Smart Shirts Limited v Sheffield Hallam University [2025] EWHC 1353 (KB)

[2025] EWHC 1353 (KB)Case No KB-2023-004736
IN THE HIGH COURT OF JUSTICE
KING’S BENCH DIVISION
MEDIA & COMMUNICATIONS LIST
Venue Royal Courts of Justice, Strand, London WC2A 2LLDate 22 May 2025
Before
MR JUSTICE NICKLIN
Between
SMART SHIRTS LIMITEDClaimantSHEFFIELD HALLAM UNIVERSITYDefendant
WILLIAM BENNETT KC and RICHARD MUNDEN (instructed by Wedlake Bell LLP) for ClaimantSARA MANSOORI KC and AIDAN WILLS (instructed by Kennedys Law LLP) for Defendant
APPROVED JUDGMENTThis Transcript is Crown Copyright. It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority. All rights are reserved.Transcript of the Stenograph Notes of Marten Walsh Cherer Ltd.,2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.Telephone No: 020 7067 2900. DX 410 LDEEmail: info@martenwalshcherer.comWeb: www.martenwalshcherer.com

[emphasis in the original]

ZEHJIANG SUNRISE

[1]This is the retrial of preliminary issues as to meaning ordered by the Court of Appeal, on 1 April 2025, following the disposal of an appeal by consent that set-aside the determination of those issues at the first trial (see [2024] EWHC 3276 (KB)).[2]The claim is for libel commenced on 19 December 2023. It concerns two publications. The first is an e-Mail, sent in late November 2023 to several retailers (“the E-Mail”). The second publication was a report by the Defendant, published in early December 2023 titled, “Tailoring Responsibility: Tracing Apparel Supply Chains from the Uyghur Region to Europe” (“the Report”). The text of the Email and the Report is set out in the Annex to this judgment with paragraph numbers added in square brackets.[3]In the original Particulars of Claim, dated 18 November 2024, the Claimant initially contended that the publications bore the following natural and ordinary meaning that was defamatory of it.(1) the E-Mail: “The Claimant is obtaining raw materials and products which have been obtained and/or produced using forced labour from the Xinjiang Uyghur Autonomous Region”.(2) The Report: “The Claimant is obtaining raw materials and products which have been obtained and/or produced using forced labour from the Xinjiang Uyghur Autonomous Region. It is thereby complicit in the People’s Republic of China’s inflicting of genocidal policies on the Uyghur people and associated appalling human rights violations against them, including familial separation, land expropriation, cultural erasure, resource exploitation and imprisonment in extrajudicial internment camps where detainees are subjected to physical and psychological torture, sexual violence and forced labour. Smart Shirts conceals from its customers and generally the fact that its products have been produced/manufactured using forced labour in the Uyghur region”.[4]A Defence was filed dated 23 February 2024. For present purposes I would note the following:(1) it denied the natural and ordinary meanings advanced by the Claimant; and(2) it advanced substantive defences of truth under s.2 Defamation Act 2013, public interest under s.4 of the same Act and qualified privilege under s.15(1), Schedule 1, paragraph 8 of the Defamation Act of 1996.[5]In relation to the truth defence, the meaning of the Defendant sought to prove true was: “… that there were strong grounds to suspect that the Claimant was using raw materials or fabrics from the Xinjiang Uyghur Autonomous Region of China which were produced or very likely to have been produced using forced labour”.[6]A Reply dated 10 May 2024 has been filed but its contents are not material for the hearing today. I have not scrutinised the Defence or the Reply for the purposes of this hearing, beyond the cursory identification of the matters that I have set out above. The substantive defences relied upon, and other matters raised the Defence, and answered in the Reply, are not relevant to the determination of meaning.[7]On 25 July 2024, Master Brown made an order by consent directing the trial of the following preliminary issues:(1) the natural and ordinary meaning of the words complained of (including, without limitation, whether any allegation against the Claimant was directed at its present or past conduct; the Chase level of any such allegation; and (if appropriate) the types of material to which it related); and(2) whether the words complained of are defamatory of the Claimant at common law.[8]The rival cases, advanced by the parties in their statements of case, as to the natural and ordinary meaning of the E-Mail and the Report were vulnerable to a challenge that neither party’s meaning had identified what was being alleged to be defamatory of the Claimant and that the parties had, in fact, managed to produce two rival meanings neither of which was defamatory of the Claimant. Unsurprisingly this was an issue that troubled Warby LJ when he granted permission to appeal. It is fundamental that natural ordinary meaning, whether advanced by a claimant or by a defendant, must identify some act or condition of the claimant that is defamatory of the claimant.[9]When the Court of Appeal allowed the appeal by consent, it ordered a re-trial and directed service by the parties of what were called, “Statements of Case for the preliminary issues retrial”. The parties have complied with that order. The result is that, at this retrial, each party has reformulated its case as to meaning as to the E-Mail and the Report that addresses the issue that was identified by Warby LJ. The parties have agreed that amendments will be made to the statements of case, as required, consequent on the Court’s decision at this re-trial.[10]In its Statement of Case for the preliminary issues retrial, dated 14 April 2025, the Claimant has set out its case as follows:(1) The E-Mail, in its natural and ordinary meaning, meant that: “… the Claimant is knowingly and wrongfully using forced labour from the Xinjiang Uyghur Autonomous Region to produce and manufacture textiles and apparel using materials produced by the use of forced labour in the Xinjiang Uyghur Autonomous Region to produce and manufacture textiles and apparel and then selling such tainted textiles and apparel internationally including to the European market”.(2) The Report, in its natural and ordinary meaning, meant that: “(a) The Claimant is knowingly and wrongfully obtaining raw materials and products which have been obtained and/or produced using forced labour in the Xinjiang Uyghur Autonomous Region; (b) It is thereby knowingly complicit in the People’s Republic of China’s inflicting of genocidal policies on the Uyghur people and associated appalling human rights violations against them including familial separation, lands appropriation, cultural assimilation, forceful migration, mass surveillance, land expropriation, cultural erasure, resource exploitation and imprisonment in extrajudicial internment camps where detainees are subjected to physical and psychological torture, sexual violence and forced labour. (c) The Claimant deliberately conceals from its customers and the public generally the fact that its products have been produced/manufactured using forced labour in the Uyghur Region”.[11]In its Statement of Case for the preliminary issues retrial, also dated 14 April 2025, the Defendant set out its case as follows: “(1) The Defendant’s primary case on the meaning of the Report is that it means that: ‘There is a risk that the Claimant obtained raw materials or products from Zhejiang Sunrise and Youngor which were produced by victims of forced labour in the Xinjiang Uyghur Autonomous Region’. As stated below this is a meaning which is not defamatory at common law. (2) The Defendant’s secondary case, and its Lucas-Box meaning in respect of the Report, is that the Report means that: ‘As a result of(a) Zhejiang Sunrise’s ownership of and connection with the Claimant, Sunrise’s industrial chain connecting factories in the Uyghur Region to its manufacturing operations in Vietnam and Sri Lanka where the Claimant operates and international customers previously listed by Sunrise sourcing garments via the Claimant and(b) the Claimant having sourced raw materials or products from Sunrise which in turn sourced materials from Youngor and both of which have ties to and source material products from the Uyghur Region; there were grounds to investigate whether the Claimant was knowingly exposed to using raw material or products from the Uyghur Region which were produced or very likely to have been produced by victims of forced labour’. (3) The Defendant’s Lucas-Box meaning in respect of the E-Mail is that the E-Mail means that: ‘There are grounds to investigate whether the Claimant knew that it was using raw materials or supplies from the Xinjiang Uyghur Autonomous Region that were the product of forced labour’. (4) As noted, the Defendant’s primary case on the Report is that it bears no meaning that is defamatory of the Claimant at all. The Defendant accepts that its alternative meanings are defamatory of the Claimant at common law”. ‘There is a risk that the Claimant obtained raw materials or products from Zhejiang Sunrise and Youngor which were produced by victims of forced labour in the Xinjiang Uyghur Autonomous Region’. As stated below this is a meaning which is not defamatory at common law. ‘As a result of (a) Zhejiang Sunrise’s ownership of and connection with the Claimant, Sunrise’s industrial chain connecting factories in the Uyghur Region to its manufacturing operations in Vietnam and Sri Lanka where the Claimant operates and international customers previously listed by Sunrise sourcing garments via the Claimant and (b) the Claimant having sourced raw materials or products from Sunrise which in turn sourced materials from Youngor and both of which have ties to and source material products from the Uyghur Region; there were grounds to investigate whether the Claimant was knowingly exposed to using raw material or products from the Uyghur Region which were produced or very likely to have been produced by victims of forced labour’. ‘There are grounds to investigate whether the Claimant knew that it was using raw materials or supplies from the Xinjiang Uyghur Autonomous Region that were the product of forced labour’.[12]Consistent with the usual practice before the hearing today, I had read the E-Mail and then considered the impact this had on me and the broad meaning it conveyed to me. I then read the entire Report and again considered the overall impact and message it conveyed to me. Only then did I consider the meaning advanced by the parties and their submissions on the preliminary issues: Tinkler -v- Ferguson [2020] EWCA Civ 819 [9] per Longmore LJ. The purpose of doing this is to capture my initial reaction putting myself, so far as possible in the position of the hypothetical ordinary reasonable reader.[13]The approach the assessing the single natural and ordinary meaning is set out in Koutsogiannis -v- Random House Group Limited [2020] 4 WLR 2025 [11]-[16] (as approved by the Court of Appeal in Corbyn -v- Millett [2021] EMLR 19 [8] and Riley -v- Murray [2023] EMLR 3 [11]. The so-called Chase level meanings have importance in this case: see Koutsogiannis [13].[14]Having now concentrated on the meanings articulated by the parties at this hearing, I am satisfied that the Claimant’s revised meaning for the E-Mail and the Report does contain elements of opinion. In the E-Mail, the word “wrongfully”, for example, is a value judgment, likewise when that word appears in the meaning advanced for the Report. Also, allegations of complicity are highly likely to be expressions of opinion.[15]Before turning to the determination of the preliminary issues there is a dispute between the parties that must be resolved as to what is to be treated as constituting the publication for assessing the natural ordinary meaning of the Report. The Report, excluding the front page, ran to some 22 pages. On page 4, there was a “Table of Contents”. The final item on the Table of Contents was: “Annex A - Corporate Responses”.[16]The Claimant argues that the notional ordinary reasonable reader would not have read Annex A. The Defendant says that s/he would have done. As a matter of principle, it is necessary to resolve this issue before going on to determine the natural ordinary meaning of the Report. That is because it affects whether what is in Annex A is included or excluded from consideration.[17]The starting point is Koutsogiannis [12(viii)]:
