LONDON: Pakistan International Airlines (PIA) won a landmark case in the Supreme Court of England after five judges unanimously ruled that the Pakistani national airliner was correct in using a lawful act under the economic duress against a British Pakistani travel agent while enforcing a new contract for ticket sales to Pakistan in 2012.
The Supreme Court of England has ruled in a landmark decision that the doctrine of a lawful act of duress is narrow in scope and does not apply in the case against Pakistan International Airlines Corporation (PIAC) by a British Pakistani travel agency based in Birmingham.
Farani Taylor Solicitors represented PIA in the long-standing case against plaintiff Times Travel – a small family-owned travel agency in Birmingham.
Under English law, economic duress arises when illegitimate economic pressure is exerted so that the weaker party has no practical choice but to agree to enter into a contract or agree to special terms.
In Pakistan International Airline Corporation v Times Travel, the question before the five judges was whether economic hardship can arise in a situation where a party commits lawful acts or threats in support of a claim that she really believes she has the right to formulate. .
The Birmingham-based company argued that it was under economic pressure in 2012 and was forced to sign a new contract without paying the commission – retrospectively exposing the demand for payment of a huge sum of commission .
Following the publication of the judgment, managing partner Farhan Farani of Farani Taylor Solicitors told Geo and The News that the impact of the judgment is extremely important in English law. He said the case is of such a serious nature that even the governments of Russia and Ukraine have intervened in the case as this judgment will have an impact on their case as well.
He added: “This decision effectively resets the limits of duress and will have major ramifications for trade negotiations. The decision is a watershed moment for trade negotiators.
PIA lawyers argued in the Supreme Court before five judges that the PIA acted legally when it terminated its contract with its UK-based Pakistani agents, offering them a new contract. The agents were claiming commissions on the fuel surcharge in connection with the tickets they sold.
PIA’s decision means that it will not have to pay commissions retrospectively for the fuel surcharge portion of the tickets.
The case concerned a dispute between PIA and Times Travel over a contract entered into by the two parties in 2008, with the agency agreeing to act as a ticket agent for the Pakistani national airline.
At that time, PIA was the only airline to operate direct flights between the UK and Pakistan and Times Travel, like dozens of other Pakistani travel agents, was entirely dependent on selling airline tickets to members. from the Pakistani community of Birmingham as well as anyone else who calls the travel agency to book a ticket to the South Asian country.
In 2012, as e-commerce began to gain the upper hand and PIA’s reliance on around 60 travel agents diminished, problems began when the airline announced the termination of contracts with Pakistani British travel agents, offering them new terms and conditions. Several travel agents refused to accept new contracts, took legal action and argued that PIA in retrospect owed them a commission – to the tune of tens of millions of pounds.
However, Times Travel accepted the new contract which included a waiver by Times Travel of its claims for unpaid commission under previous agreements. The travel agency accepted and signed the new contract, according to court documents.
However, two years later, in 2014, Times Travel sued PIA in the High Court in London, claiming to recover unpaid commissions and other payments that PIA owed it legally.
In the first round, the High Court ruled that Times Travel had the right to cancel the contract with PIA for reasons of economic duress – which meant that PIA had acted illegally to force the travel agent to enter into a new contract while ignoring the terms of the previous contract.
The PIA took the decision to the Court of Appeal, where its appeal was allowed. The Times Travel then appealed to the highest British court.
In the 2019 judgment in favor of PIAC, Lord Justice David Richards of the Court of Appeal relied on the legal argument that the PIA was entitled to exert economic pressure in support of a request that she sincerely believed she had a right to make, regardless of whether he had reasonable grounds to believe.
The Court of Appeal’s argument pointed out that PIA is able – and entitled to – to exert economic pressure due to its position as a monopoly supplier of airline tickets to Pakistan while dealing with agents. of travel.