Case No: 2011-851
Neutral Citation Number: [2012] EWHC 273 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 17/02/2012

Before :

THE HON MR JUSTICE COOKE
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Between :

	Progress Bulk Carriers Limited	Claimant	
			
	-	and –
		
	Tube City IMS L.L.C.	Defendant	

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Mark Jones (instructed by Marine Law Solicitors Limited) for the Claimant
Paul Henton (instructed by Reed Smith LLP) for the Defendant

Hearing date: Thursday, 9th February and Friday 10th February 2012
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Judgment
The Hon. Mr Justice Cooke : 
1.	This is an appeal under section 69 of the Arbitration Act 1996 from a majority award dated 10th June 2011, permission having been given by Burton J on 14th October 2011.  The point of law is expressed thus:-
“On the basis of the findings of fact in the Award and Reasons, was the Settlement Agreement made between the parties on 28th April 2009 voidable for duress, and, in particular did [the owner’s] conduct amount to the “illegitimate pressure” required to establish duress in law?”

The Facts found in the Award and Reasons
2.	The essential facts as found by the Arbitrators are fairly simply stated.  The claimants, who were the disponent Owners of the vessel Cenk Kaptanoglu (hereafter, the “Cenk K”) (the Owners), concluded a charter on amended Gencon form with the respondents (the Charterers) for carriage, on that named vessel, of a cargo of shredded scrap from the Mississippi River to China.  The charter did not give any right to substitute the vessel.  The agreed laycan was 15th-21st April 2009.  The identity of the performing vessel was important to the Charterers or, more particularly, to their receivers, whose approval was required by the terms of the Charterers’ sale contract to them.  That sale contract dated the 16th January 2009 provided for a final shipment date of 30th April 2009.  
3.	The charter was concluded on the 2nd April 2009 but from 3rd April onwards the Owners indicated they would like to substitute the Cenk K with another vessel with later laycan.  On 7th April, without any response from the Charterers to a suggestion made the previous day of an unnamed substitute with laycan of 15th-24th April, the Owners fixed the Cenk K to another charterer (referred to in the majority reasons as Daewoo) without informing the Charterers.  On the 15th April, the Owners stated that they intended to perform the voyage with a possible vessel substitution with laycan 15th-24th April, whilst Charterers were pressing for the contracted vessel, stating that they had barges waiting with the cargo to be loaded.  Any substitution, they said, was strictly subject to their own and the receiver’s approval.
4.	On the 16th April, the Charterers discovered that the Owners had chartered the Cenk K to Daewoo.  The Arbitrators found that whilst the Charterers may have agreed in principle that the Owners could make a substitution, they did not agree that the Cenk K could be switched to Daewoo before a suitable substitute had been found and approved by their receivers.  The Owners were in repudiatory breach of the charter, but the Charterers did not accept that breach as terminating the contract, which therefore remained alive, although there was by this time no realistic chance of fulfilment by the named vessel which was loading elsewhere, nor of making the agreed laycan.
5.	On the 18th April, the Owners conceded to the Charterers that they had made a mistake and said they would find an alternative vessel to load between the 27th and 30th April and that they would compensate the Charterers for all damages resulting from their failure to provide the contracted vessel, the Cenk K.  
6.	The Arbitrators found that the Charterers reasonably relied upon these assurances and did not seek to find an alternative vessel elsewhere.  On the 23rd April, the Owners proposed the Agia as a substitute performing vessel with an ETA of 7/8th May. On the following day, which was a Friday, the Charterers passed on the details of the Agia to their buyers, the receivers, for consideration, seeking to obtain an extension of time from the receivers for shipment from 30th April to 15th May, as well as substitution of the vessel.
7.	On Monday 27th April, the receivers stated that they would agree to extend the shipment date to 15th May but only on condition that the purchase price was reduced by $8 per metric ton.  The Charterers relayed this to the Owners, holding them responsible for the $8 per metric ton loss which they would suffer, claiming, in addition, barge demurrage and interest in respect of the delay. They pointed out that the deal with the receivers was the best that could be done in the circumstances, since selling elsewhere would result in a much greater loss as the market had moved downwards by more than the $8 differential sought by the receivers. The Arbitrators did not find that the parties had agreed a variation of the charter at this point, though there was clearly an in principle agreement to the Agia and to an extension of the shipment date.
