Sidiropoulos Emmanuel and Another ν. The Ship "Panagia Myrtidiotissa" (1987) 1 CLR 564

(1987)1 CLR 564 ΠΑΓΚΥΠΡΙΟΣ ΔΙΚΗΓΟΡΙΚΟΣ ΣΥΛΛΟΓΟΣ CyLaw | Αναφορικά μ'εμάς | " target="_top">Επικοινωνία | Όροι χρήσης Έρευνα - Κατάλογος Αποφάσεων - Εμφάνιση Αναφορών (Noteup on) - Αρχείο σε μορφή PDF - Αφαίρεση Υπογραμμίσεων

(1987)1 CLR 564 [PIKIS. J.]

1. EMMANOUEL SIDIROPOULOS, Plaintiff in Action 213/82,
2. DEMETRIOS TZANETOS, Plaintiff in Action 216/82, v. THE SHIP > NOW LYING AT THE PORT OF LIMASSOL, Defendant. (Consolidated Admiralty Actions Nos. 213/82 & 216/82). Contract - Consideration - The Contract Law, Cap. 149, section 25

(1)and

(2)- The rule that consideration must move from the promisee - Industrial action leading to new agreement providing for increased remuneration of employee for the same services as those under the old agreement - The new agreement will now be sustained under common law - In any event, in Cyprus the question is inextricably connected with Art. 27 of the Constitution, safeguarding the freedom to strike - Return to work is sufflcient consideration for improved remuneration. Contract - Duress - The Contract Law, Cap. 149, section 15 - Scope of - It does not cover threats to business or trade - Strike action in support of a claim for improved pay - In any event, and in view of Art. 27 of the Constitution, such action cannot be considered as an illegitimate form of pressure. By an agreement made on 25.9.82 the plaintiffs contracted to serve aboard the defendant ship for a period of seven months. On 1.11.82 the ship arrived at the Swedish port of Udevella On her arrival the vessel was boarded by officials of the International Transport Federation (ITF), an international federation of transport workers, who, having found that the remuneration of the crew was insufficient, directed that all loading work be suspended pending negotiations with the owners, conducted on their behalf by the Captain and other representatives. The plaintiffs and fellow workers stopped work pending the outcome of the intervention of ITF. The negotiations were successful. On 4th November, 1982 new agreements were executed between seamen and the Captain, acting on behalf of the owners, providing for a substantial increase of the salaries of the seamen. In addition, the owners were required to pay US$10,293.- into an ITF fund for the welfare of seamen. The new agreements replaced and superseded the agreements of the 25th September

1. Not only the· agreements were signed by the Captain without protest, but the difference in the remuneration of seamen between the first and second agreements was paid to them pursuant to the terms of the new agreements. On the same or the following day work was resumed. Upon arrival of the ship in Cyprus the agents of the defendant dismissed the plaintiffs and refused to pay them the remuneration and benefits to which they were entitled to by the agreements of 4th November
2. As a result the plaintiffs filed the present actions, claiming arrears of salary for the period between 4th November and 27th November 1982, leave allowance for the period between 23rd September to 28th November, 1982, overtime allowance, remuneration for services rendered on the days when plaintiffs were on leave and damages for wrongful dismissal. The central legal issue in these proceedings is the validity of the second agreement of 4.11.
3. In this respect, the defendant submitted that the agreements were invalid for three reasons. Lack of necessary certainty of the terms of the agreement, stemming from the incorporation of the collective agreement of ITF into the terms and conditions of the contract. Lack of consideration moving from the promisees. Plaintiffs gave no consideration for the additional benefits conferred thereby, as they were bound by the agreements of 25th September, 1982, to provide exactly the same services. Coercion resulting from the economic duress applied by ITF neutralizing the freedom of the defendant to contract as they chose, for fear of the economic consequences likely to befall them from any prolongation of the stoppage of work. Held,

(1)The agreement here under consideration conformed with the statutory norms of certainty with regard to the terms and conditions of employment of seamen. Moreover, it was possible at any one time to ascertain with certainty the rights and obligations of the parties thereunder.

