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International Product Liability

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Hogan Lovells BSTL
Hogan Lovells BSTL

International Product Liability Compilation. Juris Publishing has initiated the distribution of an international compilation of Product Liability reulation, where besides analyzing the general concepts, the regulations in different jurisdictions around the world are reviewed.

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PUBLICATION UPDATE INTERNATIONAL PRODUCT LIABILITY RELEASE 1 • 2012 HIGHLIGHTS Juris Publishing is pleased to present Release 1 of International Product Liability. This release contains comprehensive revisions to the chapters on: • Colombia • Denmark • England and Wales • Italy • Mexico • South Africa • Ukraine This release also contains new chapters on: • Malaysia • Poland • Romania Juris Publishing and the authors welcome your questions, suggestions and comments. Please contact us at Juris Publishing, Inc, 71 New Street, Huntington, N.Y. 11743 USA.
RECORD OF RELEASES FILED INTERNATIONAL PRODUCT LIABILITY is filed with all previously issued releases and is current through: Release 1 • 2012 Questions About This Publication ____________________ For editorial assistance or customer service: please call…………………………………………….1-631-350-2100 or fax…………………………………………….……1-631-351-5712 JURIS
INTERNATIONAL PRODUCT LIABILITY Second Edition DENNIS CAMPBELL General Editor CHRISTIAN CAMPBELL Editor JURIS
Questions About This Publication For assistance with shipments, billing or other customer service matters, please call our Customer Services Department at 1-631-350-2100. To obtain a copy of this book, call our Sales Department: Fax: 1-631-351-5712 Toll Free Order Line: 1-800-887-4064 (United States & Canada) See our website: www.jurispub.com Copyright © 2012 Juris Publishing, Inc. _________________ All Rights Reserved. Printed in the United States of America. ISBN: 978-1-57823-286-4 _________________ Juris Publishing, Inc. 71 New Street Huntington, NY 11743 USA www.jurispub.com
Table of Contents Argentina Introduction ............................................................................................ ARG-1 Legal Regime ......................................................................................... ARG-1 Consumers’ Claims ................................................................................ ARG-4 Concept of Defect .................................................................................. ARG-7 Information to Consumers ..................................................................... ARG-7 Remedies ................................................................................................ ARG-8 Provisions in Consumer Contracts ......................................................... ARG-8 Product Liability Insurance .................................................................... ARG-11 Product Liability Litigation .................................................................... ARG-12 Conclusion ............................................................................................. ARG-13 Austria Introduction ............................................................................................ AUT-1 Historical Evolution ............................................................................... AUT-2 Purpose of the PHG................................................................................ AUT-4 Product and Defective Product............................................................... AUT-5 Warning and Recall Obligations ............................................................ AUT-8 Defenses Contributory Fault .................................................................. AUT-8 Defect as ‘Proximate Cause’ .................................................................. AUT-10 Liable Persons General .......................................................................... AUT-11 Joint and Several Liability ..................................................................... AUT-14 Burden of Proof...................................................................................... AUT-15 Remedies ................................................................................................ AUT-16 Disclaimer Clauses................................................................................. AUT-16 Statutes of Limitation ............................................................................. AUT-17 Liability of Corporate Successors .......................................................... AUT-18 (Release 1 – 2012)
iv INTERNATIONAL PRODUCT LIABILITY Insurance ................................................................................................ AUT-18 Role of the Courts .................................................................................. AUT-19 Applicability of Austrian Law ............................................................... AUT-19 Disclaimer .............................................................................................. AUT-20 Canada Introduction ............................................................................................ CDN-1 Common Law......................................................................................... CDN-1 Contract ................................................................................................. CDN-8 Other Statutory Enactments ................................................................... CDN-11 Québec Civil Law .................................................................................. CDN-14 Conclusion ............................................................................................. CDN-25 Colombia Introduction ............................................................................................ COL-1 Specific Normative Grounds .................................................................. COL-1 Civil Liability Regime for Defective Products....................................... COL-3 Civil Code Regulation of Extra-Contractual Responsibility .................. COL-9 Collective Actions Provided under Constitution .................................... COL-10 Conclusion ............................................................................................. COL-11 Denmark Introduction ............................................................................................ DEN-1 Theories of Liability............................................................................... DEN-2 Negligence ............................................................................................. DEN-3 Fraud or Misrepresentation .................................................................... DEN-6 Warranty ................................................................................................ DEN-6 Strict Liability ........................................................................................ DEN-7 Concept of Defect .................................................................................. DEN-8 Defenses Available to Manufacturer ...................................................... DEN-15 Liability in Chain of Commerce ............................................................ DEN-17 Remedies ................................................................................................ DEN-18 (Release 1 – 2012)
TABLE OF CONTENTS v Limitations ............................................................................................. DEN-20 Successor Liability ................................................................................. DEN-21 Insurance ................................................................................................ DEN-21 Product Liability Litigation .................................................................... DEN-25 Conclusion ............................................................................................. DEN-27 England and Wales Introduction ............................................................................................ ENG-1 Basis of Manufacturer’s Liability .......................................................... ENG-1 Concept of Defect .................................................................................. ENG-4 Defenses Available to the Manufacturer ................................................ ENG-5 Examples of Strict Liability for Products ............................................... ENG-7 Contractual Liability of Distributors ...................................................... ENG-9 Remedies ................................................................................................ ENG-13 Exclusion or Limitation of Liability ...................................................... ENG-16 Statute of Limitations ............................................................................. ENG-17 Corporate Successor Liability ................................................................ ENG-18 Product Liability Insurance ................................................................... ENG-19 Product Liability Litigation .................................................................... ENG-20 Product Safety Legislation and Prosecutions by Trading Standards Officers .................................................................................. ENG-22 Conclusion ............................................................................................. ENG-23 European Community Introduction ............................................................................................ EU-1 Theory of Products Liability .................................................................. EU-2 Affected ‘Products’ ................................................................................ EU-2 Definition and Types of ‘Defect’ ........................................................... EU-4 Liable Parties ......................................................................................... EU-5 Parties Entitled to Recovery ................................................................... EU-6 Types of Remedies and Extent of Recovery .......................................... EU-7 Questions of Evidence ........................................................................... EU-8 (Release 1 – 2012)
vi INTERNATIONAL PRODUCT LIABILITY Limits of Liability .................................................................................. EU-9 Other Remedies ...................................................................................... EU-10 Disclaimer .............................................................................................. EU-11 Transformation of the EC Directive ....................................................... EU-11 Further Developments in the European Community .............................. EU-14 Appendix ................................................................................................ EU-16 India Introduction ............................................................................................ IND-1 Theories of Liability............................................................................... IND-2 Concept of Defect .................................................................................. IND-8 Defenses ................................................................................................. IND-13 Other Parties Impacted by Product Liability Considerations ................. IND-14 Remedies ................................................................................................ IND-15 Disclaimers/Limitation on Remedies by Contract ................................. IND-16 Corporate Successor Liability ................................................................ IND-17 Product Liability Insurance .................................................................... IND-18 Product Liability Litigation .................................................................... IND-20 Conclusion ............................................................................................. IND-22 Italy Introduction ............................................................................................ ITA-1 Product Liability under Contract Law .................................................... ITA-2 Product Liability under Tort Law .......................................................... ITA-3 General Principle of Producer’s Liability without Fault ........................ ITA-7 Statute of Limitation and Forfeiture Term ............................................. ITA-19 Mandatory Regime of Liability .............................................................. ITA-20 Malaysia Basis of Manufacturers’ Liability ........................................................ MAY-1 Obligations to Warn or Recall Defective Products .............................. MAY-8 Defenses Available to Manufacturer .................................................... MAY-9 (Release 1 – 2012)
TABLE OF CONTENTS vii Limitation of Liability by Proximate Cause ......................................... MAY-11 Impact of Product Liability Considerations ......................................... MAY-12 Remedies .............................................................................................. MAY-14 Limitations on Remedies by Contract .................................................. MAY-17 Claims Affected by Statute of Limitation ............................................ MAY-17 Extension of Liability for Defective Products to Corporate Successors ............................................................................................ MAY-18 Role of Insurance in Product Liability Matters .................................... MAY-18 Role of Courts and Lawyers in Product Liability Litigation ................ MAY-18 Mexico Introduction ............................................................................................ MEX-1 General Aspects of Liability in Mexico ................................................. MEX-3 Theories of Liability............................................................................... MEX-6 Concept of Defect .................................................................................. MEX-11 Obligation to Recall Defective Products ................................................ MEX-11 Obligation to Warn Consumers about Defective Products..................... MEX-11 Defenses Available to the Manufacturer ................................................ MEX-12 Proximate Cause .................................................................................... MEX-14 Liability of Others in the Supply Chain ................................................. MEX-14 Remedies ................................................................................................ MEX-15 Contractual Disclaimers or Limitations ................................................. MEX-17 Statute of Limitations ............................................................................. MEX-17 Corporate Successor Liability ................................................................ MEX-18 Product Liability Insurance .................................................................... MEX-18 Product Liability Litigation .................................................................... MEX-19 Conclusion ............................................................................................. MEX-23 The Philippines Introduction ............................................................................................ PHI-1 Theories on Manufacturers’ Liability .................................................... PHI-1 Concept of Defect .................................................................................. PHI-11 (Release 1 – 2012)
viii INTERNATIONAL PRODUCT LIABILITY Obligation to Warn Consumers or Recall Defective Products ............... PHI-15 Defenses Available to the Manufacturer ................................................ PHI-16 ‘Proximate Cause’ Limits ...................................................................... PHI-18 Others Affected by Product Liability Considerations ............................ PHI-20 Remedies ................................................................................................ PHI-22 Exclusion or Limitation of Contractual Liability ................................... PHI-25 Statutes of Limitation ............................................................................. PHI-26 Corporate Successor Liability ................................................................ PHI-27 Product Liability Litigation .................................................................... PHI-27 Conclusion ............................................................................................. PHI-30 Poland Introduction ............................................................................................ POL-1 Risk-Based Ex Delicto Liability for Dangerous Product ....................... POL-1 Concept of Defect .................................................................................. POL-5 Obligation to Warn or Recall Defective Products .................................. POL-6 Defenses Available to Product Manufacturers ....................................... POL-7 Proximate Cause and Limitation of Scope of Liability .......................... POL-9 Impact of Product Liability Considerations ........................................... POL-9 Remedies ................................................................................................ POL-10 Disclaimers or Limitations on Remedies by Contract ............................ POL-11 Claims and Statute of Limitation ........................................................... POL-12 Liability of Corporate Successors for Defective Products ..................... POL-13 Role of Insurance in Product Liability Matters ...................................... POL-13 Role of the Courts and Lawyers in Product Liability Litigation ............ POL-14 Portugal Introduction ............................................................................................ POR-1 Legislative Framework ......................................................................... POR-1 Strict Liability for Manufacturers .......................................................... POR-4 Concept of Defect .................................................................................. POR-5 Duty of Information ............................................................................... POR-8 (Release 1 – 2012)
TABLE OF CONTENTS ix Defenses Available to the Manufacturer ................................................ POR-9 Concept of Manufacturer ....................................................................... POR-11 Damages and Remedies ......................................................................... POR-13 Limitation Period and Lapse of Rights .................................................. POR-15 Conclusion ............................................................................................. POR-15 Romania Introduction .......................................................................................... ROM-1 Traditional Sources of Product Liability .............................................. ROM-1 Product Liability under Consumer Law ............................................... ROM-3 Transfer of Product Liability to Corporate Successors ........................ ROM-13 Insurance Policies and Product Liability .............................................. ROM-13 Court Proceedings in Product Liability Litigation ............................... ROM-14 Conclusion ........................................................................................... ROM-15 South Africa Introduction ............................................................................................ SA-1 Theories of Manufacturers’ Liability ..................................................... SA-2 Concept of Defect .................................................................................. SA-7 Obligations to Warn Consumers or Recall Defective Products ............. SA-8 Defenses Available to the Manufacturer ................................................ SA-9 Proximate Cause .................................................................................... SA-12 Liability in the Chain of Commerce....................................................... SA-13 Remedies ................................................................................................ SA-14 Contractual Disclaimers or Limitations ................................................. SA-17 Statute of Limitation .............................................................................. SA-22 Corporate Successor Liability ................................................................ SA-23 Product Liability Insurance .................................................................... SA-23 Product Liability Litigation .................................................................... SA-24 Conclusion ............................................................................................. SA-27 (Release 1 – 2012)
x INTERNATIONAL PRODUCT LIABILITY Spain Introduction ............................................................................................ SPA-1 Nature and Characteristics of Product Liability ..................................... SPA-2 Liability in the Chain of Commerce....................................................... SPA-3 Concept of Defect .................................................................................. SPA-8 Defenses Available to the Producer ....................................................... SPA-12 Compensable Damage............................................................................ SPA-19 Statutes of Limitation ............................................................................. SPA-22 Product Liability Insurance .................................................................... SPA-25 Conclusion ............................................................................................. SPA-28 Sweden Introduction ............................................................................................ SWE-1 Product Liability .................................................................................... SWE-1 Contractual Liability .............................................................................. SWE-4 Non-Contractual Liability ...................................................................... SWE-6 Concept of Defect .................................................................................. SWE-7 Obligation to Ward or Recall ................................................................. SWE-8 Defenses ................................................................................................. SWE-9 Who Can Be Liable? .............................................................................. SWE-10 Remedies ................................................................................................ SWE-11 Disclaimers and Limitations .................................................................. SWE-13 Statutes of Limitation ............................................................................. SWE-13 Corporate Successors ............................................................................. SWE-14 Product Liability Insurance .................................................................... SWE-14 Courts and Lawyers in Liability Litigation ............................................ SWE-16 Ukraine Introduction ............................................................................................ UKR-1 Legislative Framework for Product Liability ......................................... UKR-1 Theories of Liability............................................................................... UKR-2 Concept of Defect .................................................................................. UKR-6 (Release 1 – 2012)