“The publication must be read as a whole”
. It is this principle which prevents a claimant from suing only on the headline of a newspaper article, for example. For the purposes of determining the natural and ordinary meaning the headline must be read together with the rest of the article: Charleston -v- News Group Newspapers Limited [1995] 2 AC 65, 70. Although, in reality, some readers may read part only of an article, the meaning they would understand the publication to bear is not relevant to the objective natural an ordinary meaning that the law attaches to the publication. That meaning is what the hypothetical ordinary reasonable reader would understand the publication to bear having read the whole of the publication.[18]The next step, in the event of a dispute, is for the Court to identify what is the whole publication. In the days before online publications, the law had to confront the situation of publication of separate articles in the same newspaper and whether they were to be treated, in law, as being the single publication for the purposes of determining meaning. The leading authority on this point is Dee -v- Telegraph Media [2010] EMLR 20. The test is whether the elements of publication sought to be aggregated together are, “sufficiently closely connected to be regarded as a single publication” [29] (a phrase in fact taken from Lord Bridge’s speech from Charleston).[19]The application of the Dee principle is fact specific and depends upon the medium of publication. Here I cite what I said in Harcombe -v- Associated Newspapers Ltd [2025] 1 WLR 405: [382] So far as concerns articles that appear in print editions of newspapers, the principles regarding the circumstances in which separate articles are treated as a single publication are not controversial:(1) Where a single article is published, for the purposes of deciding the single natural and ordinary meaning of the publication, the ordinary reasonable reader is taken to have read the entire article (including headlines etc.): Charleston -v- News Group Newspapers Ltd [1995] 2 AC 65, 72F-73D. This principle applies even if the article continues over several pages: Dee -v- Telegraph Media Group Ltd [2010] EMLR 20 [27].(2) Where several articles are printed in a single edition of a newspaper, the Court must decide whether they were sufficiently closely connected as to be regarded as a single publication. If they are, it does not matter that some readers may have read only some, but not all, of the articles: Dee [29]-[30].(3) The manner of the presentation of multiple articles may nevertheless be relevant to the assessment of the natural and ordinary meaning, “since [that] is affected by the mode of publication (that is, the relative prominence or emphasis given to what is published) as well as by context”: Dee[30]; Charleston p.74D, per Lord Nicholls. [383] In Dee, the Claimant had complained of an article published on the front page, but not of a further article, published on page 20 of a supplement in the same edition of the newspaper. The front-page article contained the words ‘Full story: S20’. In the context of a summary judgment application, the Defendant argued that the Court should rule that the two articles had to be read together for the purposes of determining the single natural and ordinary meaning. Sharp J held that they should. Important factors in Dee were that the subject matter was the same in both articles and the front-page article contained a reference to the second article. [384] It is necessary to keep in mind that there are two distinct concepts. The first, which Dee exemplifies: what is to be treated as the publication for the purposes of determining the single natural and ordinary meaning. The second, what is treated as admissible context for the publication for the purposes of determining that meaning: see Riley -v- Murray [2020] EMLR 20 [16]. In Monroe -v- Hopkins[2017] 4 WLR 68 [38], Warby J noted, relying upon Dee [29]: “The test is not the same as but is influenced by the test for whether two publications are to be treated as one for the purposes of defamation”. [385] Those basic principles also apply to online publication (Ashley -v- Times Newspapers Ltd [2021] EWHC 2082 (QB) [48]), but there can be further considerations, due to the ability in online publications to provide hyperlinks to extrinsic material. [386] The issue of what is to be treated as a single publication (or admissible context on the issue of meaning) in the context of online publication has been considered in several decisions: Monroe [34]-[40]; Falter -v- Atzmon [2018] EWHC 1728 (QB) [12]-[16]; Poulter -v- Times Newspapers Ltd [2018] EWHC 3900 [21]-[24]; and Greenstein -v- Campaign Against Antisemitism [2019] EWHC 281 (QB) [17]. Of potential relevance to the specific issues in this case, I said this in Poulter [24]: ‘Whether readers follow links provided like this is influenced by a number of factors, including: (1) their familiarity with the story or subject matter and whether they consider they already know [what] they are offered by way of further reading; (2) their level of interest in the particular article and whether that drives them to wish to learn more; (3) particular directions given to read other material in the article;(4) if the reader considers that he or she cannot understand what is being said without clicking through to the hyperlink. It might be reasonable to attribute items (3) and (4) to the hypothetical ordinary, reasonable reader, but (1) and (2) will vary reader by reader.’ (1) Where a single article is published, for the purposes of deciding the single natural and ordinary meaning of the publication, the ordinary reasonable reader is taken to have read the entire article (including headlines etc.): Charleston -v- News Group Newspapers Ltd [1995] 2 AC 65, 72F-73D. This principle applies even if the article continues over several pages: Dee -v- Telegraph Media Group Ltd [2010] EMLR 20 [27]. (2) Where several articles are printed in a single edition of a newspaper, the Court must decide whether they were sufficiently closely connected as to be regarded as a single publication. If they are, it does not matter that some readers may have read only some, but not all, of the articles: Dee [29]-[30]. (3) The manner of the presentation of multiple articles may nevertheless be relevant to the assessment of the natural and ordinary meaning, “since [that] is affected by the mode of publication (that is, the relative prominence or emphasis given to what is published) as well as by context”: Dee[30]; Charleston p.74D, per Lord Nicholls. ‘Whether readers follow links provided like this is influenced by a number of factors, including: (1) their familiarity with the story or subject matter and whether they consider they already know [what] they are offered by way of further reading; (2) their level of interest in the particular article and whether that drives them to wish to learn more; (3) particular directions given to read other material in the article; (4) if the reader considers that he or she cannot understand what is being said without clicking through to the hyperlink. It might be reasonable to attribute items (3) and (4) to the hypothetical ordinary, reasonable reader, but (1) and (2) will vary reader by reader.’[20]In Falter I said this: [11] There has been further debate at the hearing about what approach the Court should adopt. I observed in argument that Charleston & News Group Newspapers comes from a different era where print copies of newspapers were essentially the main medium through which people were defamed. In such cases it was relatively straightforward, given that the totality of what was provided to the reader was readily available, to treat the ordinary reasonable reader as having read the entirety of an article including its text, headline, text, furniture, things like that. [12] The Internet provides a degree of challenge to that orthodoxy because it is possible to set out in on-line publications many hyperlinks to external material. It is perhaps unrealistic to proceed on the basis that every reader will follow all the hyperlinks, but everything depends upon its context. For example, if in a single tweet there is a single statement that says, ‘X is a liar’ and then a hyperlink is given, it is almost an irresistible inference to conclude that the ordinary reasonable reader would have to follow the hyperlink in order to make sense of what was being said. At the other end of the spectrum, a very long article could contain a very large number of hyperlinks. Only the most tenacious or diligent reader could be expected to follow every single one of those hyperlinks. Such a reader could hardly be described as the ordinary reasonable reader. How many links any individual reader would follow would depend on an individual’s interest in or knowledge of the subject matter or perhaps other particular reasons for investigating each of the hyperlinks in question. [13] It therefore does not seem to me to be possible to put forward a hard and fast rule that hyperlinks imbedded in an article that is complained of should be treated as having been read by the ordinary reasonable reader. ... [15] Monroe -v- Hopkins gives very helpful guidance, but it does not extend the principle of Charleston -v- News Group into a rigid rule that requires the Court, when determining meaning, to include in consideration material that is available to be read or watched by way of hyperlink. What, if I might summarise, I derive from Monroe -v- Hopkins is that everything is going to depend upon the context in which material is presented to the reader. [16] I suppose, ultimately, if it is a matter of dispute, the Court is going to have to take a view as to what hypothetical reasonable reader is likely to do when presented by an online publication and the extent to which s/he would follow hyperlinks presented to him/her. ...