Risk allocation in oil and gas contracts

1. 0RISK ALLOCATION IN OIL AND GAS CONTRACTS BY WAY OF INDEMNITY,EXCLUSION & LIMITATION OF LIABILITYValentine Ataka**Valentine Ataka is an Advocate of the High Court of Kenya, a blogger on Energy Law and Policy issues and an LLM Oil& Gas Law Candidate (RGU-2013) 2. 1TABLE OF CONTENTSLIST OF ABBREVIATIONS ………………………………………………………….……………………………….2ABSTRACT …………………………………………………………………………………………………………………. 21.0 INTRODUCTION ..……………………………………………………………….……………………....32.0 INDEMNITY…………………………………………………………………………..……………………….42.1 Definition of Indemnity ..…………………………………………….…………..….………..42.2 Examples …………………………………………………..………….……………..………….…...52.3 Interpretation of Indemnity Clauses ……………………………………….………………62.4 Scope of Indemnity ……………………………………………………………………………….. 63.0 EXCLUSION OF LIABILITY ……………………………………………………....….……...103.1 Definition of Exclusion …………………………………..…………..……………………..103.2 Examples & Scope of Exclusion ….……………………..….…………………..…….103.3 Interpretation of Exclusion Clause…………….....……..…………………………...134.0 LIMITATION OF LIABILITY ……………………………………………………..……………. 144.1 Definition of Limitation ……………………………………………………………………….. 144.2 Examples and Forms of Limitation …………………………………………………….. 145.0 CONCLUSION ……………………………………………………………………………….………..….15BIBLIOGRAPHY…………………………………………………………………………………………..……………..17 3. 2LIST OF ABBREVIATIONSAIPN – Association of International Petroleum NegotiatorsE&P – Exploration and ProductionIMHH- Industry Mutual Hold Harmless SchemeLOGIC - Leading Oil and Gas Industry CompetitivenessNOGEPA - Netherlands Oil and Gas Exploration and Production AssociationO&G – Oil and GasABSTRACTThis write-up presents an analysis of the various standard clauses used in Oil andGas Industry to apportion liability. The discussion focuses on standard provisionsfor indemnity, exclusion and limitation of liability and relies on examples fromvarious model contracts, industry practice around the world as well as case law.The approach taken in the brief is to discuss how such provisions can be negotiated,drafted, interpreted and applied in order to effectively realize the intended object ofproperly allocating contractual liability between and amongst parties in oil and gascontracts.This will be achieved by discussing various issues relating to the definitions,interpretation, scope of and exceptions to liability apportioning by the threeapproaches. Each issue will be discussed on the background of case law, otherauthors’ opinions and examples from industry standards contracts. 4. 31.0 INTRODUCTIONPlayers in the oil and gas industry have to contend with a wide range of risks1.These include mechanical breakdowns, HSE accidents, unfavorable price changesetc2. Atoning for the financial consequences of such risks can be very costly3andmay cause significant financial set-backs to the business.4To minimize exposure,industry players usually undertake various measures and practices to manage therisks. In a wide context, risk management includes prevention and mitigation ofrisks and remediation of loss in the event of occurrence5.One element of risk management is risk allocation between or among the partiesinvolved in an undertaking6. This is particularly problematic in the O&G industrywhich is characterized by multiplicity of parties in one project7. Risk allocation in the1Greg Gordon, ‗Risk Allocation in Oil and Gas Contracts‘ in Greg Gordon et al (eds) Oil andGas law: Current Practice and Emerging Trends’ (2ndEdn, Dundee University, 2011)2Tobby Hewitt, ‗Who is to Blame? Allocating Liability in Upstream Project Contracts‘ Journalof Energy & Natural Resources Law Vol 26 No 2 20083Piper Alpha is said to have occasioned a total insured loss of US$3.304 billion; SeeHewitt, ibid4According to the Guardian the Deepwater Horizon incident has let to the dip of BP profitsby 35% See The Guardian, ‘BPs Deepwater Horizon costs rise $847m‘ Tuesday 31 July2012http://www.guardian.co.uk/business/2012/jul/31/bp-deepwater-horizon-costsaccessed 12thApril 20135Aven T et al ‗A Decision Framework For Risk Management, With Application To TheOffshore Oil And Gas Industry‘ Reliability Engineering and System Safety 92 (2007) 433–4486Adedeji Bodunde Badiru & Samuel Olusola Osisanya, Project Management for the Oil andGas Industry: A World System Approach (CRC Press, 2013) e-book7For instance according to the House of Lords in Caledonia Northsea vs BritishCommunication Plc & Others [2002] UKHL 4, the Piper Alpha project whose accident of 6thJuly 1988 killed over 160 workers, there were over 24 Contractors involved 5. 