(2)Section 25

(1)of the Contract Law (Cap. 149) provides that an agreement made without consideration is void, unless it falls into any one of the three exceptions enumerated thereunder. However, s. 2 of the Contract Law provides that expressions used in our statute, not otherwise defined, must be presumed to have the meaning attached to them in English law and be construed accordingly. The notion of consideration under English law requires that consideration should move from the promisee. However defendants argument overlooks the Implications of novation of contract on the one hand and the legitimacy of industrial action as an agent for the substitution of industrially unacceptable agreements on the other. Substitution or variation of the terms of an agreement as a result of industrial action is no longer examined, as can be deduced from the judgment, from a straight angle of consideration, but from a broader perspective associated with the achievement of harmony and justice in industrial relations. Therefore, if the parties freely enter into an agreement replacing an old one intending to be bound thereby contractually the agreement will be sustained unless the consent of either is not a voluntary expression of willingness to enter into the agreement. In Cyprus substitution or variation of a contract of employment as a result of industrial action cannot be divorced or extricated from the provisions of Art. 27 of the Constitution safeguarding freedom to strike as a fundamental and inalienable human right. Once it is appreciated that a worker can, as of right, withhold his labour for the improvement of his remuneration, return to work, as a result of an improved offer for remuneration is sufficient consideration for the validation of the agreement. Strike action pursued in support of a claim for improved pay cannot in Cyprus be considered as an illegitimate form of pressure, in view of Art. 27.1 of the Constitution safeguarding such action as a fundamental human right. In any event, contracts resulting from the application of economic duress, are not void, but voidable. The contract can not be avoided after an act of affirmation. No act of confirmation could be clearer than the action of the defendant in this case, arising from the payment of salaries of seamen according to the agreement of 4th November 1982. In Cyprus coercion is defined by s. 15 of the Contract Law Cap. 149, and although coercion is not merely modelled on threats to life and limb, but extends to the unlawful detaining or threats to detain property, it does not extend to threats to business or trade. More importantly, threats to life or limb must constitute a criminal act under the Criminal Code, whereas in the case of detention of property again the act must be unlawful in law. None of the acts complained of in this case falls into any of the categories of acts that may found coercion under the Cyprus Contract Law. Judgment for the plaintiffs with costs. Counterclaim dismissed with costs. Cases referred to: Pan On v. Lau Yiu [1979] 3 All E.R. 65; New Zealand Shipping Co. Ltd. v. A.M. Satterthwaite and Co. Ltd. [1974] 1 All E.R. 1015; Universe Tankships v. I.T.F. [1982] 2 All E.R. 67; Barton v. Armstrong [1975] 2 All E.R. 365; North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. and Another [1978] 3 All E.R. 1170. Alec Coll (Garages) Ltd. and Others v. Total Oil G B Ltd. [1985] 1 All E.R. 303; Lamaingnere [1975] 3 All E.R. 801; Williams and Glyn's Bank Plc. v. Kouloumbis·