[21]Here, the Report was never published by the Defendant in hard copy. It was an electronic publication made available on the Defendant’s website. The Report itself contains a large number of hyperlinks in the body of the text. Mr Bennett KC, on behalf of the Claimant, argued there are some 173 hyperlinks and, relying on Falter, urges the conclusion that the hypothetical ordinary reasonable reader would not follow all these links and diligently read what each link provided. But Mr Bennett has another point. He contends that the hyperlinks to Annex A in the Report did not actually take the reader to Annex A but instead took the reader to a page on the Defendant’s website where the Report was posted. A reader who wanted to read Annex A would have had to scroll down the page, containing several paragraphs of text, and then follow a further hyperlink to Annex A. Ms Mansoori KC, for the Defendant, accepts that a reader would have to follow that route to get from the relevant hyperlink in the Report to Annex A.[22]It is perhaps unfortunate that something potentially an important as this has not been properly pleaded, or the subject of evidence but, happily, there is no dispute between the parties as to the basic fact that I have set out above.[23]I accept Ms Mansoori KC’s submission that Annex A does not fall to be treated as just another of the 173 or so embedded hyperlinks. It was more important than that. Annex A was included in the Report’s “Table of Contents”, and, expressly referred to in three of the paragraphs of the body of the Report, with a direction that the reader should “see” the Annex. She submits that it was quite clearly presented to the reader as being an integral part of the Report, sufficient to be included in the Table of Contents. She argues therefore that hypothetical ordinary reasonable reader would readily understand that Annex A, unlike other hyperlinks to third party resources, contain material assembled and presented by the authors of the Report.[24]The Claimant argues that there is no direction to the reader that s/he must read Annex A. There was no equivalent direction that the “full story” might appear in Annex A, in contradistinction to the newspaper cases where there is a reference encouraging readers to consult a further article in another part of the newspaper.[25]I accept that point, as far as it goes, but the law looks in substance not form. No reader here could have thought that Annex A was not part of the Report based on reviewing the Table of Contents. The absence of a specific direction to consider Annex A would not itself be determinative, in the same way that there is no specific direction to readers to read every chapter of a book.[26]The Claimant’s strongest argument against treating Annex A as not being part of the publication is the fact that following the link did not immediately deliver the reader to Annex A. Worse, the notional reader had to hunt for the link to Annex A on the website.[27]This is a finally-balanced balance decision. However, this is one of those cases where the Court must take a view as to what the hypothetical ordinary reasonable reader should be treated as likely to do when presented by the link to Annex A. What the reader made of the contents of Annex A is a question relevant to the assessment of meaning, it is not relevant to determining the earlier question of what is to be treated as part of the publication.[28]In my judgment, the process was too involved and too convoluted for the Court to treat the ordinary reasonable reader having clicked on the link, scrolled down the page, clicked on the further link to be taken to Annex A for it to be treated as part of the Report. On the particular evidence in this case, I am not satisfied is that Annex A was sufficiently closely connected with the Report to be regarded as a single publication. It will therefore be excluded from consideration for the purposes of determining the natural ordinary meaning of the Report.[29]A point that arose during the hearing was that the Court was being asked to be determine the issue of what amounted to the publication as a necessary part of the determination of the preliminary issues at this trial. This is a trial and, subject only to being reversed following an appeal, that issue would be now resolved in this litigation once and for all. I was concerned that the Court by doing so should not unwittingly trespass on the parameters of the section 4 defence advanced by the Defendant. As I have said, I have deliberately not considered the terms of this defence because it is not relevant for the issues I need to decide and the less I know about irrelevant matters the better able I am to put myself in the position of the ordinary reasonable reader. Nevertheless, I can readily see that Annex A may potentially have significance for a section 4 defence because it contained the right-to-reply responses that the Defendant received, including that sent that on behalf of the Claimant.[30]My decision today that Annex A is not part of the publication for the purposes of determining the natural and ordinary meaning is not to be taken as any determination of the parameters of any section 4 defence. As I say, it is a point that came up during the hearing. It has not been argued properly, so I need to make plain the Court is not deciding that issue today. If it subsequently becomes contentious, it can be resolved by the Court after proper argument on the point.[31]I am not going to set out in this judgment the arguments that have been advanced in detail by the parties. They have submitted detailed skeleton arguments and helped me today with further oral submissions. I have considered carefully what they have said both in the oral submissions and their written arguments. But the nature of the Court’s task means that prolonged analysis of the arguments advanced by them may actually distract the Court from the key task that must be performed. Particularly with a long document like the Report, there is a real risk of the Court being seduced into carrying out an intense analysis and parsing of the text. That not the correct approach: Koutsogiannis [12(iv) and (v)]. I will refer to particular arguments of the parties where it is necessary to do so to explain my decision.[32]I am going to set out my initial impressions having read the E-Mail and the Report. Each is a self-contained exercise as I already noted. There were no necessary connections between the readership, so they are to be treated as entirely separate publications.[33]The context of the E-Mail is that it was sent by the Defendant to various clothes manufacturers or retailers. The heading was:
“Tailoring Responsibility: Tracing Apparel Supply Chains from the Uyghur Region to Europe”
. It told each retailer or manufacturer to whom it was sent that the Defendant was researching forced labour in the production and manufacture of textile and apparel products. The overarching message was that European retailers were at risk of utilising the product of forced labour in their supply chain, and that they needed to carry out appropriate checks and audits of their suppliers. The E-Mail asked particular questions of each retailer and sought information on each retailer’s efforts to ensure that its suppliers did not source material, inputs or final products from Uyghur Region.[34]The key message that the E-Mail conveyed at Smart Shirts was essentially contained in paragraphs C to E. In that respect, paragraph C would be likely to have struck the notional reader as the core allegation. The Defendant had identified “significant evidence” that Smart Shirts was one of several Chinese textile and apparel suppliers who were sourcing “material inputs and labour” from the Uyghur Region.[35]However, paragraphs D and E expanded on this. They make clear that the onward or downstream supply chain involved numerous intermediary companies some of which were identified in paragraph E. The name “Smart Shirts” appeared twice as part of these intermediary companies. The fact that up to three different corporate emanations of Smart Shirts are identified in the E-Mail at different points in the supply chain does inject some element of confusion as to what message is being sent about the Claimant, but the Court is not determining the issue of reference.[36]The E-Mail was not primarily focusing on attributing culpability of the companies identified in paragraph C. Rather it was suggesting that the ultimate retailer, to whom the E-Mail was addressed, needed to carry out due diligence on its supply chain to ensure that its goods were not the product of or contain materials that were the product of forced labour.[37]If the hypothetical reader were asked what the E-Mail was saying about Smart Shirts, she or he probably would reply along the lines of what was contained in paragraph C. On its own, and even read in the context of the E-Mail as a whole, that does not address precisely what involvement Smart Shirts had in the sourcing. If the same reader were asked what, if anything, the E-Mail was saying about Smart Shirts culpability, I should expect the hypothetical reader might pause, perhaps look back at the text and reflect. Thereafter, it is possible to imagine many versions of a conversation that might ensue. What that shows, in my judgment, is the E-Mail does not make a clear allegation as to the culpability of Smart Shirts. Some readers might conclude that Smart Shirts was culpable, irrespective of actual constructive knowledge, because the reader thought it was Smart Shirts’ duty to ensure that it did not obtain material from sources of forced labour. But that reflects a value judgment of the reader and likely to reflect his or her view to corporate responsibility of those obtaining materials from the Uyghur Region where there were significant concerns about forced labour.[38]In my judgment, the E-Mail is silent on whether Smart Shirts is being alleged to have actual or constructive knowledge that materials that it was supplying to garment manufacturers were in fact the product of forced labour. It would be, in my judgment, an unreasonable jump for the hypothetical reader to conclude that the E-Mail was alleging actual knowledge on the part of the Defendant. That would be to take the worst possible construction of the E-Mail and for one that there is no support. By the same reasoning, it would be an unreasonable conclusion that the Defendant should have known. The overall message of the E-Mail would, however, have alerted the hypothetical reader that there was an issue that needed to be resolved. Read as a whole, the E-Mail clearly alleges that materials produced by forced labour in the Uyghur Region is finding its way into the supply chain and ultimately into the products sold by retailers in the European Union.[39]Reflecting these conclusions, in my judgment, the natural and ordinary meaning of the E-Mail is:
“… there are grounds to investigate whether the Claimant knew or should have known that it was sourcing raw materials or supplies that were the product of forced labour from the Xinjiang Uyghur Autonomous Region.”
