#6785 - Universe Tankships V. Itwf - Restitution of Unjust Enrichment BCL

Universe Tankships v. International Transport Workers Federation

Facts

The shipowners are a Liberian company. The tankship which they owned, the Universe Sentinel was of 269,092 tons deadweight: the crew consisted in the main of Asians employed at rates of pay substantially less than those upon which I.T.F. insists, and are provided for in what it calls the I.T.F. Collective Agreement. In July 1978, the Universe Sentinel was on time charter to Texaco and arrived on July 17 at the Texaco terminal at Milford Haven to discharge her cargo there. On her arrival the master was handed, by a representative of I.T.F., a copy of a standard form of document headed: "Conditions to be fulfilled before flag-of-convenience vessels can be issued with I.T.F. blue certificates." An I.T.F. blue certificate, though this is nowhere spelt out in the documents, is well understood by shipowners, charterers and shippers and by the constituent trade unions of I.T.F., to exempt a vessel sailing under a flag of convenience from being subject to the blacking policy of I.T.F.

The Universe Sentinel finished discharging on July 18, but because of being blacked by tugboat crews, she was prevented from sailing until July 29, when the blacking was lifted in consequence of a meeting held at the offices of I.T.F. in London on the previous day between representatives of the shipowners and officials of I.T.F. at which the shipowners yielded to the demands of I.T.F. that they should pay to I.T.F. the sum of $80,000 and enter into two agreements with I.T.F., viz., one headed "special agreement" on a standard printed form and the second in typescript ("the typescript agreement").

Of the grand total of $8,280, the sum of $6,480 is attributable to the contribution to Seafarers' International Welfare Protection and Assistance Fund ("the welfare fund"); and this is the sum that the shipowners seek to recover in their appeal to this House.

Holding

Lord Diplock

Economic Duress

My Lords, I turn to the second ground on which repayment of the $6,480 is claimed, which I will call the duress point. It is not disputed that the circumstances in which I.T.F. demanded that the shipowners should enter into the special agreement and the typescript agreement and should pay the moneys of which the latter documents acknowledge receipt, amounted to economic duress upon the shipowners; that is to say, it is conceded that the financial consequences to the shipowners of the Universe Sentinel continuing to be rendered off-hire under her time charter to Texaco, while the blacking continued, were so catastrophic as to amount to a coercion of the shipowners' will which vitiated their consent to those agreements and to the payments made by them to I.T.F. This concession makes it unnecessary for your Lordships to use the instant appeal as the occasion for a general consideration of the developing law of economic duress as a ground for treating contracts as voidable and obtaining restitution of money paid under economic duress as money had and received to the plaintiffs' use. That economic duress may constitute a ground for such redress was recognised, albeit obiter, by the Privy Council in Pao On v. Lau Yiu Long [1980] A.C. 614. The Board in that case referred with approval to two judgments at first instance in the commercial court which recognised that commercial pressure may constitute duress: one by Kerr J. in Occidental Worldwide Investment Corporation v. Skibs A/S Avanti [1976] 1 Lloyd's Rep. 293, the other by Mocatta J. in North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. [1979] Q.B. 705, which traces the development of this branch of the law from its origin in the eighteenth and early nineteenth-century cases.

It is, however, in my view crucial to the decision of the instant appeal to identify the rationale of this development of the common law. It is not that the party seeking to avoid the contract which he has entered into with another party, or to recover money that he has paid to another party in response to a demand, did not know the nature or the precise terms of the contract at the time when he entered into it or did not understand the purpose for which the payment was demanded. The rationale is that his apparent consent was induced by pressure exercised upon him by that other party which the law does not regard as legitimate, with the consequence that the consent is treated in law as revocable unless approbated either expressly or by implication after the illegitimate pressure has ceased to operate on his mind. It is a rationale similar to that which underlies the avoidability of contracts entered into and the recovery of money exacted under colour of office, or under undue influence or in consequence of threats of physical duress.

Commercial pressure, in some degree, exists wherever one party to a commercial transaction is in a stronger bargaining position than the other party. It is not, however, in my view, necessary, nor would it be appropriate in the instant appeal, to enter into the general question of the kinds of circumstances, if any, in which commercial pressure, even though it amounts to a coercion of the will of a party in the weaker bargaining position, may be treated as legitimate and, accordingly, as not giving rise to any legal right of redress. In the instant appeal the economic duress complained of was exercised in the field of industrial relations to which very special considerations apply.

Policy of the Legislature point – Was the duress illegitimate?

My Lords, so far as is relevant to this appeal, the policy of Parliament, ever since the Trade Disputes Act 1906 was passed to overrule a decision of this House, has been to legitimise acts done by employees, or by trade unions acting or purporting to act on their behalf, which would otherwise be unlawful wherever such acts are done in contemplation or furtherance of a dispute which is connected with the terms and conditions of employment of any employees. I can confine myself to the kind of acts and the particular subject matter of the trade dispute that was involved in the instant case, and I use the expression "legitimise" as meaning that the doer of the act is rendered immune from any liability to damages or any other remedy against him in a court of justice, at the suit of a person who has suffered loss or damage in consequence of the act; save only a remedy for breach of contract where the act is done in breach of a direct contract between the doer of the act and the person by whom the damage is sustained.

The statutory provisions in force when the events with which this appeal is concerned took place, and which point to the public policy to which effect ought to be given by your Lordships, are chiefly contained in sections 13, 14 and 29 of the Trade Union and Labour Relations Act 1974.

In extending into the field of industrial relations the common law concept of economic duress and the right to a restitutionary remedy for it which is currently in process of development by judicial decisions, this House would not, in my view, be exercising the restraint that is appropriate to such a process if it were so to develop the concept that, by the simple expedient of "waiving the tort," a restitutionary remedy for money had and received is made enforceable in cases in which Parliament has, over so long a period of years, manifested its preference for a public policy that a particular kind of tortious act should be legitimised in the sense that I am using that expression.

It is only in this indirect way that the provisions of the Trade Union and Labour Relations Act 1974 are relevant to the duress point. The immunities from liability in tort provided by sections 13 and 14 are not directly applicable to the shipowners' cause of action for money had and received. Nevertheless, these sections, together with the definition of trade dispute in section 29, afford an indication, which your Lordships should respect, of where public policy requires that the line should be drawn between what kind of commercial pressure by a trade union upon an employer in the field of industrial relations ought to be treated as legitimised despite the fact that the will of the employer is thereby coerced, and what kind of commercial pressure in that field does amount to economic duress that entitles the employer victim to restitutionary remedies.

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