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, 07 March 14
US PRODUCED 19.4 MMST OF COAL IN PAST 7 DAYS, SAYS EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.4 million short tons (mmst) of coal in ...
Thursday, 06 March 14
PANAMAX MARKET IS STRUGGLING IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
The Handy/Supra market experienced a rate increase in the Pacific. The activity itself is not too big, but spot tonnage is clearing up and ow ...
Wednesday, 05 March 14
THE BIG BULKERS HAVE IN FACT WITNESSED SIGNIFICANT IMPROVEMENTS IN BOTH BASINS
The BDI continues to gain back some of the lost ground, although in reality there isn't a lot to celebrate abou ...
Wednesday, 05 March 14
LEAVE IT TO CAPES TO CHANGE THE DIRECTION OF THE DRY BULK MARKET - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
Leave it to Capes to change the direction of the Dry Bulk market. The big bulkers managed to drag the BDI ...
Tuesday, 04 March 14
AUSTRALIA'S NPC TO SHIP 11.85 MMT OF COAL IN MARCH
COALspot.com: In the week ended 3 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 3.15 m ...
|
|
|
Showing 3816 to 3820 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- The University of Queensland
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Minerals Council of Australia
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
|
| |
| |
|
