What are knock-for-knock indemnities?

A knock-for-knock clause is a reciprocal agreement to apportion liability for certain losses (usually, death or injury to personnel and damage to property) between Contracting parties, supported by mutual indemnities.

A knock-for-knock regime replaces the fault-based liability regime that would otherwise apply at law with the concept that ‘loss lies where it falls’.

They are a common risk Allocation mechanism in the offshore oil and gas industry utilised to provide certainty and prevent recourse against other parties. They are also increasingly common in other complex offshore energy projects, such as offshore wind projects.

What are the key features of a knock-for-knock clause?

Knock-for-knock clauses generally maintain the principle that damage and loss to property or personnel suffered by a party’s ‘group’ (as defined in the relevant contract) is borne by that party regardless of fault. The party’s group can be extended to include its various subcontractors, affiliates and, in some circumstances, other contractors.

Standard form contracts provided by industry