**Exhibit 10.12**

[Formof Severance Agreement with Dean P. Andrews, Edwin S. Hetherington and David C.Williams]

**SEVERANCE AGREEMENT**

THIS AGREEMENT, dated December 1, 2006, is made byand between **ORIENT-EXPRESS HOTELS LTD.,** aBermuda company (the “Company”), and                                  (the “Executive”).

RECITALS

A.  TheExecutive is employed by the Company or a subsidiary of the Company and isappointed by the Company as its Vice President; and

B.  TheCompany considers it essential to the best interests of its shareholders tofoster the continued employment of key management personnel; and

C.  TheCompany’s Board of Directors recognizes that, as is the case with many publiclyheld corporations, the possibility of a change in control with respect to theCompany exists and that such possibility, and the uncertainty and questionswhich it may raise among management, may result in the departure or distractionof senior management personnel to the detriment of the Company and itsshareholders; and

D.  TheCompany’s Board of Directors has determined that appropriate steps should betaken to reinforce and encourage the loyalty and continued attention anddedication of the Company’s senior management, including the Executive, totheir assigned duties without distraction in the face of potentially disturbingcircumstances arising from the possibility of a change in control with respectto the Company.

***NOW, THEREFORE***, the Company and the Executive hereby agreeas follows:

# **Section1.**          **Defined Terms**.  Capitalized terms are defined in Section 13.

# **Section 2.**          **Term of Agreement**.  This Agreement shall commence as of the datefirst written above (the “Effective Date”) and shall continue in effectthrough the third anniversary of the Effective Date; provided, however, thatthereafter, the term shall automatically be extended for additional one-yearperiods, unless, not later than 90 days prior to the third anniversary or anyanniversary thereafter, as applicable, the Company or the Executive shall havegiven notice to the other party of its or his election not to extend the termhereof.

# **Section 3.**          **Company’s Covenants**.  In order to induce the Executive to remain inthe employ of the Company or a subsidiary of the Company, the Company agrees,under the conditions described herein, to pay the Executive the SeverancePayment set forth in Section 4. No Severance Payment shall be payable underthis Agreement, unless during the term of this Agreement there shall have beena termination of the Executive’s employment with the Company or a subsidiary ofthe Company following a Change in Control under Section 4 hereof. ThisAgreement shall not be construed as creating an express or implied contract ofemployment and, except as otherwise agreed in writing between the Executive andthe

1

----

# Company or a subsidiary of the Company, the Executive shall not haveany right to be retained in the employ of the Company or a subsidiary of theCompany.

# **Section 4.**          **Severance Payment**

# (a)       Severance Payment Following Change in Control.  Ifduring the term of this Agreement (i) a Change in Control occurs and (ii) theExecutive’s employment is terminated within one year following such Change inControl either (A) by the Company or a subsidiary of the Company without Cause,or (B) by the Executive with Good Reason, then, in any such case, the Companyshall pay the Executive a lump sum severance payment (the “Severance Payment”),in cash, equal to two times the sum of (x) the Executive’s annual base salaryas in effect immediately prior to the Date of Termination or, if higher, ineffect immediately prior to the first occurrence of an event or circumstanceconstituting Good Reason, and (y) the most recent annual bonus payment made tothe Executive.

### (b)       Termination of Employment Prior to Change inControl.  For purposes of this Agreement, the Executive’semployment shall be deemed to have been terminated following a Change inControl by the Company or a subsidiary of the Company without Cause or by theExecutive with Good Reason, if (i) the Executive’s employment is terminated bythe Company or a subsidiary of the Company without Cause prior to a Change inControl and such termination was at the request or direction of a Person whohas entered into an agreement with the Company the consummation of whichconstitutes a Change in Control (an “Acquiring Person”), or (ii) theExecutive terminates his employment for Good Reason prior to a Change inControl and the circumstance or event which constitutes Good Reason occurs atthe request or direction of an Acquiring Person.

