1 Introduction

For many decades, operations in the oil and gas industry have been conducted under agreements with indemnity obligations that, with some variations, require a party to indemnify the counterparty for certain claims when caused by the counterparty’s negligence. This is known in the industry as “knock-for-knock” indemnity obligations, which are often agreed to with respect to personal injury and property damage claims that could be brought by each party, their respective affiliates, contractors, and employees against the counterparty. This indemnity scheme is designed to create a “no-fault” system for litigation and places the risk of the loss on the party who carries first-party insurance coverage for the respective losses. The indemnity scheme also avoids having two potential tortfeasors litigate the fault of each other to the benefit of the injured party and his attorney.