“LAWFUL act duress” has divided opinion among contract lawyers. Some hail its utility in maintaining commercial ethics. Opponents are sceptical about moral crusades, or doubt whether duress can be satisfactorily defined without invoking “unlawfulness”. English law has charted a middle course. The Supreme Court, while confirming the doctrine's existence, has sought to confine it within strict limits: Times Travel (UK) Ltd. v Pakistan International Airlines Corpn [2021] UKSC 40, [2021] 3 W.L.R. 727. Their Lordships disagreed over the correct containment strategy. But we doubt the long-term stability of any compromise position: ultimately the law faces a binary choice between full-fat moralism if lawful act duress is retained, and its outright abolition.
Times Travel arranged travel to and from Pakistan. The defendant was the only airline operating direct flights between Pakistan and the UK. A dispute arose about the airline's non-payment of commissions on ticket sales to travel agents. The airline cut its allocation of flights to Times Travel and threatened not to renew their agency agreement. The airline was contractually entitled to do both of those things. As a condition of a new agency agreement, the airline demanded that Times Travel abandon its claim for unpaid commissions. With its business model almost entirely dependent on retailing the defendant's flights, Times Travel reluctantly agreed. Subsequently however, they sought to avoid the new contract for duress in order to claim the unpaid commissions. Times Travel succeeded before Warren J. but failed in the Court of Appeal. The Supreme Court dismissed their further appeal.
Lord Hodge held (Lords Reed, Lloyd-Jones and Kitchin concurring) that there had been no duress because of the absence of any “reprehensible means … [used] to manoeuvre Times Travel into a position of increased vulnerability” (exploited by demanding waiver of the unpaid-commissions claim). There had been “hard-nosed commercial negotiation that exploited [Pakistan Airlines’] position as a monopoly supplier”. But consistent with English law's refusal to recognise unequal bargaining power as a vitiating factor, that self-interested behaviour had not been “illegitimate” pressure. For different reasons, Lord Burrows agreed that there was no duress. It was on his view crucial that the airline genuinely believed it was not liable to pay the disputed commissions. Had it asserted this negotiating position in bad faith – had the airline's “own subjective perception” acknowledged its liability – Times Travel's duress claim would have succeeded.
Lord Burrows’ judgment contains most of the court's discussion of the “fundamental questions” Times Travel raised about duress (with the other judges’ express agreement). Most fundamentally, whether lawful act duress should be recognised at all. Having answered that affirmatively, Lord Burrows explained why the doctrine needed to be strictly confined and considered how best to do it.
The approval of the doctrine at the highest level marks Times Travel out as a leading case. Yet the approval was curiously muted. Lord Burrows advanced less a positive argument in favour of lawful act duress, more an explanation why, consistent with other doctrines, it could not be abolished. Thus it would be “very odd for the civil law of duress not to include threats of lawful acts when the criminal law of blackmail does so”. Moreover, equity had long avoided contracts obtained by lawful (but illegitimate) threats (i.e. in “actual” rather than the “standard area of ‘relational’ undue influence”). In Lord Burrows's opinion: “now that economic duress has been recognised at common law, there is no reason to hive off those earlier cases from duress by labelling them as cases on undue influence. On the contrary, the underlying element is identical – it is an illegitimate, albeit lawful, threat.”
The place of lawful act duress was assured by these reasons of consistency, reinforced by numerous English decisions or dicta accepting its existence. Lord Burrows reached his decision notwithstanding commentators’ calls to jettison the doctrine (see [83]–[84]): seemingly a Cambridge speciality (see also Morgan, Contract Law Minimalism (2013), 244–45), although the most prominent judicial authority is Australia and New Zealand Banking Group Ltd. v Karam (2005) 64 N.S.W.L.R. 149. Lord Burrows attractively summarised the case for abolition at [82]: “An insistence that the threat must be one to do something unlawful draws a clear line with a standard that is easily understood and can easily be applied.” By contrast, assessing commercial pressure's “legitimacy” notoriously lacks both clarity and ease of application.
Other judges have been more forthright about the merits of lawful act duress. In Al Nehayan v Kent [2018] EWHC 333 (Comm), at [187], Leggatt L.J. reasoned it was “appropriate … to judge the propriety of the defendant's conduct by reference not simply to what is lawful but to basic minimum standards of acceptable behaviour”, intervening (only) against “completely indefensible” conduct. He continued: “no apology is needed for intervening in such cases, as the enforcement of basic norms of commerce and of fair and honest dealing is an essential function of a system of commercial law.”
