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Dutch Ruling: A taste of things to come?

In a landmark ruling on 22 November 2023, an Amsterdam Court held Dutch retailer G-Star RAW accountable for abruptly ending a contract with Vert, a Vietnamese clothing manufacturer.

Why it matters: The ruling sets a precedent for suppliers to sue buyers for contract terminations during the pandemic, potentially leading to more legal action and increased scrutiny on due diligence and human rights.

By the numbers: G-Star was ordered to pay Vert US $2.6 million in damages, along with additional costs amounting to USD 16,298 and up to €25,000 for out-of-court costs.

The big picture: This ruling highlights the potential consequences for buyers who terminate contracts due to force majeure claims and emphasizes the need for careful consideration of contractual obligations.

What's next: Vert is considering an appeal, arguing that the damages awarded are insufficient and have been miscalculated.

What they're saying: "It's very unusual to see a supplier sue a buyer, and win, but my guess is that a lot of pandemic-related force majeure contract terminations would not stand up to legal scrutiny." - Auret van Heerden

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Additional material: 

Auret van Heerden quote:

“It's very unusual to see a supplier sue a buyer, and win, but my guess is that a lot of pandemic-related force majeure contract terminations would not stand up to legal scrutiny. Will this court victory encourage more suppliers to sue buyers for contracts they broke during the pandemic? The threat of legal action by suppliers will only add to buyer's woes since NGOs are planning to ramp up complaints and cases concerning due diligence and linkage to adverse human rights and environmental impacts. Just look at how many cases the Cerrejón coal mine in Colombia has generated.”

Vert is considering an appeal because it believes that the damages awarded by the Amsterdam Court have not been calculated correctly and are insufficient. The ruling, in Dutch, is available: here

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Authors: Tom Hayes

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