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PESA and IADC Partner for Force Majeure and Critical Industry Designations Webinar

PESA and IADC joined forces to share information on legal issues faced by the OFS sector, including critical industry designations and force majeure contract issues. Moderated by PESA Legal Committee Chair Dan Connelly, Senior Commercial Counsel, Baker Hughes, the panel included Mark Mehnert, Vice President – Global Operations for the Western Hemisphere, Baker Hughes, and Tyler Smith, Legal Counsel, Nabors Industries.

Because of disruption to the usual way that companies work, panelists began with pandemic work location recommendations. If employees can work from home, they should. If offices need to be open, companies should conduct health screenings at facility entrances to check for symptoms prior to entry. Organizations need to upgrade cleaning procedures and make available proper PPE to employees.

Smith suggested employees prepare a Stay at Home Exemption Letter that describes the company, and explains why the employee is essential and why they need to travel to do their job. The letter should come from the employee’s supervisor and should have that person’s contact information in case law enforcement has any questions. When possible, the letter should include the employee ID number that matches their physical ID.

Communication with industry partners, both inside your company and out, is key according to Mehnert. Everyone in the industry is facing challenges, and it’s important to maintain a cohesive team atmosphere to perform the problem-solving that will get companies through the difficult times together. Consistent communication helps maintain trust and confidence.

Smith recommended establishing and maintaining a crisis management team. During situations such as a pandemic, this team would address IT issues created by workplace changes, such as a mandatory work-from-home order. This team would also address challenges to employee safety, such as bringing teams back to the U.S. from overseas, as well as health issues such as symptom monitoring and deep cleaning of facilities.

Companies should establish a plan so employees know what procedures to follow if a co-worker tests positive. Other topics that should be addressed in the plan:

  • What are the steps the team will take if the pandemic or another crisis lasts longer than a few weeks?
  • What if altered work situations are required for a full year?
  • What is the process to get everyone back to work when the crisis subsides?

Mehnert discussed how the role of his corporate legal team evolved over the past few months. At first, the team began collaborating with unfamiliar groups such as government affairs and process management. The initial focus was how China’s shut down would affect the supply chain. As the scope of the pandemic expanded, the legal team was faced with the challenge of ensuring the employees were working in a compliant manner even though they weren’t in their normal work environment. During a crisis, it’s critical for teams to adapt to rapidly changing situations.

Force majeure has been a hot topic over the past few weeks. While current force majeure clauses that do not specifically mention pandemic may still offer protection, it’s best to include it. Details must be specific about when a disease or illness rises to the level of pandemic.

If the company’s supply chain is disrupted or shut down because of an illness, does that classify as a pandemic? Does government involvement in managing the disease classify it as a pandemic? Local laws will have an impact on the force majeure clause and whether the disruption is foreseeable. Panelists also recommend that companies performing work in other countries review their international contracts. Companies should also have a general outbreak policy and obtain operator input on the language.

Finally, the panel suggested project managers and other key employees on the ground have proper crisis management training. Having a calm, level-headed leader is the key to managing any situation.

For more information about PESA’s Legal Committee contact VP Government Affairs Tim Tarpley.

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