Reviewing Knock for Knock Indemnities: Risk Allocation in Maritime and Offshore Oil and Gas Contracts

Abstract

In light of it being the 27th anniversary of the Piper Alpha disaster and the 5th anniversary of the Deepwater Horizon disaster, this paper revisits one of the very effective risk allocation mechanism that has become industry practice in the maritime and offshore oil and gas sectors: namely, knock for knock clauses. These clauses allocate risk where it falls, so parties are only responsible for injury, death and damage to their own personnel and property and other specified losses. In light of the significant commercial advantages that effective knock for knock clauses offer, this paper posits that they need to be vigilantly negotiated and drafted. This is particularly important given possible restrictions on the operation of indemnities.