Court action to stop UK government department lifting ban on child and forced labour

by The Corner House and Samata

first published 30 April 2010

Lawyers acting for The Corner House and Indian group Samata requested a Judicial Review of the decision by the UK's Export Credits Guarantee Department (ECGD) effectively scrapping its absolute ban on providing financial support to projects overseas involving "harmful" child labour and forced labour. ECGD stated in response that it does not have to consider whether its support contributes to human rights abuse, because it "does not owe obligations to persons outside the jurisdiction of the UK".

The "Grounds for Judicial Review" were lodged just hours before the ECGD's new policy came into effect on 1 May 2010.

Under the ECGD's new policy, the Department will not assess some projects for their potential environmental and human rights impacts, including their potential use of child and forced labour. Projects requesting short-term (two years) export credits or projects in which the UK exporters' share is worth less than about £10 million will in future be approved without any screening.

Moreover, ECGD will not inform applicants that it does in fact have a policy of refusing to back projects that involve child or forced labour. As a result of its "don't ask, don't tell" policy, the risk of ECGD using taxpayer-guaranteed money to support child labour and forced labour is greatly enhanced.


The "Grounds" state clearly that:

"It is likely that UK taxpayer-backed funds will now be used to support (and in the event of a default, provide funds to) those who operate forced labour practices."

The Corner House and Samata (a community organisation representing the interests of the tribal people in the mining areas of Andhra Pradesh) argue that for ECGD to provide UK, taxpayer-backed, support for forced labour would amount to a breach of the European Convention on Human Rights(ECHR). Article 4 of this Convention places an absolute duty upon the state to prevent forced labour. As a government department, the ECGD has a positive obligation to ensure that it does not facilitate forced labour by taking reasonable steps -- such as screening and assessment -- to avoid providing taxpayer support for it.

The ECGD has suggested that any breach of Article 4 concerning its conduct would arise outside the UK where the UK Court has no jurisdiction. It even states candidly that:

"there is no arguable case that the ECHR or the 1998 [Human Rights] Act would apply to the provision by ECGD of support to an exporter who is involved in a project which operates forced labour practices outside UK territory."

The Corner House and Samata contend that the Convention applies even if any slavery takes place outside the UK:

"For similar reasons, deporting someone to face torture or the death penalty abroad are also breaches of the ECHR, even though the relevant torture or execution will take place outside the UK."

ECGD's decision to rescind its ban on supporting projects that use "harmful" child labour and forced labour will have potentially severe consequences for thousands of the estimated 12.3 million people across the world trapped in situations of forced labour and the estimated 218 million child labourers around the world. Child labour has been found in projects similar to those that have historically been financed by ECGD.

The justification for the policy change is to reduce a supposed burden on business -- a loud and clear echo of similar justifications used historically to justify the use of slave labour and child labour.

On 1 June 2010, the new Secretary of State for Business, Innovation and Skills (who oversees the ECGD and has just been appointed by the UK's new Conservative-Liberal Democratic coalition government that replaced the Labour government under which ECGD had changed its policies) issued its response to the "Grounds for Judicial Review".  Of particular note is that ECGD stated categorically that it is under no legal obligation to assess the contracts it supports abroad for their potential use of child or forced labour because ECGD "does not owe obligations to persons outside the jurisdiction of the UK" (para 57).

Lawyers acting for both groups issued a brief Reply to these Grounds on 16 June 2010 pointing out how ECGD's policy has, in practice, been abandoned.

This was followed  by another reply on 18 June drawing the court's attention to the ECGD's new application forms and guidance for those applying for ECGD's support, neither of which mention any ban on child or forced labour.

Having read all the legal papers, on 23 July 2010, the Honourable Mr Justice Ouseley refused The Corner House and Samata permission to take a judicial review, stating that the claim was not arguable in law, even though it related to important issues of policy.

In light of this ruling, The Corner House and Samata withdrew their application for judicial review.

The Export Credits Guarantee Department (ECGD) is a government department that uses taxpayers' money to provide subsidised insurance and guarantees to UK exporting companies against the risks of operating abroad (such as not being paid). In the past, ECGD has backed a range of environmentally and socially destructive projects -- large dams, oil pipelines and arms sales -- many of which have involved human rights abuses.

Until 2003, it was ECGD policy to back projects involving child or forced labour only in "exceptional circumstances". Under pressure from non-governmental organisations and parliamentarians, however, it adopted an absolute ban on supporting such projects. From 2002 to 2010, ECGD screened and assessed all applications for ECGD support (except aerospace applications) for their potential environmental and human rights impacts. But under the new policy, many new projects will be exempt from such screening and assessment.

ECGD's list of countries for which it will provide support to UK companies exporting to them have poor records on child and forced labour. These include China (which has not signed the major international conventions against forced labour, such as the International Labour Organisation's 1957 Abolition of Forced Labour Convention), India, Russia and Brazil (where an estimated 25,000-40,000 Brazilians are slave labourers).

The government announced its decision on 1 April 2010 to change ECGD's screening and assessment policy as of 1 May 2010 after public consultations held from December 2009 onwards.

Lawyers acting on behalf of The Corner House issued a letter to ECGD's Chief Executive on 12 April 2010 laying out their intention to challenge the new policy in the courts.