soften particularly Panamax index was lost 129 points or 12.88% week on wee ...
Friday, 30 May 14
CLEAN COAL PROCESSING & CONVERSION ASIA SUMMIT 2014
Clean Coal Processing & Conversion Asia Summit 2014 will be held on Nov 20-21st, 2014 in Jakarta, Indonesia.
With the cooperation of ...
|
|
|
Showing 3676 to 3680 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- White Energy Company Limited
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- The University of Queensland
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Posco Energy - South Korea
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Planning Commission, India
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
|
| |
| |
|