TABLE OF CONTENTS xi Obligation to Warn Consumers or Recall Defective Products ............... UKR-10 Defenses Available to the Manufacturer ................................................ UKR-14 Proximate Cause .................................................................................... UKR-16 Liability of Others in the Chain of Distribution ..................................... UKR-17 Remedies ................................................................................................ UKR-19 Contractual Disclaimers and Limitations ............................................... UKR-23 Statutes of Limitations ........................................................................... UKR-25 Corporate Successor Liability ................................................................ UKR-28 Product Liability Insurance .................................................................... UKR-28 Product Liability Litigation .................................................................... UKR-30 Conclusion ............................................................................................. UKR-32 United States Introduction ............................................................................................ US-1 Theories of Liability............................................................................... US-4 Concept of Defect .................................................................................. US-12 Obligations to Warn or Recall................................................................ US-14 Defenses ................................................................................................. US-16 Proximate Cause .................................................................................... US-23 Liability of Others in the Chain of Distribution ..................................... US-25 Remedies ................................................................................................ US-26 Class Actions and Multidistrict Litigation ............................................. US-32 Disclaimers and Limitations on Remedies ............................................. US-34 Statutes of Limitation ............................................................................. US-35 Corporate Successor Liability ................................................................ US-36 Product Liability Insurance .................................................................... US-38 Product Liability Litigation .................................................................... US-40 Conclusion ............................................................................................. US-41 (Release 1 – 2012)
Authors List Argentina Javier Canosa Canosa Abogados Montevideo 711 Piso 4 C1019ABO Buenos Aires Argentina Tel: (54 11) 52522462 Fax: (54 11) 52522463 Email: jc@canosa.com.ar Austria Benedikt Spiegelfeld CHSH Cerha Hempel Spiegelfeld Hlawati Parkring 2 1010 Vienna Austria Tel: (43 1) 514350 Fax: (43 1) 5143535 Email: benedikt.spiegelfeld@chsh.at and Christine Wallner CHSH Cerha Hempel Spiegelfeld Hlawati Parkring 2 1010 Vienna Austria Tel: (43 1) 514350 Fax: (43 1) 5143535 Email: christine.wallner@chsh.at Canada Ilana Schrager Ogilvy Renault LLP Suite 3800 Royal Bank Plaza, South Tower 200 Bay Street, PO Box 84 Toronto, Ontario Canada M5J 2Z4 Tel: (1 416) 2164000 Fax: (1 416) (Release 1 – 2012)
xiv INTERNATIONAL PRODUCT LIABILITY and Emmanuelle Demers Ogilvy Renault LLP Suite 3800 Royal Bank Plaza, South Tower 200 Bay Street, PO Box 84 Toronto, Ontario Canada M5J 2Z4 Tel: (1 416) 2164000 Fax: (1 416) and Bill McNamara Ogilvy Renault LLP Suite 3800 Royal Bank Plaza, South Tower 200 Bay Street, PO Box 84 Toronto, Ontario Canada M5J 2Z4 Tel: (1 416) 2164000 Fax: (1 416) 2163930 Email: wmcnamara@ogilvyrenault.com Colombia Natalia Tobón Cavelier Abogados Edificio Siski Carrera 4 No. 72 - 35 8 Bogotá Colombia Tel: (57 1) 3473611 Fax: (57 1) 2118650 Email: nataliatobon@cavelier.com and Adriana Durán Fernández Cavelier Abogados Edificio Siski Carrera 4 No. 72 - 35 8 Bogotá Colombia Tel: (57 1) 3473611 Fax: (57 1) 2118650 Email: AdrianaDuran@cavelier.com and (Release 1 – 2012)
AUTHORS LIST xv Eduardo Varela Pezzano Cavelier Abogados Edificio Siski Carrera 4 No. 72 - 35 8 Bogotá Colombia Tel: (57 1) 3473611 Fax: (57 1) 2118650 Email: eduardovarela@cavelier.com Denmark Klaus Ewald Madsen Bech-Bruun Langelinie Allé 35 2100 Copenhagen Denmark Tel: (45 ) 72270000 Fax: (45 ) 72270027 Email: kem@bechbruun.com and Jes Anker Mikkelsen Bech-Bruun Langelinie Allé 35 2100 Copenhagen Denmark Tel: (45 ) 72273490 Fax: (45 ) 89310101 Email: jam@bechbruun.com England and Wales Peter Burbidge Senior Lecturer University of Westminster 309 Regent Street London W1B 2UW England Tel: (44 207) 9115000 Fax: (44 207) 79115844 Email: burbidp@wmin.ac.uk (Release 1 – 2012)
xvi INTERNATIONAL PRODUCT LIABILITY European Community Susanne Wesch Wesch & Buchenroth Kernerstraße 43 Am Schützenplatz 70182 Stuttgart Germany Tel: (49 711) 2200940 Fax: (49 711) 22009410 India Kiran Prakash M.V.Kini & Co 1st Floor, Bilquees Mansion Opp Standard Chartered Bank D.N.Road, Fort 4001 001 Mumbai India Tel: (91 22) 612527 Fax: (91 22) 612530 Email: kiran.jaiprakash@gmail.com and Ravi Kini M.V.Kini & Co 1st Floor, Bilquees Mansion Opp Standard Chartered Bank D.N.Road, Fort 4001 001 Mumbai India Tel: (91 22) 612527 Fax: (91 22) 612530 Email: ravikini@mvkini.com and Dushyant Deep M.V.Kini & Co 1st Floor, Bilquees Mansion Opp Standard Chartered Bank D.N.Road, Fort 4001 001 Mumbai India Tel: (91 22) 612527 Fax: (91 22) 612530 Email: dushyant@mvkini.com (Release 1 – 2012)
AUTHORS LIST xvii Italy Antonello Corrado CFMP - Studio Legale Associato Via di Ripetta 141 00186 Rome Italy Tel: (39 06) 6876917 Fax: (39 06) 68192116 Email: acorrado@cfmplegal.com Malaysia Dhinesh Bhaskaran Shearn Delamore & Co 7th Floor Wisma Hamzah-Kwong Hing No 1 Leboh Ampang 50100 Kuala Lumpur Malaysia Tel: (60 3) 20272727 Fax: (60 3) 20785625 Email: dhinesh@shearndelamore.com Mexico Mónica Noriega R. Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 and Juan Francisco Torres Landa R. Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 Email: jftl@bstl.com.mx and (Release 1 – 2012)
xviii INTERNATIONAL PRODUCT LIABILITY Ernesto F. Algaba R. Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 Email: ear@bstl.com.mx and Omar Cuéllar Gamboa Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 Email: ocg@bstl.com.mx and Michelle Farah M. Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 The Philippines Lovely Concepcion C. Matillano Angara Abello Concepcion Regala & Cruz Law Offices 22/F ACCRALAW Tower Second Avenue corner 30th Street Crescent Park West Bonifacio Global City, 0399 Taguig Metro Manila Philippines Tel: (63 2) 8308000 Fax: (63 2) 4037007 and (Release 1 – 2012)
AUTHORS LIST xix Ma Patricia B. Paz Angara Abello Concepcion Regala & Cruz Law Offices 22/F ACCRALAW Tower Second Avenue corner 30th Street Crescent Park West Bonifacio Global City, 0399 Taguig Metro Manila Philippines Tel: (63 2) 8308000 Fax: (63 2) 4037007 and Salvador L. Peña Angara Abello Concepcion Regala & Cruz Law Offices 22/F ACCRALAW Tower Second Avenue corner 30th Street Crescent Park West Bonifacio Global City, 0399 Taguig Metro Manila Philippines Tel: (63 2) 8308000 Fax: (63 2) 4037007 Poland Marek Oleksyn Sołtysiński Kawecki & Szlęzak Ul. Wawelska 15B 02-034 Warsaw Poland Tel: (48 22) 6087000 Fax: (48 22) 6087070 Email: marek.oleksyn@skslegal.pl Portugal Jacinto Moniz de Bettencourt Uría Menéndez - Proenca de Carvalho Edifício Rodrigo Uría Rua Duque de Palmela, 23 1250-097 Lisbon Portugal Tel: (351 210) 308600 Fax: (351 210) 308601 Email: jbt@uria.com (Release 1 – 2012)
xx INTERNATIONAL PRODUCT LIABILITY and João de Sousa Assis Uría Menéndez - Proenca de Carvalho Edifício Rodrigo Uría Rua Duque de Palmela, 23 1250-097 Lisbon Portugal Tel: (351 210) 308600 Fax: (351 210) 308601 Email: jpz@uria.com and Filipe Fraústo da Silva Uría Menéndez - Proenca de Carvalho Edifício Rodrigo Uría Rua Duque de Palmela, 23 1250-097 Lisbon Portugal Tel: (351 210) 308600 Fax: (351 210) 308601 Email: fsi@uria.com Romania Horia Ispas Tuca Zbarcea & Asociatii Victoriei Square 4-8 Nicolae Titulescu Ave. America House West Wing, 8th Floor, Sector 1 011141 Bucharest Romania Tel: (40 21) 2048890 Fax: (40 21) 2048899 Email: horia.ispas@tuca.ro South Africa Per E van Eeden Van Eeden Attorneys POBox 33624 0010 Pretoria / Tshwane South Africa Tel: (27 86) 1111357 Fax: (27 86) 5106782 Email: vaneedenlaw@global.co.za (Release 1 – 2012)
AUTHORS LIST xxi Spain Patricia Gualde Broseta Abogados C/.Pascual y Genís, 5 46002 Valencia Spain Tel: (34 96) 3921006 Fax: (34 96) 3921088 Email: pgualde@broseta.com Sweden Magnus Dahlén Setterwalls Kungstorget 2 Box 112 35 404 25 Gothenburg Sweden Tel: (46 31) 7011700 Fax: (46 31) 7011701 Email: magnus.dahlen@setterwalls.se Ukraine Yaroslav Shkvorets RULG Ukrainian Legal Group, LLC Olimpiysky Center Suite 14, 11th floor 72 Velyka Vasylkivska Street 03150 Kiev Ukraine Tel: (38 044) 2071060 Fax: (38 044) 2071064 Email: yaroslav.shkvorets@ulg.kiev.ua and Iryna Ostapenko RULG Ukrainian Legal Group, LLC Olimpiysky Center Suite 14, 11th floor 72 Velyka Vasylkivska Street 03150 Kiev Ukraine Tel: (38 044) 2071060 Fax: (38 044) 2071064 Email: Iryna.Ostapenko@ulg.kiev.ua (Release 1 – 2012)
xxii INTERNATIONAL PRODUCT LIABILITY United States James Yuanxin Li StarRaft.com Oakland, California United States Email: JamesYuanxinLi@gmail.com and David DeBusschere Sedgwick, Detert, Moran & Arnold LLP One Market Plaza Steuart Tower, 8th Floor San Francisco, California United States 94105 Tel: (1 415) 7817900 Fax: (1 415) 7812635 Email: David.DeBusschere@sdma.com (Release 1 – 2012)
Argentina Introduction ............................................................................................ ARG-1 Legal Regime ......................................................................................... ARG-1 Civil Code System ................................................................... ARG-1 Consumer Protection Law System ........................................... ARG-3 System Related to Hidden Defects .......................................... ARG-4 Consumers’ Claims ................................................................................ ARG-4 Development of the Legal Regime .......................................... ARG-4 Strict Liability .......................................................................... ARG-5 Statue of Limitations................................................................ ARG-6 Successor Liability................................................................... ARG-6 Causation and Burden of Proof ................................................ ARG-6 Defenses................................................................................... ARG-7 Judicial and Administrative Proceedings ................................. ARG-7 Concept of Defect .................................................................................. ARG-7 Information to Consumers ..................................................................... ARG-7 Remedies ................................................................................................ ARG-8 Provisions in Consumer Contracts ......................................................... ARG-8 Abusive Clauses....................................................................... ARG-8 Prohibited Contractual Provisions ........................................... ARG-9 Product Liability Insurance .................................................................... ARG-11 Product Liability Litigation .................................................................... ARG-12 Frequency of Litigation ........................................................... ARG-12 Material Damages .................................................................... ARG-12 Lawyers’ Fees .......................................................................... ARG-13 Conclusion ............................................................................................. ARG-13
Argentina Javier Canosa Canosa Abogados Buenos Aires, Argentina Introduction Product liability is the area of law in which producers and manufacturers of products, as well as distributors, suppliers, retailers, and others who make products available to the public, are liable for the injuries caused by defective or harmful products. Individuals who are harmed by an unsafe product may have a cause for action against the persons who designed, manufactured, sold, or supplied that product. Today, the law on product liability has changed from caveat emptor (‘let the buyer beware’) to strict liability for manufacturing defects that make a product unsafe, harmful, or dangerous. Strict liability claims focus on the product rather than on the behavior of the manufacturer. Under strict liability, the manufacturer is liable if the product is defective, even if the manufacturer was not negligent in making that product defective. The legal regime for product liability in Argentina is based on a strict liability system that distinguishes between contractual and non-contractual consumer relationships. Legal Regime In Argentina, there are three different systems of product liability: the system established by the Argentine Civil Code, the system set down by Law Number 24240 on Consumer Protection, as amended (the Consumer Protection Law), and the system that relates to hidden defects, with some specific rules on commercial matters, which are governed by the Civil Code. Civil Code System In General Product liability under the Argentine Civil Code system may be contractual (when there is a contract between the buyer and the trader or manufacturer) or non-contractual (when there is no contractual relation between the injured party and the trader or manufacturer).
ARG-2 INTERNATIONAL PRODUCT LIABILITY Contractual Liability According to the provisions of the Civil Code,1 contractual relationships are governed by the principle of good contractual faith. Consequently, the existence of a defect of any origin implies, in the first place, the failure to fulfill the primary obligation assumed by the seller or manufacturer, which consists of delivering a product free of defects. Failure to fulfill this obligation triggers the mechanisms that enable the consumer to obtain the specific performance of the obligation by the seller or manufacturer, with the eventual application of the corresponding remedies. In the case of products, remedies consist of the delivery of another defect-free product in an appropriate condition; the fulfillment of the obligation by a third party; or the monetary value of the product. Optionally, the consumer may request the resolution of the contract after returning the product, claiming the refund of the price paid. In any case (execution or resolution of the contract), the consumer will be able to claim for the damages derived from the seller or the manufacturer’s failure to perform the obligation or the resolution of the contract. Non-Contractual Liability When there is no contractual relation between the injured party and the trader, manufacturer, or any party in the marketing chain that generated the defect, the rules of non-contractual liability based on the concept of ‘created risk’ apply. Created risk refers to the contingency or possibility of damage resulting from introducing defective products in the market, when the defects turn a product that was not dangerous by its nature or use into a dangerous product or increase the extent of danger posed by a product that is dangerous by its nature or use. The passive legal standing is objective, and includes not only the owner and the guardian of the product as established in the Civil Code,2 but also any party who obtains a profit or benefit from the product, as considered in the latest jurisprudence. Nevertheless, the injured party will be able to claim against a member of the marketing chain or against all of them jointly. As in the case of contractual liability, the accused party will be able to claim a refund from the party that caused the defect. As the liability is objective, the defendant can only be excused if the victim or a third party is at fault. After enactment of the Consumer Protection Law, the system of the Argentine Civil Code is, in principle, restricted to those cases where the subject acquires 1 Civil Code, s 1198. 2 Civil Code, s 1103.
ARGENTINA ARG-3 the product in order to introduce it into a production or trade process or when the subject is not a consumer. Consumer Protection Law System Under the Consumer Protection Law, the seller is responsible on a contractual basis as the person who engages with the consumer. The Consumer Protection Law protects consumers throughout the different contractual phases, from negotiation to the delivery and performance of goods (including used goods) and services. Traders must provide consumers with true, detailed, and accurate information about the goods or services offered. Consumers are vested with the right to commence individual actions in the event their rights under the Consumer Protection Law are threatened. The Consumer Protection Law also includes the right to initiate collective proceedings (class actions), which may include patrimonial claims through consumer associations and specific proceedings aimed at resolving disputes affecting consumers. Claims initiated by consumers and consumer associations may include punitive damages. The new Argentine Consumer Protection Law (the new Consumer Protection Law)3 amended the Consumer Protection Law, extending and improving consumer protection for both local and foreign individuals and companies. The new Consumer Protection Law extends the definition of ‘consumer’, making the term applicable to those individuals or entities obtaining cost-free goods or services as final recipients, either for their own or for their family group’s benefit. Additionally, the concept of ‘supplier’ includes ‘every physical person or public or private entity carrying out in a professional way, even occasionally, activities related to goods and services production, creation, construction, transformation, importation, distribution, and commercialization to consumers or users’. The new Consumer Protection Law establishes that ‘consumer relationships shall be ruled by the provisions of the Law and its regulations, notwithstanding the laws that may apply by reason of the supplier’s activities’, hence setting forth the priority of the Consumer Protection Law over any other specific laws. Additionally, the Consumer Protection Law provides that ‘suppliers should guarantee equitable treatment to consumers and users, and they should refrain from displaying behaviors that put consumers in embarrassing, humiliating, or intimidating situations’. Infringements of these rules will be subject to fines. 3 Law Number 26361 of 3 April 2008.
ARG-4 INTERNATIONAL PRODUCT LIABILITY Under the new Consumer Protection Law, foreign consumers are considered equal to national consumers in relation to prices or other commercial terms and conditions. Exceptions could be allowed with the prior authorization of the administrative authority, taking the general interest into consideration. Finally, the new Consumer Protection Law establishes the priority of the Consumers’ Protection Law over the regulations applicable to the provision of public services. Before the amendment, the provisions of the Consumer Protection Law were subject to the specific regulations for public services. System Related to Hidden Defects The contractual liability provided by the Argentine Civil Code also includes the obligation to cure hidden defects in the sale contract. The obligation of curing the defects emerges when the hidden defects of the product sold make the product unsuitable for its purpose or diminish it in such a way that a buyer who had been aware of the defects would not have bought the product or would have paid less for the product. The defects must be hidden, because the regime does not apply to manifest defects that were visible or to those defects that the buyer should have known about, given his occupation or profession. In these cases, the buyer has the option of terminating the contract and receiving a refund of the price paid or a proportional discount on the price. If the seller knew about the defect and hid it from the buyer, the buyer will have the same options. In addition, the buyer will be entitled to compensation for the damages suffered in case he decides to terminate the contract. Consumers’ Claims Development of the Legal Regime The recognition of consumers’ claims in Argentina has been a slow and arduous process. The initial stage recognized consumer relationships and identified the consumer as the weaker party in the trading relationship, due to the massive market, real inequalities, and lack of information, among other factors. The legal regime did not give precise answers to these issues. There were only some traditional warranties, such as the one provided for hidden defects, which protected the consumer to a certain extent. At this first stage, the liability of manufacturers and providers could only be based on the concept of guilt; the validity of the free will of the parties was virtually unlimited, impeding the revision of non-equitable contracts and unfair practices that were not precisely expressed in the legal regime. The second stage began with the reforms of the Civil Code and the enactment of special regulatory laws for the market. The legal regime began to create a
ARGENTINA ARG-5 consumer protection system through solutions that, although generic and not specifically meant to address consumer protection, nonetheless represented significant progress toward equity in consumer relations. The reform of the Argentine Civil Code in 1968 included the rules on good faith4 and abuse of rights,5 which enable judicial control of abusive practices and unfair clauses in consumer contracts. The introduction of the liability regime for manufactured products implicitly emerged in Sections 1198 of the Civil Code for the contractual sphere and in Section 1113 of the Civil Code for the non-contractual sphere. The prohibition of fraud in the identification of products and advertisements, the control of offers with awards, and the regime of warranties was provided by several court precedents. The control of prices and commercialization of goods and services was regulated by the Supply Law.6 The punishment of unfair practices was governed by the Competition Law.7 The control of the systems and contracts on pre-saving for determined purposes was another measure aimed at consumer protection. Finally, the third stage was initiated with the enactment of the Consumer Protection Law, which completes the consolidation of a system of juridical protection that previously was only founded on general rules that were not directly or specifically aimed at the protection of consumers. The consolidation of the Consumer Protection Law did not come about until the constitutional reform in 1994, which introduced consumers’ rights in the National Constitution. The enactment of the law amending the Consumer Protection Law8 and the new Consumer Protection Law of 2008 completed the consumer protection regime by adding the concept of ‘user’, which included users’ claims against service providers, public or otherwise. On December 2008, the legislature of the City of Buenos Aires created the Consumers Arbitration Court, which aimed to solve consumers’ and users’ claims within the scope of the City of Buenos Aires, with the same authority as a judicial ruling. Strict Liability The principle of strict liability applies to consumer claims. To be admitted by the court, damage caused must have a direct relation to the defect in the product. The plaintiff will recover for the damage that was proved in the proceeding. 4 Civil Code, s 1198. 5 Civil Code, s 1071. 6 Law Number 20680 of 1974. 7 Law Number 22262 of 1980. 8 Law Number 24999 of 1998.
