KB-2025-001929 - [2025] EWHC 2966 (KB)

I have now dealt with all the applications before the court. However, I must say something more about one of the points that has great importance to the claimants. This is their repeated submission that this court should take or retain jurisdiction because of the seriousness of the allegations they make about the defendant’s alleged misconduct. In their skeleton argument (para 4.2), the claimants identify reports of malpractice by Shein:

“On 3 July 2025, the Financial Times reported that the Defendant had been fined €40 million by French authorities for misleading consumers through false discounts and exaggerated environmental claims. On 24 September 2024, the BBC quoted the CEO of Superdry, who stated that Shein had been “allowed to dodge tax” in the UK. On 7 February 2025, the Guardian called for an end to regulatory blind spots enabling Shein’s import practices.”

The claimants point out that HMRC has acknowledged their report of Shein’s alleged misconduct. It is vital to emphasise the strength of the defendant’s rejection of what it maintains are baseless and strategic misconduct allegations. Whether there is anything in them is a matter for HMRC. Nothing in this judgment should be construed as supporting any allegation against the defendant whatsoever.

There is another aspect to the allegations. The defendant expressed concern about the frequent repetition of these grave allegations of malfeasance during the course of the public hearing and their inevitable repetition in a public judgment. This judgment would make little sense without referring to a central plank of the claimants’ arguments, whatever their merit.

The defendant submits that this is part of a tactic by the claimants to apply improper pressure on the defendant, presumably to settle their claims and/or drop Shein’s overpayment claim. On the other hand, the claimants submit that Shein’s pursuit of arbitral proceedings in private is a tactic (“a desperate attempt”) by the defendant to “silence” the concerns of the claimants and conceal their airing in public. I point out that this court does not make findings of guilt about charges of tax evasion or issue punishment or penalties for it. However, the claimants’ case is that they ended their commercial relationship with the defendant when they became aware of Shein’s alleged misconduct. The claimants’ allegations are therefore part of the narrative and an explanation for the course the claimants have taken. Against this, the defendant points out that when the SA was ended by Bill (if it was Bill, to be later determined), Bill explained the ending of the relationship by reference to “internal problems” with no reference to the grave later allegations. Indeed, the defendant goes further and points to the threatening correspondence from the claimants following the defendant’s demand for return of the overpayments. Without replicating it all, Mr Du sends an email that the defendant invites the court to read as a threat. It is dated 28 May 2025.

“This correspondence is not a request for monetary settlement. It is a demand for procedural good faith. Any attempt to derail disclosure through hollow jurisdictional objection will trigger a broader legal response.

Unless your client withdraws the jurisdictional challenge within 48 hours (by 12:00 noon on 30 May 2025) of this communication, the Claimant will proceed with the following actions:

• Submit regulatory disclosure reports to HMRC, FIS and the Competition and Markets Authority (CMA);

• Initiate coordination with other UK-based commercial parties who have expressed concern over Shein’s declaration practices;

• Advance collective documentation strategies including testimonial coordination and

expert commentary on VAT and customs structuring.”

The response from the defendant’s solicitors on the same date was forthright:

“It is clear from this letter and previous correspondence you have sent to us and our client, that your modus operandi, when faced with legitimate claims and legal arguments, is to make scurrilous threats and accusations against your counterparties in the hope that they will be deflected from the matters that properly need to be addressed, and frightened into submission. We wish to make it abundantly clear that neither Shein, nor this firm, will be distracted by, or make any concessions to, you as a result of the allegations you concoct and the threats you make against them.

Your allegations are utterly baseless, Shein has strong grounds on which to challenge jurisdiction, and it has no intention of withdrawing its jurisdiction challenge.

Finally, as raised in previous correspondence in response to your threats to make public various unsubstantiated and potentially defamatory allegations against Shein, we note that, should you proceed to do so, Shein reserves the right to pursue an action against OTL/IT Way for defamation and hold them liable for all damages and costs incurred as a result.

Yours faithfully

Howard Kennedy LLP”

I have laid this out in compressed form since it remains a sore point between the parties. The real point is that should the arbitrator determine that she lacks jurisdiction, the claimants’ claims can come back before this court for review and further case management. There is no prejudice, given the proportionality and achievability of the arbitrator’s timetable, for the claimants to have their claims temporarily stayed behind the arbitrator’s award for a relatively modest period. Indeed, it makes obvious sense that this is precisely what should happen.