Efficacy of Liability Cap Against Third Party Losses
Efficacy of Liability Cap Against Third Party Losses
Efficacy of Liability Cap Against Third Party Losses
Facts
In March 2004, ATP Oil & Gas (UK), a company engaged in
offshore oil and gas development and production activities
(the company) entered into a contract with Westerngeco
(the contractor) for the provision by the latter of seismic
survey work. The contract was based on the LOGIC CRINE
standard terms for the UK offshore oil and gas industry,
with some amendments.
Under the standard provisions of the contract, the
contractor was responsible for third party losses (i.e.
personal injury or property damage) arising from the
performance of the contract to the extent that such losses
were caused by its negligence, and was also obliged to
indemnify the company for losses arising in this way.
Held
In giving his judgment, Aikens J adopted the approach to
construing contracts set out in BCCI -v- Ali2, namely that the
objective of the court is to give effect to the parties'
intentions and that in order to ascertain the parties'
intentions, the court will:
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Comment
The case shows the difficulty in limiting a contractor's
liability against third party claims. To do so effectively in
circumstances where the contractor takes the responsibility
for third party claims arising from its own negligence, clear
words are required to provide the contractor with an
Contacts
Geoffrey Picton-Turbervill
Head of Global Energy
T: +44 (0)20 7859 1209
E: [email protected]
Ruth Jaun
Professional Development Lawyer
T: +44 (0)20 7859 1166
E: [email protected]
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www.ashurst.com 2006 Ashurst Ref:DTP/4355 Jan 07