8.	On the 27th April, the Owners replied stating that they would grant a $1 per metric ton discount on the freight rate. The Charterers protested at this, since they said they had no opportunity to negotiate a better deal with their receivers and, the same day, the Owners offered a $2 per metric ton discount on the freight. It appears from the dissenting award of one of the Arbitrators that a figure of $6 was then mentioned by the Charterers, plainly as a result of further negotiation with the receivers, who eventually agreed to accept a $6 discount on the price as compensation for the late shipment on a different vessel from that originally agreed.  This the Owners would not accept and later that day, the Charterers informed the Owners that they accepted the Agia as the performing vessel with a $2 discount for the cargo but reserved their rights in respect of all claims for damages arising out of the breach of the 2nd April charter party.
9.	On the 28th April, the sale contract with the receivers was amended with the diminished price for the cargo and a later shipment date of “on or before 15th May 2009”.  
10.	On the same day, the Owners told the Charterers that there was no point in them offering a $2 discount if the Charterers still reserved their right to make claims against them.  The Arbitrators found, in accordance with the evidence of the Owners’ representative, that the Owners made a “take it or leave it” offer.  The Owners required acceptance of the Agia, clean, with a $2 reduction per metric ton on the freight and the agreement of the Charterers to waive all claims for loss and damage arising out of the nomination of a substitute vessel outside the contractual laycan and its late arrival. This was plainly inconsistent with their prior assurances of finding a substitute vessel and compensating the Charterers for the loss and damage caused by their repudiatory breach of charter.
11.	The Charterers, in reply, said “given the exigencies of the circumstances and our urgent need to mitigate our losses and accommodate our customer in China, we are forced to accept the Owners terms under protest.”
12.	In the arbitration, the Owners argued that the Charterers had failed to mitigate by not going out into the market and obtaining another vessel.  The Arbitrators found as a fact that there was no failure to mitigate by the Charterers because, from the 16th April onwards, the Owners were assuring them that they would be in a position to nominate a substitute shortly.  The Arbitrators found that the Charterers were not only entitled to believe that a vessel would be forthcoming but, as the days passed, they were “increasingly driven into a corner” from which they could not escape.  It was not until the 23rd April that the substitute vessel, the Agia, was proposed and the Arbitrators found that, by the 28th April, the Charterers had no choice but to accept the Owners’ full and final, take it or leave it proposal.  The Arbitrators made this finding both in the context of the argument about failure to mitigate but also, expressly, in the context of the argument about economic duress.  The Charterers had been “lulled into a false sense of security” by the Owners and had promptly consulted with their buyers, the receivers, and responded to the Owners, following the Owner’s suggested substitution of the Agia on the 24th April.  When the Charterers, on Monday the 27th, passed on the receiver’s agreement, they expected the Owners to stand by their earlier assurances and honour the “commitment to compensate” which had been given by them.   By the next day, the 28th April, the Charterers had run out of time, and there was nothing else they could do if they were to fulfil their sale contracts.
The Arbitrators’ Conclusion of Law
13.	The majority of the Arbitrators held that the Charterers’ agreement, under protest, to waive all their claims for damages in respect of the repudiatory breach, was procured by economic duress.  The key paragraphs of the reasons are paragraphs 8-10 which must, as both parties accept, be read “in full in a fair and reasonable way and should not be subjected to minute textual analysis.  The courts do not approach awards with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults or with the object of upsetting or frustrating the process of arbitration”.  (see paragraph 16 of Pace Shipping Co. Ltd v Churchgate Nigeria Ltd [2010] 1 Lloyds Law Rep page 183 and the Elbrus [2010] 2 Lloyds Law Rep 315).
