International Product Liability

1. PUBLICATION UPDATEINTERNATIONAL PRODUCT LIABILITYRELEASE 1 2012 HIGHLIGHTSJuris Publishing is pleased to present Release 1 of International ProductLiability. This release contains comprehensive revisions to the chapters on: Colombia Denmark England and Wales Italy Mexico South Africa UkraineThis release also contains new chapters on: Malaysia Poland RomaniaJuris Publishing and the authors welcome your questions, suggestionsand comments. Please contact us at Juris Publishing, Inc, 71 New Street,Huntington, N.Y. 11743 USA.

2. RECORD OF RELEASES FILED INTERNATIONALPRODUCT LIABILITYis filed with all previously issued releasesand is current through:Release 1 2012 Questions About This Publication ____________________For editorial assistance or customer service:please call.1-631-350-2100or fax.1-631-351-5712JURIS 3. INTERNATIONALPRODUCT LIABILITYSecond EditionDENNIS CAMPBELLGeneral Editor CHRISTIAN CAMPBELLEditor JURIS 4. Questions About This PublicationFor assistance with shipments, billing orother customer service matters, please call our Customer ServicesDepartment 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.comCopyright 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 StreetHuntington, NY 11743 USAwww.jurispub.com 5. Table of Contents ArgentinaIntroduction ............................................................................................ ARG-1Legal Regime ......................................................................................... ARG-1Consumers Claims ................................................................................ ARG-4Concept of Defect .................................................................................. ARG-7Information to Consumers ..................................................................... ARG-7Remedies ................................................................................................ ARG-8Provisions in Consumer Contracts ......................................................... ARG-8Product Liability Insurance .................................................................... ARG-11Product Liability Litigation .................................................................... ARG-12Conclusion ............................................................................................. ARG-13 AustriaIntroduction ............................................................................................ AUT-1Historical Evolution ............................................................................... AUT-2Purpose of the PHG................................................................................ AUT-4Product and Defective Product............................................................... AUT-5Warning and Recall Obligations ............................................................ AUT-8Defenses Contributory Fault .................................................................. AUT-8Defect as Proximate Cause .................................................................. AUT-10Liable Persons General .......................................................................... AUT-11Joint and Several Liability ..................................................................... AUT-14Burden of Proof...................................................................................... AUT-15Remedies ................................................................................................ AUT-16Disclaimer Clauses................................................................................. AUT-16Statutes of Limitation ............................................................................. AUT-17Liability of Corporate Successors .......................................................... AUT-18(Release 1 2012) 6. iv INTERNATIONAL PRODUCT LIABILITYInsurance ................................................................................................ AUT-18Role of the Courts .................................................................................. AUT-19Applicability of Austrian Law ............................................................... AUT-19Disclaimer .............................................................................................. AUT-20CanadaIntroduction ............................................................................................ CDN-1Common Law......................................................................................... CDN-1Contract ................................................................................................. CDN-8Other Statutory Enactments ................................................................... CDN-11Qubec Civil Law .................................................................................. CDN-14Conclusion ............................................................................................. CDN-25ColombiaIntroduction ............................................................................................ COL-1Specific Normative Grounds .................................................................. COL-1Civil Liability Regime for Defective Products....................................... COL-3Civil Code Regulation of Extra-Contractual Responsibility .................. COL-9Collective Actions Provided under Constitution .................................... COL-10Conclusion ............................................................................................. COL-11DenmarkIntroduction ............................................................................................ DEN-1Theories of Liability............................................................................... DEN-2Negligence ............................................................................................. DEN-3Fraud or Misrepresentation .................................................................... DEN-6Warranty ................................................................................................ DEN-6Strict Liability ........................................................................................ DEN-7Concept of Defect .................................................................................. DEN-8Defenses Available to Manufacturer ...................................................... DEN-15Liability in Chain of Commerce ............................................................ DEN-17Remedies ................................................................................................ DEN-18(Release 1 2012) 7. TABLE OF CONTENTS vLimitations ............................................................................................. DEN-20Successor Liability ................................................................................. DEN-21Insurance ................................................................................................ DEN-21Product Liability Litigation .................................................................... DEN-25Conclusion ............................................................................................. DEN-27 England and WalesIntroduction ............................................................................................ ENG-1Basis of Manufacturers Liability .......................................................... ENG-1Concept of Defect .................................................................................. ENG-4Defenses Available to the Manufacturer ................................................ ENG-5Examples of Strict Liability for Products ............................................... ENG-7Contractual Liability of Distributors ...................................................... ENG-9Remedies ................................................................................................ ENG-13Exclusion or Limitation of Liability ...................................................... ENG-16Statute of Limitations ............................................................................. ENG-17Corporate Successor Liability ................................................................ ENG-18Product Liability Insurance ................................................................... ENG-19Product Liability Litigation .................................................................... ENG-20Product Safety Legislation and Prosecutions by TradingStandards Officers .................................................................................. ENG-22Conclusion ............................................................................................. ENG-23 European CommunityIntroduction ............................................................................................ EU-1Theory of Products Liability .................................................................. EU-2Affected Products ................................................................................ EU-2Definition and Types of Defect ........................................................... EU-4Liable Parties ......................................................................................... EU-5Parties Entitled to Recovery ................................................................... EU-6Types of Remedies and Extent of Recovery .......................................... EU-7Questions of Evidence ........................................................................... EU-8 (Release 1 2012) 8. vi INTERNATIONAL PRODUCT LIABILITYLimits of Liability .................................................................................. EU-9Other Remedies ...................................................................................... EU-10Disclaimer .............................................................................................. EU-11Transformation of the EC Directive ....................................................... EU-11Further Developments in the European Community .............................. EU-14Appendix ................................................................................................ EU-16IndiaIntroduction ............................................................................................ IND-1Theories of Liability............................................................................... IND-2Concept of Defect .................................................................................. IND-8Defenses ................................................................................................. IND-13Other Parties Impacted by Product Liability Considerations ................. IND-14Remedies ................................................................................................ IND-15Disclaimers/Limitation on Remedies by Contract ................................. IND-16Corporate Successor Liability ................................................................ IND-17Product Liability Insurance .................................................................... IND-18Product Liability Litigation .................................................................... IND-20Conclusion ............................................................................................. IND-22 ItalyIntroduction ............................................................................................ ITA-1Product Liability under Contract Law .................................................... ITA-2Product Liability under Tort Law .......................................................... ITA-3General Principle of Producers Liability without Fault ........................ ITA-7Statute of Limitation and Forfeiture Term ............................................. ITA-19Mandatory Regime of Liability .............................................................. ITA-20 MalaysiaBasis of Manufacturers Liability ........................................................ MAY-1Obligations to Warn or Recall Defective Products .............................. MAY-8Defenses Available to Manufacturer .................................................... MAY-9(Release 1 2012) 9. TABLE OF CONTENTS viiLimitation of Liability by Proximate Cause ......................................... MAY-11Impact of Product Liability Considerations ......................................... MAY-12Remedies .............................................................................................. MAY-14Limitations on Remedies by Contract .................................................. MAY-17Claims Affected by Statute of Limitation ............................................ MAY-17Extension of Liability for Defective Products to CorporateSuccessors ............................................................................................ MAY-18Role of Insurance in Product Liability Matters .................................... MAY-18Role of Courts and Lawyers in Product Liability Litigation ................ MAY-18MexicoIntroduction ............................................................................................ MEX-1General Aspects of Liability in Mexico ................................................. MEX-3Theories of Liability............................................................................... MEX-6Concept of Defect .................................................................................. MEX-11Obligation to Recall Defective Products ................................................ MEX-11Obligation to Warn Consumers about Defective Products..................... MEX-11Defenses Available to the Manufacturer ................................................ MEX-12Proximate Cause .................................................................................... MEX-14Liability of Others in the Supply Chain ................................................. MEX-14Remedies ................................................................................................ MEX-15Contractual Disclaimers or Limitations ................................................. MEX-17Statute of Limitations ............................................................................. MEX-17Corporate Successor Liability ................................................................ MEX-18Product Liability Insurance .................................................................... MEX-18Product Liability Litigation .................................................................... MEX-19Conclusion ............................................................................................. MEX-23 The PhilippinesIntroduction ............................................................................................ PHI-1Theories on Manufacturers Liability .................................................... PHI-1Concept of Defect .................................................................................. PHI-11 (Release 1 2012) 10. viii INTERNATIONAL PRODUCT LIABILITYObligation to Warn Consumers or Recall Defective Products ............... PHI-15Defenses Available to the Manufacturer ................................................ PHI-16Proximate Cause Limits ...................................................................... PHI-18Others Affected by Product Liability Considerations ............................ PHI-20Remedies ................................................................................................ PHI-22Exclusion or Limitation of Contractual Liability ................................... PHI-25Statutes of Limitation ............................................................................. PHI-26Corporate Successor Liability ................................................................ PHI-27Product Liability Litigation .................................................................... PHI-27Conclusion ............................................................................................. PHI-30PolandIntroduction ............................................................................................ POL-1Risk-Based Ex Delicto Liability for Dangerous Product ....................... POL-1Concept of Defect .................................................................................. POL-5Obligation to Warn or Recall Defective Products .................................. POL-6Defenses Available to Product Manufacturers ....................................... POL-7Proximate Cause and Limitation of Scope of Liability .......................... POL-9Impact of Product Liability Considerations ........................................... POL-9Remedies ................................................................................................ POL-10Disclaimers or Limitations on Remedies by Contract ............................ POL-11Claims and Statute of Limitation ........................................................... POL-12Liability of Corporate Successors for Defective Products ..................... POL-13Role of Insurance in Product Liability Matters ...................................... POL-13Role of the Courts and Lawyers in Product Liability Litigation ............ POL-14 PortugalIntroduction ............................................................................................ POR-1Legislative Framework ......................................................................... POR-1Strict Liability for Manufacturers .......................................................... POR-4Concept of Defect .................................................................................. POR-5Duty of Information ............................................................................... POR-8(Release 1 2012) 11. TABLE OF CONTENTS ixDefenses Available to the Manufacturer ................................................ POR-9Concept of Manufacturer ....................................................................... POR-11Damages and Remedies ......................................................................... POR-13Limitation Period and Lapse of Rights .................................................. POR-15Conclusion ............................................................................................. POR-15 RomaniaIntroduction .......................................................................................... ROM-1Traditional Sources of Product Liability .............................................. ROM-1Product Liability under Consumer Law ............................................... ROM-3Transfer of Product Liability to Corporate Successors ........................ ROM-13Insurance Policies and Product Liability .............................................. ROM-13Court Proceedings in Product Liability Litigation ............................... ROM-14Conclusion ........................................................................................... ROM-15 South AfricaIntroduction ............................................................................................ SA-1Theories of Manufacturers Liability ..................................................... SA-2Concept of Defect .................................................................................. SA-7Obligations to Warn Consumers or Recall Defective Products ............. SA-8Defenses Available to the Manufacturer ................................................ SA-9Proximate Cause .................................................................................... SA-12Liability in the Chain of Commerce....................................................... SA-13Remedies ................................................................................................ SA-14Contractual Disclaimers or Limitations ................................................. SA-17Statute of Limitation .............................................................................. SA-22Corporate Successor Liability ................................................................ SA-23Product Liability Insurance .................................................................... SA-23Product Liability Litigation .................................................................... SA-24Conclusion ............................................................................................. SA-27 (Release 1 2012) 12. xINTERNATIONAL PRODUCT LIABILITY SpainIntroduction ............................................................................................ SPA-1Nature and Characteristics of Product Liability ..................................... SPA-2Liability in the Chain of Commerce....................................................... SPA-3Concept of Defect .................................................................................. SPA-8Defenses Available to the Producer ....................................................... SPA-12Compensable Damage............................................................................ SPA-19Statutes of Limitation ............................................................................. SPA-22Product Liability Insurance .................................................................... SPA-25Conclusion ............................................................................................. SPA-28SwedenIntroduction ............................................................................................ SWE-1Product Liability .................................................................................... SWE-1Contractual Liability .............................................................................. SWE-4Non-Contractual Liability ...................................................................... SWE-6Concept of Defect .................................................................................. SWE-7Obligation to Ward or Recall ................................................................. SWE-8Defenses ................................................................................................. SWE-9Who Can Be Liable? .............................................................................. SWE-10Remedies ................................................................................................ SWE-11Disclaimers and Limitations .................................................................. SWE-13Statutes of Limitation ............................................................................. SWE-13Corporate Successors ............................................................................. SWE-14Product Liability Insurance .................................................................... SWE-14Courts and Lawyers in Liability Litigation ............................................ SWE-16 UkraineIntroduction ............................................................................................ UKR-1Legislative Framework for Product Liability ......................................... UKR-1Theories of Liability............................................................................... UKR-2Concept of Defect .................................................................................. UKR-6(Release 1 2012) 13. TABLE OF CONTENTSxiObligation to Warn Consumers or Recall Defective Products ............... UKR-10Defenses Available to the Manufacturer ................................................ UKR-14Proximate Cause .................................................................................... UKR-16Liability of Others in the Chain of Distribution ..................................... UKR-17Remedies ................................................................................................ UKR-19Contractual Disclaimers and Limitations ............................................... UKR-23Statutes of Limitations ........................................................................... UKR-25Corporate Successor Liability ................................................................ UKR-28Product Liability Insurance .................................................................... UKR-28Product Liability Litigation .................................................................... UKR-30Conclusion ............................................................................................. UKR-32 United StatesIntroduction ............................................................................................ US-1Theories of Liability............................................................................... US-4Concept of Defect .................................................................................. US-12Obligations to Warn or Recall................................................................ US-14Defenses ................................................................................................. US-16Proximate Cause .................................................................................... US-23Liability of Others in the Chain of Distribution ..................................... US-25Remedies ................................................................................................ US-26Class Actions and Multidistrict Litigation ............................................. US-32Disclaimers and Limitations on Remedies ............................................. US-34Statutes of Limitation ............................................................................. US-35Corporate Successor Liability ................................................................ US-36Product Liability Insurance .................................................................... US-38Product Liability Litigation .................................................................... US-40Conclusion ............................................................................................. US-41(Release 1 2012) 14. Authors ListArgentinaJavier CanosaCanosa AbogadosMontevideo 711 Piso 4C1019ABO Buenos AiresArgentinaTel: (54 11) 52522462Fax: (54 11) 52522463Email: [email protected] SpiegelfeldCHSH Cerha Hempel Spiegelfeld HlawatiParkring 21010 ViennaAustriaTel: (43 1) 514350Fax: (43 1) 5143535Email: [email protected] WallnerCHSH Cerha Hempel Spiegelfeld HlawatiParkring 21010 ViennaAustriaTel: (43 1) 514350Fax: (43 1) 5143535Email: [email protected] SchragerOgilvy Renault LLPSuite 3800Royal Bank Plaza, South Tower200 Bay Street, PO Box 84Toronto, OntarioCanada M5J 2Z4Tel: (1 416) 2164000Fax: (1 416)(Release 1 2012) 15. xivINTERNATIONAL PRODUCT LIABILITYandEmmanuelle DemersOgilvy Renault LLPSuite 3800Royal Bank Plaza, South Tower200 Bay Street, PO Box 84Toronto, OntarioCanada M5J 2Z4Tel: (1 416) 2164000Fax: (1 416)andBill McNamaraOgilvy Renault LLPSuite 3800Royal Bank Plaza, South Tower200 Bay Street, PO Box 84Toronto, OntarioCanada M5J 2Z4Tel: (1 416) 2164000Fax: (1 416) 2163930Email: [email protected] TobnCavelier AbogadosEdificio SiskiCarrera 4 No. 72 - 358 BogotColombiaTel: (57 1) 3473611Fax: (57 1) 2118650Email: [email protected] Durn FernndezCavelier AbogadosEdificio SiskiCarrera 4 No. 72 - 358 BogotColombiaTel: (57 1) 3473611Fax: (57 1) 2118650Email: [email protected](Release 1 2012) 16. AUTHORS LIST xvEduardo Varela PezzanoCavelier AbogadosEdificio SiskiCarrera 4 No. 72 - 358 BogotColombiaTel: (57 1) 3473611Fax: (57 1) 2118650Email: [email protected] Ewald MadsenBech-BruunLangelinie All 352100 CopenhagenDenmarkTel: (45 ) 72270000Fax: (45 ) 72270027Email: [email protected] Anker MikkelsenBech-BruunLangelinie All 352100 CopenhagenDenmarkTel: (45 ) 72273490Fax: (45 ) 89310101Email: [email protected] and WalesPeter BurbidgeSenior LecturerUniversity of Westminster309 Regent StreetLondon W1B 2UWEnglandTel: (44 207) 9115000Fax: (44 207) 79115844Email: [email protected](Release 1 2012) 17. xvi INTERNATIONAL PRODUCT LIABILITYEuropean CommunitySusanne WeschWesch & BuchenrothKernerstrae 43Am Schtzenplatz70182 StuttgartGermanyTel: (49 711) 2200940Fax: (49 711) 22009410IndiaKiran PrakashM.V.Kini & Co1st Floor, Bilquees MansionOpp Standard Chartered BankD.N.Road, Fort4001 001 MumbaiIndiaTel: (91 22) 612527Fax: (91 22) 612530Email: [email protected] KiniM.V.Kini & Co1st Floor, Bilquees MansionOpp Standard Chartered BankD.N.Road, Fort4001 001 MumbaiIndiaTel: (91 22) 612527Fax: (91 22) 612530Email: [email protected] DeepM.V.Kini & Co1st Floor, Bilquees MansionOpp Standard Chartered BankD.N.Road, Fort4001 001 MumbaiIndiaTel: (91 22) 612527Fax: (91 22) 612530Email: [email protected](Release 1 2012) 18. AUTHORS LISTxviiItalyAntonello CorradoCFMP - Studio Legale AssociatoVia di Ripetta 14100186 RomeItalyTel: (39 06) 6876917Fax: (39 06) 68192116Email: [email protected] BhaskaranShearn Delamore & Co7th FloorWisma Hamzah-Kwong HingNo 1 Leboh Ampang50100 Kuala LumpurMalaysiaTel: (60 3) 20272727Fax: (60 3) 20785625Email: [email protected] Noriega R.Barrera, Siqueiros y Torres Landa, S.C.Paseo de los Tamarindos #150-PBBosques de las Lomas05120 Mexico, D.F.MexicoTel: (52 55) 50910000Fax: (52 55) 50910123andJuan Francisco Torres Landa R.Barrera, Siqueiros y Torres Landa, S.C.Paseo de los Tamarindos #150-PBBosques de las Lomas05120 Mexico, D.F.MexicoTel: (52 55) 50910000Fax: (52 55) 50910123Email: [email protected](Release 1 2012) 19. xviii INTERNATIONAL PRODUCT LIABILITYErnesto F. Algaba R.Barrera, Siqueiros y Torres Landa, S.C.Paseo de los Tamarindos #150-PBBosques de las Lomas05120 Mexico, D.F.MexicoTel: (52 55) 50910000Fax: (52 55) 50910123Email: [email protected] Cullar GamboaBarrera, Siqueiros y Torres Landa, S.C.Paseo de los Tamarindos #150-PBBosques de las Lomas05120 Mexico, D.F.MexicoTel: (52 55) 50910000Fax: (52 55) 50910123Email: [email protected] Farah M.Barrera, Siqueiros y Torres Landa, S.C.Paseo de los Tamarindos #150-PBBosques de las Lomas05120 Mexico, D.F.MexicoTel: (52 55) 50910000Fax: (52 55) 50910123The PhilippinesLovely Concepcion C. MatillanoAngara Abello Concepcion Regala& Cruz Law Offices22/F ACCRALAW TowerSecond Avenue corner 30th StreetCrescent Park WestBonifacio Global City, 0399 TaguigMetro ManilaPhilippinesTel: (63 2) 8308000Fax: (63 2) 4037007and(Release 1 2012) 20. AUTHORS LISTxixMa Patricia B. PazAngara Abello Concepcion Regala & Cruz Law Offices22/F ACCRALAW TowerSecond Avenue corner 30th StreetCrescent Park WestBonifacio Global City, 0399 TaguigMetro ManilaPhilippinesTel: (63 2) 8308000Fax: (63 2) 4037007andSalvador L. PeaAngara Abello Concepcion Regala & Cruz Law Offices22/F ACCRALAW TowerSecond Avenue corner 30th StreetCrescent Park WestBonifacio Global City, 0399 TaguigMetro ManilaPhilippinesTel: (63 2) 8308000Fax: (63 2) 4037007PolandMarek OleksynSotysiski Kawecki & SzlzakUl. Wawelska 