QUEENS BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL | ||
B e f o r e :
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BP p.l.c. (On its own behalf and as a representative for and on behalf of the co-insureds listed in Schedule 1 to the Particulars of Claim as interested persons) | Claimant/Part 20 Defendant | |
- and - | ||
GE FRANKONA REINSURANCE LIMITED (and various Underwriters subscribing to Policy No. EL9801152 as listed in Schedule 2 to the Particulars of Claim) | Defendants/Part20 Claimants |
____________________
Mr Mark Howard QC, Mr Neil Calver and Mr Jasbir Dhillon (instructed by Norton Rose) for the Defendants
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Crown Copyright ©
Mr Justice Cresswell:
Introduction
(1) that the defendants are entitled to and have validly avoided the Open Cover and/or each of declarations 8-26; and/or
(2) that upon its true construction declarations 1-26 do not fall within the terms of the Open Cover and/or are non-contractual and ineffective; and/or
(3) that the claimants are estopped by convention from contending that each or any of declarations 8 to 26 give rise to a binding contract of insurance.
1. So far as the claimant and each of the defendants are concerned, are the terms of the Open Cover contained in the Open Cover slip or in the relevant Binder/Global Construction Insurance Policy, including the endorsement thereto scratched by the defendants (save for the 8th and 9th defendants) in February 1999? [The defendants conceded on Day 1 of the trial that the terms of the Open Cover were contained in the Binder/Global Construction Insurance Policy (including endorsements) stamped by Swiss Re on 19 July 1999].
2. On a true construction of the Open Cover (as determined in 1 above), in order for a project validly to be declared thereunder:
(i) Was it necessary for the project to commence during (and neither before nor after) the period of the Open Cover?
(ii) Alternatively is the commencement of the project irrelevant to the operation of the Open Cover and, rather, does the declared date of inception of the project risk, selected at the claimant's discretion, determine the start date of the period of insurance for each project?
(iii) Was it necessary for the declaration to be made:
(I) no later than 30 days after the project commencement date; and/or
(II) within the period of the Open Cover?
(iv) Was it necessary for the declaration to be presented by the claimant or its agent Aon to each of the first to ninth defendants during the period of Open Cover or presented to the Leader alone during the period of the Open Cover, or was it not necessary for it to be presented to any of the defendants during the period of the Open Cover?
3. If the project commencement date is relevant in the context of the answers to Issues 2(i) to 2(iii) above, then on a true construction of the Open Cover, when did a project commence for the purposes of the insurance? In particular:
(i) Could a project commence prior to physical construction of the project commencing and/or any parts or materials coming at risk of an Insured?
(ii) If the answer to 3(i) above is "No", do plans and/or documents and/or blueprints and/or renderings and/or specifications and/or contract documents and/or models in connection with a project constitute parts and/or materials for this purpose?
4. In the light of the answers to issues 1 to 3 above (taking account of who has the burden of proving the matters referred to), which (if any) of the declarations numbered 5, 12, 14 and 26 were validly declared by the claimant to the Open Cover?
The Open Cover
"Type: Construction All Risks Open Cover
Form: J(a) plus modified Aon Erection/Construction All Risk, Cargo, Delay in Start-up and Third Party Liability wording as more fully defined in the policy wording attached with any amendments to be agreed Leading Underwriter only, wording as agreed L/U only."
"BP Amoco PLC
Global Construction Insurance
Binder of Insurance Terms and Conditions
Type: Construction All Risks Open Coverage
Named Insured: BP Amoco PLC (see enclosed policy)
Additional Assureds: As designated by BP Amoco PLC.
Loss Payees: As designated by BP Amoco PLC.
Project Eligibility: Automatic for all projects of whatsoever nature."
[THE GCIP]
" BP AMOCO CORPORATION
Global Construction Insurance Policy
TABLE OF CONTENTS
Security
Declarations
Section I
Erection All Risk and Cargo
Delay in Start-up
Endorsements
Section II
Third Party Liability
Endorsements
Section III
General Conditions applying to all Sections of This Policy.
Endorsements applying to all Sections of This Policy."
Security
" Declarations
"Insurance is provided by the Stock Company(s) and underwriters shown herein and hereinafter called "the Company" or "Underwriters"
1. A. NAMED INSURED(S)
Principal Insured(s):
BP AMOCO Corporation (hereafter referred to as BP AMOCO) and/or all subsidiary and/or affiliated and/or associated and/or interrelated companies of every tier as may now or hereafter be constituted and/or their shareholders, directors, officers and employees, but only with respect to their interest in service to and/or employment by such companies.
At the option of BP AMOCO, co-venturers and/or project managers and/or financiers as may now or hereafter exist and as may be declared each underlying declaration.
Other Insured(s):
Any other party as may be declared each underlying declaration, including but not limited to contractors, and/or their sub-contractors of every tier whether named hereunder or not, and/or architects, engineers and consultants, and/or suppliers and/or agents and/or manufacturers and/or vendors and/or licensors in connection with the subject matters of this insurance, and/or any works, activities preparations etc. connected therewith shall have benefit of this insurance, but only to the extent, and fully limited to, the Principal Insured's obligations to directly or indirectly assume the liability of, and/or provide insurance such as is afforded by this policy to, such parties.
An Insured(s) shall not be prejudiced by any act, error or omission by an Other Insured(s) and this Policy shall remain in full force for such Insured(s) providing such act, error or omission is not with the privity of such Insured(s).
B. ADDITIONAL INSURED(S):
Additional Insured(s) will be added hereunder in the underlying declarations.
All hereinafter referred to as the Insured.
2. LOSS PAYABLE
Loss, if any, shall be adjusted with and made payable to BP AMOCO or the loss payee specified in the individual underlying declarations, or as per order BP AMOCO, whose receipt shall constitute a release in full of all liability under this policy with respect to such loss. All adjusted claims shall be paid or made good to Loss Payee, or order, within 30 days after presentation and acceptance of satisfactory proof of loss.
3. PROJECT ELIGIBILITY
Automatic for all projects of whatsoever nature
4. AUTOMATIC ACQUISITION
Erection All Risk, Related Delay in Start-Up and Third Party Liability
All projects shall automatically be held covered hereunder for a period not exceeding thirty (30) days from the commencement of said project. Coverage beyond this initial period shall be extended only upon declaration of the project and payment of any premium due thereon from the commencement of said project.
Cargo and Related Delay in Start-Up
All applicable projects to be declared hereunder prior to attachment of coverage.
5. PERIOD OF INSURANCE
Master Contract
(1) Onshore - 24 Months with effect from 23:59 31 December 1998,
Central Standard Time to 00:01 1 January 2001, Central Standard Time.
(2) Offshore - 18 Months with effect from 23:59 31 December 1998, Central Standard Time to 00:01 1 July 2000, Central Standard Time.
