German court dismisses Ali Enterprises claim

brett mathews | 11th January 2019

DORTMUND – A German court has dismissed a case which claimed retailer KiK should take responsibility for fire safety deficiencies which led to the tragic garment factory fire at Ali Enterprises in Pakistan. 258 died and dozens were injured when the textile factory burned down on 11 September 2012 in Karachi. Clothing retailer KiK was the factory’s main customer and four of the survivors and bereaved had pursued a case to court in Germany, arguing that KiK should be held liable because of its joint responsibility for inadequate fire safety precautions in the factory. More generally, the case aimed to make clear that transnational corporations are responsible for working conditions at their subsidiaries and suppliers abroad.

However, the regional Court in Dortmund said it will not investigate the facts in the case against the German textile retailer KiK, rejecting the lawsuit, and referring to a statutory limitation.

The claim – initiated by the European Center for Constitutional and Human Rights (ECCHR) and supported by medico international – was the first of its kind in Germany.

“KiK was the factory’s main customer and therefore bears some of the responsibility for the inadequate fire safety measures,” argued lawyer Remo Klinger, who represented the Pakistani plaintiffs. “KiK evaded its share of responsibility when referring to the statute of limitations and prevented the court from discussing the substantive facts of this case, as well as general questions related to the due diligence of German companies.”

The claimants will decide whether they want to appeal the court’s decision after evaluating the written judgment. 

Miriam Saage-Maaß from ECCHR stressed the fundamental importance of the proceedings: “German companies of all kinds have closely followed the complaint against KiK. Legal experts from Germany, the UK and Switzerland have supported the complainants’ arguments. Everyone understands that the current law does not fulfil all fundamental demands.” Thomas Seibert from medico international added: “The voluntary commitments from companies are not sufficient. In order to enforce human and labor rights, politicians have to implement laws for an efficient corporate liability.”

Tellingly, even KiK itself suggested there is a greater need for clarity with regards the law when it comes to transnational corporations and their supply chains.

A spokesperson from the  business said: “Several audit reports, most recently three weeks before the fire, have documented no shortcomings in fire safety. The complaint shows, however, that companies need legal certainty. It can not be that due to lack of legal regulations companies based on foreign law in Germany can be sued and thus are dependent on different interpretations of the previously voluntary recommendations. Therefore, we are in favour of a clear legal regulation of corporate due diligence at European level.”