15B02-034 WarsawPolandTel: (48 22) 6087000Fax: (48 22) 6087070Email: [email protected] Moniz de BettencourtUra Menndez - Proenca de CarvalhoEdifcio Rodrigo UraRua Duque de Palmela, 231250-097 LisbonPortugalTel: (351 210) 308600Fax: (351 210) 308601Email: [email protected] (Release 1 2012) 21. xxINTERNATIONAL PRODUCT LIABILITYandJoo de Sousa AssisUra Menndez - Proenca de CarvalhoEdifcio Rodrigo UraRua Duque de Palmela, 231250-097 LisbonPortugalTel: (351 210) 308600Fax: (351 210) 308601Email: [email protected] Frasto da SilvaUra Menndez - Proenca de CarvalhoEdifcio Rodrigo UraRua Duque de Palmela, 231250-097 LisbonPortugalTel: (351 210) 308600Fax: (351 210) 308601Email: [email protected] IspasTuca Zbarcea & AsociatiiVictoriei Square4-8 Nicolae Titulescu Ave.America HouseWest Wing, 8th Floor, Sector 1011141 BucharestRomaniaTel: (40 21) 2048890Fax: (40 21) 2048899Email: [email protected] AfricaPer E van EedenVan Eeden AttorneysPOBox 336240010 Pretoria / TshwaneSouth AfricaTel: (27 86) 1111357Fax: (27 86) 5106782Email: [email protected](Release 1 2012) 22. AUTHORS LIST xxiSpainPatricia GualdeBroseta AbogadosC/.Pascual y Gens, 546002 ValenciaSpainTel: (34 96) 3921006Fax: (34 96) 3921088Email: [email protected] DahlnSetterwallsKungstorget 2Box 112 35404 25 GothenburgSwedenTel: (46 31) 7011700Fax: (46 31) 7011701Email: [email protected] ShkvoretsRULG Ukrainian Legal Group, LLCOlimpiysky CenterSuite 14, 11th floor72 Velyka Vasylkivska Street03150 KievUkraineTel: (38 044) 2071060Fax: (38 044) 2071064Email: [email protected] OstapenkoRULG Ukrainian Legal Group, LLCOlimpiysky CenterSuite 14, 11th floor72 Velyka Vasylkivska Street03150 KievUkraineTel: (38 044) 2071060Fax: (38 044) 2071064Email: [email protected](Release 1 2012) 23. xxii INTERNATIONAL PRODUCT LIABILITYUnited StatesJames Yuanxin LiStarRaft.comOakland, CaliforniaUnited StatesEmail: [email protected] DeBusschereSedgwick, Detert, Moran & Arnold LLPOne Market PlazaSteuart Tower, 8th FloorSan Francisco, CaliforniaUnited States 94105Tel: (1 415) 7817900Fax: (1 415) 7812635Email: [email protected](Release 1 2012) 24. ArgentinaIntroduction ............................................................................................ ARG-1Legal Regime ......................................................................................... ARG-1Civil Code System ...................................................................ARG-1Consumer Protection Law System ........................................... ARG-3System Related to Hidden Defects ..........................................ARG-4Consumers 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-7Concept of Defect .................................................................................. ARG-7Information to Consumers ..................................................................... ARG-7Remedies ................................................................................................ ARG-8Provisions in Consumer Contracts ......................................................... ARG-8 Abusive Clauses....................................................................... ARG-8 Prohibited Contractual Provisions ........................................... ARG-9Product Liability Insurance .................................................................... ARG-11Product Liability Litigation ....................................................................ARG-12Frequency of Litigation ...........................................................ARG-12Material Damages ....................................................................ARG-12Lawyers Fees .......................................................................... ARG-13Conclusion ............................................................................................. ARG-13 25. ArgentinaJavier CanosaCanosa AbogadosBuenos Aires, ArgentinaIntroductionProduct liability is the area of law in which producers and manufacturers ofproducts, as well as distributors, suppliers, retailers, and others who makeproducts available to the public, are liable for the injuries caused by defective orharmful products.Individuals who are harmed by an unsafe product may have a cause for actionagainst the persons who designed, manufactured, sold, or supplied that product.Today, the law on product liability has changed from caveat emptor (let thebuyer beware) to strict liability for manufacturing defects that make a productunsafe, harmful, or dangerous.Strict liability claims focus on the product rather than on the behavior of themanufacturer. Under strict liability, the manufacturer is liable if the product isdefective, even if the manufacturer was not negligent in making that productdefective.The legal regime for product liability in Argentina is based on a strict liabilitysystem that distinguishes between contractual and non-contractual consumerrelationships.Legal RegimeIn Argentina, there are three different systems of product liability: the systemestablished by the Argentine Civil Code, the system set down by Law Number24240 on Consumer Protection, as amended (the Consumer Protection Law),and the system that relates to hidden defects, with some specific rules oncommercial matters, which are governed by the Civil Code.Civil Code SystemIn GeneralProduct liability under the Argentine Civil Code system may be contractual(when there is a contract between the buyer and the trader or manufacturer) ornon-contractual (when there is no contractual relation between the injured partyand the trader or manufacturer). 26. ARG-2 INTERNATIONAL PRODUCT LIABILITYContractual LiabilityAccording to the provisions of the Civil Code,1 contractual relationships aregoverned by the principle of good contractual faith. Consequently, the existenceof a defect of any origin implies, in the first place, the failure to fulfill theprimary obligation assumed by the seller or manufacturer, which consists ofdelivering a product free of defects.Failure to fulfill this obligation triggers the mechanisms that enable theconsumer to obtain the specific performance of the obligation by the seller ormanufacturer, with the eventual application of the corresponding remedies. Inthe case of products, remedies consist of the delivery of another defect-freeproduct in an appropriate condition; the fulfillment of the obligation by a thirdparty; or the monetary value of the product.Optionally, the consumer may request the resolution of the contract afterreturning 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 forthe damages derived from the seller or the manufacturers failure to perform theobligation or the resolution of the contract.Non-Contractual LiabilityWhen there is no contractual relation between the injured party and the trader,manufacturer, or any party in the marketing chain that generated the defect, therules of non-contractual liability based on the concept of created risk apply.Created risk refers to the contingency or possibility of damage resulting fromintroducing defective products in the market, when the defects turn a productthat was not dangerous by its nature or use into a dangerous product or increasethe 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 theguardian of the product as established in the Civil Code,2 but also any party whoobtains a profit or benefit from the product, as considered in the latestjurisprudence.Nevertheless, the injured party will be able to claim against a member of themarketing chain or against all of them jointly. As in the case of contractualliability, the accused party will be able to claim a refund from the party thatcaused the defect. As the liability is objective, the defendant can only beexcused if the victim or a third party is at fault.After enactment of the Consumer Protection Law, the system of the ArgentineCivil Code is, in principle, restricted to those cases where the subject acquires1 Civil Code, s 1198.2 Civil Code, s 1103. 27. ARGENTINA ARG-3the product in order to introduce it into a production or trade process or whenthe subject is not a consumer.Consumer Protection Law SystemUnder the Consumer Protection Law, the seller is responsible on a contractualbasis as the person who engages with the consumer. The Consumer ProtectionLaw protects consumers throughout the different contractual phases, fromnegotiation to the delivery and performance of goods (including used goods) andservices.Traders must provide consumers with true, detailed, and accurate informationabout the goods or services offered. Consumers are vested with the right tocommence individual actions in the event their rights under the ConsumerProtection Law are threatened.The Consumer Protection Law also includes the right to initiate collectiveproceedings (class actions), which may include patrimonial claims throughconsumer associations and specific proceedings aimed at resolving disputesaffecting consumers.Claims initiated by consumers and consumer associations may include punitivedamages. The new Argentine Consumer Protection Law (the new ConsumerProtection Law)3 amended the Consumer Protection Law, extending andimproving consumer protection for both local and foreign individuals andcompanies.The new Consumer Protection Law extends the definition of consumer,making the term applicable to those individuals or entities obtaining cost-freegoods or services as final recipients, either for their own or for their familygroups benefit.Additionally, the concept of supplier includes every physical person or publicor private entity carrying out in a professional way, even occasionally, activitiesrelated to goods and services production, creation, construction, transformation,importation, distribution, and commercialization to consumers or users.The new Consumer Protection Law establishes that consumer relationshipsshall be ruled by the provisions of the Law and its regulations, notwithstandingthe laws that may apply by reason of the suppliers activities, hence settingforth the priority of the Consumer Protection Law over any other specific laws.Additionally, the Consumer Protection Law provides that suppliers shouldguarantee equitable treatment to consumers and users, and they should refrainfrom displaying behaviors that put consumers in embarrassing, humiliating, orintimidating situations. Infringements of these rules will be subject to fines.3 Law Number 26361 of 3 April 2008. 