[40]I turn then to the Report. Having read the Report, and excluded Annex A from consideration, the key message that comes across are that it was presenting the evidence that the Defendant had found through research. Although the core message is clear – that there is a very clear risk (and probably an overwhelming likelihood) that the product of forced labour is making its way into the clothing and apparel sold by well-known brands and retailers in Europe – the supply chains are opaque and changing. The Report is presented as a snapshot of the data: see paragraph 3.[41]Readers are presented with an Executive Summary. Although readers are taken to read the whole Report, the Executive Summary is quite likely to have significantly shaped the message that readers received, particularly where the latter part of the Report is itself detailed. The hypothetical ordinary reader does not read the Report like a lawyer or accountant, carefully analysing evidence, following chains and reaching evidence-based conclusions. The ordinary reasonable reader will understand the core message of the Report in a much more impressionistic way.[42]After explaining the problem of forced labour in the Uyghur Region ([10]) (expanded upon and explained in [34]-[40]), the Executive Summary immediately draws the reader’s attention to the four major China-headquartered fabric and apparel manufacturers that have significant ties to the Uyghur Region through sourcing, subsidiaries and/or manufacturing. The research team, it is said, used publicly available data to trace the supply chains of these various companies.[43]The reader is told (in [12]) that each of the four companies were given an opportunity to respond to the issues, and their responses are presented in Annex A. The key finding is presented in bold (in [13]). A substantial volume of apparel, tainted by Uyghur forced-labour, is moving into the EU without restriction. Thirty-nine well-known brands are identified as being at high risk of sourcing apparel made by Uyghurs compelled to participate in state-imposed labour transfers. In consequence the Report concludes (in [14]) that EU policy is not protecting its consumers from buying products made with Uyghur Region forced labour.[44]Paragraph 15 is also likely to be significant in shaping the overall message conveyed to readers. It clearly alleges that companies in the region, which the reader in context might at this stage in the Report consider did include the Claimant:
“... are taking steps to hide their participation in in state-imposed labor transfers” and are using various tactics to obscure their operations in the region. Consequently, it is said the supply chains are, “increasingly opaque”
. The readers would see this message repeated ([52] and [54]) as they read through the Report.[45]The four major manufacturers are then identified. The first of which is Zhejiang Sunrise (“Sunrise”). The allegation is that Sunrise “is sourcing from the Region, likely operates in the Region (despite company name changes and structural reorganisation of their holdings) and either directly engages in – or sources from companies that utilise state-sponsored labor transfer programs of Uyghur people.” This core allegation is repeated in the chapter of the report dealing with Sunrise ([59]-[78]).[46]Readers are then introduced to the “Smart Shirts” – both the brand and company - which is said to be owned by Sunrise. In other parts of the Report, however, and somewhat confusingly, Smart Shirts is referred to both as a subsidiary of Sunrise and, in another part, to have merged with Sunrise. Smart Shirts it is said to be a major supplier to leading international menswear companies. I would note here that a reader of the Report may well have difficulty nailing down precisely what is being referred to as “Smart Shirts”, whether as a trading name or as identifying one or more companies, as there are several trading companies identified, particularly in the graphics as being part of the supply chain ultimately leading to retailers in Europe.[47]The Executive Summary concludes with “Key Recommendations”. They include the need for greater due diligence by the ultimate retailers as to the supply chains through which their products are sourced. The Report recommends a ban on importation of products made, in whole or in part, by forced labour. Finally, it is suggested there should be introduced a rebuttable presumption, similar to one introduced in the US in June 2022 ([41]), that all goods made in whole or in part in the Uyghur Region are made with forced labour.[48]The chapter in which the Claimant features has as its main focus Sunrise. Paragraphs 60-61 set out what a reader might well conclude, particularly in light of the allegations of opacity, is a complex corporate structure or web of interconnected companies. Although the Report clearly states that Sunrise and Smart Shirts merged in 2011, next to nothing is said about the corporate structure of Smart Shirts. The focus is very much upon Sunrise.[49]Paragraphs 62-67 concentrate entirely on Sunrise’s connections to the Uyghur Region and labour transfers. A reader of this section of the Report would come away, I am satisfied, with the clear impression that despite a complicated and opaque structure, including changes in company names, restructuring and reorganisation, there remain grounds to suspect that Sunrise, possibly in conjunction with Youngor, is knowingly producing materials produced by forced labour in Uyghur. However, in this section of the Report there is no reference to Smart Shirts at all.[50]The next reference to Smart Shirts is in paragraph 68, but importantly in the context of the Report setting out the response of Sunrise /Smart Shirts to be evidence gathered by the Report authors saying that it provides: “... robust, transparent transaction and production records from raw materials to the finished garments” and “... that these records show no contamination from the Uyghur Region”.[51]Paragraphs 71-78 of the Report deal with the onwards distribution/supply chain to ultimate consumers. There is a graphic on page 12 which is captioned “International exposure to Zhejiang Sunrise”. The reader is told that customs records show that, while international brands do not source from Sunrise directly, they instead source through its international subsidiaries identified as Smart Shirts and May YSS. The corporate entities under the Smart Shirts name are identified (in [73]) and the Report speculates about the true nature of the relationship between these companies, Sunrise and Youngor. It concludes that: “... Smart Shirts is nonetheless exposed to the Uyghur Region cotton and state-imposed labor transfers” ([74]).[52]The words “exposed to” did originally strike me as odd when I first read the Report. They were not words that were signalling clearly culpability on the part of Smart Shirts. The Report goes on to suggest that due diligence of Smart Shirts “should have turned up ... information regarding Zhejiang Sunrise’s direct connections to the Uyghur Region and significant sourcing from Youngor”. In other words, they should have sounded an alarm about whether Smart Shirts was sourcing from forced labour.[53]The Sunrise Group and Smart Shirts response is again included (in [77]) which states that it does not “knowingly source” from any entities that use forced labour and has an “advanced tracing system” to reassure its customers and relevant governments.[54]Mr Bennett KC submitted that the ordinary reasonable reader would simply reject these denials in the responses submitted on behalf of Smart Shirts as false. I reject that argument. In context, they provide an important element of antidote to the contention that the Report is suggesting guilt on the part of Smart Shirts. The pointed denial (in [77]) would, in my judgment, crystallise in the reader’s mind whether Smart Shirts did know that the source of materials it was using was forced labour.[55]Without falling into the trap of over-analysing my conclusions on the natural and ordinary meaning of the Report are these. Largely, I accept Ms Mansoori’s submissions, on behalf of the Defendant, that the real focus of the allegation of forced labour was upon Sunrise or the Sunrise Group. Smart Shirts was variously, and perhaps confusingly, referred to as a subsidiary, owned by, or a partner of Sunrise. It may be, as I have said, that the Report alleges that there are grounds to suspect that Sunrise was knowingly sourcing materials produced by forced labour, but I am not resolving that issue.[56]What the Report says about Smart Shirts is less clear. A reader would certainly be left with the very clear impression, both from the Report and the graphic, that Smart Shirts in its various corporate emanations was a key part of this corporate web of Youngor and Sunrise. But they were clearly subordinate to these entities in the supply chain. In his submissions, Mr Bennett KC accepted that the reader would see Smart Shirts as a conduit from Sunrise to the ultimate retailers. That is clearly the message that is conveyed, particularly by the graphic.[57]The Report simply does not deal with what independent roles Smart Shirts played beyond the role of conduit and, more importantly, what it knew about the materials that it was passing on. It is true that key points in the Report Sunrise and Smart Shirts are referred to together. But a reader would have to be totally unreasonable to treat allegations made against Sunrise as applying equally to Smart Shirts. A reader who did so would effectively be ignoring the very important section dealing with the activities of Sunrise that I have identified. Given the importance attached in the Report to the rather fluctuating supply chain and corporate structure, it would be unreasonable for a reader simply to assume that suspicion of Sunrise’s culpable knowledge was to be attributed to Smart Shirts.[58]Reflecting all of those matters, in my judgment, the natural ordinary meaning of the Report, as it concerns the Claimant, is that:
“… the Claimant was a key part in a supply chain of materials and there were grounds to investigate whether it knew or should have known that those materials were the product of forced labour from the Xinjiang Uyghur Autonomous Region.”
