· Web viewGENERAL CONDITIONS OF CONTRACT FOR OFFSHORE DECOMMISSIONING Edition 1 - December 2018 Page No. 19 Edition 1 – December 2018 Page No. ii

STANDARD CONTRACTS FOR THE UK OFFSHORE OIL AND GAS INDUSTRY

EDITION 1DECEMBER 2018

GENERAL CONDITIONS OF CONTRACT (INCLUDING GUIDANCE NOTES) FOR OFFSHORE DECOMMISSIONING

GENERAL CONDITIONS OF CONTRACT FOR OFFSHORE DECOMMISSIONING

Background

This contract is part of a series of different models – “Standard Contracts for the UK Offshore Oil and Gas Industry”. The first editions of these model contracts were published in 1997, as “CRINE” contracts.

CRINE was founded in 1992 as a cost reduction initiative to reduce the capital costs of developing oil and gas fields. This evolved into the CRINE Network which was supported by the UK oil and gas exploration and production industry with the added objective of increasing the global competitiveness of its participants. In the course of this a number of initiatives were established, one of which was to introduce model contract documents for use in the industry.

Leading Oil & Gas Industry Competitiveness (LOGIC) was incorporated in 1999 by the UK Oil & Gas Industry Task Force (OGITF, now PILOT) to lead a competitiveness initiative for the UK offshore oil and gas industry. LOGIC was established as a not-for-profit organisation with a Board of Directors from the founding trade organisations UKOOA (the predecessor of Oil & Gas UK (OGUK)), Offshore Contractors Association (OCA), International Association of Drilling Contractors (IADC), Energy Industries Council (EIC) and International Marine Contractors Association (IMCA) and it worked with the DTI to identify, promote and manage collaborative industry-wide tools.

LOGIC has a separate and independent Board of Directors that is accountable to Oil & Gas UK and the owners/users of the tools.

In this way LOGIC is still delivering its initial core objectives:

‘to promote competitiveness and commerce by implementing supply chain management practice and promoting collaboration, benefits and cost savings, in relation to the means by which organisations (comprising operators, contractors and suppliers) operate in the UK oil and gas sector to achieve ‘real’ business results’.

CRINE (Cost Reduction in the New Era) established in the early 1990s was incorporated into LOGIC upon its foundation in 1999 and remains as a dormant subsidiary.

Further information on LOGIC can be obtained on the website www.logic-oil.com which also provides a link to this model contract.

Edition 1 – December 2018Page No. ii

Standard Contract for the U.K. Offshore Oil and Gas Industry

General Conditions of Contract (including Guidance Notes) for Offshore Decommissioning

Edition 1 - December 2018Page No. 1

General Conditions of Contract for Offshore Decommissioning

Part 1 - General Conditions of Contract


Contents1. DEFINITIONS.....................................................................................................................

2. INTERPRETATION..............................................................................................................

3. COMPANY AND CONTRACTOR REPRESENTATIVES.............................................................

4. CONTRACTOR’S GENERAL OBLIGATIONS...........................................................................

5. RESPONSIBILITY FOR COMPANY - PROVIDED ITEMS..........................................................

6. CONTRACTOR TO INFORM ITSELF......................................................................................

7. CONTRACTOR TO INFORM COMPANY/COMPANY TO INFORM CONTRACTOR..................

8. ASSIGNMENT AND SUBCONTRACTING.............................................................................

9. CONTRACTOR PERSONNEL..............................................................................................

10. CO-OPERATION WITH OTHERS.........................................................................................

11. PROGRAMME..................................................................................................................

12. TECHNICAL INFORMATION AND ASSUMPTIONS..............................................................

13. INSPECTION AND TESTING...............................................................................................

14. VARIATIONS....................................................................................................................

15. FORCE MAJEURE.............................................................................................................

16. SUSPENSION...................................................................................................................

17. TERMS OF PAYMENT.......................................................................................................

18. TAXES AND TAX EXEMPTION CERTIFICATES.....................................................................

19. OWNERSHIP AND DISPOSAL OF MATERIAL......................................................................

20. PATENTS AND OTHER PROPRIETARY RIGHTS...................................................................

21. LAWS AND REGULATIONS...............................................................................................

22. INDEMNITIES...................................................................................................................

23. INSURANCE BY CONTRACTOR..........................................................................................

24. INSURANCE BY THE COMPANY........................................................................................

25. CONSEQUENTIAL LOSS....................................................................................................

26. CONFIDENTIALITY............................................................................................................

27. CUSTOMS PROCEDURES..................................................................................................

28. COMPLETION..................................................................................................................

29. TERMINATION.................................................................................................................

30. AUDIT AND STORAGE OF DOCUMENTS............................................................................

31. LIENS...............................................................................................................................

32. ANTI BRIBERY AND CORRUPTION....................................................................................


33. GENERAL LEGAL PROVISIONS..........................................................................................

34. LIQUIDATED DAMAGES...................................................................................................

35. LIMITATIONS OF LIABILITY...............................................................................................

36. RESOLUTION OF DISPUTES..............................................................................................

37. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT..................................................................

38. HEALTH, SAFETY AND ENVIRONMENT..............................................................................

39. BUSINESS ETHICS.............................................................................................................

SAMPLE FORM OF AGREEMENT.....................................................................................................

APPENDIX 1 TO SECTION I - FORM OF AGREEMENT........................................................................

GUIDANCE NOTES..........................................................................................................................

EXPLANATORY NOTES....................................................................................................................


1. DEFINITIONSThe following definitions shall be used for the purpose of interpreting the CONTRACT. Further definitions not contained in this Clause shall apply to the Section in which they are stated and subsequent Sections.

1.1 “ABC PROGRAMME” means an anti-bribery and corruption policy and any related procedures as amended, varied or supplemented from time to time, which (without limitation) may include policies, procedures and controls relating to recording of financial transactions; anti-bribery and corruption risk assessment and mitigation; training of personnel; whistle blowing facilities; due diligence on third party engagements/contracts; gifts and hospitality; promotional expenditures; sponsorship and charitable donations; and promoting and monitoring compliance.

1.2 “AFFILIATE” means any subsidiary or parent or holding company of any company or any other subsidiary of such parent or holding company. For the purpose of this definition, "subsidiary" and "holding company" shall have the meanings assigned to them under Section 1159 and Schedule 6 of the Companies Act 2006, and a company shall be treated, for the purposes only of the membership requirement contained in subsections 1159(1)(b) and (c), as a member of another company even if its shares in that other company are registered in the name of (a) another person (or its nominee) whether by way of security or in connection with the taking of security or (b) its nominee.

1.3 “APPLICABLE ANTI-BRIBERY LAWS” means any laws, regulations and other legally binding measures relating to bribery, corruption or similar activities of (i) the United Kingdom, including without limitation the Bribery Act 2010; (ii) the United States of America including, to the extent applicable to either PARTY, the Foreign Corrupt Practices Act 1977; and (iii) any country or countries in which any of the obligations of the CONTRACT are to be or are performed.

1.4 “ASSUMPTIONS” means the assumptions set out at Section XII - Assumptions.

1.5 “COMPANY GROUP” means the COMPANY, its CO-VENTURERS, its and their respective AFFILIATES and its and their respective directors, officers and personnel (including agency personnel), but shall not include any member of the CONTRACTOR GROUP.

1.6 “COMPANY REPRESENTATIVE” means that person referred to in Clause 3.

1.7 “COMPETENT AUTHORITY” means (i) any person having legal, executive and/or regulatory authority and/or enforcement powers (including any public body or authority responsible for the investigation and/or prosecution of criminal offences) over either or both of the PARTIES or any of their AFFILIATES providing services in connection with this CONTRACT; and/or (ii) any court of law or tribunal with jurisdiction over either or both of the PARTIES or any of their AFFILIATES providing services in connection with the CONTRACT.

1.8 “COMPLETION” means completion of the whole or the relevant part of the WORK in accordance with Clause 28.

1.9 “COMPLETION CERTIFICATE” means the certificate issued pursuant to Clause 28 in respect of the whole or the relevant part of the WORK.

1.10 “COMPLETION DATE” means the date shown on the COMPLETION CERTIFICATE on which the whole or the relevant part of the WORK was actually completed.

1.11 “CONTRACT” shall have the meaning described in Section I - Form of Agreement.

1.12 “CONTRACT PRICE” means the price for the WORK calculated in accordance with Section III - Remuneration, exclusive of Value Added Tax.

1.13 “CONTRACTOR GROUP” means the CONTRACTOR, its SUBCONTRACTORS, its and their AFFILIATES, its and their respective directors, officers and personnel (including agency personnel), but shall not include any member of the COMPANY GROUP. “CONTRACTOR GROUP” shall also mean subcontractors (of any tier) of a SUBCONTRACTOR which are performing WORK at any WORKSITE, their AFFILIATES, their directors, officers and personnel (including agency personnel).

1.14 “CONTRACTOR REPRESENTATIVE” means that person referred to in Clause 3.


1.15 “CO-VENTURER” means any other entity with whom the COMPANY is or may be from time to time a party to a joint operating agreement or unitisation agreement or similar agreement relating to the operations for which the WORK is being performed and the successors in interest of such CO-VENTURER or the assignees of any interest of such CO-VENTURER.

1.16 “FACILITY” means all of the assets, equipment and materials described in Section IV and including INCORPORATED MATERIAL (if any).

1.17 “HANDOVER”, in respect of all or any part of the TRANSFERRING MATERIAL, shall occur at the place or time stated in Appendix 1 to Section I - Form of Agreement, and if not so stated it shall be deemed to occur at the point in time when the vessel transporting it from the original site of the FACILITY (whether in containers or otherwise) has been safely moored at the quayside.

1.18 “INCORPORATED MATERIAL” means any material not originally forming part of the FACILITY prior to commencement of the WORK but which is fixed to or incorporated into the FACILITY during the course of the WORK by the CONTRACTOR.

1.19 “INTELLECTUAL PROPERTY” means patents, utility models, rights to inventions, copyright and neighbouring and related rights, moral rights, trade-marks and service marks, business names and domain names, rights in get-up and trade dress, goodwill and the right to sue for passing off, rights in designs, rights in computer software, database rights, rights to use, and protect the confidentiality of, confidential information (including KNOW-HOW) and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world.

1.20 “JOB SPECIFICATION” means the specification set out within Sections IV, V, VII, VIII and IX of the CONTRACT.

1.21 “KEY PERSONNEL” means those personnel named as such in the CONTRACT.

1.22 “KNOW HOW” means techniques, methods, skills comprised within technical information, data, notes, reports, specifications, formulae, drawings, manuals, component lists, instructions, descriptions and other knowledge of a secret and confidential nature.

1.23 “PROGRAMME” means the detailed work plan for carrying out the WORK which shall be prepared by the CONTRACTOR and which the COMPANY has approved as the current detailed work plan that the CONTRACTOR shall utilise in the performance of the WORK in accordance with Clause 11.

1.24 “SCHEDULED COMPLETION DATE” means the date or dates by which the CONTRACTOR is required to achieve COMPLETION of the whole or part of the WORK, which at the EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT shall be the date or dates as stated in the SCHEDULE OF KEY DATES.

1.25 “SCHEDULE OF KEY DATES” means the schedule of events and associated dates set out in the CONTRACT, together with amendments to any or all of such dates as may be made from time to time in accordance with Clause 14.

1.26 “SUBCONTRACT” means any contract between the CONTRACTOR and any party (other than the COMPANY or any personnel of the CONTRACTOR) for the performance of any part of the WORK.

1.27 “SUBCONTRACTOR” means any party (other than the CONTRACTOR) to a SUBCONTRACT.

1.28 “TECHNICAL INFORMATION” means all such information provided by or caused to be provided by the COMPANY pursuant to the CONTRACT.

1.29 “TRANSFERRING MATERIAL” means any part of the FACILITY more particularly described in Section IV – Scope of Work which is to be removed by the CONTRACTOR pursuant to the CONTRACT and title to which is to pass to the CONTRACTOR.


1.30 “VARIATION” means both:

(a) an instruction to the CONTRACTOR in accordance with Clause 14.1; and

(b) an adjustment to the SCHEDULE OF KEY DATES and/or CONTRACT PRICE to which the CONTRACTOR is entitled under any Clause of this Section II - Conditions of Contract.

1.32 “WORK” means all work that the CONTRACTOR is required to carry out in accordance with the provisions of the CONTRACT including (without limitation) performance of the JOB SPECIFICATION.

1.33 “WORKSITE” means the lands, waters and other places on, under, in or through which the WORK is to be performed including offshore installations, floating construction equipment, vessels (including the area covered by approved anchor patterns), design offices, workshops and places where equipment, materials or supplies are being obtained, stored or used for the purposes of the CONTRACT.

2. INTERPRETATION2.1 All instructions, notices, agreements, authorisations, approvals and acknowledgements shall be in

writing. All such documentation together with all correspondence and other documents shall be in the English language.

Nevertheless, if for any reason it is considered necessary by the COMPANY to give an instruction to the CONTRACTOR orally in the first instance, the CONTRACTOR shall comply with such instruction. Any such oral instruction shall be confirmed in writing as soon as is possible under the circumstances, provided that, if the CONTRACTOR confirms in writing any such oral instruction which is not contradicted in writing by the COMPANY without undue delay, it shall be deemed to be an instruction in writing by the COMPANY.

2.2 Any reference to statute, statutory provision or statutory instrument shall include any re-enactment or amendment thereof for the time being in force.

2.3 Unless the context otherwise requires, words importing the singular shall include the plural, and words importing the masculine gender shall include the feminine and neuter genders, and vice versa.

3. COMPANY AND CONTRACTOR REPRESENTATIVES3.1 General

(a) The COMPANY REPRESENTATIVE and the CONTRACTOR REPRESENTATIVE are the persons named as such in Appendix 1 to Section I - Form of Agreement.

(b) Such representatives, or delegates appointed in accordance with the provisions of this Clause 3, shall be readily available to enable both PARTIES to discharge their obligations under the CONTRACT.

(c) The COMPANY REPRESENTATIVE and any person authorised by him shall have access at all reasonable times to the WORKSITE and the CONTRACTOR shall afford every facility for and every assistance in obtaining the right of access.

3.2 COMPANY REPRESENTATIVE

(a) The COMPANY REPRESENTATIVE has the authority to commit the COMPANY in all matters under the CONTRACT and, subject to any delegation of such authority which shall be notified to the CONTRACTOR in writing, shall be responsible for issuing to and receiving from the CONTRACTOR all notices, information, instructions and decisions.

(b) By notice to the CONTRACTOR, the COMPANY REPRESENTATIVE may at any time delegate any of his authority to any nominated deputy. Such notice shall specify the precise authority of any such deputy and shall be sent to the CONTRACTOR REPRESENTATIVE.


(c) The COMPANY may change the COMPANY REPRESENTATIVE at any time and shall notify the CONTRACTOR of any change.

(d) Except as expressly stated in the CONTRACT, the COMPANY REPRESENTATIVE has no powers to amend the CONTRACT or to relieve the CONTRACTOR from any of its obligations under the CONTRACT.

3.3 CONTRACTOR REPRESENTATIVE

(a) The CONTRACTOR REPRESENTATIVE has the authority to commit the CONTRACTOR to any course of action within the rights and obligations of the CONTRACTOR under the CONTRACT and, subject to any delegation of such authority, shall be responsible for issuing to and receiving from the COMPANY all notices, information, instructions and decisions.

(b) The CONTRACTOR REPRESENTATIVE may delegate any of his authority to any nominated deputy, the terms of such delegation being subject to the prior approval of the COMPANY which shall not be unreasonably withheld or delayed.

(c) The CONTRACTOR shall not change the CONTRACTOR REPRESENTATIVE or any nominated deputy without cause without the prior approval of the COMPANY which shall not unreasonably be withheld or delayed.

(d) The CONTRACTOR REPRESENTATIVE has no powers to amend the CONTRACT.

4. CONTRACTOR’S GENERAL OBLIGATIONS4.1 The CONTRACTOR shall provide all management, supervision, personnel, materials and equipment,

(except materials and equipment specified to be provided by the COMPANY), plant, consumables, facilities and all other things whether of a temporary or permanent nature, so far as the necessity for providing the same is specified in or reasonably to be inferred from the CONTRACT.

4.2 The CONTRACTOR shall carry out all of its obligations under the CONTRACT and shall execute the WORK with all due care and diligence and with the skill to be expected of a reputable contractor experienced in the types of work to be carried out under the CONTRACT taking all due account of the TECHNICAL INFORMATION.

4.3 Except to the extent that it may be legally or physically impossible or create a hazard to safety the CONTRACTOR shall comply with the COMPANY's instructions and directions on all matters relating to the WORK. Subject to Clause 14, the COMPANY shall issue a VARIATION if the CONTRACTOR can show that it has suffered delay and/or incurred additional cost as a result of any instruction or direction issued under this Clause.

4.4 In order to ensure that performance and completion of the WORK are not delayed or impeded the CONTRACTOR shall be responsible for the timely provision of all matters referred to in Clause 4.1 and, where provided for elsewhere in the CONTRACT, for the timely request of COMPANY-provided materials and equipment.

4.5 Materials and equipment or parts thereof provided by the CONTRACTOR for which there is no detailed specification included in the CONTRACT shall be new or, subject to the COMPANY’s approval, as new, of good quality and workmanship and fit for the intended purpose where a purpose is defined in the CONTRACT or, where no such purpose is defined, fit for its ordinary purpose.

5. RESPONSIBILITY FOR COMPANY - PROVIDED ITEMS5.1 The COMPANY shall provide the materials, services and equipment as specified in Section X -

Materials, Services and Equipment to be provided by the COMPANY.

5.2 Notwithstanding the provisions of Clause 22.2, the CONTRACTOR shall be responsible for receiving, unloading and handling such items when delivered to the CONTRACTOR. The CONTRACTOR shall visually inspect all such items and check all supporting documentation and shall notify the COMPANY


of any discrepancy or damage within three (3) working days of receipt or such other period as may from time to time be agreed. Receipt of all such items shall be recorded in writing. In the absence of any notification of discrepancy or damage such items shall be deemed to have been delivered in a complete and undamaged state to the extent that any discrepancy or damage could have been discovered by a visual inspection. The CONTRACTOR shall not however be liable for any latent defects in any such items.

5.3 The CONTRACTOR shall carry out all special tests and inspections on materials and equipment supplied by the COMPANY which are specified in the JOB SPECIFICATION and shall notify the COMPANY of the results of such tests and inspections.

5.4 The CONTRACTOR shall maintain in a form agreed by the COMPANY and the CONTRACTOR adequate records of materials and equipment provided by the COMPANY and provide a regular monthly inventory to show the use of all materials and equipment received and the balance of materials and equipment unused at all times, in accordance with any relevant provisions of the CONTRACT.

5.5 The CONTRACTOR shall be responsible for providing suitable and safe storage for materials and equipment provided by the COMPANY to the CONTRACTOR for the WORK and shall comply with any particular storage requirements set out in the JOB SPECIFICATION. Notwithstanding the provisions of Clause 22.2, the CONTRACTOR shall make good any loss or damage to such materials and equipment which may occur whilst in the possession or control of the CONTRACTOR and, to the extent that it results from any non-compliance with the JOB SPECIFICATION, any deterioration that may occur.

5.6 The CONTRACTOR shall notify the COMPANY of all unused or surplus materials or equipment provided by the COMPANY in accordance with any relevant provisions of the CONTRACT. The COMPANY shall authorise a VARIATION in accordance with Clause 14, in relation to the disposal of any such surplus.

5.7 Where WORK is to be performed offshore, the COMPANY shall provide, at no cost to the CONTRACTOR, all routine and medi-vac transportation for CONTRACTOR GROUP provided personnel, and transportation for CONTRACTOR GROUP provided equipment and materials which are capable of transportation by helicopter or supply boat, between the COMPANY-designated heliport and supply base as specified in Appendix 1 to Section I – Form of Agreement and the offshore part of the WORKSITE.

5.8 The costs of non-routine transportation requested by the CONTRACTOR may, at the sole option of the

COMPANY, be recovered from the CONTRACTOR.

6. CONTRACTOR TO INFORM ITSELF6.1 Subject to the TECHNICAL INFORMATION being accurate in all material respects, the CONTRACTOR

confirms that, subject to the ASSUMPTIONS being factually correct, it has the necessary skill and resources to complete the WORK in accordance with the PROGRAMME and at the rates and prices set out in Section III – Remuneration.

6.2 Any failure by the CONTRACTOR to take account of matters which are evident from the TECHNICAL INFORMATION, or would have been reasonably foreseeable by a contractor experienced in the types of work to be carried out under the CONTRACT, shall not relieve the CONTRACTOR from its obligations under Clause 6.1 of the CONTRACT.

6.3 If during the execution of the WORK the CONTRACTOR encounters seabed and/or subsoil conditions, which conditions could not reasonably have been foreseen by a contractor experienced in the types of work to be carried out under the CONTRACT, due account having been taken of the TECHNICAL INFORMATION, the COMPANY shall, subject to the CONTRACTOR having given prior notice in accordance with the provisions of Clause 14, authorise a VARIATION if the CONTRACTOR can show that it has suffered delay and/or incurred additional cost as a direct result of encountering such seabed and/or subsoil conditions and has taken all reasonable steps to mitigate or avoid the impact of such unforeseen conditions.

Such VARIATION shall be evaluated using the rates and prices included in the CONTRACT or, in the absence of suitable rates and prices, on the basis of actual, additional reasonable costs incurred by the


CONTRACTOR as a result of encountering such conditions.

7. CONTRACTOR TO INFORM COMPANY/COMPANY TO INFORM CONTRACTOR7.1 The CONTRACTOR shall notify the COMPANY without undue delay of all things which in the opinion of

the CONTRACTOR appear to be (a) contradictions between the CONTRACT or the ASSUMPTIONS and the TECHNICAL INFORMATION; (b) deficiencies, omissions or contradictions in any TECHNICAL INFORMATION or (c) in conflict with the applicable law. The COMPANY shall review these items, liaise with the CONTRACTOR and the PARTIES shall, where necessary, mutually agree a procedure to overcome them before the CONTRACTOR proceeds with any part of the WORK affected. This shall be without prejudice to the CONTRACTOR’s right to take action pursuant to Clause 7.2. Subject to the provisions of Clause 14, the COMPANY shall issue a VARIATION if the CONTRACTOR can show that it has suffered delay and/or incurred additional cost as a result of any revision in the WORK or the PROGRAMME agreed pursuant to this Clause 7.1, unless the revision has resulted from any act or omission on the part of the CONTRACTOR.

