NOTES OF CASES
| DOI | http://doi.org/10.1111/j.1468-2230.1982.tb02494.x |
| Date | 01 September 1982 |
| Published date | 01 September 1982 |
NOTES
OF
CASES
ECONOMIC
DURESS
THE
immediate effect of the decision of the House of Lords in
Universe Tankships
Inc.
of
Monrovia
v.
International Transport
Workers Federation‘
is to place yet another limitation upon the
LT.F.’s campaign of blacking
“
flag of convenience
”
vessels in its
attempt to protect their crews from the savage exploitation which
most of them suffer.2
The owners of a Liberian-registered ship submitted to
I.T.F.
terms to secure the lifting of blacking (which was operated in the
usual way by port workers refusing to service the ship with tugs).
The owners signed the usual collective agreements and made the
customary payments to the
I.T.F.,
including,
inter alia,
$80,000
as
back pay for some of the crew at proper rates and
$6,480
into
I.T.F.’s Seafarers’ International Welfare Protection and Assistance
Fund. That Fund has been established to assist seafarers
“
around
the world,” and “especially those serving in flag of convenience
ships.” Twelve days after the ship had sailed the owners demanded
the return of all the payments by reason of duress. Subsequently,
the owners secured assignments from members of the crew of cer-
tain amounts of back pay (to the extent of $71,720) and the
I.T.F.
was unable to resist the assignments ultimately pro~ed.~ The owners
also claimed that the
I.T.F.
held all the payments for them on
resulting trust, a claim which Parker
J.
astonishingly upheld,
because the payments were made for non-charitable purposes (the
Welfare Fund). The Court of Appeal and
House
of
Lords found
that the rules of the Welfare Fund created no trust; the payments
had been made generally to the
1.T.F.O
On the other hand, the
I.T.F.
failed in its counterclaim for the
rest
of
the crew’s back pay
($251,761).
The agreement under which
it was payable was
a
collective agreement and not intended to be
legally enforceable between these parties, though it had been incor-
porated into the crew’s new employment c~ntracts.~ This left the
owners’ payment of
$6,480
into the Welfare Fund, on which the
1
[1982] 2 W.L.R.
803
(Lords Diplock, Cross and Russell; Lords Scarman and
Brandon dissenting) reversing the
C.A.
which reversed in part Parker
J.
[19811
I.C.R. 129.
2
On the similar effect
of
s.
17, Employment Act 1980, see
Marina Shipping
Inc.
v.
Loughton
[1982] I.R.L.R. 20; Wedderburn (1982) 45 M.L.R. 317. The demands
of
shipowners for a legal crack-down on the I.T.F. were reflected in the Green
Paper Trade
Union Immunities,
Cmnd. 8128, paras. 201-213.
3
See [1981] I.C.R. 152-153. See
too
the comments
of
Parker
J.
ibid.
at
p.
134.
4
See especially Lord Russell
of
Killowen [1982] 2 W.L.R. 822-825. See on the
“
trust
point,”
Brian Green,
infra,
p.
564.
5
Sea
[1981]
I.C.R.
152; [1982]
2
W.L.R.
809;
s.
18
(l), Trade Union and
Labour Relations Act 1974
(“
T.U.L.R.A.”). Presumably a daring member
of
the
crew who had
not
assigned his interest (or
his
authorised agent) could claim back
pay.
556
Sept.
19821
NOTES
01;
CASES
557
litigation came ultimately to be concentrated. Could that sum be
claimed back by reason of
“
economic duress
”?
At this point the judgments in
Universe Tankships
must be read
cautiously in the light of two critical concessions made by counsel.
In the House of Lords the
I.T.F.
conceded
that in blacking the ship
it was guilty of
“
economic duress
”
(not merely, it must be noted,
the tort of
“
intimidation
”
by threats to induce or actual induce-
ment of breaches of contract by the tug workers).6 Secondly, it
was
agreed
that economic pressure applied “in furtherance of a
trade dispute
”
and protected against certain liabilities in tort by
T.U.L.R.A.
