The Industry Mutual Hold Harmless Scheme (IMHH) went live on 1st July 2002 with over 90 initial participants. The IMHH Deed was brought about through a lengthy pan-industry consultation process, facilitated by LOGIC Footnote 1 and assisted by CMS Cameron McKenna, involving a lively debate between many United Kingdom Continental Shelf (UKCS) operators and contractors. The final IMHH Deed (which can be viewed on the IMHH website www.imhh.com) is the result of these negotiations, being very much a collaborative effort.
The primary objective of the IMHH Scheme is to address the contractual gap which traditionally exists between oil industry contractors working on the UKCS. The concept is not new: for some time operators have implemented mutual hold harmless schemes (for people, property and consequential loss) on an installation by installation or project by project basis. Under these schemes, the contractors essentially agree to hold each other harmless for loss, damage etc to their people and property, even if caused by the negligence of another contractor. The initiative for an industry wide mutual hold harmless agreement is an extension of this practice. The momentum for the IMHH Scheme was aided by the relatively recent Contracts (Rights of Third Parties) Act 1999 which brings into English law the ability to pass the benefit of indemnities into the contracting parties' respective "groups" (for example, their affiliates and personnel). Prior to this Act, issues of privity of contract and consideration under English law presented difficulties which were only to a certain extent alleviated through Himalaya Footnote 2 clauses. The recent House of Lords Piper Alpha decision Footnote 3, which wholeheartedly supported the use of properly drafted indemnities in North Sea contracts also provided a firm basis for the Scheme.
The IMHH Scheme is not tied to a specific contract for services or to specific facilities. It is aimed at all UKCS oil and gas industry contractors and covers (with a few exceptions set out in the IMHH Deed) all claims arising from, out of or relating to offshore oil and gas services and in connection with damage to people, property and consequential loss. The IMHH Scheme is a long term arrangement between UKCS contractors, and allows new parties to enter at any time. It is for every contractor to decide for itself whether the IMHH Scheme will be of benefit to it but ultimately, LOGIC's aim is to cover the entire UKCS contractor community.
For further information please contact Penelope Warne at penelope.warne@cms-cmck.com or on +44 (0)20 7367 3928 or Lorna Ingram at lorna.ingram@cms-cmck.com or on +44 (0)1224 622002.
Footnotes
Footnote 1 Leading Oil and Gas Industry Competitiveness: a government backed body brought about to reduce costs and increase the efficiency of the North Sea oil and gas industry.
Footnote 2 Creating an agency and trust relationship between the contracting parties and the third parties.
Footnote 3 Caledonia North Sea Limited v British Telecommunications plc, 7th February 2002, discussed more fully in a February Law-Now update "House of Lords upholds North Sea indemnity".