ARG-6 INTERNATIONAL PRODUCT LIABILITY Statute of Limitations The statute of limitations for any claim against any party is generally three years if the case falls within the scope of the Consumer Protection Law. In cases ruled by the Civil Code, the time limit for claiming damages is three months for a claim based on a hidden defect. The time limit for a claim based on a hidden defect is six months if the relationship is ruled by the Commercial Code. In both cases, the term commences at the time of delivery of the product. For an action brought by the purchaser against the non-seller manufacturer, the claim is statute-barred in is two years. For an action brought against the seller (regardless of whether the seller also is the manufacturer), the time limit is 10 years. Successor Liability If a consumer suffers damage as a result of defective goods or services, the producer, manufacturer, distributor, trader, or the person who provides the product or service will be jointly liable for such damage, unless they can show that the damage is not attributable to the relevant party. In this sense, all the subjects involved in the marketing chain may be liable toward consumers under the Consumer Protection Law, including corporate successors. This rule was included in the legal regime with the aim of guaranteeing that consumers will be able to obtain compensation for damage suffered from any of the parties to the consumer relation, regardless of the party that is ultimately responsible. Causation and Burden of Proof In relation to causation, the general principle established in the Procedural Code is that the plaintiff bears the burden of proof. Nonetheless, in claims related to the damage generated by defects in products, the courts take into consideration that the manufacturer is in a better position than the consumer to produce technical evidence; accordingly, the manufacturer has the onus of proving that the product was not defective. The seller is deemed to hold a final obligation on the security of the product sold; therefore, if the product exhibits a defect, there is a presumption of the fault of the seller. The plaintiff bears the burden of proving the existence of the defect and the relation between the defect and the alleged damage. It is not necessary to prove that the damage would not have arisen without such exposure to the product. The mere exposure to potential damage does not produce any responsibility.
ARGENTINA ARG-7 Defenses In addition to procedural defenses (e.g., a time-bar defense), substantive law authorizes the following defenses: • Product is not defective or hazardous; • No relationship between the alleged damage and the defect, even when a defect existed; • Existence of a third party for whom neither the manufacturer nor the seller are liable; • Occurrence of a force majeure event; and • Fault of the victim himself. The manufacturer’s defense showing that he complied with regulatory and/or statutory requirements relating to the development, manufacture, licensing, marketing, and supply of the product is not eligible, as the regulatory requirements are deemed to be granted under the condition that the product is harmless to consumers. Judicial and Administrative Proceedings Related to the procedure for claims, the trial is before a judge, as there are no trials by jury in Argentina. The Consumer Protection Law also regulates an administrative proceeding and allows for the imposition of fines under such procedures. Concept of Defect In Argentina, the concept of defect is defined as ‘defective manufacture’, as the manufacturer is liable for the defects of movable things. Additionally, the Consumer Protection Law introduced the liability of service providers. Although a defect is defined as defective manufacture, the Consumer Protection Law provides certain liability on the basis of advertising of products, in the event that the advertising violates the obligation of providing accurate information on the products or services offered. Information to Consumers The new Consumer Protection Law establishes the minimum content of the purchase and sale document, which should also state ‘any additional costs, specifying the final price payable by the buyer’. The new Consumer Protection Law also sets forth that ‘the document should be written in Spanish, in a complete, clear, and easily understandable manner’.
ARG-8 INTERNATIONAL PRODUCT LIABILITY Remedies Regarding remedies, the new Consumer Protection Law includes the compensation of direct damages, which is ‘any monetary damage to the user’s or consumer’s right as a consequence of an action or omission of the supplier’. In order to compensate the direct damage, the authorities could force the supplier to pay a compensation of up to five times the value of the total consumer basket, according to the value reported by the National Institute of Statistics and Census. On this basis, on 27 May 2009 the Civil and Commercial Court of Appeals of the City of Mar del Plata confirmed the lower court’s decision that condemned the defendant to pay ARS 30,000 (approximately US $11,000 at the current exchange rate) for moral material damages and ARS 30,000 for punitive damages. The claim was filed by a disabled person who needed a wheelchair for mobility. The plaintiff argued and was able to prove that he had tried to file several claims before the offices of a mobile telephone company of which he was a client, but he had not received proper attention because the company’s building did not have a wheelchair ramp. The innovation of this judicial decision is the confirmation of the award of punitive damages according to Section 52 bis of the Consumer Protection Law, introduced by the new Consumer Protection Law. The Court of Appeals stated that the defendant abused its powerful position, acting with grave disrespect to the individual rights of the plaintiff, as it did not give him decent treatment. Provisions in Consumer Contracts Abusive Clauses Regarding the provisions contained in consumer contracts, abusive clauses deserve special attention in relation to the protection of consumers’ and users’ rights. An abusive clause is one by which the rights of the manufacturer/seller are expanded and the rights of the consumer/user are intentionally restricted. An abusive clause is a provision that goes against the requirements of good faith and results in a significant and unjustified imbalance of the contractual obligations to the detriment of the consumer or user. An abusive clause may or may not be a general condition, as it may be present in particular contracts in which actual negotiation of the provisions does not exist, particularly in adhesion contracts.
ARGENTINA ARG-9 At times, it is more difficult to detect abusive clauses, because a significant number of consumer contracts are not written agreements. This does not mean that the protection does not apply to contracts that are not in writing, but it requires greater effort to prove the existence of an abusive clause. Resolution Number 53/03 of 2003 (the Resolution) sets forth specific provisions that are prohibited in consumer contracts. The Resolution not only establishes the nullity of future provisions, but also sets forth that provisions in violation of the Consumer Protection Law that are included in an existing contract will be expunged and this exclusion also will be notified to the consumer. The purpose of the Resolution was to establish objective parameters for the parties to learn, in advance, which contractual provisions would be considered void. Section 37 of the Consumer Protection Law states that contractual provisions which distort the duties of the parties, limit the liability for damages, or restrict the rights of consumers will be considered null and void. Therefore, in the case of any claim or judicial action brought by any consumer against a company, the competent authority or the competent judge has to analyze each particular provision in order to determine whether it violates (or does not violate) the general prohibition of the Consumer Protection Law. The interpretation of the provisions was subject to the discretion of the authorities or the courts, according to the circumstances of the case. Under the new Resolution, if a provision falls within the description established in its text, it will automatically be considered null and void. Prohibited Contractual Provisions Without prejudice to other practices that could be considered in violation of the general principles established by Section 37 of the Consumer Protection Law, specific contractual provisions are prohibited. The Consumer Protection Law prohibits contractual provisions that grant the supplier of goods or services the exclusive right to construe the meaning, extension, and compliance of a provision. Contractual provisions that grant the supplier of goods or services the right to unilaterally amend any provision of a contract are prohibited, unless the balance between the rights and obligations of the parties in the contractual relationship is not disturbed by means of such amendments and provided that the right to amend the contract and its parameters is expressly agreed upon in the contract. Likewise, the right of the consumer to terminate the contract as a result of such an amendment must have been previously established. Prohibited contractual provisions include those that, despite the due compliance by the consumer of all its obligations undertaken in the contract, authorize the supplier of goods or services to terminate the contract without cause.
ARG-10 INTERNATIONAL PRODUCT LIABILITY The termination of the contract by the supplier without cause will only be legal if an obligation of prior notification to the consumer is provided in the contract and if, in the case of fixed-term contracts, the right of the consumer to terminate the contract also has been previously agreed. The Consumer Protection Law prohibits contractual provisions that establish the commencement of the contract will be at the sole discretion of the supplier of goods or services, while the consumer’s acceptance of the terms and conditions of the contract is irrevocably established in the text of the contract. Provisions that impose limitations on the consumer’s judicial rights also are prohibited. This is particularly the case when provisions establish a different venue than the one corresponding to the domicile of the consumer at the time of the execution of the contract (except in those cases where the judicial claim is filed at the venue of the real domicile of the consumer at the time of the filing); provisions that establish limitations on the production of evidence or impose on the consumer the burden of producing specific evidence in disregard of the provisions of the Procedural Code in this respect; and provisions that establish certain limitations for the filing of defenses and remedies. Contractual provisions that establish the right of the supplier of goods or services to set off a credit against a consumer already in arrears with another credit of the consumer against the provider, which originated in another contract or service rendered by the consumer to the provider, are prohibited, unless this compensation is admitted by the applicable law and the provider duly notifies the consumer of this circumstance in the contract. The prohibition applies to contractual provisions that exclude or limit the responsibility of the supplier of goods or services regarding any indemnification admitted by the applicable law in case of damage caused by the product or service provided to the consumer. In fixed-term consumer contracts that grant the parties the right to terminate the contract before the specified term and in consumer contracts that have no specified term, any provisions that make the consumer’s right of termination of the contract conditional on the consumer’s prior payment of all pending obligations in favor of the other party are prohibited. Contractual provisions that establish the right of the provider to provide a different product or service than that agreed on in the contract without the prior consent of the consumer and/or which impose a term for the consumer to accept the different product or service are prohibited. Also prohibited are contractual provisions that impose on the consumer a representative in order to exercise the rights provided in the contract or to carry on any other legal act on his behalf. Contractual provisions that violate environmental regulations or allow such violations are prohibited.
ARGENTINA ARG-11 Product Liability Insurance Insurance policies available for product liability in Argentina are those that protect the insured against civil claims. In general, these policies include comprehensive general protection against liability claims derived from contractual or extra-contractual relationships, including claims related to products and services. According to the Insurance Law,9 insurance policies do not cover cases in which the insured acted intentionally or was guilty of serious misconduct. Additionally, insurance policies include a restriction on the insurance company’s protection toward the insured in case of liability, known as a ‘deductible’. If the insured incurs liability, the deductible is an amount, usually established by the insurance company, that the insured is obligated to pay before the insurance company responds to the claim. In connection with the deductible and according to the Consumer Protection Law, in the case Saldivar, Federico Reynaldo v Metrovías S.A., Tribunal M of the Civil Court of Appeals ruled that the deductible in liability insurance could not be asserted against the aggrieved party, despite the Supreme Court of Justice’s precedents that found to the contrary. The ruling provided that Metrovías S.A. and its insurance company (La Meridional Compañía Argentina de Seguros S.A.) must pay the plaintiff 80 per cent of the sums claimed. In addition, the Court ruled that the deductible of the liability insurance taken out by the insured could not be asserted against the plaintiff, in spite of several previous rulings of the Supreme Court of Justice to the contrary. Notably, the Supreme Court of Justice has repeatedly affirmed the validity and assertion of this deductible. One of the basis for the Supreme Court’s decisions is that the aggrieved party is not privy to the insurance contract entered into between the insured and the insurer. Thus the ‘third party’ who invokes this insurance contract must confine its rights to the terms and conditions agreed on between the insured and the insurer. However, the Court of Appeals understood that in the specific case of Saldivar, it was not bound to follow the Supreme Court’s rulings. Although, in principle, national courts ought to follow the Supreme Court’s doctrine, they can derogate from them if new arguments should arise that have not been taken into account by the Supreme Court. The Civil Court of Appeals maintained that the Consumer Protection Law was amended by the Argentine Congress after the Supreme Court’s contrary rulings, 9 Law Number 17418 of 1967.
ARG-12 INTERNATIONAL PRODUCT LIABILITY that the new text of the new Consumer Protection Law was in line with the ruling in a previous leading case, and that the Supreme Court had not issued any other ruling subsequent to the amendments to the Consumer Protection Law. According to the court, these amendments had widened the concept of ‘consumer’ to cover those who, without being a party to a consumer relationship, use a service as end consumers and are exposed to a consumer relationship (as in the case of the aggrieved party in Saldivar). In addition, the amendments had extended the benefits of the Consumer Protection Law to these consumers. Tribunal M held that a consumer relationship existed in the case, and therefore the limited legal effects concept based on privity of contracts (ie, the Supreme Court’s line of reasoning) should not be applied. It also held that the provisions of Article 37 of the Consumer Protection Law should be applied, which sets forth that stipulations which distort the nature of the obligations or that limit liability for damage will be null and void. Product Liability Litigation Frequency of Litigation Judicial claims on product liability issues in Argentina started before the enactment of the Consumer Protection Law and its amendments. Numerous court decisions protecting the rights of consumers built the foundations of the principles later reflected in the Consumer Protection Law. The rate of judicial claims on product liability issues in Argentina has increased since the Consumer Protection Law came into force. This rate was significantly increased by class actions filed by consumer organizations, based on the inclusion of collective rights in the Argentine legal regime. Analysts claim that, currently, consumers’ claims in Argentine courts are as common as other judicial claims. The Argentine legal regime contemplates two categories of damages that can be indemnified: material damages and non-patrimonial damages. Material Damages In General Material damages include direct damages (the direct financial loss suffered), compensation for lost profits (the profits lost by the injured party), compensation for lost chances (the loss of a potential opportunity), and litigation costs. Non-Patrimonial Damages Non-patrimonial damages are subject to compensation. The compensation relates to the pain and suffering of the victim, including physical pain and suffering, and generally to any type of suffering not related to financial losses.
ARGENTINA ARG-13 Non-patrimonial damages are for aesthetic injury (including anatomic and functional anomalies, permanent or temporary, that are externally visible) and disease (including the recovery of medical expenses and related costs). Lawyers’ Fees Lawyers’ fees are generally established based on the work done by the lawyer. Law Number 21839 on professional fees provides minimum rates that range from 11 per cent to 20 per cent of the amount claimed by the plaintiff in patrimonial claims. In addition, lawyers generally agree to a percentage to be paid by the client on winning the case, based on the amount of damages awarded by the court. Conclusion This analysis of the legal regime on consumers’ and users’ protection in Argentina leads to the conclusion that the regime has evolved during recent years, so as to favor the rights of consumers and users and increase the tools for claims. Together with these developments in the legal regime, consumers and users are now better informed about their rights, and the rate of claims on consumer relations has seen a corresponding increase. Surveys indicate that two out of 10 Argentines claim to have lodged a complaint against sellers of products or providers of services. This number increases in people of high socio-economic status (30 per cent) and within the City of Buenos Aires (28 per cent). In general, consumers and users believe that their rights are not being respected by the sellers of products or providers of services, which is a discouraging scenario that should demand the attention of the commercial sector.
Austria Introduction ............................................................................................ AUT-1 Historical Evolution ............................................................................... AUT-2 Purpose of the PHG................................................................................ AUT-4 Product and Defective Product............................................................... AUT-5 Product ..................................................................................... AUT-5 Defect....................................................................................... AUT-6 Warning and Recall Obligations ............................................................ AUT-8 Defenses Contributory Fault .................................................................. AUT-8 Assumption of Risk ................................................................. AUT-9 Product Misuse ........................................................................ AUT-9 State-of-the-Art Defense .......................................................... AUT-10 Binding, Regulations, Directions and Orders .......................... AUT-10 Defect as ‘Proximate Cause’ .................................................................. AUT-10 Liable Persons General .......................................................................... AUT-11 Manufacturer ........................................................................... AUT-11 Importer ................................................................................... AUT-12 Merchants ................................................................................ AUT-13 Licensor and Licensee ............................................................. AUT-14 Joint and Several Liability ..................................................................... AUT-14 Burden of Proof...................................................................................... AUT-15 Remedies ................................................................................................ AUT-16 Disclaimer Clauses................................................................................. AUT-16 Statutes of Limitation ............................................................................. AUT-17 Liability of Corporate Successors .......................................................... AUT-18 Insurance ................................................................................................ AUT-18 Role of the Courts .................................................................................. AUT-19 Frequency of Litigation ........................................................... AUT-19 Applicability of Austrian Law ............................................................... AUT-19 Disclaimer .............................................................................................. AUT-20
Austria Benedikt Spiegelfeld and Christine Wallner CHSH Cerha Hempel Spiegelfeld Hlawati Vienna, Austria Introduction Before examining Austrian product liability, what is understood by product1 liability in this chapter should be made clear from the outset and, consequently, to what subject mat- ter the exposition will be limited. In a broader sense, product liability in general is thought to comprise the laws and rules providing for recovery of damage or injury to human life, health or someone’s property suffered as a result of (or caused by) a defective product. These rules must be clearly distinguished from those dealing with and enforcing a seller’s obligation to fulfill a contract he has entered into by transferring property (the product) in the quality he has agreed upon (and therefore generally without a defect) to the purchaser. In this field of the law, delivery of a defective product amounts to breach of contract enabling the buyer to sue for complete fulfillment of the contract without regard to whether such non-performance was negligent or not.2 Within the broader sense of product liability as described above, we may distinguish between a violation of either a (general) law, on the one hand, or an agreement (contract), on the other, triggering the malfeasor’s liability for damage to another individual’s life or health or to his goods (apart from the product purchased). The general liability principles and rules contained largely in the Austrian Civil Code3 of 1811, as amended, cover the obligations under both of these categories. Nonetheless, we shall deal with and expose these general rules only to the extent as we deem necessary to outline the historical evolution leading very recently to the adoption of a specific Product Liability Act and whenever this latter Act refers to the general rules. The specific set of rules contained in this above-mentioned Product Liability Act will be our main interest and other related issues, such as compensation awarded due to negligence in general or due to violation of contractual obligations, will receive merely scarce consideration. 1 Scholarly treatises and court opinions in Common Law countries seem to prefer the term ‘products liability’ to ‘product liability’; as the Austrian equivalent term is Produkthaftung (with Produkt in its singular form), we shall only use the term in its respective translation, thus ‘product liability’. 2 This remedy is referred to as Gewährleistung under Austrian law. 3 Allgemeines biirgerliches Gesetzbuch (ABGB).
