Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universal Sentinal)

Economic duress makes a transaction voidable, and supports restitution, where apparent consent was induced by pressure which the law does not regard as legitimate. In industrial relations, statutory tort immunities do not directly bar restitution, but they indicate the public policy relevant to legitimacy.

A demand by a union must be genuinely connected with employees’ terms and conditions of employment. That expression is wide, but it concerns the employer–employee relationship. A demand for a contribution to a union-controlled fund, which gives the relevant employees no employment-related entitlement, falls outside it. Combining that demand with legitimate employment demands cannot legitimise it.

Universe Tankships Inc of Monrovia v International Transport Workers Federation concerned US$6,480 paid by the owners of the Universe Sentinel to the International Transport Workers’ Federation (ITF). The payment was required before the ITF would end the blacking of the vessel and permit it to leave Milford Haven.

The sum was a contribution to the ITF’s Seafarers’ International Welfare, Protection and Assistance Fund. The shipowners sought its return, alternatively on a resulting-trust basis or as money paid under economic duress.

Parker J allowed recovery. The Court of Appeal reversed that decision: [1980] 2 Lloyd's Rep. 523. The House considered whether the Fund was held on trust and whether a demand for its contribution was connected with the crew’s terms and conditions of employment so as to be legitimate industrial pressure.

1. Appeal allowed by a majority of three to two. The House reversed the Court of Appeal and restored Parker J’s order, save for the declaration that the US$6,480 was held on resulting trust. The cause was remitted to the Queen’s Bench Division.
2. The trust point. All members of the House agreed that the Fund Rules did not create a trust. Per Lord Russell of Killowen, the Fund was an earmarked part of the ITF’s assets, governed by the contractual arrangements among its affiliated unions. The contribution was therefore a payment to the ITF and not property held on trust for the shipowners.
3. The duress point. Per Lord Diplock, in the leading speech, economic duress rests on pressure which vitiates apparent consent because the law does not regard that pressure as legitimate. Although the immunities in Trade Union and Labour Relations Act 1974 did not directly govern a restitutionary claim, they informed the public-policy boundary between legitimate industrial pressure and recoverable economic duress.
4. Majority application. Lords Diplock, Cross of Chelsea and Russell of Killowen concluded that the Welfare Fund contribution was not connected with the crew’s terms and conditions of employment. The statutory expression was broad, but was confined to terms regulating the employer–employee relationship. The crew had no right to require, receive, or control the contribution, and any possible benefits from the Fund did not depend on their employment by these shipowners. A coerced recital and the inclusion of the payment in a package with legitimate employment demands could not alter the demand’s true character. The payment was therefore recoverable as money had and received.
5. Dissent. Lord Scarman and Lord Brandon of Oakbrook would have dismissed the appeal. They regarded the Fund as providing, at least potentially, a benefit connected with employment and therefore treated the blacking as protected industrial pressure rather than actionable duress.

• House of Lords: allowed the shipowners’ appeal, reversed the Court of Appeal, and restored Parker J’s order subject to removal of the resulting-trust declaration.
• Court of Appeal: allowed the ITF’s appeal from Parker J and held the US$6,480 irrecoverable: [1980] 2 Lloyd's Rep. 523.
• Commercial Court (Parker J): held the shipowners entitled to recover the contribution.