(1986)1 C.L.R. 627. Admiralty actions. Admiralty actions for alleged breaches by defendants of the agreements of the 4th November, 1982 which include arrears of salary, leave allowance, overtime allowances, remuneration for services rendered on the days plaintiffs were on leave and damages for wrongful dismissal. N. Anastassiades, for the plaintiffs. M. Montanios with R. Michaelides, for the defendants. Cur. adv. vult. PIKIS J. read the following judgment. There was long delay in the trial of these cases, mainly due to the absence of the plaintiffs abroad and the nature of their work that made it difficult for them to come to Cyprus and pursue their cases on the several occasions on which they had been fixed for hearing. Eventually, to make possible the trial of these consolidated actions, it became necessary to deconsolidate a third one, Case No. 215/82, owing to insuperable difficulties in the path of the plaintiff in that action coming to Cyprus to testify in support·of his case. In the end it became possible to try the two of the three consolidated actions, and conclude their hearing on 3rd November, 1987. Emmanuel Sidiropoulos and Demetrios Tzanetos, Greek seamen, contracted with the agents of the defendants to serve aboard «PANAGIA MYRTIDIOTISSA» as First and Second Engineer respectively. The agreement regulating terms and conditions of their service, concluded on 25th September, 1982 was evidenced in writing (Exhibits 3 and 4). It provided for the engagement of the services of the plaintiffs for a seven-month period, subject to extension, for the remuneration stipulated therein. The agreement was entered into through the mediacy of Marathassa Lines Ltd., the recruiting agents of the defendant vessel; (hereafter referred to as the «defendant»). A short while later the plaintiffs boarded the boat on a voyage to several European ports to collect general cargo. The journey was uneventful until they reached the Swedish port of Udevalla on 1st November, 1982. On her arrival the vessel was boarded by officials of the International Transport Federation (I.T.F.) an international federation of transport workers, interested to examine the terms and conditions of service of the crew, particularly those affecting their remuneration. They found the remuneration of the crew wanting and on their initiative and directions, all loading work was suspended pending negotiations with the owners, conducted on their behalf by the Captain and other representatives. The plaintiffs and fellow workers stopped work pending the outcome of the intervention of ITF. The negotiations were successful. The events surrounding the execution of the new agreements and the journey back to Cyprus were explained in the evidence of the two plaintiffs and a fellow seaman Frane Lokas (D.W.l), a witness for the defendant. It emerges from their testimony that the initiative for the stoppage of work at Udevalla rested exclusively with ITF, with the members of the crew joining in the action recommended by union officials in pursuit of claims for the improvement of their remuneration. Another witness for the plaintiffs, a union official of Petrol Employees in Cyprus, namely, Mr. Omiros Neocleous, explained that the policy of ITF is to intervene whenever the terms and conditions of employment of seamen, including their remuneration, are not founded on collective agreements negotiated in the country of origin of the vessel or the collective agreement approved by ITF. The witness strongly refuted the suggestion of defendant that ITF blacked, as a matter of policy, ships flying the Cyprus flag. The witness explained the ITF operates worldwide and is a member of the ·International Free Federation of Workers. It is the evidence of the plaintiffs that the journey back to Cyprus was bedevilled by difficulties caused by the disengagement and eventual loss of the anchor, a factor that exposed the safety of the crew to grave risks. Furthermore, conditions of work deteriorated considerably; whereas their health was put to peril by the failure of the defendant to provide them with satisfactory meals. In protest, the plaintiffs submitted their resignation, Mr. Tzanetos on the 9th November, 1982, in writing, and Mr. Sidiropoulos orally on the 17th November, 1982. Their resignations were not accepted by the Captain, whereupon they continued uninterruptedly their duties as before. Eventually she sailed to Cyprus for repairs, arriving on 27th November, 1982. It is the case for the plaintiffs that on arrival to Cyprus the agents of the defendant dismissed them and refused to pay them the remuneration and benefits to which they were entitled to by the agreements of 4th November, 1982 (Exhibit 1 and 4). It seems that with the arrival of the vessel in Cyprus, the services of the entire crew and the captain were terminated or came to an end with the sole exception of Mr. Lokas who continued in the employment of the defendant on the terms and conditions of the agreement of the 25th September, 1982. Moreover, he refunded, in due course, the additional remuneration received at Udevalla. Apart from the plaintiffs who instituted the present action, other members of the crew took action against the defendant too, resulting in the settlement of their case in the circumstances detailed by Mr. Theophilou, the advocate who acted on their behalf. He informed us that the settlements were founded on the provisions of the second agreements. The actions of the plaintiffs are founded on alleged breaches by the defendant of the agreements of 4th November, 1982 and include the following claims:- (

