Sucking up responsibility: how the Dyson ruling impacts British business

Introduction

If your business has a supply chain based overseas, the Dyson case that was settled earlier this year is worth noting. Dyson denied any wrongdoing, and the workers’ claims were not ultimately tested at trial. But an important ruling by the Supreme Court has fundamentally changed how British businesses need to think about their responsibility for overseas supply chains.

Normally, you might expect claims brought by overseas workers about conditions in an overseas factory you don’t own or operate to be heard in the courts of that country.

The Dyson decision changes that assumption. It shows that British businesses using overseas factories can be required to answer claims about what happens there in the English courts, even where they do not own or operate the overseas factory concerned.

The practical lesson is this: You don’t necessarily need to own or operate an overseas factory for a UK court to call you to account for what happens inside it.

What actually happened?

Twenty-four migrant workers from Nepal and Bangladesh brought a claim against Dyson over alleged serious violations at two Malaysian factories making parts for Dyson products, including allegations of forced labour, false imprisonment, assault, battery, cruel and degrading treatment and exposure to extremely hazardous working conditions and abusive living conditions.

Dyson didn’t own or manage the factories – they were operated by suppliers several steps removed from Dyson’s UK operations. Dyson sought to have the claims heard in Malaysia rather than England and argued that Malaysia was the proper forum. The British Courts ruled that the workers’ claims could be heard here, due to Dyson being domiciled here.

This should catch your attention. Until now, supply-chain cases have often involved parent companies, subsidiaries or group operations. They succeeded against companies that owned the overseas operation outright, think mining and oil giants and their subsidiaries.

Dyson was different: this was an ordinary commercial supplier relationship – the kind many businesses rely on. The workers argued that Dyson UK had enough oversight of the supplier’s factory standards to owe them a duty of care and had benefited financially from the lower costs that came with the exploitation.

The English courts did not decide whether that duty existed or whether Dyson was liable; they decided that the claims could be heard here. Dyson later settled the claims, without any admission of liability and without a trial on merits.

Why this matters for you

As the Court of Appeal put it, because Dyson is domiciled in the UK it “can reasonably expect, and be expected, to meet claims against it” in the English courts.

Most businesses don’t make things themselves anymore. You buy from suppliers, who may well buy from their own suppliers, often across several countries and several tiers you don’t own or control. Despite that lack of ownership, this decision shows that UK businesses may still face claims in England about alleged harm in overseas supply chains which are not under your control.

UK courts have now shown they’re willing to hear these claims even without direct ownership of the overseas workplace. The financial exposure could go beyond ordinary compensation, where like in the Dyson case, claimants plead arguments such as unjust enrichment, although those issues were not tested at trial in Dyson.

Claims also tend to snowball fast, as Dyson found when 24 claimants soon became over 100. And reputational damage doesn’t wait for a verdict; Dyson admitted nothing, yet its name is now permanently associated with this story.

What you can do about this

If you source products from overseas suppliers, particularly where they feature your brand, it’s vital that you seek to close the gap between what your policies say and what’s actually happening on the ground, because that gap is where the risk really sits. In practice, that means genuinely knowing who’s in your supply chain beyond your first-tier suppliers, making due diligence real rather than a desktop exercise, and having a remediation plan ready before you actually need one. It means getting ahead of scrutiny rather than waiting to be named, and being honest about whether your own commercial pressures, on cost, margin or delivery times, might be quietly contributing to the risk, rather than just exposing you to it.

The Dyson case is a clear signal of litigation and reputational risk to British business. Getting your due diligence right is not just about avoiding a worst-case scenario, it’s what good, credible businesses are increasingly expected to do.

If you’re not entirely sure how exposed your supply chain is, or whether your current due diligence would hold up to this kind of scrutiny, it is time for you to make those assessments, look at where your risk actually sits and what you can do to reduce it. If you’d like help with these assessments, please feel free to get in touch