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Complaint

ECCHR, Sherpa & UGF vs Louis Dreyfus

Child labour in the Uzbek cotton trade

Date filed
23 December 2010
Keywords
Countries of harm
Current status
Agreement
Sectors
NCP

Allegations

ECCHR, Sherpa, and UGF filed a joint complaint against 7 cotton dealers from France, Germany, Switzerland and the United Kingdom for knowingly profiting from (forced) child labour in the Uzbek cotton industry.

The use of child labour in the cotton harvest in Uzbekistan is a recognized problem. During the harvest season, schoolchildren are taken from classes and forced to pick cotton under poor labour conditions. The complainants claim that the money earned through the cotton trade flows directly into the Uzbek state treasury, leaving the families of the affected children with very little profit from their hard work. The complainants argue that if companies have built up intensive trade relations with state-owned enterprises of the Uzbek regime they should be aware of the problem of child labour in Uzbekistan and can thus be held accountable for their role in supporting and maintaining the system of forced child labour

Relevant OECD Guidelines

Outcome

The complaints against Otto Stadtlander, Paul Reinhart, ECOM and Devot were filed simultaneously at the French, German and Swiss NCPs in October 2010. In early December 2010, additional complaints against Cargill Cotton and ICT Cotton were filed at the UK NCP, and on the 23rd of December a complaint was filed against Louis Dreyfus at the Swiss NCP.

Despite receiving the complaints two months later than the other NCPs, the UK NCP was the first to act and the first to facilitate a settlement. In its initial assessment, the UK NCP concluded that the presence or lack of an investment nexus is not an appropriate criterion for determining whether a complaint deserves further consideration and subsequently accepted the two complaints in February 2011.

The UK NCP then proceeded to facilitate an agreement between ECCHR, Cargill Cotton UK and ICT Cotton UK on a number of concrete measures to be undertaken by the companies in order to improve the human rights situation in Uzbekistan. The parties also agreed to stay in close contact, including regularly informing each other about progress and meeting again in one years time for a thorough evaluation of the progress made. This meeting will be facilitated by the UK NCP.

The Swiss NCP also accepted the three complaints against Swiss companies ECOM, Paul Reinhart and Louis Dreyfuss in March 2011. In line with the UK NCPs decision, the Swiss NCP acknowledged the companies responsibility for conditions in their supply chains.

Although ECOM initially denied any violation of the Guidelines, after the Swiss NCP had facilitated informal meetings between the parties and then accepted the complaint, the company accepted the NCPs offer to facilitate a dialogue between the parties. Mediation was successful, and in the final agreement ECOM acknowledged its responsibility for the (child) labour situation in Uzbekistan. ECOM promised to take steps to eradicate and prevent child labour in its supply chain. The parties also agreed to continue to exchange information on the situation in Uzbekistan. ECCHR will evaluate the steps undertaken by ECOM on a regular basis.

The NCP also facilitated a mediated dialogue in the Louis Dreyfus case. During the mediation the company acknowledged the problems in the Uzbek cotton trade and that cotton traders have a responsibility in the issue. The parties agreed that if the consultations between cotton traders and the Uzbek government fail to improve the situation, ECCHR and Louis Dreyfus will meet again for a dialogue on how to find a solution. Mediation was also successful in the Paul Reinhart case, which also ended in a negotiated agreement.

The case against Otto Stadtlander was handled by the German NCP. The company maintained that it received its cotton from third parties and not directly from the Uzbek cotton selling agencies, as was alleged by ECCHR. Moreover, Uzbek cotton represents only a relatively small proportion of the total turnover of the company. Nevertheless, the company agreed to an NCP-mediated dialogue with ECCHR that ended successfully with an agreement in December 2011. The company agreed to take measures to avoid forced child labour and to report back to the NCP on the action it had taken within one year. The agreement gained further significance when the German government subsequently took a strong position against child labour in the Uzbek cotton harvest.

In September 2012, the French NCP issued a final statement in the Devcot case. The NCP held that the trade in goods produced from forced child labor constitutes a flagrant violation of the OECD Guidelines, but stated that Devcot was not involved in the purchase of such goods because Devcot has not purchased any Uzbek cotton in the last few years. Additionally, the NCP noted Devcots commitment not to resume its trade in Uzbekistan until child labour has ended. The NCP also reminded the company of its responsibility for its supply chain and invited Devcot to carry out due diligence and to encourage its business partners to implement the OECD Guidelines. ECCHR and SHERPA welcome this decision as a new step towards increased supply chain responsibility.

In a follow-up evaluation published in May 2013, ECCHR concluded that the submission of the cases had encouraged traders to take some steps to pressure the Uzbek government to end forced labour. However, after the cases were concluded and the media coverage decreased, the companies commitment tailed off.

Despite increased respect for the ban on child labour, the 2012 cotton harvest remained marked by continued state-sponsored forced labour of children and adults. If the companies had taken a strong public position against the practice, this may have put sufficient pressure on the regime to improve the situation. The companies, however, refused to do so. According to ECCHR, the cessation of business relationships with the Uzbek cotton industry remains the only adequate measure to apply further pressure on the Uzbek government and ensure that European companies do not contribute to human rights violations in Uzbekistan.

ECCHR nevertheless highlighted the fact that the Guidelines cases have triggered several positive responses from leading investment banks, which now monitor the Uzbek forced labour situation with help from ECCHR.

More details

Defendant
Company in violation
Other companies involved
Complainants
Affected people

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