4industry may be achieved by setting out in the contracts clauses which declarewhich party will be liable for (or exempted from) a given risk and to what extent.There are three forms of risk allocation approaches common to contracts used inthe O&G industry8. These are(a) Indemnity(b) Exemption and(c) Limitation of liabilityThe approaches are discussed separately below.2.0 INDEMNITY2.1 DefinitionUnder an indemnity arrangement the indemnifying party agrees to make apayment to the party having the benefit of the indemnity in the event that theindemnified party suffers loss as a result of the occurrence of a specified event9.In a more simple approach a Canadian Court in Lafrentz v. M & L Leasing10defined contractual indemnity as ‗an obligation to protect against or keep freefrom loss, to repay for what has been lost or damaged, to compensate for a loss‘To contradistinguish contractual ‗Indemnity‘ from ‗Exclusion‘ the Supreme Courtof England in Farstad Supply AS VS Enviroco11has stated that a clause thatuses both phrases ‗indemnify‘ and ‗hold harmless‘ amounts to risk allocation byindemnity and exclusion. The Court explained that the operation of the Clausewould in fact determine its true nature i.e. if it serves to create responsibility forthe exposure of ‗a third party‘ it would be an indemnity Clause; whereas if it8Greg Gordon, (above n1)9ibid102000 ABQB 714 (CanLII)11[2010] UKSC 18 6. 5operates only to create responsibility for the exposure of a party in the contractthen it would be ‗an exclusion‘ clause.Indemnity may be further dichotomized as ‗unilateral‘ or ‗mutual‘ indemnity12. Theformer refers to a situation whereby only one party (A) takes up responsibility toindemnify another (B) in the event that B suffers loss in the course of theircontractual relationship. Mutual indemnity however refers to a situation wherebyeach party is simultaneously a potential indemnifier and beneficiary of possibleindemnity.2.2 ExamplesAn example of an indemnity Clause is set out at Clause 19.1 LOGIC StandardOffshore Service Contract13reproduced in part below:19.1 The CONTRACTOR shall be responsible for and shall save, indemnify, defendand hold harmless the COMPANY GROUP from and against all claims, losses,damages, costs (including legal costs) expenses and liabilities in respect of:(a) loss of or damage to property …….The addition of the term ‗defend‘ to the obligation of the indemnifier for example inthe LOGIC contract above implies that the obligation extends to conducting thedefence of any litigation that may arise against the benefiting party.1412Gordon (above n1)13LOGIC, ‗Standard Contracts for the UK Offshore Oil and Gas Industry: Service Onshore &Offshore‘ http://www.logic-oil.com/sites/default/files/documents/Services%20Onshore%20and%20Offshore%20Edition%202.pdf accessed 3rdMarch 201314Gordon (above n1) 7. 62.3 Interpretation of Indemnity Clauses2.3.1 ContextualismCourts will construe an indemnity clause in the context of the entire contract. Thisresonates with Lord Hoffman‘s restatement in Investors Compensation SchemeLtd vs West Bromwich Building Society15. He acknowledged that while the oldrule of ‗objective bystander‘ still applied in interpretation of contracts, such abystander should be assumed to be informed of most of the background facts to thedisputing parties‘ contract.2.4.2 Contra proferentem ruleWhere there is ambiguity in the clause, the ambiguity will be construed to give anoutcome least favourable to the party likely to benefit from (in this context to beindemnifying pursuant to) the clause.16However according to Lord Glennie inSlessor vs Vecto Gray17where indemnity is mutual (for example in a knock forknock clause) the rule ceases to apply since both parties stand to be beneficiaries.2.4 Scope of indemnity2.4.1 Scope where there are multiple partiesMultiplicity of parties as is common in O&G contracts may give rise to abstractresults in effecting an indemnity clause. In Slessor18under Clause B13 of theAgreement in question, the partiesmutually and irrevocably [undertook] to release, defend and indemnify each otherfor damage to any property and/or injury to/or death of the personnel of theothers, arising out of or in connection with the Work, howsoever caused[emphasis added].15[1998] 1WLR 89616Ibid17[2006] CSOH 104 paragraph 1218Ibid 8. 