28. ARG-4INTERNATIONAL PRODUCT LIABILITYUnder the new Consumer Protection Law, foreign consumers are consideredequal to national consumers in relation to prices or other commercial terms andconditions. Exceptions could be allowed with the prior authorization of theadministrative authority, taking the general interest into consideration.Finally, the new Consumer Protection Law establishes the priority of theConsumers Protection Law over the regulations applicable to the provision ofpublic services. Before the amendment, the provisions of the ConsumerProtection Law were subject to the specific regulations for public services.System Related to Hidden DefectsThe contractual liability provided by the Argentine Civil Code also includes theobligation to cure hidden defects in the sale contract.The obligation of curing the defects emerges when the hidden defects of theproduct sold make the product unsuitable for its purpose or diminish it in such away that a buyer who had been aware of the defects would not have bought theproduct or would have paid less for the product.The defects must be hidden, because the regime does not apply to manifestdefects that were visible or to those defects that the buyer should have knownabout, given his occupation or profession.In these cases, the buyer has the option of terminating the contract and receivinga refund of the price paid or a proportional discount on the price. If the sellerknew about the defect and hid it from the buyer, the buyer will have the sameoptions. In addition, the buyer will be entitled to compensation for the damagessuffered in case he decides to terminate the contract.Consumers ClaimsDevelopment of the Legal RegimeThe recognition of consumers claims in Argentina has been a slow and arduousprocess. The initial stage recognized consumer relationships and identified theconsumer as the weaker party in the trading relationship, due to the massivemarket, real inequalities, and lack of information, among other factors.The legal regime did not give precise answers to these issues. There were onlysome traditional warranties, such as the one provided for hidden defects, whichprotected the consumer to a certain extent.At this first stage, the liability of manufacturers and providers could only bebased on the concept of guilt; the validity of the free will of the parties wasvirtually unlimited, impeding the revision of non-equitable contracts and unfairpractices that were not precisely expressed in the legal regime.The second stage began with the reforms of the Civil Code and the enactment ofspecial regulatory laws for the market. The legal regime began to create a 29. ARGENTINA ARG-5consumer protection system through solutions that, although generic and notspecifically meant to address consumer protection, nonetheless representedsignificant progress toward equity in consumer relations.The reform of the Argentine Civil Code in 1968 included the rules on goodfaith4 and abuse of rights,5 which enable judicial control of abusive practices andunfair clauses in consumer contracts.The introduction of the liability regime for manufactured products implicitlyemerged in Sections 1198 of the Civil Code for the contractual sphere and inSection 1113 of the Civil Code for the non-contractual sphere.The prohibition of fraud in the identification of products and advertisements, thecontrol of offers with awards, and the regime of warranties was provided byseveral court precedents. The control of prices and commercialization of goodsand services was regulated by the Supply Law.6 The punishment of unfairpractices was governed by the Competition Law.7 The control of the systemsand contracts on pre-saving for determined purposes was another measure aimedat consumer protection.Finally, the third stage was initiated with the enactment of the ConsumerProtection Law, which completes the consolidation of a system of juridicalprotection that previously was only founded on general rules that were notdirectly or specifically aimed at the protection of consumers.The consolidation of the Consumer Protection Law did not come about until theconstitutional reform in 1994, which introduced consumers rights in theNational Constitution. The enactment of the law amending the ConsumerProtection Law8 and the new Consumer Protection Law of 2008 completed theconsumer protection regime by adding the concept of user, which includedusers claims against service providers, public or otherwise.On December 2008, the legislature of the City of Buenos Aires created theConsumers Arbitration Court, which aimed to solve consumers and usersclaims within the scope of the City of Buenos Aires, with the same authority as ajudicial ruling.Strict LiabilityThe principle of strict liability applies to consumer claims. To be admitted bythe 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. 30. ARG-6INTERNATIONAL PRODUCT LIABILITYStatute of LimitationsThe statute of limitations for any claim against any party is generally three yearsif the case falls within the scope of the Consumer Protection Law. In cases ruledby the Civil Code, the time limit for claiming damages is three months for aclaim based on a hidden defect. The time limit for a claim based on a hiddendefect is six months if the relationship is ruled by the Commercial Code. In bothcases, the term commences at the time of delivery of the product.For an action brought by the purchaser against the non-seller manufacturer, theclaim 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 10years.Successor LiabilityIf a consumer suffers damage as a result of defective goods or services, theproducer, manufacturer, distributor, trader, or the person who provides theproduct or service will be jointly liable for such damage, unless they can showthat the damage is not attributable to the relevant party.In this sense, all the subjects involved in the marketing chain may be liabletoward consumers under the Consumer Protection Law, including corporatesuccessors.This rule was included in the legal regime with the aim of guaranteeing thatconsumers will be able to obtain compensation for damage suffered from any ofthe parties to the consumer relation, regardless of the party that is ultimatelyresponsible.Causation and Burden of ProofIn relation to causation, the general principle established in the Procedural Codeis 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 positionthan the consumer to produce technical evidence; accordingly, the manufacturerhas the onus of proving that the product was not defective.The seller is deemed to hold a final obligation on the security of the productsold; therefore, if the product exhibits a defect, there is a presumption of thefault of the seller.The plaintiff bears the burden of proving the existence of the defect and therelation between the defect and the alleged damage. It is not necessary to provethat the damage would not have arisen without such exposure to the product.The mere exposure to potential damage does not produce any responsibility. 31. ARGENTINA ARG-7DefensesIn addition to procedural defenses (e.g., a time-bar defense), substantive lawauthorizes the following defenses: Product is not defective or hazardous; No relationship between the alleged damage and the defect, even when adefect existed; Existence of a third party for whom neither the manufacturer nor the seller areliable; Occurrence of a force majeure event; and Fault of the victim himself.The manufacturers defense showing that he complied with regulatory and/orstatutory requirements relating to the development, manufacture, licensing,marketing, and supply of the product is not eligible, as the regulatoryrequirements are deemed to be granted under the condition that the product isharmless to consumers.Judicial and Administrative ProceedingsRelated to the procedure for claims, the trial is before a judge, as there are notrials by jury in Argentina. The Consumer Protection Law also regulates anadministrative proceeding and allows for the imposition of fines under suchprocedures.Concept of DefectIn Argentina, the concept of defect is defined as defective manufacture, as themanufacturer is liable for the defects of movable things.Additionally, the Consumer Protection Law introduced the liability of serviceproviders.Although a defect is defined as defective manufacture, the Consumer ProtectionLaw provides certain liability on the basis of advertising of products, in theevent that the advertising violates the obligation of providing accurateinformation on the products or services offered.Information to ConsumersThe new Consumer Protection Law establishes the minimum content of thepurchase 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 bewritten in Spanish, in a complete, clear, and easily understandable manner. 32. ARG-8INTERNATIONAL PRODUCT LIABILITYRemediesRegarding remedies, the new Consumer Protection Law includes thecompensation of direct damages, which is any monetary damage to the usersor consumers right as a consequence of an action or omission of the supplier.In order to compensate the direct damage, the authorities could force thesupplier to pay a compensation of up to five times the value of the totalconsumer basket, according to the value reported by the National Institute ofStatistics and Census.On this basis, on 27 May 2009 the Civil and Commercial Court of Appeals ofthe City of Mar del Plata confirmed the lower courts decision that condemnedthe defendant to pay ARS 30,000 (approximately US $11,000 at the currentexchange rate) for moral material damages and ARS 30,000 for punitivedamages.