14.	Whilst the reasons do not state in terms what test was applied by the Arbitrators in coming to the conclusion that the settlement agreement was voidable for economic duress, both parties accepted that the point had been fully argued before them, with reference to numerous authorities and that the Arbitrators’ attention was directed to the need for “illegitimate pressure” (hence the terms of the question of law posed for the court).  The one authority to which reference was made by the Arbitrators in their reasons is Huyton v Cremer [1999] 1 Lloyds Rep 620, a decision of Mance J (as he then was) in which he set out the requirements for economic duress, at page 630 he said it was established law that economic pressure could amount to duress and referred to two basic ingredients for duress of that character.  He identified those ingredients as first, “illegitimate pressure by one party”, and secondly the requirement that this should be “a significant cause inducing the other party to act as he did”.  There was dispute between the parties in that case as to whether there were other ingredients and as to what those ingredients connoted and whether there was an area of flexibility.  In order for the Owners to succeed on this appeal, they must show (as they accepted they had to) that the Arbitrators applied the wrong test.  I shall return to that later, after detailing the points made by the Arbitrators.  
15.	The Arbitrators at paragraph 8 concluded that the Owners were in renunciatory and/or repudiatory breach of charter, a matter which they described as “straightforward”.  They went on to say that the repudiation was “never formally accepted as such by the Charterers” and so “technically the charter remained alive, although physically incapable of performance.”  That was the starting point for their reasoning, since without that none of the later events would have occurred at all.  
16.	The Arbitrators then rejected the argument of the Owners that the Charterers could have accepted the Agia as a substitute, on the terms of the original charter, whilst reserving their rights to claim damages at a later date.  The Arbitrators said that this submission was unconvincing and unrealistic and drew attention to the Owners’ “take it or leave it” offer on the 28th April which supported their conclusion that the Owners would not have been prepared to proceed on this basis.  The Owners, in the circumstances in which they had put the Charterers, were in a position to “extract a favourable settlement”.  
17.	At paragraph 10 of the Reasons, the majority of the Arbitrators said that consideration of that issue drove them to the heart of the Charterers’ case on economic duress.  They indicated that they had been referred to numerous cases on the subject and the way the law had developed.  They then said this:-
“Clearly there was nothing unlawful in the sense of illegal or criminal in the position the Owners’ representative adopted. However on the facts as we have found them to be we were left in no doubt that but for the pressure which the Charterers’ representative was under on 28th April, with barges clocking up demurrage in the Mississippi and with a serious drop in the price of scrap such that his buyers/receivers were very unlikely to agree yet another variation of the sales contract without extracting an even fiercer price reduction, he would never have agreed to take m.v. Agia on the terms he did. Indeed by this very late stage he really had no reasonable alternative but to accept the vessel on the "take it or leave" it basis it was offered. We do so find, although we accepted Charterers' submission that there was almost certainly no need to have a "no reasonable alternative” ingredient in the mix (see Huyton v Cremer [1999] 1 Lloyds Rep 620). Accordingly we have no hesitation in concluding that the Charterers’ representative agreement, albeit under protest, to a full and final settlement was voidable for economic duress. Indeed, having lulled the Charterers’ representative into a full sense of security when he was in fact being quietly manoeuvred in a corner, we do not think it was appropriate or open for the Owners’ to then produce their “take it or leave it” rabbit out of the hat.”
18.	On a fair reading of the Award and the Reasons, the Arbitrators were exonerating the Owners from illegal or criminal conduct, but they had already found that the Owners were in repudiatory breach of charter. Thus when they referred to the problems faced by the Charterers because loaded barges were clocking up demurrage in the Mississippi and the price of the cargo had dropped so that their buyers/receivers would not agree to any further variation of the sales contract without a further significant price reduction, it is obvious that the Charterers were in this position because of what the Owners had done.  But for the situation in which the Charterers found themselves, consequent upon the Owners’ breach and the events that followed, the Charterers would not have agreed to take the Agia on the terms upon which the Owners insisted, namely waiver of the right to claim for the original breach.