7The Court interpreted ‘personnel of the others’ to mean that the three parties in thecontract (say A, B and C) had agreed that A would indemnify B&C for the injury ofB&C‘s personnel, B had agreed to indemnify A&C for the injury of A&C‘s personneland similarly C to indemnify A&B‘s for the injury of A&B‘s personnel. Whileconcerned that this interpretation ‗was not supported by any commercial orbusiness commonsense‘ Lord Glennie held that since it was the clear wording of theClause, it would be upheld.2.4.2 Scope of indemnity where there is subrogationWhere the Indemnifier has taken out an insurance policy to cover the same riskthat is the subject of the contract, the obligation to indemnify may be extinguisheddepending on whether or not there is an express obligation on the indemnifier totake out the policy.In BP Exploration Operating Co. Ltd. V. Kvaerner Oilfield Products Ltd19Clause 10.5 of the Contract in question imposed an obligation on BP to take out aninsurance policy whose cover was found to extend to the contractor. The Court heldthat in the circumstances, the Insurance Company had no right to subrogate andthe duty to indemnify was extinguished once the insurance company settled theclaim.By contrast in Caledonia North Sea Limited (Respondents) v BritishTelecommunications Plc (Appellants) (Scotland) and others20the courtfound that there was no obligation on the part of the operator to take out aninsurance policy. Still it did and the insurance company met the claims. The Courttherefore upheld the insurer‘s right to subrogate and be reimbursed in full assecondary indemnifiers.19[2004] All ER (D) 8720[2002] UKHL 4 9. 82.4.3 Extension of scope to third PartiesIndemnity will ordinarily not extend to third parties if not contemplated by thecontract. In Westerngeco v ATP Oil & Gas,21a contractor (Westerngeco) enteredinto a contract for streaming of seismic cables from a vessel with ATP (company)whereby‗The parties agree[d] that the Contractor‘s Group‘s [the claimant‘s] liability underthis Contract shall not exceed the aggregate amount of payments received by theContractor for the work and Company [Clause 19.8]In carrying out the work, Westerngeco damaged wellheads belonging to Totalwho were not a party to the contract. The Court had to determine whetherpursuant to Clause 19.8 Westerngeco could claim indemnity to also cover lossesincurred by Total.The Court found that the words ‘under this Contract’ in Clause 19.8 referred to thedefendant only hence held that a limitation of liability could only be effective to limitliability to the other contracting party, not third parties.2.4.4 Extending scope through Knock for Knock IndemnitiesThe UKCS industry offers a model approach to resolving the complexities ofindemnity in a multi-party industry. Under the auspices of LOGIC, industry playershave put together a Mutual Hold Harmless (IMMH) Scheme with a Draft Deed(IMMH Deed22). Contractors join the scheme by signing standard Deeds ofAdherence. Under Clause 2.1 of the deed, the signatories are obliged tobe solely responsible for and shall defend, indemnify and hold harmless the otherSignatories and the other members of their respective Groups against all Claimsarising from, out of, or relating to the Services in connection with:(i) personal injury to or sickness……; and(ii) loss of, recovery of, or damage to any Property ……; and21[2006] All ER (D) 25422LOGIC ‗Mutual Indemnity And Hold Harmless Deed‘(2012) http://www.logic-oil.com/sites/default/files/documents/IMHH%202012%20Deed.pdf Accessed 12thApril 2013 10. 