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, 15 May 14
USA COAL CONFERENCE
Press Release: IHS Inc. (NYSE: IHS), the leading global source of information and analysis, will host the Coal USA Conference, June 18-20, 2014, ...
Wednesday, 14 May 14
COAL PRICES IN CHINA HAVE DROPPED TO THEIR LOWEST LEVELS SINCE END-2008
COALspot.com: Coal prices in China have dropped to their lowest levels since end-2008, Fitch says in its latest rating report on one of the coal ...
Wednesday, 14 May 14
ALMOST THROUGH THE HALF OF THE YEAR, THE DRY BULK INDEX SHOW SIGNS OF WEAKNESS; CREATING TO BOTH EXISTING SHIP OWNERS AND POTENTIAL INVESTORS A LOT OF INSECURITY - PANOS MAKRINOS
Almost through the half of the year, the overall shipping market and more specifically the Dry Bulk Index show signs of weakness, creating to bo ...
Tuesday, 13 May 14
NPC COAL EXPORT VOLUMES PLUNGE TO 2.48 MMT WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 12 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Quee ...
Tuesday, 13 May 14
YET ANOTHER POSIDONIA EXHIBITION IS ON ITS WAY - INTERMODAL
With less than a month to go before another Posidonia exhibition starts and all the parties and celebrations get under way we thought that it wo ...
|
|
|
Showing 3706 to 3710 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Deloitte Consulting - India
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
|
| |
| |
|
