Mining is a big job with even bigger challenges. And with those challenges comes risk which needs to be understood and mitigated.
That makes expert advice crucial in any contract or commercial dealings within the mining and resources sectors.
Hillhouse Legal Partners works closely with Cartledge Mining and Geotechnics in ensuring that risks are identified, advised upon and reduced and mitigated accordingly which in turn reduces their exposure to potential significant negative financial consequences in worst-case scenarios.
Hillhouse Director Craig Hong said this ability to catch and save before anything happened would be beneficial to all businesses across the entire industry.
“It's not unique to the industry, but what we've seen for Cartledge servicing a lot of very large mining sector clients is they will be repeatedly required to undertake some work that on an insurance front or on an indemnity front would actually leave them with a gap where they have significant liability exposure that they have no insurance for,” he said.
“If that event were to occur it would be financially devastating for the business because they'll have a multimillion-dollar claim with no insurance coverage.”
“A few times in negotiating contracts, we've been able to catch those exposures for them and negotiate different terms to mitigate risk, remove it from the contract entirely or advise to seek insurance coverage for such risks or some combination thereof.”
“Large mining companies generally aren't interested in suing you for the gap as they know most mining services businesses will not have the financial wherewithal to cover it regardless. They just want to have the insurance position right. If there is a problem, they want to have a claim on your insurance,” Craig said.
“We’ve always been pretty successful on that negotiating front.” Because of that great strike rate of getting the insured position just right, they regularly check Cartledge’s new contracts for just such issues.
Hillhouse has worked with Cartledge for a number of years. They consider themselves the equivalent of having an in-house counsel without the expense of full-time legal representation. Areas they assist Cartledge with include contract and commercial dealings work on general terms and conditions, employment legislation issues, as well as any commercial disputes and the aforementioned insurance work.
Craig said they especially help when Cartledge is negotiating a contract with a larger industry player.
“If you're undertaking work for a big miner, they generally provide that: "Here are the terms and conditions that you'll be subject to." There's no suggestion that you are going to be able to use your own terms and conditions.
“When advising in those circumstances where contract form and terms are being dictated to you we generally unpick all their high-risk items and require some amendments in respect of those.”
The success rate means that Cartledge can obtain the accommodations that they need, particularly ones that would be a problem for their insurances. There is also industry knowledge and skill in knowing what are “deal breakers” for the large miner that they will not amend and advising your client that if they wish to “play in this space” that is a term or risk they need to accept and time and money should not be incurred on attempting to negotiate out something that is futile.
Craig said most engineers or people engaged in the mining industry have similar gap and insurance exposure, whether they know it or not.
Cartledge principal Tim Cartledge has been incredibly proactive at dealing with such issues and getting himself in a stronger contractual position.
Craig said that the first few times such advice and reviews can take a while to sort things out but as things move along, clients become more aware of what to look for and how to sort the problems with the help of legal representation.
“By doing it consistently, they actually start saving time and money,” he said.
Traditionally, many people think when entering a contract with a large resources player that the contract will be okay, but Hillhouse point out it is generally skewed significantly in favour of the major company.
But when Hillhouse point out the problem it frequently gets sorted to a fairer level playing field with little fuss. For a company like Cartledge that is a real plus.
To get in contact and make a time to discuss your personal circumstances simply send us an email or call 07 3220 1144.
This article was originally published in the Endeavour Magazine here.
The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.