7.2 Where the CONTRACTOR, acting with all due skill and care, identifies a contradiction between the CONTRACT or the ASSUMPTIONS and the TECHNICAL INFORMATION or a deficiency or omission or contradiction in the TECHNICAL INFORMATION or a conflict with the applicable law during the course of the WORK which creates an immediate need for action to be taken to avoid a risk to human health and safety or the environment, the CONTRACTOR shall be entitled to take such action as is reasonable and proportionate in all the circumstances to avoid or mitigate such risk and to request and to be issued with a VARIATION from the COMPANY in respect of Clause 14.

7.3 In addition to the requirements of Section VI - Health, Safety and Environment (including waste disposal) and the provisions of Clause 38, the CONTRACTOR shall notify the COMPANY without delay of any accidents which occur in connection with the carrying out of the WORK. The CONTRACTOR shall also notify the COMPANY of any other incidents which occur which might affect the carrying out of the WORK or the CONTRACT.

7.4 The CONTRACTOR shall notify the COMPANY immediately of any proposed or actual stoppages of work, industrial disputes or other matters affecting or likely to affect the carrying out or completion of the WORK. When requested by the COMPANY, the CONTRACTOR shall also supply to the COMPANY other information in connection with the WORK relating to industrial relations including but not limited to minimum rates of pay, allowances, amenities, working hours, periods of unpaid leave and overtime.

7.5 The COMPANY shall without delay provide to the CONTRACTOR all information affecting the WORK which the CONTRACTOR reasonably requires and requests from the COMPANY in order to properly perform the WORK in accordance with the CONTRACT.

8. ASSIGNMENT AND SUBCONTRACTING8.1 Assignment

(a) The COMPANY is entitled to assign the CONTRACT or any part of it or any benefit or interest in or under it to any CO-VENTURER or AFFILIATE of the COMPANY. In addition the COMPANY may make any such assignment to any other third party but only with the prior agreement of the CONTRACTOR which shall not unreasonably be withheld or delayed.

(b) The CONTRACTOR undertakes that, in the event of any assignment described above, it will execute without delay a formal assignment of interest in the CONTRACT to the relevant party, to be effective upon the written assumption by the assignee of all obligations of the COMPANY under the CONTRACT.

(c) The CONTRACTOR shall assign neither the CONTRACT nor any part of it nor any benefit or interest in or under it without the prior approval of the COMPANY which shall not unreasonably be withheld or delayed.


8.2 Subcontracting

(a) The CONTRACTOR shall not subcontract the whole of the WORK. The CONTRACTOR shall not subcontract any part of the WORK specified in Appendix 1 to Section I – Form of Agreement without the prior approval of the COMPANY which approval shall not unreasonably be withheld or delayed.

(b) Before entering into any SUBCONTRACT, whether provided for in the CONTRACT or not, the COMPANY shall be given an adequate opportunity to review the form of SUBCONTRACT, the choice of SUBCONTRACTOR, the part of the WORK included in the SUBCONTRACT and any other relevant details requested by the COMPANY.

Where the COMPANY will be required to reimburse to the CONTRACTOR the sum paid to the SUBCONTRACTOR, any procedure for award of such SUBCONTRACTS included in the CONTRACT shall be followed and the COMPANY shall be entitled to review all relevant aspects of the SUBCONTRACT.

(c) No SUBCONTRACT shall bind or purport to bind the COMPANY or the CO-VENTURERS. Nevertheless the CONTRACTOR shall ensure that any SUBCONTRACTOR shall be bound by and observe the provisions of the CONTRACT in so far as they apply to the SUBCONTRACT.

Each material SUBCONTRACT shall expressly provide for the CONTRACTOR’s unconditional right of assignment of the SUBCONTRACT to the COMPANY in the event that the COMPANY terminates the CONTRACT or the WORK.

(d) The CONTRACTOR shall be responsible for all work, acts, omissions and defaults of any SUBCONTRACTOR as fully as if they were work, acts, omissions or defaults of the CONTRACTOR.

9. CONTRACTOR PERSONNEL9.1 The CONTRACTOR undertakes to provide sufficient personnel at all times to ensure performance and

completion of the WORK in accordance with the provisions of the CONTRACT.

9.2 All personnel employed on the WORK shall, for the work which they are required to perform, be competent, properly qualified, skilled and experienced in accordance with good industry practice. The CONTRACTOR shall verify all relevant qualifications of such personnel.

9.3 The KEY PERSONNEL shall be provided by the CONTRACTOR and shall not be replaced without the prior approval of the COMPANY. Any replacement shall work with the person to be replaced for a reasonable handover period.

9.4 The CONTRACTOR shall ensure that the KEY PERSONNEL and supervisory personnel of the CONTRACTOR and SUBCONTRACTORS shall read, write and speak fluent English.

9.5 The CONTRACTOR shall make its own arrangements for the engagement of personnel, local or otherwise, and, save in so far as the CONTRACT otherwise provides, for their payment and onshore transport, housing, maintenance and board and lodging.

9.6 The CONTRACTOR shall be as responsible for any WORK performed by any agency personnel and by any other person provided by the CONTRACTOR in connection with the WORK as if the WORK was performed by the personnel of the CONTRACTOR.

9.7 The CONTRACTOR shall ensure that all employees (including agency personnel) of the CONTRACTOR and any SUBCONTRACTOR engaged in the performance of the WORK comply with applicable laws including immigration laws and where required are in possession of a valid work permit for the duration of the CONTRACT. When requested details of such work permits shall be submitted to the COMPANY prior to personnel being engaged in the WORK.

9.8 The COMPANY may instruct the CONTRACTOR to remove from the WORKSITE any person engaged in


any part of the WORK who in the reasonable opinion of the COMPANY is:

(a) incompetent or negligent in the performance of his duties; or

(b) engaged in activities which are contrary or detrimental to the interests of the COMPANY; or

(c) not conforming with relevant safety procedures described in Section VI - Health, Safety and Environment (including waste disposal) or persists in any conduct likely to be prejudicial to safety, health or the environment.

Any such person shall be removed forthwith from the WORKSITE. Any person removed for any of the above reasons shall not be engaged again in the WORK or on any other work of the COMPANY without the prior approval of the COMPANY.

The CONTRACTOR shall provide a suitable replacement for any such person within twenty-four (24) hours or such longer time as may be agreed by the COMPANY.

10. CO-OPERATION WITH OTHERS10.1 During the carrying out of the WORK the COMPANY may employ other contractors in connection with

its operations at the WORKSITE. The CONTRACTOR shall permit free access to the WORKSITE to such other contractors and shall co-operate with them and afford all reasonable facilities to them.

10.2 Subject to Clause 14, the COMPANY shall issue a VARIATION if the CONTRACTOR can show that in compliance with Clause 10.1 the CONTRACTOR has suffered delay and/or incurred cost that could not reasonably have been avoided by an experienced contractor.

11. PROGRAMME11.1 The CONTRACTOR shall be responsible for the programming of the WORK and for independently

controlling its progress.

The CONTRACTOR shall produce a detailed work plan, which complies with any requirements set out in the CONTRACT, providing for performance and completion of the WORK in accordance with the SCHEDULE OF KEY DATES.

11.2 The CONTRACTOR shall submit the detailed work plan referred to in Clause 11.1, together with full supporting details to the COMPANY for review. When approved by the COMPANY such work plan shall become the PROGRAMME.

11.3 The CONTRACTOR shall use the PROGRAMME as the basis for progress reporting, scheduling, forecasting and controlling performance of the WORK.

11.4 In order to take account of VARIATIONS and actual progress of the WORK, the CONTRACTOR shall continually update its detailed work plan and supporting details and regularly submit them to the COMPANY for review. Once a revised work plan has been approved by the COMPANY it shall become the PROGRAMME, there being only one (1) PROGRAMME at any particular time.

11.5 If for any reason which does not entitle the CONTRACTOR to a VARIATION the rate of progress of the WORK is at any time in the reasonable opinion of the COMPANY too slow to ensure performance and completion in accordance with the SCHEDULE OF KEY DATES, the COMPANY shall notify the CONTRACTOR and the CONTRACTOR shall thereupon inform the COMPANY of its proposals and take such steps as are necessary to expedite progress so as to complete the WORK or such part of the WORK in accordance with the SCHEDULE OF KEY DATES.

12. TECHNICAL INFORMATION AND ASSUMPTIONS12.1 The COMPANY has provided to the CONTRACTOR the TECHNICAL INFORMATION listed in Section IX -

Documents and Drawings. To the best knowledge of the COMPANY such TECHNICAL INFORMATION gives a reasonable representation of the FACILITY, but the PARTIES acknowledge that no warranty is


given with respect to the accuracy of such TECHNICAL INFORMATION.

12.2 The PARTIES acknowledge that the scope of the WORK, the PROGRAMME and the calculation of the CONTRACT PRICE have been based on the TECHNICAL INFORMATION and the ASSUMPTIONS being correct.

12.3 In the event that the COMPANY identifies any TECHNICAL INFORMATION relevant to the WORK after the EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT which has not been disclosed to the CONTRACTOR or discovers that any of the TECHNICAL INFORMATION or the ASSUMPTIONS are factually incorrect, it shall inform the CONTRACTOR without delay and provide copies of any relevant information as soon as is practicable. The CONTRACTOR shall review such relevant information, liaise with the COMPANY and the PARTIES shall, where necessary, mutually agree any VARIATION to the WORK or the PROGRAMME and in the interim consider, acting reasonably, if it is appropriate for the WORK or any part of the WORK to be suspended pending agreement of any VARIATION which is required to reflect the relevant information.

12.4 The CONTRACTOR shall give adequate notice of any further TECHNICAL INFORMATION that may be required for the proper carrying out and completion of the WORK in accordance with the SCHEDULE OF KEY DATES.

12.5 Where the CONTRACTOR is required to produce sketches, drawings, calculations, reports, recommendations and the like, or the preparation of such is necessary for the proper carrying out and completion of the WORK, the CONTRACTOR shall submit all such documents to the COMPANY as may be requested by the COMPANY, for review and comment. The COMPANY shall be afforded the time specified in the CONTRACT (or if no time is specified a reasonable time) to carry out such review so that progress of the WORK is not delayed.

12.6 The CONTRACTOR shall maintain in a readily accessible form at appropriate locations a complete set of all relevant TECHNICAL INFORMATION together with all relevant documents and drawings provided by the CONTRACTOR for the purposes of the WORK. Such information shall be made available to the COMPANY REPRESENTATIVE or any other person authorised by him at all reasonable times.

12.7 The CONTRACTOR shall carry out such checks on TECHNICAL INFORMATION as are specified in the JOB SPECIFICATION. The COMPANY shall not be responsible for any additional cost and/or delay that results from the CONTRACTOR’s omission to complete such checks promptly and properly.

12.8 When requested by the COMPANY the CONTRACTOR shall, following COMPLETION or termination of all of the WORK or the CONTRACT, return all copies of TECHNICAL INFORMATION to the COMPANY. Notwithstanding the above, the CONTRACTOR may retain one (1) copy of such documents while admitting that the COMPANY has title to all such documents.

13. INSPECTION AND TESTING13.1 The CONTRACTOR shall carry out all tests and inspections expressly detailed in the JOB SPECIFICATION.

The CONTRACTOR shall supply the COMPANY with certified copies of all test records and inspection reports as soon as they become available.

The COMPANY has the right, but not the obligation, to witness any test or inspection carried out by the CONTRACTOR. The CONTRACTOR shall notify the COMPANY in adequate time in order that the COMPANY may exercise this right.

The COMPANY has the right, but not the obligation, to inspect, test and examine all things provided by the CONTRACTOR for the purposes of the WORK, including but not limited to materials and equipment, together with all documentation relating thereto.

13.2 The COMPANY shall have the right to reject any part of the WORK or rework which does not comply with any requirement or requirements of the CONTRACT, including, but not limited to, faulty workmanship, services, materials or equipment. Upon receiving notice of rejection the CONTRACTOR shall immediately commence to re-perform, repair or complete (to the extent that such work is capable of being re-performed, repaired or completed) the defective or incomplete part of the WORK


and shall carry out such inspections and/or tests on other parts of the WORK as the COMPANY may require to ensure that there are no similar parts of the WORK that fail to comply with the requirements of the CONTRACT.

13.3 Where re-performance, repair, replacement, uncovering, reinstating, testing and inspection are additional to the requirements of the CONTRACT and are not the result of failure by the CONTRACTOR to conform with the CONTRACT or some other similar part of the WORK and do not reveal failure to comply with the CONTRACT, such WORK shall be at the expense of the COMPANY.

13.4 Neither failure on the part of the COMPANY to inspect the WORK or witness or test or to discover defects nor failure to reject work performed by the CONTRACTOR which is not in accordance with the CONTRACT shall relieve the CONTRACTOR from any liability or obligation under the CONTRACT.

13.5 In case of default on the part of the CONTRACTOR in carrying out its obligations under Clause 13.2, the COMPANY, having given prior notice, shall be entitled to undertake the CONTRACTOR’s responsibilities in this respect. The COMPANY shall be entitled to recover from the CONTRACTOR all costs reasonably incurred by the COMPANY in carrying out such responsibilities.

14. VARIATIONS14.1 Right of the COMPANY to issue instructions

(a) The COMPANY has the right, subject to the CONTRACTOR’s other existing contractual commitments, to issue instructions to the CONTRACTOR at any time to do any of the following;

(i) make any revision to the WORK which may include additions, omissions, substitutions and changes in quality, form, character, kind, position, dimension, level or line and changes in any method of construction or dismantling specified by the COMPANY;

(ii) after commencement of the WORK, accelerate the WORK or any part thereof in order to recover all or part of any delay in respect of which the CONTRACTOR would otherwise have been entitled to a revision to the SCHEDULE OF KEY DATES in accordance with Clause 14.5;

(iii) reprogramme the WORK and reschedule its resource in order to complete the WORK or any part thereof in accordance with any amendment to the SCHEDULE OF KEY DATES the COMPANY may require.

(b) An instruction under Clause 14.1(a) will constitute a VARIATION. When required by the COMPANY, on receipt of any such VARIATION, the CONTRACTOR shall (subject to it having the necessary resources and being able to accommodate the instructions due to other contractual commitments) proceed immediately as instructed even though the amount of any adjustment to the CONTRACT PRICE and/or SCHEDULE OF KEY DATES may not have been determined.

(c) Notwithstanding the provisions of Clause 14.1(b), any instruction given by the COMPANY under Clause 14.1(a) requiring the CONTRACTOR to perform work within 500 metres of any permanent oil and gas production facilities and pipelines, where such are not identified in the CONTRACT under the provisions of Clause 22.2(d), will constitute a VARIATION, save that the CONTRACTOR shall not be obliged to proceed as instructed until the PARTIES have agreed the following terms in respect of said VARIATION, namely;

(i) amount of any adjustment to the CONTRACT PRICE, and/or

(ii) specific amendment to the CONTRACT for the COMPANY providing an indemnity to the CONTRACTOR GROUP in respect of Clause 22.2(d), and/or

(iii) specific amendment to the CONTRACT for the COMPANY limiting the CONTRACTOR's liability in respect of Clause 22.2(d).


14.2 VARIATIONS Generally

(a) Prior to instructing or authorising any VARIATION, the COMPANY may require the CONTRACTOR to submit estimates as described in Clause 14.4.

(b) The CONTRACT PRICE and/or SCHEDULE OF KEY DATES shall be subject to adjustment only as a result of a VARIATION.

(c) The CONTRACTOR shall not be entitled to receive a VARIATION to cover any instruction, decision or act of the COMPANY which may be made or given in order to ensure that the CONTRACTOR complies with any of its obligations under the CONTRACT.

(d) A VARIATION shall in no way affect the rights or obligations of the PARTIES except as expressly provided in that VARIATION. Any VARIATION shall be governed by all the provisions of the CONTRACT.

14.3 CONTRACTOR’s Right to Request a VARIATION

(a) If the CONTRACTOR considers that an occurrence has taken place for which it is or may be entitled to receive a VARIATION, the CONTRACTOR, before proceeding with any work affected by such occurrence, shall request without delay in writing that the COMPANY issue a VARIATION. Any such request shall include details of the occurrence including any relevant dates and the Clause or Clauses of the CONTRACT under which the CONTRACTOR considers itself to be entitled to a VARIATION. Such occurrences shall include but not be limited to the following:

(i) an instruction from the COMPANY, whether contained in drawings or specifications issued by the COMPANY or not, which in the opinion of the CONTRACTOR constitutes a revision to the WORK; or

(ii) matters arising under any Clause of the CONTRACT including Clause 14.6 in respect of which it is specifically stated that a VARIATION will be authorised by the COMPANY.

(b) If the CONTRACTOR fails to submit requests for VARIATIONS in accordance with Clause 14.3(a) when it considers or should reasonably have considered that an occurrence has taken place for which it is or may be entitled to receive a VARIATION and/or fails to provide supporting estimates in accordance with Clause 14.4, the CONTRACTOR shall, at the sole discretion of the COMPANY, forfeit any right to receive such VARIATIONS and any rights concerning adjustment to the CONTRACT PRICE and/or SCHEDULE OF KEY DATES.

(c) The COMPANY shall within a reasonable time of having received a request for a VARIATION and the supporting estimates give notice to the CONTRACTOR stating:

(i) that the proposed VARIATION or part thereof is accepted in principle in which case the COMPANY will issue such VARIATION; and/or

(ii) that what is requested or part thereof is included in the obligations undertaken by the CONTRACTOR under the terms of the CONTRACT and that the request is accordingly rejected; and/or

(iii) that the request or part thereof is rejected for other stated reasons.

Should the CONTRACTOR wish to pursue any request for a VARIATION or part thereof which has been rejected by the COMPANY it shall proceed in accordance with the provisions of Clause 14.7.


14.4 CONTRACTOR’s Estimates

Within seven (7) days of having been requested by the COMPANY in accordance with Clause 14.2(a) or the CONTRACTOR having requested a VARIATION in accordance with Clause 14.3(a) or such longer time as the COMPANY shall agree where reasonable for any specific VARIATION the CONTRACTOR shall submit to the COMPANY fully detailed estimates prepared on a basis as directed by the COMPANY.

Such estimates shall include:

(i) a description of the work to be varied under the VARIATION;

(ii) a detailed schedule for the execution of the VARIATION showing the resources to be employed;

(iii) the effect (if any) on the CONTRACT PRICE;

(iv) the effect (if any) on the PROGRAMME and SCHEDULE OF KEY DATES.

14.5 Adjustments to CONTRACT PRICE and SCHEDULE OF KEY DATES

Adjustments to the CONTRACT PRICE and SCHEDULE OF KEY DATES relating to any VARIATION shall be made as follows:

Wherever possible the effect (if any) of a VARIATION on CONTRACT PRICE and SCHEDULE OF KEY DATES shall be agreed before the instruction is issued or before work starts, using the estimates prepared by the CONTRACTOR in accordance with Clause 14.4.

Failing agreement on the basis of the CONTRACTOR’s estimate, the COMPANY shall determine the effects of VARIATIONS in accordance with the following principles:

(a) where work is of a similar nature and carried out under similar conditions to work priced in the CONTRACT it shall be valued at the appropriate rates and prices included in the CONTRACT.

In the event that rates and prices for delay and/or adjustments to the SCHEDULE OF KEY DATES are included in Section III - Remuneration, then such rates and prices shall be used where appropriate;

(b) where work is not of a similar nature or is not carried out under similar conditions to work priced in the CONTRACT or there are no appropriate rates or prices in the CONTRACT then a fair valuation shall be made;

(c) with respect to effect on the SCHEDULE OF KEY DATES a fair and reasonable adjustment shall be made taking into account all relevant factors including any acceleration instructed under Clause 14.1(a).

Except insofar as the CONTRACTOR can demonstrate that adjustments (including nil adjustments) to the CONTRACT PRICE and/or SCHEDULE OF KEY DATES determined for a VARIATION are incorrect due to factors which could not have been foreseen by the CONTRACTOR at the time of such determination, any such adjustments shall not be subject to renegotiation and shall be deemed to include any cumulative effect of the VARIATION and the determined effect of any and all other previously authorised VARIATIONS on the CONTRACT PRICE and the SCHEDULE OF KEY DATES.

Should factors arise which could not have been foreseen as described, no alteration shall be made to any agreed VARIATION but a new VARIATION shall be issued to deal with any additional effects of such factors.


14.6 VARIATIONS in respect of delay and/or additional cost

The COMPANY shall authorise a VARIATION if the CONTRACTOR can show that it has suffered or may suffer delay and/or incurred cost as a direct result of any of the following:

(a) failure of the COMPANY to comply with relevant CONTRACT provisions in respect of drawings and/or specifications and/or other information;

(b) failure of the COMPANY to comply with relevant CONTRACT provisions in respect of Section X - Materials, Services and Equipment to be provided by the COMPANY;

(c) the TECHNICAL INFORMATION and/or other information supplied by the COMPANY for which the COMPANY is liable under the terms of the CONTRACT being factually incorrect or inconsistent with the conditions encountered by the CONTRACTOR, or the ASSUMPTIONS are found to be factually incorrect, and which has a material impact on the PROGRAMME, the cost of the WORK or the manner in which the WORK needs to be performed, provided the CONTRACTOR has complied with its obligations under Clause 7.1;

(d) subject to any restrictions specified in Appendix 1 to Section I - Form of Agreement, failure by the COMPANY to provide free and unrestricted access for the CONTRACTOR to any part of the WORKSITE; and/or

(e) a suspension under Clause 16 arising other than due to the default of the CONTRACTOR.

Under any such VARIATION and notwithstanding the provisions of Clause 14.5(a), the CONTRACTOR will be entitled to such adjustments to the CONTRACT PRICE and SCHEDULE OF KEY DATES as are fair and reasonable taking into account all relevant factors including the following:

(i) any acceleration ordered by the COMPANY to overcome all or part of any delay in accordance with Clause 14.1(a);

(ii) that the CONTRACTOR is entitled to recover necessary direct additional cost which includes any necessary additional overheads but not profit.

In the event that specific rates and prices for delay and/or extension to the SCHEDULE OF KEY DATES are included in Section III - Remuneration, then such rates and prices shall be used where appropriate to evaluate any adjustment to the CONTRACT PRICE under the provisions of this Clause and shall be deemed to represent direct additional cost to the CONTRACTOR as defined herein.

14.7 Disputed VARIATIONS

(a) If at any time the CONTRACTOR intends to claim any adjustment to the CONTRACT PRICE and/or SCHEDULE OF KEY DATES additional to that previously determined by the COMPANY for a VARIATION issued by the COMPANY or requested by the CONTRACTOR, the CONTRACTOR shall give notice in writing of such intention without delay after the happening of the events giving rise to such claim.