19.	The Arbitrators had already drawn attention at paragraph 6 of the award to “the all important concession” made by the Owners’ representative in his evidence that the offer of the 28th April was made on a “take it or leave it basis”.  The Arbitrators, whilst saying that it was not necessary for them to find that the Charterers had no reasonable alternative but to accept the vessel on that basis, found that in fact they did have no reasonable alternative.  The last sentence of paragraph 10 focuses on the Owners’ conduct following their repudiatory breach.  Having earlier described their conduct as having the effect of “driving the Charterers into a corner from which they could not escape”, here they referred to the Owners “lulling the Charterers into a false sense of security” whilst “quietly manoeuvring them into a corner”.  It was the combination of the repudiatory breach and the assurances given thereafter about providing another vessel and compensating the Charterers for any legal costs which created the pressure upon the Charterers to accept the “take it or leave it” offer, because they had no reasonable alternative in the light of the sale contract which they had concluded and already varied. 
20.	The Arbitrators found that it was not “appropriate or open” for the Owners to produce their “take it or leave it” rabbit out of the hat on the 28th April, having put the Charterers into the position they were in by reason of their breach and subsequent conduct.  It is plain that, in using the words “appropriate or open”, the Arbitrators considered that the pressure put upon Charterers was “illegitimate” when making that “take it or leave it” offer in the circumstances which they had brought about.  A synonym for the word “open” in that final sentence of paragraph 10 is “legitimate”.  
The Law
21.	The Arbitrators were apparently shown a large volume of authorities, as was I.  The Owners’ primary submission was that economic duress only operated if the victim was subjected to pressure by unlawful action on the part of the perpetrator.  All the reported cases of economic duress, it was said, involved a minimum requirement of unlawfulness and even that was not necessarily enough.  Thus, some threats to break a contract, if made bona fide, in the reasonable belief of entitlement to carry out the threats, have been found not to amount to the pressure required to constitute economic duress.  Threats to carry out acts, which are in themselves lawful, can be unlawful where they constitute blackmail, but there is still the element of unlawfulness in the pressure.  
22.	The Owners’ alternative submission was that, if the conduct which was lawful could amount to the requisite “illegitimate pressure”, the bar had to be set very high and pressure should only be branded as “illegitimate” where it provoked such a sense of moral outrage and appeared so unconscionable or so manifestly beyond the norms of ordinary commercial practice that it could be considered on a par with conduct that the law does expressly recognise as illegal or criminal.  
23.	The parties agreed that there are two necessary elements in economic duress.  The first is “illegitimate pressure” and the second is “causation” in the sense that the illegitimate pressure must cause the pressurised party to enter into the contract that he seeks to avoid.  A third element, said to be in doubt, by the Owners, is whether the victim must show that he had no reasonable alternative but to agree to the contract, or whether this is merely evidence of the causative link between the illegitimate pressure and the contract in question.
24.	I do not need to go through the line of authorities to which I was referred.  The decision of the Privy Council in Pao On v Lau Yiu Long [1980] AC 614 set out the law as then understood, requiring that economic duress should “amount to a coercion of will, which vitiated consent.”  The payment made or the contract concluded could not be a voluntary act, if the doctrine was to apply.  The law has moved on since then but Lord Scarman, page 365 C-E said it was material to enquire “whether the person alleged to have been coerced did or did not protest; whether, at the time he was allegedly co-erced into making the contract, he did or did not have an alternative course open to him, such as an adequate legal remedy; whether he was independently advised; and whether after entering the contract he took steps to avoid it.”  All those matters were said to be relevant in determining whether the victim had acted voluntarily or not.  
25.	In 1983, the House of Lords had cause to consider the question of economic duress where a ship was blacked by the ITF and the question arose as to whether or not a tort had been committed and/or whether the Trade Union and Labour Relations Act 1974 exempted the union from liability for any such tort.  In Universe Tankships v ITF [1983] 1 AC 366, at 383-387, Lord Diplock, with whom the majority agreed, considered the ambit of economic duress in its then state, referring to the need for a coercion of the will, as opposed to a deflection of it, which is the terminology usually used today.  At page 385B, however, he stated that the form that the duress takes may or may not be tortious.  The use of economic duress is not a tort in itself, though the particular form that some economic duress takes may amount to a tort.  The remedy to which economic duress gives rise is not an action for damages but an action for restitution of property or money extracted under such duress and the avoidance of any contract that is induced by it.  In some cases the economic duress may amount to a tort, in which case the restitutionary remedy for money had and received is merely an alternative remedy to an action for damages in tort.  The two are however distinct.