1. a)Arrears of salary for the period between 4th November and 27th November, 1982. (
2. b)Leave allowance for the period between 23rd September to 28th November, 1982. (
3. c)Overtime allowance. (
4. d)Remuneration for services rendered on the days when plaintiffs were on leave. (
5. e)Damages for wrongful dismissal. The defendant disputed the claims and sought a declaration for the rescission of the agreements entered into at Udevalla. Before the execution of the second agreement, the plaintiffs, it was alleged, were in breach of the contract of their employment by refusing directions to transfer to another vessel of the owners of «PANAGIA MYRTIDIOTISSA», a suggestion unwaveringly denied by both plaintiffs. No evidence was adduced to substantiate this aspect of their case or the allegation that plaintiffs were guilty of negligence leading in the causation of considerable damage to the engine of the defendant estimated at US$100,000. - The counterclaim for the recovery of damages for negligence was abandoned at the end of the day in the absence of any evidence to support it. The central theme of the case for the defendant is that the agreements· of 4th November, 1982, were the product of coercion and on that account are liable to be set aside. A declaration to that end was sought in the counterclaim. The Court was asked to infer from the evidence of the plaintiffs that the agreements were the product of economic duress applied by ITF intended to coerce the defendant into submission to their terms. According to Mr. Andreas Vassiliades, the secretary and one of the directors of Marathassa Lines Ltd., the financial loss from the suspension of work at Udevalla was. considerable, while the defendant stood to suffer much more if the stoppage continued. The very stoppage created difficulties in the performance of their contract with an Iranian corporation to which the vessel was Chartered. He acknowledged, however, that the agreements were signed on their behalf by the Captain without protest. They signified their opposition to the agreements of 4th November 1982, as soon as the vessel arrived in Cyprus when they sought from members of the crew refund of the additional monies paid to them at Udevella. On consideration of the evidence before me, it emerges and so I accept that the services of the plaintiffs were terminated on 27th November, 1982, because of their unwillingness to donounce the agreements of 4th November, 1982. Another inference is that defendant refused to pay plaintiffs for services rendered in accordance with the stipulations of those agreements. Furthermore, I accept the evidence of the plaintiffs that conditions of work aboard «PANAGIA MYRTIDIOTISSA» were unacceptable, exposing their safety and health to risk. The central issue in these proceedings is the validity of the second agreements. If found that the agreements were valid, plaintiffs will be entitled to the damages claimed in their actions. Mr. Montanios, for the defendant, submitted that the agreements of 4th November, 1982, were invalid for three reasons: (
6. a)Lack of necessary certainty of the terms of the agreement, stemming from the incorporation of the collective agreement of ITF into the terms and conditions of the contract. (b). Lack of consideration moving from the promises. Plaintiffs gave no consideration for the additional benefits conferred thereby as they were bound by the agreements of 25th September, 1982, to provide exactly the same services. (
7. c)Coercion resulting from the economic duress applied by ITF neutralizing the freedom of the defendant to contract as they chose, for fear of the economic consequences likely to befall them from any prolongation of the stoppage of work. (
8. a)Certainty of the terms of the agreement Mr. Anastassiades drew the attention of the Court to the provisions of s. 12

(6)of Merchant and Shipping (Captains and Seamen) Law 1963, giving statutory sanction to the incorporation by reference in seamen's agreement of the terms of collective agreements. The agreement here under consideration conformed with the statutory norms of certainty with regard to the terms and conditions of employment of seamen. In my judgment the contract cannot be faulted for lack of certainty of its terms. Moreover, it was possible at anyone time to ascertain with certainty the rights and obligations of the parties thereunder. There is no room for invalidating the agreements for lack of certainty of their terms in any material respect. (b) Consideration Section 25