# **Section 5.**          **Termination of Employment Agreement**. Notwithstanding any provisions in the employment agreement of theExecutive with the Company or a subsidiary of the Company, as in effect on theEffective Date (the “Employment Agreement”), regarding the right to terminatethe Executive’s employment without cause or any other reason, or regarding therequired notice for termination, the Executive’s employment may only beterminated by him or by the Company or a subsidiary of the Company withoutcause or any other reason, if the party terminating shall give the other partynot less than six months’ prior written notice of the date of termination,unless the termination occurs following a Change in Control, in which eventSection 6(b) hereof shall apply.  ThisSection 5 shall not affect (i) any provisions in the Employment Agreementrelated to termination for cause or any other reason or (ii) any provisions inthis Agreement related to termination for Cause or Good Reason.

# **Section 6.**          **Termination Procedures**.

## (a)       Notice of Termination.  After a Change in Control and during the termof this Agreement, any purported termination of the Executive’s employment(other than by reason of death) shall be communicated by written Notice ofTermination from one party hereto to the other party hereto in accordance withSection 9 hereof. For purposes of this Agreement, a “Notice of Termination”shall mean a notice which shall state (i) in the event of a termination by theCompany or a subsidiary of the Company, whether the termination is occurringfor Cause, and (ii) in the event of termination by the Executive, whether thetermination is occurring for Good Reason, and shall set forth in reasonabledetail the facts and circumstances claimed to provide a basis for terminationof the Executive’s employment under the provision so indicated. Further, aNotice of Termination for Cause is required to include a copy of a resolutionduly adopted by the affirmative vote of not less than 

2

----

## three-quarters (3/4) of the entire membership of the Company’s Board ofDirectors at a meeting of the Company’s Board of Directors (after reasonablenotice to the Executive and an opportunity for the Executive, together with theExecutive’s counsel, to be heard before the Company’s Board of Directors)finding that, in the good faith opinion of the Company’s Board of Directors,the Executive was guilty of conduct set forth in clause (i) or (ii) of thedefinition of Cause herein, and specifying the particulars thereof inreasonable detail.

## (b)       Date of Termination.  With respect to any purported termination ofthe Executive’s employment after a Change in Control and during the term ofthis Agreement, the phrase “Date of Termination” shall mean the datespecified in the Notice of Termination (which, in the case of a termination bythe Company or a subsidiary of the Company, shall not be less than thirty (30)days (except in the case of a termination for Cause) and, in the case of atermination by the Executive, shall not be less than fifteen (15) days nor morethan sixty (60) days, respectively, from the date such Notice of Termination isgiven).

# **Section 7.**          **Excise Tax**.   In the event that it shall be determinedthat any payment or distribution by the Company or a subsidiary of the Companyto or for the benefit of the Executive in connection with a Change in Control,whether paid or payable or distributed or distributable pursuant to the termsof this Agreement or otherwise (including, without limitation, the accelerationof any payment, award, distribution or benefit) (the “Payment”),constitutes an “excess parachute payment” within the meaning of Section 280G ofthe Code, the Executive shall be paid an additional amount (the “Gross-UpPayment”) such that the net amount retained by the Executive afterdeduction of (i) any excise tax imposed under Section 4999 of the Code and (ii)any federal, state and local income and employment tax and excise tax imposedupon the Gross-Up Payment shall be equal to the Payment.  For purposes of determining the amount of theGross-Up Payment, the Executive shall be deemed to pay (a) federal income taxand employment taxes at the highest marginal rate of federal income andemployment taxation in the calendar year in which the Gross-Up Payment is to bemade and (b) state and local income taxes at the highest marginal rate oftaxation in the state and locality of the Executive’s residence in the calendaryear in which the Gross-Up Payment is to be made, net of the maximum reductionin federal income taxes that may be obtained from the deduction of such stateand local taxes.