Such events shall include but not be limited to the following:

(i) rejection by the COMPANY of a request for a VARIATION made by the CONTRACTOR;

(ii) any VARIATION where effect on CONTRACT PRICE and/or SCHEDULE OF KEY DATES cannot be determined at the time.

Upon the happening of such events the CONTRACTOR shall keep such contemporary records as may reasonably be necessary to support any claim it may subsequently wish to make.

(b) Upon receipt by the COMPANY of any such notice of claim, and without necessarily admitting any liability, the COMPANY may instruct the CONTRACTOR to keep such contemporary


records or further contemporary records as the case may be as are reasonable and may be material to the claim of which notice has been received and the CONTRACTOR shall keep such records, copies of which shall be supplied to the COMPANY as and when the COMPANY may direct.

(c) The CONTRACTOR shall send to the COMPANY at the end of every month an account giving particulars, as full and detailed as possible, of all such claims.

(d) If the CONTRACTOR does not give notices and/or does not submit records and accounts in accordance with the provisions of Clauses 14.7(a), 14.7(b) and 14.7(c) the CONTRACTOR shall, at the sole discretion of the COMPANY, forfeit any right to receive any adjustment to the CONTRACT PRICE and/or SCHEDULE OF KEY DATES in respect of any such claims.

(e) Where any matter in respect to adjustments to the CONTRACT PRICE and/or SCHEDULE OF KEY DATES has not been finalised and without prejudice to the rights of either the COMPANY or the CONTRACTOR, the COMPANY having taken into account the relevant provisions of the CONTRACT and all other relevant factors, will make such adjustments as it considers to be fair and reasonable. The COMPANY will inform the CONTRACTOR of decisions reached in this respect and will make appropriate payments in accordance with such decisions.

14.8 Discretionary Provision

If the CONTRACTOR has forfeited the right to receive any VARIATION under the provisions of Clause 14.3(b) and/or 14.7(d) in respect of any occurrence which it considers would otherwise have entitled it to receive a VARIATION, the CONTRACTOR shall nevertheless have the option at any time to discuss such matters with the COMPANY. The COMPANY shall, at its sole discretion, decide whether to issue a VARIATION in respect of any such matters.

14.9 Response time for Variations

The COMPANY shall respond to any request for a VARIATION by the CONTRACTOR within the number of days stated in Appendix 1 to Section I - Form of Agreement. If no such statement is made, the COMPANY shall respond in a reasonable and timely manner.

15. FORCE MAJEURE15.1 Neither PARTY shall be responsible for any failure to fulfil any term or condition of the CONTRACT if

and to the extent that fulfilment has been delayed or temporarily prevented by a force majeure occurrence, as hereunder defined, which has been notified in accordance with this Clause 15 and which is beyond the control and without the fault or negligence of the PARTY affected and which, by the exercise of reasonable diligence, the said PARTY is unable to provide against.

15.2 For the purposes of this CONTRACT only the following occurrences shall be force majeure.

(a) Riot, war, invasion, act of foreign enemies, hostilities (whether war be declared or not), acts of terrorism, civil war, rebellion, revolution, insurrection of military or usurped power;

(b) Ionising radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel or radioactive, toxic, explosive or other hazardous properties of any explosive nuclear assembly or nuclear component thereof;

(c) Pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds;

(d) Earthquake, flood, fire, explosion and/or other natural physical occurrence, but excluding weather conditions as such, regardless of severity;

(e) Strikes at a national or regional level or industrial disputes at a national or regional level, or strikes or industrial disputes by labour not employed by the affected party its subcontractors or its suppliers and which affect a substantial or essential portion of the WORK;


(f) Maritime or aviation disasters;

(g) Changes to any general or local Statute, Ordinance, Decree, or other Law, or any regulation or bye-law of any local or other duly constituted authority or the introduction of any such Statute, Ordinance, Decree, Law, regulation or bye-law.

15.3 In the event of a force majeure occurrence, the PARTY that is or may be delayed in performing the CONTRACT shall notify the other PARTY without delay giving the full particulars thereof and shall use all reasonable endeavours to remedy the situation without delay.

15.4 If either PARTY is delayed in performing the CONTRACT by a force majeure occurrence, the SCHEDULE OF KEY DATES but not the CONTRACT PRICE, except as otherwise expressly provided in the CONTRACT, shall be adjusted in accordance with Clause 14 and Clause 15.6.

15.5 Following notification of a force majeure occurrence in accordance with Clause 15.3, PARTIES shall meet without delay with a view to agreeing a mutually acceptable course of action to minimise any effects of such occurrence.

Subject to the provisions of this Clause, the COMPANY may instruct the CONTRACTOR to remain on stand-by at the WORKSITE in which event the CONTRACTOR shall be entitled to payment at the relevant stand-by rates set out in Appendix 1 to Section I - Form of Agreement. In the event that the COMPANY does not elect to retain the CONTRACTOR on stand-by at the WORKSITE or, having elected to retain the CONTRACTOR, the delay due to force majeure exceeds the time period specified in Appendix 1 to Section I - Form of Agreement, then subject to Clause 15.6, the CONTRACTOR may leave the WORKSITE in order to fulfil any obligations it may have under other contracts or applicable law.

15.6 Upon cessation of any force majeure occurrence the CONTRACTOR shall prepare a revised PROGRAMME to include for rescheduling of the WORK so as to minimise the effects of the delay. Providing however that if, in accordance with Clause 15.5, the CONTRACTOR has left the WORKSITE as a result of such occurrence, the CONTRACTOR may allow in such revised PROGRAMME any necessary time for completion of any operations on which it is engaged at the date of cessation of the force majeure occurrence.

Having made due allowance for any instruction to accelerate the WORK given in accordance with Clause 14, the COMPANY shall authorise a VARIATION to adjust the SCHEDULE OF KEY DATES in order to take into account any remaining effects of such delay.

16. SUSPENSION16.1 The COMPANY shall have the right, by notice to the CONTRACTOR, to suspend the WORK or any part

thereof to the extent detailed in the notice, for any of the following reasons:

(a) subject only to Clause 16.3, in the event of a default on the part of the CONTRACTOR; or

(b) in the event that suspension is necessary for the proper execution or safety of the WORK or persons; or

(c) to suit the convenience of the COMPANY.

16.2 Upon receipt of any such notice, the CONTRACTOR shall, unless instructed otherwise:

(a) discontinue the WORK or the part of the WORK detailed in the notice, on the date and to the extent specified; and

(b) properly protect and secure the WORK as required by the COMPANY.

16.3 In the event of a default on the part of the CONTRACTOR and before the issue by the COMPANY of a notice to suspend the WORK or any part thereof the COMPANY shall give notice of default to the CONTRACTOR giving details of such default. If the CONTRACTOR, upon receipt of such notice, does not


commence and thereafter continuously proceed with action satisfactory to the COMPANY to remedy such default the COMPANY may issue a notice of suspension in accordance with the provisions of Clause 16.1.

16.4 Unless the suspension arises as a result of default on the part of the CONTRACTOR, the CONTRACT PRICE and SCHEDULE OF KEY DATES shall be adjusted in accordance with the relevant provisions of Section III - Remuneration or, in the absence of such provisions, in accordance with Clause 14.

16.5 If suspension results from default on the part of the CONTRACTOR, any additional costs reasonably incurred by the COMPANY as a direct result shall be recoverable by the COMPANY from the CONTRACTOR.

16.6 The COMPANY may, by further notice, instruct the CONTRACTOR to resume the WORK to the extent specified. If the suspension was made under Clause 16.1(c), such resumption of WORK will be subject to the CONTRACTOR’s other existing contractual commitments.

16.7 In the event of any suspension, PARTIES shall meet at not more than seven (7) day intervals with a view to agreeing a mutually acceptable course of action during the suspension and for the CONTRACTOR to keep the COMPANY fully informed of the deployment of its relevant resources during the period of suspension and the availability thereof for remobilisation to the offshore WORKSITE following the lifting of the suspension by the COMPANY.

16.8 If the period of any suspension not arising as a result of a default on the part of the CONTRACTOR exceeds the period stated in Appendix 1 to Section I - Form of Agreement the CONTRACTOR may serve a notice on the COMPANY requiring permission within fourteen (14) days from the receipt of such notice to proceed with the WORK or that part thereof subject to suspension. If within the said fourteen (14) days the COMPANY does not grant such permission the CONTRACTOR, by a further notice, may (but is not bound to) elect to treat the suspension as either:

(a) where it affects part only of the WORK, an omission of such part under Clause 14; or

(b) where it affects the whole of the WORK, termination in accordance with Clause 29.1(a).

17. TERMS OF PAYMENT17.1 For the performance and completion of the WORK, the COMPANY shall pay or cause to be paid to the

CONTRACTOR the amounts provided in Section III - Remuneration at the times and in the manner specified in Section III – Remuneration and in this Clause.

17.2 Except where it is expressly provided that the COMPANY shall carry out an obligation under the CONTRACT at its own cost, all things to be supplied or performed by the CONTRACTOR under the CONTRACT shall be deemed to be included in the rates and prices included in Section III - Remuneration.

17.3 The CONTRACTOR shall submit to the COMPANY an invoice within thirty (30) days after the end of such stages as are specified in and showing the amount calculated in accordance with Section III – Remuneration.

17.4 All payments contemplated under the CONTRACT are exclusive of Value Added Tax (“VAT”), which shall be charged by and accounted to the relevant tax authority by the relevant PARTY as is required under prevailing VAT legislation. Furthermore, the CONTRACTOR will comply with all applicable invoicing requirements regarding the charging and accounting of VAT.

17.5 Accompanying any invoice submitted by the CONTRACTOR after COMPLETION shall be a schedule of all items for which, in the opinion of the CONTRACTOR, payment is due under the CONTRACT but for which, at the date of issue of the said invoice, payment in part or in full has not been received. Such items shall be limited to those for which previous notification has been given by the CONTRACTOR to the COMPANY pursuant to Clauses 14.3 and 14.7. The schedule shall include estimates of cost against each item fully supported by necessary documentation as described in Clauses 14.4 and 14.7.


Following completion of the whole of the WORK, the CONTRACTOR shall not be entitled to receive any payment on any invoice received by the COMPANY after the time specified in Appendix 1 to Section I – Form of Agreement as the latest time for receipt of invoices. Nevertheless, the COMPANY may, at its sole discretion, make payment against any such invoice.

17.6 Each invoice shall show separately the individual amounts under each of the headings in Section III - Remuneration, and shall quote the COMPANY Contract Reference Number, Title and such other details as may be specified in the CONTRACT.

17.7 Within thirty (30) days from receipt of a correctly prepared and adequately supported invoice by the COMPANY at the address specified in Appendix 1 to Section I – Form of Agreement, the COMPANY shall make payment in respect of such invoices as follows:

(a) for payments in Sterling the COMPANY shall make payment of the due amount into the bank account of the CONTRACTOR specified in Appendix 1 to Section 1 – Form of Agreement or otherwise notified by the CONTRACTOR, using the Banker's Automated Clearing System; and

(b) for payments in foreign currencies the COMPANY shall make payment of the due amount in the appropriate currency into the bank account of the CONTRACTOR specified in Appendix 1 to Section 1 – Form of Agreement or otherwise notified by the CONTRACTOR.

17.8 If the COMPANY disputes any items on any invoice in whole or in part or if the invoice is prepared or submitted incorrectly in any respect, the COMPANY shall notify the CONTRACTOR of the reasons and request the CONTRACTOR to issue a credit note for the unaccepted part or whole of the invoice as applicable. Upon receipt of such credit note the COMPANY shall be obliged to pay the undisputed part of a disputed invoice.

If any other dispute connected with the CONTRACT exists between the PARTIES the COMPANY may withhold from any money which becomes payable under the CONTRACT the amount which is the subject of the dispute. The COMPANY shall not be entitled to withhold monies due to the CONTRACTOR under any other contracts with the COMPANY as set off against disputes under the CONTRACT, nor shall it be entitled to withhold monies due under the CONTRACT as set off against disputes under any other contract.

On settlement of any dispute the CONTRACTOR shall submit an invoice for sums due and the COMPANY shall make the appropriate payment in accordance with the provisions of Clause 17.7 and Clause 17.10 where applicable.

17.9 Neither the presentation nor payment or non-payment of an individual invoice shall constitute a settlement of a dispute, an accord and satisfaction, a remedy of account stated, or otherwise waive or affect the rights of the PARTIES hereunder.

In particular the COMPANY may correct or modify any sum previously paid in any or all of the following circumstances:

(a) any such sum was incorrect;

(b) any such sum was not properly payable to the CONTRACTOR;

(c) any work in respect of which payment has been made and which does not comply with the terms of the CONTRACT.

17.10 Interest shall be payable for late payment of correctly prepared and supported invoices. The amount of interest payable shall be based on the then current annual Bank of England ‘Base Rate’ plus the annual percentage stated in Appendix 1 to Section I - Form of Agreement and shall be calculated pro rata on a daily basis. In the absence of such percentage, the amount of interest payable shall be based on the then current annual Bank of England ‘Base Rate’ plus three percent (3%) per annum and shall be calculated pro rata on a daily basis. Interest shall run from the date on which the sum in question becomes due for payment in accordance with the provisions of Clause 17.7 until the date on which actual payment is made. Any such interest to be claimed by the CONTRACTOR shall be invoiced


separately and within ten (10) working days of payment of the invoice to which the interest relates. Payment of the invoice claiming interest shall be in accordance with the provisions of Clause 17.7 hereof.

17.11 If the COMPANY at any time incurs costs which, under the provisions of the CONTRACT, the COMPANY is entitled to recover from the CONTRACTOR, the COMPANY may invoice the CONTRACTOR for such costs, provided always that the COMPANY may deduct the amount of such costs from any amount due, or that may become due to the CONTRACTOR under the CONTRACT.

The CONTRACTOR shall pay the COMPANY within thirty (30) days of receipt of invoice any sums outstanding after such deduction.

17.12 For the purposes of Clause 17.11 and elsewhere in the CONTRACT, wherever a PARTY is entitled to recover from other PARTY any costs incurred then the amount of such costs shall be the amount of all claims, losses, damages, charges, disbursements, costs (including amounts paid to third parties), overheads and expenses directly resulting from the matter in question, but no element of profit.

18. TAXES AND TAX EXEMPTION CERTIFICATES18.1 The CONTRACTOR shall in accordance with the provisions of Clause 21, except as may otherwise be

provided in Section III - Remuneration, be responsible for:

(a) the payment of all taxes, duties, levies, charges and contributions (and any interest or penalties thereon) for which the CONTRACTOR is liable as imposed by any appropriate governmental authority whether of the United Kingdom or elsewhere, whether or not they are calculated by reference to the wages, salaries, benefits or expenses and other remuneration paid directly or indirectly to persons engaged or employed by the CONTRACTOR; and

(b) the payment of all taxes, duties, levies, charges and contributions (and any interest or penalties thereon) including but not limited to income , profits, corporation taxes and taxes on capital gains, turnover and added value taxes for which the CONTRACTOR is liable, whether arising in the United Kingdom, its territorial waters, its continental shelf or elsewhere, now or hereafter levied or imposed by any appropriate governmental authority whether of the United Kingdom or elsewhere, arising from this CONTRACT; and

(c) compliance with all statutory obligations to make deductions on account of tax and remit the required amounts to any appropriate governmental authority whether of the United Kingdom or elsewhere, including, but not limited to income tax, PAYE, national insurance, employee taxes, charges, social security costs, levies and contributions whether or not they are measured by the wages, salaries or other remuneration or benefits paid to persons employed by the CONTRACTOR, or persons providing services in connection with the CONTRACT to the CONTRACTOR, and the imposition of a similar obligation upon all SUBCONTRACTORS or any other persons employed by them or providing services to them in connection with the CONTRACT; and

(d) ensuring that any SUBCONTRACTOR or any other person employed, or providing services on or in connection with the CONTRACT shall comply with this Clause 18.

18.2 The CONTRACTOR shall supply to the COMPANY all such information, in connection with activities under the CONTRACT, as is necessary to enable the COMPANY to comply with the lawful demands for such information by any appropriate governmental authority whether of the United Kingdom or elsewhere.

18.3 Where the CONTRACTOR, any SUBCONTRACTOR or any other person employed by them, or providing services to them on or in connection with the CONTRACT, is or may become liable for tax as a result of the operation of Part 7A of the Taxes Management Act 1970 and/or Section 1013 of the Income Tax Act 2007 and/or Section 1313 of the Corporation Tax Act 2009 and/or Section 1170 of the Corporation Tax Act 2010 and/or Section 276 of the Taxation of Chargeable Gains Act 1992 or, in each case, any amending legislation, and if such a person, within forty five (45) days of the EFFECTIVE DATE OF


COMMENCEMENT OF THE CONTRACT, is not able to exhibit to the reasonable satisfaction of the COMPANY that the person is “resident” for tax purposes within the United Kingdom, the CONTRACTOR shall, where the WORK or any part thereof is to be performed within the United Kingdom and/or within a “designated area”, obtain for itself and procure that any such SUBCONTRACTOR or other person employed by them, or providing services to them on or in connection with the CONTRACT, obtains an exemption certificate from an officer of HM Revenue and Customs in favour of the COMPANY in accordance with Section 77F of the Taxes Management Act 1970 and any amendment thereto. The CONTRACTOR shall immediately upon receipt thereof, forward such certificate to the COMPANY or where such certificate is refused, the CONTRACTOR shall upon being so informed, immediately notify the COMPANY of such refusal. If the person ceases to be so resident or such exemption certificate is cancelled the CONTRACTOR shall immediately advise the COMPANY of such event.

If such exemption certificate is not obtained within forty five (45) days of the EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT, or having been obtained is subsequently withdrawn, the COMPANY shall have the right to make deductions from any amounts due to the CONTRACTOR up to the maximum estimated potential tax liability arising to the person or persons whose exemption certificate has not been obtained or has been withdrawn, as reasonably computed by the COMPANY, arising out of the CONTRACT.

If any such deductions are made by the COMPANY, these shall be paid to the CONTRACTOR on the receipt by the COMPANY of satisfactory evidence that the CONTRACTOR, SUBCONTRACTOR or other person employed by them or providing services to them on or in connection with the CONTRACT has paid all taxes arising out of the CONTRACT and HM Revenue and Customs will not be serving a notice on the COMPANY under Section 77C of the Taxes Management Act 1970.

“designated area” shall for the purpose of this Clause bear the same meaning as that given to the “UK sector of the Continental Shelf” in Section 874 of the Income Tax (Trading and Other Income) Act 2005 and/or “designated area” in Section 278 of the Corporation Tax Act 2010 and/or “designated area” in Section 276 of the Taxation of Chargeable Gains Act 1992.

“resident” shall for the purpose of this Clause 18 mean that the company or person is regarded by HM Revenue and Customs as United Kingdom resident.

18.4 Where any of the WORK involves the performance of construction operations as defined for the purposes of Chapter III of Part III of the Finance Act 2004 and the Income Tax (Construction Industry Scheme) Regulations 2005 (together, the "Construction Industry Scheme) then the PARTIES shall comply with the provisions of the Construction Industry Scheme.

Payments under the CONTRACT by the COMPANY in respect of construction operations shall be made net of any deductions which the COMPANY is required to make by law.

The CONTRACTOR shall provide the COMPANY with such information about the CONTRACTOR as is required by the COMPANY to verify with the Commissioners of HM Revenue and Customs whether the CONTRACTOR is registered for gross payment or for payment under deduction or is not registered for the purposes of the Construction Industry Scheme and shall provide the COMPANY with any such further information to enable the COMPANY to calculate accurately any deduction applicable under the Construction Industry Scheme to any payments under the CONTRACT.

Where at the due date for payment, the COMPANY has not received such information, all payments will be made subject to maximum deductions as could be required by law.

The COMPANY shall not be liable to reimburse the CONTRACTOR for any over-deduction under this Clause 18 or for any tax arising as a result of the CONTRACTOR's failure to provide such information promptly or to provide sufficient information.

18.5 The CONTRACTOR shall save, indemnify, defend and hold harmless the COMPANY against all levies, charges, contributions and taxes of the type referred to in this Clause 18 and any interest or penalty thereon which may be assessed, by any appropriate governmental authority whether of the United Kingdom or elsewhere, on the CONTRACTOR GROUP in connection with the CONTRACT and from all


costs reasonably incurred in connection therewith.

18.6 If the COMPANY receives a notice requiring it to pay any levies, charges, contributions or taxes of the types referred to in this Clause 18 and/or any interest or penalty thereon whether with respect to the CONTRACTOR, any SUBCONTRACTOR, their respective AFFILIATES or any other person employed by the CONTRACTOR or any SUBCONTRACTOR or providing any services to the CONTRACTOR or any SUBCONTRACTOR on or in connection with the CONTRACT, the COMPANY shall forthwith notify the CONTRACTOR who shall work with the COMPANY to make all reasonable endeavours to make any valid appeal against such payment. If the COMPANY is ultimately required to make such payment, the COMPANY may recover from the CONTRACTOR any such sums and all costs reasonably incurred in connection therewith and the CONTRACTOR shall within fourteen (14) days of receiving written notice from the COMPANY pay to the COMPANY any such sum or the COMPANY shall be entitled to deduct such sums from any monies due, or which may become due, to the CONTRACTOR.

18.7 The COMPANY shall save, indemnify, defend and hold harmless the CONTRACTOR against all levies, charges, contributions and taxes of the type referred to in this Clause 18 and any interest or penalty thereon which may be assessed, by any appropriate governmental authority whether of the United Kingdom or elsewhere, on the COMPANY in connection with the CONTRACT and from all costs incurred in connection therewith, other than those taxes and other matters referred to above which the provisions of this Clause 18 allow the COMPANY to recover from the CONTRACTOR.

19. OWNERSHIP AND DISPOSAL OF MATERIAL19.1 Subject to Clause 19.3 below, the FACILITY and any material forming part thereof or deriving or

originating or emanating therefrom is and shall at all times throughout the period of the CONTRACT remain the property of the COMPANY.

19.2 Any INCORPORATED MATERIAL shall form part of the FACILITY when it is added to the FACILITY.

19.3 If the PARTIES agree in Section IV – Scope of Work that the FACILITY shall contain TRANSFERRING MATERIAL, the TRANSFERRING MATERIAL shall become the property of the CONTRACTOR on HANDOVER and such TRANSFERRING MATERIAL shall be supplied by the COMPANY with full title guarantee and free from all encumbrances, liens and/or retention of title claims from any third party.