AUT-2 INTERNATIONAL PRODUCT LIABILITY In general, the PHG helps to increase the level of protection against defective products for two reasons: first, it encourage producers to do their best to produce safe products by com- plementing the regulatory measures of a given product group like Food Safety and Consumer Protection Act4 (LMSVG) and the Product Safety Act5 (PSG) and, second, once these preventive measures have failed and accidents have happened, it allows to obtain redress of the producer. Historical Evolution In this chapter, the development in Austrian product liability law the equivalent of which in common law is known and referred to as, the breakdown of the privity requirement, will be described.6 Until 1988, product liability in Austria was mainly governed by the general principles and rules contained in the Civil Code of 1811. These entitled those who suffered damage to demand reparation of such damage from the originator or author of the conduct causing the damage, and in essence required a certain fault or wrongdoing (general liability prin- ciples). The Austrian Parliament adopted the Federal Act on the Liability for a Defective Product on 21 January 19887 (according to its German title referred to as the PHG). Under these general principles, the fault or wrongdoing consisted of a breach of a duty imposed by law or by contract. Being consigned to these general remedies against injuries to his person or property, a plaintiff could succeed in only a very few cases. Usually the manufacturer of a product does not himself violate any duty imposed by law and could moreover almost never be held liable for any misconduct of his employees. Section 1315 of the Austrian Civil Code imposes liability on employers towards third parties only in the two cases that the employer either employs persons incapable of or unfit for the kind of work to be executed or that the employer in fact knew that the employee’s conduct was dangerous to other per- sons’ life, health and property with regard to the execution of his work. Under a contractual relationship, that is, between the two or more parties to an agreement, of course section 1313(a) of the Civil Code would provide for an overall and extensive responsibility of a producer or manufacturer for negligence of all persons assisting in the production or manufacturing process. Most of the typical product liability (related) cases, though, lack such an agreement between the producer and the person injured, as such agreement has generally only been entered into between the customer and the retailer. The retailer himself very rarely could be charged with a violation of any duty as many or almost all defects are latent and cannot 4 Lebensmittelsicherheit und Verbraucherschutzgesetz, Federal Law Gazette No 13 of 2006 (Bundesgesetzblatt 13/2006). 5 Produktsicherheitsgesetz 2004, Federal Law Gazette No 16 of 2005 (Bundesgesetzblatt 16/2005). 6 Allgemeines biirgerliches Gesetzbuch (ABGB). 7 Bundesgesetz vom 21. Janner 1988 über die Haftung für ein fehlerhaftes Produkt (Produkthaftungsgesetz); Federal Law Gazette No 99 of 1988 (Bundesgesetzblatt 99/1988).
AUSTRIA AUT-3 be detected in the ordinary and due course of business. In general, the law does not impose on wholesalers or retailers the duty to loosely examine the goods purchased for mere resale. Most of the time, wholesalers and retailers would lack both technical knowledge as well as equipment to do so. As a consequence — in the case of absence of a respective duty — a plaintiff cannot prove negligence against such a middleman merely serving as conduit. Legal scholars8 and the courts9 tried to solve these difficulties implicit in the approach and linked to a wrong or fault by developing an interpretative concept that would protect third parties beyond the contract between the producer and the first wholesaler so long as a series of contracts lead to the person ultimately suffering the damage.10 It was argued that obligations of the manufacturer should not extend to wholesalers’ or retailers’ (with whom a contract actually was entered into) claims for the protection of individuals against harm to life, health and property, because these never would use the product purchased for its intended purpose but rather for mere resale. Therefore, the purpose of any obligation arising from the contract between the producer and the first wholesaler guaranteeing a certain standard of quality and freedom from defect should be to entitle the final customer or user to claim compensation. This extension of the producer’s contractual obligations allowed the applicability of the above-mentioned section 1313(a) of the Civil Code between original producer and final purchaser of goods. Therefore, the producer could be held responsible for the breach of duty by his assistants and, pursuant to section 1298 of the Civil Code, he had to prove the absence of such negligence. Since not all damage can be recovered under the new PHG, such as damage to property up to a minimal amount of EUR 500,11 this theory retains some of its importance. Nevertheless, this contract-based liability could and can be impaired or even avoided by deliberate drafting of the contract between the producer and the first wholesaler. The Aus- trian Supreme Court (Oberster Gerichtshof) has held such an exclusion of third-party claims as lawful.12 By maintaining that these claims arose by operation of law and not contract, some Austrian scholars remain opposed to this holding. Still another drawback of the theory should be mentioned: as stated above, only persons with a certain contractual linkage to the producer would have benefited. One requirement was that the defective product was either used as a result of a chain of contracts leading to possession of the product by the person injured or that this person belonged to those 8 Bydlinski, ‘Vertragliche Sorgfaltspflichten zugunsten Dritter’, JB1 1960, 359; Bydlinski, in: Klang-Gschnitzer, Kommentar zum Allgemeinen biirgerlichen Gesetzbuch 1V2 (1978), 180. 9 SZ 51/169, SZ 54/152. 10 Known in German als Vertrag mit Schutzwirkung zugunsten Dritter. 11 Pursuant to s 2 of the PHG, damage to property shall only be indemnified with such amount exceeding the threshold of EUR 500. Relief sought on the grounds of the PHG accordingly will leave the customer with a loss up to EUR 500. On the other hand, it should be stated in this context that the law has not placed any cap on the possible and imaginable amount of recovery under the PHG. 12 SZ 51/169.
AUT-4 INTERNATIONAL PRODUCT LIABILITY individuals of which the producer reasonably must have expected that they might have contact with the product (such as the family members of the ultimate purchaser). The innocent bystander therefore still remained unprotected. Motivated by these considerations, along with the adoption of the Directive on product liability of the European Community on 25 July 1985 obliging all Member States of the Community to take every necessary step to implement this Directive by 30 July 1988, Austria, though not yet a Member State, but in an effort to establish equal and fair trading conditions and avoid any bias in competition, enacted the new law (PHG) on 21 January 1988 and ultimately entered into force on 1 July 1988.13 In 1994 in virtue of the Agree- ment on the European Economic Area14 an extensive adjustment of the PHG was necessary regarding: • The lower not in accordance with the council directive threshold was increased from ATS 5,000 up to ATS 7,900; • The removal of the equal treatment of private and commercial used items; and • The adjustment of the limitation period in accordance with the council directive. Furthermore, in 1999, pursuant to the Directive on the approximation of the laws, regula- tions and administrative provisions of the Member States concerning liability for defective products of the European Parliament and of the Council, on 10 May 1999, the restriction regarding the exception of primary agriculture products and games was removed with effect from 1 January 2000. In connection with the Austrian product liability law, it is mentionable that in 1983 the Aus- trian Product Safety Act15 entered into force and was amended in 199516 and in 200417 in accordance with the council directives on general product safety. It is to be noted that the Product Safety Act and the Product Liability Act have a complementary function: the first instrument ensures that only safe products are put on the market (preventive function), and the second instrument establishes the rules under which personal injury and damage to property caused by a defective product are compensated (compensational function). Purpose of the PHG Section 1 of the PHG sets forth the fundamental rule that certain groups of persons shall be liable for the defect of a product whenever such defect has caused damage in the form of: • The death of an individual; 13 Bundesgesetz vom 21. Janner 1988 über die Haftung für ein fehlerhaftes Produkt (Produkthaftungsgesetz); Federal Law Gazette No 99 of 1988 (BGBl 1988/99). 14 Kundmachung des Bundeskanzlers betreffend die Rechtsvorschriften, die gleichzeitig mit dem Abkommen über den Europäischen Wirtschaftsraum, Federal Law Gazette No 917 of 1993 (BGBl 1993/917). 15 Produktsicherheitsgesetz 1983 — PSG 1983, Federal Law Gazette No 171 of 1983 (BGBl 1983/171). 16 Produktsicherheitsgesetz 1994 — PSG 1994, Federal Law Gazette No 63 of 1995 (BGBl 1995/63). 17 Produktsicherheitsgesetz 2004 — PSG 2004, Federal Law Gazette No 16 of 2005 (BGBl 2005/16).
AUSTRIA AUT-5 • An injury of a person or harm to his health; and • An injury to his tangible property.18 It excludes damage to the defective product itself. Therefore, liability under the PHG does not require negligence or fault of a particular person nor does it require a contractual link between the original producer and the indi- vidual who has finally suffered the loss. Thus, the innocent bystander is also protected under the PHG. Division of labor in the industrial production process with all its inherent risks and dan- gers (sometimes causing defective products) as well as the expectations of wholesalers, retailers and consumers relying on the suitability of products for their intended use when offered for purchase are commonly quoted as the justifying rationale for the extended responsibility. Moreover, nobody else is in a better position to reduce risks caused by defective products than the manufacturer. Furthermore, the persons potentially liable under the rules of the PHG would tend to and now must19 react by insuring these liabilities and distribute the price of the insurance ultimately among those who benefit from the improved safety: consumers.20 As already mentioned, section 15(1) of the PHG explicitly states that any provision of the Civil Code or other laws imposing liability for losses to a greater extent or with regard to further originators of such losses than under the PHG shall remain unaffected. Section 15(2) of the PHG expresses that the PHG does not provide for compensation in respect of dam- age occasioned as a result of a nuclear incident covered by an international convention ratified by EFTA states and EC Member States. Under Austrian law, this field is covered by the Federal Act on the Liability for Nuclear Damages of 29 April 1964.21 Product and Defective Product Product Pursuant to section 4 of the PHG, a product for the purpose of this Act is defined as mov- able and tangible property22 notwithstanding that it is part of other movable property or has been annexed to realty, and shall moreover include energy. Under Austrian law, the term ‘Sache’, property, comprises everything different from the person and serving the use of humanity.23 Property will be regarded as movable if it can be 18 In German, körperliche Sache. 19 See below, Role of Insurance. 20 Fitz Purtscheller, in: Fitz Purtscheller Reindl, Produkthaftung, 1988, 31; Welser, Produkthaftungsgesetz 1988, 28. 21 Bundesgesetz vom 29. April 1964 über die Haftung nuklearer Schäden; see Federal Law Gazette No 117 of 1964 (Bundesgesetzblatt 117/1964), commonly referred to as the Atomhaftpflichtgesetz. 22 In German, bewegliche, körperliche Sache. 23 Civil Code, s 285.
AUT-6 INTERNATIONAL PRODUCT LIABILITY removed from one place to another without inevitable damage to its substance.24 Finally, property is thought of as tangible if it appeals to the senses,25 a quality that is commonly attributed to property that can be touched and seen. Accordingly, services and rights will not be regarded as tangible and therefore cannot result in liability under the PHG. It is, for example, impossible to establish responsibility of lawyers or tax advisors for any sort of malpractice on the grounds of product liability. Legal advice is not a product under the PHG. For the same reason, the PHG cannot be applied to any sort of information of a false or misleading character contained in books, articles (like this), magazines, newspapers and the like. An in various ways discussed query is whether computer software can be regarded as a product for the purpose of this provision or not. In this case, you have to distinguish between operating system-related software and hardware-related software as well as standard software and individual software. Whereas mass-produced operating system-related software and hardware-related software fall under the definition of this provision, and exist controversial opinions in respect to standard software. Individual software pro- grams, however, cannot be viewed as products under the PHG.26 For any reader from a common law country it should be noted that Austrian courts — in view of such exact wording in recent legislation — will almost certainly not extend the applicability of the PHG for teleological reasons of whatever nature in cases where one might otherwise see fit to do so. Defect Pursuant to section 5(1) of the PHG, a product shall be regarded as defective if it does not provide for safety which, with regard to all circumstances, one may expect of the product, particularly in view of: • The presentation of the product; • The use of the product to be equitably expected; and • The point of time the product has been placed in the stream of commerce. It is evident that this definition creates a broad field of possible judicial interpretation, though the wording ‘which one may expect’ tries to introduce an objective standard of common and ordinary consumer expectations. The personal attitude or view of a particu- lar customer will not be taken into consideration, whether it be a customer with extraordinarily high or low expectations. A product falling within the realm of this standard set by the expectations of an ordinary consumer or user will not be regarded as defective and will therefore not trigger liability under the PHG. 24 Civil Code, s 293. 25 Civil Code, s 292. 26 Posch in Schwimann, ABGB, s 4 PHG; 10.
AUSTRIA AUT-7 Hinged on the concept of safety expectations, the concept of the PHG allows certain consideration of inevitable defectiveness as a result of the production process and state of technology. This will certainly apply to products that — due to production techniques — are incapable of being made absolutely safe at a certain and given point of available human knowledge. The term ‘presentation of the product’ means any activity of a person subject to liability that introduces the product to the public or the individual user,27 such as advertisement, contractual guarantees, operating instructions, user’s manuals and other descriptive materials such as plans and brochures. Up to a certain point, a risk unavoidably threatening a consumer’s safety would not amount to defectiveness of a product and therefore would not trigger liability if the pro- ducer, wholesaler, retailer or sales personnel in presenting the product draws the consumer’s attention to the inherent dangers. The greater, less obvious and less detectable these inherent dangers and risks are, the more explicit and thorough the warning has to be. Nonetheless, it should be stressed that products the danger of which exceeds a certain limit (to be set ultimately by courts) must not be released into the stream of commerce at all, even if the defectiveness may be unavoidable at a certain point of time and technical knowledge, notwithstanding warning and instructions. Such products must be recon- structed and improved, until at least the occurrence of serious damage (such as harm to an individual’s life and health) is avoided. Number 2 of section 5(1), with its reference to the use of the product that can be equita- bly expected, seeks a balance between the use as defined by the producer and the actual use of the product by the customer. Therefore, a certain misapplication and misuse (especially where children might have access) has to be expected and taken into consid- eration.28 Number 3 of section 5(1), on the one hand, guarantees that technical knowledge which was not available at the time of the release of the product into the stream of commerce, but rather was accomplished and acquired by scientific progress and research afterwards, shall not render a previously marketed product defective and, thus, on the other, seeks to avoid any restraints on technical improvement and innovative efforts.29 The concept of ‘defect’ under the PHG comprises defective design, production or man- ufacturing defects and erroneous, misleading or insufficient warning and instruction (presentation of the product). As there are no different legal consequences imposed on the various types of defectiveness, it is not necessary to further distinguish between them.30 27 Fitz Purtscheller, in: Fitz Purtscheller Reindl, Produkthaftung, 1988, 64; Welser, Produkthaftungsgesetz, 1988, 65. 28 Fitz Purtscheller, in: Fitz Purtscheller Reindl, Produklhaftung, 1988, 68; Welser, Produkthaftungsgesetz, 1988, 67. 29 Welser, Produkthaftungsgesetz, 1988,68. 30 Fitz Purtscheller, in: Fitz Purtscheller Reindl, Produkthaftung, 1988, 81; Welser, Produkthaftungsgesetz, 1988, 72.
AUT-8 INTERNATIONAL PRODUCT LIABILITY Warning and Recall Obligations A long time before the PHG was enacted in 1988, Austrian case law had already established (arguing on the basis of accessory contractual obligations) that a seller has to warn his customers of any possibility of damage with regard to a certain application or use of the product sold. Under general liability principles, this responsibility of a seller depends on fault or negligence of the persons involved. As described above, the PHG has changed this situation merely insofar as omission of instruction and warning (at the time of the release of the product into the stream of com- merce) would amount to a defect pursuant to section 5 of the PHG, but did not go further and did not introduce strict liability for damage suffered due to the failure to issue postal warnings. Almost the same is true with regard to a duty of manufacturers to monitor the reliability and safety of their products when actually in use in the market: the PHG does not regulate this issue and we are once again referred to the general principles of Austrian liability law requiring fault or negligence in order to recover any loss suffered. The Austrian Supreme Court nonetheless has ruled — on the grounds of the general liabil- ity principles — that a manufacturer is obliged to warn users and customers of any potential hazard possibly caused by the usage of his product (the manufacturer must not wait until actual damage has occurred) and has to exchange defective and dangerous products by others. He must do this from the point of time he has actual knowledge of the dangers and risks. In Austria, however, inter alia, the Food Safety and Consumer Protection Act (LMSVG) and the Product Safety Act (PSG) regulate under which circumstances a product shall be recalled. According to the Product Safety Act, a product must be recalled if: • The product under normal and reasonably foreseen conditions of usage presents a risk; or • The product does not provide the minimum risk compatible with the product’s use con- sidered to be acceptable and consistent with a high level of protection for the safety and health of a person. Defenses Contributory Fault Pursuant to section 11 of the PHG, section 1304 of the Civil Code shall apply accordingly if the conduct of the user or consumer who has suffered the loss, or of any other person whose conduct they are responsible for, was negligent with regard to the injury. If successful, such defense of contributory negligence leads to only partial reimburse- ment to the plaintiff for the losses incurred.31 Section 11 of the PHG requires the product liability-related cause(s) for the loss, such as the gravity of the defect or the difficulty to detect it, on the one hand, to be compared with 31 This is referred to as Schadensteilung.
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International Product Liability

  • 1. PUBLICATION UPDATE INTERNATIONAL PRODUCT LIABILITY RELEASE 1 • 2012 HIGHLIGHTS Juris Publishing is pleased to present Release 1 of International Product Liability. This release contains comprehensive revisions to the chapters on: • Colombia • Denmark • England and Wales • Italy • Mexico • South Africa • Ukraine This release also contains new chapters on: • Malaysia • Poland • Romania Juris Publishing and the authors welcome your questions, suggestions and comments. Please contact us at Juris Publishing, Inc, 71 New Street, Huntington, N.Y. 11743 USA.
