Who is liable when property is damaged under offshore contracts?

View pdf   Download pdf     
An at-a-glance-guide

Damage to property, whether fixed or moveable, is a common risk during the operation of an offshore vessel. This risk can often result in a significant liability exposure for Members, as the damage may not be limited to their property, but also to property belonging either to their contractual counterparties, or third parties. In addition, in certain circumstances (e.g. towage by an insured vessel), P&I cover will only respond if the vessel’s operation is subject to contractual terms approved by the Club.

In many incidents where property is damaged, the allocation of the parties’ liability is governed by a contract. Although offshore contracts try to provide a straightforward framework for apportioning liability, different standard form contracts deal with these risks in a variety of ways, especially in respect of third party property.

The table below provides a summary of the parties generally responsible for property damage under the most popular standard offshore contracts (assuming they are unamended). By understanding where liability lies under these contracts, Members may ascertain which cover responds best to their overall liability exposure.

Stella Kounakou
Claims Executive, Offshore