September 26, 2012 Articles

The Expansion of OCSLA to Offshore Indemnity Agreements

Grand Isle Shipyard changes the game for offshore contractual disputes.

By Emile J. Dreuil III – September 26, 2012

The Outer Continental Shelf Lands Act (OCSLA) contains a mandatory choice-of-law provision that controls which law will govern claims arising on the Outer Continental Shelf (OCS). The court in Grand Isle Shipyard, Inc. v. Seacor Marine, L.L.C., 589 F.3d 778 (5th Cir. 2009), overruled a long line of indemnity cases that held that the location of an underlying tort, not the subject matter of the contract in dispute, determines whether the OCSLA will apply to indemnity contracts. The focus now, said the Fifth Circuit, is no longer where the tort occurred, but rather what type of work the indemnity contract contemplated and where the majority of the work under the contract actually took place. This ruling makes it more likely that OCSLA, along with its mandatory choice-of-law rules, will govern offshore contractual disputes. This could have a significant impact on whether a party’s indemnity agreement will be deemed valid.

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