E E Caledonia Ltd v Orbit Valve Co plc [1994] 1 WLR 1515
Wording and clarity of indemnity clauses, attempts to indemnify for own negligence
Facts
This case was linked to the Piper Alpha platform disaster. The Claimants made a settlement with the estate of a deceased engineer, who had passed away as a result of the disaster which occurred on an oil platform owned by the Claimants. The Claimants were not, however, the employee of the Claimants but rather of Orbit Valve, the Defendants. The Claimants sought to claim the cost of that payment/settlement from the Defendants under an indemnity clause, found in the contract between them. The relevant indemnity clause stated that it applied in respect of any claim, demand, cause of action, loss, expense or liability arising from the death of an employee, during the performance of the contract. The clause did not, however, make any reference to negligence. This is relevant since the death had been found to have been as a result of the Claimant’s negligence, particularly due to failure to apply relevant health and safety regulations.
Issues
The issue was whether the clause could be interpreted to protect the claimant from his own negligence.
Decision/Outcome
The court observed how implausible it would be for anyone to willingly contract to indemnify someone else for their own negligence and that in order for that to happen, very clear language would have to be used. In this case this was not so, the language was ambiguous in that reference to negligence was not made. The court observed this to be particularly problematic for the claimant, since this was clearly a professionally drafted contract and therefore, there was no reason for negligence not to have been included in the wording if this had been intended by the parties. Consequently, the Claimants failed.
Updated 19 March 2026
This case summary accurately reflects the decision in EE Caledonia Ltd v Orbit Valve Co plc [1994] 1 WLR 1515. The core principle — that clear and express language is required before a court will construe an indemnity clause as covering a party’s own negligence — remains good law. It continues to be applied alongside the well-established Canada Steamship guidelines (Canada Steamship Lines Ltd v The King [1952] AC 192) and has been consistently affirmed in subsequent case law, including the Supreme Court’s analysis of indemnity and exemption clauses in Impact Funding Solutions Ltd v Barrington Support Services Ltd [2016] UKSC 57 and related authorities. There have been no statutory or judicial developments that materially undermine the principles stated in this summary. Readers should note that indemnity clauses in commercial contracts may also be subject to reasonableness review under the Unfair Contract Terms Act 1977 where applicable, a point not addressed in this summary but relevant in some factual contexts.
