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, 20 January 14
SUB-BIT INDONESIA COAL SWAP SEEN LOWER IN 2ND HALF OF 2014
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery lost $ 0.78 pmt month on month on Friday 17 January 2014. T ...
Monday, 20 January 14
THE CFR SOUTH CHINA COAL MARKET APPEARS TO HAVE LOST DIRECTION
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery lost 4.25 percept month on month and closed at US$ 79.48 per mt as ...
Sunday, 19 January 14
FREIGHT MARKETS SEE CONTINUED WEAK PERFORMANCE
COALspot.com: The market has continued to soften particularly in the far East/SE Asia sector.
The BDI was down 6 pct week on week, the index was ...
Friday, 17 January 14
US COAL PRODUCTION DOWN WEEK ON WEEK: EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.3 million short tons (mmst) of co ...
Friday, 17 January 14
DRY BULK MARKET ENDS DECLINE, BOUNCES BACK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's been a rough start to the New Year for the dry bulk market, which was supposed to be on the verge of rallying to new heights this year, on the ...
|
|
|
Showing 3896 to 3900 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- White Energy Company Limited
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
|
| |
| |
|
