Introduction & Background
The primary objective of the industry mutual hold harmless deed (IMHH) is to address the contractual gap that traditionally exists between contractors working on the UKCS with regard to the allocation of liability. On an offshore installation an operator will award contracts to a contractor who may sub-contract to its sub-contractors. This provides a vertical relationship between some of the parties but no relationship across contractors and sub-contractors. The IMHH is designed to sit as a background agreement where there is no direct contract between the contractors.
The use of mutual hold harmless provisions within the industry’s contracts is common practice. In fact some operators have their own version of the IMHH. These are, however, limited to specific contracts or companies and as a result an industry scheme was developed.
The IMHH applies to the UK’s territory of the North Sea and the Irish Sea. It is intended to underpin all offshore activity (with a few exceptions) in the oil and gas industry and Participants should be able to enter into it for the long term (although there are limited rights of withdrawal and termination). Parties who are not members initially will be able to join at any time. The IMHH Scheme has been created to manage the risks inherent in the industry in a much more comprehensive and effective manner. It operates on the premise that a company is in a much better position to protect and insure their own people and equipment. In doing so, companies can be more certain of the risks they need to insure and this, in turn, reduces multiple policies insuring the same risk.
Of course, there are other benefits in that it reduces the need to negotiate or litigate such matters as companies should understand their liabilities. In any event, the IMHH has proved to be a success within the industry and is now in its second phase.
The IMHH Scheme has been running since 1st July 2002. The 2002 IMHH Scheme ran for 10 years until 31st December 2011. The 2012 IMHH Scheme will run from 1st January 2012 until 31st December 2021.