(1)of the Contract Law (Cap. 149) provides that an agreement made without consideration is void, unless it falls into any one of the three exceptions enumerated thereunder, that need not concern us in this case. Our statute does not define consideration. However, s. 2 of the Contract Law provides that expressions used in our statute, not otherwise defined, must be presumed to have the meanting attached to them in English law and be construed accordingly. The notion of consideration under English law requires that consideration should move from the promise, And inasmuch as the plaintiffs gave nothing in return for the additional benefits conferred to them by the new agreements, the agreements were voided for lack of consideration. The self same services they contracted to render by the agreements of Udevalla, plaintiffs were under contractual obligation to render by the agreements of 25th September, 1982, Hence they gave nothing in return for the enhanced benefits; sequentially the agreement was abortive for lack of consideration. The argument overlooks the implications of novation of contract on the one hand and the legitimacy of industrial action as an agent for the substitution of industrially unacceptable agreements, on the other, Both topics are reviewed, most comprehensively, by Lord Scarman in the judgment of the Privy Council in Pao On v. Lau Yiu. Substitution or variation of the terms of an agreement as a result of industrial action is no longer examined, as can be deduced from the judgment, from a straight angle of consideration, but from a broader perspective associated with the achievement of harmony and justice in industrial relations. Therefore, if the parties freely enter into an agreement replacing an old one intending to be bound thereby contractually, the agreement will be sustained; unless the consent of either is not a voluntary expression of willingness to enter into the agreement. The following passage from the judgment of Lord, Scarman in the above case puts the matter in perspective and obviates, to my comprehension, any need to refer to previous caselaw:- « Their Lordships' conclusion is that where businessmen are negotiating at arm's length it is unnecessary for the achievement of justice, and unhelpful in the development of the law, to invoke such a rule of public policy. It would also create unacceptable anomaly. It is unnecessary because justice requires that men, who have negotiated at arm's length, be held to their bargains unless it can be shown that their consent was vitiated by fraud, mistake or duress. If a promise is induced by coercision of a man's will, the doctrine of duress suffices to do justice. The party coerced, if he chooses and acts in time, can avoid the contract. If there is no coercion, there can be no reason for avoiding the contract where there is shown to be a real consideration which is otherwise legal». Elsewhere in the judgment attention was drawn to the fact that American caselaw has moved along the same lines. In the American Restatement of the Law of Contracts the view is adopted that a pre-existing legal duty should not of itself be decisive; what should be weighed are the moral and economic elements associated with the new agreement. In Cyprus substitution or variation of a contract of employment as a result of industrial action cannot be divorced or extricated from the provisions of Art. 27 safeguarding freedom to strike as fundamental and inalienable human right. The right to strike would be diminished if agreements resulting from its exercise were invalid in law because of a pre-existing contractual duty. Once it is appreciated that a worker can, as of right, withhold his labour for the improvement of his remuneration, return to work as result of an improved offer for remuneration, is sufficient consideration for the validation of the agreement. The relevant provisions of the Contract Law Cap. 149, must be read and applied subject to the Constitution. On consideration of the evidence, I make the following findings relevant to this aspect of the case. The action of ITF was taken in support of the rights of seamen in general and for the immediate benefit of the crew of >. The plaintiffs and fellow seamen joined in the industrial action for the improvement of their remuneration. The economic pressure that was undoubtedly exerted by ITF on defendant was the result of industrial action mounted in support of conditions of pay of members of the class of workers that ITF represented on a global basis. It emerges from the evidence of Mr. Vassiliades that the remuneration of the crew, averaging about US$350.- per month was far below the standard of remuneration acceptable to ITF. As a result of the industrial action the average remuneration of seamen serving on «PANAGIA MYRTIDIOTISSA» was raised to US$1,000.