[59]I have rejected that part of the Claimant’s meaning that suggested deliberate concealment. In my judgment, that allegation is not levelled at the Claimant. It is levelled at Sunrise. I have also not included any element of meaning (b) in relation to the alleged complicity in China’s genocidal policies. To allege that somebody is complicit in is something, in most cases, that would be a value judgment. Had the meaning I found as part of this meaning to be a factual one at Chase Level 1, there might have been room for an additional meaning along the lines of meaning (b) advanced by the Claimant. But having found the meaning to be a Chase Level 3, such a meaning is not a natural one. It would be a forced meaning that would have been contingent on the results of the investigation. The defamatory sting comes from forced labour.[60]Finally, on the issue of meaning, I must deal with the question of whether the meaning should reflect that this is the current state of the position regarding the Claimant or a historic one: the difference between the Claimant’s meaning “is”, and the Defendant’s meaning “was”. This is the first time I have had to deal with an argument based upon such a distinction. I remember capturing the meaning that I considered these publications to bear at the time when I originally considered them and, as with most of these decisions, they were reflective. Almost naturally as a product of publication what is said at any one point is looking backwards to what has happened before. I can imagine there may be some particular types of communication which so deliver a sense of urgency or invite immediate action because of continuing problem in which case you might say there was scope for the meaning to focus deliberately on “is” rather than “was”. But this is not one of those cases. Nothing that I have heard together in the arguments has persuaded me to depart from the meaning that I originally captured when I read the Report and the E-Mail.[61]On the second preliminary issue, whether the meanings are defamatory of the Claimant at common law, given the meanings I have found there is no dispute that they are defamatory of the Claimant.[62]Those are the reasons for the decision the Court has made today on the preliminary issues. Annex: the publications complained of (A). the Email [emphasis in the original] Good day, [A] I write from Sheffield Hallam University's Helena Kennedy Centre for International Justice to amend a clerical error in my earlier correspondence. [B] We are researching forced labor in the production and manufacture of textile and apparel products, including cotton, man-made and synthetic fibers, and final garments, particularly those destined for the European market. [C] In the process of this work, we have identified significant evidence that the following Chinese textile and apparel suppliers are sourcing material inputs and labor from the Xinjiang Uyghur Autonomous Region: 1. ZHEJIANG SUNRISE GARMENT GROUP CO./SUNRISE MANUFACTURE GROUP CO., YOUNGOR GROUP, and SMART SHIRTS; 2. BEIJING GUANGHUA TEXTILE GROUP and BEIJING FASHION HOLDINGS; 3. ANHUI HUAMAO GROUP CO., LTD.; and 4. XINJIANG ZHONGTAI GROUP & XINJIANG LIHUA GROUP. [D] We have traced the downstream supply chains of these four companies and their subsidiaries, utilizing public vessel manifest data as well as public reporting. We have identified numerous intermediary companies and manufacturers that purchase textile inputs and/or apparel products from one or more of the named companies (or their respective subsidiaries), as listed below. [E] Intermediary Manufacturers: 68. Smart Shirts (Sri Lanka) 69. Smart Shirts (Vietnam) 70. MayYSS 71. Shahi Exports (India) 72. Gain Lucky (Vietnam) 73. Gemini Enterprises (India) 74. SM Lu Ila Industries Worldwide 75. Penguins Sportswear [F] We have further traced the downstream customers of those international intermediaries. Your company has been identified as a customer of one or more of the listed companies. Based on these research findings, we have determined your brand/s are at risk of importing textile and / or apparel goods made wholly or in part in Xinjiang. [G] We are aware that supply chains often change, particularly given the current situation in the Xinjiang region. Therefore, we write this letter to grant you the opportunity to respond to our findings, in particular: 1. Can you tell us whether you are indeed a customer of one of these companies or their subsidiaries? 2. Can you tell us what, if anything, your company has done to:a. respond to allegations of forced labor in the Xinjiang Region? and/orb. comply with the U.S. Uyghur Forced Labor Prevention Act (UFLPA) or active U.S. Withhold Release Orders (WROs)?c. trace the supply chains of your textile/ apparel products, from raw materials to the final product? [H] We welcome any updates on how your supply chains may have shifted, or any efforts you have undertaken, to ensure that your suppliers do not source material inputs or final products from Xinjiang. We are sincerely appreciative of any insight you are willing to share regarding what companies have done to respond to the crisis in the Uyghur Region. [I] Please respond by Monday December 4th (COB, GMT) in order for us to include your response on our report landing page before the report is released. Of course, we accept any responses after that date and will publish them in the corporate responses. Sincerely, Forced Labour Lab, Helena Kennedy Centre for International Justice (B). The Report [hyperlinks, tables, diagrams, photographs and captions omitted] [emphasis in the original] ACKNOWLEDGEMENTS [1] This report is a collaborative project of Uyghur Rights Moni tor, Sheffield Hallam University, and the Uyghur Center for Democracy and Human Rights. It was researched and co-authored by an international team of scholars, many of whom are from affected communities. We are grateful for the generosity of other experts who gave feedback on this report or provided research support. Research for this report was funded by the Group of the Progressive Alliance of the Socialists & Democrats in the European Parliament, with additional support from Freedom Fund. Our particular thanks go to Raphael Glucksmann and Place Publique for their interest and investment in this project. The information presented here is wholly the work of the authors; funders had no role in the design, research, writing, or review of this report. This report does not represent the views of the funding organizations and does not suggest endorsement. [2] Design and Layout by Southpaw Creative. [3] This publication is meant for purposes of the public good and is designed to provide accurate and authoritative information in relation to the subject matter covered. It is a point­in-time analysis; some of the information presented herein may change as supply chains or government initiatives shift. It is provided with the understanding that the author and publisher are not engaged in rendering any form of professional or other advice or ser­ vices through the publication of this repo rt. The report reflects the authors’ own conclusions, based on inferences drawn from an analysis of publicly available sources. No person or entity should rely on the contents of this publication without first obtaining professional advice. [4] The Uyghur Rights Monitor (URM, Turkey) is a new project founded by Uyghur researchers who are personally and professionally invested in investigating Uyghur rights issues. URM aims to increase access to reliable evidence of the Chinese government’s human rights abuses against Uyghurs and other Turkic groups and support efforts to hold perpetrators accountable. The URM has recently published a series of three papers, which are part of a longer series of detailed investigative reports on local, regional, and central government officials’ and institutions’ involvement in the planning, decision-making, implementation, and whitewashing of the genocide against the Uyghurs and other Turkic people in the Uyghur region, including on the structure of the forced labor system in the region and its links to government agencies. Researchers from the URM team have also collaborated with Sheffield Hallam University on major research projects, including the “Driving Force” report about automotive supply chain exposure to the Uyghur Region. [5] The Helena Kennedy Centre for International Justice at Sheffield Hallam University is a leading center for social justice and human rights research, practice, and pedagogy. It provides a vibrant environment at the cutting edge of legal and criminal justice practice which prepares students for excellence in their chosen professional careers. The center is home to a range of social justice and human rights activities that include research, global engagement, impact on policy, professional training, and advocacy. [6] Its central values are those of widening access to justice and education, the promotion of human rights, ethics in legal practice, equality and a respect for human dignity in overcoming social injustice. The center works on high-profile projects in a variety of human rights and social justice areas. Research and projects concern modern slavery, gender-based violence, hate crime, and more. [7] The Uyghur Center for Democracy and Human Rights (UZDM, Germany) is a charitable, non-profit, non-governmental organisation based in Germany, whose mission is to defend and promote human rights and democratic representation for the Uyghur people, both within China and abroad. Since its establishment in 2019, the UZDM has been actively implementing advocacy campaigns with state and non-state actors internationally, raising awareness of the human rights situation in East Turkistan and engaging in capacity-building activities with the Uyghur diaspora. Our staff, which is majority Uyghur, has vast experience in these areas and holds critical representative functions vis-a-vis the large majority of the global Uyghur diaspora. The UZDM has recently published a toolkit for responding to transnational repression. Table of Contents Executive Summary 5 Introduction & Policy Considerations 7 Zhejiang Sunrise Garment Group Co./ Sunrise Manufacture Group Co., Youngor Group, and Smart Shirts 10 Beijing Guanghua Textile Group and Beijing Fashion Holdings 13 Anhui Huamao Group Co., Ltd. 16 Xinjiang Zhongtai Group and Xinjiang Lihua Group 19 Table 1. Supply Chain Connections 21 Annex A - Corporate Responses EXECUTIVE SUMMARY [8] This report provides critical insight into how forced labor in the Uyghur Region is affecting European Union apparel supply chains. [9] The apparel industry’s connections to the Uyghur Region are now well-established. The Region produces approximately 23% of the world’s cotton and 10% of the world’s PVC, a key material in the production of protective clothing and accessories. As a result, a huge quantity of the world’s clothes and footwear risk being implicated in the forced labor of the Uyghur people. [10] Since 2017, the People’s Republic of China (PRC) has imposed an unprecedented system of forced labor on Uyghurs and other Turkic, majority Muslim citizens of the Region. State-imposed forced labor programs are a primary nexus through which the PRC government is inflicting its genocidal policies on the Uyghur people. Through the facilitation of familial separation, land expropriation and cultural assimilation, these schemes are eliminating vital resources for the continuity of Uyghur culture and community. [11] This report maps various apparel supply chains potentially from the Uyghur Region to the EU marketplace. To conduct this research, the team identified four major China-headquartered fabric and apparel manufacturers that have significant ties to the Uyghur Region, through sourcing, subsidiaries, and/or manufacturing. Using publicly available sources, including shipping data, corporate financial and media reporting, journalism, state propaganda, remote sensing data, and maps, they then traced the sup­ ply chains of these companies to brands and retailers in the EU. [12] The companies named in this report were provided the opportunity to respond to these issues. All responses are available in Annex A - CorporateResponses on the website for this report. [13] The report’s key finding is that a substantial volume of apparel taint­ ed by Uyghur forced labor is moving into the EU without restriction. Throughout the report, 39 well-known brands are identified to be at high risk of sourcing apparel made by Uyghurs compelled to participate in state-imposed labor transfers. [14] The number of companies identified in this scaled-down mapping exercise indicates that EU policy is not protecting its consumers from buying products made with Uyghur forced labor. With the EU poised to decide on forced labor regulation and the Corporate Sustainability Due Diligence Directive, this report addresses how legislation such as the US’ landmark Uyghur Forced Labor Prevention Act can shield companies and consumers from complicity in human rights violations against the Uyghur people. 