Economic duress

The chapter seeks to explore the doctrine of economic duress in the UK, Malaysia, Singapore and Australia. The following provides some background about the doctrine. In the UK the doctrine was first recognised in England by Ker J in the Siboen and The Sibotre [1976] 1 Lloyds Rep 293 and its existence has been affirmed in cases such as R v A-G for England and Wales [2003] UKPC 22. The common law has been the primary driving force to develop the doctrine with new insights being provided by Kolmar Group AG v Traxpo Enterprises PVT Limited [2010] EWHC 113 (Comm).

In Malaysia, the ground work for contract law is provided for by the Contracts Act 1950, wherein section 15 recognises coercion as a vitiating factor, there is no mention of economic duress within the statutory framework. However judicial ingenuity has used section 73 of the 1950 Act to import the concept of economic duress.

In Australia the concept was dealt with in Equitticorp Finance Ltd v Bank of New Zealand (1993) 32 NSWLR 50 which showed reluctance to find economic duress in commercial cases. Australian cases have taken a stand that for duress to succeed it has to be shown that the pressure exerted on the party claiming duress must be illegitimate and it caused the party to enter into the contract.

In Singapore the concept of economic duress was endorsed in Tam Tak Chuen v Khairul bin Abdul Rahman [2009) 2 SLR(R) 240 and in E C Investment Holding Pte Ltd v. Ridout Residence Pte Ltd and another (Orion Oil Limited and another, Interveners) [2011] 2 SLR 232. These cases endorsed the view taken by Lord Scarman in Universe Tankships Inc of Monrovia v. International Transport Workers Federation [1983] l AC 366, 400. However, the judicial approach in Singapore is generally governed by Lee Kuan Yew v. Chee Soon Juan [2003] 3 SLR(R) 8 which provides that contracts should not be easily set aside.

It has been noted that economic duress has been difficult to stabilise as a doctrine because as with any pressure arising under contract law, the issue is whether such pressure is legitimate or illegitimate. Where pressure is illegal it is prima facie illegitimate. The only issue is whether pressure caused the innocent party to enter into the contract. But in the case of economic duress the question of whether pressure is illegitimate or not has not been straightforward. For this reason, courts are more wary than willing to allow a claim for economic duress. The chapter therefore seeks to explore the different judicial approaches between these countries on application of ‘coercion of will theory’ in developing the concept of economic duress in the UK, Malaysia, Singapore and Australia. The chapter would explore the basis for the different approaches and limitations (if any) to gain insight into the future of the doctrine in the respective jurisdictions.