  • 2.
  • 3. RECORD OF RELEASES FILED INTERNATIONAL PRODUCT LIABILITY is filed with all previously issued releases and is current through: Release 1 • 2012 Questions About This Publication ____________________ For editorial assistance or customer service: please call…………………………………………….1-631-350-2100 or fax…………………………………………….……1-631-351-5712 JURIS
  • 4.
  • 5. INTERNATIONAL PRODUCT LIABILITY Second Edition DENNIS CAMPBELL General Editor CHRISTIAN CAMPBELL Editor JURIS
  • 6. Questions About This Publication For assistance with shipments, billing or other customer service matters, please call our Customer Services Department at 1-631-350-2100. To obtain a copy of this book, call our Sales Department: Fax: 1-631-351-5712 Toll Free Order Line: 1-800-887-4064 (United States & Canada) See our website: www.jurispub.com Copyright © 2012 Juris Publishing, Inc. _________________ All Rights Reserved. Printed in the United States of America. ISBN: 978-1-57823-286-4 _________________ Juris Publishing, Inc. 71 New Street Huntington, NY 11743 USA www.jurispub.com
  • 7. Table of Contents Argentina Introduction ............................................................................................ ARG-1 Legal Regime ......................................................................................... ARG-1 Consumers’ Claims ................................................................................ ARG-4 Concept of Defect .................................................................................. ARG-7 Information to Consumers ..................................................................... ARG-7 Remedies ................................................................................................ ARG-8 Provisions in Consumer Contracts ......................................................... ARG-8 Product Liability Insurance .................................................................... ARG-11 Product Liability Litigation .................................................................... ARG-12 Conclusion ............................................................................................. ARG-13 Austria Introduction ............................................................................................ AUT-1 Historical Evolution ............................................................................... AUT-2 Purpose of the PHG................................................................................ AUT-4 Product and Defective Product............................................................... AUT-5 Warning and Recall Obligations ............................................................ AUT-8 Defenses Contributory Fault .................................................................. AUT-8 Defect as ‘Proximate Cause’ .................................................................. AUT-10 Liable Persons General .......................................................................... AUT-11 Joint and Several Liability ..................................................................... AUT-14 Burden of Proof...................................................................................... AUT-15 Remedies ................................................................................................ AUT-16 Disclaimer Clauses................................................................................. AUT-16 Statutes of Limitation ............................................................................. AUT-17 Liability of Corporate Successors .......................................................... AUT-18 (Release 1 – 2012)
  • 8. iv INTERNATIONAL PRODUCT LIABILITY Insurance ................................................................................................ AUT-18 Role of the Courts .................................................................................. AUT-19 Applicability of Austrian Law ............................................................... AUT-19 Disclaimer .............................................................................................. AUT-20 Canada Introduction ............................................................................................ CDN-1 Common Law......................................................................................... CDN-1 Contract ................................................................................................. CDN-8 Other Statutory Enactments ................................................................... CDN-11 Québec Civil Law .................................................................................. CDN-14 Conclusion ............................................................................................. CDN-25 Colombia Introduction ............................................................................................ COL-1 Specific Normative Grounds .................................................................. COL-1 Civil Liability Regime for Defective Products....................................... COL-3 Civil Code Regulation of Extra-Contractual Responsibility .................. COL-9 Collective Actions Provided under Constitution .................................... COL-10 Conclusion ............................................................................................. COL-11 Denmark Introduction ............................................................................................ DEN-1 Theories of Liability............................................................................... DEN-2 Negligence ............................................................................................. DEN-3 Fraud or Misrepresentation .................................................................... DEN-6 Warranty ................................................................................................ DEN-6 Strict Liability ........................................................................................ DEN-7 Concept of Defect .................................................................................. DEN-8 Defenses Available to Manufacturer ...................................................... DEN-15 Liability in Chain of Commerce ............................................................ DEN-17 Remedies ................................................................................................ DEN-18 (Release 1 – 2012)
  • 9. TABLE OF CONTENTS v Limitations ............................................................................................. DEN-20 Successor Liability ................................................................................. DEN-21 Insurance ................................................................................................ DEN-21 Product Liability Litigation .................................................................... DEN-25 Conclusion ............................................................................................. DEN-27 England and Wales Introduction ............................................................................................ ENG-1 Basis of Manufacturer’s Liability .......................................................... ENG-1 Concept of Defect .................................................................................. ENG-4 Defenses Available to the Manufacturer ................................................ ENG-5 Examples of Strict Liability for Products ............................................... ENG-7 Contractual Liability of Distributors ...................................................... ENG-9 Remedies ................................................................................................ ENG-13 Exclusion or Limitation of Liability ...................................................... ENG-16 Statute of Limitations ............................................................................. ENG-17 Corporate Successor Liability ................................................................ ENG-18 Product Liability Insurance ................................................................... ENG-19 Product Liability Litigation .................................................................... ENG-20 Product Safety Legislation and Prosecutions by Trading Standards Officers .................................................................................. ENG-22 Conclusion ............................................................................................. ENG-23 European Community Introduction ............................................................................................ EU-1 Theory of Products Liability .................................................................. EU-2 Affected ‘Products’ ................................................................................ EU-2 Definition and Types of ‘Defect’ ........................................................... EU-4 Liable Parties ......................................................................................... EU-5 Parties Entitled to Recovery ................................................................... EU-6 Types of Remedies and Extent of Recovery .......................................... EU-7 Questions of Evidence ........................................................................... EU-8 (Release 1 – 2012)
  • 10. vi INTERNATIONAL PRODUCT LIABILITY Limits of Liability .................................................................................. EU-9 Other Remedies ...................................................................................... EU-10 Disclaimer .............................................................................................. EU-11 Transformation of the EC Directive ....................................................... EU-11 Further Developments in the European Community .............................. EU-14 Appendix ................................................................................................ EU-16 India Introduction ............................................................................................ IND-1 Theories of Liability............................................................................... IND-2 Concept of Defect .................................................................................. IND-8 Defenses ................................................................................................. IND-13 Other Parties Impacted by Product Liability Considerations ................. IND-14 Remedies ................................................................................................ IND-15 Disclaimers/Limitation on Remedies by Contract ................................. IND-16 Corporate Successor Liability ................................................................ IND-17 Product Liability Insurance .................................................................... IND-18 Product Liability Litigation .................................................................... IND-20 Conclusion ............................................................................................. IND-22 Italy Introduction ............................................................................................ ITA-1 Product Liability under Contract Law .................................................... ITA-2 Product Liability under Tort Law .......................................................... ITA-3 General Principle of Producer’s Liability without Fault ........................ ITA-7 Statute of Limitation and Forfeiture Term ............................................. ITA-19 Mandatory Regime of Liability .............................................................. ITA-20 Malaysia Basis of Manufacturers’ Liability ........................................................ MAY-1 Obligations to Warn or Recall Defective Products .............................. MAY-8 Defenses Available to Manufacturer .................................................... MAY-9 (Release 1 – 2012)
  • 11. TABLE OF CONTENTS vii Limitation of Liability by Proximate Cause ......................................... MAY-11 Impact of Product Liability Considerations ......................................... MAY-12 Remedies .............................................................................................. MAY-14 Limitations on Remedies by Contract .................................................. MAY-17 Claims Affected by Statute of Limitation ............................................ MAY-17 Extension of Liability for Defective Products to Corporate Successors ............................................................................................ MAY-18 Role of Insurance in Product Liability Matters .................................... MAY-18 Role of Courts and Lawyers in Product Liability Litigation ................ MAY-18 Mexico Introduction ............................................................................................ MEX-1 General Aspects of Liability in Mexico ................................................. MEX-3 Theories of Liability............................................................................... MEX-6 Concept of Defect .................................................................................. MEX-11 Obligation to Recall Defective Products ................................................ MEX-11 Obligation to Warn Consumers about Defective Products..................... MEX-11 Defenses Available to the Manufacturer ................................................ MEX-12 Proximate Cause .................................................................................... MEX-14 Liability of Others in the Supply Chain ................................................. MEX-14 Remedies ................................................................................................ MEX-15 Contractual Disclaimers or Limitations ................................................. MEX-17 Statute of Limitations ............................................................................. MEX-17 Corporate Successor Liability ................................................................ MEX-18 Product Liability Insurance .................................................................... MEX-18 Product Liability Litigation .................................................................... MEX-19 Conclusion ............................................................................................. MEX-23 The Philippines Introduction ............................................................................................ PHI-1 Theories on Manufacturers’ Liability .................................................... PHI-1 Concept of Defect .................................................................................. PHI-11 (Release 1 – 2012)
  • 12. viii INTERNATIONAL PRODUCT LIABILITY Obligation to Warn Consumers or Recall Defective Products ............... PHI-15 Defenses Available to the Manufacturer ................................................ PHI-16 ‘Proximate Cause’ Limits ...................................................................... PHI-18 Others Affected by Product Liability Considerations ............................ PHI-20 Remedies ................................................................................................ PHI-22 Exclusion or Limitation of Contractual Liability ................................... PHI-25 Statutes of Limitation ............................................................................. PHI-26 Corporate Successor Liability ................................................................ PHI-27 Product Liability Litigation .................................................................... PHI-27 Conclusion ............................................................................................. PHI-30 Poland Introduction ............................................................................................ POL-1 Risk-Based Ex Delicto Liability for Dangerous Product ....................... POL-1 Concept of Defect .................................................................................. POL-5 Obligation to Warn or Recall Defective Products .................................. POL-6 Defenses Available to Product Manufacturers ....................................... POL-7 Proximate Cause and Limitation of Scope of Liability .......................... POL-9 Impact of Product Liability Considerations ........................................... POL-9 Remedies ................................................................................................ POL-10 Disclaimers or Limitations on Remedies by Contract ............................ POL-11 Claims and Statute of Limitation ........................................................... POL-12 Liability of Corporate Successors for Defective Products ..................... POL-13 Role of Insurance in Product Liability Matters ...................................... POL-13 Role of the Courts and Lawyers in Product Liability Litigation ............ POL-14 Portugal Introduction ............................................................................................ POR-1 Legislative Framework ......................................................................... POR-1 Strict Liability for Manufacturers .......................................................... POR-4 Concept of Defect .................................................................................. POR-5 Duty of Information ............................................................................... POR-8 (Release 1 – 2012)
  • 13. TABLE OF CONTENTS ix Defenses Available to the Manufacturer ................................................ POR-9 Concept of Manufacturer ....................................................................... POR-11 Damages and Remedies ......................................................................... POR-13 Limitation Period and Lapse of Rights .................................................. POR-15 Conclusion ............................................................................................. POR-15 Romania Introduction .......................................................................................... ROM-1 Traditional Sources of Product Liability .............................................. ROM-1 Product Liability under Consumer Law ............................................... ROM-3 Transfer of Product Liability to Corporate Successors ........................ ROM-13 Insurance Policies and Product Liability .............................................. ROM-13 Court Proceedings in Product Liability Litigation ............................... ROM-14 Conclusion ........................................................................................... ROM-15 South Africa Introduction ............................................................................................ SA-1 Theories of Manufacturers’ Liability ..................................................... SA-2 Concept of Defect .................................................................................. SA-7 Obligations to Warn Consumers or Recall Defective Products ............. SA-8 Defenses Available to the Manufacturer ................................................ SA-9 Proximate Cause .................................................................................... SA-12 Liability in the Chain of Commerce....................................................... SA-13 Remedies ................................................................................................ SA-14 Contractual Disclaimers or Limitations ................................................. SA-17 Statute of Limitation .............................................................................. SA-22 Corporate Successor Liability ................................................................ SA-23 Product Liability Insurance .................................................................... SA-23 Product Liability Litigation .................................................................... SA-24 Conclusion ............................................................................................. SA-27 (Release 1 – 2012)
  • 14. x INTERNATIONAL PRODUCT LIABILITY Spain Introduction ............................................................................................ SPA-1 Nature and Characteristics of Product Liability ..................................... SPA-2 Liability in the Chain of Commerce....................................................... SPA-3 Concept of Defect .................................................................................. SPA-8 Defenses Available to the Producer ....................................................... SPA-12 Compensable Damage............................................................................ SPA-19 Statutes of Limitation ............................................................................. SPA-22 Product Liability Insurance .................................................................... SPA-25 Conclusion ............................................................................................. SPA-28 Sweden Introduction ............................................................................................ SWE-1 Product Liability .................................................................................... SWE-1 Contractual Liability .............................................................................. SWE-4 Non-Contractual Liability ...................................................................... SWE-6 Concept of Defect .................................................................................. SWE-7 Obligation to Ward or Recall ................................................................. SWE-8 Defenses ................................................................................................. SWE-9 Who Can Be Liable? .............................................................................. SWE-10 Remedies ................................................................................................ SWE-11 Disclaimers and Limitations .................................................................. SWE-13 Statutes of Limitation ............................................................................. SWE-13 Corporate Successors ............................................................................. SWE-14 Product Liability Insurance .................................................................... SWE-14 Courts and Lawyers in Liability Litigation ............................................ SWE-16 Ukraine Introduction ............................................................................................ UKR-1 Legislative Framework for Product Liability ......................................... UKR-1 Theories of Liability............................................................................... UKR-2 Concept of Defect .................................................................................. UKR-6 (Release 1 – 2012)
  • 15. TABLE OF CONTENTS xi Obligation to Warn Consumers or Recall Defective Products ............... UKR-10 Defenses Available to the Manufacturer ................................................ UKR-14 Proximate Cause .................................................................................... UKR-16 Liability of Others in the Chain of Distribution ..................................... UKR-17 Remedies ................................................................................................ UKR-19 Contractual Disclaimers and Limitations ............................................... UKR-23 Statutes of Limitations ........................................................................... UKR-25 Corporate Successor Liability ................................................................ UKR-28 Product Liability Insurance .................................................................... UKR-28 Product Liability Litigation .................................................................... UKR-30 Conclusion ............................................................................................. UKR-32 United States Introduction ............................................................................................ US-1 Theories of Liability............................................................................... US-4 Concept of Defect .................................................................................. US-12 Obligations to Warn or Recall................................................................ US-14 Defenses ................................................................................................. US-16 Proximate Cause .................................................................................... US-23 Liability of Others in the Chain of Distribution ..................................... US-25 Remedies ................................................................................................ US-26 Class Actions and Multidistrict Litigation ............................................. US-32 Disclaimers and Limitations on Remedies ............................................. US-34 Statutes of Limitation ............................................................................. US-35 Corporate Successor Liability ................................................................ US-36 Product Liability Insurance .................................................................... US-38 Product Liability Litigation .................................................................... US-40 Conclusion ............................................................................................. US-41 (Release 1 – 2012)
  • 16.