80. The court apparel manufacturers profiled in the report are: ZEHJIANG SUNRISE [16] Zhejiang Sunrise is sourcing from the Regi on, likely operates in the Region (despite corporate name changes and structural reorganizations of their holdings) and either directly engages in - or sources from companies that utilize - state-sponsored labor transfer programs of Uyghur people. [17] Zhejiang Sunrise owns the ‘Smart Shirts’ company and brand, which is a major supplier to international menswear companies, including Hugo Boss in Germany, Ralph Lauren Europe and Burberry in Italy. … KEY RECOMMENDATIONS To EU companies/investors/procurers: [24] Conduct forensic due diligence on any products made of cotton, rayon/ viscose, or PVC, including synthetic leather, to identify exposure to companies operating in the Uyghur Region, including those identified in this report. As supply chains become increasingly opaque, it is essential that due diligence procedures strengthen and evolve. To all EU stakeholders: [25] Support the regulation to ban the import of products made with forced labor. The ban should include all products made in whole or in part with forced labor, should include no de minimis standard that would allow any portion of forced labor-made goods to enter, and should apply to businesses of all sizes. Import bans must also incorporate a rebuttable presumption to apply in cases of state-imposed forced labor. [26] Support the EU Corporate Sustainability Due Diligence Directive (CS3D) to ensure that companies are responsible for addressing human rights violations across the value chain. [27] Support manifest transparency legislation that makes all ground, air, rail, and sea shipments publicly available, to aid in the investigation of supply chains tainted with forced labor. [28] Support multi-lateral information sharing of data regarding cargo that has been identified as having been made with forced labor. INTRODUCTION & POLICY CONSIDERATIONS THE PURPOSE OF THIS REPORT [29] This project is intended to provide critical insight into the ways forced labor in the Uyghur Region is affecting European Union supply chains. The research team employed research methods developed by Sheffield Hallam University’s Helena Kennedy Center Forced Labour Lab (among others) to identify forced labor in the Uyghur Region. The research relies on publicly available sources, in English, Mandarin, and Uyghur languages, including corporate financial and media reporting, journalism, state propaganda, remote sensing data, and maps. The team traced the supply chains of affected companies, using the above sources, but also deploying the use of customs records that are available by subscription. Because customs records of EU member states are not available for research purposes, the team identified third country customs records to find products (including yarn and fabrics) that move from China, into those third countries (such as Sri Lanka and Vietnam), and then into the EU (typically as finished garments). The supply chain tracing is conducted using a variety of online technology platforms. [30] In this collaborative project of Uyghur Rights Monitor, Sheffield Hallam University, and the Uyghur Center for Democracy and Human Rights, the research team identified shipments of goods exposed to Uyghur forced labor that are being imported into the European Union. The research team identified four major China-headquartered fabric and apparel manufacturers that have significant ties to the Uyghur Region, through sourcing, subsidiaries, and/or manufacturing in the region. Each of these companies sells products into the EU market. Using the methods and tools described above, the re­ search team then traced the supply chains of these companies to brands and retailers in the EU. [31] The companies are diverse in their ways of engaging in the Uyghur Region, as well as in the products they make and the EU brands that are their customers. All of the companies engage directly in the Uyghur Region, but at least one of them has also worked with the government to move Uyghur youth between the Uyghur Region and Beijing factories for training before assigning them to work in the XUAR. One of the companies is a supplier to major luxury brands, while another is a primary supplier for men’s professional wear, and others supply fast fashion brands. All of these companies make products with cotton, but some of them also work in synthetic materials, including viscose and chemically treated fabrics. Some of the companies are state owned, and others are privately owned but nonetheless very much affected by central government policy and pressure. [32] The suppliers that are profiled in this report include:[1]Zhejiang Sunrise Garment Group Co./Sunrise Manufacture Group Co., and Smart Shirts[2]Beijing Guanghua Textile Group and Beijing Fashion Holdings[3]Anhui Huamao Group Co., Ltd.[4]Xinjiang Zhongtai Group and Xinjiang Lihua Group [33] The primary finding of this report is that a substantial amount of apparel made by Uyghurs compelled to work through state-imposed labor transfers is moving into the EU without restriction. By examining only four China-based suppliers, it is clear that EU brands have significant exposure to Uyghur forced labor-made goods. While companies are shifting supply chains to comply with US restrictions on the import of forced labor-made goods, these goods move freely into the EU. There are currently no policies that protect EU consumers from buying products made with Uyghur forced labor. THE ISSUE [34] Over the course of the last six years, the People’s Republic of China (PRC) government has instituted an unprecedented system of state-sponsored forced labor for Uyghur, Kazakh, Kyrgyz, and other minoritized citizens in the Xinjiang Uyghur Autonomous Region (or XUAR or Uyghur Region). 85. The Region’s state-imposed programs are implemented through three primary mechanisms: [36] Forced labor transfers: Involuntary “labor transfer” schemes conscript Uyghurs and other minoritized citizens to work in as­ signed factories, mines and farms, both within and outside the Uyghur Region. Government officials enforce cooperation in these extreme fear and intimidation consistent with the International Labour Organization (]LO) indicators of forced labor. In 2021, the government reported as many as 3.17 million labor transfers. [37] Forced labor of internment camp detainees: Between 900 000-1.8million Uyghurs and other minoritized citizens have been held in extrajudicial internment camps. Within these camps, detainees are routinely subjected to physical and psychological torture, sexual violence and forced labor. Upon their release, many internees may be transferred directly to or assigned to factories to work. [38] Prison labor: Labor is compulsory for all people incarcerated in the PRC, including in prisons administered by the Xinjiang Pro­ duction and Construction Corps. [39] Since 2019, an extraordinary number of people have been moved from the internment camp system into long prison sentences, typically without a fair judicial process and often for engaging in everyday activities that are not crimes, even according to the PRC’s laws. Some people appear to have been released from the camps as well, and some smaller camps appear to have closed, while the surveillance state, larger camps and prisons, and other forms of repression remain. [40] Even as there are some changes to the apparatus of oppression in the Uyghur Region, it appears that state-imposed forced labor programs re­ main a primary nexus through which the PRC government is inflicting its genocidal policy on the Uyghur people. The effect of compelling young adult and adult-aged people to work in industry is that they are often separated from their families and unable to start families of their own or care for their children and bring them up in their own cultural traditions. They are often stripped of their lands and moved away from the communities in which they were born and raised. Once they are working in factories, Uyghur and other minoritized citizens are forbidden from practicing their religion in the fashion they choose, as well as often forbidden from speaking their own languages. These practices are designed to eliminate connections and commitments central to maintaining com­ munity and culture. Understanding forced labor is central to understanding the genocide that is happening in the Uyghur Region. HOW LEGISLATION CAN ADDRESS UYGHUR FORCED LABOR [41] In June of 2022, the United States’ Uyghur Forced Labor Prevention Act went into effect. The law includes a rebuttable presumption that indicates that the government should assume that all goods made in whole or in part in the Uyghur Region are made with forced labor, relying on the country’s 1930 Tariff Act, which bans the import of all goods made with forced labor. [42] The effect has been significant. As of October 2023, US Customs and Border Protection (CBP) has stopped nearly $2 billion worth of goods from entering the country that they have determined to have been made in the Uyghur Region. The US Forced Labor Enforcement Task Force has named 27 companies to its UFLPA entity list, which designates companies that are known to use forced labor or sell products made with forced labor in the Uyghur Region. [43] As this report will document, since that time, many companies have shifted their supply chains to avoid complicity with the genocide in the Uyghur Region - or at least to protect themselves against legal, financial, and reputational risks. Some companies have excluded suppliers operating in the Uyghur Region, suppliers sourcing from the region, and/ or companies outside the Uyghur Region that are recruiting Uyghur workers through state-imposed labor transfer programs. This is a sea change that only legislation could have made happen. Companies are now subject to investigation of their entire supply chains, which has encouraged more due diligence and more visibility in what were previously incredibly opaque relationships. [44] This report finds, for instance, that Xinjiang Zhongtai Chemical has long supplied