Deepak Fertilisers & Petrochemical Corporation v Davy McKee (London) Ltd & Anor [1998] EWCA Civ 1753 (12 November 1998)

Deepak Fertilisers & Petrochemical Corporation v Davy McKee (London) Ltd & Anor [1998] EWCA Civ 1753 (12 November 1998)

The Court held that the exclusion and indemnity clauses, properly construed, excluded Davy's and ICI's liability for negligence, negligent misrepresentation, and breach of collateral warranty. The letter of acceptance released Davy from contractual obligations, but not from post-acceptance obligations or liabilities arising after the letter. Davy and ICI could not rely on co-insurance or subrogation defences after construction and commissioning were complete, as they no longer had an insurable interest in the plant. Davy was entitled to enforce Deepak's promise to indemnify ICI and to seek a stay of proceedings against ICI to the extent of the indemnity.

Citation
[1998] EWCA Civ 1753
Parties
Appellant/plaintiff: Deepak Fertilisers and Petrochemical Corporation; Respondent/defendant: Davy McKee (London) Ltd; Respondent/defendant: ICI Chemicals & Polymers Ltd
Jurisdiction
England and Wales
Judgment Date
12 November 1998
Procedural Posture
Civil Appeal / Appeal From High Court (commercial Court, Queen's Bench Division)
Outcome
Appeal allowed in part; cross-appeal dismissed in part; judgment varied.
Legal Topics
Exclusion Clauses, Indemnity Clauses, Negligence, Negligent Misrepresentation, Collateral Warranty, Limitation of Liability, Co Insurance, Subrogation, Construction of Contracts
Contract Law Tort Law Commercial Law Insurance Law Exclusion Clauses Indemnity Clauses Negligence Negligent Misrepresentation +5 more

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Parties

Deepak Fertilisers and Petrochemical Corporation

Appellant/plaintiff

Davy McKee (London) Ltd

Respondent/defendant

ICI Chemicals & Polymers Ltd

Respondent/defendant

Procedural Posture

Civil Appeal / Appeal From High Court (commercial Court, Queen's Bench Division)

Legal Issues

  1. 1 Whether the letter of acceptance released Davy from all contractual obligations and liabilities under the contract.
  2. 2 Whether exclusion and indemnity clauses in the contract excluded or limited Davy's and ICI's liability for negligence, negligent misrepresentation, and breach of collateral warranty.
  3. 3 Whether Davy and ICI could rely on co-insurance and subrogation provisions as a defence to Deepak's claims.

Ratio Decidendi

The Court held that the exclusion and indemnity clauses, properly construed, excluded Davy's and ICI's liability for negligence, negligent misrepresentation, and breach of collateral warranty. The letter of acceptance released Davy from contractual obligations, but not from post-acceptance obligations or liabilities arising after the letter. Davy and ICI could not rely on co-insurance or subrogation defences after construction and commissioning were complete, as they no longer had an insurable interest in the plant. Davy was entitled to enforce Deepak's promise to indemnify ICI and to seek a stay of proceedings against ICI to the extent of the indemnity.

Court Disposition

Appeal allowed in part; cross-appeal dismissed in part; judgment varied.

Orders

  • Davy and ICI's liability to Deepak for negligence, negligent misrepresentation, and breach of collateral warranty is excluded by the contract.
  • Davy is released from contractual obligations by the letter of acceptance, except for post-acceptance obligations.