  • 17. Authors List Argentina Javier Canosa Canosa Abogados Montevideo 711 Piso 4 C1019ABO Buenos Aires Argentina Tel: (54 11) 52522462 Fax: (54 11) 52522463 Email: jc@canosa.com.ar Austria Benedikt Spiegelfeld CHSH Cerha Hempel Spiegelfeld Hlawati Parkring 2 1010 Vienna Austria Tel: (43 1) 514350 Fax: (43 1) 5143535 Email: benedikt.spiegelfeld@chsh.at and Christine Wallner CHSH Cerha Hempel Spiegelfeld Hlawati Parkring 2 1010 Vienna Austria Tel: (43 1) 514350 Fax: (43 1) 5143535 Email: christine.wallner@chsh.at Canada Ilana Schrager Ogilvy Renault LLP Suite 3800 Royal Bank Plaza, South Tower 200 Bay Street, PO Box 84 Toronto, Ontario Canada M5J 2Z4 Tel: (1 416) 2164000 Fax: (1 416) (Release 1 – 2012)
  • 18. xiv INTERNATIONAL PRODUCT LIABILITY and Emmanuelle Demers Ogilvy Renault LLP Suite 3800 Royal Bank Plaza, South Tower 200 Bay Street, PO Box 84 Toronto, Ontario Canada M5J 2Z4 Tel: (1 416) 2164000 Fax: (1 416) and Bill McNamara Ogilvy Renault LLP Suite 3800 Royal Bank Plaza, South Tower 200 Bay Street, PO Box 84 Toronto, Ontario Canada M5J 2Z4 Tel: (1 416) 2164000 Fax: (1 416) 2163930 Email: wmcnamara@ogilvyrenault.com Colombia Natalia Tobón Cavelier Abogados Edificio Siski Carrera 4 No. 72 - 35 8 Bogotá Colombia Tel: (57 1) 3473611 Fax: (57 1) 2118650 Email: nataliatobon@cavelier.com and Adriana Durán Fernández Cavelier Abogados Edificio Siski Carrera 4 No. 72 - 35 8 Bogotá Colombia Tel: (57 1) 3473611 Fax: (57 1) 2118650 Email: AdrianaDuran@cavelier.com and (Release 1 – 2012)
  • 19. AUTHORS LIST xv Eduardo Varela Pezzano Cavelier Abogados Edificio Siski Carrera 4 No. 72 - 35 8 Bogotá Colombia Tel: (57 1) 3473611 Fax: (57 1) 2118650 Email: eduardovarela@cavelier.com Denmark Klaus Ewald Madsen Bech-Bruun Langelinie Allé 35 2100 Copenhagen Denmark Tel: (45 ) 72270000 Fax: (45 ) 72270027 Email: kem@bechbruun.com and Jes Anker Mikkelsen Bech-Bruun Langelinie Allé 35 2100 Copenhagen Denmark Tel: (45 ) 72273490 Fax: (45 ) 89310101 Email: jam@bechbruun.com England and Wales Peter Burbidge Senior Lecturer University of Westminster 309 Regent Street London W1B 2UW England Tel: (44 207) 9115000 Fax: (44 207) 79115844 Email: burbidp@wmin.ac.uk (Release 1 – 2012)
  • 20. xvi INTERNATIONAL PRODUCT LIABILITY European Community Susanne Wesch Wesch & Buchenroth Kernerstraße 43 Am Schützenplatz 70182 Stuttgart Germany Tel: (49 711) 2200940 Fax: (49 711) 22009410 India Kiran Prakash M.V.Kini & Co 1st Floor, Bilquees Mansion Opp Standard Chartered Bank D.N.Road, Fort 4001 001 Mumbai India Tel: (91 22) 612527 Fax: (91 22) 612530 Email: kiran.jaiprakash@gmail.com and Ravi Kini M.V.Kini & Co 1st Floor, Bilquees Mansion Opp Standard Chartered Bank D.N.Road, Fort 4001 001 Mumbai India Tel: (91 22) 612527 Fax: (91 22) 612530 Email: ravikini@mvkini.com and Dushyant Deep M.V.Kini & Co 1st Floor, Bilquees Mansion Opp Standard Chartered Bank D.N.Road, Fort 4001 001 Mumbai India Tel: (91 22) 612527 Fax: (91 22) 612530 Email: dushyant@mvkini.com (Release 1 – 2012)
  • 21. AUTHORS LIST xvii Italy Antonello Corrado CFMP - Studio Legale Associato Via di Ripetta 141 00186 Rome Italy Tel: (39 06) 6876917 Fax: (39 06) 68192116 Email: acorrado@cfmplegal.com Malaysia Dhinesh Bhaskaran Shearn Delamore & Co 7th Floor Wisma Hamzah-Kwong Hing No 1 Leboh Ampang 50100 Kuala Lumpur Malaysia Tel: (60 3) 20272727 Fax: (60 3) 20785625 Email: dhinesh@shearndelamore.com Mexico Mónica Noriega R. Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 and Juan Francisco Torres Landa R. Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 Email: jftl@bstl.com.mx and (Release 1 – 2012)
  • 22. xviii INTERNATIONAL PRODUCT LIABILITY Ernesto F. Algaba R. Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 Email: ear@bstl.com.mx and Omar Cuéllar Gamboa Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 Email: ocg@bstl.com.mx and Michelle Farah M. Barrera, Siqueiros y Torres Landa, S.C. Paseo de los Tamarindos #150-PB Bosques de las Lomas 05120 Mexico, D.F. Mexico Tel: (52 55) 50910000 Fax: (52 55) 50910123 The Philippines Lovely Concepcion C. Matillano Angara Abello Concepcion Regala & Cruz Law Offices 22/F ACCRALAW Tower Second Avenue corner 30th Street Crescent Park West Bonifacio Global City, 0399 Taguig Metro Manila Philippines Tel: (63 2) 8308000 Fax: (63 2) 4037007 and (Release 1 – 2012)
  • 23. AUTHORS LIST xix Ma Patricia B. Paz Angara Abello Concepcion Regala & Cruz Law Offices 22/F ACCRALAW Tower Second Avenue corner 30th Street Crescent Park West Bonifacio Global City, 0399 Taguig Metro Manila Philippines Tel: (63 2) 8308000 Fax: (63 2) 4037007 and Salvador L. Peña Angara Abello Concepcion Regala & Cruz Law Offices 22/F ACCRALAW Tower Second Avenue corner 30th Street Crescent Park West Bonifacio Global City, 0399 Taguig Metro Manila Philippines Tel: (63 2) 8308000 Fax: (63 2) 4037007 Poland Marek Oleksyn Sołtysiński Kawecki & Szlęzak Ul. Wawelska 15B 02-034 Warsaw Poland Tel: (48 22) 6087000 Fax: (48 22) 6087070 Email: marek.oleksyn@skslegal.pl Portugal Jacinto Moniz de Bettencourt Uría Menéndez - Proenca de Carvalho Edifício Rodrigo Uría Rua Duque de Palmela, 23 1250-097 Lisbon Portugal Tel: (351 210) 308600 Fax: (351 210) 308601 Email: jbt@uria.com (Release 1 – 2012)
  • 24. xx INTERNATIONAL PRODUCT LIABILITY and João de Sousa Assis Uría Menéndez - Proenca de Carvalho Edifício Rodrigo Uría Rua Duque de Palmela, 23 1250-097 Lisbon Portugal Tel: (351 210) 308600 Fax: (351 210) 308601 Email: jpz@uria.com and Filipe Fraústo da Silva Uría Menéndez - Proenca de Carvalho Edifício Rodrigo Uría Rua Duque de Palmela, 23 1250-097 Lisbon Portugal Tel: (351 210) 308600 Fax: (351 210) 308601 Email: fsi@uria.com Romania Horia Ispas Tuca Zbarcea & Asociatii Victoriei Square 4-8 Nicolae Titulescu Ave. America House West Wing, 8th Floor, Sector 1 011141 Bucharest Romania Tel: (40 21) 2048890 Fax: (40 21) 2048899 Email: horia.ispas@tuca.ro South Africa Per E van Eeden Van Eeden Attorneys POBox 33624 0010 Pretoria / Tshwane South Africa Tel: (27 86) 1111357 Fax: (27 86) 5106782 Email: vaneedenlaw@global.co.za (Release 1 – 2012)
  • 25. AUTHORS LIST xxi Spain Patricia Gualde Broseta Abogados C/.Pascual y Genís, 5 46002 Valencia Spain Tel: (34 96) 3921006 Fax: (34 96) 3921088 Email: pgualde@broseta.com Sweden Magnus Dahlén Setterwalls Kungstorget 2 Box 112 35 404 25 Gothenburg Sweden Tel: (46 31) 7011700 Fax: (46 31) 7011701 Email: magnus.dahlen@setterwalls.se Ukraine Yaroslav Shkvorets RULG Ukrainian Legal Group, LLC Olimpiysky Center Suite 14, 11th floor 72 Velyka Vasylkivska Street 03150 Kiev Ukraine Tel: (38 044) 2071060 Fax: (38 044) 2071064 Email: yaroslav.shkvorets@ulg.kiev.ua and Iryna Ostapenko RULG Ukrainian Legal Group, LLC Olimpiysky Center Suite 14, 11th floor 72 Velyka Vasylkivska Street 03150 Kiev Ukraine Tel: (38 044) 2071060 Fax: (38 044) 2071064 Email: Iryna.Ostapenko@ulg.kiev.ua (Release 1 – 2012)
  • 26. xxii INTERNATIONAL PRODUCT LIABILITY United States James Yuanxin Li StarRaft.com Oakland, California United States Email: JamesYuanxinLi@gmail.com and David DeBusschere Sedgwick, Detert, Moran & Arnold LLP One Market Plaza Steuart Tower, 8th Floor San Francisco, California United States 94105 Tel: (1 415) 7817900 Fax: (1 415) 7812635 Email: David.DeBusschere@sdma.com (Release 1 – 2012)
  • 27. Argentina Introduction ............................................................................................ ARG-1 Legal Regime ......................................................................................... ARG-1 Civil Code System ................................................................... ARG-1 Consumer Protection Law System ........................................... ARG-3 System Related to Hidden Defects .......................................... ARG-4 Consumers’ Claims ................................................................................ ARG-4 Development of the Legal Regime .......................................... ARG-4 Strict Liability .......................................................................... ARG-5 Statue of Limitations................................................................ ARG-6 Successor Liability................................................................... ARG-6 Causation and Burden of Proof ................................................ ARG-6 Defenses................................................................................... ARG-7 Judicial and Administrative Proceedings ................................. ARG-7 Concept of Defect .................................................................................. ARG-7 Information to Consumers ..................................................................... ARG-7 Remedies ................................................................................................ ARG-8 Provisions in Consumer Contracts ......................................................... ARG-8 Abusive Clauses....................................................................... ARG-8 Prohibited Contractual Provisions ........................................... ARG-9 Product Liability Insurance .................................................................... ARG-11 Product Liability Litigation .................................................................... ARG-12 Frequency of Litigation ........................................................... ARG-12 Material Damages .................................................................... ARG-12 Lawyers’ Fees .......................................................................... ARG-13 Conclusion ............................................................................................. ARG-13
  • 28.
  • 29. Argentina Javier Canosa Canosa Abogados Buenos Aires, Argentina Introduction Product liability is the area of law in which producers and manufacturers of products, as well as distributors, suppliers, retailers, and others who make products available to the public, are liable for the injuries caused by defective or harmful products. Individuals who are harmed by an unsafe product may have a cause for action against the persons who designed, manufactured, sold, or supplied that product. Today, the law on product liability has changed from caveat emptor (‘let the buyer beware’) to strict liability for manufacturing defects that make a product unsafe, harmful, or dangerous. Strict liability claims focus on the product rather than on the behavior of the manufacturer. Under strict liability, the manufacturer is liable if the product is defective, even if the manufacturer was not negligent in making that product defective. The legal regime for product liability in Argentina is based on a strict liability system that distinguishes between contractual and non-contractual consumer relationships. Legal Regime In Argentina, there are three different systems of product liability: the system established by the Argentine Civil Code, the system set down by Law Number 24240 on Consumer Protection, as amended (the Consumer Protection Law), and the system that relates to hidden defects, with some specific rules on commercial matters, which are governed by the Civil Code. Civil Code System In General Product liability under the Argentine Civil Code system may be contractual (when there is a contract between the buyer and the trader or manufacturer) or non-contractual (when there is no contractual relation between the injured party and the trader or manufacturer).
  • 30. ARG-2 INTERNATIONAL PRODUCT LIABILITY Contractual Liability According to the provisions of the Civil Code,1 contractual relationships are governed by the principle of good contractual faith. Consequently, the existence of a defect of any origin implies, in the first place, the failure to fulfill the primary obligation assumed by the seller or manufacturer, which consists of delivering a product free of defects. Failure to fulfill this obligation triggers the mechanisms that enable the consumer to obtain the specific performance of the obligation by the seller or manufacturer, with the eventual application of the corresponding remedies. In the case of products, remedies consist of the delivery of another defect-free product in an appropriate condition; the fulfillment of the obligation by a third party; or the monetary value of the product. Optionally, the consumer may request the resolution of the contract after returning the product, claiming the refund of the price paid. In any case (execution or resolution of the contract), the consumer will be able to claim for the damages derived from the seller or the manufacturer’s failure to perform the obligation or the resolution of the contract. Non-Contractual Liability When there is no contractual relation between the injured party and the trader, manufacturer, or any party in the marketing chain that generated the defect, the rules of non-contractual liability based on the concept of ‘created risk’ apply. Created risk refers to the contingency or possibility of damage resulting from introducing defective products in the market, when the defects turn a product that was not dangerous by its nature or use into a dangerous product or increase the extent of danger posed by a product that is dangerous by its nature or use. The passive legal standing is objective, and includes not only the owner and the guardian of the product as established in the Civil Code,2 but also any party who obtains a profit or benefit from the product, as considered in the latest jurisprudence. Nevertheless, the injured party will be able to claim against a member of the marketing chain or against all of them jointly. As in the case of contractual liability, the accused party will be able to claim a refund from the party that caused the defect. As the liability is objective, the defendant can only be excused if the victim or a third party is at fault. After enactment of the Consumer Protection Law, the system of the Argentine Civil Code is, in principle, restricted to those cases where the subject acquires 1 Civil Code, s 1198. 2 Civil Code, s 1103.
  • 31. ARGENTINA ARG-3 the product in order to introduce it into a production or trade process or when the subject is not a consumer. Consumer Protection Law System Under the Consumer Protection Law, the seller is responsible on a contractual basis as the person who engages with the consumer. The Consumer Protection Law protects consumers throughout the different contractual phases, from negotiation to the delivery and performance of goods (including used goods) and services. Traders must provide consumers with true, detailed, and accurate information about the goods or services offered. Consumers are vested with the right to commence individual actions in the event their rights under the Consumer Protection Law are threatened. The Consumer Protection Law also includes the right to initiate collective proceedings (class actions), which may include patrimonial claims through consumer associations and specific proceedings aimed at resolving disputes affecting consumers. Claims initiated by consumers and consumer associations may include punitive damages. The new Argentine Consumer Protection Law (the new Consumer Protection Law)3 amended the Consumer Protection Law, extending and improving consumer protection for both local and foreign individuals and companies. The new Consumer Protection Law extends the definition of ‘consumer’, making the term applicable to those individuals or entities obtaining cost-free goods or services as final recipients, either for their own or for their family group’s benefit. Additionally, the concept of ‘supplier’ includes ‘every physical person or public or private entity carrying out in a professional way, even occasionally, activities related to goods and services production, creation, construction, transformation, importation, distribution, and commercialization to consumers or users’. The new Consumer Protection Law establishes that ‘consumer relationships shall be ruled by the provisions of the Law and its regulations, notwithstanding the laws that may apply by reason of the supplier’s activities’, hence setting forth the priority of the Consumer Protection Law over any other specific laws. Additionally, the Consumer Protection Law provides that ‘suppliers should guarantee equitable treatment to consumers and users, and they should refrain from displaying behaviors that put consumers in embarrassing, humiliating, or intimidating situations’. Infringements of these rules will be subject to fines. 3 Law Number 26361 of 3 April 2008.
  • 32. ARG-4 INTERNATIONAL PRODUCT LIABILITY Under the new Consumer Protection Law, foreign consumers are considered equal to national consumers in relation to prices or other commercial terms and conditions. Exceptions could be allowed with the prior authorization of the administrative authority, taking the general interest into consideration. Finally, the new Consumer Protection Law establishes the priority of the Consumers’ Protection Law over the regulations applicable to the provision of public services. Before the amendment, the provisions of the Consumer Protection Law were subject to the specific regulations for public services. System Related to Hidden Defects The contractual liability provided by the Argentine Civil Code also includes the obligation to cure hidden defects in the sale contract. The obligation of curing the defects emerges when the hidden defects of the product sold make the product unsuitable for its purpose or diminish it in such a way that a buyer who had been aware of the defects would not have bought the product or would have paid less for the product. The defects must be hidden, because the regime does not apply to manifest defects that were visible or to those defects that the buyer should have known about, given his occupation or profession. In these cases, the buyer has the option of terminating the contract and receiving a refund of the price paid or a proportional discount on the price. If the seller knew about the defect and hid it from the buyer, the buyer will have the same options. In addition, the buyer will be entitled to compensation for the damages suffered in case he decides to terminate the contract. Consumers’ Claims Development of the Legal Regime The recognition of consumers’ claims in Argentina has been a slow and arduous process. The initial stage recognized consumer relationships and identified the consumer as the weaker party in the trading relationship, due to the massive market, real inequalities, and lack of information, among other factors. The legal regime did not give precise answers to these issues. There were only some traditional warranties, such as the one provided for hidden defects, which protected the consumer to a certain extent. At this first stage, the liability of manufacturers and providers could only be based on the concept of guilt; the validity of the free will of the parties was virtually unlimited, impeding the revision of non-equitable contracts and unfair practices that were not precisely expressed in the legal regime. The second stage began with the reforms of the Civil Code and the enactment of special regulatory laws for the market. The legal regime began to create a
  • 33. ARGENTINA ARG-5 consumer protection system through solutions that, although generic and not specifically meant to address consumer protection, nonetheless represented significant progress toward equity in consumer relations. The reform of the Argentine Civil Code in 1968 included the rules on good faith4 and abuse of rights,5 which enable judicial control of abusive practices and unfair clauses in consumer contracts. The introduction of the liability regime for manufactured products implicitly emerged in Sections 1198 of the Civil Code for the contractual sphere and in Section 1113 of the Civil Code for the non-contractual sphere. The prohibition of fraud in the identification of products and advertisements, the control of offers with awards, and the regime of warranties was provided by several court precedents. The control of prices and commercialization of goods and services was regulated by the Supply Law.6 The punishment of unfair practices was governed by the Competition Law.7 The control of the systems and contracts on pre-saving for determined purposes was another measure aimed at consumer protection. Finally, the third stage was initiated with the enactment of the Consumer Protection Law, which completes the consolidation of a system of juridical protection that previously was only founded on general rules that were not directly or specifically aimed at the protection of consumers. The consolidation of the Consumer Protection Law did not come about until the constitutional reform in 1994, which introduced consumers’ rights in the National Constitution. The enactment of the law amending the Consumer Protection Law8 and the new Consumer Protection Law of 2008 completed the consumer protection regime by adding the concept of ‘user’, which included users’ claims against service providers, public or otherwise. On December 2008, the legislature of the City of Buenos Aires created the Consumers Arbitration Court, which aimed to solve consumers’ and users’ claims within the scope of the City of Buenos Aires, with the same authority as a judicial ruling. Strict Liability The principle of strict liability applies to consumer claims. To be admitted by the court, damage caused must have a direct relation to the defect in the product. The plaintiff will recover for the damage that was proved in the proceeding. 4 Civil Code, s 1198. 5 Civil Code, s 1071. 6 Law Number 20680 of 1974. 7 Law Number 22262 of 1980. 8 Law Number 24999 of 1998.
