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Fashion Retailer’s Ethical Stance Triggered Libel Action

A leading UK fashion retailer which took an ethical stance and withdrew its business from an overseas supplier which it believed was putting its workforce at risk has succeeded in fighting off a High Court defamation claim.

The retailer introduced a rigorous inspection regime in respect of its suppliers after a garment factory collapsed in Bangladesh, resulting in over 1,000 deaths. Following one such inspection, it took the view that one of the supplier’s factories, also in Bangladesh, was structurally unsound and potentially very unsafe.

Although that was disputed, the retailer ceased trading with the supplier and issued a press release announcing its decision. Allegations concerning the supplier also appeared on a website and it launched a libel claim in London, initially seeking around £13 million in compensation for the damage to its trading reputation.

In striking out the claim, however, the Court noted that the words complained of had been the subject of only very limited publication in the UK. The company had delayed more than a year before lodging proceedings and that placed a question mark over the genuineness of its desire for vindication. The legal costs of the case were also likely to greatly exceed any damages that might be awarded to a foreign company with no reputation of substance to protect in the UK.