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, 02 April 14
CHINA: ARBITRATION CLAUSES IN BILLS OF LADING UNDER CHINESE LEGAL PRACTICE - SKULD
KNOWLEDGE TO ELEVATE
Successful incorporation of a charterparty arbitration clause into the bills of lading is not a straight forward matte ...
Wednesday, 02 April 14
BPI BREAKING BELOW THE 1,000 PSYCHOLOGICAL LEVELS - INTERMODAL
Any resistance put forth by the Dry Bulk market the week prior was succumbed this time round. All indices slid and losses were noted across the ...
Tuesday, 01 April 14
NEWCASTLE PORT SHIPPED 11.95 MILLION TONS OF COAL IN MARCH 2014
COALspot.com: In the week ended 31 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2 ...
Monday, 31 March 14
SHIPPING CONFIDENCE HITS HIGHEST LEVEL SINCE 2008 - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for almost six years in the three-month period to February 2014, ...
Monday, 31 March 14
COAL SWAP FOR Q1 2015 DELIVERY HAS CLOSED 4.76% HIGHER COMPARED Q2 14 CLOSING
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 gained this pa ...
|
|
|
Showing 3771 to 3775 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Planning Commission, India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
|
| |
| |
|
