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, 22 January 14
HANDY/SMAX: TALK OF RATES INDICATES A STEADY TO FIRMING TREND - INTERMODAL
Last week closed off on the red once more for the Dry Bulk market, which continues to see freight rates trying to get steady feet. Nonetheless, with ...
Wednesday, 22 January 14
EXPORT BAN ON UNPROCESSED MINERALS EFFECTIVE 12 JANUARY 2014 - THREE - YEAR REPRIEVE FOR SOME, BUT UNCERTAINTY REMAINS: PWC
COALspot.com: On 11 January 2014, only hours before a long-debated ban on the export of unprocessed minerals was to come into effect, the Government ...
Wednesday, 22 January 14
DRY SECTOR: SENTIMENT REMAINS STRONG - INTERMODAL
As we have now entered 2014 and the Chinese are soon entering their Year of the Horse (sit tight for the ride!), it is a great opportunity to see ho ...
Wednesday, 22 January 14
SGX SUCCESSFULLY LAUNCHED FREIGHT FUTURES
COALspot.com: Singapore exchanged announced that, SGX Freight Futures were successfully launched on 20 January 2014, and the first trade ...
Tuesday, 21 January 14
PORT OF NEWCASTLE SHIPPED SLIGHTLY MORE COAL WEEK ON WEEK
COALspot.com: In the week ended 20 January 14, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 2. ...
|
|
|
Showing 3891 to 3895 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Central Java Power - Indonesia
- CNBM International Corporation - China
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Economic Council, Georgia
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
|
| |
| |
|