Unfortunately, the Supreme Court did not discuss this beguiling justification. Compare this with David Richards L.J. [2019] EWCA Civ 828, [2020] Ch. 98, [102]: “Expressed in these general terms, it is difficult to disagree with [Leggatt L.J.'s] sentiments, but the difficulty and uncertainty comes in applying them to particular cases.”
We can infer the Supreme Court's lack of enthusiasm about enforcing “basic norms of commerce” from its extensive consideration of limiting lawful act duress. (The court also, pointedly, disavowed a general doctrine of good faith – such as at [27] (Lord Hodge), [95] (Lord Burrows) – without even citing Leggatt J.'s celebrated exposition in Yam Seng v International Trade Corpn [2013] EWHC 111 (Q.B.).) Lord Burrows identified at [93] the “significant danger” that lawful act duress could undermine English commercial law's “reputation for certainty and clarity”. He emphasised at [97] that “in general, a demand motivated by commercial self-interest is justified. If that were not the case, normal commercial bargaining would be seriously disrupted”. Lord Hodge similarly stressed that lawful act duress will be “very rare” and “extremely limited” in the cut-and-thrust of commercial negotiations. Both judgments are characteristically sensible and forceful. But their Lordships disagreed how to define the exceptional cases when the defence might succeed.
As noted, for Lord Burrows (as for the Court of Appeal) the critical question was whether the party demanding that the other (weaker) party abandon some claim against it actually bona fide believed that the claim was legally unsound. Bad faith would raise the duress defence. The majority judgment rejected this “bad faith” test. It would extend duress, unsettling commercial transactions, in a way “difficult to anchor … in any recognised legal principle” (see [49]). The majority preferred to limit lawful act duress to two well-established categories of “highly reprehensible” behaviour (see [4]). First, threatening to report a crime committed by the claimant – where the analogy with blackmail is strong. Second, forcing waiver of a claim against the defendant by deliberately manoeuvring the claimant into a position of vulnerability “by means which the law regards as illegitimate”. However, responding directly to Lord Hodge's judgment, Lord Burrows robustly defended bad faith for providing “a limited but clear and workable boundary” and criticised the majority's own pivotal concept of “reprehensible” or “illegitimate” manoeuvring as unclear and uncertain (see [133]–[135]).
Each makes valid, indeed formidable, criticisms. If not quite a “circular firing squad”, the judgments reciprocally inflict serious damage on the claimed determinacy of both the rival tests. For ultimately, we suggest, no “clear and workable boundaries” exist. The law of contract has been here before. Earlier attempts to control economic duress using “overborn will”, “vitiated consent” and (latterly) a higher threshold for demonstrating causation have been abandoned. Courts have acknowledged that a “plausible-sounding but inscrutable expression serves only to conceal a discretion” (Birks, “The travails of duress” [1990] L.M.C.L.Q. 342). The latest attempt to impose bright-line rules on the intractable question of “illegitimate pressure” is also doomed to unravel. When traversing “shifting sands” (cf. Lord Burrows, at [126]), it is futile to draw a line in them. Inevitably, the majority's preferred line in the sand will be contested in future litigation, and likely blurred or erased as courts condemn sufficiently “reprehensible” behaviour outside the strict categories.
At [94], Lord Burrows firmly rejected counsel's suggested approach of openly balancing a “range of factors” in lawful act duress, by express analogy with the illegality defence following Patel v Mirza [2016] UKSC 42, [2017] A.C. 467. His Lordship noted that courts had previously employed “covert reasoning” to circumvent the “unsatisfactory rules” on ex turpi causa – rules which Patel v Mirza had sensibly “cast aside”. Yet Times Travel's supposed bright-line rules on lawful act duress face a similar danger of covert manipulation in persuasive cases (or by persuadable judges). Just as in Patel v Mirza, the courts may ultimately have to consider abandoning artificial limits on an inherently indefinable doctrine. The question of abolishing lawful act duress altogether (not a serious option for the illegality defence in Patel v Mirza) would then need to be faced afresh.
