Times Travel (UK) Ltd v Pakistan International Airlines Corp [2021] UKSC 40

Facts

• Times Travel (UK) Ltd and Pakistan International Airlines Corp were parties to a contractual relationship.
• Disputes arose regarding pressure exerted by one party during renegotiations.
• Issues concerned whether the pressured party entered into a new agreement due to economic duress.
• The new agreement was challenged on grounds that the pressure exerted was illegitimate and vitiated consent.
• The factual controversy centered on the nature of the pressure and available alternatives to the claimant.

Issues

1. Whether economic duress can be established in the absence of bad faith by the party exerting the pressure.
2. Whether lawful act pressure can constitute illegitimate pressure amounting to economic duress.
3. What causation test applies—in particular, whether the claimant must show that 'but for' the pressure, they would not have contracted.
4. How the availability and practicality of alternatives affect claims of economic duress.

Decision

• The Supreme Court clarified that bad faith is not an essential requirement for establishing lawful act economic duress.
• It held that the legitimacy of pressure depends on a contextual analysis, including the motivations and conduct of the party exerting pressure.
• The Court affirmed that economic duress requires proof that the pressure was illegitimate and caused the claimant to enter into the contract.
• The "but for" test applies: claimants must establish they would not have agreed but for the pressure.
• The existence and feasibility of alternative remedies or courses of action are relevant to causation and the assessment of duress.
• The decision provided guidance on the factual and detailed analysis required in such cases.

Legal Principles

• Economic duress invalidates contracts resulting from illegitimate pressure.
• Illegitimate pressure includes both unlawful acts and, in some circumstances, lawful acts that are applied in an illegitimate way.
• Bad faith is not a prerequisite for lawful act duress, but it may be a relevant factor.
• The "but for" causation test applies: the pressure must have caused the claimant to contract.
• The availability of practical alternatives may negate economic duress if the claimant had realistic options.
• The factual context, including motivations, conduct, and documentation, is central to determining illegitimate pressure.

Conclusion

The Supreme Court in Times Travel clarified that economic duress does not require proof of bad faith, and focused on a contextual, fact-specific inquiry into the nature of the pressure and causation. The "but for" test and consideration of practical alternatives are central to the analysis, providing essential guidance for the application of economic duress in commercial negotiations.