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Clifford Chance

Clifford Chance

Business & Human Rights Insights

The failure of the Kik Case and the call for stronger corporate due diligence laws

The Higher Regional Court in Hamm, Germany has rejected the claimants' application for legal aid in Jabir and others v. KiK Textilien und Non-Food GmbH.

In March 2015, four individuals affected by a fire at the Ali Enterprises textile factory in Karachi, Pakistan in 2012, which killed 262 workers, filed a civil action against KiK in a court in Germany seeking EUR 30,000 each in compensation. The claimants alleged that they were owed a direct duty of care by Kik, and that Kik had breached this direct duty of care, along with a non-delegable duty of care; and that, additionally, KiK was vicariously liable for the negligence of Ali Enterprises.

The Regional Court in Dortmund, Germany, dismissed the lawsuit in January 2019, on the basis that the claims were statute-barred, owing to the expiration of the limitation period.

The decision by the Higher Regional Court in Hamm to reject the claimants' application for legal aid has led to calls for an improvement into corporate due diligence laws and for greater emphasis on the prevention of human rights violations.

The European Center for Constitutional and Human Rights (ECCHR) has called for the law to be urgently updated, to ensure that those affected by corporate rights violations get access to the justice they deserve. ECCHR has pressed for a fundamental reform of Germany's corporate due diligence laws.

One such corporate due diligence law has already been proposed in Germany, as a framework law on the sustainable design of global value chains and the amendment of commercial law provisions, including a core law on the regulation of human rights and environmental due diligence in global value chains. If implemented, the law would require applicable companies to comply with sections 4 to 10 of the proposed law, which provide that companies carry out internal supply chain risk assessments, appoint a compliance officer to monitor compliance with the law’s requirements, and establish an effective complaints mechanism for foreign workers.

A translation of the proposed law can be read here.