19.4 All materials provided by the CONTRACTOR for incorporation into the FACILITY shall become the property of the COMPANY upon delivery to the WORKSITE or payment by the COMPANY, whichever is the earlier. The CONTRACTOR shall ensure that all CONTRACTOR-provided items are provided with full title guarantee and free from all encumbrances, liens and/or retention of title claims from any third party.

19.5 Title to any equipment, materials and supplies provided by the CONTRACTOR which do not comply with the requirements of the CONTRACT and which are rejected by the COMPANY, shall re-vest immediately in the CONTRACTOR.

Title to such items provided by the CONTRACTOR for which no payment has been made by the COMPANY and which are no longer required for the purposes of the CONTRACT, shall re-vest in the CONTRACTOR.

19.6 Subject to Clause 19.3, the COMPANY shall retain title to COMPANY-provided items and information, including but not limited to, TECHNICAL INFORMATION and materials and equipment.

19.7 All items of COMPANY property in the possession of the CONTRACTOR shall be suitably marked or clearly identified as the property of the COMPANY. As far as possible all such items shall be segregated from other property.

20. PATENTS AND OTHER PROPRIETARY RIGHTS20.1 Neither PARTY shall have the right of use, other than for the purposes of the CONTRACT, whether

directly or indirectly, of any INTELLECTUAL PROPERTY provided by the other PARTY and rights in such INTELLECTUAL PROPERTY shall remain with the PARTY providing it.


20.2 The CONTRACTOR shall and hereby grants COMPANY a royalty free, irrevocable non-exclusive, non-transferable, world-wide licence to use the INTELLECTUAL PROPERTY (utilised in or generated during the performance of the WORK by the CONTRACTOR) for the purposes of the CONTRACT only. Such right shall be non-transferable with the exception that the COMPANY may transfer such right to any successor licence operator.

20.3 Where any INTELLECTUAL PROPERTY right in any country in the world results from:

(a) developments by the CONTRACTOR GROUP which are based wholly on data, equipment, processes, substances and the like in the possession of the CONTRACTOR GROUP at the EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT or otherwise produced outside the CONTRACT; or

(b) enhancements of or in the existing INTELLECTUAL PROPERTY of the CONTRACTOR GROUP,

such rights shall vest in the CONTRACTOR or another company within the CONTRACTOR GROUP as the case may be.

20.4 Where any INTELLECTUAL PROPERTY right in any country in the world results from:

(a) developments by the COMPANY GROUP which are based wholly on data, equipment, processes, substances and the like in the possession of the COMPANY GROUP at the EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT or otherwise produced outside of the CONTRACT; or

(b) enhancements of or in the existing INTELLECTUAL PROPERTY of the COMPANY GROUP,

such rights shall vest in the COMPANY and its AFFILIATES or CO-VENTURERS as the case may be.

20.5 Except as provided in Clause 20.1, Clause 20.3 and Clause 20.4, where any registrable INTELLECTUAL PROPERTY right in any country in the world arises out of the WORK and is invented during the term of the CONTRACT, such rights shall vest in the party or parties as specified in Appendix 1 to Section I – Form of Agreement.

20.6 Where under Clause 20.5 a right vests in one of the PARTIES absolutely, such PARTY may at its sole discretion give the other PARTY and its AFFILIATES and its CO- VENTURERS a royalty free, irrevocable, non-exclusive, non-transferable, world-wide licence to use such right which shall not be sub-licensed.

20.7 Where under Clause 20.5 a right vests in the PARTIES jointly, then the PARTIES shall unless otherwise agreed in writing jointly file a patent or other registration application in that joint right.

20.8 The CONTRACTOR shall save, indemnify, defend and hold harmless the COMPANY GROUP from all claims, losses, damages, costs (including legal costs), expenses and liabilities of every kind and nature for, or arising out of, any alleged infringement of any INTELLECTUAL PROPERTY right arising out of or in connection with the performance of the obligations of the CONTRACTOR under the CONTRACT except where such infringement necessarily arises from the TECHNICAL INFORMATION and/or the COMPANY’s instructions. However, the CONTRACTOR shall use its reasonable endeavours to identify any infringement in the TECHNICAL INFORMATION and/or the COMPANY’s instructions of any INTELLECTUAL PROPERTY right, and should the CONTRACTOR become aware of such infringement or possible infringement then the CONTRACTOR shall inform the COMPANY immediately.

20.9 The COMPANY shall save, indemnify, defend and hold harmless the CONTRACTOR GROUP from all claims, losses, damages, costs (including legal costs), expenses, and liabilities of every kind and nature for, or arising out of, any alleged infringement of any INTELLECTUAL PROPERTY right arising out of or in connection with the performance of the obligations of the COMPANY under the CONTRACT or the use by the CONTRACTOR of TECHNICAL INFORMATION or materials or equipment supplied by the COMPANY.


21. LAWS AND REGULATIONS21.1 The CONTRACTOR shall comply with all applicable laws, rules and regulations of any governmental or

regulatory body having jurisdiction over the WORK and/or the WORKSITE, including laws pertaining to the management, transport and disposal of waste.

21.2 The CONTRACTOR shall obtain all licences, permits, temporary permits and authorisations required by the applicable laws, rules and regulations for the performance of the WORK, save to the extent that the same can only be legally obtained by the COMPANY.

21.3 Should changes in any applicable laws, rules and regulations, including any change in interpretation of the same by a COMPETENT AUTHORITY, made after the EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT, result in increases or decreases in the cost to the CONTRACTOR of performing the WORK, the CONTRACT PRICE may be adjusted to the extent described in Section III – Remuneration, or as otherwise may be agreed between the PARTIES.

22. INDEMNITIES22.1 The CONTRACTOR shall be responsible for and shall save, indemnify, defend and hold harmless the

COMPANY GROUP from and against all claims, losses, damages, costs (including legal costs) expenses and liabilities in respect of:

(a) loss of or damage to property of the CONTRACTOR GROUP whether owned, hired, leased or otherwise provided by the CONTRACTOR GROUP arising from, relating to or in connection with the performance or non-performance of the CONTRACT; and

(b) personal injury including death or disease to any personnel of the CONTRACTOR GROUP arising from, relating to or in connection with the performance or non-performance of the CONTRACT; and

(c) subject to any other express provisions of the CONTRACT, personal injury including death or disease or loss of or damage to the property of any third party to the extent that any such injury, loss or damage is caused by the negligence or breach of duty (whether statutory or otherwise) of the CONTRACTOR GROUP. For the purposes of this Clause 22.1(c) “third party” means any party which is not a member of the CONTRACTOR GROUP or COMPANY GROUP.

22.2 The COMPANY shall be responsible for and shall save, indemnify, defend and hold harmless the CONTRACTOR GROUP from and against all claims, losses, damages, costs (including legal costs) expenses and liabilities in respect of:

(a) loss of or damage to property of the COMPANY GROUP (including removed or decommissioned material) whether

(i) owned by the COMPANY GROUP, or

(ii) leased or otherwise obtained under arrangements with financial institutions by the COMPANY GROUP

which is located at the WORKSITE arising from, relating to or in connection with the performance or non-performance of the CONTRACT; and

(b) personal injury including death or disease to any personnel of the COMPANY GROUP arising from, relating to or in connection with the performance or non-performance of the CONTRACT; and

(c) subject to any other express provisions of the CONTRACT, personal injury including death or disease or loss of or damage to the property of any third party to the extent that any such injury, loss or damage is caused by the negligence or breach of duty (whether statutory or otherwise) of the COMPANY GROUP. For the purposes of this Clause 22.2(c) “third party” means any party which is not a member of the CONTRACTOR GROUP or COMPANY GROUP; and


(d) loss of or damage to such permanent third party oil and gas production facilities and pipelines and consequential losses arising therefrom (as specified and defined in Appendix I to Section I - Form of Agreement) where such loss or damage is arising from, relating to or in connection with the performance or non-performance of the CONTRACT. The provisions of this Clause 22.2(d) shall apply only to such specified permanent oil and gas production facilities and pipelines which are within a 500 metre radius of any working barge or vessel which is at the time directly engaged in the WORK but not while such working barge or vessel is in transit to or from the FACILITY or when performing any other operations. The provisions of this Clause 22.2(d) shall apply notwithstanding the provisions of Clause 22.1(c).

22.3 Except as provided by Clause 22.1(a), Clause 22.1(b) and Clause 22.4, the COMPANY shall save, indemnify, defend and hold harmless the CONTRACTOR GROUP from and against any claim of whatsoever nature arising from pollution emanating or originating from the reservoir or from the property of the COMPANY GROUP or from any third party property described in Clause 22.2(d) arising from, relating to or in connection with the performance or non-performance of the CONTRACT.

22.4 Except as provided by Clause 22.2(a) and Clause 22.2(b), the CONTRACTOR shall save, indemnify, defend and hold harmless the COMPANY GROUP from and against any claim of whatsoever nature arising from pollution occurring on the premises of the CONTRACTOR GROUP or emanating from the property and equipment of the CONTRACTOR GROUP (including but not limited to marine vessels) arising from, relating to or in connection with the performance or non-performance of the CONTRACT.

22.5 Subject to Clause 22.6, the CONTRACTOR shall be responsible for the recovery or removal and when appropriate the marking or lighting of any wreck or debris

(a) arising from or relating to the performance of the WORK by the CONTRACTOR; or (b) that is the property, equipment, vessels or any part thereof provided by the CONTRACTOR

GROUP in relation to the CONTRACT;

in either case when required by law, or governmental authority, or where such wreck or debris is interfering with COMPANY operations or is a hazard to fishing or navigation and shall, except as provided for in Clause 22.2 and Clause 22.3, save, indemnify, defend and hold harmless the COMPANY GROUP in respect of all claims, liabilities, costs (including legal costs), damages or expenses arising out of such wreck or debris, whether or not the negligence or breach of duty (whether statutory or otherwise) of the COMPANY GROUP caused or contributed to such wreck or debris.

22.6 Notwithstanding the provisions of Clause 22.1, where the COMPANY provides transportation for the

property of the CONTRACTOR GROUP to the offshore WORKSITE, and the COMPANY elects to, or is required by law or governmental authority to recover or remove or mark or light any wreck or debris of such property, the COMPANY shall, except as hereinafter provided, save, indemnify, defend, and hold harmless the CONTRACTOR GROUP from and against any claim of whatever nature relating to the costs of such recovery, removal, marking or lighting. Provided, however, that the foregoing indemnity and hold harmless shall not apply to the extent that the recovery, removal, marking or lighting arises as a result of the negligence or breach of duty (whether statutory or otherwise) of the CONTRACTOR GROUP.

22.7 All exclusions and indemnities given under this Clause 22 (save for those under Clauses 22.1(c) and 22.2(c) and Clause 22.6) shall apply irrespective of cause and notwithstanding the negligence or breach of duty (whether statutory or otherwise) of the indemnified PARTY or any other entity or party and shall apply irrespective of any claim in tort, under contract or otherwise at law.

22.8 The indemnities given by the PARTIES under this CONTRACT are full and primary, and shall apply irrespective of whether the indemnified party has, or has not insurance in place relating to any claims, losses, damages or costs in respect of the subject matter of any indemnity given under this CONTRACT.

22.9 Each PARTY expressly agrees that the indemnities set out in this Clause 22 do not extend to criminal sanctions imposed upon it, arising from, relating to or in connection with the performance or non-performance of the CONTRACT.

22.10 If either PARTY becomes aware of any incident likely to give rise to a claim under the above


indemnities, it shall notify the other and both PARTIES shall co-operate fully in investigating the incident.

22.11 Where applicable and if requested by CONTRACTOR in writing, the COMPANY shall make available to the CONTRACTOR details of its other contractors to be present at the WORKSITE.

23. INSURANCE BY CONTRACTOR23.1 The CONTRACTOR shall arrange as a minimum the insurances set out in this Clause 23 and ensure that

they are in full force and effect throughout the life of the CONTRACT. All such insurances shall be placed with reputable and substantial insurers, satisfactory to the COMPANY, and shall for all insurances (including insurances provided by SUBCONTRACTORS) other than Employers’ Liability Insurance/Workmen's Compensation, to the extent of the liabilities assumed by the CONTRACTOR under the CONTRACT, include the COMPANY, CO-VENTURERS and its and their respective AFFILIATES as additional assureds. All insurances required under this Clause 23 shall be endorsed to provide that underwriters waive any rights of recourse, including in particular subrogation rights against the COMPANY, CO-VENTURERS and its and their respective AFFILIATES in relation to the CONTRACT to the extent of the liabilities assumed by the CONTRACTOR under the CONTRACT. Such insurances shall also where possible, provide that the COMPANY shall be given not less than thirty (30) days’ notice of cancellation of or material change to cover. The provisions of this Clause 23 shall in no way limit the liability of the CONTRACTOR under the CONTRACT.

23.2 The insurances required to be effected under Clause 23.1 shall be as follows (to the extent that they are relevant to the WORK):

(a) Employers’ Liability and/or (where the jurisdiction of where the WORK is to be performed or under which the personnel employed requires the same) Workmen's Compensation insurance covering personal injury to or death of the personnel of the CONTRACTOR engaged in the performance of the WORK to the minimum value required by any applicable legislation including extended cover (where required) for working offshore or such greater sum as is set out in Appendix 1 to Section I - Form of Agreement;

(b) General Third Party Liability insurance for any incident or series of incidents covering the operations of the CONTRACTOR in the performance of the CONTRACT, in an amount not less than that set out in Appendix 1 to Section I - Form of Agreement;

(c) Third Party and Passenger Liability insurance and other motor insurance as required by applicable jurisdiction;

(d) Marine Hull and Machinery insurance including war risk coverage and, to the extent not provided in (e) below, collision liability in respect of all vessels used by CONTRACTOR GROUP in the performance of the WORK in an amount not less than that set out in Appendix 1 to Section I - Form of Agreement;

(e) Protection and Indemnity Insurance including wreck and debris removal and oil pollution liability in respect of all vessels, craft or floating equipment owned, leased or hired by the CONTRACTOR GROUP in the performance of the WORK in amounts not less than those set out in Appendix 1 to Section I - Form of Agreement;

(f) such further insurances (if any) as set out in Appendix 1 to Section I - Form of Agreement.

23.3 The CONTRACTOR shall supply the COMPANY with evidence of such insurances on demand.

23.4 The CONTRACTOR shall procure that SUBCONTRACTORS are insured to appropriate levels as may be relevant to their work.

24. INSURANCE BY THE COMPANY24.1 The COMPANY shall arrange Decommissioning All Risks insurance, a summary of which (including

deductibles) is set out in Appendix 1 to Section I - Form of Agreement. Liability for deductibles payable


under such insurance relative to the WORK shall be for the account of the CONTRACTOR but the size of such deductibles shall not be increased without the prior consent of the CONTRACTOR. The COMPANY agrees that the insurance shall be properly placed and be maintained on the same terms for the benefit of all parties mentioned as assureds for the period set out in Appendix 1 to Section I - Form of Agreement. The provisions of this Clause 24 shall in no way limit the liability of the CONTRACTOR under the CONTRACT.

24.2 The insurances arranged under Clause 24.1 shall include the CONTRACTOR, SUBCONTRACTORS and its and their respective AFFILIATES as additional assureds and shall be endorsed to require the underwriters to waive any rights of recourse including in particular subrogation rights against the CONTRACTOR, SUBCONTRACTORS and its and their respective AFFILIATES. Such insurance shall provide that the CONTRACTOR shall be given not less than thirty (30) days’ notice of cancellation of or material change to cover.

24.3 Notwithstanding Clause 24.1, the COMPANY may decide, at its discretion, not to arrange Decommissioning All Risks insurance under Clause 24.1, in which case the COMPANY shall advise the CONTRACTOR accordingly and shall provide an indemnity to the CONTRACTOR, its SUBCONTRACTORS and its and their respective AFFILIATES in lieu of such insurance, always provided that such indemnity shall be expressed in full in Appendix 1 to Section I - Form of Agreement, and such indemnity shall apply in excess of the amount(s), if any, set out in Appendix 1 to Section I - Form of Agreement.

25. CONSEQUENTIAL LOSSFor the purposes of this Clause 25 the expression “Consequential Loss” means:

(a) consequential or indirect loss under English law; and

(b) loss and/or deferral of production, loss of product, loss of use, loss of revenue, profit or anticipated profit (if any), in each case whether direct or indirect to the extent that these are not included in (a), and whether or not foreseeable at the EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT.

Notwithstanding any provision to the contrary elsewhere in the CONTRACT and except to the extent of any agreed liquidated damages (including without limitation any predetermined termination fees) provided for in the CONTRACT, the COMPANY shall save, indemnify, defend and hold harmless the CONTRACTOR GROUP from the COMPANY GROUP's own Consequential Loss and the CONTRACTOR shall save, indemnify, defend and hold harmless the COMPANY GROUP from the CONTRACTOR GROUP's own Consequential Loss, arising from, relating to or in connection with the performance or non-performance of the CONTRACT.

All exclusions and indemnities given under this Clause 25 shall apply irrespective of cause and notwithstanding the negligence or breach of duty (whether statutory or otherwise) of the indemnified party or any other entity or party and shall apply irrespective of any claim in tort, under contract or otherwise at law.

26. CONFIDENTIALITY26.1 The CONTRACTOR shall at no time without the prior written agreement of the COMPANY either:

(a) make any publicity releases or announcements concerning the subject matter of the CONTRACT, or

(b) except as may be necessary to enable the CONTRACTOR to perform its obligations under the CONTRACT, use, reproduce, copy, disclose to, place at the disposal of or use on behalf of any third party or enable any third party to use, peruse or copy any information including but not limited to drawings, data, and computer software which:

(i) is provided to the CONTRACTOR by or on behalf of the COMPANY, the CO-VENTURERS or its or their AFFILIATES in or in relation to the CONTRACT; or

(ii) vests in the COMPANY in accordance with the CONTRACT; or


(iii) the CONTRACTOR prepares in connection with the WORK.

26.2 The provisions of Clause 26.1 shall not apply to information which:

(a) is part of the public domain; or

(b) was in the possession of the CONTRACTOR prior to award of the CONTRACT and which was not subject to any obligation of confidentiality owed to the COMPANY; or

(c) was received from a third party whose possession is lawful and who is under no obligation not to disclose; or

(d) is required to be disclosed in order to comply with the requirements of any law, rule or regulation of any governmental or regulatory body having jurisdiction over the WORK or the CONTRACTOR, or of any relevant stock exchange; or

(e) is used or disclosed by the CONTRACTOR five (5) years or more after COMPLETION.

26.3 The CONTRACTOR shall ensure that the provisions of this Clause 26 are incorporated in any SUBCONTRACT and that the officers, personnel and agents of the CONTRACTOR and of the SUBCONTRACTORS comply with the same.

26.4 All information provided by the CONTRACTOR which the CONTRACTOR wishes to remain confidential shall be clearly marked as confidential provided, however, that any such information relating to the CONTRACTOR’s pricing and trade secrets shall always be treated as confidential by the COMPANY without the necessity on the part of the CONTRACTOR to clearly mark as such. In respect of such confidential information, the COMPANY shall be entitled to:

(a) disclose to and authorise use by the COMPANY GROUP

(b) disclose pursuant to any statutory or other legal requirement; and

(c) subject to the CONTRACTOR’s prior consent, which shall not be unreasonably withheld or delayed, disclose to and authorise use by third parties to the extent necessary for the execution and maintenance of the project in connection with which the WORK is to be performed.

Notwithstanding the above, the COMPANY shall, and shall ensure that its officers, personnel and agents take all reasonable measures to protect confidential information of the CONTRACTOR concerning or arising from the CONTRACT for a period of five (5) years from the EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT. For the avoidance of doubt, the provisions of this Clause 26.4 shall not apply to information which vests in the COMPANY in accordance with the CONTRACT.

27. CUSTOMS PROCEDURES27.1 When applicable the PARTIES shall each apply to HM Revenue and Customs for Shipwork End Use

(SEU) and shall also where appropriate apply for Inward Processing Relief (IPR), Outward Processing Relief (OPR) and Returned Goods Relief (RGR) for their respective import, export and re-import of materials, goods, tools, equipment and supplies required for the CONTRACT.

27.2 The CONTRACTOR undertakes to import, export and re-import any items for the WORK which are subject to customs control in such a way as to enable maximum advantage to be taken of HM Revenue and Customs procedures.

27.3 The PARTIES shall each develop with government authorities, customs procedures for their respective export to the WORKPOINT and re-import from the WORKPOINT of all materials, goods, tools, equipment and supplies to be provided under the CONTRACT.


27.4 The PARTIES shall each respectively be accountable and liable for compliance with customs procedures based on each PARTY being a customs authorised trader and who is in possession (not ownership) of the items subject to customs control at any given time.

27.5 For the purposes of this Clause 27, “WORKPOINT”‘ means an offshore location or vessel from which exploration or exploitation of oil and/or gas is or was carried out.

27.6 The CONTRACTOR shall pay and make payment at such times when due and payable, all import/ export taxes and duties on materials, goods, tools, equipment and supplies required for the CONTRACT and imported or exported by the CONTRACTOR. The CONTRACTOR will be responsible for ensuring that it holds the necessary import/ export licences issued by the relevant authorities prior to the commencement of the WORK.

27.7 Where equipment and materials are sold to the COMPANY under the CONTRACT the CONTRACTOR shall:

(a) prepare and provide to the COMPANY full documentation to show and certify all information regarding items subject to customs control, including the origin, customs status and customs commodity code number as may be necessary for the COMPANY to minimise or nullify the effect of customs duty on such items; and

(b) make available on a confidential basis to HM Customs and Revenue all data reasonably necessary to enable the CONTRACTOR to obtain the maximum benefits in terms of reliefs and shall pass all such benefits in full to the COMPANY; and

(c) inform the COMPANY without delay in the event that the CONTRACTOR is unsuccessful in any application for reliefs. In such event, the COMPANY shall have the option to import or export or re-import any items affected under its own authorised procedure.

28. COMPLETION28.1 When the CONTRACTOR considers that the whole or any part of the WORK for which a separate time

for completion is specified in Appendix 1 to Section I - Form of Agreement (or where the COMPANY has terminated the whole of the WORK or the CONTRACT under Clause 29.1 (a)) has been substantially completed and has satisfactorily passed any final test that may be prescribed in the CONTRACT, the CONTRACTOR shall so notify the COMPANY and request the issue of a COMPLETION CERTIFICATE.

