ECONOMIC DURESS AND ILLEGITIMATE PRESSURE

In Progress Bulk Carriers Ltd v Tube City IMS LLC [2012] EWHC 273, [2012] All ER (D) 122 (Feb) Mr Justice Cooke, in the context of a claim to set aside a contract on the ground of economic duress, affirmed that illegitimate pressure can be constituted by conduct which is not in itself unlawful, although it will be an unusual case where that is so, particularly in the commercial context. He also held that a past unlawful act, as well as a threat of a future unlawful act can, in appropriate circumstances, amount to illegitimate pressure.

The facts

The facts of the case are not immediately relevant to the construction industry and so can be set out relatively briefly. The claimants agreed to charter a vessel to the defendants. The contract of hire did not entitle the claimants to provide a substitute vessel. Subsequently, however, the claimants allocated the agreed vessel to the performance of another contract and then sought to allocate a new vessel to the charter with the defendants. The claimants acknowledged that their allocation of the agreed vessel to another contract was a mistake and initially assured the defendants that they would compensate the defendants for any loss suffered as a result of their failure to provide the contracted vessel.