Dimskai Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152

Facts

  • Dimskai Shipping Co SA operated the vessel Evia Luck.
  • The International Transport Workers’ Federation (ITF), a trade union, demanded increased wages and improved working conditions for the crew.
  • The ITF threatened to blacklist the vessel, which would prevent it from docking and continuing operations.
  • The company faced substantial commercial pressure, as blacklisting would cause major financial losses.
  • Dimskai Shipping agreed to the ITF’s demands, subsequently arguing that the agreement resulted from economic duress.

Issues

  1. Whether the ITF’s threat to blacklist the ship amounted to illegitimate pressure constituting economic duress.
  2. Whether Dimskai Shipping truly lacked a practical choice other than to submit to the ITF’s demands.
  3. Whether a causal connection existed between the threat of blacklisting and Dimskai Shipping’s agreement to the terms.
  4. How far the principles of duress in contract law extend to commercial and industrial pressure.

Decision

  • The House of Lords held that the ITF’s threat to blacklist the ship constituted illegitimate pressure when used to coerce agreement to contractual terms.
  • It was determined that Dimskai lacked a practical and commercially realistic alternative to acceding to the demands, as pursuing legal action was deemed impractical.
  • The court found a direct causal link between the threat and Dimskai’s agreement; the threat was a significant cause of entering into the contract.
  • The decision confirmed that economic duress may vitiate a contract where illegitimate commercial pressure leaves the victim without a practical choice.

Legal Principles

  • Economic duress in contract law requires illegitimate pressure, the absence of a practical choice for the victim, and a causal link between pressure and agreement.
  • The distinction between lawful industrial action and unlawful coercion is central; not all pressure constitutes duress.
  • The availability of theoretical alternatives does not preclude duress if those options are commercially unrealistic or financially unviable.
  • Later cases, such as DSND Subsea Ltd v Petroleum Geo-Services ASA [2000] BLR 530, further emphasized considering the victim’s response and the nature of available alternatives.

Conclusion

The Evia Luck established foundational principles for the doctrine of economic duress in English contract law. The House of Lords ruled that where illegitimate commercial pressure deprives a party of any practical choice and induces contract agreement, the contract may be set aside. This decision remains central to assessing claims of economic duress in commercial contexts.

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