Pakistan International Airline Corporation v Times Travel (UK) Ltd and economic duress – a useful clarification
In the recent decision of Pakistan International Airline Corporation (Respondent) v Times Travel (UK) Ltd (Appellant),[1] Lord Hodge has provided some needed clarification on the law surrounding economic duress. This article shall discuss the position prior to this case and the degree to which it has now changed.
The prior position
One of the main difficulties in the area of economic duress has been identifying its requisite elements.[2] In earlier cases, the courts focused their attention on the party subject to the requisite pressure, rather than the party exerting it. However, in Dimskal Shipping Co SA v International Transport Workers’ Federation (The Evia Luck),[3] the court adopted a different approach, instead focusing more on the nature of the pressure being applied. This seems a more sensible direction; in a commercial world filled with constraints of time, money, and other factors, there will always be an element of pressure present in dealings[4] – the nature of the pressure is far more telling as to whether economic duress really occurred.
However, this has given rise to a new question for the courts: was said pressure ‘illegitimate’? In subsequent case law, the terminology ‘unconscionable conduct’ has also been used,[5] further obfuscating what kind of pressure is needed for economic duress to be proved.
There is much debate as to whether a lawful act or threat can constitute illegitimate pressure for the purposes of economic duress. Progress Bulk Carriers Ltd v Tube City IMS LLC, for example, upholds that it can,[6] but some commentators have argued against it because of concerns over the disruption and uncertainty it could cause for commercial parties.[7]
Fortunately, the UK Supreme Court judgment on Pakistan International Airline Corporation[8] has provided some clarity on these two issues.
The effect of the judgment
Regarding how one determines the illegitimacy of pressure in economic duress, Lord Hodge went into a lengthy discussion on this, placing particular importance on how the party exerting the pressure justifies the demand they made.[9] Also, through his reference to Borelli v Ting and the phrase ‘unconscionable conduct’ it seems that Lord Hodge has confirmed that this concept is on the same plane as ‘illegitimate’ pressure.
Additionally, Lord Hodge addresses the controversy surrounding lawful act economic duress. After acknowledging both sides of the argument, he ultimately concludes that lawful act duress does – and should – exist in English law.[10]
Pakistan International Airline Corporation therefore seems to have brought clarity to the required threshold of ‘illegitimate’ and the debate on lawful act economic duress, although it remains to be seen whether this will translate in practice.
[1] [2021] UKSC 40.
[2] Ewan McKendrick, Contract Law (8th edn OUP 2018) 624.
[3] [1992] 2 AC 152.
[4] Andrew Stewart, ‘Economic Duress – Legal Regulation of Commercial Pressure’ (1984) 14 Melb Univ L Rev 410, 422.
[5] Borrelli v Ting [2010] UKPC 21, [32].
[6] [2012] EWHC 273 (Comm), [30].
[7] Graham Virgo, The Principles of the Law of Restitution (3rd edn 2015)
[8] n1.
[9] ibid, [93-103].
[10] n1, [92].