28.2 The COMPANY shall as soon as reasonably practicable and in any case within thirty (30) days of receipt of such notice either:

(a) issue to the CONTRACTOR a COMPLETION CERTIFICATE in respect of the whole or the relevant part of the WORK; or

(b) notify the CONTRACTOR of any defects in the WORK or the relevant part of the WORK, arising from any default of the CONTRACTOR.

save that where the WORK involves provision of a vessel(s) by the CONTRACTOR, the COMPANY shall respond to the CONTRACTOR as above within the period specified in Appendix 1 to Section I - Form of Agreement or in the absence of any period being specified, within thirty (30) days.

28.3 Any notice issued under Clause 28.2(b) shall include details of the specific nature of each defect and shall specify the part or parts of the CONTRACT containing the obligations which the CONTRACTOR has failed to meet.

The CONTRACTOR shall on receipt of any such notice, promptly correct all defects. When it has completed such correction it shall notify the COMPANY in accordance with Clause 28.1.

29. TERMINATION29.1 The COMPANY shall have the right by giving notice to terminate all or any part of the WORK or the


CONTRACT at such time or times as the COMPANY may consider necessary for any or all of the following reasons:

(a) to suit the convenience of the COMPANY; or

(b) subject only to Clause 29.2 in the event of any default on the part of the CONTRACTOR; or

(c) in the event of the CONTRACTOR becoming bankrupt or making a composition or arrangement with its creditors or a winding-up order of the CONTRACTOR being made or (except for the purposes of amalgamation or reconstruction) a resolution for its voluntary winding-up being passed or a provisional Liquidator, Receiver, Administrator or Manager of its business or undertaking being appointed or presenting a petition or having a petition presented applying for an administration order to be made pursuant to Section 9 Insolvency Act 1986, or possession being taken by or on behalf of the holders of any debenture secured by a Floating Charge of any property comprised in or subject to the Floating Charge, or any equivalent act or thing being done or suffered under any applicable law.

29.2 In the event of default on the part of the CONTRACTOR and before the issue by the COMPANY of an order of termination of all or any part of the WORK or the CONTRACT, the COMPANY shall give notice of default to the CONTRACTOR giving the details of such default. If the CONTRACTOR upon receipt of such notice does not commence and thereafter continuously proceed with action satisfactory to the COMPANY to remedy such default the COMPANY may issue a notice of termination in accordance with the provisions of Clause 29.1.

29.3 If the COMPANY gives the CONTRACTOR notice of termination of all or any part of the WORK or the CONTRACT, such notice shall become effective on the date specified therein (or in the absence of any specified date at the date of receipt of the notice) whereupon the CONTRACTOR shall immediately:

(a) cease performance of the WORK or such part thereof as may be specified in the notice;

(b) allow the COMPANY or its nominee full right of access to the WORKSITE to take over the WORK or the relevant part of the WORK;

(c) assign to the COMPANY, or its nominee, to the extent desired by the COMPANY all or the relevant parts of the rights, titles, liabilities and SUBCONTRACTS relating to the WORK which the CONTRACTOR may have acquired or entered into;

(d) except as required under Clause 29.3(b), remove all the equipment or materials of the CONTRACTOR from the immediate area in which the WORK or the relevant part thereof is being performed unless otherwise instructed by the COMPANY.

Within thirty (30) days of the effective date of termination the CONTRACTOR shall deliver to the COMPANY all the relevant parts respectively of the TECHNICAL INFORMATION and originals, copies and reproductions of all drawings, specifications, requisitions, calculations, programme listings, erection plans, schedules, computer tapes, discs and other essential recording matter and all other data and documents prepared by the CONTRACTOR or any SUBCONTRACTOR.

Notwithstanding the above the CONTRACTOR may retain one copy of any such documents while admitting that the COMPANY has title to all such documents.

In the event of termination under Clause 29.1(b) or Clause 29.1(c) the COMPANY shall have the right to obtain completion of the WORK or the relevant part of the WORK by other contractors.

29.4 In the event of termination under Clause 29.1(a) the CONTRACTOR shall be entitled to payment as set out in Section III - Remuneration for the part of the WORK performed in accordance with the CONTRACT together with such other payments and fees as may be set out in that Section or, in the absence of such provisions, such reasonable costs as agreed between the PARTIES at the time of termination.

29.5 In the event of termination of part of the WORK in accordance with Clause 29.1(b) the CONTRACTOR


shall be entitled to payment only as set out in Section III ¬ Remuneration for the part of the WORK performed in accordance with the CONTRACT. Any additional costs reasonably incurred by the COMPANY as a direct result of such termination shall be recoverable from the CONTRACTOR.

29.6 In the event of termination of all of the WORK or the CONTRACT in accordance with Clause 29.1 (b) or Clause 29.1 (c) the following conditions shall apply:

(a) the CONTRACTOR shall cease to be entitled to receive any money or monies on account of the CONTRACT until the costs of completion and all other costs arising as a result of the CONTRACTOR’s default or other events giving rise to the termination have been finally ascertained;

(b) thereafter and subject to any deductions that may be made under the provisions of the CONTRACT the CONTRACTOR shall be entitled to payment only as set out in Section III - Remuneration for the part of the WORK completed in accordance with the CONTRACT up to the date of termination; and

(c) any additional costs reasonably incurred by the COMPANY as a direct result of the CONTRACTOR’s default or other events giving rise to termination shall be recoverable from the CONTRACTOR.

29.7(a) In the event of termination of the CONTRACT the rights and obligations of the PARTIES

included in the following Sections and Clauses shall remain in full force and effect:

(i) Section I - Form of Agreement;

(ii) Section II a) - Conditions of Contract Clauses 4, 5, 8, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 29, 30, 31, 33, 35, 36, 37.

(iii) Such additional Clauses and Special Conditions of Contract (if any) as are set out in Appendix 1 to Section I - Form of Agreement.

(b) In the event of termination of all or any part of the WORK:

(i) the whole of the CONTRACT shall remain in full force and effect in connection with the performance of the portion of the WORK that has not been terminated;

(ii) the provisions of Clause 29.7(a) shall apply to confirm the Sections and Clauses which will remain in full force and effect in connection with the portion of the WORK which has been terminated.

30. AUDIT AND STORAGE OF DOCUMENTS30.1 During the course of the WORK and for a period ending two (2) years after the COMPLETION DATE of

the whole work, the COMPANY or its duly authorised representative shall have the right to audit at all reasonable times and, upon request, take copies of all of the CONTRACTOR’s records (howsoever stored), books, personnel records, accounts, correspondence, memoranda, receipts, vouchers and other papers of every kind relating to:

(a) all invoiced charges made by the CONTRACTOR on the COMPANY; and

(b) any provision of this CONTRACT under which the CONTRACTOR has obligations the performance of which is capable of being verified by audit.

In this respect the COMPANY shall not be entitled to investigate the make up of rates and lump sums included in the CONTRACT except to the extent necessary for the proper evaluation of any VARIATIONS.


30.2 The CONTRACTOR shall co-operate fully with the COMPANY and/or its representatives in the carrying out of any audit required by the COMPANY. The COMPANY will conduct any audit in a manner which will keep to a reasonable minimum any inconvenience to the CONTRACTOR.

30.3 The CONTRACTOR shall obtain equivalent rights of audit to those specified above from all SUBCONTRACTORS and will cause such rights to extend to the COMPANY.

30.4 The PARTIES shall keep all documents and data (howsoever stored) related to this CONTRACT for a period of six (6) years after the COMPLETION DATE for the whole of the WORK.

31. LIENS31.1 The CONTRACTOR shall not claim any lien or attachment on the WORK or on any property of the

COMPANY in the possession of the CONTRACTOR or at the WORKSITE.

31.2 Without prejudice to any other provisions of this Clause 31, the CONTRACTOR shall save, indemnify, defend and hold harmless the COMPANY from and against all liens or attachments by any SUBCONTRACTORS in connection with or arising out of the CONTRACT.

31.3 The CONTRACTOR shall immediately notify the COMPANY of any possible lien or attachment which may affect the WORK or any part thereof.

31.4 If at any time there is evidence of any lien or attachment to which, if established, the COMPANY or its property might be subjected, whether made by any persons against the CONTRACTOR or made by any SUBCONTRACTOR against the COMPANY, then the COMPANY shall have the right to withhold and/or set off or otherwise recover from the CONTRACTOR such sum of money as will fully indemnify the COMPANY against any such lien or attachment.

31.5 Before withholding any payment due to the CONTRACTOR in accordance with Clause 31.4, the COMPANY shall give to the CONTRACTOR a reasonable opportunity to demonstrate that the purported lien or attachment is either unenforceable or is covered by the provisions of a security to the reasonable satisfaction of the COMPANY.

31.6 For the purpose of this Clause 31 reference to the COMPANY shall include the CO-VENTURERS and its and their AFFILIATES and references to the CONTRACTOR shall include its AFFILIATES.

32. ANTI BRIBERY AND CORRUPTION32.1 Each PARTY warrants and represents that in negotiating and concluding the CONTRACT it has

complied, and in performing its obligations under the CONTRACT it has complied and shall comply, with all APPLICABLE ANTI-BRIBERY LAWS.

32.2 The CONTRACTOR warrants that it has an ABC PROGRAMME setting out adequate procedures to comply with APPLICABLE ANTI-BRIBERY LAWS and that it will comply with such ABC PROGRAMME in respect of the CONTRACT.

32.3 In addition and subject to Clause 30 on provision of no less than thirty (30) days’ formal notice, the COMPANY or its duly authorised representatives shall have the right to audit, at its own cost, the existence, content and implementation of the CONTRACTOR’s ABC PROGRAMME, but such right shall not include access to documents that are legally privileged or were created for the purpose of an on-going internal investigation.

32.4 Where it is legally able to do so, and subject to a request by a COMPETENT AUTHORITY not to notify, each PARTY shall notify the other in writing immediately upon whichever is the earlier of:

(a) becoming aware of any investigation or proceedings initiated by a COMPETENT AUTHORITY relating to an alleged breach of APPLICABLE ANTI-BRIBERY LAWS by either PARTY or any member of its GROUP in connection with the CONTRACT; or


(b) having a reasonable belief that either PARTY or any member of its GROUP may have breached APPLICABLE ANTI-BRIBERY LAWS in connection with the CONTRACT.

The affected PARTY shall use reasonable efforts to keep the other PARTY informed as to the progress and findings of such investigation or proceedings, the details of any measures being undertaken by the affected PARTY to respond to the alleged or potential breach and the remedial measures that are being or will be implemented to prevent such conduct in the future.

32.5 (a) Subject to the remaining provisions of this Clause 32.5, if the COMPANY has a reasonable belief that the CONTRACTOR has breached Clause 32.1, the COMPANY may give formal notice of its intention to suspend payments under the CONTRACT to the CONTRACTOR giving the basis of such reasonable belief. If within seven (7) days of receipt of such formal notice the CONTRACTOR neither responds with information reasonably satisfactory to the COMPANY to refute such belief nor commences and continues with action reasonably satisfactory to the COMPANY to remedy such suspected breach of Clause 32.1, the COMPANY may, by the provision of formal notice, suspend with immediate effect any payments due under Section III - Remuneration without liability.

(b) The COMPANY shall not be entitled to suspend payment for sums due under Section III – Remuneration for any part of the WORK performed in accordance with the CONTRACT that the CONTRACTOR can reasonably substantiate as not being connected with the suspected breach.

(c) In the event of any such suspension, PARTIES shall meet at not more than seven (7) day intervals with a view to agreeing an appropriate course of action during the period of suspension.

(d) On expiration of the period stated in Appendix 1 to Section I – Form of Agreement, the COMPANY shall, unless otherwise agreed, either:

(i) within thirty (30) days make full payment of any sums retained pursuant to this Clause 32.5 which are otherwise due; or

(ii) if its reasonable belief remains, within thirty (30) days serve formal notice that the CONTRACT is terminated pursuant to this provision.

32.6 In the event of termination in accordance with Clause 32.5(d)(ii) the following conditions shall apply:

(a) subject to the remaining provisions of this Clause 32.6, the CONTRACT is deemed to have been terminated in accordance with Clause 29.1(b), but Clause 29.2 is not applicable;

(b) subject to paragraph (c), the CONTRACTOR shall be entitled to payment only as set out in Section III – Remuneration for WORK completed in accordance with the CONTRACT up to the date of termination;

(c) the CONTRACTOR shall not be entitled to payment for any sums connected with the possible breach of APPLICABLE ANTI-BRIBERY LAWS (including those retained under Clause 32.5(a));

(d) subject to the COMPANY being able to evidence that a breach of Clause 32.1 has occurred, the COMPANY shall be entitled to receive from CONTRACTOR any additional costs reasonably incurred by the COMPANY as a result of a breach by the CONTRACTOR;

(e) payment shall be made to the CONTRACTOR within thirty (30) days of the date of termination of the CONTRACT;

(f) provided that the COMPANY had a reasonable belief at the time of issuing the termination notice that the CONTRACTOR breached APPLICABLE ANTI-BRIBERY LAWS, the COMPANY shall not be in breach of the CONTRACT in issuing a termination notice even if it transpires that the CONTRACTOR is not in breach of APPLICABLE ANTI-BRIBERY LAWS; and


(g) notwithstanding any other provision of the CONTRACT, if at a subsequent date it is determined or agreed that the CONTRACTOR did not breach Clause 32.1, the CONTRACTOR shall be entitled to payment for all sums retained under Clause 32.6(c) (including those retained under Clause 32.5(a)).

33. GENERAL LEGAL PROVISIONS33.1 Waiver

None of the terms and conditions of the CONTRACT shall be considered to be waived by either PARTY unless a waiver is given in writing by one PARTY to the other. No failure on the part of either PARTY to enforce any of the terms and conditions of the CONTRACT shall constitute a waiver of such terms.

33.2 Retention of Rights

Subject to the provisions of Clauses 22 and 35, unless otherwise specifically stated in the CONTRACT, both PARTIES shall retain all rights and remedies, both under the CONTRACT and at law, which either may have against the other.

The CONTRACTOR shall not be relieved from any liability or obligation under the CONTRACT by any review, approval, authorisation, acknowledgement or the like, by the COMPANY.

33.3 CONTRACTOR’S AFFILIATES

Any limitation of liability given by the COMPANY to the CONTRACTOR under the CONTRACT shall include the AFFILIATES of the CONTRACTOR.

33.4 Independence of the CONTRACTOR

The CONTRACTOR shall act as an independent contractor with respect to the WORK and shall exercise control, supervision, management and direction as to the method and manner of obtaining the results required by the COMPANY.

33.5 Proper Law and Language

The CONTRACT, and any non-contractual rights and obligations arising out of or in connection with it and its subject matter, shall be governed and construed in accordance with English Law. The CONTRACT, and any non-contractual rights and obligations arising out of or in connection with it and its subject matter and subject to the provisions of Clause 35, shall be subject to the exclusive jurisdiction of the English Courts.

The ruling language of the CONTRACT shall be the English Language.

33.6 Notices

All formal notices in respect of the CONTRACT shall be given in writing and delivered by hand, by fax or by first class post to the relevant address specified in Appendix 1 to Section I - Form of Agreement and copied to such other office or offices of the PARTIES as shall from time to time be nominated by them in writing to the other.

Such notices shall be effective:

(a) if delivered by hand, at the time of delivery;

(b) if sent by fax, on the first working day at the recipient address following the date of sending;

(c) if sent by first class post, forty eight (48) hours after the time of posting.


Subject to any specific administrative instructions agreed between the PARTIES, any standard business correspondence associated with the CONTRACT and/or the WORK may be sent by either e-mail, fax or letter.

33.7 Status of COMPANY

The COMPANY enters into the CONTRACT for itself and as agent for and on behalf of the other CO-VENTURERS. Without prejudice to the provisions of Clause 37 and notwithstanding the above:

(a) the CONTRACTOR agrees to look only to the COMPANY for the due performance of the CONTRACT and nothing contained in the CONTRACT will impose any liability upon, or entitle the CONTRACTOR to commence any proceedings against any CO-VENTURER other than the COMPANY; and

(b) the COMPANY is entitled to enforce the CONTRACT on behalf of all CO-VENTURERS as well as for itself. For that purpose the COMPANY may commence proceedings in its own name to enforce all obligations and liabilities of the CONTRACTOR and to make any claim which any CO-VENTURER may have against the CONTRACTOR; and

(c) All losses, damages, costs (including legal costs) and expenses recoverable by the COMPANY pursuant to the CONTRACT or otherwise shall include the losses, damages, costs (including legal costs) and expenses of the COMPANY's CO-VENTURERS and its and their respective AFFILIATES except that such losses, damages, costs (including legal costs) and expenses shall be subject to the same limitations or exclusions of liability as are applicable to the either PARTY under the CONTRACT. For the avoidance of doubt any and all limitations of the CONTRACTOR's liability set out in the CONTRACT shall represent the aggregate cumulative limitation of the liability of the CONTRACTOR to the COMPANY, its CO-VENTURERS and its and their respective AFFILIATES.

33.8 Entire Agreement

The CONTRACT constitutes the entire agreement between the PARTIES hereto with respect to the WORK and supersedes all prior negotiations, representations or agreements related to the CONTRACT, either written or oral. No amendments to the CONTRACT shall be effective unless evidenced in writing and signed by the PARTIES to the CONTRACT.

33.9 Mitigation of Loss

Both PARTIES shall take all reasonable steps to mitigate any losses resulting from any breach of CONTRACT by the other PARTY.

33.10 Invalidity and Severability

If any provision of this CONTRACT shall be found by any court or administrative body of competent jurisdiction to be invalid or unenforceable, the invalidity or unenforceability shall not affect the other provisions of this CONTRACT and all provisions not affected by such invalidity or unenforceability shall remain in full force and effect. The PARTIES agree to attempt to substitute, for any invalid or unenforceable provision, a valid or enforceable provision which achieves to the greatest possible extent, the economic, legal and commercial objectives of the invalid or unenforceable provision.

34. LIQUIDATED DAMAGES34.1 If the CONTRACTOR fails to complete any of the items listed in Appendix 1 to Section I - Form of

Agreement in accordance with the relevant date included in the SCHEDULE OF KEY DATES and/or fails to achieve the requirements of the CONTRACT in respect of any other items listed under the heading Clause 34.1 - Liquidated Damages in the said Appendix 1, the CONTRACTOR shall be liable to the COMPANY for Liquidated Damages. The amounts of such Liquidated Damages shall be as specified in the said Appendix 1 to Section I – Form of Agreement.

34.2 Payment of such Liquidated Damages shall be the sole and exclusive financial remedy of the


COMPANY in the event of CONTRACTOR’s failure to complete any of the items listed in Appendix 1 to Section I - Form of Agreement in accordance with the relevant date included in the SCHEDULE OF KEY DATES and/or CONTRACTOR’s failure to achieve the requirements of the CONTRACT in respect of any other items listed under the heading Clause 34.1- Liquidated Damages in the said Appendix 1 to Section I - Form of Agreement. However, payment of Liquidated Damages shall not relieve CONTRACTOR of its obligation to perform the CONTRACT and shall not limit CONTRACTOR’s liability with respect to any other provision of this CONTRACT.

34.3 If the CONTRACTOR can show that it has suffered delay as a direct result of the number of “waiting on weather days” exceeding the number of such days specified in Appendix 1 to Section I - Form of Agreement, then, subject to Clause 14, the COMPANY shall issue a VARIATION to adjust the SCHEDULE OF KEY DATES to take into account any such delay. Except as otherwise provided in the CONTRACT, no adjustments to the CONTRACT PRICE shall be made in respect of any such delay.

35. LIMITATIONS OF LIABILITY35.1 Limitation of Liability

(a) Limitation of Liability before the COMPLETION DATE for the whole of the WORK

Before the COMPLETION DATE for the whole of the WORK, the CONTRACTOR’s total cumulative liability to the COMPANY arising out of or related to the performance of the CONTRACT shall be limited to the sum specified in Appendix 1 to Section I – Form of Agreement, or in the absence of such sum the CONTRACT PRICE.

(b) Limitation of Liability after the COMPLETION DATE for the whole of the WORK

After the COMPLETION DATE for the whole of the WORK, the CONTRACTOR’s total cumulative liability to the COMPANY arising out of or related to the performance of the CONTRACT shall be limited to the sum specified in Appendix 1 to Section I – Form of Agreement, or in the absence of such sum the CONTRACT PRICE.

(c) CONTRACTOR’s Limitation after termination under Clause 29.1(b) or 29.1(c)

Except as provided in Clause 35.1 (a) and notwithstanding the provisions of Clause 35.1(b):

(i) in the event of termination of all of the WORK or the CONTRACT under Clause 29.1(b) or 29.1(c), the CONTRACTOR's total cumulative liability to the COMPANY arising out of or related to the performance of the CONTRACT shall be limited to the sum specified in Appendix 1 to Section I - Form of Agreement or in the absence of any such sum the CONTRACT PRICE;

(ii) in the event of termination of any part or parts of the WORK under Clause 29.1(b) or 29.1(c), the CONTRACTOR's total cumulative liability to the COMPANY arising out of or related to the part or parts of the WORK which are terminated shall be limited to the sum specified in Appendix 1 to Section I - Form of Agreement or in the absence of any such sum the CONTRACT PRICE.

Provided however that the limitations described in Clause 35.1(a), Clause 35.1(b) and Clause 35.1(c)(i) and (ii) above shall not apply to any liabilities assumed by the CONTRACTOR under Clauses 18, 20, 23, 27 and 31, or to any indemnity given by the CONTRACTOR under Clause 22.

35.2 Limitation Period

The CONTRACTOR's liability under the CONTRACT shall cease at the end of the period described in Appendix 1 to Section I - Form of Agreement provided, however, that the provisions of this Clause shall not apply to any liabilities assumed by the CONTRACTOR under Clauses 18, 20, 23, 27 and 31, or to any indemnity given by the CONTRACTOR under Clause 22.

35.3 Extent of exclusion or limitation of liability


Any exclusion or limitation of liability under the CONTRACT shall exclude or limit such liability not only in contract but also in tort or otherwise at law.

35.4 Precedence

Subject to the provisions of Clause 25, this Clause 35 shall apply notwithstanding any provisions to the contrary elsewhere in the CONTRACT.