  • 34. ARG-6 INTERNATIONAL PRODUCT LIABILITY Statute of Limitations The statute of limitations for any claim against any party is generally three years if the case falls within the scope of the Consumer Protection Law. In cases ruled by the Civil Code, the time limit for claiming damages is three months for a claim based on a hidden defect. The time limit for a claim based on a hidden defect is six months if the relationship is ruled by the Commercial Code. In both cases, the term commences at the time of delivery of the product. For an action brought by the purchaser against the non-seller manufacturer, the claim is statute-barred in is two years. For an action brought against the seller (regardless of whether the seller also is the manufacturer), the time limit is 10 years. Successor Liability If a consumer suffers damage as a result of defective goods or services, the producer, manufacturer, distributor, trader, or the person who provides the product or service will be jointly liable for such damage, unless they can show that the damage is not attributable to the relevant party. In this sense, all the subjects involved in the marketing chain may be liable toward consumers under the Consumer Protection Law, including corporate successors. This rule was included in the legal regime with the aim of guaranteeing that consumers will be able to obtain compensation for damage suffered from any of the parties to the consumer relation, regardless of the party that is ultimately responsible. Causation and Burden of Proof In relation to causation, the general principle established in the Procedural Code is that the plaintiff bears the burden of proof. Nonetheless, in claims related to the damage generated by defects in products, the courts take into consideration that the manufacturer is in a better position than the consumer to produce technical evidence; accordingly, the manufacturer has the onus of proving that the product was not defective. The seller is deemed to hold a final obligation on the security of the product sold; therefore, if the product exhibits a defect, there is a presumption of the fault of the seller. The plaintiff bears the burden of proving the existence of the defect and the relation between the defect and the alleged damage. It is not necessary to prove that the damage would not have arisen without such exposure to the product. The mere exposure to potential damage does not produce any responsibility.
  • 35. ARGENTINA ARG-7 Defenses In addition to procedural defenses (e.g., a time-bar defense), substantive law authorizes the following defenses: • Product is not defective or hazardous; • No relationship between the alleged damage and the defect, even when a defect existed; • Existence of a third party for whom neither the manufacturer nor the seller are liable; • Occurrence of a force majeure event; and • Fault of the victim himself. The manufacturer’s defense showing that he complied with regulatory and/or statutory requirements relating to the development, manufacture, licensing, marketing, and supply of the product is not eligible, as the regulatory requirements are deemed to be granted under the condition that the product is harmless to consumers. Judicial and Administrative Proceedings Related to the procedure for claims, the trial is before a judge, as there are no trials by jury in Argentina. The Consumer Protection Law also regulates an administrative proceeding and allows for the imposition of fines under such procedures. Concept of Defect In Argentina, the concept of defect is defined as ‘defective manufacture’, as the manufacturer is liable for the defects of movable things. Additionally, the Consumer Protection Law introduced the liability of service providers. Although a defect is defined as defective manufacture, the Consumer Protection Law provides certain liability on the basis of advertising of products, in the event that the advertising violates the obligation of providing accurate information on the products or services offered. Information to Consumers The new Consumer Protection Law establishes the minimum content of the purchase and sale document, which should also state ‘any additional costs, specifying the final price payable by the buyer’. The new Consumer Protection Law also sets forth that ‘the document should be written in Spanish, in a complete, clear, and easily understandable manner’.
  • 36. ARG-8 INTERNATIONAL PRODUCT LIABILITY Remedies Regarding remedies, the new Consumer Protection Law includes the compensation of direct damages, which is ‘any monetary damage to the user’s or consumer’s right as a consequence of an action or omission of the supplier’. In order to compensate the direct damage, the authorities could force the supplier to pay a compensation of up to five times the value of the total consumer basket, according to the value reported by the National Institute of Statistics and Census. On this basis, on 27 May 2009 the Civil and Commercial Court of Appeals of the City of Mar del Plata confirmed the lower court’s decision that condemned the defendant to pay ARS 30,000 (approximately US $11,000 at the current exchange rate) for moral material damages and ARS 30,000 for punitive damages. The claim was filed by a disabled person who needed a wheelchair for mobility. The plaintiff argued and was able to prove that he had tried to file several claims before the offices of a mobile telephone company of which he was a client, but he had not received proper attention because the company’s building did not have a wheelchair ramp. The innovation of this judicial decision is the confirmation of the award of punitive damages according to Section 52 bis of the Consumer Protection Law, introduced by the new Consumer Protection Law. The Court of Appeals stated that the defendant abused its powerful position, acting with grave disrespect to the individual rights of the plaintiff, as it did not give him decent treatment. Provisions in Consumer Contracts Abusive Clauses Regarding the provisions contained in consumer contracts, abusive clauses deserve special attention in relation to the protection of consumers’ and users’ rights. An abusive clause is one by which the rights of the manufacturer/seller are expanded and the rights of the consumer/user are intentionally restricted. An abusive clause is a provision that goes against the requirements of good faith and results in a significant and unjustified imbalance of the contractual obligations to the detriment of the consumer or user. An abusive clause may or may not be a general condition, as it may be present in particular contracts in which actual negotiation of the provisions does not exist, particularly in adhesion contracts.
  • 37. ARGENTINA ARG-9 At times, it is more difficult to detect abusive clauses, because a significant number of consumer contracts are not written agreements. This does not mean that the protection does not apply to contracts that are not in writing, but it requires greater effort to prove the existence of an abusive clause. Resolution Number 53/03 of 2003 (the Resolution) sets forth specific provisions that are prohibited in consumer contracts. The Resolution not only establishes the nullity of future provisions, but also sets forth that provisions in violation of the Consumer Protection Law that are included in an existing contract will be expunged and this exclusion also will be notified to the consumer. The purpose of the Resolution was to establish objective parameters for the parties to learn, in advance, which contractual provisions would be considered void. Section 37 of the Consumer Protection Law states that contractual provisions which distort the duties of the parties, limit the liability for damages, or restrict the rights of consumers will be considered null and void. Therefore, in the case of any claim or judicial action brought by any consumer against a company, the competent authority or the competent judge has to analyze each particular provision in order to determine whether it violates (or does not violate) the general prohibition of the Consumer Protection Law. The interpretation of the provisions was subject to the discretion of the authorities or the courts, according to the circumstances of the case. Under the new Resolution, if a provision falls within the description established in its text, it will automatically be considered null and void. Prohibited Contractual Provisions Without prejudice to other practices that could be considered in violation of the general principles established by Section 37 of the Consumer Protection Law, specific contractual provisions are prohibited. The Consumer Protection Law prohibits contractual provisions that grant the supplier of goods or services the exclusive right to construe the meaning, extension, and compliance of a provision. Contractual provisions that grant the supplier of goods or services the right to unilaterally amend any provision of a contract are prohibited, unless the balance between the rights and obligations of the parties in the contractual relationship is not disturbed by means of such amendments and provided that the right to amend the contract and its parameters is expressly agreed upon in the contract. Likewise, the right of the consumer to terminate the contract as a result of such an amendment must have been previously established. Prohibited contractual provisions include those that, despite the due compliance by the consumer of all its obligations undertaken in the contract, authorize the supplier of goods or services to terminate the contract without cause.
  • 38. ARG-10 INTERNATIONAL PRODUCT LIABILITY The termination of the contract by the supplier without cause will only be legal if an obligation of prior notification to the consumer is provided in the contract and if, in the case of fixed-term contracts, the right of the consumer to terminate the contract also has been previously agreed. The Consumer Protection Law prohibits contractual provisions that establish the commencement of the contract will be at the sole discretion of the supplier of goods or services, while the consumer’s acceptance of the terms and conditions of the contract is irrevocably established in the text of the contract. Provisions that impose limitations on the consumer’s judicial rights also are prohibited. This is particularly the case when provisions establish a different venue than the one corresponding to the domicile of the consumer at the time of the execution of the contract (except in those cases where the judicial claim is filed at the venue of the real domicile of the consumer at the time of the filing); provisions that establish limitations on the production of evidence or impose on the consumer the burden of producing specific evidence in disregard of the provisions of the Procedural Code in this respect; and provisions that establish certain limitations for the filing of defenses and remedies. Contractual provisions that establish the right of the supplier of goods or services to set off a credit against a consumer already in arrears with another credit of the consumer against the provider, which originated in another contract or service rendered by the consumer to the provider, are prohibited, unless this compensation is admitted by the applicable law and the provider duly notifies the consumer of this circumstance in the contract. The prohibition applies to contractual provisions that exclude or limit the responsibility of the supplier of goods or services regarding any indemnification admitted by the applicable law in case of damage caused by the product or service provided to the consumer. In fixed-term consumer contracts that grant the parties the right to terminate the contract before the specified term and in consumer contracts that have no specified term, any provisions that make the consumer’s right of termination of the contract conditional on the consumer’s prior payment of all pending obligations in favor of the other party are prohibited. Contractual provisions that establish the right of the provider to provide a different product or service than that agreed on in the contract without the prior consent of the consumer and/or which impose a term for the consumer to accept the different product or service are prohibited. Also prohibited are contractual provisions that impose on the consumer a representative in order to exercise the rights provided in the contract or to carry on any other legal act on his behalf. Contractual provisions that violate environmental regulations or allow such violations are prohibited.
  • 39. ARGENTINA ARG-11 Product Liability Insurance Insurance policies available for product liability in Argentina are those that protect the insured against civil claims. In general, these policies include comprehensive general protection against liability claims derived from contractual or extra-contractual relationships, including claims related to products and services. According to the Insurance Law,9 insurance policies do not cover cases in which the insured acted intentionally or was guilty of serious misconduct. Additionally, insurance policies include a restriction on the insurance company’s protection toward the insured in case of liability, known as a ‘deductible’. If the insured incurs liability, the deductible is an amount, usually established by the insurance company, that the insured is obligated to pay before the insurance company responds to the claim. In connection with the deductible and according to the Consumer Protection Law, in the case Saldivar, Federico Reynaldo v Metrovías S.A., Tribunal M of the Civil Court of Appeals ruled that the deductible in liability insurance could not be asserted against the aggrieved party, despite the Supreme Court of Justice’s precedents that found to the contrary. The ruling provided that Metrovías S.A. and its insurance company (La Meridional Compañía Argentina de Seguros S.A.) must pay the plaintiff 80 per cent of the sums claimed. In addition, the Court ruled that the deductible of the liability insurance taken out by the insured could not be asserted against the plaintiff, in spite of several previous rulings of the Supreme Court of Justice to the contrary. Notably, the Supreme Court of Justice has repeatedly affirmed the validity and assertion of this deductible. One of the basis for the Supreme Court’s decisions is that the aggrieved party is not privy to the insurance contract entered into between the insured and the insurer. Thus the ‘third party’ who invokes this insurance contract must confine its rights to the terms and conditions agreed on between the insured and the insurer. However, the Court of Appeals understood that in the specific case of Saldivar, it was not bound to follow the Supreme Court’s rulings. Although, in principle, national courts ought to follow the Supreme Court’s doctrine, they can derogate from them if new arguments should arise that have not been taken into account by the Supreme Court. The Civil Court of Appeals maintained that the Consumer Protection Law was amended by the Argentine Congress after the Supreme Court’s contrary rulings, 9 Law Number 17418 of 1967.
  • 40. ARG-12 INTERNATIONAL PRODUCT LIABILITY that the new text of the new Consumer Protection Law was in line with the ruling in a previous leading case, and that the Supreme Court had not issued any other ruling subsequent to the amendments to the Consumer Protection Law. According to the court, these amendments had widened the concept of ‘consumer’ to cover those who, without being a party to a consumer relationship, use a service as end consumers and are exposed to a consumer relationship (as in the case of the aggrieved party in Saldivar). In addition, the amendments had extended the benefits of the Consumer Protection Law to these consumers. Tribunal M held that a consumer relationship existed in the case, and therefore the limited legal effects concept based on privity of contracts (ie, the Supreme Court’s line of reasoning) should not be applied. It also held that the provisions of Article 37 of the Consumer Protection Law should be applied, which sets forth that stipulations which distort the nature of the obligations or that limit liability for damage will be null and void. Product Liability Litigation Frequency of Litigation Judicial claims on product liability issues in Argentina started before the enactment of the Consumer Protection Law and its amendments. Numerous court decisions protecting the rights of consumers built the foundations of the principles later reflected in the Consumer Protection Law. The rate of judicial claims on product liability issues in Argentina has increased since the Consumer Protection Law came into force. This rate was significantly increased by class actions filed by consumer organizations, based on the inclusion of collective rights in the Argentine legal regime. Analysts claim that, currently, consumers’ claims in Argentine courts are as common as other judicial claims. The Argentine legal regime contemplates two categories of damages that can be indemnified: material damages and non-patrimonial damages. Material Damages In General Material damages include direct damages (the direct financial loss suffered), compensation for lost profits (the profits lost by the injured party), compensation for lost chances (the loss of a potential opportunity), and litigation costs. Non-Patrimonial Damages Non-patrimonial damages are subject to compensation. The compensation relates to the pain and suffering of the victim, including physical pain and suffering, and generally to any type of suffering not related to financial losses.
  • 41. ARGENTINA ARG-13 Non-patrimonial damages are for aesthetic injury (including anatomic and functional anomalies, permanent or temporary, that are externally visible) and disease (including the recovery of medical expenses and related costs). Lawyers’ Fees Lawyers’ fees are generally established based on the work done by the lawyer. Law Number 21839 on professional fees provides minimum rates that range from 11 per cent to 20 per cent of the amount claimed by the plaintiff in patrimonial claims. In addition, lawyers generally agree to a percentage to be paid by the client on winning the case, based on the amount of damages awarded by the court. Conclusion This analysis of the legal regime on consumers’ and users’ protection in Argentina leads to the conclusion that the regime has evolved during recent years, so as to favor the rights of consumers and users and increase the tools for claims. Together with these developments in the legal regime, consumers and users are now better informed about their rights, and the rate of claims on consumer relations has seen a corresponding increase. Surveys indicate that two out of 10 Argentines claim to have lodged a complaint against sellers of products or providers of services. This number increases in people of high socio-economic status (30 per cent) and within the City of Buenos Aires (28 per cent). In general, consumers and users believe that their rights are not being respected by the sellers of products or providers of services, which is a discouraging scenario that should demand the attention of the commercial sector.
  • 42.
  • 43. Austria Introduction ............................................................................................ AUT-1 Historical Evolution ............................................................................... AUT-2 Purpose of the PHG................................................................................ AUT-4 Product and Defective Product............................................................... AUT-5 Product ..................................................................................... AUT-5 Defect....................................................................................... AUT-6 Warning and Recall Obligations ............................................................ AUT-8 Defenses Contributory Fault .................................................................. AUT-8 Assumption of Risk ................................................................. AUT-9 Product Misuse ........................................................................ AUT-9 State-of-the-Art Defense .......................................................... AUT-10 Binding, Regulations, Directions and Orders .......................... AUT-10 Defect as ‘Proximate Cause’ .................................................................. AUT-10 Liable Persons General .......................................................................... AUT-11 Manufacturer ........................................................................... AUT-11 Importer ................................................................................... AUT-12 Merchants ................................................................................ AUT-13 Licensor and Licensee ............................................................. AUT-14 Joint and Several Liability ..................................................................... AUT-14 Burden of Proof...................................................................................... AUT-15 Remedies ................................................................................................ AUT-16 Disclaimer Clauses................................................................................. AUT-16 Statutes of Limitation ............................................................................. AUT-17 Liability of Corporate Successors .......................................................... AUT-18 Insurance ................................................................................................ AUT-18 Role of the Courts .................................................................................. AUT-19 Frequency of Litigation ........................................................... AUT-19 Applicability of Austrian Law ............................................................... AUT-19 Disclaimer .............................................................................................. AUT-20
  • 44.
  • 45. Austria Benedikt Spiegelfeld and Christine Wallner CHSH Cerha Hempel Spiegelfeld Hlawati Vienna, Austria Introduction Before examining Austrian product liability, what is understood by product1 liability in this chapter should be made clear from the outset and, consequently, to what subject mat- ter the exposition will be limited. In a broader sense, product liability in general is thought to comprise the laws and rules providing for recovery of damage or injury to human life, health or someone’s property suffered as a result of (or caused by) a defective product. These rules must be clearly distinguished from those dealing with and enforcing a seller’s obligation to fulfill a contract he has entered into by transferring property (the product) in the quality he has agreed upon (and therefore generally without a defect) to the purchaser. In this field of the law, delivery of a defective product amounts to breach of contract enabling the buyer to sue for complete fulfillment of the contract without regard to whether such non-performance was negligent or not.2 Within the broader sense of product liability as described above, we may distinguish between a violation of either a (general) law, on the one hand, or an agreement (contract), on the other, triggering the malfeasor’s liability for damage to another individual’s life or health or to his goods (apart from the product purchased). The general liability principles and rules contained largely in the Austrian Civil Code3 of 1811, as amended, cover the obligations under both of these categories. Nonetheless, we shall deal with and expose these general rules only to the extent as we deem necessary to outline the historical evolution leading very recently to the adoption of a specific Product Liability Act and whenever this latter Act refers to the general rules. The specific set of rules contained in this above-mentioned Product Liability Act will be our main interest and other related issues, such as compensation awarded due to negligence in general or due to violation of contractual obligations, will receive merely scarce consideration. 1 Scholarly treatises and court opinions in Common Law countries seem to prefer the term ‘products liability’ to ‘product liability’; as the Austrian equivalent term is Produkthaftung (with Produkt in its singular form), we shall only use the term in its respective translation, thus ‘product liability’. 2 This remedy is referred to as Gewährleistung under Austrian law. 3 Allgemeines biirgerliches Gesetzbuch (ABGB).
