EE Caledonia v Orbit Valve [1995] 1 All ER 174

• Defendant agreed to carry out work on Plaintiff’s oil rig, subject to the clause that “any claim… or liability… arising by reason of… death of any employee… of the indemnifying party, resulting from or… connected with the performance of this order”.

• One of Defendant’s employees died due to Plaintiff’s negligence and Plaintiff paid a settlement to the deceased’s family, and then claimed the settlement money from Defendant under the clause.

• CA rejected Plaintiff’s claim, since the clause was to allocate the risk so that each party would be liable for his own negligence.

• Thus Plaintiff couldn’t force Defendant to pay for Plaintiff’s negligence. 

Steyn LJ

• He approves the dictum of Lord Morton that regarding exemption/indemnity clauses:

  1. An express exemption of Plaintiff from liability in cases of negligence is effective;

  2. If negligence is not mentioned expressly the court must consider whether the terms used are wide enough to cover negligence cases;

  3. If they are wide enough, then the court must consider if, realistically, there is another head of damage under which the exemption clause could be invoked, then Plaintiff cannot rely on it in negligence claims.