26.	As far back therefore as 1983, the highest court in the land recognised that economic duress could arise where what was being done was not in itself an actionable wrong, although in that case it was accepted that, subject to the issue of immunity from suit of trade unions for acts done in contemplation of a trade dispute and/or the policy underlying that immunity, there was economic duress.  The legitimacy of the pressure had therefore to be determined in the context of that policy.  
27.	In CTN. Cash & Carry Ltd v Gallaher Ltd [1994] 4 AER 714, the Court of Appeal had cause to consider the width of the doctrine of economic duress.  Steyn LJ, in a judgment with which the other Lords Justices agreed, stated, as has been stated many times before and since, that other authorities illustrate developments in this branch of the law but that it was necessary to focus on the distinctive features of the individual case and then to ask whether it amounted to a case of duress.  He said that there were three characteristics in that case which assisted the court in its decision.  First, the dispute did not concern a protected relationship and did not arise in the context of dealings between a supplier and a customer.  It arose in the context of arms length commercial dealings between two trading companies.  Secondly, the defendants in that case were in law entitled to refuse to enter into any future contracts with the plaintiffs for any reason whatsoever, or for no reason at all.  Because a decision not to deal with the plaintiffs in the future would have been lawful, it was also lawful for them to threaten the plaintiffs that they would no longer grant them credit, when demanding payment of an invoice which was alleged to be due.  The third, and critically important characteristic was that the defendant bona fide thought that the sum was owed and that therefore, when exerting commercial pressure in order to obtain payment, were not motivated by malice or anything which could be described as “bad faith”.
28.	Both parties relied upon that decision.  The Owners laid stress on the fact that the defendants in CTN Cash were entitled to refuse to enter into any future contract with the plaintiff and argued that, in the present case, although they had breached the charter party, the Owners were not bound to enter into any variation or any new contract with the Charterers at all.  Hence they were, it was said, entitled to insist on any terms that they wished and to drive as hard a bargain as they liked in the context of the state of the market and the Charterers’ commercial predicament.  Furthermore, the Owners said that there was no finding by the Arbitrators of bad faith against them.  The Charterers however, pointed to the fact that the Owners’ course of conduct began with an unlawful act, namely the repudiatory breach of charter, and that all their actions thereafter were coloured by that.  Whether or not there was a further binding agreement to substitute the Agia with different laycan on 27th April, which the Owners then threatened to break by insisting on a waiver of liability of claims in respect of their repudiatory breach, or whether there were merely assurances given that a substitute vessel would be provided and full compensation paid, it was the unlawful act of the Owners in repudiating the charter, coupled with their later actions which were tainted by that, which drove the Charterers into the position where they had no alternative but to waive their claims on the 28th April. Furthermore, the Charterers pointed to the findings of the Arbitrators to which I have already referred, in which the Owners’ course of conduct was described in terms of manoeuvring the Charterers into a corner before producing the take it or leave it offer.  
29.	Each case however turns on its own facts.  More important than the facts of CTN Cash are the statements of principle which appear at pages 718e-719B.  I set out the relevant passage in full:-
“I also readily accept that the fact that the defendants have used lawful means does not by itself remove the case from the scope of the doctrine of economic duress. Professor Birks, in An Introduction to the Law of Restitution (1989) p 177, lucidly explains: 
‘Can lawful pressures also count? This is a difficult question, because, if the answer is that they can, the only viable basis for discriminating between acceptable and unacceptable pressures is not positive law but social morality. In other words, the judges must say what pressures (though lawful outside the restitutionary context) are improper as contrary to prevailing standards. That makes the judges, not the law or the legislature, the arbiters of social evaluation. On the other hand, if the answer is that lawful pressures are always exempt, those who devise outrageous but technically lawful means of compulsion must always escape restitution until the legislature declares the abuse unlawful. It is tolerably clear that, at least where they can be confident of a general consensus in favour of their evaluation, the courts are willing to apply a standard of impropriety rather than technical unlawfulness.’ 