At the Insured's and Underwriters mutual agreement, this policy may be extended up to an additional twelve (12) months at any time during the policy period
(3) Individual declarations - From inception (as declared) at 12:01 a.m. Local Standard Time at the location of the Insured Project and insures in respect of each part, item or portion of the subject matters of this insurance from the time of becoming at the risk of an Insured hereunder, including work carried out at Contractors and/or Sub-Contractors premises (and/or Manufacturers and/or Suppliers and/or Vendors premises if mutually agreed by the Insured and Underwriters and declared) and all transits (on and offshore) and shall cover continuously thereafter during all operations until completion of the entire Insured Project and issuance of certificates of acceptance ("acceptance") by Principal Insured(s) or until attachment of a separate operating insurance whichever shall first occur but not beyond a declared expiration date (anticipated) or held covered at a premium to be agreed.
(4) Nevertheless in respect of liabilities covered hereunder, insurance shall attach from the time of signing of individual contract(s) or agreements(s) or letter(s) of intent in connection with the Insured Project even if predating the attachment date specified above and shall continue until expiry date as above plus maintenance period as below.
(5) The interest of the Other Insured(s) shall be covered throughout the entire Period of Insurance (irrespective of contract period(s)) subject to full coverage as herein. The foregoing shall not operate to increase the limit(s) of liability contained herein.
(6) Insurance shall apply at all times including while at temporary sites, prefabrication sites, fabrication yards, Contractors and/or Sub-Contractors premises (and/or Manufacturers and/or Suppliers and/or Vendors premises if mutually agreed by the Insured and Underwriters and declared), construction sites, offshore sites, and will be in force during the engineering, design, manufacture, procurement, storage, prefabrication, fabrication, assembly, construction or repair, float-out, load-out, lifting, installation or reinstallation, hook-up, pipelaying, tie-in, start-up, commissioning, testing, trials, performance testing, existence, modification, drilling, completion and partial/initial operating phases and declared maintenance period of the Insured Project or otherwise including:
Up to 24 months maintenance period following the expiration date of each project.
An option to extend coverage for up to one (1) year following acceptance for operational phase subject to a 15% charge of the annual project premium for each quarterly extension.
(7) The foregoing is deemed to include, but not be limited to, all transits (on and offshore) and movements by any means (including air and/or ocean transit(s) by steamer(s) and/or motor vessel(s) and/or barges in tow or otherwise) including call(s) at port(s) or place(s) as may be required, whilst there for whatever reason and loading and unloading.
(8) It is further agreed that any equipment and/or property covered under this Policy which is to be returned to shore shall be covered until safely returned to shore irrespective of the above expiry date but prior to the expiry of the final maintenance period. With privilege for the first named Principal Insured hereunder to cancel and/or amend coverage hereunder on individual items if and as required prior to scheduled expiry."
[The numbering (1) to (8) has been inserted for convenience].
6. EXTENSION OF TERM OF INSURANCE
7. INTEREST
8. SCHEDULE OF LIMITS (100%)
9. DEDUCTIBLES/EXCESS (Applied on a per project basis) (100%)
10. SCHEDULE OF RATES
11. PREMIUM AND REPORTING TERMS
12. POLICY TERRITORY
13. ORDER HEREON]
SECTION I
"1. INSURING AGREEMENT
This Master Policy, and all underlying declaration(s) issued hereto, insures against all risks of direct physical loss of or damage to the insured property during the Period of Insurance insured hereunder…
2. CONDITIONS …
3. PROPERTY INSURED
This Policy insures:
A. Property of every kind and description including the works infrastructure, auxiliary facilities and temporary works (including scaffolding, falsework, formwork, fences, temporary buildings and contents) executed in the performance of all the contracts relating to this entire project, and all materials, components, parts, machinery, fixtures, spare pipe, equipment or any other property destined to become a part of the completed project, or used up or consumed in the completion of the project, complete with all plant, equipment, machinery, materials, outfit and all property associated therewith whether intended to form a permanent part of the works or not. Including site preparatory work, including pipelines (to shore or elsewhere), flowlines, gathering and loading systems. …
4. EXTENSIONS OF COVERAGE (included within the overall Limit of Liability) …
D. Plans, Documents, Blueprints, Drawings, Renderings, Specifications or Other Contract Documents and Models
This policy is extended to cover physical loss or damage to plans, blueprints, drawings, renderings, specifications or other contract documents and models.
…
5. EXCLUSIONS APPLICABLE TO SECTION I A…
6. FAULTY DESIGN CLAUSE …
B) In respect of offshore projects: It is understood and agreed that physical loss and/or damage to the subject matter insured during the period of the policy caused by faulty design, faulty or defective materials, faulty or defective workmanship (including welding) and including physical loss and/or defect or damage to the faulty part shall be covered hereunder even though the fault in design and/or defect may have occurred prior to the attachment date of the policy. Including the cost of repairing, replacing or renewing any defective part or parts condemned solely in consequence of the discovery therein during the period of this policy of a latent defect.
Notwithstanding the foregoing it is understood and agreed that coverage in respect of faulty or defective materials and/or faulty or defective workmanship, including welding, does not apply in respect of any loss solely by reason of the item failing to achieve its design specification or being unfit for its intended purpose.
It is further agreed with respect to pipelines any rupture, twisting, holing, bending, buckling, breakage or other deformation of any kind shall deemed to be damage covered hereunder whether or not caused by or contributed to by faulty or defective workmanship or faulty or defective material, or faulty or defective construction or design.
7. DEFINITIONS…
8. VALUATION...
At the time and place of loss, the basis of adjustment of a claim, unless otherwise endorsed herein, shall be as follows: …
D) Plans, Blueprints, Drawings, Renderings, Specifications or Other Contract Documents and Models - At the cost to repair or replace the property with other property of like kind and quality including the cost of gathering or assembling information if replaced, or if not replaced, at the value of blank material; if such property lost or damaged includes renderings or models it shall be valued at cost to Insured.
…
9. GENERAL AVERAGE …
10. TOWAGE..."
"This section of the Policy covers Third Party Liabilities up to an overall Full Limit of Liability of US$ 50,000,000 (as per individual declaration) for 100% interest any one accident or occurrence in accordance with (A), (B), (C) and (D) below:
(A) Protection and Indemnity, excluding crew, as per Full Clause contained in the Institute Clause for Builders Risks dated 1st December 1972, and War etc., Protection and Indemnity as Institute War Clauses and Strikes Clauses - Builders Risk dated 1st December 1972 but excluding removal of wreckage to the extent covered under Section I of this Policy. All the foregoing clauses apply in so far as they do not conflict with or restrict coverage provided by the typewritten wording of this Policy.
(B) General Third Party Liabilities including Contractual Liability, it being understood and agreed that coverage hereunder in this respect shall be in accordance with the following:
The Company agrees that if the Insured shall become liable (under contract or otherwise) to pay and shall pay any sum or sums in respect of any responsibility, claim, demand, damages and/or expenses, or shall incur any other loss arising from or occasioned either directly or indirectly by the Insured's operations in connection with the Insured Project or parts thereof, including operations undertaken during the maintenance period; that is to say:
(i) loss of life, personal injury, or illness, including care and loss of service resulting therefrom. …
(ii) loss or damage to or loss of use of property of any kind or description other than property covered under Section I of this Policy. …
(iii) any responsibility, claim, demand, damages and/or expenses caused by or alleged to have been caused directly or indirectly by seepage, pollution or contamination arising out of the Insured's operations covered by this Policy including …
(iv) loss or damage to or loss of use of existing property belonging to or operated by a Principal Insured(s) or their Co-Venturers, excess of any recoveries under Section I, at the project site and not otherwise forming a part of the Insured Project …
...
