UK top court dismisses plea against PIA over unpaid commission

Five-judge bench rejects claim of travel agency over unpaid commission

KARACHI:

The UK Supreme Court dismisses an appeal on Wednesday filed by a local travel agent against the Pakistan International Airlines Corporation (PIAC) over a new contract for sales of tickets to Pakistan in 2012.

A five-judge bench, headed by Lord Reed and comprising Lord Hodge (Deputy President), Lord Lloyd-Jones, Lord Kitchin, Lord Burrows, handed down the judgment, saying that PIAC cutting Times Travel (UK) Ltd’s (TT) ticket allocation was not a reprehensible conduct.

According to the information available on the UK Supreme Court website, Lord Hodge gave the lead judgment with which Lord Reed, Lord Lloyd-Jones and Lord Kitchin agree, while Lord Burrows gave a concurring judgment.

The dispute arose in 2011 and 2012 when certain travel agents, including the TT, alleged that the PIAC had not been paying them certain commission payments. In September 2012, the PIAC gave notice of the termination of the agency contracts and offered Times Travel a new contract.

The new contract contained a waiver by the TT of its claims for unpaid commission under the prior arrangements. Though the TT accepted and signed the new contract, it brought proceedings in 2014 to recover unpaid commission and other payments under the previous contractual arrangements.

At first instance, the High Court held that the TT was entitled to avoid the contract with the PIAC on the grounds of economic duress. But later a court of appeal allowed the PIAC’s appeal. The TT then lodges appeal in the Supreme Court.

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While dismissing the appeal, the Supreme Court ruled that the TT could not rescind the new agreement for lawful act economic duress. Lord Burrows agreed with Lord Hodge that the appeal should be dismissed but disagreed on what was meant by illegitimate threats in relation to economic duress.

Lord Hodge held that the PIAC giving notice that the previous contract would be terminated and cutting TT’s ticket allocation was not reprehensible conduct in the sense used in the case law. PIAC’s genuine belief that it was not liable to pay the disputed commission further supports the view that its behaviour was not reprehensible.

Lord Burrows’ view was that a demand was unjustified, so that the accompanying threat was illegitimate… “On the facts of this case, TT’s claim for lawful act economic duress fails because PIAC genuinely believed it was not liable for the unpaid commission.”