And there are a number of cases where English courts have accepted that a threat may be illegitimate when coupled with a demand for payment even if the threat is one of lawful action (see Thorne v Motor Trade Association [1937] 3 All ER 157 at 160-161, [1937] AC 797 at 806-807, Mutual Finance Ltd v John Wetton & Sons Ltd [1937] 2 All ER 657, [1937] 2 KB 389 and Universe Tankships Inc of Monrovia v International Transport Workers Federation [1982] 2 All ER 67 at 76, 89, [1983] 1 AC 366 at 384, 401). On the other hand, Goff and Jones Law of Restitution (3rd edn, 1986) p 240 observed that English courts have wisely not accepted any general  principle that a threat not to contract with another, except on certain terms, nay amount to duress. 
We are being asked to extend the categories of duress of which the law will take cognisance. That is not necessarily objectionable, but it seems to me that an extension capable of covering the present case, involving 'lawful act duress' in a commercial context in pursuit of a bona fide claim, would be a radical one with far-reaching implications. It would introduce a substantial and undesirable element of uncertainty in the commercial bargaining process. Moreover, it will often enable bona fide settled accounts to be reopened when parties to commercial dealings fall out. The aim of our commercial law ought to be to encourage fair dealing between parties. But it is a mistake for the law to set its sights too highly when the critical inquiry is not whether the conduct is lawful but whether it is morally or socially unacceptable. That is the inquiry in which we are engaged. In my view there are policy considerations which militate against ruling that the defendants obtained payment of the disputed in-voice by duress.
Outside the field of protected relationships, and in a purely commercial context, it might be a relatively rare case in which 'lawful act duress' can be established. And it might be particularly difficult to establish duress if the defendant bona fide considered that his demand was valid. In this complex and changing branch of the law I deliberately refrain from saying 'never’.”
30.	This is Court of Appeal authority for the proposition that the exertion of pressure by “lawful means” does not prevent the operation of the doctrine of economic duress.  Whilst the particular examples in earlier cases, to which reference is made in the passage quoted above, do not take the matter much further, Steyn LJ refers to “the critical enquiry” as being “not whether the conduct is lawful but whether it is morally or socially unacceptable”.  He said in terms that that was the enquiry in which the court was engaged, although the Court should not set its sights too high and  it might be a relatively rare care in which “lawful act duress” could be established, particularly in a commercial context.  
31.	The decision to which the Arbitrators referred, when saying that the victim probably did not have to establish “no reasonable alternative” as an ingredient of economic duress, was Huyton v Cremer (Ibid).  At page 629, in the right hand column, Mance J (as he then was) accepted that a compromise agreement could be voidable for duress which involved illegitimate pressure, consisting in the non-performance or threat of non-performance of an obligation, the existence of which was apparently the subject of the compromise.  The party asserting duress would have to show on the facts that the illegitimate pressure was a significant cause inducing it to enter the contract of compromise and protests about the illegitimate pressure would be a relevant factor in considering that.  He then went on to deal with the two basic ingredients of duress, to which I have already referred and to the submission made on behalf of Cremer that a party either threatening or committing a breach of contract, even if acting in good faith could be guilty of illegitimate pressure.
32.	At page 637, the judge referred to CTN Cash and to the decision of the House of Lords in the Evia Luck [1992] 2 AC 152, referring to a dictum of Lord Goff in the latter decision.  Lord Goff had said that it was accepted that economic pressure could amount to duress provided that the economic pressure could be characterised as illegitimate and constituted a significant cause inducing the plaintiff to enter the relevant contract.  Mance J went on to state that this left room for flexibility in the characterisation of illegitimate pressure and of the relevant causal links. He said that the recognition of some degree of flexibility was not open to the reproach that it introduced a judicial discretion because courts frequently had to form judgments regarding inequitability or unconscionability, giving effect in doing so to the reasonable expectations of honest people.  It was the law’s function to discriminate between different factual situations, and so it was appropriate to adopt the approach set out by Steyn LJ in CTN Cash, by focusing on distinctive features of the particular case and deciding whether or not it did amount to a case of duress.
