DSND Subsea Ltd v Petroleum Geo-Services ASA [2000]
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DSND Subsea Ltd v Petroleum Geo-Services ASA [2000] BLR 530 centred on a contractual variation and the claim of economic duress by Petroleum Geo-Services ASA against DSND Subsea Ltd, a subcontractor involved in construction work on oil rigs.
The factual background involved a change in the scope of work, prompting DSND Subsea Ltd to suspend its activities until a contractual variation was signed. The purpose was to ensure that insurance covered the new type of work, reflecting a genuine concern about the associated risks. Under financial pressure, Petroleum Geo-Services ASA eventually entered into the contractual variation but later sought to escape from it, claiming that entry had been induced by duress.
In the High Court, the judgment by Dyson J clarified the elements constituting actionable duress. These included pressure with a practical effect of compelling or limiting practical choices for the victim, illegitimacy of the pressure, and the pressure being a significant cause inducing the claimant to enter into the contract.
The court considered various factors in assessing whether the pressure amounted to illegitimacy. These factors encompassed an actual or threatened breach of contract, the good or bad faith of the party exerting pressure, the existence of realistic practical alternatives for the victim, whether the victim protested at the time, and whether the victim later confirmed and sought to rely on the contract. It was emphasised that illegitimate pressure should be distinguished from the ordinary pressures of normal commercial bargaining.
In the specific circumstances of this case, even if DSND Subsea Ltd was deemed to be in breach of contract, the court held that the pressure exerted was not illegitimate. Dyson J characterised it as reasonable behaviour by a contractor acting bona fide in a very difficult situation. The court highlighted that Petroleum Geo-Services ASA had realistic practical alternatives, such as seeking alternative vessels, pursuing an injunction against DSND Subsea Ltd, or terminating the contract based on its contractual rights.
Ultimately, the court concluded that the contract was not voidable for duress, as the pressure exerted by DSND Subsea Ltd was considered legitimate under the challenging circumstances. This case serves as an illustration of the careful examination courts undertake to distinguish between legitimate commercial pressures and illegitimate pressures amounting to economic duress.
The factual background involved a change in the scope of work, prompting DSND Subsea Ltd to suspend its activities until a contractual variation was signed. The purpose was to ensure that insurance covered the new type of work, reflecting a genuine concern about the associated risks. Under financial pressure, Petroleum Geo-Services ASA eventually entered into the contractual variation but later sought to escape from it, claiming that entry had been induced by duress.
In the High Court, the judgment by Dyson J clarified the elements constituting actionable duress. These included pressure with a practical effect of compelling or limiting practical choices for the victim, illegitimacy of the pressure, and the pressure being a significant cause inducing the claimant to enter into the contract.
The court considered various factors in assessing whether the pressure amounted to illegitimacy. These factors encompassed an actual or threatened breach of contract, the good or bad faith of the party exerting pressure, the existence of realistic practical alternatives for the victim, whether the victim protested at the time, and whether the victim later confirmed and sought to rely on the contract. It was emphasised that illegitimate pressure should be distinguished from the ordinary pressures of normal commercial bargaining.
In the specific circumstances of this case, even if DSND Subsea Ltd was deemed to be in breach of contract, the court held that the pressure exerted was not illegitimate. Dyson J characterised it as reasonable behaviour by a contractor acting bona fide in a very difficult situation. The court highlighted that Petroleum Geo-Services ASA had realistic practical alternatives, such as seeking alternative vessels, pursuing an injunction against DSND Subsea Ltd, or terminating the contract based on its contractual rights.
Ultimately, the court concluded that the contract was not voidable for duress, as the pressure exerted by DSND Subsea Ltd was considered legitimate under the challenging circumstances. This case serves as an illustration of the careful examination courts undertake to distinguish between legitimate commercial pressures and illegitimate pressures amounting to economic duress.