# **Section 8.**          **Binding Agreement**.  This Agreement shall inure to the benefit ofand be enforceable by the Executive’s personal or legal representatives,executors, administrators, successors, heirs, distributees, devisees and legatees.If the Executive shall die while any amount would still be payable to theExecutive hereunder (other than amounts which, by their terms, terminate uponthe death of the Executive) if the Executive had continued to live, all suchamounts, unless otherwise provided herein, shall be paid in accordance with theterms of this Agreement to the executors, personal representatives oradministrators of the Executive’s estate.

# **Section 9.**          **Notices**.  For the purpose of this Agreement, noticesand all other communications provided for in the Agreement shall be in writingand shall be deemed to have been duly given when (i) sent by telefax, (ii) handdelivered, (iii) sent by courier, or (iv) mailed by registered mail, returnreceipt requested, postage prepaid, addressed, if to the Executive, to theaddress inserted below the Executive’s signature on the final page hereof and,if to the Company, to the address set forth below, or to such other address aseither party may have furnished to the other in writing in accordance herewith,except that notice of change of address shall be effective only upon actualreceipt:

3

----

Tothe Company:

Orient-ExpressHotels Ltd.

c/oOrient-Express Services Ltd.

20Upper Ground

LondonSE1 9PF

England

Attention:  Company Secretary

Fax:  +44-(0)20-7805-5908

# **Section 10.**        **Miscellaneous**.

## (a)       No provision of this Agreement may be modified, waived or dischargedunless such waiver, modification or discharge is agreed to in writing andsigned by the Executive and such officer as may be specifically designated bythe Company’s Board of Directors.

## (b)       No waiver by either party hereto at any time of any breach by the otherparty hereto of, or of any lack of compliance with, any condition or provisionof this Agreement to be performed by such other party shall be deemed a waiverof similar or dissimilar provisions or conditions at the same or at any prioror subsequent time.

## (c)       This Agreement supersedes any other agreements or representations, oralor otherwise, express or implied, with respect to the subject matter hereofwhich have been made by either party; provided, however, that, except as setforth in Section 5 hereof, this Agreement shall not supersede, but insteadgovern in addition to, the Employment Agreement, and in the event of a conflictbetween the Employment Agreement and this Agreement, this Agreement shallgovern.

## (d)       The validity, interpretation, construction and performance of thisAgreement shall be governed by the laws of Bermuda.

## (e)       Any payments provided for hereunder shall be paid net of any applicablewithholding required under applicable laws.

## (f)        The obligations of the Company and the Executive under this Agreementwhich by their nature may require either partial or total performance after theexpiration of the term of this Agreement shall survive such expiration.

# **Section 11.**        **Counterparts**.  This Agreement may be executed in severalcounterparts, each of which shall be deemed to be an original but all of whichtogether will constitute one and the same instrument.

# **Section 12.**        **Resolution of Disputes; Arbitration**.

## (a)       All claims by the Executive for benefits under this Agreement shall bedirected to and determined by the Company’s Board of Directors and shall be inwriting. Any denial by the Company’s Board of Directors of a claim for paymentsunder this Agreement shall be delivered to the Executive in writing and shallset forth the specific reasons for the denial and the specific provisions ofthis Agreement relied upon. The Company’s Board of Directors shall afford areasonable opportunity to the Executive for a review of the decision denying aclaim and shall further allow the Executive to appeal to the Company’s Board of

4

----

## Directors a decision of the Company’s Board of Directors within sixty(60) days after notification by the Company’s Board of Directors that theExecutive’s claim has been denied.

## (b)       Any further dispute or controversy arising under or in connection withthis Agreement shall be settled exclusively by arbitration before the AmericanArbitration Association in New York, New York in accordance with its commercialarbitration rules as in effect at the time when the dispute or controversyarises.  Judgment may be entered on thearbitrator’s award in any court having jurisdiction. Notwithstanding anyprovision of this Agreement to the contrary, the Executive shall be entitled toseek specific performance of the Executive’s right to be paid until the Date ofTermination during the pendency of any dispute or controversy arising under orin connection with this Agreement.

