note: Mercedes is a recent graduate of the LL.B. dual-degree
programme English and German Law, which is taught jointly by University College
London (UCL) and the University of Cologne. She will sit the German state exam
in early 2022. In September 2020 she joined the Asser Institute as a research
intern for the Doing Business Right project.
Covid-19 pandemic is straining global supply chains and exposes the inequality
that underlies them. As many countries entered lockdowns, the economy was
brought to a rapid halt. This caused demand for apparel goods to plummet.
Global apparel brands, in turn, have begun to disengage from business
relationships with their suppliers. Lead firms cancelled
or even breached
their contracts with suppliers (often relying on force majeure or hardship),
suspended, amended or postponed orders already made. This practice had a
devastating effect on suppliers.
situation again shows that the contractual structure of global supply chains is
tilted towards (often) European or North American lead firms. In this blog, I
will first outline the power imbalance embedded in global supply chain
contracts. Secondly, I will outline how order cancellations impact suppliers
and their workers. In Part II, I will go through four approaches to mitigate
the distress of suppliers and their workers and to allow the parties to reach
solutions which take into account their seemingly antagonistic interests. More...