36. RESOLUTION OF DISPUTES36.1 Any dispute between the PARTIES in connection with or arising out of the CONTRACT or the WORK

shall be resolved by means of the following procedure:

(a) the dispute shall initially be referred, by means of a formal notice containing the information set out in Clause 36.4 and served in accordance with Clause 33.6 to the COMPANY REPRESENTATIVE and CONTRACTOR REPRESENTATIVE who shall discuss the matter in dispute and make all reasonable efforts to reach an agreement;

(b) if no agreement is reached under Clause 36.1(a) above within forty (40) days of the service of such formal notice, the dispute shall be referred to the two (2) persons named in Appendix 1 to Section I - Form of Agreement. Such persons are nominated one by the COMPANY and one (1) by the CONTRACTOR. Such persons may be replaced by the PARTY which nominated them by notice to the other PARTY;

(c) if no agreement is reached under Clause 36.1(b) above within twenty (20) days of expiry of the period referred to in Clause 36.1(b) (that is, within sixty (60) days of the service of the formal notice referred to at Clause 36.1(a)), the dispute shall be referred to an appropriate Senior Executive of each of the PARTIES who shall meet to discuss the matter in dispute within twenty (20) days (that is, within eighty (80) days of the service of the formal notice referred to at Clause 36.1(a)). If no agreement is reached within twenty (20) days (that is, within eighty (80) days of the service of the formal notice referred to at Clause 36.1(a)), the PARTIES may attempt to settle the dispute by a form of Alternative Dispute Resolution to be agreed between the PARTIES.

36.2 In the absence of any agreement being reached on a particular dispute within eighty (80) days of the service of the formal notice referred to at Clause 36.1(a), either PARTY may:

(a) subject to Clause 36.3, take appropriate action in the Courts to resolve the dispute at any time; and/or

(b) refer the dispute to adjudication in accordance with the procedure set out in Schedule 1 Part I to the Scheme for Construction Contracts (England & Wales) Regulations 1998/649 (as amended) and any reference to “construction contract” in that procedure shall be deemed, for the purposes of this clause only, to mean the CONTRACT. The decision of the adjudicator shall be binding on the PARTIES until the dispute is finally determined by legal proceedings, by arbitration (if the PARTIES agree to go to arbitration) or by agreement.

36.3 It shall be a condition precedent to the referral of a dispute to the Courts under Clause 36.2(a) that the PARTY which intends to commence proceedings in relation to the dispute first uses its reasonable endeavours to follow and complete the procedures set out in Clauses 36. 1 (a), (b) and (c).

36.4 Where any claim or counter claim in connection with or arising out of the CONTRACT is made, the PARTY making the claim or counter claim shall ensure that such claim or counter claim contains, without limitation, the following information:

(a) a clear summary of the facts on which the claim or counter claim is based; and

(b) the basis on which the claim or counter claim is made, including the principal contractual terms and/or statutory terms relied on; and


(c) the nature of the relief claimed; and

(d) where a claim or counter claim has been made previously and rejected by the other PARTY, and the PARTY making the claim or counter claim is able to identify the reason(s) for such rejection, the grounds of belief as to why the claim or counter claim was wrongly rejected.

36.5 Whilst any matter or matters are in dispute, the CONTRACTOR shall proceed with the execution and completion of the WORK and the PARTIES shall comply with all the provisions of the CONTRACT.

37. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT37.1 Subject to Clause 37.3, the PARTIES intend that no provision of the CONTRACT shall, by virtue of the

Contracts (Rights of Third Parties) Act 1999 (“the Act”) confer any benefit on, nor be enforceable by any person who is not a PARTY to the CONTRACT.

37.2 For the purposes of this Clause, “Third Party” means any member of the COMPANY GROUP (other than the COMPANY) or CONTRACTOR GROUP (other than the CONTRACTOR).

37.3 Subject to the remaining provisions of the CONTRACT

(a) Clause 20.8, Clause 20.9, Clause 22, Clause 23, Clause 24, and Clause 25 are intended to be enforceable by a Third Party; and

(b) Clause 33.3 is intended to be enforceable by the AFFILIATES of the CONTRACTOR, by virtue of the Act.

37.4 Notwithstanding Clause 37.3, the CONTRACT may be rescinded, amended or varied by the PARTIES without notice to or the consent of any Third Party even if, as a result, that Third Party's right to enforce a term of this CONTRACT may be varied or extinguished.

37.5 The rights of any Third Party under Clause 37.3 shall be subject to the following:

(a) any claim, or reliance on any term of the CONTRACT by a Third Party shall be notified in writing in accordance with the requirements of Clause 22.10 and Clause 33.6 by such Third Party as soon as such Third Party becomes aware that an event is likely to give rise to such a claim and such notification shall contain the following information as a minimum:

(i) details of the occurrence giving rise to the claim; and

(ii) the right relied upon by the Third Party under the CONTRACT;

(b) the provisions of Clause 36 shall apply in respect of any claim by a Third Party in that the relevant parties agree to resolve any dispute between them in a prompt and amicable manner by adopting the provisions of Clause 36;

(c) the Third Party's written agreement to submit irrevocably to the jurisdiction of the English Courts in respect of all matters relating to such rights.

37.6 In enforcing any right to which it is entitled by virtue of the Act and the provisions of this CONTRACT, the remedies of a Third Party shall be limited to damages.

37.7 A Third Party shall not be entitled to assign any benefit or right conferred on it under this CONTRACT by virtue of the Act.

38. HEALTH, SAFETY AND ENVIRONMENT38.1 The COMPANY places prime importance on health, safety and environment (hereinafter “HS&E”)

issues and requires that the CONTRACTOR GROUP subscribes to and actively pursues the highest standards of HS&E performance.


38.2 The CONTRACTOR shall take full responsibility for the adequacy, stability and safety of all its operations and methods necessary for the performance of the WORK and shall keep strictly to the provisions of Section VI - Health, Safety and Environment. The CONTRACTOR shall collaborate with the COMPANY in establishing HS&E interface arrangements and the production of a HS&E interface document.

38.3 Failure to meet the requirements of Section VI - Health, Safety and Environment or to satisfy the COMPANY's reasonable requirements with regard to the control of HS&E risks in any material respect will be regarded as due cause for the COMPANY giving notice to terminate all or any part of the WORK or the CONTRACT in accordance with Clause 29.1(b).

38.4 The CONTRACTOR shall co-operate with the COMPANY in providing an appropriate response to any emergency occurring at the WORKSITE and shall immediately take such action as may be necessary to protect life and make safe property where such is in imminent peril.

39. BUSINESS ETHICS39.1 Both PARTIES shall uphold the highest standards of business ethics in the performance of the

CONTRACT. Honesty, fairness and integrity shall be paramount principles in the dealings between the PARTIES.

39.2 Neither PARTY shall knowingly involve itself in any business in connection with, or use information arising from, the CONTRACT, in any manner which conflicts with the interests of the other PARTY.

SAMPLE FORM OF AGREEMENT

The CONTRACT is made between the following parties:

………………………………………………. a company having its registered office

at ……………………………………………………………………………………………………………………………………………………………………

hereinafter called the COMPANY

and

…………………………………………………… a company having its registered office at ……………………………………………..

...........................................................................................................................................................................

hereinafter called the (together referred to as the "PARTIES" and individually as a "PARTY").

WHEREAS:

1) the COMPANY wishes that certain WORK shall be carried out, all as described in this CONTRACT; and,

2) the CONTRACTOR wishes to carry out the WORK in accordance with the terms of this CONTRACT.

NOW:

The PARTIES hereby agree as follows:

1) In this CONTRACT all capitalised words and expressions shall have the meanings assigned to them in

this FORM OF AGREEMENT or elsewhere in the CONTRACT.

2) The following Sections shall be deemed to form and be read and construed as part of the CONTRACT:


1. Section I Form of Agreement including Appendix 1;

2. Section II a) General Conditions of Contract for Offshore Decommissioning – Edition

1;

b) Special Conditions of Contract;

3. Section III Remuneration;

4. Section IV Scope of Work;

5. Section V Administration Instructions;

6. Section VI Health, Safety and Environment;

7. Section VII Quality Management;

8. Section VIII Training;

9. Section IX Documents and Drawings;

10. Section X Materials, Services and Facilities to be provided by the COMPANY;

11. Section XI CONTRACTOR's Plans.

12. Section XII ASSUMPTIONS

The Sections shall be read as one document, the contents of which, in the event of ambiguity or

contradiction between Sections, shall be given precedence in the order listed, with the exception that

the Special Conditions of Contract shall take precedence over the General Conditions of Contract.

3) In accordance with the terms and conditions of the CONTRACT, the CONTRACTOR shall perform and

complete the WORK and the COMPANY shall pay the CONTRACT PRICE.

4) The terms and conditions of the CONTRACT shall apply from the date specified in Appendix 1 to this

Section I - Form of Agreement, which date shall be the EFFECTIVE DATE OF COMMENCEMENT OF

THE CONTRACT.

5) The CONTRACTOR shall perform the WORK in conformity with the SCHEDULE OF KEY DATES and

achieve COMPLETION by the SCHEDULED COMPLETION DATE as specified in Appendix 1 to this

Section1 – Form of Agreement.

6) The duration of the CONTRACT shall be set out in Appendix 1 to Section I – Form of Agreement.

The authorised representatives of the PARTIES have executed the CONTRACT in duplicate upon the

dates indicated below:

For : For :

(CONTRACTOR) (COMPANY)

Name : Name :

Title : Title :

Date : Date :


APPENDIX 1 TO SECTION I - FORM OF AGREEMENT

ReferenceSection I

Clause 4The EFFECTIVE DATE OF COMMENCEMENT OF THE CONTRACT is…………………………………………

Clause 5 The duration of the CONTRACT is…………………………………………………………….

Section II

Clause 1.17

Clause 3.1 (a)

Clause 5.7

HANDOVER shall be………………………………………………….

The COMPANY REPRESENTATIVE is………………………………………………………………….The CONTRACTOR REPRESENTATIVE is……………………………………………………………

The COMPANY designated heliport is………………………The COMPANY designated supply base is…………………

Clause 8.2

Clause 14.6(d)

The work that may not be sub-contracted without approval Is……………………………………………………………

Restrictions to free and unrestricted access…………………………………………………..

Clause 14.9

Clause 15.5

Number of days for COMPANY to respond to request for VARIATION is

Period of Force Majeure delay is ……………………………………………………………………..


(b) Number of days at zero rate ………………………………………………….

(c) Number of days: ……….. at rate:

Clause 16.8 The period of suspension is …………………………………………………………………………….

Clause 17.5

Clause 17.7

Latest time for receipt of invoices after COMPLETION of the whole of the WORK………………………………………………………………

Invoices shall be addressed to……………………………………

Bank account details for payment of CONTRACTOR are:

Sterling payment……………………………………….

Foreign Currencies……………………………………

Clause 17.10 Interest rate per annum - Base Rate plus ………. percent p.a.

Clause 20.5 Rights shall vest in……………………………………………………………………

Clause 22.2(d) This indemnity is given in respect of the following property referred to in Clause 22.2(d):……………………………………………………………………………………………………………

For the purposes of Clause 25.2(d) only, consequential losses means……………………………………………………………………………………………………………..In the absence of a definition above then the meaning of consequential loss for the purpose of this Clause shall be as set out in Clause 24

Clause 23.2 Insurance by the CONTRACTOR, the amounts are:

Employers’ Liability..................................................................................

General Third Party…………………………………………………………………………

Marine Hull and Machinery…………………………………………………………………

Protection and Indemnity:…………………………………………………………………

General…………………………………………………………………………

Oil Pollution…………………………………………………………………

Wreck Removal……………………………………………………………

Clause 24 Decommissioning All Risks Insurance to be arranged by COMPANY - YES/ NO (delete as applicable)

If “YES”, thenClause 24.1 Summary of Decommissioning All Risks Insurance (including the period for such

insurance)……………………………………………………………..If “NO”, then:Clause 24.3 Insert indemnity referred to in Clause 24.3……………………………….

Clause 28.1 Completion times are as follows:(a) For the relevant part of the WORK…………….(b) For………………………………………….(c) For………………………………………….

Clause 28.2 In respect of WORK involving vessels the period is…………………….


Clause 29.7 (a) Special Conditions remaining in full force and effect shall beClause 32.5(d)

Clause 33.6

The period shall be .......................................

The addresses for the service of notices are:

(i) COMPANY……………………………..(ii) CONTRACTOR………………………..

Clause 34.1 Liquidated Damages………………………………….

Clause 34.3 ............................ “waiting on weather days” allowedSchedule of Key Dates:1………………………..2………………………..3………………………..

Clause 35.1 Limitation of LiabilityClause 35.1(a) Limitation of liability before the COMPLETION DATEThe sum is………………………………………..Clause 35.1(b) Limitation of liability after the COMPLETION DATEThe sum is…………………………………….

Clause 35.1(c)Limitation of liability after the date of termination of the WORKThe sum is…………………………………….

Clause 35.2 The Limitation Period is from .

Clause 36.1 (b) Resolution of Disputes. The nominees are:

(i) COMPANY(ii) CONTRACTOR


OFFSHORE DECOMMISSIONING

GUIDANCE NOTES

Offshore Decommissioning

General Conditions of Contract

Introduction

The model contract for which these guidance notes are written is the General Conditions of Contract for Offshore Decommissioning, Edition 1, December 2018.

For guidance on the use of this model, see “Intended Applications”, below

The Case for a Standard Approach

By common consent the UKCS is in its maturity, resulting in increased unit costs and competition for investment from other prospective oil provinces across the world.

These circumstances make the need for efficiency in support of operations, while always necessary, even more important. Consider therefore how we have traditionally managed contracting for goods and services.

Invitations to Tender issued by UKCS operators in the past typically contained individual specific contract terms and conditions. More often than not these terms would differ from the form previously seen by contractors thus necessitating a fresh review on each and every occasion. A variety of contracts, legal and project/operational personnel will typically be involved in this process. The contract form issued by the operator would normally be drafted in the operator’s favour, anticipating, and receiving, lengthy qualifications by tenderers. Tenderers in turn would demand more concessions than they would expect the operator to agree to as “negotiation” was expected. Often lengthy discussion followed, involving many individuals, before an agreed position was reached.

The above process, on an industry wide basis, taking into account the number of operators, contractors and


suppliers involved and the whole range of exploration, development and production activities covered, has a very significant resource and cost impact.

What did or does this process achieve? For many who have worked with this arrangement over many years the belief is that it achieves very little. Risk is not managed or allocated where it can most appropriately be borne, rather it is pushed from one party to another depending on prevailing market conditions. Additional insurance costs can result and contract costs may be increased due to uncertainties and/or contingencies being added. Ultimately, however, the contracts that are signed by different operators and contractors often end up being remarkably alike.

So there is a compelling case for standard contracts, not, it should be said, in the case of scopes of work, company health, safety and environment matters, technical specifications, or in the area of true commercial and pricing issues, where of course it is normal and necessary to encourage competition, innovation and a vigorous relationship between the parties. Standardisation in this context deals only with the general terms and conditions, the “boiler plate”, where little value, but significant cost, attaches to a repetitive adversarial approach.

To date there has been no standard approach to the contractual arrangements for the carrying out of decommissioning work on the UKCS. Given the maturity of the region decommissioning of structures has already occurred and decommissioning activity is increasing. It is forecast that the level of activity will continue to increase in the medium term. For this reason LOGIC set out to prepare a standard contract for offshore decommissioning work to be added to the existing suite of LOGIC documents.

The long period taken to produce the contract has been due in large part to the difficulty involved in attempts (i) to reconcile the views expressed by operators and contractors on risk allocation, particularly in light of uncertainties involved in decommissioning work and (ii) to produce a contract which is capable of being used whether the work is to be carried out by one main contractor which will subcontract part of the decommissioning work or whether the operator will contract separately with contractors to carry out different phases/aspects of the overall decommissioning process. The particular issues involved in decommissioning work has led, in some cases, to a departure from the approach taken in other current LOGIC contracts such as with respect to contract Variations and in particular the use of “Assumptions”.

Purpose of Model Contract

The purpose of the model General Conditions of Contract is to provide a commonly known and understood foundation around which the Company and the Contractor can build their particular requirements.

This eliminates much of the effort historically spent reviewing, qualifying and reviewing qualifications to the many different sets of general conditions offered by the industry. That time is now available to focus on developing specific terms directly beneficial to the work to be done.

The model General Conditions are supported by a model Form of Agreement which includes a schedule of other sections to the contract. These facilities allow the Company to shape the total contract to match the Work.

Provision is made in the model Form of Agreement for Special Conditions of Contract. This enables the Company, in negotiation with the Contractor, to adapt the General Conditions as necessary to suit their specific requirements and purpose.

Purpose of Guidance Notes

During the development of the General Conditions it was apparent that the meanings and intentions behind certain parts of the General Conditions might usefully be explained for the benefit of users particularly in the case of Edition 1 of the General Conditions. These guidance notes make those explanations. They are intended for use by practitioners in industry as practical support in getting best value from using the Model Contracts. These guidance notes do not form part of the General Conditions of Contract and are not to be taken as a legal interpretation of the General Conditions.

Intended Applications


The General Conditions of Contract for Offshore Decommissioning have been prepared to serve the following scopes of work:

complete decommissioning of infrastructure from cessation of production to delivery to shore (or alternative disposal pursuant to an OSPAR derogation);

any particular phase of the above.

The contract could be used for the purposes of a complete operation up to and including actual delivery of materials to shore. Disposal of waste material onshore requires the holding of appropriate disposal licenses and the OGUK Legal Issues Forum Decommissioning Work Group (“the Work Group”) considered that it would be appropriate to contract separately with the holder of such licences for the onshore disposal element of a decommissioning project.

If the Operator is intending to use the contract to cover disposal of waste materials onshore, relevant wording needs to be included in the Scope of Work and Job Specification to make this clear. Parties are advised to consider responsibility for compliance with waste legislation if this is the intention. Please see the guidance to clause 21.1 in this regard. In addition it should be kept in mind that the 2012 Industry Mutual Indemnity and Hold Harmless Deed does not cover the onshore element of work and that accordingly absent the extension of the Company Group definition to include other contractors or other bespoke arrangements there would be no indemnity coverage between contractors for the onshore elements.

The contract is not intended to cover well plugging and abandonment work (and associated cleaning and / or disconnection) which the Work Group consider can be dealt with adequately using the General Conditions of Contract for Well Services.

Feedback

It is intended that these model contracts should be documents that evolve to meet the changing needs of the industry. To this end it is important that the industry provides feedback on its experience with the use of the model contracts. This will be particularly relevant in the context of a developing area in the UKCS such as decommissioning.

LOGIC requests specifically:

details of common areas of concern which give rise to consistent modifications to material terms of the Contract through custom and usage;

case histories of the model contracts being either helpful or unhelpful with specific detail of why that was so;

recommendations to develop the scope of existing model contracts or additional models which would serve the industry well; and

suggested modifications or additions to the guidance notes.

All feedback should be sent in the first instance to:

Contracts for the Offshore Oil and Gas Industry: Comments

LOGIC 3rd FloorThe Exchange 262 Market StreetAberdeenAB11 5PJ


[email protected]

Acknowledgements

LOGIC wishes to acknowledge the contributions made by the Oil & Gas UK Legal Issues Forum Decommissioning Task Finish Group, in preparing this model contract.

Other Relevant Models

Model General Conditions of Contract (with supporting guidance notes):

Construction Edition 3

Services (On- and Off-shore) Edition 3

Well Services Edition 2

Design Edition 2

Marine Construction 2

Mobile Drilling Rig Edition 1

Supply of Major Items of Plant and Equipment Edition 3

Purchase of Goods Edition 3

Small/Medium Enterprises (SME) Services Edition 1

Subcontract Small/Medium Enterprises (SME) Services Edition 1

Copies of these documents can be obtained from: www.logic-oil.com

EXPLANATORY NOTES1. Structure of the Contract1.1 The structure of the Contract that has been assumed is set out in the Sample Form of Agreement

attached to the General Conditions of Contract. There, a number of Sections are listed which, in some cases, are referred to in the General Conditions of Contract. The document has been drafted in this way in an attempt to make the use and understanding of Contracts as easy as possible. It is however recognised that some Companies may not wish to set out their Contracts in this way. If certain of the Sections listed are not required, this can easily be taken into account in the Special Conditions of Contract (Section II (b)) by including a Clause which details where the relevant information can be found and which changes all references to discarded Sections.

1.2 A Form of Agreement must of course be drafted taking into account the specific Contract to which it relates. The Sample Form should not however require much if any alteration. The Appendix 1 attached to the Form of Agreement must be completed for each Contract as discussed below.

1.3 Attached to the Sample Form of Agreement is an Appendix – numbered 1 – which refers to various Clauses included in the General Conditions of Contract. Such Clauses are drafted in such a manner that each individual Company can include its own requirements for matters such as insurances, liquidated damages, limitations of liability, etc, in the Appendix.

It is essential that, as far as possible, the information listed in Appendix 1 is supplied to tenderers as part of the invitation to tender documents, in order that tenderers may price the requirements of the Company.

All outstanding information, including the names of the Contractor Representative, the Contractor’s address to which notices are to be sent, etc., must be completed and included in any signed Contract.

1.4 The General Conditions of Contract may be supplemented by Special Conditions as provided for in Section II (b) of the Sample Form of Agreement. Such Special Conditions should include any additional matters for a specific contract which are not dealt with in the General Conditions. In addition, the


Special Conditions may modify or delete certain Clauses included in the General Conditions, but it is hoped that Companies will only modify the General Conditions when such modifications are considered to be essential.

1.5 Included in Appendix 1 are two important dates/periods namely, the Effective Date of the Contract and the duration of the Contract. Provision is included in the General Conditions of Contract for additional requirements in relation to programme to be included in the Special Conditions of Contract in the form of a Schedule of Key Dates.

As a minimum such schedule should include the two dates included in Appendix 1.

1.6 The whole of the contract document has been drafted with the aim of keeping the wording as simple and short as reasonably possible.

1.7 In the preparation of the General Conditions of Contract no attempt has been made to comply fully with the relevant provisions of Part II of the Housing Grants, Construction and Regeneration Act 1996 (“the 1996 Act”) since it appears that such provisions do not apply to the types of work which it is anticipated will be carried out under the new LOGIC Decommissioning Contract. For a discussion on this subject, please see the case of Staveley Industries plc -v- Odebrecht Oil & Gas Services Limited (2001) 98 (10) L.S.G. 46. In that case, from the Technology and Construction Court, the judge expressed the view that structures which are founded or to be founded in the sea bed below the low water mark are not structures forming (or to form) part of the land in terms of Section 105(1)(a) of the 1996 Act. For the same reason, the 1996 Act also does not apply to floating platforms.

If however these General Conditions of Contract are to be used for types of work which are covered by the 1996 Act, modifications will be necessary by way of Special Conditions in order to meet the relevant requirements of the 1996 Act, failing which the “Scheme for Construction Contracts” published in relation to the 1996 Act will automatically apply to any such Contract.