Excluding Workmen's Compensation Acts and Employers' Liability but including liabilities resulting from legal recourses in respect of the rights of subrogation legally permitted under Workmen's Compensation Acts or other common law liability but the foregoing shall not be deemed as being substituted to Employers' legal or statutory obligations as to Workmen's Compensation Acts or Employers' Liability Acts to their own personnel.
…
CONTINGENT LIABILITIES AS FOLLOWS:
Principal Insured (and other Contractors)
Property and/or Personnel Clause
It is noted that Principal Insured(s) will endeavour to make each of their Contractors contractually responsible for loss or damage to that Contractors' owned and/or rented and/or hired property (which could include vessels and/or craft and/or other offshore equipment) and for that Contractor's own Personnel. Also the Principal Insured(s) may hold that Contractor harmless in respect of Principal Insured(s) property and personnel and also that of their other Contractors and Sub-contractors (which could include vessels and/or craft and/or other offshore equipment).
Agreed that where Principal Insured(s) are unable to obtain a hold harmless from Contractor in words as above (or of similar intent), this insurance covers the contractual obligations assumed by the Principal Insured(s) under the wording of the hold harmless as above (or wording of similar intent) in respect of the Principal Insured(s)' Contractors property or personnel.
The foregoing shall not in any way limit the cover provided by this Section Two in the absence of this agreement. …"
...
"The several titles of the various paragraphs of this form and endorsements attached to this Policy are inserted for reference and shall not be deemed in any way to affect the provisions to which they relate."
…
"The conditions contained in this form shall supersede those of the basic policy to which this form is attached wherever the same may conflict. Where there is a conflict between the specific sections and general conditions of this policy, the conditions of the specific section shall prevail."
…
"Furthermore, it is understood and agreed that all Underwriters subscribing hereto will be subject to all terms, clauses, credits, allowances and wording as agreed by the Leading Underwriters (AIG, Swiss Re and Aegis Insurance Services) and it is agreed to follow automatically all additions and/or deletions and/or amendments and/or alterations of any description whatsoever therein, Underwriters hereon waiving advice hereunder and also to follow all claim settlements made by the Leading Underwriters of this policy (No. EL9801152) without exception.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED."
The Claimant's Case
(a) An identifiable project must have reached or be reasonably expected within a reasonable time to reach any of the phases referred to in the fourth paragraph under the heading 'Individual Declarations' in clause 5 of GCIP Declarations, including the design and engineering phase.
(b) The declaration must be made within the period of the Open Cover, but as regards all the defendants, a declaration is made at the time when it was made to the leading Underwriters (Swiss Re and AIG), irrespective of the time when it was advised or shown to the defendants.
(c) The declaration must (i) be for an inception date selected at the option of the claimant, save that it must be within the period of the Open Cover, and (ii) be within a reasonable time before or after the declared inception date or the time when any part of subject-matter of the insurance has become at the risk of an Insured (whichever is later).
The Defendants' Case
1. That a declaration to the Open Cover would only give rise to a binding contract of insurance if the "project" the subject of the declaration actually commenced construction prior to the expiry of the Open Cover, the contract of insurance taking effect on the date of commencement of construction, and if the declaration was made no later than 30 days after the commencement of construction. For a project to have actually commenced construction, it was necessary for contracts to have been let to a contractor (probably the main contractor) and for physical construction work to have started by a contractor at the site or possibly on shore or to have been due to start imminently.
2. Alternatively to 1, that a declaration to the Open Cover would only give rise to a binding contract of insurance at the date of declaration if, at that date, the "project" to which it related:
(a) either had already actually commenced construction and the declaration was made no more than 30 days after the commencement of construction; or
(b) was bona fide estimated to commence construction prior to the expiry of the Open Cover.
3. If, and contrary to the Underwriters' primary case, on a true construction of clause 4 GCIP Declarations, a "project" is to be treated as having commenced at any stage earlier than the commencement of construction, that a declaration in respect of such a "project" was required to be declared, if to be insured, no later than 30 days after such commencement.
4. That, in order to make a contract of insurance with an underwriter subscribing to the Open Cover, a declaration was required to be made to such underwriter prior to the expiry of the Open Cover, the declaration to such underwriter being the means by which a contract of insurance would be made with him.
The Witnesses
The Expert Evidence
The Claimant's Submissions
(1) Insurance is available under the Open Cover in respect of 'projects'. There must therefore be an identifiable 'project' in existence at the time of the declaration to which it relates. But for this purpose the project means the entire project, including all the phases said to make up the 'Insured Project' in para. (6) of the Period of Insurance clause. There is nothing in the contract and no need to imply any restriction which would tie the making of declarations to any particular phase.
(2) A declaration must be made either before, or within a reasonable time after, the contract attaches to any part of the subject-matter, and in any event before a known loss. For this purpose, the contract attaches to a part of the subject-matter at such time on or after the declared inception date as it becomes at an Insured's risk.
(3) In addition, under the general law, the Insured must, at the time of the declaration, either have an insurable interest at risk or reasonably expect to acquire one.
(1) The effect of the Leading Underwriter endorsement to the Policy is that a declaration to the Open Cover is validly made to all insurers if it is validly made to the leading underwriters, Swiss Re and AIG. This is because the endorsement authorises them to deal with the administration of the Cover on the market's behalf including 'additions' to the Cover, which include declarations. As a matter of practice it will then be advised to the following market in due course.
(2) If, however, this is wrong, and the contract is silent on the point, then the declaration must be shown or advised to every insurer, but where the Cover is obligatory on the Insurer's side, the market procedure is that there is a single date, namely the date of declaration to the leaders, on which the declaration is treated as being made to the whole market. This is not because the leading underwriters have any authority on behalf of the followers. It is simply because where the declaration process extends over a period of time, the date on which it is made to the leaders fixes the date of the declaration.
(1) The commencement of the project (however defined) is irrelevant to the right to make a declaration.
(2) It is not necessary for the commencement of the project (however defined) to fall within the period of the Open Cover.
The Defendants' submissions
The need for commencement of construction within the period of the Open Cover
(a) either had already actually commenced construction and the declaration was made no more than 30 days after the commencement of construction; or
(b) was bona fide estimated to commence construction prior to the expiry of the Open Cover.
(a) It is common ground that none of Valhall, Nam Con Son and Nakika was estimated to commence construction within the period of the Open Cover at the date of declaration to any of the underwriters;
(b) King Field was not estimated to commence construction within the period of the Open Cover at the date of declaration to the defendant underwriters, in so far as it was declared to them.