# **Section 13.**        **Definitions**.  For purposes of this Agreement, the followingterms shall have the meanings indicated below:

## (a)       “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgatedunder Section 12 of the Exchange Act.

## (b)       “Acquiring Person” shall have the meaning setforth in Section 4 hereof.

## (c)       “Cause” for termination by the Company or a subsidiary of the Companyof the Executive’s employment shall mean (i) the continued failure by theExecutive to substantially perform the Executive’s duties with the Companyafter a written demand for substantial performance is delivered to theExecutive by the Company’s Board of Directors, which demand specificallyidentifies the manner in which the Company’s Board of Directors believes thatthe Executive has not substantially performed the Executive’s duties, andExecutive has not cured any such failure that is capable of being cured in allmaterial respects within ten (10) days of receiving such written demand, or(ii) the Executive’s incapacity due to physical or mental illness to performthe Executive’s duties with the Company for a period of three (3) consecutivemonths, or (iii) the conviction of the Executive for any indictable criminaloffense.

## (d)       For purposes of this Agreement, “Change in Control” means any of thefollowing events:

(i)        any “person” (as that term is defined for the purposes of Section 13(d)or 14(d) of the Exchange Act) shall directly or indirectly acquire more than40% of the voting shares of the Company then outstanding and then entitled tovote generally in the election of directors of the Company; or

(ii)       individuals who, on the date of entering into this Agreement,constitute the Company’s Board of Directors (or the successors of suchindividuals nominated by such Board of Directors or a committee thereof onwhich such individuals or their successors constitute a majority) shall ceaseto constitute a majority of the Company’s Board of Directors; or

(iii)      the Company amalgamates, merges or consolidates with or into any othercorporation, without the approval of its Board of Directors constituted asprovided in clause (ii) above; or

5

----

(iv)      the Company sells, leases, exchanges or otherwise disposes of all orsubstantially all of its assets and business without the approval of its Boardof Directors constituted as provided in clause (ii) above.

## (e)       “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.

## (f)        “Company” shall mean Orient-Express Hotels Ltd., and, except indetermining under Section 12(d) hereof whether or not any Change in Control ofthe Company has occurred, shall include any successor to its business and/orassets which assumes and agrees to perform this Agreement by operation of law,or otherwise.

## (g)       “Date of Termination” shall have the meaning set forth in Section 6hereof.

## (h)       “Effective Date” shall have the meaning setforth in Section 2 hereof.

## (i)        “Employment Agreement” shall have the meaning set forth in Section 5hereof.

## (j)        “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, asamended from time to time.

## (k)       “Executive” shall mean the individual named in the first paragraph ofthis Agreement.

## (l)        “Good Reason” for termination by the Executive of the Executive’semployment shall mean the occurrence (without the Executive’s express writtenconsent) of any one of the following acts by the Company, or failures by theCompany to act, unless, in the case of any act or failure to act described inany of clauses (i), (iv), (v), (vi) or (vii) below, such act or failure to actis corrected prior to the Date of Termination specified in the Notice ofTermination given in respect thereof:

(i)        the assignment to theExecutive of any duties inconsistent with the Executive’s status as a seniorexecutive officer of the Company or a substantial adverse alterationin the nature or status of the Executive’s responsibilities from those ineffect immediately prior to the Change in Control;

(ii)       a reduction by the Companyor a subsidiary of the Company in the Executive’s annual base salary as ineffect on the date hereof or as the same may be increased from time to time;

(iii)      the relocation of the Executive’s principal place ofemployment to a location more than 50 miles from the Executive’s principalplace of employment immediately prior to the Change in Control or the Company’srequiring the Executive to be based anywhere other than such principal place ofemployment (or permitted relocation thereof) except for required travel on theCompany’s business to an extent substantially consistent with the Executive’spresent business travel obligations;