9(iii) Consequential Loss ……...The Deed extends the scope of indemnity to the signatories and their affiliates,personnel and invitees23. At Clause 5.1 it also resolves the subrogation problem byenjoining signatories to procure waiver of subrogation rights from their respectiveinsurers.The deed however serves only as a gap filler since it does not take precedence overany existing indemnity agreements between parties.24Further being a voluntaryScheme, it has been shunned by some important players in the industry such asseveral large drilling companies who are wary of the potential losses which theymay suffer since they have relatively larger numbers of personnel on theplatforms.25A similar arrangement is adopted by the Industry in Netherlands through theMutual Indemnity Agreement in the E&P Industry administered by NOGEPA26. TheDutch scheme aims to provide clarity in allocation of liabilities and avoidance ofoverlapping insurances covering identical risks. Unlike the IMHH model, it permitsthe participation of Operators.23See definition of ‗Group‘ under Clause 1 in reference to the entitlement of ‗Groups‘ underClause 224Clause 11 of the Deed25Gordon (above n1)26NOGEPA, ‗Mutual Indemnity Agreement‘http://www.nogepa.nl/en/Home/MIAwederzijdsevrijwaring.aspx accessed 20th April 2013 11. 103.0 EXCLUSION OF LIABILITY3.1 DefinitionThe sum effect of an exclusion clause is to absolve a party from responsibility forloss arising from an identified risk27. The absolution may be in respect of a class ofrisks or any risks whatsoever arising from the contract.These provisions in a contract create a class of injury or loss whose occurrence areexpressed not to be qualified for remediation by the party with the obligation toremedy the risk covered.3.2 Examples & Scope of Exclusion ClausesIn O&G contracts parties usually agree to exclude liability for(i) Consequential loss(ii) Loss resulting from wilful conduct(iii) Loss resulting from gross negligence3.2.1 Consequential/indirect LossThe common law basis for this kind of exclusion is inferable from the celebratedcase of Hadely vs Baxendale28which established the two-limb rule that an injuredparty can only claim(i) damages that are fairly and reasonably considered to have arisennaturally from the breach itself, or(ii) such damages as may be reasonably supposed to have been in thecontemplation of both parties at the time the contract was made.The English courts have held the view that Consequential loss for the purposes ofexclusion connotes matters falling under the second limb in Hadley vs. Baxendalesuch as production costs and loss of profit by relating it to. For instance inCroudace Construction v Cawoods Concrete Products29the liability clauseprovided that:we are not under any circumstances to be liable for any consequential loss ordamage caused or arising by reason of late supply or any fault failure or defect in27Fastard Case [2010] UKSC 18289 Exch. 341, 156 Eng. Rep. 145 (1854)29[1978] 2 Lloyds Rep 55 CA 12. 11any material or goods supplied by us or by reason of the same not being of thequality or specification ordered or by any other matter whatsoever.The Court of Appeal in England held that the word consequential excluded any losswhich directly and naturally resulted in the ordinary course of events from latedelivery which included the indemnification of a claim made by sub-contractorsagainst the claimants. The claim was made in respect of a delay in the sub-contractors‘ work which was said to have been caused by the absence of thematerial which the defendants ought to have delivered.However a Victorian (Australia) Court of Appeal in Environmental Systems PtyLtd v Peerless Holdings Pty Ltd30has discredited the English approach and heldthatit was not correct to construe consequential loss as limited to the second limbin Hadley v Baxendale in accordance with the English authorities. Instead,consequential loss in the exclusion clause should have the meaning that‗ordinary reasonable business persons would naturally conceive of‘. Namely,as ―everything beyond the normal measure of damages, such as profits lostor expenses incurred through breach‖Under the Australian approach therefore, costs incurred in curing the breach wouldbe excluded as consequential loss.3.2.2 Gross negligenceContractual allocation of liability defies the common law rule that a party will not becompensated for their own negligence31. Liability clauses generally permitcompensation irrespective of the negligence of the beneficiary. However this isusually qualified by exempting liability for losses arising out of the beneficiary‘s own‗gross negligent‘ acts.30[2008] VSCA 2631Timur Makarov, ‗Indemnity in the International Oil and Gas contracts: Key Features,Drafting and Interpretation‘(CEPMLP, June 2009) 13. 