- per month. The inevitable inference is that the intervention of ITF led to a drastic increase of the remuneration of the crew. From the view point of the crew the new agreements were a vast improvement on the previous terms of their employment (negotiated without union support). The action of ITF, as far as it affected the plaintiffs, constituted industrial action designed to improve the salaries of members of the class of workers they represented. Economic Duress - Coercion At common law coercion as an agent for the avoidance of a contract was confined to criminal acts involving threat to life or limb. Over the years the law developed and came to recognize that other forms of duress could found coercion in the field of civil law, first threats to property and secondly threats to a man's trade or business. Development in this sphere of the law is discussed in Universe Tankships v. I. T.F. The law acknowledges that economic duress can, provided it vitiates the consent of a contracting party, be relied upon to avoid an agreement. The case of Barton v. Armstrong indicates that the pressure exerted cannot be divorced from the legitimacy of the cause in furtherance to which it is applied. None of the cases cited suggest that industrial action mounted in pursuit of a claim for higher pay can found economic duress. Though pressure applied for securing a collateral end may, with regard to attainment of that end, be treated as illegitimate. In any event and quite independently of the legal position in other countries, strike action pursued in support of a claim for improved pay cannot in Cyprus be considered as an illegitimate form of pressure, in view of Art. 27.1 of the Constitution safeguarding such action as a fundamental human right. To pursue the implications of economic duress one step further, it must be noticed that contracts resulting from the application of such pressure vitiating the consent of a party thereto are not void but voidable. This emerges from the case of Universe Tankships (supra) as well as from· the extensive discussion of the subject by Mocatta, J., in North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. and Another, The Atlantic Baron. A contract liable to be set aside for economic duress cannot be avoided after any act of affirmation by the party pressured, objectively consistent with the confirmation of the agreement. And no act of confirmation could be clearer than the action of the defendant in this case arising from the payment of salaries of seamen according to the agreement of 4th November, 1982. Therefore, under any circumstances it is too late for the defendant to seek to avoid the contract. And to complete the legal framework affecting the avoidance of contracts on account of inequality of bargaining power, reference may be made to the case of Alec Lobb (Garages) Ltd. and Others v. Total Oil GB Ltd. where the question was put in perspective by stressing that for the Court to interfere on that score, there must be a distinct element of unfairness as in the case of strong party pushing the weak to the wall. The arguments raised by counsel for the defendant revolved exclusively round the state of English Law without noticing that there are differences between contemporary concept of ### under English and Cyprus Law. In Cyprus coercion is defined by s. 15 of the Contract Law, Cap. 149, and is fashioned to an earlier understanding of the notion under English Law. Although coercion is not merely modelled on threats to life and limb and extends to the unlawful detaining or threats to detain property, it does not extend to threats to business or trade. More importantly, threats to life or limb must constitute a criminal act under the Criminal Code whereas in the case of detention of property again the act must be unlawful in law. We need not explore the ambit of s. 15 further for none of the acts complained of in this case falls into any of the categories of acts that may found coercion under the Cyprus Contract Law. Section 14, on the other hand, of our Contract Law provides that consent to a contract «is said to be free when it is not caused by» any of the facts specified thereunder, including coercion as defined in s. 15. To conclude, none of the acts relied upon by the defendant could found coercion under Cyprus Law. The case for the' defendant for coercion must be dismissed. Having accepted, as I do, the case for the plaintiffs with regard to breaches of the agreements of 4th November, 1982, and the justification of the claims of the plaintiffs based under their provisions, the plaintiffs are entitled to judgment as per claim, that is, the plaintiff in Action No. 213/82 to US$6,674.90 and the plaintiff in Action .No. 216/82 to US$4,533.20. Judgment will be given in the currency of the contract. Therefore, judgment is given for the plaintiff in Action No. 213/82 for U5$6,674.90 or its equivalent in Cyprus pounds. Furthermore, judgment is given for plaintiff in Action No 216/82 for US$4,533.20 or its equivalent in Cyprus pounds. The plaintiffs are entitled to their costs. The counterclaim is dismissed with costs; save that where litigation for the claim coincided with litigation for the counterclaim, one set of costs should be recovered. Judgment and order for costs as above. cylaw.org: Από το ΚΙΝOΠ/CyLii για τον Παγκύπριο Δικηγορικό Σύλλογο