The claim against Dyson
A group of claimants has threatened legal action against global manufacturer Dyson for its alleged responsibility for the actions of a Malaysian-domiciled third party with which it had contracted to produce parts for its vacuum cleaners. In short, it was alleged that (i) the third-party contractor, ATA Limited ("ATA"), had engaged in forced labour practices, (ii) Dyson owed a duty of care to the victims of the alleged forced labour practices, (iii) Dyson failed to protect the victims, and (iv) Dyson financially benefitted from the practices. The threatened legal action, made public earlier this year, was accompanied by a well-publicised documentary broadcast in the UK on Channel 4, which received significant attention on social media.
Following the publicity associated with the documentary and the threatened legal action, representatives of Dyson confirmed that it had previously been made aware of allegations regarding ATA. As was confirmed by a Dyson spokesperson at the time, two internal and four external audits were performed on ATA between 2019 and 2021. However, in September 2021, a whistle-blower made allegations regarding "unacceptable actions" by staff of ATA, following which Dyson launched further external investigations into the allegations.
Though the findings are not publicly available, it was reported that the final independent investigation uncovered substantial issues relating to forced labour. In November 2021, after receiving the results of the final audit, Dyson announced that it was terminating its commercial relationship with ATA with six months' contractual notice. This, however, was not enough to prevent the group of claimants from threatening to issue a value chain liability claim in the High Court in London. We understand that, as at the date of this article, the proceedings remain at the pre-action stage.
The case raises important questions about the value of social audits in uncovering human rights abuses and other forms of corporate misfeasance. Social audits and related certification schemes are often seen as one of the main methods of conducting human rights and health and safety due diligence on a company's value chains. However, the Business and Human Rights Resource Centre's 2021 Social Audit Report argues that such measures have systematically failed to improve labour conditions and could, in the worst cases, perpetuate human rights abuses (see our related article on Social Auditor Accountability – Proposals for Reform for further commentary).
This case also highlights the need for companies with complex supply chains and international operations to be prepared to address allegations of impropriety and misconduct in their value chains (both legally and reputationally).