The Supreme Court curtails the scope of economic duress
The UK’s recent Supreme Court judgment in Pakistan International Airline Corp v Times Travel (UK) Ltd  UKSC 40, establishes the existence of and test for economic duress for the first time.
The Court’s admirably clear judgment rejected the Respondent’s argument that the doctrine should be abolished and defined its essential elements, identifying just two circumstances where economic duress has applied to date: exploitation of knowledge of criminal activity by the claimant and using illegitimate means to manoeuvre the claimant into a position of weakness to force it to waive its claim. The Court made clear that the doctrine should be applied restrictively and rarely.
The hearing featured an intervention by the All Party Parliamentary Group on Fair Business Banking (APPG) to explain its experience of bank customers being placed under lawful but illegitimate pressure. It advocated a restatement of the doctrine based on the principle of good faith. With the narrowing of the doctrine an economic duress claims will be harder to win than ever before for bank customers. This reinforces the need for greater regulatory protection for bank customers, especially small and medium sized businesses.
In this webinar, Philip Shepherd QC (Chambers of Philip Shepherd QC) and Thomas Roe QC (3 Hare Court), the lead advocates before the Court for the Appellant and Intervener respectively, analysed the decision and its implications. Ned Beale of Hausfeld chaired.