Knock-For-Knock Indemnities and the Law
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Applying knock-for-knock in Germany
1 Introduction
Conducting constructions, operations and maintenance offshore poses a large number of challenges for developers, operators and contractors. Typically, there are many parties involved, very large sums of money at stake, and constantly evolving and therefore potentially dangerous work environments to contend with. Consequently, the allocation of risk between the parties is a fundamental issue for consideration at the outset of contract negotiations. In the offshore oil and gas sector, the so-called knock-for-knock regime has been practiced for decades. In the German offshore wind farm sector, although many parties are keen to contract on a knock-for-knock basis, there has been and remains resistance from some. This is because the knock-for-knock regime is fundamentally different from the liability regime and fault-based concept of German law. Consequently, German companies have been initially hesitant to accept these clauses, which were developed in the context of English law. The clauses, and their validity, are still not fully tested by German courts, so there are several legal uncertainties in this regard. In any case, the standard wording of knock-for-knock clauses needs to be adapted to be valid under German law.