Dimskal Shipping Co SA v International Transport Workers Federation
The Evia Luck
House of Lords
Citations: [1991] 3 WLR 875; [1992] 2 AC 152.
Facts
The claimants owned a vessel named ‘The Evia Luck’ manned by ten Greek sailors and twenty Filipino sailors, while sailing under the Panamanian flag. The defendant was the International Transport Federation. At the time of the dispute, the defendant campaigned against ‘flags of convenience’, and enlisted many organisations in Sweden to this end. Its main tactic was to threaten ships with ‘blacking’ (being prevented from leaving port) unless they agreed to more favourable terms for their crew. This tactic, while illegal in the UK, was legal under Swedish law.
It was unloading at a Swedish port when official of the Swedish Transport Workers’ Union, an affiliate of the defendants, told the crew that the ship would be blacked unless the claimant agreed to enter International Transport Federation contracts with the crew. Various other parties associated with the defendant issued further demands, all backed by the threat of blacking.
The claimant capitulated and signed a variety of contracts with the defendant. They later sought a declaration that the agreements were voidable for economic duress, and restitution of sums paid. The relevant agreements were governed by English law and subject to the jurisdiction of the English courts.
Issue(s)
- Was the threat to ‘black’ the claimant’s ship ‘illegitimate pressure’ for the purposes of economic duresS?
Decision
The House of Lords held that the contract was voidable for economic duress. Therefore, the claimant was entitled to restitution. The defendant had exercised pressure on the claimant by threatening to black their ship. This pressure was unlawful as a matter of English law, so it was illegitimate. The fact that the acts complained of took place abroad where they were lawful was not relevant.
This Case is Authority For…
Economic duress applies where one party exerts illegitimate pressure which is a ‘substantial cause’ of the other party’s decision to agree to a contract.
A trade union engages in economic duress if they force an employer to increase wages by procuring a boycott of their business. To act lawfully, the union must comply with the statutory restrictions imposed on trade unions and industrial action.
Other
Lord Goff sought to give guidance on the notion of ‘illegitimate’ pressure by describing it as ‘illegal’ or ‘unconscionable’ behaviour. Lord Goff also cast doubt on earlier cases, such as Pao On v Lau Yiu Long [1980] AC 614, which referred to a need for the pressure to ‘coerce the will’.
