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Offshore Construction Contracting Principles

Indemnity for Personnel and Property

It is recommended that the following principles be applied in relation to indemnities for personnel and property under offshore construction contracts.

Knock for Knock Indemnity

Each Party shall assume responsibility for the personnel and property within its own Party Group and shall indemnify the other Party accordingly, irrespective of cause or circumstances, and irrespective of any negligence or any misconduct.

Third Party Indemnity

For the purpose of liabilities and indemnities, any personnel or property at the Offshore Location such as platforms, pipelines, vessels and rigs, but excluding any Contractor Group personnel or property, shall be considered Company Group property.

Responsibility for "Deductible"

Irrespective of the above, Contractor shall assume liability towards loss, damage or destruction of Company Group property solely caused by Contractor up to a maximum of US$100,000 per event or series of events emanating from the same cause.
A few considerations:
  • While the US$100,000 per event represents a fair part of Contractor's projected profit, this should be no problem for a Contractor which has confidence in the quality and safety of its operations;

  • This maximum sum is irrespective of any deductibles which Company may be liable for under its insurances (if any) and for which Company shall always remain solely liable. (Some operators elect to self-insure)