12In the Red Sea Tankers Ltd v Papchristidis32the Court described ‗grossnegligence‘ as embracing:serious negligence amounting to reckless disregard without any necessaryimplication of consciousness of the high degree of risk or the likely consequencesof the conduct on the part of the person acting or omitting to act;3.2.3 Wilful misconductWilful misconduct on the other hand was dealt with at length by Colman J in thecase of National Oilwell (UK) Ltd v Davy Offshore Ltd33where the judgeadopted the definition coined by Johnson J in Graham v Belfast and NorthernCounties Ry Co34where he says:Wilful misconduct in such a special condition means misconduct to which the willis party as contradistinguished from accident, and is far beyond any negligence,even gross or culpable negligence, and involves that a person wilfully misconductshimself who knows and appreciates that it is wrong conduct on his part in theexisting circumstances to do, or to fail or omit to do (as the case may be), aparticular thing, and yet intentionally does, or fails or omits to do it, or persists inthe act, failure, or omission regardless of consequences.In a more recent case of De Beers UK Limited v Atos Origin IT Services35, thejudge defined ‗wilful misconduct as conduct by a person who knows that heis committing, and intends to commit a breach of duty, or is reckless in thesense of not caring whether or not he commits a breach of duty.32[1997] 2 Lloyd‘s Rep 54733[1993] 2 Lloyd‘s Rep 58234[1901] 2 IE 1335[2010] EWHC (TCC) 14. 13The ingredients of wilful conduct as interpreted by the English Courtstherefore include knowledge, intention and recklessness.3.3 Interpretation of Exclusion Clauses3.3.1 Clause to be interpreted in the contractual and commercial contextThe Supreme Court of Canada in Tercon Contractors Ltd v. BritishColumbia36has taken the view that an exclusion clause should not be interpreted inisolation. The Court bears in mind the other provisions of the contract as well as thecommercial context of the contract and subject transaction.3.3.2 Where ‗exclusion‘ in not expressThe words used to exclude liability have a great influence on the likelydetermination of what the parties intended to omit from the ambit of liability. Inmany cases the Courts usually look to the express usage of the phrases such as‗consequential‘, wilful conduct‘ to find the existence of an exclusion.However, in Sonat Offshore SA v Amerada Hess Development Ltd37the Courtnoted that exclusion does not have to be express in the contract. The court statedthatit does not follow that because there is no express reference to the exclusion orlimitation of liability the agreement cannot have the effect on its true constructionof clearly providing for the consequences of breach or other fault.Saville in that case J followed the decision in The Evia38, where it was held that aprovision requiring charterers to pay for extra insurance if the vessel was orderedinto a war zone should be construed as providing exclusively for the consequencesof the charterers‘ breach in ordering the vessel to such a zone, though the provisiondid not expressly limit liability to the amount of the extra premiums.36[2010] SCC 4 (S.C.C.)37[1988] 1 Lloyd‘s Rep. 145 at 15738[1982] 2 Lloyd‘s Rep. 307 15. 144.0 LIMITATION OF LIBILITY4.1 DefinitionA liability clause may apportion the responsibility for remedying loss arising out ofan act of the benefiting party but at the same time put a cap on it39. The cap maybe on the basis of a predetermined portion of the loss or a fixed sum40.While an Exclusion clause completely absolves liability, a limitation clause merelycurtails the scope of the liability of the duty bearer.4.2 Examples and forms of Limitation4.2.1 Fixed amount limitationIt may be the desire of parties to specifically provide for the maximum amount ofloss that either of them would be liable for in the event of risk occurrence. Anexample is found at Clause 35 of LOGIC Standard Contract for Supply of MajorItems41. It provides thatthe CONTRACTOR‘s total cumulative liability to the COMPANY arising out of orrelated to the performance of the CONTRACT shall be limited to the sum specifiedin Appendix 1 to Section I – Form of Agreement, or in the absence of such sumthe CONTRACT PRICEThis type of limitation is used especially in O&G contracts where there is a prospectof unlimited and potentially exorbitant liability if left unchecked42. They may serve39Glenn D. Well et al, ‗Contracting to Avoid Extra-Contractual Liability—Can YourContractual Deal Ever Really Be the ―Entire‖ Deal?