The need for declaration no later than 30 days after commencement
The need for declarations to be made to each underwriter
Analysis and Conclusions
The principles by which contractual documents are construed
"I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 1 W.L.R. 1381, 1384-1386 and Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of "legal" interpretation has been discarded. The principles may be summarised as follows:
(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax. (see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] 2 WLR 945
(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera S.A. v. Salen Rederierna A.B. 19851 A.C. 191, 201:
". . . if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense." "
"The drafting of the slip formed no part of the relevant matrix in this case. That matrix was the background to the commercial adventure that formed the subject matter of the contract, not the mechanism by which the parties set about negotiating and reaching agreement. ...the strict application of the parol evidence rule has a particular justification in a case such as the present. An insurance slip customarily sets out a shorthand version of the contract of insurance, in terms which may be neither clear nor complete. Where, as here, the slip provides for the formal wording to be agreed by the leading underwriter, the other subscribers to the risk anticipate and agree that the leading underwriter will, on their behalf, agree the final wording of the slip and that of the formal contract which is embodied in the policy give rise to the possibility that the natural meaning of the slip differs from that of the policy, the natural assumption is and should be that the wording of the policy has been designed the better to reflect the agreement between the parties. To refer to the slip as an aid to the construction of the policy runs counter to one of the objects of replacing the slip with the policy."
"It is now, in my view, somewhat old-fashioned to approach such a problem armed with the parol evidence rule, that evidence is not admissible to vary or contradict the words of a written contract. The modern approach of the House of Lords is that, on the positive side, evidence should be admitted of the background to the contract, the surrounding circumstances, the matrix, the genesis and aim. Almost every day in these courts there is a contest as to what comes within that description . As Lord Wilberforce said in Reardon Smith Line Ltd v Hansen-Tangen [1976] 2 Lloyd's Rep 621 at page 624, col 2; [1976] 1 WLR 989 at page 995, the expression "surrounding circumstances" is imprecise. But so to some extent is "matrix", if I may say so, although it is a picturesque metaphor. It may well be that no greater precision is possible. The notion is what the parties had in mind, and the Court is entitled to know, what was going on around them at the time when they were making the contract. This applies to circumstances which were known to both parties. And to what each might reasonably have expected the other to know.
The negative aspect of the modern doctrine is that evidence of negotiations is not admissible as an aid to interpretation, at all events unless they show an agreed meaning for the language used. In Prenn v Simmonds [1971] 1 WLR 1381 at page 1384 Lord Wilberforce said
"There were prolonged negotiations between solicitors, with exchanges of draft clauses, ultimately emerging in clause 2 of the agreement. The reason for not admitting evidence of these exchanges is not a technical one or even mainly one of convenience, (though the attempt to admit it did greatly prolong the case and add to its expense). It is simply that such evidence is unhelpful. By the nature of things, where negotiations are difficult, the parties' positions, within each passing letter, are changing and until the final agreement, though converging, still divergent. It is only the final document which records a consensus. If the previous documents use different expressions, how does construction of those expressions, itself a doubtful process, help on the construction of the contractual words? If the same expressions are used, nothing is gained by looking back; indeed, something may be lost since the relevant surrounding circumstances may be different."
It can be argued that an insurance slip is different from negotiations for the formation of a contract. It contains a concluded agreement between the parties, albeit one which they may expect, and even agree, to replace by different wording in a formal contract. The nature of the problem which then arises is clearly illustrated by the present case...
...somebody, for some reason, has transferred the term as to 48 months from Period to Interest. But that is no help at all. Even if one could confidently discern what the words meant in the slip – which I do not think one can – there would remain the possibility, and perhaps even a probability, that the parties wished to alter that meaning when they prepared and agreed the policy. It is not argued that the leading underwriter had no authority to do so on behalf of the others.
I accordingly would hold that the slip, whether admissible or not, is of no assistance in this case."
"Although the slip initialled by underwriters the original agreement between the parties, if it contains words showing an intention that the terms will subsequently be incorporated into a policy form, when the policy has been issued it is the policy and not the slip which constitutes the contract or agreement between the parties. Reinsurers who invited the learned Judge to have regard to the wording of the slip as an aid to the interpretation of the contract did not seek rectification. The slip is clearly admissible in evidence for some purposes. Section 89 of the Marine Insurance Act 1906 provides that reference may be made "as heretofor" to the slip or covering note in any legal proceeding.
…
If prior to the passing of the Marine Insurance Act 1906, the slip was not admissible to explain or in any way affect the construction of the policy, in my judgment it was not admissible for the purpose of affecting the construction of the policy in question in this case.
If reinsurers had sought rectification because the policy omitted a term contained in the slip and intended to be incorporated into the subsequent policy, no doubt the Court would have looked at the slip as a document in which the parties had originally recorded their agreement. But that is not the case here and in my judgment the slip was not admissible as an aid to the construction of the reinsurance contract."
"Secondly, it was submitted that, once a policy has been issued, its terms are conclusive evidence of the contract between the parties unless and until it is altered by the process of rectification. That can happen by agreement of the parties or by order of a Court but not otherwise. And there has been no application for rectification in this case.
This doctrine is said to be supported by Youell v Bland Welch & Co Ltd (No. 1) [1990] 2 Lloyd's Rep 423 and Punjab National Bank v de Boinville [1992] 1 Lloyd's Rep 7. But in our opinion those cases are concerned with the situation where a policy has been agreed to by the parties. In those circumstances the policy will, at any rate in the ordinary way, be conclusive evidence of the contract unless and until it has been rectified; the slip cannot be used to add to, explain or contradict the meaning of the policy. That is not this case. Here the issue is whether the policy ever was agreed to. The insurers cannot pre-empt the answer to that question by the unilateral act of issuing it. That was the reasoning of Mr Justice Potter, and we agree with it."
"In principle, it would seem to me that it is always admissible to look at a prior contract as part of the matrix or surrounding circumstances of a later contract. I do not see how the parol evidence rule can exclude prior contracts, as distinct from mere negotiations. The difficulty of course is that, where the later contract is intended to supersede the prior contract, it may in the generality of cases simply be useless to try to construe the later contract by reference to the earlier one. Ex hypothesi, the later contract replaces the earlier one and it is likely to be impossible to say that the parties have not wished to alter the terms of their earlier bargain. The earlier contract is unlikely therefore to be of much, if any, assistance. Where the later contract is identical, its construction can stand on its own feet, and in any event its construction should be undertaken primarily by reference to its own overall terms. Where the later contract differs from the earlier contract, prima facie the difference is a deliberate decision to depart from the earlier wording, which again provides no assistance. Therefore a cautious and sceptical approach to finding any assistance in the earlier contract seems to me to be a sound principle. What I doubt, however, is that such a principle can be elevated into a conclusive rule of law. Where, however, it is not even common ground that the later contract is intended to supersede the earlier contract, I do not see how it can ever be permissible to exclude reference to the earlier contract. I do not see how the relationship of the two contracts can be decided without considering both of them. In essence there are, it seems to me, three possibilities. Either the later contract is intended to supersede the earlier, in which case the above principles apply. Or, the later contract is intended to live together with the earlier contract, to the extent that that is possible, but where that is not possible it may well be proper to regard the later contract as superseding the earlier. Or the later contract is intended to be incorporated into the earlier contract, in which case it is prima facie the second contract which may have to give way to the first in the event of inconsistency. I doubt that it is in any event possible to be dogmatic about these matters. Is the insurance context different? Is the case of a slip followed by a policy a special case? First, it may be said that where a slip is followed by a policy there will usually be an intention to supersede the slip by the policy. That was the situation which was common ground in Youell's case etc. Secondly, the considerations mentioned by Phillips J, such as the fact that slips customarily set out the contract in shorthand in a way that is neither clear nor complete, will in general promote and underline the inutility of seeking to find in the slip an aid to the construction of the policy. Beyond that, however, I am doubtful that it is at all helpful to go."
