Whither Economic Duress? Reflections on Two Recent Cases

Abstract

From its rather tentative and extremely recent beginnings,' the law relating to economic duress has developed at a relatively rapid pace during the last decade or so. We have had a series of decisions from various courts and jurisdictions2 which, collectively at least, affirm the existence of the doctrine in English law. The pronouncements at the highest levels, however,3 have not purported to be definitive, and, as we shall see, have certainly not aided in a clarification and systematization of the doctrine of economic duress.4 The two recent decisions, which are the subject of the present comment, have merely underscored the very urgent need for a bolder and more definitive approach toward this dynamic area of the common law Since the factual nature of the doctrine is of special importance, it is appropriate to begin with the essential facts of each case. The first, Vantage Navigation Corporation v Suhail and Saud Bahwan Building Materials LLC, (The 'Alev'),5 a decision by Hobhouse, J., concerned plaintiff shipowners who had brought an action against the defendant endorsees of the bill of lading under the following circumstances. The plaintiffs had time chartered their vessel to third parties who, as it turned out, were financially unsound, ultimately declaring themselves bankrupt; only part of the hire had in fact been paid. The plaintiffs then attempted to recoup their losses by renegotiating with the various bill of lading holders, of which the defendants, of course, were one. The plaintiffs adopted this course of action even though they were nevertheless legally bound to carry the cargo to destination as freight had been prepaid with regard to the bills of lading. The plaintiffs' basic approach was to 'seek' financial assistance, failing which they intimated that the voyage to the various destinations could not be completed. It is of significance to note that, although the other bill of lading holders paid the plaintiffs various sums of money, the defendants initially stood their ground6 all this despite the fact (and an important one at that) that the delay in delivering the cargo was 'seriously dislocating' the defendants' business.7 The plaintiffs, however, persisted in their stand, clearly threatening the defendants (as Hobhouse J. equally clearly found),8