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Commentary: Lawsuit against KiK over Pakistan factory fire & supply chain liability of transnational cos. for human rights impacts

"Supply chain liability under the law of negligence: What does Jabir and Others v KiK Textilien und Non-Food GmbH mean for European companies with supply chains in the sub-continent and other common law countries?", 10 Dec 2018

Last month a court in Dortmund heard arguments in Jabir and others v. KiK Textilien und Non-Food GmbH.  It is a case brought against a German retailer,...in relation to a fire at the factory of a supplier in Pakistan...

Under the Rome II Regulation, the law applicable to compensation claims arising out of a tort or delict is the law of the country in which the damage occurred, i.e. Pakistan.  Pakistani tort law is based on English common law so, if the case proceeds to a trial on the merits, we will have the unusual situation of a German court deciding a case based on the English common law of negligence.  This is all the more remarkable given that the English courts have never before attributed liability to a purchaser company for human rights impacts in its supply chain...

The law does not necessarily impose a duty on a purchaser company to prevent adverse human rights impacts in its supply chain...In KiK, the claimants contend that KiK owed them a duty of care to procure a healthy and safe working environment and breached this duty by failing to do its share to prevent the fire, and the resulting harm...

The KiK case presents the unusual situation in which a German court is being asked to decide a case on common law principles, in circumstances where there is no firm precedent for a duty of care...[N]o provisions of German law explicitly prescribe responsibility for a supplier or subsidiary in this context...[T]here have been attempts to establish responsibility by reference to other concepts under German law...

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