19747
“would not constitute duress in law and any
sum extracted by such pressure would not be recoverable.” Whilst
most
of
the Law Lords seemed to accept the correctness of the
first of these concessions, the second did not command uncon-
ditional and unanimous a~sent.~ Section
13
(1)
of T.U.L.R.A. pro-
tects claims
“
in tort
”;
but this was
a
restitutionary claim based on
duress.
The roots of duress lie in actual or threatened force to the person.
Subsequently it flowered into
“a
threat to commit a crime or a
tort.”
lo
The parallel with the growth of the torts of
“
intimida-
tion
”
and
“
unlawful interference
”
is striking. The latter have
been extended from threats of violence to threats to commit
a
crime or
a
tort and now to threats to break a contract.” Indeed, a
threat
to
break
a
contract has been categorised both as
a
tort and
as a form of ‘‘duress.”12 Duress may be coterminous with tort;
but it need not be. Traditionally, though, “for duress to afford a
ground of relief it must be duress of
a
man’s person, not
of
his
goods.”
l3
True, equity always disposed
of
wider concepts
of
undue
6
[1982] 2 W.L.R. 812,
per
Lord Diplock. Because of the concession, the way in
which the will of the owners (all the shareholders of which lived in the
U.S.A.:
[1981] I.C.R. 147) was
‘‘
overborne
”
was never investigated.
Quaere
whether it
was overborne when
it
was “the intention of the shipowning company
all
along
.
.
.to
claim back by legal proceedings the
sum
of
U.S.
$80,000
which
it
had been
compelled to pay
”:
Lord Brandon [I9821
2
W.L.R. 832. Would not the coercion
of
the
”
will” of such
a
company require
a
detailed investigation
of
its (and its
shareholders’) other commercial ventures? The point was contested before Parker
!.
but his judgment did little more than assume that the owners’ consent had been
vitiated
”:
[1981] I.C.R. 141-145. See
infru,
note 22.
7
Here by
s.
13 (1) T.U.L.R.A. (the inducement
of
breaches of employment
contracts).
8
Per
Lord Brandon [1982]
2
W.L.R. 833.
9
See
per
Lord Brandon
ibid.;
and the C.A. [19811 I.C.R. 160-161
(s.
13 (1)
10
Cheshire and Fifoot,
Law
of
Contrucf
(10th ed., Furmston 1981), p. 274.
11
RookeJ
v.
Barnard
[1964] A.C. 1129; Clerk and Lindsell,
Torts
(15th cd.,
1982), Chap. 15. paras. 15-15 and 15-20.
12
See
Kerr
J.,
Occidentul Worldwide Investment Corpn.
v.
Skibs
AIS
Avanti
The
Siboen
119761
1
Lloyd’s Rep. 293,
335,
citing the judgments
of
Lord Denning
M.R. and Danckwerts L.J. in
D.
&
C. Builders
v.
Rees
[1966]
2
Q.B. 617.
1s
Cheshire and Fifoot,
op. cit.
p. 275; the leading case was
Skeute
v.
Beale
(1840)
11 Ad.
&
El.
983. See too Bla’s Comm.
Book
1,
12th ed.,
pp.
130-131, cited
by Lord Scarman in
Pa0
Oti
v.
Laic
Yiu
Long
[1980]
A.C.
635.
I‘
somehow
or
other
.
. .
operates to defeat
a
claim
”
based on duress).
558
THE MODERN LAW REVIEW
[Vol.
45
influence and the like; and a suit for money had and received came
to lie in certain limited cases
of
“
duress to goods.”
l4
In
1976,
however, there began
a
line of judgments in commercial
cases which swept this old learning aside. They were attempts to
introduce
a
new element of
“
fairness
”
into some commercial
bargains by judges insufficiently reckless (or courageous, according
to taste) to go the whole hog and limit private enterprise by judicial
reference to
“
inequality
of
bargaining power.”
l5
Instead, the Privy
Council and Kerr
J.
introduced the more limited concept that has
come to be known as
‘‘
economic duress.” This operates whenever
“
the consent of the other party was overborne by compulsion
so
as
to deprive him of any
animus
contrahendi.”
