The Australian clothing and footwear union is taking athletic footwear and clothing giant Nike Inc to court on Tuesday, alleging it has broken an agreement designed to allow the union to track down sweatshops.

The Federal Court in Melbourne is scheduled to hold two days of hearings beginning on Tuesday on the case brought last year by the Textile Clothing and Footwear Union of Australia.

The union argues that Nike has not upheld an industrial agreement which requires it to file lists of its manufacturing contractors so that the union can trace those contractors and their subcontracted workers.

Nike, long a target of activists against exploitation of workers in developing countries, said it had written confirmations from all its manufacturing partners that they would not use homeworkers.

The company said it would stop doing business with any contractor if it did use homeworkers.

"Homeworkers are not used in the manufacture of Nike products. We strongly believe a factory environment allows Nike to ensure fair and equitable working conditions," Nike Australia managing director Mel Sutton said in a statement.

The union will be seeking the maximum penalty against Nike of A$10,000 per breach of the agreement.