Dimskal Shipping Co SA v International Transport Workers’ Federation, The Evia Luck [1991] 3 WLR 875, 883

KEY POINTS

• A contract induced by duress is voidable by the innocent party. One type of duress is unjustified economic pressure, which includes the "blacking" (refusing to allow docking) or threat of the blacking of a ship. 

• Economic pressure can be considered duress if it can be characterized as unlawful and served as a "but for" factor in the claimant's decision to engage into a contract.

FACTS

• The respondent owned the vessel known as Evia Luck, which was registered in Panama and employed a crew from Greece and the Philippines under conditions that the federation considered subpar. The appellant federation was a trade union that sought to prevent the use of low-cost labor on ships with "flags of convenience."

• The federation ordered a work stoppage (blacked the ship) when the Evia Luck berthed in a Swedish port by persuading local workers not to load or assist the ship until the owners agreed to particular terms. These requirements included paying the federation back for the crew's previous salary, having the crew sign new contracts that adhered to federation-approved terms, and paying into the federation's welfare fund.

• The contracts that came about as a result of the federation's efforts specified that English law applied to them. The owners appealed the Court of Appeal's ruling that ruled the agreements between the federation and the owners illegal and ordered the federation to pay the owners $111,743 plus interest.

JUDGEMENT

• Appeal dismissed.

COMMENTARY

• This case serves as an example of how the legal principle regarding economic pressure as duress can be applied in practice, especially in cases involving labor unions, contractual negotiations, and international aspects of governing law.

ORIGINAL ANALYSIS

• Defendant threatened to refuse to let Plaintiff’s ship dock unless it entered into an ITF contract with its workers. Plaintiff sought a declaration that the contracts were voided.

• HL held that the contracts were voided due to economic duress. 

Lord Goff

• Economic pressure can amount to economic duress, provided the pressure is illegitimate. It is not a good test to ask whether Plaintiff has been “coerced” (see Atiyah).

• Under English law “blacking” (refusing to allow docking) is illegitimate. If an action is legitimised by statute, then it cannot be illegitimate. The illegitimate pressure must be a “significant cause” of Defendant’s act e.g. agreeing to new contract. 

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