16
Mere
“
commercial
pressure” by itself is not enough (how could it be?). But any
“
coercion of the will which vitiates consent
”
suffices.“ While
English judges have not stretched the doctrine
to
the length of their
American counterparts,1B and most of the cases in which the
doctrine has been applied have involved duress by way
of
acts
wrongful in themselves,‘O judges have now stated the doctrine in
wider terms.’O Economic duress turns upon whether “the com-
mercial pressure exercised by one party on the other was such as to
vitiate the other party’s consent by coercion of his will.”
Although approved by today’s modish liberalism, this fashionable
new doctrine suffers, even in commercial law, from a number
of
profoundly unsatisfactory features. First, as Professor Atiyah has
amply demonstrated, its conceptual apparatus of the
“
overborne
will
”
is
wrongheaded,
“
internally inconsistent and contradic-
tory,”
22
A victim of this sort of duress does choose to submit. His
14
See,
e.g.
Maskell
v.
Horner
[1915] 3
K.B.
106;
and the different treatment
of
such cases in Cheshire and Fifoot,
op. cit.
pp.
276, 595,
and in Treitel,
Law
of
Con-
fruct
(5th ed.,
1979),
pp.
306-307.
In modern terms such cases can invariably be
explained as involving threats
or
actions that were tortious.
l5
As would Lord Denning M.R..
Lloyds Bank
v.
Bundy
[19751
Q.B.
326, 339.
16
Per
Kerr
J.
The Siboen, supra,
p.
336;
Barfon
v.
Armstrong
[1976]
A.C.
104
(P.C.).
1’
Per
Lord Scarman
Pa0
On
v.
Lau Yiu Long
[1980]
A.C.
614, 635.
On burden
of
proof see
Barton
v.
Armstrong
[1976]
A.C.
104.
1s
Seo
J.
P.
Dawson
‘‘
Economic Duress
”
(1947) 45
Michigan L.R.
253.
19
e.g.
torts
or
threats to break contracts:
North
Ocean
Shipping
Co.
Ltd.
V.
Hyundai Construction
Co.
Ltd.
[1979]
Q.B.
705
;
the
Universe Tankships
case
[
19823 2
W.L.R.
803
(inducing breach of contract).
20 See Lord Scarman,
Burmah Oil Ltd.
v.
Bank
of
England
[19801
A.C.
1090,
1140;
Pa0
On
v.
Lau Yiu Long
[1980]
A.C.
614, 635-636.
“As yet the cases do not
answer the question whether a threatened breach of contract marks the boundaries
of
economic duress,” A. Evans
[1981]
J.B.L.
188,
192;
G.
Treitel,
op. cit.
p.
307
states that
“
legally wrongful conduct .
.
.
is
necessary to constitute duress
”;
sed
quaere,
infra. note
26.
See too
P.
Baker
(1979) 95
L.Q.R.
475;
J.
Adam
(1979) 42
M.L.R.
557;
J.
Beatson
[1974]
C.L.J.
97
and
(1976) 92
L.Q.R.
496.
21
Per
Lloyd
J.
Syros
Shipping
S.A.
v.
Elaghill
Truding
Co.
[19811 3
All E.R.
189,
192.
22
“Economic Duress and the Ovcrbornz Will”
(1982) 98
L.Q.R.
197,
201
(also
pointing out the “monumental oversight of the reasoning
in
Lynch
v.
D.P.P.
Northern Ireland
[1975]
A.C.
653,
in the recent civil cases). Atiyah’;‘
criticism
is
especially applicable to the judgment of P!fker
J.
who found as a
quesfion
of
fact
’*
that the
loss
to the shipowners was
so
potentially disastrous that they had
no
practical option but to submit
”
[1981]
I.C.R.
141.
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