E E Caledonia v Orbit Valve - Summary

E E Caledonia Ltd v Orbit Valve Co plc [1994] 1 WLR 1515

Wording and clarity of indemnity clauses, attempts to indemnify for own negligence

Facts

This case was linked to the Piper Alpha platform disaster. The Claimants made a settlement with the estate of a deceased engineer, who had passed away as a result of the disaster which occurred on an oil platform owned by the Claimants. The Claimants were not, however, the employee of the Claimants but rather of Orbit Valve, the Defendants. The Claimants sought to claim the cost of that payment/settlement from the Defendants under an indemnity clause, found in the contract between them. The relevant indemnity clause stated that it applied in respect of any claim, demand, cause of action, loss, expense or liability arising from the death of an employee, during the performance of the contract. The clause did not, however, make any reference to negligence. This is relevant since the death had been found to have been as a result of the Claimant’s negligence, particularly due to failure to apply relevant health and safety regulations.

Issues

The issue was whether the clause could be interpreted to protect the claimant from his own negligence.

Decision/Outcome

The court observed how implausible it would be for anyone to willingly contract to indemnify someone else for their own negligence and that in order for that to happen, very clear language would have to be used. In this case this was not so, the language was ambiguous in that reference to negligence was not made. The court observed this to be particularly problematic for the claimant, since this was clearly a professionally drafted contract and therefore, there was no reason for negligence not to have been included in the wording if this had been intended by the parties. Consequently, the Claimants failed.