  • 46. AUT-2 INTERNATIONAL PRODUCT LIABILITY In general, the PHG helps to increase the level of protection against defective products for two reasons: first, it encourage producers to do their best to produce safe products by com- plementing the regulatory measures of a given product group like Food Safety and Consumer Protection Act4 (LMSVG) and the Product Safety Act5 (PSG) and, second, once these preventive measures have failed and accidents have happened, it allows to obtain redress of the producer. Historical Evolution In this chapter, the development in Austrian product liability law the equivalent of which in common law is known and referred to as, the breakdown of the privity requirement, will be described.6 Until 1988, product liability in Austria was mainly governed by the general principles and rules contained in the Civil Code of 1811. These entitled those who suffered damage to demand reparation of such damage from the originator or author of the conduct causing the damage, and in essence required a certain fault or wrongdoing (general liability prin- ciples). The Austrian Parliament adopted the Federal Act on the Liability for a Defective Product on 21 January 19887 (according to its German title referred to as the PHG). Under these general principles, the fault or wrongdoing consisted of a breach of a duty imposed by law or by contract. Being consigned to these general remedies against injuries to his person or property, a plaintiff could succeed in only a very few cases. Usually the manufacturer of a product does not himself violate any duty imposed by law and could moreover almost never be held liable for any misconduct of his employees. Section 1315 of the Austrian Civil Code imposes liability on employers towards third parties only in the two cases that the employer either employs persons incapable of or unfit for the kind of work to be executed or that the employer in fact knew that the employee’s conduct was dangerous to other per- sons’ life, health and property with regard to the execution of his work. Under a contractual relationship, that is, between the two or more parties to an agreement, of course section 1313(a) of the Civil Code would provide for an overall and extensive responsibility of a producer or manufacturer for negligence of all persons assisting in the production or manufacturing process. Most of the typical product liability (related) cases, though, lack such an agreement between the producer and the person injured, as such agreement has generally only been entered into between the customer and the retailer. The retailer himself very rarely could be charged with a violation of any duty as many or almost all defects are latent and cannot 4 Lebensmittelsicherheit und Verbraucherschutzgesetz, Federal Law Gazette No 13 of 2006 (Bundesgesetzblatt 13/2006). 5 Produktsicherheitsgesetz 2004, Federal Law Gazette No 16 of 2005 (Bundesgesetzblatt 16/2005). 6 Allgemeines biirgerliches Gesetzbuch (ABGB). 7 Bundesgesetz vom 21. Janner 1988 über die Haftung für ein fehlerhaftes Produkt (Produkthaftungsgesetz); Federal Law Gazette No 99 of 1988 (Bundesgesetzblatt 99/1988).
  • 47. AUSTRIA AUT-3 be detected in the ordinary and due course of business. In general, the law does not impose on wholesalers or retailers the duty to loosely examine the goods purchased for mere resale. Most of the time, wholesalers and retailers would lack both technical knowledge as well as equipment to do so. As a consequence — in the case of absence of a respective duty — a plaintiff cannot prove negligence against such a middleman merely serving as conduit. Legal scholars8 and the courts9 tried to solve these difficulties implicit in the approach and linked to a wrong or fault by developing an interpretative concept that would protect third parties beyond the contract between the producer and the first wholesaler so long as a series of contracts lead to the person ultimately suffering the damage.10 It was argued that obligations of the manufacturer should not extend to wholesalers’ or retailers’ (with whom a contract actually was entered into) claims for the protection of individuals against harm to life, health and property, because these never would use the product purchased for its intended purpose but rather for mere resale. Therefore, the purpose of any obligation arising from the contract between the producer and the first wholesaler guaranteeing a certain standard of quality and freedom from defect should be to entitle the final customer or user to claim compensation. This extension of the producer’s contractual obligations allowed the applicability of the above-mentioned section 1313(a) of the Civil Code between original producer and final purchaser of goods. Therefore, the producer could be held responsible for the breach of duty by his assistants and, pursuant to section 1298 of the Civil Code, he had to prove the absence of such negligence. Since not all damage can be recovered under the new PHG, such as damage to property up to a minimal amount of EUR 500,11 this theory retains some of its importance. Nevertheless, this contract-based liability could and can be impaired or even avoided by deliberate drafting of the contract between the producer and the first wholesaler. The Aus- trian Supreme Court (Oberster Gerichtshof) has held such an exclusion of third-party claims as lawful.12 By maintaining that these claims arose by operation of law and not contract, some Austrian scholars remain opposed to this holding. Still another drawback of the theory should be mentioned: as stated above, only persons with a certain contractual linkage to the producer would have benefited. One requirement was that the defective product was either used as a result of a chain of contracts leading to possession of the product by the person injured or that this person belonged to those 8 Bydlinski, ‘Vertragliche Sorgfaltspflichten zugunsten Dritter’, JB1 1960, 359; Bydlinski, in: Klang-Gschnitzer, Kommentar zum Allgemeinen biirgerlichen Gesetzbuch 1V2 (1978), 180. 9 SZ 51/169, SZ 54/152. 10 Known in German als Vertrag mit Schutzwirkung zugunsten Dritter. 11 Pursuant to s 2 of the PHG, damage to property shall only be indemnified with such amount exceeding the threshold of EUR 500. Relief sought on the grounds of the PHG accordingly will leave the customer with a loss up to EUR 500. On the other hand, it should be stated in this context that the law has not placed any cap on the possible and imaginable amount of recovery under the PHG. 12 SZ 51/169.
  • 48. AUT-4 INTERNATIONAL PRODUCT LIABILITY individuals of which the producer reasonably must have expected that they might have contact with the product (such as the family members of the ultimate purchaser). The innocent bystander therefore still remained unprotected. Motivated by these considerations, along with the adoption of the Directive on product liability of the European Community on 25 July 1985 obliging all Member States of the Community to take every necessary step to implement this Directive by 30 July 1988, Austria, though not yet a Member State, but in an effort to establish equal and fair trading conditions and avoid any bias in competition, enacted the new law (PHG) on 21 January 1988 and ultimately entered into force on 1 July 1988.13 In 1994 in virtue of the Agree- ment on the European Economic Area14 an extensive adjustment of the PHG was necessary regarding: • The lower not in accordance with the council directive threshold was increased from ATS 5,000 up to ATS 7,900; • The removal of the equal treatment of private and commercial used items; and • The adjustment of the limitation period in accordance with the council directive. Furthermore, in 1999, pursuant to the Directive on the approximation of the laws, regula- tions and administrative provisions of the Member States concerning liability for defective products of the European Parliament and of the Council, on 10 May 1999, the restriction regarding the exception of primary agriculture products and games was removed with effect from 1 January 2000. In connection with the Austrian product liability law, it is mentionable that in 1983 the Aus- trian Product Safety Act15 entered into force and was amended in 199516 and in 200417 in accordance with the council directives on general product safety. It is to be noted that the Product Safety Act and the Product Liability Act have a complementary function: the first instrument ensures that only safe products are put on the market (preventive function), and the second instrument establishes the rules under which personal injury and damage to property caused by a defective product are compensated (compensational function). Purpose of the PHG Section 1 of the PHG sets forth the fundamental rule that certain groups of persons shall be liable for the defect of a product whenever such defect has caused damage in the form of: • The death of an individual; 13 Bundesgesetz vom 21. Janner 1988 über die Haftung für ein fehlerhaftes Produkt (Produkthaftungsgesetz); Federal Law Gazette No 99 of 1988 (BGBl 1988/99). 14 Kundmachung des Bundeskanzlers betreffend die Rechtsvorschriften, die gleichzeitig mit dem Abkommen über den Europäischen Wirtschaftsraum, Federal Law Gazette No 917 of 1993 (BGBl 1993/917). 15 Produktsicherheitsgesetz 1983 — PSG 1983, Federal Law Gazette No 171 of 1983 (BGBl 1983/171). 16 Produktsicherheitsgesetz 1994 — PSG 1994, Federal Law Gazette No 63 of 1995 (BGBl 1995/63). 17 Produktsicherheitsgesetz 2004 — PSG 2004, Federal Law Gazette No 16 of 2005 (BGBl 2005/16).
  • 49. AUSTRIA AUT-5 • An injury of a person or harm to his health; and • An injury to his tangible property.18 It excludes damage to the defective product itself. Therefore, liability under the PHG does not require negligence or fault of a particular person nor does it require a contractual link between the original producer and the indi- vidual who has finally suffered the loss. Thus, the innocent bystander is also protected under the PHG. Division of labor in the industrial production process with all its inherent risks and dan- gers (sometimes causing defective products) as well as the expectations of wholesalers, retailers and consumers relying on the suitability of products for their intended use when offered for purchase are commonly quoted as the justifying rationale for the extended responsibility. Moreover, nobody else is in a better position to reduce risks caused by defective products than the manufacturer. Furthermore, the persons potentially liable under the rules of the PHG would tend to and now must19 react by insuring these liabilities and distribute the price of the insurance ultimately among those who benefit from the improved safety: consumers.20 As already mentioned, section 15(1) of the PHG explicitly states that any provision of the Civil Code or other laws imposing liability for losses to a greater extent or with regard to further originators of such losses than under the PHG shall remain unaffected. Section 15(2) of the PHG expresses that the PHG does not provide for compensation in respect of dam- age occasioned as a result of a nuclear incident covered by an international convention ratified by EFTA states and EC Member States. Under Austrian law, this field is covered by the Federal Act on the Liability for Nuclear Damages of 29 April 1964.21 Product and Defective Product Product Pursuant to section 4 of the PHG, a product for the purpose of this Act is defined as mov- able and tangible property22 notwithstanding that it is part of other movable property or has been annexed to realty, and shall moreover include energy. Under Austrian law, the term ‘Sache’, property, comprises everything different from the person and serving the use of humanity.23 Property will be regarded as movable if it can be 18 In German, körperliche Sache. 19 See below, Role of Insurance. 20 Fitz Purtscheller, in: Fitz Purtscheller Reindl, Produkthaftung, 1988, 31; Welser, Produkthaftungsgesetz 1988, 28. 21 Bundesgesetz vom 29. April 1964 über die Haftung nuklearer Schäden; see Federal Law Gazette No 117 of 1964 (Bundesgesetzblatt 117/1964), commonly referred to as the Atomhaftpflichtgesetz. 22 In German, bewegliche, körperliche Sache. 23 Civil Code, s 285.
  • 50. AUT-6 INTERNATIONAL PRODUCT LIABILITY removed from one place to another without inevitable damage to its substance.24 Finally, property is thought of as tangible if it appeals to the senses,25 a quality that is commonly attributed to property that can be touched and seen. Accordingly, services and rights will not be regarded as tangible and therefore cannot result in liability under the PHG. It is, for example, impossible to establish responsibility of lawyers or tax advisors for any sort of malpractice on the grounds of product liability. Legal advice is not a product under the PHG. For the same reason, the PHG cannot be applied to any sort of information of a false or misleading character contained in books, articles (like this), magazines, newspapers and the like. An in various ways discussed query is whether computer software can be regarded as a product for the purpose of this provision or not. In this case, you have to distinguish between operating system-related software and hardware-related software as well as standard software and individual software. Whereas mass-produced operating system-related software and hardware-related software fall under the definition of this provision, and exist controversial opinions in respect to standard software. Individual software pro- grams, however, cannot be viewed as products under the PHG.26 For any reader from a common law country it should be noted that Austrian courts — in view of such exact wording in recent legislation — will almost certainly not extend the applicability of the PHG for teleological reasons of whatever nature in cases where one might otherwise see fit to do so. Defect Pursuant to section 5(1) of the PHG, a product shall be regarded as defective if it does not provide for safety which, with regard to all circumstances, one may expect of the product, particularly in view of: • The presentation of the product; • The use of the product to be equitably expected; and • The point of time the product has been placed in the stream of commerce. It is evident that this definition creates a broad field of possible judicial interpretation, though the wording ‘which one may expect’ tries to introduce an objective standard of common and ordinary consumer expectations. The personal attitude or view of a particu- lar customer will not be taken into consideration, whether it be a customer with extraordinarily high or low expectations. A product falling within the realm of this standard set by the expectations of an ordinary consumer or user will not be regarded as defective and will therefore not trigger liability under the PHG. 24 Civil Code, s 293. 25 Civil Code, s 292. 26 Posch in Schwimann, ABGB, s 4 PHG; 10.
  • 51. AUSTRIA AUT-7 Hinged on the concept of safety expectations, the concept of the PHG allows certain consideration of inevitable defectiveness as a result of the production process and state of technology. This will certainly apply to products that — due to production techniques — are incapable of being made absolutely safe at a certain and given point of available human knowledge. The term ‘presentation of the product’ means any activity of a person subject to liability that introduces the product to the public or the individual user,27 such as advertisement, contractual guarantees, operating instructions, user’s manuals and other descriptive materials such as plans and brochures. Up to a certain point, a risk unavoidably threatening a consumer’s safety would not amount to defectiveness of a product and therefore would not trigger liability if the pro- ducer, wholesaler, retailer or sales personnel in presenting the product draws the consumer’s attention to the inherent dangers. The greater, less obvious and less detectable these inherent dangers and risks are, the more explicit and thorough the warning has to be. Nonetheless, it should be stressed that products the danger of which exceeds a certain limit (to be set ultimately by courts) must not be released into the stream of commerce at all, even if the defectiveness may be unavoidable at a certain point of time and technical knowledge, notwithstanding warning and instructions. Such products must be recon- structed and improved, until at least the occurrence of serious damage (such as harm to an individual’s life and health) is avoided. Number 2 of section 5(1), with its reference to the use of the product that can be equita- bly expected, seeks a balance between the use as defined by the producer and the actual use of the product by the customer. Therefore, a certain misapplication and misuse (especially where children might have access) has to be expected and taken into consid- eration.28 Number 3 of section 5(1), on the one hand, guarantees that technical knowledge which was not available at the time of the release of the product into the stream of commerce, but rather was accomplished and acquired by scientific progress and research afterwards, shall not render a previously marketed product defective and, thus, on the other, seeks to avoid any restraints on technical improvement and innovative efforts.29 The concept of ‘defect’ under the PHG comprises defective design, production or man- ufacturing defects and erroneous, misleading or insufficient warning and instruction (presentation of the product). As there are no different legal consequences imposed on the various types of defectiveness, it is not necessary to further distinguish between them.30 27 Fitz Purtscheller, in: Fitz Purtscheller Reindl, Produkthaftung, 1988, 64; Welser, Produkthaftungsgesetz, 1988, 65. 28 Fitz Purtscheller, in: Fitz Purtscheller Reindl, Produklhaftung, 1988, 68; Welser, Produkthaftungsgesetz, 1988, 67. 29 Welser, Produkthaftungsgesetz, 1988,68. 30 Fitz Purtscheller, in: Fitz Purtscheller Reindl, Produkthaftung, 1988, 81; Welser, Produkthaftungsgesetz, 1988, 72.
  • 52. AUT-8 INTERNATIONAL PRODUCT LIABILITY Warning and Recall Obligations A long time before the PHG was enacted in 1988, Austrian case law had already established (arguing on the basis of accessory contractual obligations) that a seller has to warn his customers of any possibility of damage with regard to a certain application or use of the product sold. Under general liability principles, this responsibility of a seller depends on fault or negligence of the persons involved. As described above, the PHG has changed this situation merely insofar as omission of instruction and warning (at the time of the release of the product into the stream of com- merce) would amount to a defect pursuant to section 5 of the PHG, but did not go further and did not introduce strict liability for damage suffered due to the failure to issue postal warnings. Almost the same is true with regard to a duty of manufacturers to monitor the reliability and safety of their products when actually in use in the market: the PHG does not regulate this issue and we are once again referred to the general principles of Austrian liability law requiring fault or negligence in order to recover any loss suffered. The Austrian Supreme Court nonetheless has ruled — on the grounds of the general liabil- ity principles — that a manufacturer is obliged to warn users and customers of any potential hazard possibly caused by the usage of his product (the manufacturer must not wait until actual damage has occurred) and has to exchange defective and dangerous products by others. He must do this from the point of time he has actual knowledge of the dangers and risks. In Austria, however, inter alia, the Food Safety and Consumer Protection Act (LMSVG) and the Product Safety Act (PSG) regulate under which circumstances a product shall be recalled. According to the Product Safety Act, a product must be recalled if: • The product under normal and reasonably foreseen conditions of usage presents a risk; or • The product does not provide the minimum risk compatible with the product’s use con- sidered to be acceptable and consistent with a high level of protection for the safety and health of a person. Defenses Contributory Fault Pursuant to section 11 of the PHG, section 1304 of the Civil Code shall apply accordingly if the conduct of the user or consumer who has suffered the loss, or of any other person whose conduct they are responsible for, was negligent with regard to the injury. If successful, such defense of contributory negligence leads to only partial reimburse- ment to the plaintiff for the losses incurred.31 Section 11 of the PHG requires the product liability-related cause(s) for the loss, such as the gravity of the defect or the difficulty to detect it, on the one hand, to be compared with 31 This is referred to as Schadensteilung.