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.
|
|
Monday, 21 April 14
DRY BULK MARKET UPS AND - MOST RECENTLY - DOWNS OFFERS NO ROOM FOR RELAXING AMONG DRY BULK SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market's latest demise, with the market retrating once again, since the end of March, has come at a time, when most ship owners ...
Sunday, 20 April 14
FREIGHT RATES END WEEK ON WEAK NOTE - VISTAAR
Wish you all Happy Easter.
The freight market continued to its downwards as BDI was fell 7.187 percent to 930 points week on week.
The ...
Friday, 18 April 14
US WEEKLY COAL PRODUCTION DECLINED BY 1% TO 18.9 MMST
COALspot.com – United States the world's second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal i ...
Thursday, 17 April 14
DRY BULK MARKET ON RETREAT MODE, WHILE NEWBUILDING ORDERING ACTIVITY STALLS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating this week, a pattern which emerged since late March. Yesterday the BDI (Baltic Dry Index) ended yet a ...
Wednesday, 16 April 14
INDONESIA'S FEBRUARY 2014 COAL EXPORT VOLUME FELL 2.41%
COALspot.com: Indonesia, the world 4th largest coal producer and the global largest multi grade coal exporter shipped around $1.77* billio ...
|
|
|
Showing 3746 to 3750 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- ICICI Bank Limited - India
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Australian Coal Association
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
|
| |
| |
|