Notwithstanding the fact that it appears that the 1996 Act does not apply to this type of work, the parties to a decommissioning contract are free to apply any of the Act's provisions to their contract by agreement. The 1996 Act introduced a fast track dispute resolution method called “adjudication”. After the dispute has been referred to an adjudicator, the adjudicator has 28 days to make a decision. Once made, the adjudicator’s decision has interim binding effect. This means the decision can be enforced and will remain binding until the dispute is otherwise determined by litigation, arbitration (if the parties’ contract provides for arbitration) or by agreement. Adjudication has been used successfully for many years now in the construction industry to resolve disputes. It allows the matter in dispute to be resolved quickly on an interim basis, which enables the project to move on. It is believed that the adjudication procedure would be of benefit to the parties to a decommissioning contract and so provision has been made for this in Clause 36 – Resolution of Disputes.

1.8 When issuing invitation to tender documents it is anticipated that the General Conditions of Contract will not be included in such documents but will simply be referred to in tender documents and be incorporated by reference in resulting contracts.

2. Legislative provisions / International Obligations relating to decommissioning2.1 Section 29 Notices

The Petroleum Act 1998 (the “1998 Act”) provides the Secretary of State with the ability to serve a notice (a “Section 29 Notice”) on various parties requiring them to submit a decommissioning programme for approval and following submission those persons are jointly and severally liable to carry it out.

With respect to offshore installations, Section 29 Notices may be served on a wide range of persons. In the first instance, notices are usually served on licensees, the operator, the owners and the parties to the relevant operating agreement. Section 29 Notices can also be served on any person who owns any interest in an installation other than as security for a loan and even a company which is associated with any of these companies. Guidance has been issued by OGA to the effect that it does not generally consider contractors carrying out the day-to day management of an installation to be a “manager” under the terms of the 1998 Act (and therefore capable of being subject to receipt of a


Section 29 Notice) and that the Operator approved by the regulator would be the Operator for these purposes.

In the case of pipelines Section 29 Notices are normally only served on the owners of the pipeline or associated companies.

2.2 OSPAR Derogations

The U.K.’s international obligations under the Convention on the Protection of the Marine Environment of the North East Atlantic (the “OSPAR Convention”) apply with respect to decommissioning. In 1998, OSPAR Decision 98/3 introduced a new regime for the decommissioning of disused offshore installations (but not pipelines).

Under the Decision 98/3, there is a general prohibition on dumping and leaving wholly or partly in place, disused offshore installations within the maritime area. The presumption is that all structures will be returned to land for re-use, recycling or disposal. It is possible however to apply for a derogation from the general rule. For example, derogations may be considered in the cases of concrete structures and the “footings” of certain large steel installations (namely those weighing over 10,000 tonnes which were installed prior to February 1999). Other derogations may be obtained in exceptional circumstances e.g. where there is structural deterioration. Derogation is not automatic in the situations referred to above and each application for derogation will be considered individually. Any such application must be supported with the appropriate assessments and consultations. A derogation will only be granted if there are significant reasons why an installation should not be returned to land for recycling or disposal.

It is anticipated that as decommissioning technologies and capabilities evolve, the scope for derogation will decrease.

3. Issues Particular to Decommissioning 3.1 Uncertainties

During work to create this form of contract, concern was expressed that decommissioning involves a degree of uncertainty which cannot easily be priced into a contract at the tendering stage. The consensus was that the level of uncertainty in a decommissioning project is greater than the level involved in a construction contract. The uncertainty is derived in large part from the potential for errors or insufficiencies in the information which is available at the tendering stage. The level of uncertainty is a major reason why currently few, if any, contractors are prepared to enter into a fixed price turnkey decommissioning contract.

The Company will provide prospective tenderers with information on the infrastructure which is to be decommissioned such as “as built” plans of any platform and details of amendments to structures since build date. In some cases the plans will be unavailable or changes will have occurred of which the Company is unaware. When tendering, the Contractor will base the bid on the information provided by the Company. The data provided might not be correct and it is almost certain that it will not be comprehensive. The commercial question then faced is who should take the risk of the position on the job being different from that envisaged at the tendering stage? From a cost perspective the issue will be pronounced for the Contractor where the Contractor has agreed a lump sum price for all, or the relevant part, of the work. Any discrepancy between what was envisaged and what is ultimately required by the circumstances on the ground could also have implications with respect to the timing of the Work.

As the statutory obligation for decommissioning rests with recipients of notices under Section 29 of the Petroleum Act 1998 (usually the licensees/owners) the approach taken in the contract is that discrepancies should, in the main, be a cost of the Operator and its co-venturers, through the variation procedure in the contract.

The contract envisages two main situations where inaccurate or incomplete information can lead into the Variation process. These are as follows:

A) Inaccurate information is providedThe Company provides “TECHNICAL INFORMATION”. In terms of Clause 14.6 (c) the Company is to authorise a Variation if the Contractor can show that it may suffer or has suffered delay and / or


incurred cost as a direct result of the Technical Information or other information supplied by the Company and for which the Company is liable being incorrect or inconsistent with the conditions encountered by the Contractor; or where the Assumptions are found to be factually incorrect and this has a material impact on the programme, the cost of the work or the manner in which the works need to be performed. For example: The Company advises that the infrastructure is hydrocarbon free but when the Contractor

commences work it becomes apparent that this is not the case so requiring the Contractor to carry out further cleaning operations. In such a case Clause 14.6(c) would require the Company to authorise a Variation;

B) Information is not provided It is almost certainly the case that the Technical Information will not be all information which could be relevant when tendering for the contract. The Contractor will prepare the tender on the basis of the Technical Information but also on the basis of its own assessment of what may be required. To price the Work the Contractor will need to make its own assumptions.

For example: The workscope set out in the invitation to tender makes no mention of the existence or otherwise

of NORM (naturally occurring radioactive material). When decommissioning work commences NORM is encountered, leading to increased cost and delay for the Contractor.

The workscope makes no mention of the presence of asbestos in the structure. Asbestos is

uncovered during decommissioning work and as a result the Contractor requires to subcontract the asbestos removal to a specialist subcontractor.

In the two examples set out immediately above the Technical Information is not “incorrect” in that the Technical Information did not say that “there is no NORM present” or that “no asbestos is included in the structure of the platform”. It may therefore be problematic to obtain a Variation under Clause 14.6(c) based on issues with Technical Information and if matters were left on this basis the Contractor could effectively be bearing the risk of any unanticipated work being required (unless as a result of incorrect/new Technical Information or if a Variation was otherwise possible under Clause 14.3(a)). For this reason the General Conditions envisage that “Assumptions” (which the Company will be in the position to agree or qualify) will be added in Section XII. The purpose of the Assumptions is to set out the basis on which the Contractor has tendered. If it transpires that an Assumption is not correct then there is a mechanism for a contract Variation by way of Clause 14.6(c), which can include a variation in price and timing. This enables the Contractor to tender for the contract on the basis of the information at hand and on the basis of its own assumptions with a right to a Variation if it suffers delay or additional cost because an Assumption is incorrect and where this has a material impact on the programme, the cost of the Works or the manner in which the Works need to be performed.

It is envisaged that when tendering the Contractor will set out its Assumptions. To cover the two examples above the Contractor could propose the following as Assumptions:

“Contractor shall not be required to remove, handle or dispose of any NORM”.

“Contractor shall not be required to remove, handle or dispose of any asbestos”.

If the Contractor encounters NORM or asbestos then the relevant Assumption would be inconsistent with the conditions encountered by the Contractor and accordingly where the Contractor suffers delay or costs as a direct result the Company would be required to authorise a Variation pursuant to Clause 14.6(c) where the requirements of that clause are met.

It would be advisable for the parties to ensure that all Assumptions are clearly stated and phrased in such a way that they will be either clearly correct or clearly incorrect. Assumptions which are vague or which involve subjective judgement should be avoided.

For example assumptions such as:


“There is no material amount of NORM present”; or

“No greater amount of asbestos is comprised within the Facility than would normally be found in a structure of the age and design of the Facility”

would be likely to lead to dispute.

Parties may wish to provide what the effect of certain variances from the Assumptions may be in Section III (Remuneration) whilst assuming at the outset that these variances will not occur. For example a price for handling NORM could be added to that Section.

3.2 Environmental issuesA contract for decommissioning will involve handling and, potentially, disposing of a large volume of material. Some of this may be hazardous material or material which can only be handled or disposed of by companies onshore which hold appropriate licences / permits under legislation.

Under Clause 21.1 of the Contract the Parties undertake to comply with all applicable laws including “laws pertaining to the management, transport and disposal of waste” and under Clause 21.2 the Contractor agrees to obtain all licences and permits required for the work, except to the extent that these can only be obtained by the Company. A deliberate decision was taken neither to name legislation which governs environmental and waste handling issues nor to list the permits which may be required. This decision was taken as different licences /permits will be required depending on, for example (i) the asset which is being decommissioned and the location of the waste handling, transportation and disposal activities relating to that asset and (ii) the location of the waste treatment activities and of disposal. The applicable legislation will also change over time.

The Contractor will have to ensure that all relevant legislation has been considered and appropriate permits/licences are obtained. In addition to the provisions of the Petroleum Act 1998 and the Energy Act 2008, there are numerous other legislative provisions which may apply. Some of the legislative provisions (e.g. environmental assessments) will have been considered/fulfilled as part of the approval of the statutory decommissioning programme whereas others (more particularly regarding waste disposal) will be specific to the actual decommissioning process. Legislative provisions covering both offshore and onshore operations may have to be considered.From a UK perspective an illustrative, non-exhaustive list of legislation may be accessed at: http://oilandgasukenvironmentallegislation.co.uk/ (the “Webpage”).

In respect of waste considerations in particular, it is important to understand the meaning of waste given the various definitions and interpretations that exist. According to the EU Waste Framework Directive (2008/98/EC) waste “means any substance or object which the holder discards or intends or is required to discard.” Whilst an operator may intend to re-use, rather than dispose of, some assets forming part of an offshore platform, in practice, the vast majority of material forming part of an offshore platform being decommissioned is likely to be regarded as 'waste'. The decommissioning programme relating to each installation will be expected to show how waste arising from the decommissioning activity is to be managed to minimise the environmental impact. Operators and contractors will be expected to maximise reuse and recycling of material and disposal to landfill will be regarded as a last resort.

Although offshore installations do not require a licence for waste generation and handling, there are a number of regulatory requirements to which offshore facility operators must adhere. Many of these are contained within the International Convention for the Prevention of Pollution from Ships (MARPOL) 1973. MARPOL was introduced into UK law through the Merchant Shipping (Prevention of Pollution by Sewage and Garbage from Ships) Regulations 2008. The 2008 regulations generally prohibit waste disposal in the offshore marine environment with limited exceptions.

Although not directly applicable offshore, the parties will need to be mindful of the legal requirements that apply to the onshore management, handling and disposal of waste, so that the transfer of waste ashore is carried out in a way that allows these requirements to be met. The original waste producer has a ‘duty of care’ to ensure waste is transferred and disposed of properly. Although the waste producer has the primary role, this duty of care also extends to any person who imports, produces,


carries, keeps, treats or disposes of waste or, as a broker, has control of such waste. Those owing a duty of care must take the following steps in relation to this duty:

Prevent release of waste through appropriate handling and storage; Understand waste in their possession and accurately describe its contents; Ensure waste is transferred to an appropriately licensed carrier; Prevent waste from causing harm according to what is known and foreseeable; and Monitor waste through an environmental management system.

If a Contractor contracts to carry out the whole decommissioning process, including, for example, waste management and disposal onshore, then unless it holds the necessary environmental permits/licences, it will require to subcontract the relevant parts of the work for which a permit/licence is required. Where the Contractor contracts to perform work which it would not legally be entitled to perform without a permit/licence, robust arrangements ought to be put in place to ensure that an appropriately licensed person will be available at the necessary time to carry out those activities which the Contractor itself would be prohibited from performing due the absence of a necessary permit/licence.

As the contract is drafted from a UK perspective the above legislation/regulation on the Webpage relates to the UK (or parts thereof). Where waste is destined for another jurisdiction any waste disposal contractor will have to comply with the legislation/regulations in respect of waste in the country of destination and attention will have to be paid to the Transfrontier Shipment of Waste Regulations 2007.

4. Comments on Specific Clauses included in the General Conditions of ContractClause 1 – Definitions Clause 1.2 – “Affiliate”A general definition is included in Clause 1.2 but users should review this Clause and amend as necessary in the Special Conditions to take into account their own particular corporate structure, should the general definition be unsuitable.

In addition to changes required in relation to the corporate structure of the Company, an additional definition may be required for the Contractor. For example, in the case of a Joint Venture Company which may well have no Affiliates, the Joint Venture Partners and their Affiliates may have to be taken into account.

Clause 1.4 – “Assumptions”These General Conditions incorporate a concept – “Assumptions” – which is not used in other current LOGIC contracts, but the need for such a concept has been identified and agreed as being specific to the unique nature of decommissioning work. Please refer to 3.1 (above) for details. The Assumptions are to be inserted into Section XII. The Contractor is not obliged to insert Assumptions into a tender, however it is highly recommended in the interests of clarity and to support any future Variation requests. Failure to include Assumptions could indicate that all reasonable costs and variable factors have been priced into the bid, especially where the basis of the work is lump sum.

Clause 1.13 - “Contractor Group”Clause 1. 13 defines the “Contractor Group” as including not only the first tier subcontractors but also those subcontractors of any tier who are performing the Work at any Worksite.

Clause 1.16 – “Facility”This definition refers to Section IV in which details of all assets, equipment and materials comprised in the offshore structure are to be added.

Note that in a case where a derogation has been obtained under OSPAR (such as in respect of a concrete base) the whole structure, including what is to be left in place pursuant to the derogation, is to be included in the Facility definition.

Clause 1.17 – “Handover”This definition is only used in relation to Transferring Material. The contract envisages that there may be scenarios where Operator and Contractor agree that ownership of material comprised within the


Facility which is being removed may pass from the owners of that infrastructure to the Contractor (for example as part consideration for the Work). Such material is defined in the General Conditions as “Transferring Material”. It is appreciated that in many cases there will be no “Transferring Material” in which case in Section IV the section in respect of Transferring Material can simply state “None”.

“Handover” is the point in time when ownership of the Transferring Material will pass to the Contractor. The General Conditions provide for this to be when the vessel carrying the Transferring Material (if any) has been safely moored at the quayside (which may be before Completion) unless the Parties provide otherwise in Appendix 1 to Section I – Form of Agreement.

Clause 1.18 – “Incorporated Material”Incorporated Material is material added to the Facility by the Contractor and which effectively becomes part of the Facility. An example might be pad eyes added to allow lifting or replacement walkways which the Contractor adds to the Facility to make it safe for decommissioning work to take place on board. The General Conditions provide at Clause 19.2 that such Incorporated Material will become part of the Facility (and so will be owned by the infrastructure owners rather than by the Contractor). The rationale is to protect the Contractor from any argument (no matter how theoretical) that the Contractor owns an interest in infrastructure for the purposes of Section 29 of the Petroleum Act 1998 and so could be served with a “Section 29 Notice”.

Clause 1.20 – “Job Specification”The sections referred to in this definition are the sections listed in the Sample Form of Agreement discussed above.

Clause 1.29 – “Transferring Material”See notes on definition of “Handover” for details. If there are to be Transferring Materials then these should be detailed in Section IV.

Clause 1.30 – “Variation”The word “Variation” may mean one of the two things described in this Clause:(a) an instruction to modify the work given in accordance with Clause 14.1,(b) other matters which may give an entitlement to the Contractor to additional payment and/or

changes to the Schedule of Key Dates (defined in Clause 1.25).

Clause 14 does not include a list of items which fall under (b) but various other Clauses refer to the issue of a Variation in the circumstances described in each particular Clause. These Clauses include 14.6.It should be noted that “material” is not defined although it is used in various Clauses such as 6.1 and 8.2(b). To avoid disputes as to whether something will or will not be treated as material parties may wish to add definitions of such terms. Clause 5 – Company Provided Items The contract includes Clauses 5.1-5.6 (inclusive) which deal, amongst other things, with the provision of items by the Company and the receipt, testing and storage of those items by the Contractor. These are included in case such items are provided by the Company however if nothing is to be supplied by the Company then these provisions may be excluded in the Special Conditions.

Clause 5.7 provides that the Company will provide routine and medi-vac transportation for Contractor personnel and transportation for Contractor provided materials which are to be transported by helicopter or supply boat. This provision may need to be amended to reflect the commercial arrangement agreed in respect of such transportation and the identity of the installation operator.

Clause 6 – Contractor to Inform Itself In some LOGIC contracts (such as Marine Construction) there is provision to the effect that the Contractor will be deemed to have satisfied itself in respect of a variety of matters such as the nature and extent of the work, the sufficiency of rates and prices etc. prior to entering into the contract. One of the results of such clauses is to limit the opportunity for Contractors to obtain Variations.

In the context of a contract for decommissioning work there can be high degree of uncertainty even


where detailed information is provided by the Company prior to the contract award – see 2.1. For that reason it was not thought appropriate to have a general provision in terms of which the Contractor is deemed to have satisfied itself. It was however considered that the Contractor should confirm that subject to the Technical Information being accurate in all material respects and the Assumptions being factually correct that the Contractor has the necessary skills and resources to carry out the work on time and at the rates and prices quoted. The Contractor might not know everything but should confirm that on the basis of what it knows and on the Assumptions that it can do the work for the price.

Clause 6.3 provides that the Company will authorise a variation where the Contractor encounters seabed conditions / subsoil conditions which could not reasonably have been foreseen having taken into account the Technical Information. The view was taken that this issue was of such importance that the Contractor should have an express right to a variation where, despite attempts to mitigate the impact of the issue, it suffers delay or additional cost as a direct result of the issue.

Clause 7 – Contractor to Inform Company / Company to Inform Contractor In terms of Clause 7.1 the Contractor is to notify Company of matters which the Contractor considers to (i) contradictions between the Contract or the Assumptions and the Technical Information; or (ii) deficiencies, omissions or contradictions in the Technical Information; or (iii) conflicts with law.

The parties are then to agree a position before the Contractor proceeds with any part of the Work which is affected (subject to rights to act in emergency scenarios – Clause 7.2).

The Company is to issue a Variation if it has suffered delay or incurred additional cost as a result of revisions to the Work or the Programme (unless caused by the Contractor).

Clause 8 – Assignment and Subcontracting Clause 8.1 – AssignmentAlthough this Clause gives the Company wide powers to assign the Contract, it is possible that some Company Joint Operating Agreements will require even wider powers in which case this Clause should be amended in the Special Conditions. Given the scale of obligations under a decommissioning contract careful consideration should be given by the Operator and Contractor to any assignment of the Contract. Parties may wish to restrict assignments unless the proposing assignor has evidenced to the satisfaction of the other party the financial (and if applicable, technical capability) of the proposed assignee to perform the obligations under the contract.

Clause 8.2 – SubcontractingIt is considered that generally, if substantial parts of the Work are to be subcontracted such arrangements should be discussed before signature of the Contract and, wherever possible named subcontractors should be listed in the Contract itself.

If that is not done however, Clause 8.2 will still provide reasonable powers for the Company in relation to the award of such subcontracts.

In terms of Clause 8.2(a) the Contractor cannot subcontract the whole of the work. In addition the parties can include in Appendix 1 to Section 1 – Form of Agreement a list of parts of the Work which cannot be subcontracted without consent of the Company. The rationale is to avoid the need to obtain consent to immaterial subcontracts.

Clause 8.2(b) provides for the Company to have a right to review Subcontracts, the choice of subcontractors and the part of the Work which is to be subcontracted. In practice such a provision is often amended so that the Company is be given rights in respect of the review and award of Subcontracts where these are “material”. If such an amendment is made the parties may wish to define what they mean by “material”.

Clause 12 – Technical Information and Assumptions Under Clause 12.1 the Company confirms that to the best of its knowledge the Technical Information gives a reasonable representation of the Facility but gives no warranty. Such a limited confirmation on its own would be little use to the Contractor. However the Clause goes on acknowledge at Clause 12.2 that the scope of Work and the Contract Price have been calculated based on the Assumptions.


Clause 12.3 is forward looking in that it provides for a scenario in which if the Company identifies Technical Information relevant to the Work after the commencement of the contract or the Company discovers that the Technical Information or Assumptions are factually incorrect there is an obligation upon the Company to provide such information to the Contractor to review. The Parties may then agree a variation if the circumstances warrant it. The clause provides that in the interim the Parties, acting reasonably, are to consider whether it is appropriate for the Works or part thereof to be suspended pending agreement of a Variation.

Clause 12.5 provides that all documents of the types listed shall be provided, if requested by the Company, for its review and comment.

This Clause is drafted in this way partly with the objective of reducing cost and partly from a consideration of the practical aspects of the review of documents.

When contracts are drafted however, the Company should give consideration to which classes of documents it will require to see in any event (if any). Any specific requirements should be included in the Special Conditions of Contract.

Clause 12.7 contemplates that the Company may require the Contractor to carry out checks on specific items of Technical Information. Where such is a requirement, each item to be checked should be clearly identified and, where appropriate the nature of the check should be specified.

Clause 13 – Inspection and TestingThis Clause may not appear relevant in decommissioning contracts where the scope may be complete removal of a structure. Not all decommissioning contracts will deal with complete removal (eg. where an OSPAR derogation has been granted or where different contractors are carrying out different stages of the project). Given the possible permutations it was considered necessary to retain provisions dealing with testing and with right to reject work or to require re-performance or completion. An example would be a scenario where structural steelwork cuts are to be made at a certain point beneath sea level but they are made at an incorrect level or depth. In such a case the Company would require the right to have the Contractor make a further cut at the right level so as to comply with the statutory decommissioning programme.

Clause 14 – Variations Clause 14.1 gives the Company wide powers to issue instructions, subject to Contractor’s other existing contractual commitments, not only to change the Work but also to accelerate and reprogramme the Work. In accordance with Clause 2.1 all such instructions are to be in writing or, if given orally in the first instance, confirmed in writing.In addition any such instruction should be given or confirmed by the Company Representative or a nominated deputy who has written authority to give and/or confirm such instruction (please see Clause 3.2).

In terms of Clause 14.1(c) if Company’s Variation involves Work within 500 metres of any permanent oil and gas production facilities and/or pipelines which are not detailed in the contract, then Contractor has the right to refuse to perform the Work in instances where the Company and Contractor cannot agree on price, indemnity and Contractor’s limitation of liability in respect of Clause 22.2(d).

