18.—(1) If any detriment to the Canal or any interference with, or delay or obstruction to, any vessels on the Canal is caused by, or arises as a result of, the construction or failure of any specified work or protective work if carried out by the undertaker, the undertaker or (if the authority so elects) the authority, but at the undertaker’s expense, must immediately make good such detriment and the undertaker must on demand pay to the authority all reasonable expenses to which the authority may be put, and compensation for any loss which the authority may sustain, in making good or otherwise by reason of any such detriment, interference, delay or obstruction.
(2) The undertaker is responsible for and must make good to the authority all claims, demands, proceedings, costs, charges, damages, expenses and losses not otherwise provided for in this Schedule which may be occasioned to or reasonably incurred by the authority—
(a)by reason of the construction or failure of any specified work or a protective work (for the avoidance of doubt the indemnity is to include liability resulting from damage caused to the Canal by vibration caused by the use of the specified works); or
(b)by reason of any act or omission of the undertaker or of any person in its employ or of its contractors or others whilst engaged upon the construction of any specified work or of a protective work,
and subject to sub-paragraphs (3) and (4) the undertaker must effectively indemnify and hold harmless the authority from and against all charges, claims, demands, expenses and liabilities arising out of any of the matters referred to in sub-paragraphs (a) and (b).
(3) Nothing in this paragraph imposes any liability on the undertaker with respect to any losses, costs, charges, damages, expenses, claims or demand referred to in sub-paragraph (2) to the extent that they are attributable to negligence on the part of the authority or of any person in the authority’s employ or the authority’s contractors or agents.
(4) Except to the extent provided by sub-paragraph (3), the fact that any act or thing may have been done by the authority on behalf of the undertaker or in accordance with any requirements of the engineer or in accordance with plans approved by the engineer or under the engineer’s supervision or awards of an arbitrator does not (if it was done without negligence on the part of the authority or any person in its employ or its contractor or agents) excuse the undertaker from any liability under the provisions of this paragraph.
(5) The authority must give to the undertaker reasonable notice of any such claim or demand and no settlement or compromise of any such claim or demand is to be made without the prior consent in writing of the undertaker (which must not be unreasonably withheld) which, if it notifies the authority that it desires to do so, is to have the sole conduct of any settlement or compromise or of any proceedings necessary to resist the claim or demand provided that no settlement or compromise of any such claim or demand is to be made without the consent of the authority (which must not be unreasonably withheld). If consent is not given by the undertaker, the authority must diligently defend such claim or demand.