Author: Alexander Wildschütz
This article is taken from the latest edition of Fladgate’s Fashion Update. Please email the marketing team on firstname.lastname@example.org to be added to the mailing list for future updates.
Clothing retailers are subject to ever increasing scrutiny from consumers over the working practices and conditions in which their products are being produced, in particular in respect of goods which are manufactured in low-cost locations. In December 2015, Primark hit the headlines when a shopper reported finding a note in a pair of socks which apparently was a “cry for help” from a Chinese worker. Although this appeared to have been a hoax, Primark nevertheless had to deal carefully with the publicity generated.
A large proportion of low-cost textile products are manufactured in countries such as Bangladesh and China where labour tends to be cheaper. The often poor conditions of some factories in countries such as these were highlighted by the collapse of a factory building in Bangladesh in April 2013 which claimed more than 1,000 lives. The industry responded to this tragedy by forming the “Accord on Fire and Building Safety in Bangladesh” (ACCORD). The ACCORD is a legally binding agreement between fashion brands, retailers and local and international trade unions designed to monitor and improve health and safety standards in the Bangladeshi garment making industry. The ACCORD provides for a regime of inspections and, where necessary, remedial works in order to ensure minimum standards of safety at the factory buildings. It also obliges its signatories to cease doing business with suppliers who fall short of these standards and refuse to take remedial action.
The recent High Court case of Liberty Fashion Wears Ltd v (1) Primark Stores Limited (2) Primark Ethical Trading Limited (3) Primark (UK) Limited  EWHC 415 (QB) illustrates that the ACCORD signatories have to apply a balanced approach when publicising breaches of the ACCORD standards. During an inspection of a manufacturing site owned by a Bangladeshi garment producer Liberty Fashion Wears Ltd (LFWL), the building was found to be unsafe. Upon receiving notice of the report, Primark demanded that production stop and that the building be evacuated immediately. LFWL refused and produced its own report which declared the building to be safe. However, Primark was not satisfied with LFWL’s report and identified a number of shortcomings in that second inspection which it said rendered that report unreliable. Accordingly, Primark renewed its demand for the building to be cleared. When LFWL refused to agree a plan for the remedy of defects and, in particular, would not agree to the immediate evacuation of the building, Primark terminated its manufacturing orders and, in the ensuing days, published a press release on the ACCORD website and in a Bangladesh newspaper explaining its decision and the background.
LFWL responded with a defamation claim arguing that as a result of the negative publicity it had suffered losses of just under £13 million. LFWL’s claim was dismissed mainly on technical grounds without the judge having to decide the facts in dispute. Although the recent reforms of English defamation law have restricted the ability of a corporation to sue purely for injured reputation, actual financial loss caused by an unjustified harmful statement will put the maker of such a statement at risk of liability. As a result, considerable care needs to be taken when choosing the forum, format and contents of a potentially damaging press release or publication.
Alexander Wildschütz, Partner, Fladgate LLP (email@example.com)