Supply chain liability: pushing the boundaries of the common law?

On 29 August 2016, in a claim by Pakistani survivors and legal heirs against German retailer KiK for injuries and deaths during a fire at a factory supplying jeans in Karachi, German judges accepted jurisdiction and granted legal aid to the Pakistani claimants to cover the legal fees. The case pending before the German court thus poses the question of supply chain liability. Taking the lawsuit by the Pakistani plaintiffs against KiK in Germany as a case study, this article provides an analysis of the available legal grounds for such liability. Economic changes have ushered in linkages between purchasers and suppliers that call for strong principles of liability – principles that are already embedded in the law but which need fresh articulation and application. English courts have only recently recognised that under certain circumstances, liability might attach to a parent company under the tort of negligence for damage to third parties ostensibly caused by its subsidiary. The KiK case is testing the extension of such liability to certain supply chain relationships. Beyond that, the case is also testing the application of the rules on non-delegable duties and vicarious liability in the supply chain context. Even if the court disagrees with the claimants’ position, the novel arguments advanced in this case are likely to be the starting point for an important debate about the proper fit between traditional tort law and the fast changing commercial and employment relationships of the 21st century.