For the first time, the Supreme Court has considered the doctrine of economic duress in its recent judgment in Pakistan International Airline Corp v Times Travel (UK) Ltd [2021] UKSC 40 (“PIA”).

While it is well established that the threat of an unlawful act can give rise to economic duress, the question of whether a threat to carry out a lawful act (such as threatening to lawfully terminate a contract) can amount to actionable economic duress has been more controversial and uncertain. In PIA, the Supreme Court considered whether the threat of a lawful act can amount to economic duress and the criteria for determining this.  

In short, the answer was yes – the threat of a lawful act can constitute economic duress, however the threshold is a high one in commercial scenarios.

During this podcast, Zahira Hussain discusses why.