‘(2007)http://www.weil.com/files/Publication/563ccf98-648d-4e5b-b3e5-129805230615/Presentation/PublicationAttachment/fb77618a-f943-4797-98a1-2a69d92a4522/Extra-Contractual%20Liability%20Article.pdf accessed 13thApril 201340Gordon (above n1)41LOGIC, ‗General Conditions of CONTRACT for Supply of Major items of Plant andEquipment‘ http://www.logic-oil.com/sites/default/files/documents/Supply%20of%20Major%20Items%20of%20Plant%20and%20Equipment%20Edition%202.pdf Accessed 3rdApril 201342Gordon (above) pg 497 16. 15as a compromise where the parties cannot agree on a mutual hold harmlessindemnity or exclusion of consequential loss provision.They are advisable in the Oil and Gas industry for two key reasons summed up byGordon as follows(1) Some O&G projects are so valuable that even the potential losses which areunequivocally direct may be more than a contactor can bear; (2) even if the losseswhich the contractor fears should be shut out by the indemnity or exclusion clausethere is always a risk that those clauses might for some reason be susceptible tochallenge. A liability cap therefore performs the valuable function of providing asecond line of defence of indeterminate or disproportionate liability4.2.2 Proportionate LimitationSome contracts specifically limit the liability of parties involved to the proportion oftheir participation in the undertaking. An example is the AIPN Model InternationalOperating Agreement43provides as follows at Clause 4.6(A) Except as set out in this Article 4.6, neither the party designated as operator norany other indemnitee (as defined below) shall bear (except as a party to theextent of its participating interest share) any damage, loss, cost, expense orliability resulting from performing (or failing to perform) the duties and functionsof the operator, and the indemnitees are hereby released from liability to non-operators for any and all damages, losses, costs, expenses and liabilities arisingout of, incident to or resulting from such performance or failure to perform, eventhough caused in whole or in part by a pre-existing defect, the negligence(whether sole, joint or concurrent), gross negligence, strict liability or other legalfault of operator (or any such indemnitee).5.0 CONCLUSIONThe use of indemnity, exemption and limitation in O&G contracting is generallyintended to manage risks in such a way that liability is borne by the person mostcapable of meeting it. Besides, such clauses are a safety net in an industry that isprone to occurrence of risks which albeit far apart may have devastating financialramifications. They are also a response to the dependence of the industry onuninterrupted operations; driven by the desire to expeditiously dispense with anydisputes involving the occurrence of operation risks. The clauses further serve the43AIPN ‗Model International Operating Agreement‘ (1995) 17. 16difficult purpose of balancing the interests of the often multiple parties in O&Gundertakings.In order to meet these objectives, persons negotiating, drafting and/or relying onthe three forms of risk allocation clauses in the O&G contracts are invited to bear inmind the following among other matters:-In drafting the clauses there is need for clarity on the intention of theparties since as a general rule courts will, look to the agreement andprovided it is clear and unequivocal apply the agreed provision.44Each negotiating party must secure a scope that serves its interest sincethe court may extend scope to liability not anticipated unless the partiesare unequivocal on the scope.45In drafting and applying liability clauses parties need to be aware of strayliability i.e. provisions within the contract which do not necessarily fallunder a Clause aptly titled ‗Liability‘ or ‗Indemnity‘46Parties