The Supreme Court of England on Wednesday issued a verdict in favour of Pakistan International Airlines (PIA) in an economic duress case filed by a Birmingham-based travel agency.
The issue in this appeal was whether, and if so in what circumstances, a party can set aside a contract on the ground that it was entered into as a result of the other party threatening to do a lawful act.
The case was heard by President of the UK’s apex court Lord Reed, Deputy president Lord Hodge, Lord Lloyd-Jones, Lord Kitchin and Lord Burrows. The hearings of the case were held on November 2 and 3 last year, with the judgment issued on August 18 (today).
Times Travel (TT), a travel agency, and PIA signed a contract with former giving the right to sell plane tickets as an agent.
A dispute arose in 2011 and 2012 when certain travel agents, including TT, alleged that PIAC had not been paying them certain commission payments. Claims were brought to recover the unpaid commission. Under pressure from PIAC, TT did not join those claims.
However, in September 2012 PIAC cut TT’s normal fortnightly ticket allocation from 300 to 60 tickets, as it was entitled to do, and gave notice that it would terminate their existing arrangement at the end of October 2012.
This would have put TT out of business and so on 24 September 2012 TT agreed to accept new terms by which it waived any claims it might have for the previously unpaid commission.
TT subsequently brought a claim against PIAC for the unpaid commission. It argued that it could rescind the New Agreement for lawful act economic duress.
The trial judge agreed but also found that PIAC had genuinely believed that the disputed commission was not due. The Court of Appeal allowed PIAC’s appeal as PIAC had not acted in bad faith in that sense.
Lord Hodge holds that TT cannot rescind the New Agreement. PIAC giving notice that the previous contract would be terminated and cutting TT’s ticket allocation was not reprehensible conduct in the sense used in the case law.
Lord Burrows agrees with Lord Hodge that the appeal should be dismissed but disagrees on what is meant by illegitimate threats in relation to economic duress.
“On the facts of this case, TT’s claim for lawful act economic duress fails because PIAC genuinely believed it was not liable for the unpaid commission,” the Supreme Court said in the ruling.
In May this year, a court in the British Virgin Island has announced a verdict in favour of Pakistan in a case related to Reko-Diq, district of Balochistan famous for its mineral wealth, including gold and copper.
Following the historic legal victory, Pakistan International Airlines has again received ownership of its hotels located in the US and France and other properties.