33.	The more recent cases on economic pressure, in no way, derogate from the principles to which I have referred.  Dyson J (as he then was) in two decisions in 2000 set out the range of factors which fell to be considered when looking at the question of legitimate pressure.  At paragraph 131 of DSND Subsea v Petroleum Geo-Services [2000] BLR 530, he set out the range of factors to be taken into account in a passage which he repeated in Carillion Construction Ltd v Felix (UK) Ltd [2001] BLR 1 at paragraph 24 and which were accepted as accurate by counsel in that case and in the subsequent decision of David Donaldson QC sitting as a Deputy High Court Judge in Adam Opel GmbH v Mitras Automotive (UK) Ltd [2007] EWHC 3481 (QB):-  
“The ingredients of actionable duress are that there must be pressure, (a) whose practical effect is that there is compulsion on, or a lack of practical choice for, the victim, (b) which is illegitimate, and (c) which is a significant cause inducing the claimant to enter into the contract: see Universe Tankships Inc of Monrovia v  International Transport Workers Federation [1983] 1 AC 366, 400B—E, and Dimskal Shipping Co SA v International Transport Workers Federation [1992] 2 AC 152, 165G. In determining whether there has been illegitimate pressure, the court takes into account a range of factors. These include whether there has been an actual or threatened breach of contract; whether the person allegedly exerting the pressure has acted in good or bad faith; whether the victim had any realistic practical alternative but to submit to the pressure; whether the victim protested at the time and whether he affirmed and sought to rely on the contract. These are all relevant factors. Illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal commercial bargaining.
34.	The most recent decision of high authority on the subject is Borrelli and others v Ting [2010] BusLR 1718, where the Privy Council found that the past failure of the former chairman and chief executive officer of a company, to cooperate with the liquidators of the company and to assist them, as was his duty, and his opposition to a proposed scheme of arrangement, resorting to forgery and false evidence in order to further that opposition, amounted to unconscionable conduct on his part which was sufficient to vitiate a settlement agreement concluded between himself and the liquidators.  By that agreement he consented to withdraw his opposition to the scheme in consideration of the liquidators waiving any claims against him in respect of his management of the company prior to liquidation.  Whilst there was unlawfulness involved in forgery and false evidence to the court, in opposition to the scheme, that conduct was past conduct and not a threat of future conduct, as such.
35.	It is also worth noting that the authors of the major textbooks which deal with the subject all agree that there is room for the operation of the doctrine of economic duress where the threat is to commit what would otherwise be a perfectly lawful act.  Whilst the textbooks focus on cases which amount to blackmail, there is general agreement, in accordance with the view of Professor Birks, as quoted in CTN Cash, that however unusual the situation may be, the courts are willing to apply a standard of impropriety rather than technical unlawfulness.  In this connection, reference should be made to paragraph 7-045 of Chitty on Contracts, 30th Edition, paragraph 7-010a of the third supplement to it, Anson’s Law of Contract, 29th Edition at page 357-8, (by reference to Alf Vaughn & Co. Ltd v Royscot Trust Plc [1999] 1AER (Comm) at 863) and Goff & Jones, the Law of Unjust Enrichment, 8th Edition at paragraphs 10-03 and 10-86.    
The question of law posed on the Appeal
36.	The question of law posed is whether the owners conduct, as found in the Award and Reasons, amounted to “the illegitimate pressure” required to establish economic duress in law.  As indicated above, it was accepted that the question could be reframed by asking whether or not the Arbitrators applied the wrong test in law in analysing the facts.  It is, in my judgement, clear from the authorities that “illegitimate pressure” can be constituted by conduct which is not in itself unlawful, although it will be an unusual case where that is so, particularly in the commercial context. It is also clear that a past unlawful act, as well as a threat of a future unlawful act can, in appropriate circumstances, amount to “illegitimate pressure”.
37.	The only basis of the appeal put forward was that the Arbitrators had not made findings of fact which could amount to “illegitimate pressure”, essentially because they had not found that the pressure put upon the Charterers to enter into the settlement agreement involved an unlawful act.  The Owners’ were not threatening to break a contract at the time nor committing any tort in refusing to enter into a variation of the charter with the substitution of the Agia and a new laycan, save on terms which bore down heavily upon the Charterers because of their existing sale contract.  It was said that this was just the operation of market forces of which the Owners’ were entitled to take advantage.  
