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Nigel Jones QC and Tom Bell acted for Pakistan International Airlines Corporation in their successful appeal against the judgment against them by Warren J. The Court of Appeal (David Richards, Moylan and Asplin LJJ) has allowed PIAC’s appeal against the judgment in which Warren J had set aside an agreement between the airline and a UK travel agent on the ground that it was procured by economic duress.
The central issue under appeal was whether the doctrine of economic duress might in principle apply if the act, which the defendant had threatened to carry out if the claimant did not enter into the agreement, was entirely lawful.
In a unanimous decision (David Richards LJ giving the leading judgment), the Court of Appeal held that the doctrine
“does not extend to the use of lawful pressure to achieve a result to which the person exercising pressure believes in good faith it is entitled, and that is so whether or not, objectively speaking, it has reasonable grounds for that belief.”
In this regard, the Court declined to follow the approach suggested by Leggatt LJ in Al Nehayan v Kent to transpose into objective terms the elements of the offence of blackmail.
Underlying the Court’s reasoning was a concern to inject clarity and certainty into the law of contract. Its view was that it was not for the common law to rebalance the relationship between parties of unequal bargaining strength by undermining contracts brought about as a result of pressure that only the stronger party could exert. As Asplin LJ pointed out in a short concurring judgment, “…it is not appropriate to develop the law of economic duress in a way which would fetter the lawful use of a monopoly position.”
This decision is likely to prove the leading case on the subject.
The judgment can be found here.
Nigel Jones QC and Tom Bell (instructed by James Sherratt of Farani Taylor solicitors) acted for the successful appellant.
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