1 Introduction

The knock-for-knock system is a contractual system in which the parties to the system agree to cover all their losses through first-party insurance and to dispense with tort liability. The system ensures that each party’s insurance contracts cover losses to the party’s own assets and own employees, and that the first-party insurers cannot seek redress under tort law against the other parties. Moreover, while the system cannot dispense with tort claims raised by third parties, the system can allocate such risks to the better insured party (e.g., the operator of an oil rig rather than the contractors) through indemnity clauses.