38.	The Owners’ contended that the Arbitrators had not found any threatened breach of contract by them, in refusing to ship the cargo on the Agia without a waiver of rights by the Charterers. It is true that the Arbitrators made no finding that there had been a binding agreement made on the 27th April to ship the cargo on the Agia, so that there could be no threatened breach in refusing to do so, without the waiver of rights. Thus far the Owners are correct.
39.	What however the Owners’ submissions overlook is the fact that their repudiatory breach was the root cause of the problem and that their continuing conduct thereafter was, as described by the Arbitrators, designed to put the Charterers in a position where they had no option but to accept the settlement agreement in order to ship the cargo to China and avoid further huge losses on the sale contract to the Chinese receivers.   As the Charterers submitted, it would be very odd if pressure could be brought about by a threatened breach of contract, which did amount to an unlawful act but not by a past breach, coupled with conduct since that breach, which drove the victim of the breach into a position where it had no realistic alternative but to waive its rights in respect of that breach, in order to avoid further catastrophic loss.  
40.	The factors set out by Dyson J expressly include an actual breach as well as a threatened breach of contract and here there is no doubt about the repudiation which had taken place.  That was the dominant factor in the situation.  Whilst the Arbitrators did not expressly find that the Owners were in bad faith in what they did thereafter, it is clear that the Arbitrators took the view that the Owners had manoeuvred the Charterers into the position they were in, following the breach, in order to a drive a hard bargain.  The Charterers had no realistic practical alternative but to submit to the pressure and they did protest at the time.  They did not affirm the contract once the pressure was relieved and they were able to bring arbitration proceedings in respect of the claims which they had been forced to waive.  
41.	In my judgment, it cannot be said that the Arbitrators applied the wrong test, as their reference to the line of authorities and Huyton v Cremer shows.  There is no issue raised by the Owners on this appeal as to causation. They complain solely that the facts found by the Arbitrators could not amount to “illegitimate pressure”.  
42.	The Owner’s primary position in law is unsustainable since, for the reasons I have held, illegitimate pressure can involve the doing of acts which are not unlawful in themselves, albeit unusually in commercial cases, but in any event, the refusal to substitute the Agia for the Cenk K unless the Charterers agreed to waive their prior breach, has to be seen both in the light of that prior repudiatory breach which was unlawful and the Owner’s subsequent attempts to take advantage of the position created by that unlawfulness.
43.	The Owners’ alternative test for illegitimate pressure can fare no better than the test advanced in their primary case.  Such a test is not supported by any authority and, once it is accepted that there is scope for the doctrine to operate where the threatened act is lawful, each case will be fact sensitive.  It will always be a matter of applying the relevant criteria to the facts found by the relevant arbiter of fact, although, self-evidently, the more serious the impropriety and the greater the moral obloquy which attaches to the conduct, the more likely the pressure is to be seen as illegitimate.  Whilst all the authorities express the need for caution in relation to what are termed “lawful acts”, particularly in the commercial context, none suggest any limitation of the kind put forward by the Owners.   
44.	 As I have already said, the pressure created by the Owners in their demand for a waiver of rights by the Charterers has to be seen both in the light of their repudiatory breach and  in the light of their subsequent conduct, including their deliberate refusal to comply with the assurances they had previously given about providing a substitute vessel and paying full compensation in respect of that breach.  Their refusal to supply the substitute vessel to meet the Charterers’ needs, in circumstances which they had created by their breach and their subsequent misleading activity, unless the Charterers waived their rights, could readily be found by the Arbitrators to amount to “illegitimate pressure”.  In my judgment, not only was that a finding which the Arbitrators could properly reach when applying the correct test in law, as set out in the authorities to which I have referred, it was the right decision on the facts of this case.  
Conclusion
45.	In these circumstances, the Owners’ appeal fails, and unless there are peculiar factors of which I have not been informed, costs should follow the event.  No doubt the parties can address me on consequential matters if they cannot be agreed.