Universe Tankships v. ITWF (1982) — Economic Duress
Author: Gulzar Hashmi Location: India Publish Date: 26 Oct 2025
Quick Summary
ITWF “blacked” the claimant’s ship at Milford Haven, stopping it from leaving. To free the ship, the owners signed new employment terms and paid $6,480 to a welfare fund. They later sued to get the money back, saying they had no real choice. The House of Lords agreed: this was economic duress. The pressure was illegitimate and left no reasonable alternative. The payment was recoverable.
Issues
- Were the new contracts and the $6,480 payment made under economic duress?
- Did the shipowners have any reasonable alternative to paying/signing at the time?
Rules
- Economic Duress: Illegitimate pressure + no reasonable alternative + causation (the pressure induced consent) + prompt steps to avoid once the duress ends.
- Where these are proved, the contract or payment is voidable and money can be recovered.
Arguments
Appellant / Claimant (Shipowners)
- Pressure was illegitimate; ship was held to ransom.
- No reasonable alternative: injunction unlikely; vessel needed urgently.
- Payment made under compulsion; promptly sought recovery when free.
Respondent (ITWF)
- Union action was lawful/immune; payment was voluntary.
- Owners could have sought legal relief or waited.
The House of Lords (majority) held for the shipowners. The claimed immunity failed. The owners were in a situation of extreme commercial necessity; they reasonably believed an injunction would not be granted in time. The blacking would not be lifted unless payment was made. The $6,480 was paid under economic duress and was recoverable.
Ratio Decidendi
Economic duress exists where pressure is illegitimate and leaves the victim with no practical alternative. If the pressure causes the agreement or payment, and the victim acts promptly to unwind it once free, the court can set aside the transaction and order restitution.
Why It Matters
- Clarifies the modern test for economic duress in commercial settings.
- Shows that hard bargaining is fine, but illegitimate pressure is not.
- Guides exam answers: apply the four-part analysis (illegitimacy, alternatives, causation, prompt protest).
Key Takeaways
| Do | Avoid |
|---|---|
| Document advice received and time pressure. | Assuming all union/commercial pressure is duress. |
| Show lack of realistic legal remedy in time. | Delaying protest after pressure lifts. |
| Prove causation: payment because of the threat. | Relying on mere “hard bargaining” arguments. |
Mnemonic + 3-Step Hook
Mnemonic: “ILLEGIT PRESSURE? NO CHOICE.”
- Illegitimate? Is the pressure wrongful, not just hard bargaining?
- No Choice? Were realistic legal/commercial alternatives absent?
- Undo Fast: Did the victim act promptly once free?
IRAC Outline
Issue
Were the new terms and $6,480 payment obtained by economic duress?
Rule
Economic duress = illegitimate pressure + no reasonable alternative + causation + prompt avoidance.
Application
Ship blacked; release conditioned on payment; injunction prospects minimal; extreme commercial need to sail. Pressure induced payment; owners later sought recovery quickly.
Conclusion
Payment recoverable; union’s claimed immunity fails; economic duress established.
Glossary
- Blacking
- Industrial action preventing a ship’s movement or services.
- Illegitimate Pressure
- Pressure the law condemns (e.g., unlawful threats or bad-faith leverage).
- Restitution
- Recovery of money/benefit transferred under duress or other vitiating factor.
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