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 claimsbefore the offices of a mobile telephone company of which he was a client, buthe had not received proper attention because the companys building did nothave a wheelchair ramp.The innovation of this judicial decision is the confirmation of the award ofpunitive 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 notgive him decent treatment.Provisions in Consumer ContractsAbusive ClausesRegarding the provisions contained in consumer contracts, abusive clausesdeserve special attention in relation to the protection of consumers and usersrights.An abusive clause is one by which the rights of the manufacturer/seller areexpanded and the rights of the consumer/user are intentionally restricted. Anabusive clause is a provision that goes against the requirements of good faithand results in a significant and unjustified imbalance of the contractualobligations to the detriment of the consumer or user.An abusive clause may or may not be a general condition, as it may be presentin particular contracts in which actual negotiation of the provisions does notexist, particularly in adhesion contracts. 33. ARGENTINA ARG-9At times, it is more difficult to detect abusive clauses, because a significantnumber of consumer contracts are not written agreements. This does not meanthat the protection does not apply to contracts that are not in writing, but itrequires greater effort to prove the existence of an abusive clause.Resolution Number 53/03 of 2003 (the Resolution) sets forth specific provisionsthat are prohibited in consumer contracts. The Resolution not only establishesthe nullity of future provisions, but also sets forth that provisions in violation ofthe Consumer Protection Law that are included in an existing contract will beexpunged and this exclusion also will be notified to the consumer.The purpose of the Resolution was to establish objective parameters for theparties to learn, in advance, which contractual provisions would be consideredvoid. Section 37 of the Consumer Protection Law states that contractualprovisions 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 consumeragainst a company, the competent authority or the competent judge has toanalyze each particular provision in order to determine whether it violates (ordoes not violate) the general prohibition of the Consumer Protection Law.The interpretation of the provisions was subject to the discretion of theauthorities or the courts, according to the circumstances of the case. Under thenew Resolution, if a provision falls within the description established in its text,it will automatically be considered null and void.Prohibited Contractual ProvisionsWithout prejudice to other practices that could be considered in violation of thegeneral principles established by Section 37 of the Consumer Protection Law,specific contractual provisions are prohibited.The Consumer Protection Law prohibits contractual provisions that grant thesupplier 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 tounilaterally amend any provision of a contract are prohibited, unless the balancebetween the rights and obligations of the parties in the contractual relationship isnot disturbed by means of such amendments and provided that the right toamend 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 suchan amendment must have been previously established.Prohibited contractual provisions include those that, despite the due complianceby the consumer of all its obligations undertaken in the contract, authorize thesupplier of goods or services to terminate the contract without cause. 34. ARG-10 INTERNATIONAL PRODUCT LIABILITYThe termination of the contract by the supplier without cause will only be legalif an obligation of prior notification to the consumer is provided in the contractand if, in the case of fixed-term contracts, the right of the consumer to terminatethe contract also has been previously agreed.The Consumer Protection Law prohibits contractual provisions that establish thecommencement of the contract will be at the sole discretion of the supplier ofgoods or services, while the consumers acceptance of the terms and conditionsof the contract is irrevocably established in the text of the contract.Provisions that impose limitations on the consumers judicial rights also areprohibited. This is particularly the case when provisions establish a differentvenue than the one corresponding to the domicile of the consumer at the time ofthe execution of the contract (except in those cases where the judicial claim isfiled 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 onthe consumer the burden of producing specific evidence in disregard of theprovisions of the Procedural Code in this respect; and provisions that establishcertain limitations for the filing of defenses and remedies.Contractual provisions that establish the right of the supplier of goods orservices to set off a credit against a consumer already in arrears with anothercredit of the consumer against the provider, which originated in another contractor service rendered by the consumer to the provider, are prohibited, unless thiscompensation is admitted by the applicable law and the provider duly notifiesthe consumer of this circumstance in the contract.The prohibition applies to contractual provisions that exclude or limit theresponsibility of the supplier of goods or services regarding any indemnificationadmitted by the applicable law in case of damage caused by the product orservice provided to the consumer.In fixed-term consumer contracts that grant the parties the right to terminate thecontract before the specified term and in consumer contracts that have nospecified term, any provisions that make the consumers right of termination ofthe contract conditional on the consumers prior payment of all pendingobligations in favor of the other party are prohibited.Contractual provisions that establish the right of the provider to provide adifferent product or service than that agreed on in the contract without the priorconsent of the consumer and/or which impose a term for the consumer to acceptthe different product or service are prohibited.Also prohibited are contractual provisions that impose on the consumer arepresentative in order to exercise the rights provided in the contract or to carryon any other legal act on his behalf. Contractual provisions that violateenvironmental regulations or allow such violations are prohibited. 35. ARGENTINA ARG-11Product Liability InsuranceInsurance policies available for product liability in Argentina are those thatprotect the insured against civil claims. In general, these policies includecomprehensive general protection against liability claims derived fromcontractual or extra-contractual relationships, including claims related toproducts and services.According to the Insurance Law,9 insurance policies do not cover cases in whichthe insured acted intentionally or was guilty of serious misconduct. Additionally,insurance policies include a restriction on the insurance companys protectiontoward the insured in case of liability, known as a deductible.If the insured incurs liability, the deductible is an amount, usually established bythe insurance company, that the insured is obligated to pay before the insurancecompany responds to the claim. In connection with the deductible and accordingto the Consumer Protection Law, in the case Saldivar, Federico Reynaldo vMetrovas S.A., Tribunal M of the Civil Court of Appeals ruled that thedeductible in liability insurance could not be asserted against the aggrievedparty, despite the Supreme Court of Justices precedents that found to thecontrary.The ruling provided that Metrovas S.A. and its insurance company (LaMeridional Compaa Argentina de Seguros S.A.) must pay the plaintiff 80 percent of the sums claimed. In addition, the Court ruled that the deductible of theliability insurance taken out by the insured could not be asserted against theplaintiff, in spite of several previous rulings of the Supreme Court of Justice tothe contrary.Notably, the Supreme Court of Justice has repeatedly affirmed the validity andassertion of this deductible.One of the basis for the Supreme Courts decisions is that the aggrieved party isnot privy to the insurance contract entered into between the insured and theinsurer. Thus the third party who invokes this insurance contract must confineits rights to the terms and conditions agreed on between the insured and theinsurer.However, the Court of Appeals understood that in the specific case of Saldivar,it was not bound to follow the Supreme Courts rulings. Although, in principle,national courts ought to follow the Supreme Courts doctrine, they can derogatefrom them if new arguments should arise that have not been taken into accountby the Supreme Court.The Civil Court of Appeals maintained that the Consumer Protection Law wasamended by the Argentine Congress after the Supreme Courts contrary rulings,9 Law Number 17418 of 1967. 36. ARG-12 INTERNATIONAL PRODUCT LIABILITYthat the new text of the new Consumer Protection Law was in line with theruling in a previous leading case, and that the Supreme Court had not issued anyother ruling subsequent to the amendments to the Consumer Protection Law.According to the court, these amendments had widened the concept ofconsumer to cover those who, without being a party to a consumerrelationship, use a service as end consumers and are exposed to a consumerrelationship (as in the case of the aggrieved party in Saldivar). In addition, theamendments had extended the benefits of the Consumer Protection Law to theseconsumers.Tribunal M held that a consumer relationship existed in the case, and thereforethe limited legal effects concept based on privity of contracts (ie, the SupremeCourts line of reasoning) should not be applied. It also held that the provisionsof Article 37 of the Consumer Protection Law should be applied, which setsforth that stipulations which distort the nature of the obligations or that limitliability for damage will be null and void.Product Liability LitigationFrequency of LitigationJudicial claims on product liability issues in Argentina started before theenactment of the Consumer Protection Law and its amendments. Numerouscourt decisions protecting the rights of consumers built the foundations of theprinciples later reflected in the Consumer Protection Law.The rate of judicial claims on product liability issues in Argentina has increasedsince the Consumer Protection Law came into force. This rate was significantlyincreased by class actions filed by consumer organizations, based on theinclusion of collective rights in the Argentine legal regime. Analysts claim that,currently, consumers claims in Argentine courts are as common as otherjudicial claims. The Argentine legal regime contemplates two categories ofdamages that can be indemnified: material damages and non-patrimonialdamages.Material DamagesIn GeneralMaterial damages include direct damages (the direct financial loss suffered),compensation for lost profits (the profits lost by the injured party), compensationfor lost chances (the loss of a potential opportunity), and litigation costs.Non-Patrimonial DamagesNon-patrimonial damages are subject to compensation. The compensationrelates to the pain and suffering of the victim, including physical pain andsuffering, and generally to any type of suffering not related to financial losses. 