1. I apply the principles summarized by Lord Hoffmann in ICS Ltd v West Bromwich B.S., to the construction of the 57 pages of the policy (contained in the Binder/Global Construction Insurance Policy).
2. It is common ground that the policy was intended to and did supersede the slip.
3. The placing information was not incorporated into the policy (see MacGillivray on Insurance Law 10th edn p. 287).
4. The policy was available to an extremely wide range of Insureds (see GCIP Declarations clause 1). In commercial terms potential Insureds (other than BP) would expect to be able to, and would need to be able to, ascertain the meaning of the policy without reference to other materials.
5. I refer below to the background knowledge which would reasonably have been available to the parties at the time of the contract.
The legal principles that govern the Open Cover
"SEVERAL LIABILITY NOTICE...
The subscribing insurers' obligations under contracts of insurance to which they subscribe are several and not joint and are limited solely to the extent of their individual subscriptions. The subscribing insurers are not responsible for the subscription of any co-subscribing insurer who for any reason does not satisfy all or part of its obligations."
The true construction of the policy
At what stage of a project could declarations be made to the Open Cover?
(i) The width of the definition of Principal Insured(s) (BP Amoco and/or all subsidiary, affiliated, associated and inter-related companies of every tier, their shareholders, directors, officers and employees and at the option of BP Amoco co-venturers, project managers, financiers declared each underlying declaration) in GCIP Declarations clause 1.
(ii) The width of the definition of Other Insured(s) (any other parties may be declared including but not limited to contractors, sub-contractors, architects, engineers and consultants, suppliers, agents, manufacturers, vendors, licensors, limited to the Principal Insured's obligations to assume the liability of or provide insurance as afforded by the policy to such parties) in GCIP Declarations clause 1.
(iii) The width of the definition of project eligibility (Automatic for all projects of whatsoever nature) in GCIP Declarations clause 3.
(iv) The width of the phrase "all operations" in the GCIP Declarations Period of Insurance clause 5(3).
(v) The width of the places at which the "Insurance shall apply" (at all times including while at temporary sites, pre-fabrication sites, fabrication yards, Contractors and/or Sub-Contractors premises (and/or Manufacturers and/or Suppliers and/or Vendors premises if mutually agreed by the Insured and Underwriters and declared), construction sites and offshore sites) in the GCIP Declarations Period of Insurance clause 5(6).
(vi) The width of the stages/phases during which the insurance will be in force (the engineering, design, manufacture, procurement, storage, prefabrication, fabrication, assembly, construction or repair, float-out, load-out, lifting, installation or reinstallation, hook-up, pipe laying, tie-in, start-up, commissioning, testing, trials, performance testing, existence, modification, drilling, completion and partial/initial operating phases and declared maintenance period of the Insured Project or otherwise) in GCIP Declarations Period of Insurance clause 5(6).
(vii) The reference to any part(s) of the subject matter(s) of the insurance, in storage, ashore or afloat, loading, unloading and in transit, in GCIP Section 1 Part A clause 2(B).
(viii) The width of the Property Insured (property of every kind and description including the works infrastructure, auxiliary facilities and temporary works...all materials, components, parts, machinery, fixtures, spare pipe, equipment or any other property destined to become a part of the completed project, or used up or consumed in the completion of the project, complete with all plant, equipment, machinery, materials, outfit and all property associated therewith whether intended to form a permanent part of the works or not, including site preparatory work...) in GCIP Section 1 Part A clause 3(A).
(ix) Extensions of coverage in GCIP Section 1 Part A clause 4 including (in sub-paragraph D) physical loss or damage to plans, blueprints, drawings, renderings, specifications or other contract documents and models.
(x) The width of the Faulty Design Clause 6 in GCIP Section 1 Part A.
(xi) The width of GCIP Section II Third Party Liability cover including (without limitation) the reference to the Insured's "operations" in (B) and the terms of the Principal Insured (and other Contractor's) Property and/or Personnel Clause.
(xii) The width of "Cargo" at page 3 of the Binder.
"Period
For an operation as complex as an off-shore construction project it is impracticable to point to one moment in time when the underwriters' risk commences. The issue is overcome by agreeing a date when the policy will incept, which is usually at some time prior to the commencement of procurement of materials and allowing underwriters' risk to attach in respect of each separate part or item when such items become at the risk of any insured party, whenever that may be subsequent to the date of inception."
"4. AUTOMATIC ACQUISITION
Erection All Risk, Related Delay in Start-Up and Third Party Liability
All projects shall automatically be held covered hereunder for a period not exceeding thirty (30) days from the commencement of said project. Coverage beyond this initial period shall be extended only upon declaration of the project and payment of any premium due thereon from the commencement of said project.
Cargo and Related Delay in Start-Up
All applicable projects to be declared hereunder prior to attachment of coverage."
"A further additional provision is known as the "Automatic Acquisition" clause which secures a holding covered agreement automatically on new assets acquired by the assured. It is generally subject to a sub-limit and advice to insurers as soon as practicable with payment of a commensurate premium. There have been several instances where assureds have had to invoke this clause, where for example a take-over bid conducted in the strictest secrecy is concluded very quickly, leaving little time and information available to negotiate with insurers."
"Period
For an operation as complex as an off-shore construction project it is impracticable to point to one moment in time when the underwriters' risk commences. The issue is overcome by agreeing a date when the policy will incept, which is usually at some time prior to the commencement of procurement of materials and allowing underwriters' risk to attach in respect of each separate part or item when such items become at the risk of any insured party, whenever that may be subsequent to the date of inception."
"In marine insurance the insured must have an insurable interest at the time of the loss [Marine Insurance Act 1906 section 6(1)]. If so, it matters not that he had no interest at the time of contract or that since the time of the loss his interest has ceased. This rule probably applies to other kinds of indemnity insurance, with two qualifications. First, in all other kinds of insurance, at the time of making the contract of insurance the person making it must have had a reasonable expectation of acquiring an interest..." (Clarke 'The Law of Insurance Contracts' paragraph 4-4).
(1) A declaration had to be made during the period of the Open Cover, i.e. in the case of offshore risks between 1 January 1999 and 30 June 2000 (GCIP Declarations clause 5(2)).
(2) Insurance was available under the standing offer contained in the Open Cover in respect of projects of whatsoever nature. There must therefore have been an identifiable project in existence at the time of the declaration i.e. a project which had reached one or more of the stages/phases listed in GCIP Declarations clause 5(6), including engineering, design, manufacture, procurement, storage, prefabrication, fabrication, assembly and construction.
(3) At the time of the declaration, the Insured(s) must have had an insurable interest at risk or must have had a reasonable expectation of acquiring such an interest.
(4) The declaration had to be made for an inception date, selected at the option of the claimant, within the period of the Open Cover.
