The Validity of Knock-for-Knock Clauses in Comparative Perspective

Abstract

This article discusses the validity of so-called knock-for-knock clauses, by which parties to offshore oil and gas or maritime contracts agree that each of them will cover its own losses regardless of who caused them. The issue of validity of such clauses and of the liability exclusions they contain is analyzed in a comparative perspective between the law of their tradition of origin (common law, especially UK law) and Nordic civil law, where such agreements are also frequently used, namely in the context of oil extraction activities in the North Sea. Based on an assessment of the different criteria used to promote or dismiss knock-for-knock clauses in case law and academic literature, the article reaches the conclusion that the question of whether knock-for-knock clauses should be held valid depends on whose interests are being considered, and that further research is warranted on the efficiency of mechanisms supposed to replace the deterrence effect of tort or contractual liability.

Keywords: Knock-for-knock, Offshore contracts, Maritime contracts, Liability exclusions, Liability limitations, Comparative private law