DSND Subsea Ltd v Petroleum Geo-Services ASA [2000] BLR 530

DSND and Petroleum Geo-Services were involved in a contract for subsea work. During difficulties in performance they signed a memorandum varying aspects of their arrangements. PGS later alleged that it had agreed to the memorandum because of misrepresentation and economic duress. It also asserted that it had validly terminated the main contract under its notice provisions. The dispute required findings about what had been represented, the commercial pressure during negotiations and the particular breach identified in the termination notice. The competing arguments concerned both avoidance of the variation and termination of the original agreement.

Was the variation procured by misrepresentation or illegitimate economic pressure, and did the stated contractual notice validly terminate the main agreement?

Dyson J rejected the attempt to avoid the memorandum on the alleged grounds. The misrepresentation case failed on the findings concerning truth and reliance, and the circumstances did not establish economic duress. Commercial insistence on resolving a genuine dispute was not necessarily illegitimate pressure.

The analysis examined whether there was pressure leaving no practical choice, whether that pressure was illegitimate and whether it induced the agreement. Matters such as good faith, threatened breach, alternatives, protest and subsequent conduct were relevant to the overall assessment. The claimed contractual termination also failed under the particular notice provisions. The court did not recognise a general right to support a specified termination notice by substituting a wholly different ground after the event.

Economic duress requires illegitimate pressure that materially induces agreement in circumstances lacking a practical choice. Good faith, threatened breach, available alternatives and protest help assess the pressure. Hard bargaining or a demand made to resolve a genuine commercial dispute does not automatically establish duress.

DSND supplies a frequently used framework for economic duress, while illustrating why its elements require concrete findings. A demand for changed terms cannot be labelled duress simply because refusal would be costly. The case also distinguishes avoidance from termination under contractual machinery: the wording of a notice requirement may constrain the grounds relied upon. Later authority on lawful-act duress, including Times Travel, requires separate attention before treating a good-faith belief or lawfulness of conduct as a complete answer in every case.