Indemnity clause (with Emphasis on Upstream Oil and Gas Contracts)

Abstract

Difficulty of extraction from the depths of the earth and sea beds has made oil and gas industry the most dangerous industry in the world, so that the parties of upstream oil and gas contracts always seek to use different solutions such as indemnity clause to allocate the risks. According to indemnity clause, risks is up to the party that is more capable of managing risks. continuously repetition of this clause in the aforementioned contracts can be regarded as a practice- a step before formation of a custom rule- in the field of risk allocation in oil and gas industry that undoubtedly will be an effective step in formation of lex petrolea in the future. But by a survey in writings and thoughts of scholars and the text of the upstream oil and gas contracts, it can be found that there is no overall consensus about the definition and scope of this clause and sometimes the scope of this clause has been confused with other similar terms. So in present article we have considered concept, nature and important notes in drafting of this provision.

Keywords

• risk allocation
• indemnity
• hold harmless
• upstream oil and gas contracts
• compensate