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.
|
|
Tuesday, 28 January 14
DRY BULK SHIP OWNERS RETREAT TO OLD 'HABITS', REFUSING TO DEMOLISH OLD VESSELS, THREATENING MARKET RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
If one thing is clear as we reflect on the 2013 shipping markets, it's that ship owners took advantage of low prices, in order to acquire newer ton ...
Monday, 27 January 14
MERCATOR SINGAPORE REPORTS 52% INCREASE IN EBITDA FOR Q3 FY 2014 AS COMPARED TO PREVIOUS QUARTER
COALspot.com: Mercator Lines (Singapore) Limited, a leading Indian-owned international dry bulk shipping company that operates a fleet of fourteen d ...
Monday, 27 January 14
13TH CLEAN COAL FORUM 2014
COALspot.com: (Press Release) - Produced by CDMC Events, The 13th Clean Coal Forum 2014 will be held on June 12 &13 2014 in Beijing, China. We a ...
Monday, 27 January 14
Q3 & Q4 API 8 CFR SOUTH CHINA COAL SWAPS CONTINUE TO REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swaps for average Q1 14 delivery lost 4.45 percent month on month and closed at US$ 79.05 per mt as on Frid ...
Monday, 27 January 14
Q3 2014 SUB-BIT INDONESIA COAL SWAP LOST GROUND, ENDS AT $60 PMT
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery lost 2.29% pmt month on month on Friday 24 January 2014. Th ...
|
|
|
Showing 3881 to 3885 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Star Paper Mills Limited - India
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
|
| |
| |
|