(5) The insurance attached from inception (as declared) in respect of each part, item or portion of the subject matter of the insurance, from the time of becoming at the risk of the Insured(s) (GCIP Declarations clause 5(3)).
The form of declarations to be made under the Open Cover
The timing of declarations to the following market
"Furthermore, it is understood and agreed that all Underwriters subscribing hereto will be subject to all terms, clauses, credits, allowances and wording as agreed by the Leading Underwriters (AIG, Swiss Re and Aegis Insurance Services) and it is agreed to follow automatically all additions and/or deletions and/or amendments and/or alterations of any description whatsoever therein, Underwriters hereon waiving advice hereunder and also to follow all claim settlements made by the Leading Underwriters of this policy (No. EL9801152) without exception.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED"
(1) changes to the terms of the standing offer contained in the Open Cover;
(2) declarations accepting the offer contained in the Open Cover, attaching the risk to the cover; and
(3) settlements.
Market Practice
The Eighth and Ninth Defendants
'all Aon Natural Resources Worldwide Business .. upon which Aon Natural Resources (Houston) receive instructions to provide coverage following all terms and conditions of insurances/reinsurances in respect of such business ('Main Placing') attaching for periods as required, not exceeding 36 months, and which cover any or all of the operations of assureds involved in or connected with the Oil and/or Gas and/or Energy and/or Marine and/or Sulphur and/or Uranium and/or Mining and/or Extraction and/or Exploration Industries in all or any of their phases onshore and/or offshore including associated support and service industries.'
'Agree accept Declarations subject to all terms, clauses, conditions, wordings, policies, additions, deletions, agreements, amendments, extensions, alterations, additional and return premiums, warranties, survey provisions, individual profit commissions or other premium allowances, held covered arrangements and all other stipulations and provisions of 'Main Placing' and furthermore to pay costs and expenses as 'Main Placing' and to follow payments, settlements and decisions of Underwriters thereon in every respect.
...
Premium hereon to be signed to Underwriters on Monthly Bordereau(x) (Paid & declared)
All declarations to comply with War etc. Exclusion/cancellation/ termination provisions (as applicable) in line with current Market Agreements. Each declaration complying with the foregoing shall attach hereunder automatically subject only to advice to Underwriters hereon prior to attachment date or within 14 days thereof.
Declarations to be retained in the offices of Aon Group Ltd.'
'For sake of good order, it is understood and agreed Underwriters hereon to be advised only of any additions, deletions, agreements, amendments, extensions, alterations to main placement(s) generating premium transaction(s).
All other terms clauses and conditions remaining unchanged'.
Answers to the Preliminary Issues
(1) A declaration had to be made during the period of the Open Cover, i.e. in the case of offshore risks between 1 January 1999 and 30 June 2000 (GCIP Declarations clause 5(2)).
(2) Insurance was available under the standing offer contained in the Open Cover in respect of projects of whatsoever nature. There must therefore have been an identifiable project in existence at the time of the declaration i.e. a project which had reached one or more of the stages/phases listed in GCIP Declarations clause 5(6), including engineering, design, manufacture, procurement, storage, prefabrication, fabrication, assembly and construction.
(3) At the time of the declaration, the Insured(s) must have had an insurable interest at risk or must have had a reasonable expectation of acquiring such an interest.
(4) The declaration had to be made for an inception date, selected at the option of the claimant, within the period of the Open Cover.
(5) The insurance attached from inception (as declared) in respect of each part, item or portion of the subject matter of the insurance, from the time of becoming at the risk of the Insured(s) (GCIP Declarations clause 5(3)).
A declaration containing certain minimum information (including the inception date) had to be received by each defendant by 30.6.00. I will refer to such a declaration as a "valid declaration".
SCHEDULE 1
KING FIELD – DECLARATION
Date: Event:
02 July 96
Preferred Supplier Master Agreement between Amocoand Cameron. Amoco indemnities at clauses 23.5 and
23.9. Insurance clause at clause 23.8
Late 97
Work on "Spar concept" for developing King Field andKing's Peak Field and moves through Amoco Appraise/
Select/Define stages
01 Dec 98
Master Engineering Services Agreement betweenAmoco and Mustang. Amoco indemnities at clause 17.03.
Clause 18.01 and 18.02 deal with insurance.
25 Feb 98
Work Order from BP to Camerons to manufacture 13Christmas Trees under Preferred Supplier Master
Agreement
Jan 99
Sanction not approved for "Spar concept" because it wasconsidered uneconomical. Work then focused on a new
development concept, namely the modification to BP's
Marlin TLP and a subsea tieback by way of a system of
dual flowlines
BP mothball manufacture of 10 of 13 Christmas trees.
Work on 3 Christmas Trees continues
20 Apr 99
Work Release issued under Master Engineering ServicesAgreement by BP to Mustang for provision of preliminary
engineering on new modifications/ tie-back concept
22 Apr 99
BP's alleged project commencement date (subject to thecaveats set out in paragraphs 5 and 6 of the Amended
Voluntary Particulars)
26 Apr 99
Master Engineering Services Contract between Amoco and Aker Engineering commences. Amoco indemnities at Clause 17.03. Clause 18 deals with insurance.
10 Jun 99
New project moves from Select to Define stage of Amoco CVP
6 July 99
Work Release issued by BP to Mustang to provide FEEDservices for topside modifications
12 July 99
Work Release issued by BP to Aker to provide FEED services for subsea modifications
31 Aug 99
Drawings prepared by Aker (the claimant says) come on BP's risk
1 Oct 99
Anticipated commencement of production/execute Gate for project being reached on 31.01.02
1 Dec 99
The claimant says first Christmas Tree comes on BP's risk at Camerons yard
1 Dec 99
Anticipated that 2 wells would first begin to be drilled in June 2000. First oil expected in December 2001.Preliminary Deepwater Operations Plan to be submitted
for regulatory approval from Minerals Management Services (although approval had already been granted for the previous Spar concept and no problems were anticipated)
15 Dec 99
Sir John Browne sanctions the King Field project
25 Feb 00
Change Order issued by BP to Camerons re: modifications to Christmas Trees
1 Mar 00
Systems integration testing on the Christmas Trees at Camerons yard.
6 Mar 00
Project declaration first scratched by Swiss Re, with stated inception date of 1 March 2000
15 Apr 00
Offshore Construction Services contract let by BP to Allseas. This anticipated that offshore drilling would
commence and be completed by the 2nd quarter of 2000,
and (by clause 6.2.2 of Exhibit A) work on the pipeline
installation was to commence at the offshore
work site between 01.04.01 and 31.07.01.By Article 20.01.09 Amoco to obtain a Builders Risk
Insurance policy covering physical loss of or damage to the
Work, existing equipment and property and/or items.
18 Apr 00
Project schedule revised. Offshore drilling of 1st well to commence on 15.07.00. Commencement of pipeline installation on 01.04.01 Modification of Christmas trees completed but they remain at manufacturers' premises so that they were not insurable under the Open Cover without separate agreement from underwriters.