international intermediary manufacturers that produce PVC flooring, as well as a wide range of textile inputs, apparel products, and chemicals for various other industries. Since the company’s engagement in state-imposed labor transfer programs was exposed, however, the company has been named to the UFLPA entity list and subject to additional government and consumer scrutiny. The company has also seen a massive shift in its customer base. While Zhongtai continues to produce inputs and final goods destined for international markets using Uyghur forced labor, it appears that the company can no longer do so out in the open. Instead, the company has continued to sell its PVC and textile products to third parties, or ship its goods through newly created logistics firms. Zhongtai seems to be mainly exporting its fibers and apparel-bound PVC to India, where it appears to be used primarily for domestic consumption, rather than distribution in the international markers to which it was previously accustomed. [45] As the EUis in various stages of negotiations on forced labor regulation and the Corporate Sustainability Due Diligence Directive, the successes of the UFLPA can be instructive and clearly point to the efficacy of border control-based legislation. Legislative efforts to combat forced labor in the global supply chain generally take three legal forms:(1) dis­ closure-based;(2) human rights due diligence-based; and(3) border control-based. While disclosure and due-diligence laws have had some success in illuminating the risk of human rights abuse, in particular forced labor in the supply chains of multinational enterprises, without meaningful legal accountability included in disclosure and due diligence laws, the biggest risk to companies was and is reputational, which does not drive changes in behavior. The deployment of import bans, particularly when implemented on the commodity or regional level, is singularly effective in curbing corporate sourcing of state-imposed forced labour inputs. Border control laws that prohibit the importation of goods made with forced labor by detaining or excluding shipments at the border are exemplified by the UFLPA. By bar­ ring the entry of tainted goods and denying commercial benefit to those participating in or benefiting from modern slavery, border control laws represent an extremely effective and commercially concrete policy tool for ethically and legally sound supply chains. As global traders are forced to contend with governmental and consumer awareness of repressive labor practices in the supply chains of their goods, the economic risk of losing market access, alongside risk of legal liability in cases of non-compliance, are powerful drivers of reform. [46] Public disclosure of vessel manifest information would further the EU’s policy efforts. The EU should consider shipping manifest transparency across all modes of transportation, as part of its commitment to preventing the importation of goods made with forced labor. Supply chain visibility is the lynchpin to effective prevention of illicit trade and, in particular, the identification of and enforcement against imports produced with forced labor. Inward vessel manifest data - whether by air, ocean, or land transport - must be made public to ensure consumers are empowered to make ethical purchasing choices, corporations are accountable for cleaning up their supply chains, researchers and advocates are able to identify abuses, and law enforcement is capable of identifying and interdicting trade to assure economic security. [47] Furthermore, the identification and monitoring of the importation of products made from forced labor requires improved public access to customs data. To facilitate this, the European Commission should amend the Union Customs Code to clarify that customs data is not confidential and should be disclosed publicly, as well as requiring companies that import goods into the EU to disclose the name and address of the manufacturer to the relevant Customs Authorities. HOW UYGHUR FORCED LABOR AFFECTS EUROPEAN UNION SUPPLY CHAINS [48] Companies operating in the Uyghur Region manufacture inputs for a vast range of industries, including electronics, apparel and green technology. implicating huge swathes of the world’s goods in egregious forced labor practices. The Chinese government actively incentivizes companies to operate in the Region and facilitate state-imposed labor transfer schemes. The state and businesses’ shared investment in the construction and continuation of forced labor infrastructure makes on-the-ground due diligence and remediation impossible. [49] Some companies registered in the European Union are directly or indirectly engaged in the Uyghur Region and appear to maintain these relationships, despite the enormous evidence of crimes against humanity happening in the Region. Volkswagen, for instance, owns a factory and testing field in the region’s capitol. The company has admitted that in 2014, the region was subjected to a “significantly more repressive approach,” but has refused to exit the region. BMW Mercedes Benz Porsche and practically all other EU-based automotive companies are exposed to Uyghur forced labor in their supply chains, often through their first-tier suppliers. In 2023, the European Center for Constitutional and Human Rights brought a claim to the German Federal Office of Economics and Export Control (BAFA) to hold German automotive manufacturers responsible for forced labor in their supply chains. Carlsberg Beer makes regionally sold Wusu Beer (and indeed holds 85% of the beer marker in the Uyghur Region) and has been alleged to engage in the state’s repressive programs. Siemens and BASF partner with the state-owned enterprise Xinjiang Zhongtai Chemical, which is an avid participant in and facilitator of the labor transfer program (more on Zhongtai later in the report). In 2021, French non-profit organizations including Sherpa, the Ethique sur l’Etiquette collective, and the European Uyghur Institute brought a forced labor claim against Skechers Inditex (owner of Zara) Uniglo and French fashion group SCMP for use of Uyghur forced labor. The original claim was disputed and dismissed, but the groups have filed a new claim requesting an investigation of the companies. Most recently, the Outlaw Ocean Project revealed that Uyghur forced laborers were employed in fish processing plants that sell fish into EU markets. [50] All of the companies listed above have refuted the claims of forced labor in their supply chains or joint ventures. BASF, Sketchers, and the Volkswagen Group (which includes Porsche) claim to have conducted sufficient due diligence audits in the Uyghur Region, as well as those outside the region using Uyghur labor, and found no evidence of forced labor or other human rights violations. These claims are made despite wide consensus that meaningful social compliance audits, particularly for forced labor, cannot be conducted in the Region in the current political and regulatory environment. [51] As this report reveals, many products of Uyghur forced labor are exported, directly or indirectly, to European Union member states as well as other allied nations. Consumers across the EU unwittingly purchase goods made with Uyghur forced labor, despite international attention to the issue. CORPORATE OBFUSCATION [52] It is critical to note that companies are scaling back advertisement of their participation in labor transfer schemes or other oppressive state-imposed programs. Many companies have erased evidence of their engagement in state-imposed labor programs from the internet in an effort to obscure their complicity in ethnically driven oppression. Thus, this report cites the most recent evidence of participation, much of which predates 2020. However, this absence of evidence should not, under any circumstances, be construed as evidence of absence. [53] This report reveals man y of the ways companies are attempting to hide their XUAR connections while continuing to profit from the labor of coerced citizens in the Uyghur Region. The research identified companies that have changed the names of their XUAR subsidiaries so that they no longer reflect the name of the parent company. This tactic represents one of the myriad strategies China-based firms deploy to obscure their manufacturing and sourcing relationships to the XUAR. Other companies claim to have sold their XUAR subsidiaries, bur continue to share officers, directors, partners, or shareholders. Disavowed relationships to XUAR factories are often empty public declarations that obscure thinly veiled and ongoing sourcing relationships. [54] Many of these companies celebrate their high ESG rankings and certification programs as a way of proving that they are responsible, even while engaging in labor transfers. Private certifications such as those issued by the Better Corron Initiative (BC[), Global Organic Textile Standard (GOTS), Solidaridad’s Better Mill Initiative, and the Higg Index Verification, as well as public international credentials like the ILO/IFC’s BetterWork accreditation, are routinely cited as evidence of equitable labor conditions; however, the significance of these certifications vary widely, as qualifications are largely predicated on social compliance norms that predate modern forced labor regulations and typically do not account for state-imposed forced labor. POLICY CONSIDERATIONS In light of the findings of this report, stakeholders in the European Union should consider the following: [55] Support regulation to ban the import of products made with forced labor. The ban should include all products made in whole or in part with forced labor, should include no de minimis standard that would allow any portion of forced labor-made goods to enter, and should apply to businesses of all sizes. Import bans must also incorporate a rebuttable presumption to apply in cases of state-imposed forced labor. [56] Support the EU Corporate Sustainability Due Diligence Directive (CS3D) to ensure that companies are responsible for addressing human rights violations across the value chain. [57] Support manifest transparency legislation that makes all ground, air, rail, and sea shipments publicly available, to aid in the investigation of supply chains tainted with forced labor. [58] Support multi-lateral information sharing of data regarding cargo that has been identified as having been made with forced labor. ZHEJIANG SUNRISE GARMENT GROUP CO./SUNRISE MANUFACTURE GROUP CO., YOUNGOR GROUP, AND SMART SHIRTS IN BRIEF [59] Zhejiang Sunrise is sourcing from the Uyghur Region, is likely operating in the Uyghur Region despite corporate name changes and structural re­ organizations of their holdings, has claimed to understand its entire supply chain as being “rooted” in the Uyghur Region, and is either directly engaging in - or sourcing from companies that utilize - state-sponsored labor transfer programs of Uyghur people and, allegedly, the forced labor of North Koreans. Zhejiang Sunrise owns the Smart Shirts company and brand, which is a major supplier to international menswear companies. COMPANY PROFILE [60] Zhejiang Sunrise Garment Group Co., Ltd. ((浙江盛泰服装集团股份有限公司) is a major Chinese garment and fabric manufacturer. Now known as Sunrise Manufacture Group Co., Ltd., according to Financial Times records, the company is also known as Zhejiang Shengtai Garment Group Co., Sunrise (Shengzhou) Textiles Co., and Shengtai Intelligent Manufacturing Group. Youngor Group originally founded Zhejiang Sunrise, though official corporate record cited above show that as of May 2023 