Universe Tankships Inc of Monrovia v International Transport Workers Federation
House of Lords
Citations:  AC 111;  3 WLR 205;  2 All ER 833.
The claimant’s ship was registered in Liberia and sailed under a Liberian flag. It docked in Milford Haven, a UK port. It did not hold a ‘blue certificate’. This was a document issued by the defendant. It prevented ships from being ‘blacked’ (prevented from entering or leaving port) by the defendant’s campaign against ‘flags of convenience’. The aim of the campaign was to improve sailors’ wages and working conditions.
The defendant blacked the claimant’s ship. To end this, the claimant agreed pay money to the defendant’s ‘welfare fund’ and back-pay to its crew. The claimant did so out of fear of the economic consequences of being trapped at port. The purpose of the welfare fund was ‘to help provide welfare, social and recreational facilities in ports around the world for seafarers of all nations, especially those serving in flag of convenience ships.’
The claimant later sought to have the payment to the welfare fund set aside for economic duress. The defendant resisted this, arguing that their actions were lawful under s.13 of the Trade Union and Labour Relations Act 1974. The claimant also argued that the welfare fund was an invalid trust. This would mean that the defendant held the payment on resulting trust for the claimant.
- Did the defendant hold the payment on resulting trust?
- If not, was the payment voidable for economic duress?
The House of Lords held that the welfare fund was not a trust. Rather, it was a contract set up between affiliated unions. Accordingly, the claimant did not make the payment on trust – it was an accretion to the contract. There was therefore no resulting trust, and the money could not be recovered on this basis.
Meanwhile, the defendant had procured the payment by economic duress. Their actions were not lawful under s.13 of the Trade Union and Labour Relations Act 1974. This was because they were not done in contemplation of a trade dispute. The welfare fund had nothing to do with the crew’s terms and conditions of employment. The fact that the defendant made the demand for a donation to the fund at the same time as demanding back-pay for the crew (something that was connected to terms of employment) was irrelevant. The two demands were treated separately.
This Case is Authority For…
S.13 Trade Union and Labour Relations Act 1974 sets out the circumstances in which a union will be immune from liability for acts done ‘in contemplation or furtherance of a trade dispute’. For an act to be in contemplation or furtherance of a trade dispute, the act must be connected with the employees’ ‘terms and conditions of employment’ within the meaning of s.29(1)(a). The connection must be relatively direct.
Lord Bandon dissented on this point, believing that the statute should be given its broadest possible meaning. He would have allowed even indirect or ‘fringe benefits’ to connect the demand with the crew’s terms and conditions of employment.
Economic duress arises if one party puts illegitimate pressure on the other, giving the other no practical choice but to enter the transaction. There is no need for the innocent party to object to the transaction at the time. Economic duress renders a transaction voidable.
Some of the Lords implicitly treated acts which amount to a criminal offence or a tort as inherently illegitimate. The defendant had conceded that their pressure would be illegitimate if it were unlawful.
Lord Scarman thought that assessing legitimacy involves examining both the ‘nature of the pressure’ and the ‘nature of the demand’. However, he did say that ‘The origin of the doctrine of duress in threats to life or limb, or to property, suggests strongly that the law regards the threat of unlawful action as illegitimate, whatever the demand.’
In the present case, Lord Scarman thought if the act was lawful it could not be illegitimate because this would be inconsistent with the legislative policy of the Trade Union and Labour Relations Act 1974.
Lord Diplock and Lord Cross noted that an illegitimate demand cannot be legitimised by making a simultaneous legitimate demand and presenting both as ‘part of a package deal’.