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Offshore Construction Contracting Principles

Waivers of Subrogation

Principles

It is essential that the following principles be applied in relation to waivers of subrogation under offshore construction contracts:

Each of the respective Party's insurances shall contain appropriate waivers of subrogation against the other Party Group.


Clarifications / Considerations

To avoid erosion of the Knock for Knock Indemnity mechanism, each indemnifying Party shall ensure that its insurers shall have no right to make any claim against the indemnified Party.


Example Clause

The following is an example of a Waiver of Subrogation Clause which incorporates the above contracting principles.

X. Waivers of Subrogation

Any and all of the Parties' insurances policies provided under the provisions of the Contract or which may be used in relation to the Contract shall contain provisions that insurers shall have no right of subrogation against the other Party Group, it being the intent of the Parties that the insurance policies shall protect both Party Groups.

As such, Company Group shall be named as additional insured in all of Contractor's policies, except Contractor's Workmen Compensation and P&I insurance policies, and Contractor Group shall be named as additional insured in all of Company's insurance policies, except Company's Workmen Compensation and P&I insurance policies. With respect to its P&I policies, each Party shall provide a protective co-insurance addendum with a "misdirected arrow" clause in favour of the other Party.

Notwithstanding the provisions of this Article, the naming of either Party Group as additional assureds and/or protective co-insured is:

  • only with respect to claims, demands, suits and actions resulting from operations under the Contract; and
  • not intended to derogate from the division of risk and indemnity agreements set out under the Contract.

Contractor Group shall not be entitled to assert a claim against Company's insurance with respect to liabilities and losses assumed by Contractor or as to which Contractor indemnifies Company under the Contract.

Company Group shall not be entitled to assert a claim against Contractor's insurance with respect to liabilities and losses assumed by Company or as to which Company indemnifies Contractor under the Contract.