BP Exploration Operating Company Ltd v Kvaerner Oilfield Products Ltd & Anor [2004] EWHC 999 (Comm) (06 May 2004)

BP Exploration Operating Company Ltd v Kvaerner Oilfield Products Ltd & Anor [2004] EWHC 999 (Comm) (06 May 2004)

The court held that the obligation on BP to procure insurance for Kvaerner under clause 10.5(b) of the Development Contract was limited by the opening words of clause 10.5. The insurance and waiver of subrogation extended only to loss or damage arising from post-delivery activities by Kvaerner as specified in the contract, not to all losses claimed by BP. The broader language in the Notes on Insurance and clause 10.5(b) described the policy generally but did not override the contractual limitation. Therefore, Kvaerner was not entitled to the full benefit of the waiver of subrogation for the losses claimed, and BP's insurers were not precluded from pursuing a subrogated claim against...

Citation
[2004] EWHC 999 (Comm)
Parties
Claimant: BP Exploration Operating Company Ltd; 1st Defendant: Kvaerner Oilfield Products Ltd; Part 20 Defendant: Cooper Cameron (UK) Ltd
Jurisdiction
England and Wales
Judgment Date
06 May 2004
Procedural Posture
Commercial Court Preliminary Issues Trial / Judgment on Preliminary Issues
Outcome
BP's insurers are not precluded from pursuing a subrogated claim against Kvaerner; Kvaerner is not entitled to the full benefit of the waiver of subrogation under the policy for the losses claimed; similar reasoning applies to Cooper Cameron (UK) Ltd.
Legal Topics
Construction All Risks Insurance, Waiver of Subrogation, Contract Interpretation, Contribution Claims, Defective Equipment Liability
Insurance Law Contract Law Construction Law Construction All Risks Insurance Waiver of Subrogation Contract Interpretation Contribution Claims Defective Equipment Liability

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Parties

BP Exploration Operating Company Ltd

Claimant

Kvaerner Oilfield Products Ltd

1st Defendant

Cooper Cameron (UK) Ltd

Part 20 Defendant

Procedural Posture

Commercial Court Preliminary Issues Trial / Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether Kvaerner is entitled to the benefit of the waiver of subrogation under the Construction All Risks Policy for the loss and damage claimed by BP.
  2. 2 Whether Cooper Cameron (UK) Ltd is entitled to the benefit of the waiver of subrogation such that Kvaerner cannot claim contribution from Cooper Cameron in respect of the same loss and damage.

Ratio Decidendi

The court held that the obligation on BP to procure insurance for Kvaerner under clause 10.5(b) of the Development Contract was limited by the opening words of clause 10.5. The insurance and waiver of subrogation extended only to loss or damage arising from post-delivery activities by Kvaerner as specified in the contract, not to all losses claimed by BP. The broader language in the Notes on Insurance and clause 10.5(b) described the policy generally but did not override the contractual limitation. Therefore, Kvaerner was not entitled to the full benefit of the waiver of subrogation for the losses claimed, and BP's insurers were not precluded from pursuing a subrogated claim against...

Court Disposition

BP's insurers are not precluded from pursuing a subrogated claim against Kvaerner; Kvaerner is not entitled to the full benefit of the waiver of subrogation under the policy for the losses claimed; similar reasoning applies to Cooper Cameron (UK) Ltd.

Orders

  • Preliminary issue 1 determined against Kvaerner: BP's insurers may pursue subrogated claims against Kvaerner.
  • Preliminary issue 2 determined against Cooper Cameron (UK) Ltd: Kvaerner may pursue contribution claims against Cooper Cameron.