In a landmark Judgement, the United Kingdom's Supreme Court on Wednesday ruled in favour of Pakistan International Airlines Corporation (PIAC) in an appeal filed by an UK based travel agency - Times Travel (UK) .
The case before the court was about the economic duress, and whether such duress can arise where lawful acts or threats are made by one party in support of a demand which that party genuinely believes it is entitled to make.
The case hearing was done in presence of President of the Supreme Court Lord Reed, Deputy president Lord Hodge, as well as Lord Lloyd-Jones, Lord Kitchin and Lord Burrows. The hearings took place on November 2 and 3 last year, with the judgement delivered on August 18 .
Case summary reads as , PIA had entered into a contract with the appellant, Times Travel in the year 2008, based on which Times Travel acted as a ticketing agent to PIAC.
Times Travel was a small UK based family owned travel agency, that was mostly dependent on its ability to sell PIAC's tickets. By 2012, a large number of PIAC's ticketing agents had either commenced or threatened proceedings to recover substantial sums they said PIAC owed to them by way of commission.
In September 2012, PIAC gave lawful notice of the termination of its existing agency contracts and offered Times Travel a new contract.
However, the new contract contained a waiver by 'Times Travel' of its claims for unpaid commission under the prior arrangements. Times Travel accepted and signed the new contract.
In the year 2014, 'Times Travel' initiated proceedings to recover unpaid commission and other payments which it said were due to it under the prior contractual arrangements.
At first instance, the High Court held that Times Travel was entitled to avoid the contract with PIAC on the grounds of economic duress. The Court of Appeal had allowed PIAC's appeal. Times Travel then appealed to the Supreme Court, which ruled in favour of PIA.
The law Society gazette Quotes from the Proceedings ,
'Lawful act economic duress was not made out on the facts of this case because the threatened lawful act was not coupled with a bad faith demand. On the facts found by Warren J, Times Travel failed to establish bad faith by PIAC in the specific sense relating to PIAC’s genuine belief as to its not being contractually liable for the unpaid commission. The Court of Appeal correctly applied the “bad faith demand” requirement in this case. I would therefore dismiss the appeal.'
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