37. ARGENTINA ARG-13Non-patrimonial damages are for aesthetic injury (including anatomic andfunctional anomalies, permanent or temporary, that are externally visible) anddisease (including the recovery of medical expenses and related costs).Lawyers FeesLawyers fees are generally established based on the work done by the lawyer.Law Number 21839 on professional fees provides minimum rates that rangefrom 11 per cent to 20 per cent of the amount claimed by the plaintiff inpatrimonial claims.In addition, lawyers generally agree to a percentage to be paid by the client onwinning the case, based on the amount of damages awarded by the court.ConclusionThis analysis of the legal regime on consumers and users protection inArgentina leads to the conclusion that the regime has evolved during recentyears, so as to favor the rights of consumers and users and increase the tools forclaims.Together with these developments in the legal regime, consumers and users arenow better informed about their rights, and the rate of claims on consumerrelations has seen a corresponding increase.Surveys indicate that two out of 10 Argentines claim to have lodged a complaintagainst sellers of products or providers of services. This number increases inpeople of high socio-economic status (30 per cent) and within the City ofBuenos Aires (28 per cent).In general, consumers and users believe that their rights are not being respectedby the sellers of products or providers of services, which is a discouragingscenario that should demand the attention of the commercial sector. 38. AustriaIntroduction ............................................................................................ AUT-1Historical Evolution ............................................................................... AUT-2Purpose of the PHG................................................................................ AUT-4Product and Defective Product............................................................... AUT-5 Product ..................................................................................... AUT-5 Defect....................................................................................... AUT-6Warning and Recall Obligations ............................................................ AUT-8Defenses Contributory Fault ..................................................................AUT-8Assumption of Risk .................................................................AUT-9Product Misuse ........................................................................ AUT-9State-of-the-Art Defense .......................................................... AUT-10Binding, Regulations, Directions and Orders ..........................AUT-10Defect as Proximate Cause .................................................................. AUT-10Liable Persons General .......................................................................... AUT-11 Manufacturer ........................................................................... AUT-11 Importer ................................................................................... AUT-12 Merchants ................................................................................ AUT-13 Licensor and Licensee .............................................................AUT-14Joint and Several Liability ..................................................................... AUT-14Burden of Proof...................................................................................... AUT-15Remedies ................................................................................................ AUT-16Disclaimer Clauses................................................................................. AUT-16Statutes of Limitation ............................................................................. AUT-17Liability of Corporate Successors .......................................................... AUT-18Insurance ................................................................................................ AUT-18Role of the Courts .................................................................................. AUT-19 Frequency of Litigation ........................................................... AUT-19Applicability of Austrian Law ............................................................... AUT-19Disclaimer .............................................................................................. AUT-20 39. AustriaBenedikt Spiegelfeld and Christine WallnerCHSH Cerha Hempel Spiegelfeld Hlawati Vienna, AustriaIntroductionBefore examining Austrian product liability, what is understood by product1 liability inthis 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 rulesproviding for recovery of damage or injury to human life, health or someones propertysuffered as a result of (or caused by) a defective product.These rules must be clearly distinguished from those dealing with and enforcing a sellersobligation to fulfill a contract he has entered into by transferring property (the product) inthe 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 contractenabling the buyer to sue for complete fulfillment of the contract without regard towhether such non-performance was negligent or not.2Within the broader sense of product liability as described above, we may distinguishbetween a violation of either a (general) law, on the one hand, or an agreement (contract),on the other, triggering the malfeasors liability for damage to another individuals life orhealth or to his goods (apart from the product purchased).The general liability principles and rules contained largely in the Austrian Civil Code3 of1811, as amended, cover the obligations under both of these categories. Nonetheless, weshall deal with and expose these general rules only to the extent as we deem necessary tooutline the historical evolution leading very recently to the adoption of a specific ProductLiability Act and whenever this latter Act refers to the general rules. The specific set ofrules contained in this above-mentioned Product Liability Act will be our main interestand other related issues, such as compensation awarded due to negligence in general ordue to violation of contractual obligations, will receive merely scarce consideration.1 Scholarly treatises and court opinions in Common Law countries seem to prefer the termproducts 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, thusproduct liability.2 This remedy is referred to as Gewhrleistung under Austrian law.3 Allgemeines biirgerliches Gesetzbuch (ABGB). 40. AUT-2INTERNATIONAL PRODUCT LIABILITYIn general, the PHG helps to increase the level of protection against defective products fortwo 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 andConsumer Protection Act4 (LMSVG) and the Product Safety Act5 (PSG) and, second,once these preventive measures have failed and accidents have happened, it allows toobtain redress of the producer.Historical EvolutionIn this chapter, the development in Austrian product liability law the equivalent of whichin common law is known and referred to as, the breakdown of the privity requirement,will be described.6Until 1988, product liability in Austria was mainly governed by the general principles andrules contained in the Civil Code of 1811. These entitled those who suffered damage todemand reparation of such damage from the originator or author of the conduct causingthe 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 DefectiveProduct on 21 January 19887 (according to its German title referred to as the PHG). Underthese general principles, the fault or wrongdoing consisted of a breach of a duty imposedby law or by contract.Being consigned to these general remedies against injuries to his person or property, aplaintiff could succeed in only a very few cases. Usually the manufacturer of a productdoes not himself violate any duty imposed by law and could moreover almost never beheld liable for any misconduct of his employees. Section 1315 of the Austrian Civil Codeimposes liability on employers towards third parties only in the two cases that theemployer either employs persons incapable of or unfit for the kind of work to be executedor that the employer in fact knew that the employees 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 extensiveresponsibility of a producer or manufacturer for negligence of all persons assisting in theproduction or manufacturing process.Most of the typical product liability (related) cases, though, lack such an agreementbetween the producer and the person injured, as such agreement has generally only beenentered into between the customer and the retailer. The retailer himself very rarely couldbe charged with a violation of any duty as many or almost all defects are latent and cannot4 Lebensmittelsicherheit und Verbraucherschutzgesetz, Federal Law Gazette No 13 of 2006(Bundesgesetzblatt 13/2006).5 Produktsicherheitsgesetz 2004, Federal Law Gazette No 16 of 2005 (Bundesgesetzblatt16/2005).6 Allgemeines biirgerliches Gesetzbuch (ABGB).7 Bundesgesetz vom 21. Janner 1988 ber die Haftung fr ein fehlerhaftes Produkt(Produkthaftungsgesetz); Federal Law Gazette No 99 of 1988 (Bundesgesetzblatt 99/1988). 