2 May 00
Date set, as at 18 April, for shipping Christmas Trees to rig
15 May 00
Declaration scratched by 1st Defendant
16 May 00
Declaration scratched by 5th & 6th Defendants
17 May 00
Declaration scratched by 4th Defendant
22 May 00
Declaration scratched by 7th Defendant
6 June 00
King project referred to in borderaux scratched by 8th Defendant. [D8 does not accept that this document constitutes a valid declaration]
8 June 00
King project referred to in borderaux scratched by 9th Defendant. [D9 does not accept that this document constitutes a valid declaration]
21 June 00
Offshore schedule revised: Christmas Trees now to beshipped to rig on 1 Oct 2000, with drilling to commence
on 1 Dec 2000. Final submission for seeking regulatory
approval to be made on 30.11.01.
30 June 00
Open Cover expires: as at this date total project spend amounts to US$ 5-6 million
1 Sep 00
IUA on behalf inter alia of Third Defendant stamp King Declaration
12 Sep 00
Declaration sent to Second Defendant
15 Apr 01
Christmas Trees shipped to offshore rig. Installed between 15.04.01 and 15.06.01.
VALHALL – DECLARATION 12
Date: Event:
12 Aug 96
FEED contract with Halliburton entered into
1996/97
Valhall Waterflood project originally conceived by Amoco
1998
Valhall Waterflood project shelved because no concessions on royalties then available from the Norwegian authorities
Aug 99
Norwegian authorities send encouraging signals to Amoco regarding the fiscal framework conditions, and the Valhall project is revived
22 Sep 99
The claimant says FEED work by Halliburton (formerly Brown & Root Energy Services AS) commencedBP's alleged date of project commencement (subject to
The caveats set out in paragraphs 5 and 6 of the
Amended Voluntary Particulars)
07 Dec 99
BP completed project questionnaire, which estimated start of construction as 3rd quarter 2000
Dec 99
Sir John Browne signs Authority To Negotiate, allowing BP to fully fund design stage of project and to negotiate the royalty relief with the Norwegian authorities.
Define stage expected to run from 1st quarter 2000 to early 3rd quarter 2000.
Jan – Mar 00
Halliburton produce reports, plans, drawings and diagrams which (the claimant says) are at BP's risk from these dates
12 Mar 00
BP produce project plan which anticipates detailed design starting at the end of June 2000; contract award on 14.09.00 along with the start of procurement, and drilling and platform construction; and with offshore installation to take place between 01/06/02 and 30/08/02
14 Mar 00
The negotiations with the Norwegian authorities result in the removal of the production fee for the Valhall field, with retrospective effect from 1 January 2000, subject to the submission of a Plan for Development and Operation by Q2 2000
11 Apr 00
BP sends invitations to tender to 4 tenderers in respect of the EPCIC contract, which BP hoped to award in Sep 2000
26 May 00
Project declaration first sent to Swiss Re, with stated inception date of 1 April 2000 and estimated start of construction in Q3 2000
16 June 00
BP receives tender submissions from all four tenderers
18 June 00
Sir John Browne signs the project sanction form though Chairman of BP Norway signed the project sanction form on 12.07.00 Project sanction form states that execute stage will run from end of 3rd quarter 2000 to early 1st quarter 2003
21 June 00
Project declared to AIG
29 June 00
1st, 6th, 7th and 8th Defendants provided with list of intended declarations, including Valhall Waterflood. [These defendants do not accept that such documents constitute declarations for the purposes of the Open Cover]
30 June 00
Open Cover expires: as at this date total project spend amounts to NOK 26,230,302 (approx US$3 million)
4 July 00
D1, D4, D5, D6 and D7 received Aon's e-mail of that date attaching updated list of declarations. [These defendants do not accept that this document constitutes a valid declaration. In any event, it was received by the relevant defendants after the expiry of the Open Cover.]
6 July 00
Two of the EPCIC tenderers, Aker and Heerema, are short-listed for project contract award
12 Sep 00
Declaration sent to Second Defendant
15 Sep 00
Final proposal from two tenderers received
Oct 00
The Valhall project moves from Define to Execute phase
12 Oct 00
Swiss Re scratches the project declaration
13 Oct 00
Letter of intent is awarded to Aker
13 Oct 00
AIG scratches the project declaration
07 Nov 00
Declaration sent to Third Defendant
Nov 00
Declaration sent to First, Fourth, Fifth, and Sixth and Seventh Defendants
Nov/Dec 00
Declaration sent to Eighth Defendant
Nov/Dec 00
Declaration sent to Ninth Defendant
19 Mar 01
The claimant says first main delivery of steel to Aker's yard in Norway
6 Apr 01
Following resolution of outstanding technical issues, the EPCIC contract with Aker is signedBy article 26.7, BP became obliged at the earliest practical date following signature of the contract to procure a CAR insurance policy to cover the contractors work.
Aug 02
Offshore phase of project commenced
DECLARATION 14, NAM CON SON MIDSTREAM OFFSHORE PROJECT
1993 | Gas discovered in the Lan Tay reservoir |
29.05.97 | The claimant says:- Project moves from Select to Define stage of Amoco CVP. Contract for Front End Engineering and Design awarded to Brown & Root. BP's alleged date for project commencement (subject to caveats set out in paragraphs 5 & 6 of the Amended Voluntary Particulars |
07.98 | Project management team demobilised |
05.99 | New project management team mobilised BP considering abandoning project |
15.07.99 | Master Contracts for Project Management Services with Halliburton International Inc and Brown & Root concluded |
10.12.99 | BP sanctions expenditure of US$ 156 m for the Midstream development, conditional on execution of agreements with Vietnamese government and satisfactory licences. The claimants says at this time it was anticipated that the Commercial Agreements would be in place by mid 2000. |
26.04.00 | Project Execution Plan issued and approved by Mr. Green. This was also provided to the Lead underwriters with the Declaration. Transition from Define to Executes stages of CVP scheduled for June 2000. Milestones are July 2000 for award of the pipeline construction contract; within October 2000 for delivery of the first load of linepipe to the coating yard; and between April to June 2001 for commencement of the installation of the offshore pipeline |
26.04.00 | ITT issued for pipe and pipeline equipment (contract award anticipated June/July 2000 and anticipated delivery of first shipment was by 21 August 2000). Stated that tenderers should be aware that the project has not been sanctioned by BP or its Co-venturers thus it is possible that the project may be delayed or postponed. |
27.04.00 28.04.00 |
ITT produced for offshore pipeline and flowline construction (contract award anticipated 8/00) Stated that tenderers should be aware that the project has not been sanctioned by BP or its Co-venturers thus it is possible that the project may be delayed or postponed BP issue request for quotation for supply of parts to be incorporated in offshore pipeline with required delivery date of January 2001 |
03.00 – 05.00 26.05.00 01.06.00 |
Various RFQs issued Date for submission of 1st stage tenders under 26 April ITT Inception date as stated in project declaration |
07.06.00 |
Piping and Instrument Diagram issued for design and (the claimant says) became BP's responsibility |
19.06.00 26.06.00 |
Insurance questionnaire completed. Estimated start of construction date given of June 2000. Attached Underwriting submission states that the offshore pipelines will be installed between April and October 2001 Declaration made to Swiss Re |
