Crisis management

Unfortunately, catastrophic events sometimes occur. In the final part of this two-part series for Australian Mining, Baker & McKenzie's Leigh Duthie, Philippa Murphy and Angela Sevenson focus on strategies to employ when responding to a catastrophic event.

The judgment in BHP Coal Pty Ltd and Ors v. O&K Orenstein & Koppel AG and Ors [2008] QSC 141 handed down by the Queensland Supreme Court in July 2008 has serious ramifications for the bulk materials handling industry globally.

In particular, it has a significant impact on the risk practices of the bulk materials handling, resource, equipment manufacturing, and professional design industries.

Baker & McKenzie’s Leigh Duthie, Philippa Murphy and Angela Sevenson acted for the defendants in the case, which resulted from the collapse of a bucketwheel excavator.

They have drawn on that experience, and their broader bulk materials handling industry experience, in writing this series of articles.

In part one, published in the February 2009 edition of Australian Mining magazine, four preventative steps were recommended in order to limit your legal exposure arising from a catastrophic event.

They were:

1. review your standard terms and conditions for service or supply;

2. have appropriate insurance cover;

3. manage hand overs; and

4. exercise due care with third parties.

Unfortunately, even with the best planning and preventative action, catastrophic events do occur.

In part two of this series, the authors focus on strategies to employ when responding to a catastrophic event, such as the collapse of bulk materials handling equipment.

Step 1: Plan ahead

If you have not already done so, consider having your existing risk management strategy reviewed by an external consultant with appropriate qualifications. This can bring a level of objectivity to the document. An audit of the document by in-house or external lawyers, to ensure appropriate coverage of ‘legal’ issues, might also be prudent.

Draft, maintain and implement an event-response strategy. It should deal with all aspects of a potential catastrophic event including:

• medical and emergency response;

• notification of appropriate government bodies;

• media liaison;

• implementation of investigation procedures;

• allocation of responsibilities with a clear chain of command; and

• the collation and preservation of evidence.

Relevant individuals should be educated about this strategy and its implementation so that no important steps are inadvertently missed in circumstances where quick thinking and fast action may be required.

Step 2: Do not hesitate

If a catastrophic event occurs (such as the collapse of a piece of equipment, a bridge, a tunnel, a mine, there is a train crash or an accident on site) the most important action is to implement your event-response strategy immediately.

Failure to educate and train the relevant individuals who implement these strategies can be disastrous.

It can result in confusion and miscommunication at what is a critically important time.

Step 3: Contact and engage lawyers

Immediately engage lawyers to oversee and advise on the event-response strategy.

Provide them with copies of the contractual documents and any other relevant paperwork.

Your lawyers need to work with government bodies, experts, consultants, staff and media to ensure that all of your legal rights are preserved and that any court procedures are followed.

After reviewing the key documents, lawyers will be in the best position to analyze what and where liability may ultimately fall as a result of a catastrophic event.

It is important to know this from the outset as it will assist you in reporting to your management, staff and shareholders.

Engaging lawyers early is also critical to ensuring that you can act quickly if urgent injunctions are required or defamation issues arise.

Step 4: Act to preserve and enforce your legal rights

Anticipate whether there will be a public and/or government response and work with those organisations so that your needs as well as theirs are being met.

Engage an expert immediately and arrange to have that expert work alongside the government experts and/or third party consultants.

Ensure that the expert does not interfere with the government work but instead that they are acting in an overseeing role to assist you by later advising what evidence was collected, why, and providing you with his/her view as to the cause/potential causes of the event.

Be aware of the laws relating to legal professional privilege and the use of experts in the applicable jurisdiction.

These differ around Australia. Inadvertent waiver of privilege should be avoided at all costs.

Keep an open and frequent dialogue with management, staff, shareholders, public and/or regulatory bodies and the unions.

Ensure that you have appropriate PR advice, including clear allocation of those persons authorized to speak to press, and education of individuals “at the coal face” as to what can and cannot be communicated.

Put yourself in a position to control what you would like to be on the public record.

Monitor the press. If any incorrect, misleading or damaging statements are made that are sufficiently serious, correct them.

Step 5: Contact your insurers

Inform your insurers of your event-response strategy and keep them informed throughout the entire process.

If appropriate, obtain their preliminary views as to cover.

It may be necessary to enter into dialogue with them regarding your ongoing legal representation and/or the use of experts/third party consultants as they may have their own specific requirements or recommendations which you may wish to take into account.

Step 6: Manage your documentation

Implement your document retention policy and ensure all levels of your organization comply with it.

If no such policy exists at the time of the event, it is crucial that your lawyers create one and that you act quickly to fully implement it.

Doing so will assist to protect you in any resulting litigation.

In addition, a communication protocol directed to staff and consultants should exist, or if not, one should be prepared and implemented as quickly as possible.

The protocol should clearly express what internal and external communications are appropriate with regard to the event.

Maximize any available legal professional privilege protection, and minimise any intra company email communications and the like.

No such communications should speculate on the cause of the incident.

Ensure that all documents collected pursuant to the document retention policy, and any communications made under the communications protocol, are collated and retained in a central location (possibly a dedicated intranet site).

Collation and preservation of evidence will be crucial in the event litigation is instituted against your company.

Step 7: Seek advice

Obtain comprehensive and, if appropriate, written advice on potential aspects of liability. This should take into account exclusion clauses, statutory limitations, rights under the TPA, vicarious liability and corporate succession.

Consider technical points of expert evidence, such as fracture mechanics, and look at national and international construction standards and industry inspection practices.

As with Step 4 be careful, however, about what you seek to obtain in writing from experts.

In some jurisdictions all draft expert reports, whether obtained before court proceedings are issued or during court proceedings, may ultimately be subject to disclosure.

Conclusion

Finally, it is worth remembering that public scrutiny at the time of a catastrophic event can be overwhelming.

While the immediate level of public scrutiny will fade fairly quickly the effects may still be felt by the company for years to come.

Companies that wish to put themselves in the best possible position to limit their liability in these situations ought to follow the prevention and response procedures set out in the February 2009 edition of the Australian Mining Magazine, as well as in this article.

*Leigh Duthie is a partner and Philippa Murphy and Angela Sevenson are senior associates at Baker & McKenzie in Melbourne. They represented the defendants in the matter of BHP Coal Pty Ltd and Ors v O&K Orenstein & Koppel AG and Ors. If you are interested in how this significant judgment may impact your business, contact Leigh, Philippa or Angela on 03 9617 4200.

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