Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1981] UKHL 9 (01 April 1981)

Ship owners paid money into a union's welfare fund under threat of their ship being 'blacked' and prevented from sailing. They sued successfully to recover the payment, claiming economic duress. The case established a key test for economic duress.

Facts

The appellants, Universe Tankships Inc of Monrovia, owned the ship ‘The Universe Sentinel’. While it was docked at Milford Haven, the respondent union, the International Transport Workers Federation (ITF), ‘blacked’ the ship. This meant tugs would not service the vessel, preventing it from sailing. The blacking was part of ITF’s policy to improve the poor pay and conditions of crews on ‘flag of convenience’ ships. To lift the blacking and release the ship, the ITF demanded that the owners pay approximately $80,000 in back pay for the crew and also make a payment of $6,480 to the ITF’s Seafarers International Welfare, Protection and Assistance Fund (the Welfare Fund). The owners paid both sums to secure the release of their ship and avoid catastrophic financial loss. They subsequently brought an action to recover the $6,480 paid to the Welfare Fund, on the grounds that it was paid under duress and was recoverable as money had and received.

Issues

The case presented two primary legal issues for the House of Lords to determine:

1. Did the ITF’s threat to black the ship, and the subsequent payment by the owners, amount to economic duress, thereby vitiating the owners’ consent to the payment?
2. If the payment was made under duress, was the ITF’s action protected by statutory immunity under the Trade Union and Labour Relations Act 1974? Specifically, was the demand for a contribution to the Welfare Fund an act done ‘in contemplation or furtherance of a trade dispute’ as defined by section 29(1) of the Act?

Judgment

The House of Lords, allowing the appeal, held that the payment was made under economic duress and was recoverable. Their Lordships were unanimous that the pressure exerted by the ITF was a clear case of economic duress, as it deprived the ship owners of any practical alternative but to comply.

The Nature of Economic Duress

Lord Scarman provided a now-classic definition of the modern doctrine of economic duress, identifying two essential elements:

“It is, I think, already established law that economic pressure can in law amount to duress… there are two elements in the wrong of duress: (1) pressure amounting to compulsion of the will of the victim; and (2) the illegitimacy of the pressure exerted.”

Lord Diplock further clarified that compulsion of the will does not mean the absence of consent, but rather an intentional submission because there is no other practical choice available.

“The classic case of duress is, however, not the lack of will to submit but the victim’s intentional submission arising from the realisation that there is no other practical choice open to him.”

Legitimacy of the Pressure and the Trade Dispute Defence

The central point of disagreement was whether the pressure exerted by the ITF was legitimate. Legitimacy in this context depended on whether the ITF’s actions were protected by the immunity for acts done in furtherance of a ‘trade dispute’ under the 1974 Act. If the act was lawful due to this immunity, the duress could not be proven.

A majority (Lord Diplock, Lord Cross of Chelsea, and Lord Russell of Killowen) concluded that the demand for payment into the Welfare Fund was not connected to the terms and conditions of employment of the ship’s crew. It was a means of imposing ITF policy more broadly and increasing the union’s own funds. Therefore, this specific demand fell outside the statutory definition of a trade dispute. As the demand was not part of a legitimate trade dispute, the pressure applied to enforce it was illegitimate, rendering the resulting payment voidable for duress.

The minority (Lord Scarman and Lord Brandon of Oakbrook) dissented on this point. They argued that the demand for the contribution was sufficiently connected with the primary dispute over terms and conditions of employment and was therefore part of a legitimate trade dispute, affording the ITF immunity.

Implications

This decision is a landmark case in the common law of economic duress. It firmly established that economic pressure, such as a threatened breach of contract or a tortious act, could vitiate a contract or payment. The two-part test articulated by Lord Scarman (‘compulsion of will’ and ‘illegitimacy of pressure’) became the foundational framework for analysing all subsequent economic duress claims. Furthermore, the case provided important clarification on the limits of statutory immunity for trade unions in the UK, holding that demands not directly related to the core subject matter of a trade dispute (such as terms and conditions of employment) may fall outside the scope of legal protection, even if made alongside legitimate demands. The decision highlights the court’s role in policing the boundary between legitimate commercial or industrial pressure and unlawful duress.

Verdict: Appeal allowed. The ship owners were entitled to the return of the $6,480 paid to the ITF’s Welfare Fund.

Source: Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1981] UKHL 9 (01 April 1981)