27.06.00 | Declaration made to AIG |
29.06.00 | D1 provided with list of intended declarations including Nam Con Son. [The defendants (in particular D1, 6, 7 and 8), do not accept that such documents constitute declarations for the purposes of the Open Cover.] |
29.06.00 | D6 provided with list of intended declarations including Nam Con Son |
29.06.00 | D7 provided with list of intended declarations including Nam Con Son |
29.06.00 | D8 provided with notice of intended and/or imminent declaration |
30.06.00 | Cumulative project expenditure US$ 20.89 million |
04.07.00 | D1, D4, D6, D7 received Aon's e-mail of that date attaching updated list of declarations. [These defendants do not accept that this document constitutes a valid declaration. In any event, it was received by the relevant defendants after the expiry of the Open Cover.] |
07.07.00 13.07.00 02.08.00 Aug 00 12.09.00 03.10.00 23.10.00 26.10.00 |
Date given in ITT for submission of 1st stage tenders in response to 27th April 2000 ITT Project approved technical bids for the proposed contract for supply of steel for offshore pipeline (26 April ITT) Date for submission of 2nd stage tenders in response to 27th April 2000 ITT Project reached significant hiatus due to inability to award purchase orders for equipment and materials, given delays in concluding commercial agreements with Vietnamese Declaration sent to 2nd Defendant Project moves from Define to Execute stages of CVP Project approved the technical bids for the offshore pipeline installation contract (27 April ITT) Project approved the commercial bids for the proposed contract for the supply of steel for the offshore pipeline |
00.11.00 07.11.00 Nov/Dec 00 Nov/Dec 00 15.12.00 |
Declaration sent to 1st, 4th, 5th, 6th and 7th Defendants Declaration sent to Third Defendant Declaration sent to 9th Defendant Declaration sent to 8th Defendant Commercial agreements with Vietnamese Government and Vietnamese Government Guarantees (upon which BP project sanction was conditioned) entered into by parties. |
03.01.01 | Project approved commercial bids for the offshore pipeline installation contract (27 April ITT) |
Feb 2001 | Gas Transportation Agreement (one of the agreements upon which the project sanction was conditioned) was signed. |
28.03.01 13.04.01 |
An interim arrangement was issued by BP and its co-venturers which confirmed (subject to the satisfaction of a number of conditions) their intent to award the contract for the offshore pipeline construction to consortium. Consortium counter sign this interim arrangement on 4.4.01 The agreements with Vietnamese Government become effective and project then given unrestricted access to the project funds. |
16.04.01 | Contract for supply of pipe and pipeline equipment signed by BP. Countersigned by other parties 23.04.01. Contract effective from 31.01.01 |
18.04.01 | Offshore pipeline construction contract signed by BP. Countersigned by other parties 22-30.04.01. Contract effective from 28.03.01 |
30.08.01 | First shipment of linepipe |
DECLARATION 26, NA KIKA
Mid to late 80s |
Discovery of fields |
01.02.99 22.06.99 15.09.99 |
The claimant says project commencement date. The defendants dispute this Project passes through Shell's VAR 3 gate Shell revised Project Schedule which anticipated that facility fabrication would commence in May 2001. |
Late Jan 00 | System concept finalised as semi-submersible vessel |
02.00 01.02.00 |
The claimant says detailed design and engineering work by ABB Lummus in relation to hull commences Inception date as stated in project declaration |
By 03.00 | The claimant says project enters Define stage of Amoco CVP |
07.02.00 | Offer by Marintek to test 1:60 scale model of hull, which (the claimant says) was accepted by Shell |
14.02.00 | Preliminary Process and Instrument diagrams for production systems |
01.03.00 | The claimant says detailed topsides design and engineering work by WH Linder and WS Nelson commenced |
27.03.00 | Preliminary Process and Instrument diagrams for Utility systems |
05.04.00 | Partnership Agreement signed between Shell and ABB Lummus |
06.04.00 | Shell sign AFE re expenditure of US$ 5.9 million to fund preliminary engineering |
15.04.00 27.04.00 |
Preliminary Process and Instrument diagrams for Hull systems Insurance questionnaire completed which stated estimated start of construction as Sept 99 sanction |
05.05.00 11.05.00 |
Project sanction anticipated in 4th quarter 2000 BP sign AFE re expenditure of US$ 11.8 million for preliminary system design and engineering |
19.06.00 | BP Nakika project team inform BP insurance that declaration of project to Open Cover authorised |
19.06.00 | Purchase Order numbered 4500052537 for NaKika hull design and engineering and drafting issued to ABB Lummus with delivery date of 31.12.02 |
21.06.00 | Declaration made to AIG |
22.06.00 | BP approves Finance Memorandum authorising progress of the project from Select stage to Define stage and expenditure of US$ 25.8 million for funding define stage work. Project targeted for sanction during September 2000 and Execute stage anticipated to commence after sanction. |
26.06.00 | The claimant says pre-qualification inquiry document (stated not to be a purchase order or request for quotation) issued by Shell to interested fabrication contractors. The defendants say that the document was issued on 10.07.00. Any proposals to be submitted by 10.08.00 |
29.06.00 | Shell notify BP by e-mail that they wish to utilise Open Cover with formal letter to follow |
29.06.00 | Declaration made to Swiss Re |
29.06.00 | D1 provided with list of intended declarations including NaKika. [The defendants (in particular D1, 6, 7 and 8) do not accept that such documents constitute declarations for the purposes of the Open Cover.] |
29.06.00 | D6 provided with list of intended declarations including NaKika |
29.06.00 | D7 provided with list of intended declarations including NaKika |
29.06.00 | D8 provided with notice of intended and/or imminent declaration |
30.06.00 | The claimant says total project spend c. US$ 12.1 million |
03.07.00 04.07.00 11.07.00 24-28.07.00 |
Project schedule revised with anticipated date for commencement of facility fabrication brought forward to April 2001 D1, D4, D5, D6 and D7 received Aon's e-mail of that date attaching updated list of declarations. [These defendants do not accept that this document constitutes a valid declaration. In any event, it was received by the relevant defendants after the expiry of the Open Cover.] First revision of Project Execution Plan which anticipated that no major contract awards would take place prior to 15 September 2000 The claimant says project passes through Shell VAR 4 gate |
12.09.00 13.09.00 15.09.00 12.10.00 18.10.00 |
Declaration sent to 2nd Defendant Shell Group Conference approved the project Shell approved authorities for expenditure in respect of project execution implementation and for long lead items Swiss Re stamp declaration and endorsement thereto amending deductible to US$1 million and premium to US$5,946,491 (from US$3,135,238) BP approved project and signed authority for expenditure in respect of long lead items. The claimant says project moved from Define to Execute Stage. The defendants agree this save that the project was not governed by BP Amoco CVP |
23.10.00 | AIG stamp declaration and endorsement thereto amending deductible and premium |
00.11.00 07.11.00 Nov/Dec 00 Nov/Dec 00 9th March –16th June 2001 |
Declaration sent to D1, 4, 5, 6, and 7 Declaration sent to Third Defendant Declaration sent to 9th Defendant Declaration sent to 8th Defendant Letters of Intend in respect of offshore installation issued |
00.05.03 | Offshore installation anticipated to commence |