On 4 August 2025, the Australian Uyghur Tangritagh Women’s Association (AUTWA) commenced proceedings in the Federal Court of Australia seeking preliminary discovery from a prospective respondent, Kmart Australia Limited (Kmart).

According to media reports, AUTWA is seeking certain documents to determine whether to commence proceedings against Kmart on the basis that Kmart may have engaged in misleading or deceptive conduct (in contravention of s 18 of the Australian Consumer Law (Schedule 2to the Competition and Consumer Act 2010 (Cth)) by making misleading public statements about ethical sourcing of products that it sells through its network of 450 stores in Australia. In particular, AUTWA is concerned that at least two of Kmart's clothing suppliers in China (as identified in Kmart's published factory list) may have used forced labour, despite the representations that it had addressed the risk of the use of forced labour in its supply chain.

Kmart is part of the Wesfarmers Group of companies. Wesfarmers Group's most recent Modern Slavery Statement is available here: Statement #2024-2693.

Modern Slavery reporting obligations

Under to the Modern Slavery Act 2018 (Cth), large entities operating in the Australian market with a consolidated revenue over A$100 million are required to prepare an annual Modern Slavery Statement. Among other matters, the Modern Slavery Statement is required to:

(a) describe the structure, operations and supply chains of the reporting entity;

(b) describe the risks of modern slavery practices in the operations and supply chains of the reporting entity, and any entities that the reporting entity owns or controls;

(c) describe the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to assess and address those risks, including due diligence and remediation processes; and

(d) describe how the reporting entity assesses the effectiveness of such actions.

The Modern Slavery Statements are publicly available on the Modern Slavery Statements Register.

While there are currently no offences associated with failing to comply with the reporting obligations under the Modern Slavery Act, following the review into the Act, the Commonwealth Government has agreed to engage in consultation regarding a civil penalty regime to strengthen the compliance and enforcement a framework in the Act. Consultation is currently underway, and will close on 1 September 2025.

Preliminary discovery

Rule 7.23 of the Federal Court Rules 2011 (Cth) provides that a prospective applicant may apply to the Court for an order for a prospective respondent to give discovery of certain documents, where the prospective applicant:

(a) reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b) after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

(c) reasonably believes that:

(i) the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii) inspection of the documents by the prospective applicant would assist in making the decision.

AUTWA is reportedly seeking access to documents held by Kmart of the following description:

• Third-party audits of the two suppliers.
• Any audits, reports of any documented non-compliance with Kmart's ethical sourcing code.
• Any reports or documents saying that Kmart may have suspended or terminated or taken any other remedial action against the two suppliers.
• Any documents recording information on factory visits or complaints about the two suppliers.

Whether an applicant has sufficient information to commence proceedings (limb (b)), is assessed objectively. Further, the Court will only order the discovery of such information that is necessary (and no more than what is necessary). This is to overcome the insufficiency of information already in the prospective applicant's possession after making all reasonable enquiries, to make a decision as to whether to commence proceedings.

The Court will need to determine whether the information already held by AUTWA, based on research of public domain sources, including various human rights reports and information received following 12 months of correspondence with Kmart is sufficient for AUTWA to be in a position to commence proceedings, or whether any of the documents subject of the preliminary discovery application are reasonably necessary to make that decision.

We are monitoring this case, including to see whether Kmart makes an application for security for costs (as contemplated by rule 7.29 of the Federal Court Rules).

We have seen the ACCC prioritise action in connection with misleading Environmental, Social and Governance (ESG) claims, including misleading greenwashing claims and misleading privacy claims. Like the ACCC, affected individuals and bodies corporate may also commence proceedings to police misleading or deceptive ESG claims in reliance on section 18 of the Australian Consumer Law. However, unlike the ACCC which has a broad array of powers to compel the production of documents and information as part of its investigative efforts, affected individuals and bodies corporate need to rely on Court processes, such as preliminary discovery, in order to obtain information from prospective respondents.

If the AUTWA is successful in its preliminary discovery application, this case could serve as precedent for other interested parties to apply for orders requiring the production of documents from prospective respondents in order to make a decision as to whether or not to commence proceedings under the Australian Consumer Law in relation to a broad array of ESG claims.

If the AUTWA ultimately commence proceedings against Kmart for misleading or deceptive conduct, it may be the first case of its kind in Australia testing the veracity of statements about ethical sourcing, including as contained within a Modern Slavery Statement. The potential for this type of action by the ACCC, consumer groups, shareholders and competitors highlight the importance of ensuring that all public statements about ESG matters, including ethical sourcing, must be accurate and supported by appropriate evidence.

If you would like to assess your ethical sourcing and ESG claims program, contact our team. With integrated legal and consulting expertise, we see ESG as more than compliance or a risk to mitigate – it's a strategic opportunity for every facet of your business, from operations to supply chain and beyond.