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1) The Himalaya clause contained in the Supplytime 2005 is valid under Dutch law. It gives third parties the full benefits of the indemnity clauses.
2) The judgment shows the dangers of Art. 6:248 DCC. If that article is applied too easily (as it was by the court of first instance), it really represents an obstacle against choosing Dutch law in charter parties and other contracts in the offshore industry. In the offshore industry, a crystal clear division of responsibilities and liabilities is essential because of the potentially huge liabilities that contractors can incur when working offshore. That crystal clear system is given in the knock for knock provisions which it is standard industry practice to use in the offshore industry (particularly in the North Sea). These knock for knock systems are supported by a comprehensive system of Hull & Machinery, P&I/Special Operations, Third Party Liability, Workmen’s Compensation and Construction All Risk insurances. The combination of the knock for knock system and the insurance package should lead to a more or less water tight system in which everbody everybody knows exactly where he stands.
It simply creates uncertainty if this comprehensive system can be broken open for reasons of “reasonableness and fairness”. For the same reason, I (the writer) am opposed to carve outs for gross negligence and wilful misconduct in knock for knock clauses. Courts should be very careful when breaking open contracts which govern huge liabilities and are supported by comprehensive insurance systems. Fortunately in this case, the Court of Appeal reversed the Court of First Instance’s judgment in which the knock for knock system was held not binding for reasons of ‘reasonableness and fairness’.
