The National Crime Agency’s (NCA) failure to investigate the suspected import of forced labour cotton into the UK has been declared unlawful by the Court of Appeal, opening the door to prosecutions for money laundering under the Proceeds of Crime Act (POCA) 2002.

The landmark legal action, brought by the World Uyghur Congress (WUC) and supported by the non-profit Global Legal Action Network (GLAN), argued that the UK should be held responsible for any harm caused by its failure to investigate cotton imports linked to forced labour in China.

The WUC claimed that the NCA had failed to honour section 1 of the Foreign Prison-Made Goods Act, which prohibits the import of goods made in foreign prisons; and that the law enforcement agency wrongly interpreted POCA when failing to bring criminal investigations for money laundering with regards Xinjiang cotton imports.

The NCA argued that once adequate consideration is paid for criminal property, the property is cleansed of its criminal character and is free to be bought and sold without consequence.

But the Court of Appeal rejected this argument, holding that while a purchaser is protected when they pay the market value for criminal property, transferring that property exposes them to criminal liability. This means criminal property can be bought, but not passed on. 

The appeals court further determined that the NCA had made an error of law in stating that a specific consignment of forced labour cotton needed to be identified to launch an investigation. 

Today’s ruling requires the NCA to reconsider its earlier decision not to investigate, with the WUC expecting a full investigation into imports from the Xinjiang region to follow, and a commitment from the crime agency to stopping tainted goods entering UK markets.  

“This is a monumental victory and a moral triumph,” said WUC director Rahima Mahmut. “For far too long, there has been no international court to hold China accountable. The UK government’s lack of action forced us to pursue this case, and it is incredibly heartening to see the judges’ findings support our arguments.”

The decision overturns a January 2023 High Court ruling which found that the NCA had acted reasonably and “there would be little if any purpose to be served by pursuing an investigation which would not bear fruit in the form of prosecutions or seizures”.

The WUC said today’s ruling should serve as a warning to companies profiting from forced labour and is a major step towards ridding the UK high street of the proceeds of crime. Chinese cotton has been linked with garments sold by many clothing retailers both in the UK and abroad. 

The WUC said it hope that the risk of being prosecuted for money laundering or having their products confiscated by UK authorities will encourage businesses to clean up their supply chains. It has also called on the next UK government to urgently implement tougher legislation to combat forced labour in supply chains.

This litigation is seen as particularly significant given that the government and the High Court readily accepted that forced labour is occurring in China, and that goods produced in these circumstances amount to the proceeds of crime under UK law. 

This was reiterated by the Court of Appeal, which noted that the lower court had identified “a ‘striking consensus’ as to the clear and widespread exploitation and abuses in that industry involving forced labour, and that forced labour accounts for a significant proportion of all cotton originating from China”. 

Dearbhla Minogue, a senior lawyer at GLAN, said: “This litigation has been critical in recognising the mass atrocities being committed against Uyghur and other Turkic Muslim people by the Chinese government, and holding to account those complicit in, or profiting from, these crimes. 

“There is an abundance of evidence that UK companies are importing forced labour cotton from China. Following this ruling, we expect the National Crime Agency will investigate and prosecute where appropriate to prevent forced labour cotton from flooding the UK market.” 

Bindmans’ Alice Hardy added: “It is fantastic that the Court of Appeal has recognised the need for an effective mechanism to investigate those crimes and confirmed that the National Crime Agency was wrong to take the view that a consignment of cotton must be identified as criminal proceeds before an investigation could commence was wrong.” 

Through a network of high-security “de-extremification” camps, Beijing is accused of systematically detaining more than 1 million Uyghurs and other Turkic people in Xinjiang, an autonomous territory in northwest China.

In addition to allegations of torture, sexual violence, and forced medical experimentation, reports estimate 100,000 minority people are forced to work in the region’s cotton industry, which accounts for 85% of the total cotton produced by China and 20% of global cotton production.

An independent tribunal led by Sir Geoffrey Nice KC, the lead prosecutor at Slobodan Milošević's trial, declared China’s actions as a genocide and crimes against humanity in 2021. Lawmakers and independent lawyers in several countries, including the US, Canada, and the Netherlands, have likewise declared China’s programme to be illegal under international law. 

Beijing continues to deny the allegations, describing the claims of human rights abuses in Xinjiang as “malicious lies and disinformation” designed to damage the Chinese economy. 

The WUC was represented by Dearbhla Minogue and Leanna Burnard of GLAN, Alice Hardy of Bindmans, Jonathan Fisher KC, Tom Forster KC, and Anita Clifford of Red Lion Chambers, Russell Hopkins of Temple Garden Chambers, and Admas Habteslasie of Landmark Chambers.