(iv)      the failure by the Company or a subsidiary ofthe Company to pay to the Executive any portion of the Executive’s currentcompensation within thirty (30) days of the date such compensation is due;

6

----

(v)       the failure by the Company or a subsidiary ofthe Company to continue in effect any compensation plan in which the Executiveparticipates immediately prior to the Change in Control which is material to theExecutive’s total compensation, including but not limited to the Company’sstock option, bonus and other plans or any substitute plans adopted prior tothe Change in Control, unless an equitable arrangement (embodied in an ongoingsubstitute or alternative plan) has been made with respect to such plan, or thefailure by the Company or a subsidiary of the Company to continue the Executive’sparticipation therein (or in such substitute or alternative plan) on a basisnot materially less favorable, both in terms of the amount or timing of paymentof benefits provided and the level of the Executive’s participation relative toother participants, as existed immediately prior to the Change in Control;

(vi)      the failure by the Company or a subsidiary ofthe Company to continue to provide the Executive with benefits substantiallysimilar to those enjoyed by the Executive under any of the Company’s pension,savings, life insurance, medical, health and accident, or disability plans inwhich the Executive was participating immediately prior to the Change inControl, the taking of any other action by the Company or a subsidiary of theCompany which would directly or indirectly materially reduce any of suchbenefits or deprive the Executive of any material fringe benefit enjoyed by theExecutive at the time of the Change in Control, or the failure by the Companyor a subsidiary of the Company to provide the Executive with the number of paidvacation days to which the Executive is entitled on the basis of years ofservice with the Company or a subsidiary of the Company in accordance with theCompany’s normal vacation policy or any employment agreement in effect at thetime of the Change in Control; or

(vii)     any purported termination of the Executive’semployment by the Company or a subsidiary of the Company following a Change inControl which is not effected pursuant to a Notice of Termination satisfyingthe requirements of Section 6(a) hereof.

The Executive’s continued employment for thirty (30)days following any act or failure to act constituting Good Reason shallconstitute a waiver of rights with respect to such (but only such) act orfailure to act.

## (m)      “Gross-Up Payment” shall have the meaning set forth in Section 7hereof.

## (n)       “Notice of Termination” shall have the meaning set forth in Section 6hereof.

## (o)       “Payment” shall have the meaning set forth in Section 7 hereof.

## (p)       “Person” shall have the meaning given in Section 3(a)(9) of theExchange Act, as modified and used in Sections 13(d) and 14(d) thereof, exceptthat such term shall not include (i) the Company or any of its subsidiaries,(ii) a trustee or other fiduciary holding securities under an employee benefitplan of the Company or any of its Affiliates, (iii) an underwriter temporarilyholding securities pursuant to an offering of such securities, or (iv) acorporation owned, directly or indirectly, by the shareholders of the Companyin substantially the same proportions as their ownership of stock of theCompany.

7

----

## (q)       “Severance Payment” shall have the meaning set forth in Section 4hereof.

|        |                                                          |                                            |   |
|--------|---------------------------------------------------------------|-------------------------------------------------|--------|
|   | By:                                                           | /s/ Edwin S. Hetherington *                |   |   |
|   | Name:                                                         | Edwin S. Hetherington                           |   |
|   | Title:                                                        | Vice President,  General Counsel  and Secretary |   |
|   |                                                          |                                            |   |
|   |                                                          |                                            |   |
|   | [Individual agreement signed by each person  noted on page 1] |                                            |
|   | Name:                                                         |                                            |
|   | Address:                                                      |                                            |
|   |                                                          |                                            |   |
|   | [home address]                                                |                                            |   |
|   |                                                          |                                            |   |
|   |                                                          |                                            |   |
|        |                                                               |                                                 |        |  |  |

 

----

[* Signed by Simon M.C.Sherwood, President and Chief Executive Officer, on Mr. Hetherington’sagreement.]

8

----