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December 15, 2017

Settlement reached in Bangladesh Accord arbitration

A partial settlement has been reached in an arbitration case filed last year against two "leading" fashion brands for non-compliance with the Bangladesh Accord on Fire and Building Safety.

A partial settlement has been reached in an arbitration case filed last year against two “leading” fashion brands for non-compliance with the Bangladesh Accord on Fire and Building Safety.

Claims were made by unions against the two unnamed global brands in 2016 that they failed to require suppliers to remediate facilities within the mandatory deadlines imposed by the Accord, and failed to negotiate commercial terms to make it financially feasible for their suppliers to cover the costs of remediation.

IndustriAll Global Union and Uni Global Union say they have now reached a settlement agreement in one of the two cases, ensuring the supplier factories associated with the fashion brand are remediated and that substantial funds are available for that work, consistent with the 2013 Bangladesh Accord.

The case had hinged on whether the global brands involved met the Accord requirements to require their suppliers to remediate facilities within the mandatory deadlines imposed by the Accord and to negotiate commercial terms to make it financially feasible for their suppliers to cover the costs of remediation.

The Permanent Court of Arbitration at The Hague has required that the names of the brands remain confidential.

The legally-binding five-year Accord commits signatories to independent safety inspections with public reports on all their Bangladeshi suppliers, mandatory repairs and renovations, the obligation by brands to underwrite the costs of safety upgrades, and repercussions for suppliers that refuse to improve conditions including the termination of business. It also binds signatories to maintain sourcing volumes in Bangladesh for two years.

So far, the Accord’s inspectors have completed fire and building safety reviews at 1,800 facilities, which supply more than 200 signatory brands. Accord engineers have identified over 118,500 fire, electrical and structural hazards at these factories.

Nearly 80% of workplace dangers discovered in the Accord’s original round of inspections have been remediated, and 500 Accord factories have completed 90% or more of the necessary fixes.

A second Accord was signed in June of this year, which will go into effect when the original agreement expires in May 2018. However, the group admitted recently that major life-threatening safety concerns remain outstanding in too many of the factories it monitors.

Accord clarifies role in Bangladesh beyond 2018

Bangladesh Accord admits major safety concerns remain

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