Clause 14.5 provides that, wherever possible, the effect of a Variation shall be agreed before the instruction is issued. Clearly such a procedure will eliminate many future potential disputes. It is however recognised that such a procedure cannot always be followed so an alternative is included in this Clause for cases where no such agreement is reached. Work may in any case proceed in accordance with the provisions of Clause 14.1(b) (provided that the Contractor having the necessary resources and being able to accommodate such work given its other contractual commitments).

Clause 14.6 deals with situations where the Contractor can show that it has suffered delay and / or increased cost for one of a variety of reasons and gives the Contractor an entitlement to receive a Variation in such cases. Such reasons include errors in TECHNICAL INFORMATION, as industry


experience has shown that these are likely to be key areas of challenge. In addition the Contractor can seek a variation where the Assumptions are found to be factually incorrect. In terms of payment the Clause specifies that the Contractor shall receive necessary direct additional cost plus overheads but not profit (see Clause 14.6 (e)(ii)).

Clause 14.7 deals with disputed Variations, i.e. cases where no agreement can be reached, and the procedure for dealing with such. In particular Clause 14.7(e) provides that the Company shall make such adjustments as it considers fair This is included to ensure that some payment is made in such cases in order to maintain the Contractor’s cashflow.

This Clause is complementary to Clause 14.5 which describes how payment should be calculated.

Clause 15 – Force Majeure Clause 15.2 defines Force Majeure for the purposes of the Contract. It should be noted that weather conditions as such, regardless of severity are not Force Majeure but are the risk of the Contractor. It must however be remembered in this context that, where, for example, heavy lift vessels are to be used, the method of payment for such will either be on the basis that the Contractor accepts weather risk or on the basis that standby time will be reimbursed should wind and/or sea conditions exceed certain specified parameters. Accordingly it is not necessary in such cases to resort to claims of Force Majeure. It is however essential that Section III – Remuneration should deal fully with such matters.

Clause 15.5 allows the Company to retain the Contractor at the Worksite during a force majeure delay, subject to such delay not exceeding the time specified in Appendix 1 to Section I. During any such period the Contractor is entitled to payment as described in the Clause.

If the delay exceeds the period specified in Appendix 1 of Section I however, or the Company does not instruct the Contractor to remain at the Worksite, the Contractor may leave in order to fulfil contractual obligations to others.

At the end of a force majeure occurrence, Clause 15.6 requires the Contractor to reprogramme the Work so as to minimise the delay. If the Contractor has left the Worksite however, it can allow time in the revised programme to complete other operations on which it is engaged at the date of cessation of the force majeure.

It is considered that generally such provisions strike a fair balance between the parties. Much will however depend upon the other commitments of the Contractor and the length of time required to complete work for others. The parties should of course discuss all such matters as provided for in the opening paragraph of Clause 15.5.

For certain specialised vessels and for contracts where time is critical it is recognised that amendments to the arrangements discussed above may be necessary.Clause 16 – Suspension Clause 16 gives the Company the right to suspend the Work for various reasons, including where there is a default on the part of the Contractor. In practice such provisions often give rise to debate between parties as in a scenario where work is suspended for Contractor default there is no adjustment of the Contract Price or of the Schedule of Key Dates and additional costs reasonably incurred by the Company as a direct result are recoverable by the Company from the Contractor. Contractors argue that such provisions should be applicable only where there is “material” default by the Contractor so as to avoid a situation where a Company argues that a breach of the contract which has no (or only a minor effect) is used as a basis for suspension. Contactors often argue that a suspension for a default which is not a “material” default should be treated as a suspension for convenience and should be treated accordingly. If “material” is added by way of a Special Condition the parties may wish to define what will constitute “material” for these purposes.

Clause 16.4 provides that unless a suspension which is requested by the Company results from some default on the part of the Contractor, the Contract Price and Schedule of Key dates shall be adjusted in accordance with the relevant provisions of Section III – Remuneration or in the absence of such provisions in accordance with Clause 14 (Variations). It is therefore necessary that such payment section includes appropriate rates for suspension. These rates must be agreed specifically for each Contract


. Clause 17 – Terms of Payment Clause 17.2 emphasises the normal position that the rates and prices in the Contract are deemed to include everything that the Contractor must supply or do, unless the Contract specifically provides otherwise. Accordingly statements to the effect that the Contractor shall carry out a particular operation at his own cost are not included elsewhere in the General Conditions since that is the normal position.

Clause 17.4 deals with Value Added Tax and states that VAT should be added to the Contract Price as appropriate. Accordingly all rates and prices included in the Contract should be quoted without any inclusion for VAT and the Invitation to Tender documents and Section III – Remuneration should make this very clear.

Clause 17.10 provides for interest to be paid for late payment of invoices. The Late Payment of Commercial Debts (Interest) Act came into effect on 1 November 1998 and gives the statutory right to claim interest for late payment of invoices at bank base rate plus an additional percentage. Appendix 1 of Section I allows for the percentage over the base rate to be specified in each contract to cater, for instance, for flexible arrangements in terms of delivery on the part of the Contractor which might be offset against the beneficial credit period/interest rate on the part of the Company. The contract default position is 3% over the base rate (which is in accordance with other current LOGIC contracts). However, it is important to ensure that the amount of interest remains “substantial” in the eyes of the Court which at a later date may consider it insufficient to reflect the intent of the legislation. There were views expressed within the Work Group that 3% over base rate is not an appropriate rate for default interest and that in some instances this rate could be more attractive than the interest rates being charged by debt providers. Parties using the General Conditions may wish to consider whether this rate should be increased.

Clause 17.12 includes a definition of the word “costs” in respect of Clauses which provide for the recovery of “costs”.

Clause 18 - Taxes and Tax Exemption Certificates Clause 18 has been updated to include reference to legislation and practices current as at January 2014.However, under the impending Offshore Employment Intermediaries (OEI) legislation, licence holders can be held responsible/liable for PAYE/NIC liabilities and reporting obligations in respect of UK employees supplied by an OEI, where the OEI (which does not have a UK associated entity) fails to meet its UK PAYE/NIC obligations in respect of those employees. To mitigate the risk of liabilities being transferred to licence holders, the government agreed to introduce an exemption scheme similar to that in place in respect of non-resident contractors. This has been discussed in the UKOITC and there may in future be some standard drafting to address the impact of the OEI legislation (e.g. warranty regarding the use of offshore employers, an obligation to provide an exemption certificate if such a warranty cannot be given, and the right to withhold amounts if an exemption certificate cannot be provided or is withdrawn). However, no wording has yet been agreed. In the meanwhile all parties are advised to consider this issue closely, and if necessary seek their own advice.

Clause 19 – Ownership of Material Clause 19.1 states that the Facility and all of its constituent parts will at all times remain the property of the Company. Any Incorporated Material shall be deemed to become part of the Facility and therefore become the Company’s property when added to the Facility. There is also provision (Clause 19.3) which allows the parties to agree that the title of material classified as Transferring Material in Section IV – Scope of Work will be transferred to the Contractor. As referred to in paragraph 3.2 above, under UK law, duties of care in respect of waste (including record keeping requirements) do not simply pass with legal ownership and duties of care may potentially be owed by any person who imports, produces, carries, keeps, treats or disposes of controlled waste. If the parties are considering transfer of the title to waste to the Contractor under the provisions in Section IV, the implications in relation to compliance with waste legislation should be considered and separate advice could be taken in that regard.


Clause 20 – Patents and Other Proprietary Rights Decommissioning activity is a relatively new area in the UKCS and new technologies are being developed to carry out decommissioning in technically and cost efficient methods. For that reason it was considered that it would be inappropriate to have a position such as in the LOGIC Marine Construction contract where title to, copyright in and ownership of all things created under the Contract would vest in the Company (See Clause 19 of Marine Construction – Edition 2).

Instead the Company is granted a licence to utilise the Intellectual Property Rights of the Contractor in connection with the Works for the purpose of the contract only. Clause 21 – Laws and Regulations Clause 21 provides that the Parties will comply with laws, rules and regulations including any laws pertaining to the management, transport and disposal of waste. For the reasons given above, the General Conditions do not list those laws

Clause 21.2 provides that the Contractor shall obtain all licences etc. required for the performance of the Work other than those which can only be obtained legally by the Company or where the Parties agree otherwise.

In any particular case it may be necessary to specify in the Special Conditions of Contract, precisely what licences etc. will be obtained by the Company.

Clause 21.3 deals with changes in laws etc. and specifies that the Contractor’s entitlement to reimbursement for any additional cost, which may result from such changes, is as set out in Section III – Remuneration. Accordingly Section III should address any specific areas, such as changes in safety legislation requiring changes to vessels etc., where some specified payment is to be made.

Clause 22 – IndemnitiesGenerally this Clause includes reciprocal indemnities in respect of property and personnel of the Company Group and Contractor Group and third parties (as defined in Clause 22.1(c)). There are however exceptions in relation to property of the Company Group in that the indemnity included in Clause 22.2(a) is limited to property at the “Worksite” . The indemnity given by the Company in Clause 22.2(a) applies both to property which is owned by the Company Group and to property which is leased or otherwise obtained under arrangements with financial institutions by the Company Group.

“Worksite” is as defined in Clause 1.33.

The Clause has been drafted for the general case where the Company Group owns all property at the Worksite likely to be affected by the Contractor.

Concern has been expressed that the indemnity in 22.2(d) in for example, the LOGIC Marine Construction Contract, gives no protection where the relevant third party infrastructure is not detailed in the Form of Agreement. The General Conditions retains the requirement for an express listing of third party infrastructure as without such a listing the indemnity might cover infrastructure which the Contractor should not be near whilst carrying out the Work. Parties may wish to consider whether the indemnity should be limited to specified permanent third party infrastructure. A risk to be considered will be consequential losses arising from damage to third party property. Care must be taken in defining the categories of loss included.

The clause has been drafted to include for loss of or damage to permanent third party oil and gas production facilities and pipelines since it is aimed primarily at cases where pipeline crossings and/or tie-ins to third party property are affected by the Work. For that reason drilling rigs and vessels are not included. A reasonable approach to such matters in the use of this Clause will alleviate some of the issues described below and therefore due consideration should be given by Operators to provide a more comprehensive indemnity to the Contractor. In some cases it may be possible and appropriate to extend the cover of this clause to other types of property.

As discussed above, the indemnity in Clause 22.2(a) is in respect of Company Group property. Some Company Joint Operating Agreements may not allow the operator to give such indemnities in respect


of Co-Venturer’s property. It is suggested that, in such cases, separate agreements should be obtained from the Co-Venturers to the use of that Clause since it is considered to be unreasonable to give anything less in the way of indemnity.

The reciprocal indemnities between Company and Contractor relate only to the parties included in the Company and Contractor Groups as defined in Clauses 1.5 and 1.13.

For the purposes of Clauses 22.1(c) and 22.2(c), Third Parties are defined as any party which is not a member of the Company or Contractor Groups.

The result of the above is that certain parties, who in many cases will be present at some parts of the Worksite, are Third Parties for the purposes of the Indemnity Clauses. These include in particular other contractors of the Company.

It should be noted, therefore, that the Company’s other Contractors (and the subcontractors of such other Contractors) are not included in the “Company Group” definition. In this regard the Standard Contracts Committee supports the Industry Mutual Hold Harmless (“IMHH”) as the most appropriate means of dealing with the allocation of liability for injury to persons, damage to property and consequential loss between the Company’s contractors and strongly encourages all contractors to join the IMHH Scheme. Details of the IMHH are available on the LOGIC website (www.logic-oil.com). It should be noted that the IMHH Scheme does not covered the onshore aspects of work.

Taking the above into account, in order that liabilities may be properly defined and insurance costs may be minimised, consideration should be given to the following when preparing contracts;(a) Where the Company has obtained an indemnity from a third party, such as another Oil

Company, in respect of items of its property affected by the Work, such agreement should specify that the indemnity extends to the Contractor Group. The Company should disclose to the Contractor details of such indemnity.

(b) Where an indemnity of the type discussed in (a) only commences above a specified value, insurance for claims up to such amount must be considered. If the Contractor is to insure such risk, it may wish to consider passing the cost back to the Company.

(c) Similarly, where the Company leased substantial items, every effort should be made to include the Contractor in any indemnity given to the Company in respect of such property.

(d) As to onshore Worksites or offshore Worksites where a number of contractors (some of whom may not be members of the IMHH Scheme) will be working in close proximity to each other, consideration should be given both by the Company and by the various contractors involved, to the use of a stand-alone mutual hold harmless agreement, signed by all the relevant parties. By the use of a suitable document the parties can define their obligations to each other in respect of a particular project, thereby simplifying insurance arrangements and minimising costs.To assist in the negotiation of such agreements, Clause 22.10 provides that, where applicable, the Company will give details of its other contractors on request.

Clause 23 – Insurance by Contractor The insurances required under the provisions of this Clause will vary depending on the workscope of each particular contract and this is recognised by the opening paragraph of Clause 23.2. The exact values of insurances required by the Company must be specified in Appendix 1 of Section I as discussed above.Clause 23.4 requires that Subcontractors carry appropriate levels of insurance as may be relevant to their work.

Clause 24 – Insurance by Company Whilst Clause 24.1 deals with the arrangement of a Decommissioning All Risks (“DAR”) insurance policy by the Company, Clause 24.3 provides that the Company may, at its discretion, elect to provide an indemnity to the Contractor in lieu. Any such indemnity must be expressed in full in Appendix 1 to the Form of Agreement.

Where DAR insurance is to be provided by the Company, it is preferable that the Contractor be provided with a copy of such policy. If that is not possible relevant details should be included in


Appendix 1 to the Form of Agreement. In the interests of avoiding double insurance, Contractors will be interested in establishing precisely what is covered in the DAR Policy including, for example, parties covered, the period, third party cover, pollution cover, deductibles and other such issues and whether they are included or excluded. It should be noted that Clause 24.2 includes only first tier subcontractors but not lower tiers of subcontractors. When exact details of the insurance cover are available this wording may also require amendment in the Special Conditions of Contract.

It is generally assumed that DAR Insurance will provide cover in the event that loss or damage is caused by the negligence of one of the parties covered by such insurance and in particular by the negligence of the Contractor. Indeed insurance that does not include such cover is of limited use.

In any particular case where negligence is not included however, that fact should be specifically drawn to the attention of the Contractor in Appendix 1 to the Form of Agreement.

With respect to the question of who is liable in respect of deductibles under the insurance provided by the Company, it is very difficult to draft contracts to deal with every eventuality. The wording of Clause 24.2 could in certain cases make the Contractor liable for such deductibles. It is suggested in this respect that a reasonable approach should be adopted by the parties and that in cases where damage is not the fault of the Contractor, it should not be held liable for deductibles.

Clause 25 – Consequential Loss There are two parts to the “Consequential Loss” definition under Clause 25. Part (i) deals with consequential or indirect loss under English Law, whilst Part (ii) lists specific heads of loss which are also covered by the definition.

The second paragraph is drafted in the form of an indemnity since the exclusions of liability in respect of Consequential Loss apply between the Company Group and the Contractor Group and not simply between the Company and the Contractor.

As with the indemnities under Clause 22 some Joint Operating Agreements may not permit the Company to give the indemnities included in this Clause on behalf of their Co-Venturers. It is suggested in any such cases that separate agreements should be obtained from Co-Venturers to the use of this Clause since it is considered to be unreasonable to give anything less in the way of an indemnity.

Clause 28 – Completion It should be noted that in Clause 28.2 the Company is required to act “as soon as reasonably practicable”, in order to avoid unnecessary delay and expense for the Contractor.

Clause 29 – Termination Section III – Remuneration should include full details of any termination fees to be paid in the event of termination to suit the convenience of the Company, as described in Clause 29.4.

The Clause does allow the alternative of agreeing such fees at the time of termination but it is strongly recommended that any such fees should be included in the Contract.

Clause 29 includes provision for both termination of part or all of the Work or termination of the Contract. Accordingly a “continuing obligations” Clause – Clause 29.7 is included to cover all possibilities. In the event of termination of all or part of the Work the whole Contract remains in full force and effect. In the event of termination of the Contract however only certain obligations are specified to remain (please see Clause 29.7 (a)). If important Clauses are included in any Special Conditions of Contract, the Parties may agree that such Clauses remain in being after termination of the Contract and these must be listed in Appendix 1 as provided for in Clause 29.7(a)(iii).

A particular aspect of decommissioning contracts is the potential high value of scrap. Parties should carefully consider the offsetting of any resultant scrap value against the contract price in the event of an early termination, and including such value in any termination fees.

Clause 34 – Liquidated Damages In the context of a decommissioning project there may not be time pressure in respect of the


execution of the project. Company may be willing to allow the Contractor to carry out the decommissioning Work to fit in with Contractor’s other work.

The timescale for carrying out Work may be important in other scenarios such as: (i) where the regulator has set a deadline for the carrying out of decommissioning work; or(ii) where Contractor A is to carry out one part of the decommissioning project and Contractor B

is waiting to start its work on the decommissioning project – e.g. a heavy lift vessel is waiting for Contractor A to finish; or

(iii) where a yard or onshore site has allocated capacity and is waiting for the arrival of the whole or part of a structure.

For this reason Clause 34 is a very general liquidated damages clause leaving users of the document to specify in Appendix 1 of the Form of Agreement those events to which liquidated damages are to apply. Any such damages so specified are the sole financial remedy of the Company in respect of any failure of the Contractor to comply with its obligations in respect of such events.

In lump sum contracts, the Contractor will have included in its price for a certain period of time during which his vessels and other resources will be utilised. Normally the price also includes “waiting on weather”. If the weather is such that such allowance is insufficient, then the Contractor will suffer direct losses from additional “waiting on weather days”. Accordingly Clause 34.3 has been included in order to protect the Contractor against claims for payment of liquidated damages in respect of “waiting on weather” since this is considered to be a fair arrangement. This Clause provides for an adjustment to the Schedule of Key Dates should such delays exceed the number of days listed in Appendix 1 of the Form of Agreement. The Clause does not provide for additional payment in this respect unless that is provided elsewhere in the Contract.

In cases where the Work is phased and appreciable periods of time exist between the phases, each phase will need to be treated separately for this purpose, as provided in Appendix 1 of the Form of Agreement.

Clause 35 – Limitations of Liability Contractors will wish both to limit liability during the period of the contract and in respect of termination. Accordingly Clause 35.1 deals with limitation of the Contractor’s liability in three distinct situations:

(a) from the Effective Date of Commencement of the Contract to completion of the whole of the Work ;

(b) from the completion of the whole of the Work; and(c) in the event of termination of all or part of the Work due to Contractor default or insolvency.

In all cases a default amount is included in the clause in case no sums are entered in Appendix 1 of the Form of Agreement. In each case the relevant limit should be added to Appendix 1 to Section 1 – Form of Agreement. In the absence of such sums being stated the limitation will be the Contract Price.

There are however certain exceptions to all the limitations described in Clause 35.1(a) and (b). In particular the provisions of Clause 35 do not affect the indemnities given by the Contractor under Clause 22 nor does it apply to Contractor’s obligations under Clause 25.

In addition to a limitation on financial liability, Clause 35.2 provides the opportunity to state a limitation period for Contractor’s liability under the Contract. Such period (or the end date) should be included in Appendix 1 to Section I - Form of Agreement.

It is recognised that many different approaches could be used in respect of limitation of liability. The clause has been drafted as a suitable base case for the types of work for which the Contract is likely to be used.

Clause 36 – Resolution of Disputes Clause 36.1 contains an escalation procedure.


If the dispute is not resolved then either party may take court action or refer the dispute to Adjudication. Adjudication is a fast track process that has been very successfully used in the UK construction industry since 1998. After a dispute has been referred to an adjudicator, the adjudicator has 28 days to make a decision. Once made, the adjudicator’s decision has interim binding effect. This means the decision can be enforced and will remain binding until the dispute is otherwise determined by litigation, arbitration (if the parties’ contract provides for arbitration) or by agreement. This procedure is particularly useful when a dispute arises while a project is ongoing. The dispute can be resolved quickly (albeit on an interim basis) and this allows the parties to move on with the project.

Clause 36.2(b) refers to Schedule 1 Part I to the Scheme for Construction Contracts (England & Wales) Regulations 1998/649, which contains a full adjudication procedure which the parties can use. The parties may wish to consider amending the standard form provision to specify the name of an adjudicator or, alternatively, the name of an adjudicator nominating body who can appoint an adjudicator, if the parties cannot agree who should be appointed.

It is recognised however that other methods of finally resolving disputes may be appropriate in certain cases. In particular, arbitration may be considered to be appropriate where the international marine element forms the greater part of the Work.

Clause 37 - Contract (Rights of Third Parties) Act The Contract (Rights of Third Parties) Act provides for the creation of third party rights under all contracts with an effective date of commencement of 11 May 2000 or later unless its application is excluded. This Clause provides that only those rights of third parties referred to under the following Clauses shall be enforceable under the Act:

Clauses 20.7 and 20.8 - Patents and Other Proprietary Rights

Clause 22 - Indemnities

Clause 23 - Insurance by Contractor

Clause 24 - Insurance by the Company

Clause 25 - Consequential Loss

Clause 33.3 - Contractor’s Affiliates

5. Section V – Administration Instructions5.1 Indicative List of items to be included in Section V – Administration Instructions.

Organisation Charts for Company and Contractor;

Communications;

Programming;

Reporting;

Variations;

Transport Offshore – Personnel;

Transport Offshore – Materials and Equipment;

Query System;

Invoicing;

Reimbursable Personnel;

Measurement of Work;

Subcontracts;

Call off for Company Provided items;

Drawings and Documents;

Permit to Work system;


Incident reporting;

Certificate of Ownership;

Completion and Closeout.


All rights reserved. This document may be freely reproduced and used while acknowledging its source, but may not be hosted on any website other than LOGIC’s; and if users edit the document, any reference within the document to it being a LOGIC Standard must be removed. While the information in this document is given in good faith and belief in its accuracy, neither Oil & Gas UK nor LOGIC accepts any responsibility whatever for the consequences of its use in any particular circumstances. Parties using all or any portion or any variation of this model are encouraged to seek the advice of qualified legal counsel to ensure that the final document reflects the actual agreement of the parties

General Conditions of Contract for Construction

Leading Oil & Gas Industry Competitiveness (LOGIC) is a company registered under the Companies Act limited by guarantee and registered in Scotland No. 199292.

The information given in this document is given in good faith and belief in its accuracy. However, the individual members of the Standard Contracts Committee and their respective companies, organisations and industry bodies including LOGIC do not accept any responsibility whatsoever for the consequences of its use or misuse in any particular circumstances.



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