41. AUSTRIA AUT-3be detected in the ordinary and due course of business. In general, the law does not imposeon wholesalers or retailers the duty to loosely examine the goods purchased for mereresale. Most of the time, wholesalers and retailers would lack both technical knowledge aswell as equipment to do so. As a consequence in the case of absence of a respectiveduty a plaintiff cannot prove negligence against such a middleman merely serving asconduit.Legal scholars8 and the courts9 tried to solve these difficulties implicit in the approach andlinked to a wrong or fault by developing an interpretative concept that would protect thirdparties beyond the contract between the producer and the first wholesaler so long as aseries of contracts lead to the person ultimately suffering the damage.10 It was argued thatobligations of the manufacturer should not extend to wholesalers or retailers (withwhom a contract actually was entered into) claims for the protection of individuals againstharm to life, health and property, because these never would use the product purchased forits intended purpose but rather for mere resale. Therefore, the purpose of any obligationarising from the contract between the producer and the first wholesaler guaranteeing acertain standard of quality and freedom from defect should be to entitle the final customeror user to claim compensation.This extension of the producers contractual obligations allowed the applicability of theabove-mentioned section 1313(a) of the Civil Code between original producer and finalpurchaser of goods. Therefore, the producer could be held responsible for the breach ofduty by his assistants and, pursuant to section 1298 of the Civil Code, he had to prove theabsence of such negligence.Since not all damage can be recovered under the new PHG, such as damage to property upto 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 bydeliberate 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-partyclaims as lawful.12 By maintaining that these claims arose by operation of law and notcontract, some Austrian scholars remain opposed to this holding.Still another drawback of the theory should be mentioned: as stated above, only personswith a certain contractual linkage to the producer would have benefited. One requirementwas that the defective product was either used as a result of a chain of contracts leading topossession of the product by the person injured or that this person belonged to those8 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 amountexceeding the threshold of EUR 500. Relief sought on the grounds of the PHG accordinglywill leave the customer with a loss up to EUR 500. On the other hand, it should be stated in thiscontext that the law has not placed any cap on the possible and imaginable amount of recoveryunder the PHG. 12 SZ 51/169. 42. AUT-4 INTERNATIONAL PRODUCT LIABILITYindividuals of which the producer reasonably must have expected that they might havecontact with the product (such as the family members of the ultimate purchaser). Theinnocent bystander therefore still remained unprotected.Motivated by these considerations, along with the adoption of the Directive on productliability of the European Community on 25 July 1985 obliging all Member States of theCommunity 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 tradingconditions and avoid any bias in competition, enacted the new law (PHG) on 21 January1988 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 wasnecessary regarding: The lower not in accordance with the council directive threshold was increased fromATS 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 fordefective products of the European Parliament and of the Council, on 10 May 1999, therestriction regarding the exception of primary agriculture products and games wasremoved 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 inaccordance with the council directives on general product safety. It is to be noted that theProduct Safety Act and the Product Liability Act have a complementary function: the firstinstrument ensures that only safe products are put on the market (preventive function), andthe second instrument establishes the rules under which personal injury and damage toproperty caused by a defective product are compensated (compensational function).Purpose of the PHGSection 1 of the PHG sets forth the fundamental rule that certain groups of persons shall beliable 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 ber die Haftung fr ein fehlerhaftes Produkt(Produkthaftungsgesetz); Federal Law Gazette No 99 of 1988 (BGBl 1988/99). 14 Kundmachung des Bundeskanzlers betreffend die Rechtsvorschriften, die gleichzeitig mitdem Abkommen ber den Europischen Wirtschaftsraum, Federal Law Gazette No 917 of1993 (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). 43. AUSTRIAAUT-5 An injury of a person or harm to his health; and An injury to his tangible property.18It excludes damage to the defective product itself.Therefore, liability under the PHG does not require negligence or fault of a particularperson 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 protectedunder 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 whenoffered for purchase are commonly quoted as the justifying rationale for the extendedresponsibility. Moreover, nobody else is in a better position to reduce risks caused bydefective products than the manufacturer. Furthermore, the persons potentially liableunder the rules of the PHG would tend to and now must19 react by insuring these liabilitiesand distribute the price of the insurance ultimately among those who benefit from theimproved safety: consumers.20As already mentioned, section 15(1) of the PHG explicitly states that any provision of theCivil Code or other laws imposing liability for losses to a greater extent or with regard tofurther 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 conventionratified by EFTA states and EC Member States. Under Austrian law, this field is coveredby the Federal Act on the Liability for Nuclear Damages of 29 April 1964.21Product and Defective ProductProductPursuant 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 orhas been annexed to realty, and shall moreover include energy.Under Austrian law, the term Sache, property, comprises everything different from theperson and serving the use of humanity.23 Property will be regarded as movable if it can be 18 In German, krperliche 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 ber die Haftung nuklearer Schden; see Federal LawGazette No 117 of 1964 (Bundesgesetzblatt 117/1964), commonly referred to as theAtomhaftpflichtgesetz. 22 In German, bewegliche, krperliche Sache. 23 Civil Code, s 285. 44. AUT-6 INTERNATIONAL PRODUCT LIABILITYremoved 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 commonlyattributed to property that can be touched and seen.Accordingly, services and rights will not be regarded as tangible and therefore cannotresult in liability under the PHG. It is, for example, impossible to establish responsibilityof 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 beapplied 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 aproduct for the purpose of this provision or not. In this case, you have to distinguishbetween operating system-related software and hardware-related software as well asstandard software and individual software. Whereas mass-produced operating system-relatedsoftware and hardware-related software fall under the definition of this provision, andexist controversial opinions in respect to standard software. Individual software pro-grams, however, cannot be viewed as products under the PHG.26For any reader from a common law country it should be noted that Austrian courts inview of such exact wording in recent legislation will almost certainly not extend theapplicability of the PHG for teleological reasons of whatever nature in cases where onemight otherwise see fit to do so.DefectPursuant to section 5(1) of the PHG, a product shall be regarded as defective if it does notprovide 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 ofcommon 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 withextraordinarily high or low expectations.A product falling within the realm of this standard set by the expectations of an ordinaryconsumer or user will not be regarded as defective and will therefore not trigger liabilityunder the PHG. 24 Civil Code, s 293. 25 Civil Code, s 292. 26 Posch in Schwimann, ABGB, s 4 PHG; 10. 45. AUSTRIAAUT-7Hinged on the concept of safety expectations, the concept of the PHG allows certainconsideration of inevitable defectiveness as a result of the production process and state oftechnology. 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 availablehuman knowledge.The term presentation of the product means any activity of a person subject to liabilitythat introduces the product to the public or the individual user,27 such as advertisement,contractual guarantees, operating instructions, users manuals and other descriptivematerials such as plans and brochures.Up to a certain point, a risk unavoidably threatening a consumers safety would notamount 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 theconsumers attention to the inherent dangers. The greater, less obvious and less detectablethese 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 certainlimit (to be set ultimately by courts) must not be released into the stream of commerce atall, even if the defectiveness may be unavoidable at a certain point of time and technicalknowledge, notwithstanding warning and instructions. Such products must be recon-structed and improved, until at least the occurrence of serious damage (such as harm to anindividuals 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 actualuse 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.28Number 3 of section 5(1), on the one hand, guarantees that technical knowledge whichwas not available at the time of the release of the product into the stream of commerce, butrather was accomplished and acquired by scientific progress and research afterwards,shall not render a previously marketed product defective and, thus, on the other, seeks toavoid any restraints on technical improvement and innovative efforts.29The 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 onthe various types of defectiveness, it is not necessary to further distinguish betweenthem.30 27 Fitz Purtscheller, in: Fitz Purtscheller Reindl, Produkthaftung, 1988, 64; We

International Product Liability

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