Campbell v Conoco (UK) Ltd & Ors

A contractual indemnity for injury arising out of or in connection with contractual performance may extend beyond injury caused by the contracted work. The phrase “in connection with” requires a connection, but not necessarily a causal connection.

In a chain of back-to-back contracts, an indemnity covering “all liability for” injury may include the indemnitee’s contractual liability under an equivalent upstream indemnity. The clause must be construed carefully, but clear and deliberately broad language should receive its natural commercial meaning.

An employee of Salamis SGB Ltd was seriously injured while performing fireproofing work on an offshore platform. His injury resulted from the accidental venting of compressed air and had no causal relationship with the work he was performing.

Conoco (UK) Ltd accepted liability to the employee. Amec Process and Energy Ltd then accepted liability to Conoco under an indemnity in the main contract. Amec claimed against Salamis under an identically worded indemnity incorporated into a back-to-back subcontract.

Garland J upheld Amec’s claim. Salamis appealed, contending that the injury lacked the required connection with performance of the subcontract and that the indemnity did not cover Amec’s contractual liability to Conoco.

1. Appeal dismissed. Rix LJ, with whom Tuckey LJ agreed, held that the employee’s injury fell within the indemnity. He was injured while performing subcontract work, although the mechanism of injury was unrelated to that work.
2. The expressions “as a result of”, “arising out of” and “in connection with” were of increasing width. “In connection with” required a connection of some kind but did not require a causal connection. The clause was drafted in broad, passive terms and did not specify how the injury must occur.
3. The reference to performance or non-performance of the “Contract” was not confined to work done or omitted by Salamis or its personnel. Unlike the reciprocal indemnity, the provision did not identify the person by whom the performance or non-performance must occur. The definition of “Personnel” identified the status of persons deployed under the contract; it did not make their status change according to whether they were working at the precise moment of injury.
4. The construction was supported by EEC Caledonia Ltd v Orbit Valve Co Europe [1994] 1 WLR 221 and [1994] 1 WLR 1515. Those decisions treated comparable language as extending to an employee who was on an offshore platform because of the contract, although asleep and off duty when killed. Tuckey LJ agreed that the present clause could likewise extend to injury occurring while an employee was not actually working.
5. The clause also covered Amec’s contractual liability under its upstream indemnity. The phrase “all liability for” injury was wider than “claims arising in respect of” injury. In the commercial context of identical, back-to-back indemnities down a contracting chain, it encompassed Amec’s liability to indemnify Conoco for Conoco’s liability to the injured employee.
6. Burns v Shuttlehurst Ltd [1999] 2 All ER 27 concerned narrower language in provisions governing pre-action disclosure. Its procedural context did not determine the meaning of the broader contractual wording. Salamis was ordered to pay the costs of the dismissed appeal, subject to detailed assessment.

1. Court of Appeal (Civil Division): The court dismissed Salamis’s appeal and affirmed Garland J’s construction of the subcontractual indemnity: [2002] EWCA Civ 704.
2. High Court, Queen’s Bench Division: Garland J held that the indemnity covered both the circumstances of the employee’s injury and Amec’s contractual indemnity liability to Conoco. No citation is stated in the judgment.