Indemnity Provision Enforceable Where Offshore Contract Is Maritime In Nature

In a contractual indemnity dispute following an offshore worker’s injuries, the U.S. District Court for the Eastern District of Louisiana confronted whether a the contract’s indemnity provision was enforceable.  Specifically, the court had to determine whether the contract was governed by maritime law (making the indemnification provision enforceable) or whether it was governed by federal law by virtue of the Outer Continental Shelf Lands Act (OCSLA), in which case federal law would adopt the law of the adjacent state, Louisiana, and thus the Louisiana Oilfield Indemnity Act would apply (making the indemnification provision unenforceable).

The court found that the underlying injury triggering the indemnification demand arose on a “situs” governed by OCLSA (on a drilling rig temporarily attached to the seafloor), but then concluded that federal maritime law applied on its own force because the Daywork Drilling Contract at issue was maritime in nature.  To reach this latter conclusion, the court conducted the fact-specific analysis set forth in Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313 (5th Cir. 1990), to determine whether the contract was maritime in nature given that the Fifth Circuit had not unambiguously established whether plugging and abandoning activities related to wireline operations in a contract for drilling services were always either maritime or non-maritime.  Here, the court concluded the contract was maritime because the crew was assigned to work aboard a vessel in navigable waters and the work being performed was more than incidentally related to the execution of the vessel’s goal:  “The provision of casing services, which logically includes the removal of casing services, contributes to the mission of a special purpose vessel and is ‘inextricably intertwined with maritime activities since it required the use of a vessel and its crew.'”

Accordingly, maritime law applied and the indemnity provision was enforceable.

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