the company is a joint venture of Youngor Clothing (16.9% ownership), Itochu Excellent Fibers (Asia) (22.5%), and Ningbo Shengtai Textile Co Ltd (30.33%, itself a wholly owned subsidiary of Shengtai Group Enterprise Co.). [61] Zhejiang Sunrise Garment Group engages in nearly every step of apparel production, from the cultivation and spinning of cotton to the design and cutting of ready-to-wear garments. Founded in 2007 with head- quarters in Shenzhou, Sunrise merged with Smart Shirts in 2011 to, according to Smart Shirts, “become one of the largest vertically integrated textile and garment manufacturing companies in worldwide [sic].” Together they claim to produce millions of garments every month. Sunrise and Smart Shirts promote themselves as environmentally friendly suppliers of knits, dress clothing, and sportswear. Sunrise’s production and its more than 29,000 employees are now spread throughout China and into Vietnam, Sri Lanka, Ethiopia, and beyond. CONNECTIONS TO THE UYGHUR REGION AND LABOR TRANSFERS [62] Zhejiang Sunrise boasted in 2018 that it has “formed a complete industrial chain along the Belt and Road” that begins in Aksu, XUAR, where the company claimed to be “rooted.” It claims, “Shengtai is not only rooted in Aksu, but also takes advantage of Aksu’s local climate advantages to develop its proud product ‘Awat Cotton’”. In that same article, Zhejiang Sunrise’s representative indicated that this industrial chain stretches from their factories in the Uyghur Region all the way to their global manufacturing operations in Vietnam and Sri Lanka, revealing recent direct connections between the company’s manufacturing operations outside China and within the Uyghur Region. Zhejiang Sunrise’s 2022 Annual Report continued to reveal its engagement in the Uyghur Region; under the heading “Industry conditions of the company during the reporting period,” the company lists a series of XUAR-related programs, including building the Xinjiang Silk Road Economic Belt, supporting policies to develop the garment industry in the XUAR, and “promoting” employment in the region. This suggests that the company is still very much engaged in the Uyghur Region. [63] Until 2019 (at least), Zhejiang Sunrise owned apparel-relevant subsidiaries in the Uyghur Region. Sunrise owned the Jiashi Shengtai (Sunrise) Knitting Factory) in Payzawat (Ch: Jiashi) County, XUAR, which “contributed significantly to maximize the transfer of the labor force to employment.” In the same 2019 article, Uyghur workers described their experiences at the Sunrise factory to state media, with one saying that she was disappointed and wanted to return home when she first was transferred, a red flag for compulsory labor. She noted that for two years she was paid only 1,500 yuan a month, under the local minimum wage for that time. She also mentioned that she had applied to become a member of the communist party, and the article celebrated the woman’s transformed mind­ set, both of which are typical ideological conditions of state-imposed labor transfer programs in the Uyghur Region. [64] According to the company’s disclosures, Zhejiang Sunrise claims to have “transferred out of Jiashi Shengtai in December 2018” and that the Jiashi subsidiary “ceased to be a related party” as of December 2019. However, it appears that the factory is merely part of a reorganization through which Zhejiang Sunrise affiliates have taken (at least nominal) control. The company continues to use the Zhejiang Sunrise’s Chinese name Shengtai and is currently held by a privately owned holding company called Shanghai Jinsheng Textile Co., which appears to only exist to own the XUAR-based Jiashi Shengtai. The current majority owner of the company holding Jiashi, Zi Sanfei, appears to be employed by a wholly owned subsidiary of Zhejiang Sunrise and manages at least five other Shengtai companies. This suggests that Jiashi Shengtai and Zhejiang Sunrise remain closely interconnected despite the recent reorganization which resulted in their ostensible distancing. [65] Zhejiang Sunrise also set up an XUAR-based joint venture with Youngor Group in Aksu called the Aksu Youngor Textile Co. (阿克苏雅戈尔纺织有限公) in 2010; according to official corporate records the company’s name was changed in 2020 to Aksu Xinhao Textile Co. (阿克苏新昊纺织有限公司 or Aksu Newsky Textile Co.; the company has also been called Aksu Xinya Cotton Textile Co. / Aksu Youngor Textile Co.). The factory’s deputy general manager announced in 2018 that the company would support Xi Jinping’s call to provide more jobs to rural surplus laborers (which suggests participation labor transfers). This XUAR subsidiary is now held by Youngor through its Anhui Xinhao Textile Technology Co. subsidiary and Hefei Anya, a company that is majority-owned by Xi Zhiwu, who until 2016 was a director at Shengtai and borrowed money interest-free from Sheng tai, according to the company’s 2020 IPO. Sunrise had another XUAR-located joint venture with Youngor and Itochu, which was previously callde Kashi Youngor Japan-China Textile Co. (喀什雅戈尔日中纺织有限公司), and now appears to be called Kashgar Xinhao Textile (喀什新昊纺织有限公司); Xu Zhiwu also manages Kashgar Xinhao, which is now owned by Ningbo Xinhao. The complicated connections revealed in Zhejiang Sunrise’s own IPO surrounding each of these purportedly transferred XUAR-based subsidiaries suggest that sourcing and even ownership relationships may still be ongoing for Sunrise. [66] Other reports published at the time of Zhejiang Sunrise’s IPO suggest the Youngor and Zhejiang Sunrise may be inextricably intertwined, with assets (tangible and intangible), ownership, and management all passing between the two entities. As Youngor has been involved in labor transfers as well, this is a very high-risk relationship. Youngor has operated spinning mills and factories in the Uyghur Region since 2011. It is often celebrated in Chinese state media as one of the region’s most important manufacturers. UYGHUR REGION SOURCING [67] Regardless of all of its ownership changes, Zhejiang Sunrise named Youngor (which certainly owns these factories in the Uyghur Region and participates in the above-described labor transfer programs, among others) as its top supplier in the company’s 2020 prospectus. In the company’s 2022 annual report, Zhejiang Sunrise no longer named its top suppliers. However, the annual report does note that the highest accounts payable receiver for Zhejiang Sunrise was Youngor, suggesting that Youngor is a supplier. A recent Kharon brief noted that Aksu Xinhao Textile remains a supplier to Zhejiang Sunrise. [68] In a pre-publication response, legal counsel on behalf of Sunrise Group/Smart Shirts asserts that, for customers outside of China, Sunrise Group/Smart Shirts provides “robust, transparent transaction and production records from raw materials to finished garments.” They claim that these records show “no contamination from the Uyghur Region” of products shipped outside of China. See Annex A – Corporate Responses. OTHER ALLEGATIONS OF REPRESSION [69] Allegations of repression extend beyond the Uyghur Region exposure. In December 2022, US Customs and Border Protection (CBP) began detaining merchandise produced by Zhejiang Sunrise (Shengtai) Garment Group based on evidence indicating Zhejiang Sunrise uses North Korean labor in its supply chain, in violation of the Countering America’s Adversaries Through Sanctions Act (CAATSA). The CAATSA enforcement action bars the company from importing any goods into the United States. [70] According to Kharon, a corporate risk analysis firm, Zhejiang Sunrise sources from Youngor’s Hunchun factory. Zhejiang Sunrise sourced clothing accessories and paid for “labor services” from Youngor (Hunchun) from 2018 until at least 2022. A China-based foreign policy think tank, the Charhar Institute, reported that Youngor (Hunchun) employs “3,070 North Korean workers” in its factory, and the report specifically notes that companies “use North Korean labor due to their low cost and superior quality.” CUSTOMERS [71] In its 2021 annual report, Zhejiang Sunrise named its international customers, many of which are well-known international brands, and in 2023, Sohu indicated a broad range of international brands that source from the company. (The company’s annual reports no longer list its customers.) [72] Customs records indicate, however, that while international brands do not source from Zhejiang Sunrise directly, they instead source through its international subsidiaries Smart Shirts and May YSS. According to available customs records, Smart Shirts’ most significant customers in Europe over the past year are Hugo Boss in Germany, Ralph Lauren Europe and Burberry in Italy, Tommy Hilfiger Europe and Calvin Klein Europe (both PVH brands) in the Netherlands. Based on customs records, Smart Shirts also appears to ship significant quantities to itself, primarily to Smart Shirts consignees in Germany and France. May YSS has shipped significant quantities of goods to Hong Kong addressed to PVH Europe brands. Other companies are sourcing smaller amounts. [73] In Vietnam and Sri Lanka, Zhejiang Sunrise owns subsidiaries that operate under the name Smart Shirts Limited (CH: Xinma Clothing). Smart-shirts.com is actually Zhejiang Sunrise’s official url (and an older .cn version of the website from 2021 can be found here). In its updated website, Smart Shirts has a statement linked to the navigation bar on its front page titled “On the relationship between Sunrise Group (parent company of Smart Shirts) and Youngor Group” claiming that Youngor Group is merely a minority shareholder of Zhejiang Sunrise and has no power to appoint directors. It does not mention the significant ties between the companies in regard to sourcing, loans, and executive management. [74] Whether or not Youngor is a powerful shareholder of Sunrise Group and Smart Shirts, Sunrise and Youngor’s possible shared ownership of XUAR factories, along with Sunrise’s documented sourcing from Youngor, mean that Smart Shirts is nonetheless exposed to Uyghur Region cotton and state-imposed labor transfers. [75] According to customs records, Zhejiang Sunrise sends shipments of fabric to its Smart Shirts subsidiaries in Sri Lanka and Vietnam, and to May YSS (Cong Ty Tnhh May YSS), another subsidiary in Vietnam. [76] International brands have every reason to know that Smart Shirts was ex­ posed to the Uyghur Region because that company was included in the findings of the Sheffield Hallam “Laundering Cotton” report published in November 2021. Corporate due diligence of Smart Shirts should have turned up this information regarding Zhejiang Sunrise’s direct connections to the Uyghur Region and significant sourcing from Youngor. [77] In a pre-publication response, legal counsel claims on behalf of Sunrise Group / Smart Shirts that it has “established the whole of its fully traceable and transparent vertical supply chain outside of China,” and does not “knowingly source” from any entities that use forced labor, and has developed an “advanced tracing system” so as to reassure its customers and relevant governments. See Annex A - Corporate Responses. [78] Smart Shirts has a tab on its home page dedicated to ESG. The page is focused primarily on the environment, recycling, sustainable fibers, and water. The company claims to be a member of the Better Cotton Initiative and GOTS, to be Higg Index Verified, to be accredited by workers’ rights group BetterWork, and a member of Solidaridad’s Better Mill Initiative. Figure 2. International exposure to Zhejian Sunrise … [page 21] TABLE 1. SUPPLY CHAIN CONNECTIONS