need to be aware of statutory provisions which have overridingeffect on industry practice and common law positions e.g. the TexasOilfield Anti-Indemnity Act, 197347which generally proscribes contractualindemnification for one‘s own negligenceAbove all, interpretation of the clauses should be approached objectively taking intoaccount the discernible intention of the parties as well as the contractual and thecommercial context of the parties‘ engagement.44Canada Steamship Lines Ltd. v. The King (1952)45Campbell vs Conoco [2002] All ER (D) 446Gordon47As endorsed by Atlantic Richfield Co. v. Petroleum Personnel Inc 758 S.W.2d 843 (1988) 18. 17BIBLIOGRAPHYStatutesOilfield Anti-Indemnity Act, 1973 (Texas)Unfair Contract Terms Act, 1977 (UK)BooksGreg Gordon et al (eds) Oil and Gas law: Current Practice and Emerging Trends’ (2ndEdn,Dundee University, 2011)Adedeji Bodunde Badiru & Samuel Olusola Osisanya, Project Management for the Oil andGas Industry: A World System Approach (CRC Press, 2013) e-bookCase lawAtlantic Richfield Co. v. Petroleum Personnel Inc 758 S.W.2d 843 (1988)BP Exploration Operating Co. Ltd. V. Kvaerner Oilfield Products Ltd [2004] All ER (D) 87Caledonia North Sea Limited (Respondents) v British Telecommunications Plc (Appellants)(Scotland) and others [2002] UKHL 4Campbell vs Conoco [2002] All ER (D) 4Canada Steamship Lines Ltd. v. The King (1952)Croudace Construction v Cawoods Concrete Products [1978] 2 Lloyds Rep 55 CADe Beers UK Limited v Atos Origin IT Services [2010] EWHC (TCC)Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26Farstad Supply AS VS Enviroco [2010] UKSC 18Graham v Belfast and Northern Counties Ry Co[1901] 2 IE 13Hadely vs Baxendale 9 Exch. 341, 156 Eng. Rep. 145 (1854)Investors Compensation Scheme Ltd vs West Bromwich Building Society [1998] 1WLR 896Lafrentz v. M & L Leasing 2000 ABQB 714 (CanLII)National Oilwell (UK) Ltd v Davy Offshore Ltd[1993] 2 Lloyd‘s Rep 582Northsea vs British Communication Plc & Others [2002] UKHL 4Red Sea Tankers Ltd v Papchristidis [1997] 2 Lloyd‘s Rep 547Slessor vs Vecto Gray [2006] CSOH 104Sonat Offshore SA v Amerada Hess Development Ltd [1988] 1 Lloyd‘s Rep. 145 at 157Tercon Contractors Ltd v. British Columbia [2010] SCC 4 (S.C.C.) 19. 18The Evia [1982] 2 Lloyd‘s Rep. 307Westerngeco v ATP Oil & Gas [2006] All ER (D) 254ArticlesAven T et al ‗A Decision Framework For Risk Management, With Application To The OffshoreOil And Gas Industry‘ Reliability Engineering and System Safety 92 (2007) 433–448Glenn D. Well et al, ‗Contracting to Avoid Extra-Contractual Liability—Can Your ContractualDeal Ever Really Be the ―Entire‖ Deal?‘(2007)http://www.weil.com/files/Publication/563ccf98-648d-4e5b-b3e5-129805230615/Presentation/PublicationAttachment/fb77618a-f943-4797-98a1-2a69d92a4522/Extra-Contractual%20Liability%20Article.pdf accessed 13thApril 2013Greg Gordon, ‗Risk Allocation in Oil and Gas Contracts‘ in Greg Gordon et al (eds) Oil andGas law: Current Practice and Emerging Trends’ (2ndEdn, Dundee University, 2011)Timur Makarov, ‗Indemnity in the International Oil and Gas contracts: Key Features,Drafting and Interpretation‘(CEPMLP, June 2009)Tobby Hewitt, ‗Who is to Blame? Allocating Liability in Upstream Project Contracts‘ Journalof Energy & Natural Resources Law Vol 26 No 2 2008OthersAIPN ‗Model International Operating Agreement‘ (1995)LOGIC - -‗Standard Contracts for the UK Offshore Oil and Gas Industry: ServiceOnshore & Offshore‘ http://www.logic-oil.com/sites/default/files/documents/Services%20Onshore%20and%20Offshore%20Edition%202.pdf accessed 3rdMarch 2013- ‗Mutual Indemnity And Hold Harmless Deed‘(2012) http://www.logic-oil.com/sites/default/files/documents/IMHH%202012%20Deed.pdf Accessed12thApril 2013- ‗General Conditions of CONTRACT for Supply of Major items of Plant andEquipment‘ http://www.logic-oil.com/sites/default/files/documents/Supply%20of%20Major%20Items%20of%20Plant%20and%20Equipment%20Edition%202.pdf Accessed 3rdApril 2013NOGEPA, ‗Mutual Indemnity Agreement‘http://www.nogepa.nl/en/Home/MIAwederzijdsevrijwaring.aspx accessed 20th April 2013The Guardian, ‘BPs Deepwater Horizon costs rise $847m‘ Tuesday 31 July2012http://www.guardian.co.uk/business/2012/jul/31/bp-deepwater-horizon-costsaccessed 12thApril 2013