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The Commercial Court, a hold harmless indemnity & sub sea operations in international waters

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The Commercial Court, a hold harmless indemnity & sub sea operations in international waters

07 March 2018

In what may be one of his last Commercial Court opinions, Lord Tyre has issued his judgment following proof in Scanmudring AS v James Fisher MFE Limited (No.2).

The case saw the court grapple with an international contractual dispute between a specialised Norwegian sub-sea contractor and an English marine company concerned with underwater operations for a proposed wind farm in German territorial waters.

It is well known that contracts used by the offshore industry regularly carry “back to back” indemnity or “hold harmless” provisions. Such clauses often result in a “knock for knock” disposal of claims arising from offshore incidents. The contract in Scanmudring contained certain hold harmless provisions. The dispute concerned an offshore incident where a component on the pursuer’s sub-sea dredging machine became detached, resulting in the machine falling from a ship-board crane and landing on the sea-bed. The pursuer sued the defender for payment of contractual hire charges which it said were due on account of the temporary abandonment of the machine. In response, the defender claimed that the contractual hold harmless provisions dealing with loss of, or damage to, the machine precluded the pursuer’s claim.  The court held that, properly analysed, the pursuer’s claim was simply one for payment of the hire charges prescribed by the parties’ contract. The claim could not be re-characterised as a claim for damages involving loss of, or damage to, the machine. The terms of that contract precluded inquiry into the cause of the incident. As a result of all this, the “hold harmless” regime was of no application to the circumstances of the case.   

The judgment serves as a useful analysis from the court in relation to an important form of contractual provision in the offshore industry, and, in particular, the limits of its application.  It is also another example of the Commercial Court’s ability to deal efficiently and expeditiously with high level, commercial litigation. The proof was heard over a period of 5 days with evidence from no less than 18 witnesses which serves to illustrate the efficiency which can be achieved when the Commercial Court’s procedures are put to good use by experienced judges, counsel and solicitors.

The pursuer was represented by Garry Borland QC and Scott Manson, advocate. The defender was represented by Roisin Higgins QC.

A copy of Lord Tyre’s opinion can be found here: