European Product Liability
A Comparative Study of "Development Risks" in English and German Law
A thesis submitted to the University of Manchester for the degree of Doctor of Philosophy in the Faculty of Humanities.
2019
Marcus J. Pilgerstorfer
School of Law Faculty of Humanities
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Abstract
This thesis focuses upon one of the major areas of controversy in the European Product Liability Directive: the so-called ‘development risks defence’ (article 7(e)). That defence exculpates a producer from liability where he can prove “that the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered”. Most member states have implemented the defence and it is regularly identified as being part of the balance between consumer and producer interests forming the ‘fair apportionment of risk’ which the PLD has set. The wording of the defence, whilst at first seductively simple, upon examination gives rise to many questions of interpretation. The answers to these will not only determine the true scope of the defence, but in many ways the strictness of the liability imposed by the PLD itself.
This study explores these questions using a comparative law lens and by examining how two particular jurisdictions – (i) England and Wales, and (ii) Germany – have implemented and applied the defence and the related concept of defect. Following a brief introduction (chapter 1), and outline of the methods employed (chapter 2), I examine the concepts of defect and DRD as a matter of EU law (chapter 3). After considering the justifications for strict product liability (chapter 4), I then examine the implementation in England (chapter 5) and Germany (chapter 6). In chapter 7, I explore the similarities and divergences in the regimes and conclude that whilst there are significant differences in methodological approach, as a matter of substance a strict application of the defence is achieved in both. I also offer my own observations as to the true scope of the harmonising EU norms, arguing that the DRD is properly regarded as a narrow escape route from liability imposed by the directive and that considerations of reasonableness ought not to affect the assessment of discoverability. Further, the characterisation of ‘defect’ for the purpose of the DRD is rightly identified by the German courts as the underlying risk of harm, rather than the approach apparent from the most recent English case of Gee v DePuy.
The law is stated as at 1 August 2018, but where possible subsequent developments have been included.
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Declaration and Copyright Notice
Declaration No portion of the work referred to in the thesis has been submitted in support of an application for another degree or qualification of this or any other university or other institute of learning.
Copyright Notice (i) The author of this thesis (including any appendices and/or schedules to this thesis) owns certain copyright or related rights in it (the “Copyright”) and s/he has given The University of Manchester certain rights to use such Copyright, including for administrative purposes. (ii) Copies of this thesis, either in full or in extracts and whether in hard or electronic copy, may be made only in accordance with the Copyright, Designs and Patents Act 1988 (as amended) and regulations issued under it or, where appropriate, in accordance with licensing agreements which the University has from time to time. This page must form part of any such copies made. (iii) The ownership of certain Copyright, patents, designs, trademarks and other intellectual property (“the Intellectual Property”) and any reproductions of copyright works in the thesis, for example graphs and tables (“Reproductions”), which may be described in this thesis, may not be owned by the author and may be owned by third parties. Such Intellectual Property and Reproductions cannot and must not be made available for use without the prior written permission of the owner(s) of the relevant Intellectual Property and/or Reproductions. (iv) Further information on the conditions under which disclosure, publication and commercialisation of this thesis, the Copyright and any Intellectual Property and/or Reproductions described in it may take place is available in the University IP Policy (see http://documents.manchester.ac.uk/DocuInfo.aspx?DocID=24420), in any relevant Thesis restriction declarations deposited in the University Library, The University Library’s regulations (see http://www.library.manchester.ac.uk/ about/regulations/) and in The University’s policy on Presentation of Theses.
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Acknowledgements
There are many people to whom I am grateful and without whose influence, help and assistance I could not have completed this work.
First, and principally, I must thank my supervisors. Over the lifetime of this project I have been very pleased to have had input and unwavering support and encouragement from Annette Nordhausen-Scholes, Dimitrios Doukas and Geraint Howells. I am also grateful to the examiners of this work – Ken Oliphant, Peter Rott and Eleanor Aspey – for their helpful comments and discussion. All errors remain, of course, my own.
I would also like to record my appreciation to Simon Whittaker (who first sparked my interest in this field as an undergraduate), and to the many distinguished barristers and solicitors with whom I have enjoyed working on product cases. Special thanks go to the following who have helped develop my thinking in this area over the years: Barry Cotter, Charles Pugh, Christopher Makey, Robin Oppenheim, Hugh Preston and Duncan Fairgrieve.
Combining this study with practice as a barrister has presented its challenges and I am grateful to colleagues and particularly my clerks at Chambers for assisting with making it happen. I am also very grateful to Barnaby Moore for his proof-reading assistance.
Finally, but importantly, I must thank my wife Alex and children Joshua and Liesl for their support and understanding whilst I have been engaged in this endeavour.
Marcus Pilgerstorfer 10 June 2019
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Table of Contents
ABSTRACT ...... 2 DECLARATION AND COPYRIGHT NOTICE ...... 3 ACKNOWLEDGEMENTS ...... 4 TABLE OF CONTENTS ...... 5 BIBLIOGRAPHY ...... 10
TABLE OF STATUTORY MATERIAL ...... 10
TABLE OF CASES ...... 12
TABLE OF OTHER REFERENCES ...... 17
LIST OF ABBREVIATIONS ...... 29 1 INTRODUCTION ...... 30
1.1 THE PLD AND THE DEVELOPMENT RISKS DEFENCE...... 30
1.2 A TALE OF TWO JURISDICTIONS...... 32
1.3 AIMS OF THIS STUDY ...... 34
1.4 OVERVIEW OF CHAPTERS ...... 35
1.5 BREXIT ...... 35
2 COMPARATIVE LAW IN THE PRESENT WORK ...... 38
2.1 THEORETICAL APPROACHES TO COMPARATIVE LAW ...... 39
2.2 PRACTICAL COMPARATIVE LAW...... 42
2.3 REFINING A METHOD FOR THE PRESENT STUDY ...... 49
2.4 CONCLUSIONS ...... 50
3 THE PRODUCT LIABILITY DIRECTIVE ...... 51
3.1 INTRODUCTION ...... 51
3.2 BACKGROUND AND HISTORY ...... 51 3.2.1 Background ...... 51 3.2.2 Influences from Across the Atlantic ...... 52 3.2.2.1 The American Experience ...... 52 3.2.2.2 Influence on Europe ...... 55 3.2.3 Thalidomide and other Scandals ...... 56
3.3 EUROPEAN CONVENTION ON PRODUCTS LIABILITY ...... 57 3.3.1 The Work Leading to the Convention ...... 58 3.3.2 The Adopted Convention ...... 59 3.3.3 The Convention’s Eclipse ...... 60
3.4 FRAMING THE DIRECTIVE ...... 61
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3.4.1 The Legal Framework ...... 61 3.4.2 The Initial Proposal: September 1976 ...... 63 3.4.3 Institutional Reaction to the Proposal 1977-1979 ...... 64 3.4.4 The Amended Proposal: October 1979 ...... 67 3.4.5 The Negotiation Period: 1979-1984 ...... 68 3.4.6 The relevance of the travaux préparatoires ...... 68
3.5 THE ADOPTED DIRECTIVE ...... 69 3.5.1 Preliminary Remarks ...... 70 3.5.1.1 The Fair Apportionment of Risks ...... 70 3.5.1.2 The Aim of Consumer Protection ...... 71 3.5.1.3 An Effective, Simplified Remedy ...... 72 3.5.1.4 Insurance ...... 73 3.5.1.5 Harmonisation and its use as a guide to Interpretation ...... 73 3.5.2 Basic Structure ...... 75 3.5.3 Defectiveness ...... 78 3.5.3.1 Generally ...... 78 3.5.3.2 Relevant Circumstances ...... 82 3.5.3.2.1 Avoidability and Risk-Utility ...... 82 3.5.3.2.2 Regulatory Compliance ...... 84 3.5.4 Development Risks Defence ...... 85 3.5.4.1 An Optional Defence ...... 85 3.5.4.2 Court Guidance ...... 86 3.5.4.3 The Academic Debate Thus Far ...... 89 3.6 CONCLUSION ...... 92
4 STRICT V. FAULT-BASED LIABILITY: A THEORETICAL FRAMEWORK ...... 93
4.1 INTRODUCTION ...... 93
4.2 THE PROBLEM OF DEFINITION ...... 93
4.3 FROM CATEGORIES TO A CONTINUUM ...... 95
4.4 SYSTEM STRICTNESS ...... 96
4.5 JUSTIFICATIONS FOR STRICT LIABILITY ...... 97
4.6 CONCLUSIONS ...... 104
5 ENGLAND AND WALES...... 105
5.1 INTRODUCTION ...... 105
5.2 OVERVIEW OF THE CPA...... 106
5.3 THE WIDER ENGLISH PRODUCT LIABILITY CONTEXT ...... 109 5.3.1 Contract ...... 109 5.3.2 Negligence ...... 112 5.3.3 Introduction of the CPA ...... 114 6
5.4 THE CPA AS APPLIED IN THE COURTS ...... 115 5.4.1 CPA as European Law...... 115 5.4.2 Defect ...... 119 5.4.2.1 Features of the General Approach ...... 119 5.4.2.1.1 Safety Expectations ...... 119 5.4.2.1.2 Categories of Case ...... 121 5.4.2.1.3 Timing of the Assessment ...... 124 5.4.2.1.4 Burden of Proving Defect and Definitional Issues ...... 125 5.4.2.2 Relevant Circumstances ...... 129 5.4.2.2.1 Listed factors and ‘all the circumstances’ ...... 129 5.4.2.2.2 Avoidability and Risks v Benefits ...... 131 5.4.2.2.3 Regulatory Compliance ...... 135 5.4.2.2.4 Learned Intermediary ...... 137 5.4.2.3 Conclusion ...... 138 5.4.3 Development Risks ...... 139 5.4.3.1 Wording of s4(1)(e) CPA ...... 139 5.4.3.2 Application in the Courts ...... 143 5.4.3.2.1 Relationship with the Defectiveness Enquiry ...... 143 5.4.3.2.2 The Relevant Time ...... 144 5.4.3.2.3 Knowledge ...... 145 5.4.3.2.4 Characterisation of the ‘defect’ to be discovered ...... 147 5.4.3.2.5 Discoverability ...... 149 5.4.3.3 Conclusion ...... 151
6 GERMANY ...... 152
6.1 INTRODUCTION ...... 152
6.2 OVERVIEW OF THE PRODHAFTG AND AMG ...... 153 6.2.1 ProdHaftG ...... 154 6.2.2 AMG ...... 157 6.2.3 The AMG and the PLD ...... 159
6.3 THE WIDER GERMAN PRODUCT LIABILITY CONTEXT ...... 160 6.3.1 Contract ...... 161 6.3.2 General Tort Law ...... 162
6.4 THE PRODHAFTG AS APPLIED IN THE COURTS ...... 168 6.4.1 General Approach to the ProdHaftG ...... 168 6.4.2 Defect ...... 171 6.4.2.1 Features of the General Approach ...... 171 6.4.2.1.1 Safety Expectations ...... 171 6.4.2.1.2 Categories of Case ...... 173 6.4.2.1.3 Timing of the Assessment ...... 177 6.4.2.1.4 Burden of Proving Defect and Definitional Issues ...... 177 7
6.4.2.2 Relevant Circumstances ...... 181 6.4.2.2.1 Listed factors and ‘all the circumstances’ ...... 181 6.4.2.2.2 Avoidability and Risks v Benefits ...... 183 6.4.2.2.3 Regulatory Compliance ...... 185 6.4.2.2.4 Learned Intermediary ...... 186 6.4.2.3 Conclusion ...... 188 6.4.3 Development Risks ...... 188 6.4.3.1 Wording of §1(2)(5) ProdHaftG ...... 188 6.4.3.2 Conceptual Issues and some Terminology ...... 190 6.4.3.3 Application in the Courts ...... 192 6.4.3.3.1 The Influence of §823(1) BGB and Categorisation ...... 192 6.4.3.3.2 Relationship with Defect ...... 194 6.4.3.3.3 The Relevant Time ...... 195 6.4.3.3.4 Knowledge ...... 195 6.4.3.3.5 Characterisation of the ‘defect’ to be discovered ...... 198 6.4.3.3.6 Discoverability ...... 201 6.4.3.4 Conclusion ...... 202 6.5 THE AMG AS APPLIED IN THE COURTS ...... 203 6.5.1 Route 1: harmful effects in excess of that which is acceptable...... 203 6.5.2 Route 2: damage due to labelling/information which does not reflect medical knowledge ...... 204 6.5.3 Development Risks ...... 204 6.5.4 Conclusions ...... 206
7 ANALYSIS AND CONCLUSIONS ...... 207
7.1 INTRODUCTION ...... 207
7.2 RECEPTION OF THE PLD INTO NATIONAL LAW ...... 208
7.3 UNCERTAINTY AND HARMONISATION ...... 209
7.4 DEFECT ...... 213 7.4.1 Conclusions from the Two Jurisdictions ...... 213 7.4.1.1 The Defectiveness Analysis ...... 213 7.4.1.2 The Relevant Circumstances ...... 215 7.4.1.3 The Concept of Defect ...... 216 7.4.2 Assessment ...... 217 7.4.2.1.1 Conceptualisation of defect ...... 217 7.4.2.1.2 From Categories to Comparison ...... 218 7.4.2.1.3 Circumstances? ...... 219 7.5 DEVELOPMENT RISKS ...... 222 7.5.1 Scope of Implementation and Harmonisation ...... 222 7.5.2 Application of the Defence ...... 223 7.5.2.1 Similarities ...... 224 7.5.2.2 Differences ...... 225 8
7.5.3 Assessment ...... 227 7.5.3.1 General ...... 227 7.5.3.2 Discoverability ...... 227 7.5.3.3 What must be Discovered? ...... 229 7.6 FINAL CONCLUSIONS ...... 230
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Bibliography
Table of Statutory Material
Treaty establishing the European Economic Community (Treaty of Rome) 1957 Restatement (Second) of Torts (1965) Consumer Credit Act 1974 Arzneimittelgesetz in der Fassung der Bekanntmachung vom 12. Dezember 2005 (BGBl. I S. 3394) European Convention on Products Liability in Regard to Personal Injury and Death (European Treaty Series - No 91) 27 January 1977 Haftpflichtgesetz vom 4. Januar 1978 (BGBl. I S. 145) Sale of Goods Act 1979 Limitation Act 1980 Supply of Goods and Services Act 1982 Council Directive of 25 July 1985 concerning liability for defective products (85/374/EEC) Official Journal L 210/29 of 7.8.85 Single European Act 1986 Official Journal L 169 of 29.6.1987 Consumer Protection Act 1987 Produkthaftungsgesetz vom 15. Dezember 1989 (BGBl. I S. 2198) Burgerlijk Wetboek (Dutch Civil Code) 1992 Treaty of European Union 1992 (the Maastrict Treaty) Official Journal C 191 of 29.7.1992 Gentechnikgesetz in der Fassung der Bekanntmachung vom 16. Dezember 1993 (BGBl. I S. 2066) Spanish Law of 6 July 1994 on civil liability for damage caused by defective products (No 22/94) Common Sense Product Liability Legal Reform Act 1996 HR 956 (104th Congress) Civil Procedure Rules 1998 (SI 1998/3132) French Civil Code, Title IV concerning Liability for Defective Products (Provisions inserted by Law No 98-389 of 19 May 1998) Restatement (Third) of Torts: Product Liability (1998) Contracts (Rights of Third Parties) Act 1999 Directive of the European Parliament and of the Council of 10 May 1999 amending Council Directive 85/374/EEC on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (1999/34/EC) Official Journal L 141/20 of 4.6.1999 Directive of the European Parliament and of the Council on certain aspects of the sale of consumer goods and associated guarantees (1999/44/EC) Regulation (EC) No 1206/2001 on the taking of evidence in civil or commercial matters OJ L 174/1 of 27.6.2001 Bürgerliches Gesetzbuch in der Fassung der Bekanntmachung vom 2. Januar 2002 (BGBl. I S. 42, 2909; 2003 I S. 738) Medizinproduktegesetz vom 7. August 2002 (BGBl. I S. 3146) Zweites Schadensersatzrechtsänderungsgesetz vom 19. Juli 2002 (BGBl. I S. 3394)
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Produktsicherheitsgesetz vom 8. November 2011 (BGBl. I S. 2178, 2179; 2012 I S. 131) TFEU OJ C 326/1 of 26.10.2012 Consumer Rights Act 2015 European Union (Notification of Withdrawal) Act 2017 European Union (Withdrawal) Act 2018 European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) Regulations 2019 (SI 2019/718) European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) (No. 2) Regulations 2019 (SI 2019/859)
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Table of Cases
Winterbottom v Wright (1883) 10 M & W 109 (Exch) Rylands v Fletcher (1865) 3 H&C 774 (Exch) Preist v Last [1903] KB 148 (CA) MacPherson v Buick Motor Co (1916) 111 NE 1050 (New York Court of Appeals) Donoghue v Stevenson [1932] AC 562 (Scot) (HL) Brown v Cotterill (1934) 51 TLR 21 Malfroot v Noxal Ltd (1935) 51 TLR 551 Grant v Australian Knitting Mills Ltd [1936] AC 85 (PC) Howard v Furness Houlder Argentine Lines Ltd [1936] 2 All ER 781 Barnes v Irwell Valley Water Board [1939] 1 KB 21 Stennett v Hancock & Peters [1939] 2 All ER 578 Conway v O'Brien (1940) 111 F.2d 611 (Court of Appeals 2nd Circuit) Watson v Buckley, Osborne, Garrett & Co [1940] 1 All ER 174 Hazeldine v CA Daw & Son Ltd [1941] 2 KB 343 Glasgow Corporation v Muir [1943] AC 448 Escola v Coca Cola Bottling Company of Fresno (1944) 24 Cal. 2d 453 (California Supreme Court) Bolton v Stone [1951] AC 850 Paris v Stepney Borough Council [1951] AC 367 Roe v Ministry of Health [1954] 2 QB 66 Algera & Others v Common Assembly of the ECSC (Joined Cases 7/56, 3/57, 7/57) [1957] ECR 39 (CJEU) Bolam v Friern Hospital Management Committee [1957] 2 All ER 118 Cooling Machine (Urteil vom 18.10.1960 VI ZR 8/60) VersR 1960, 1095 (BGH) Henningsen v Bloomfield Motors Inc (1960) 32 NJ 358 (Supreme Court of New Jersey) Greenman v Yubba Power Products Inc (1963) 377 P.2d 897 (Supreme Court of California) Sharpe v ET Sweeting & Sons Ltd [1963] 1 WLR 665 Fisher v Harrods Ltd [1966] 1 Lloyd's Reports 500 Chicken Pest (Urteil vom 26.11.1968 VI ZR 212/66) BGHZ 51, 91 (BGH) Diesel Fuel (Urteil vom 25.9.1968 VIII ZR 108/66) NJW 1968, 2238 (BGH) Griffiths v Arch Engineering Company (Newport) [1968] 3 All ER 217 Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 (HL) Nettleship v Weston [1971] QB 691 Vacwell Engineering Company v BDH Chemicals [1971] 1 QB 88 Nold v Commission (Case 4-73) [1974] ECR 491 (CJEU) Expansion Coupling (Urteil vom 3.6.1975 VI ZR 192/73) NJW 1975, 1827 (BGH) Floating Switch (Urteil vom 24.11.1976 VIII ZR 137/75) BGHZ 67, 359 (BGH) 12
Ministere Public v Vincent Auer (Case 136/78) [1979] 2 CMLR 373 (CJEU) Folding Bicycle (Urteil vom 11.12.1979 VI ZR 141/78) NJW 1980, 1219 (BGH) M v Commission (Case 155/78) [1980] ECR 1797 (CJEU) Benomyl (Urteil vom 17.3.1981 VI ZR 286/78) BGHZ 80, 199 (BGH) Derosal (Urteil vom 17.3.1981 VI ZR 191/79 (Celle)) BGHZ 80, 186 (BGH) Independent Broadcasting Authority v EMI Electronics Ltd [1981] 14 BLR 1 (HL) Infusion Liquid (Urteil vom 3.11.1981 VI ZR 119/80) NJW 1982 699 (BGH) Lemonade Bottle (Urteil vom 7.6.1988 VI ZR 91/87) BGZH 104, 323 (BGH) Srl CILFIT and Lanificio di Gavardo SpA v Ministry of Health (Case 283/81) [1982] ECR 3415 (CJEU) Vehicle Lift (Urteil vom 18.1.1983 VI ZR 270/80) VersR 1983, 346 (BGH) Chisel (Urteil vom 17.1.1984 VI ZR 35/83) VersR 1984, 270 (BGH) Feldman v Lederle Laboratories (1984) 479 A.2d 374 (New Jersey Supreme Court) Re the Business Transfer Directive: EC Commission v Belgium (Case 237/84) [1988] 2 CMLR 865 (CJEU) Wormell v RHM Agricultural (East) Limited [1987] 1 WLR 1091 (CA) Brown v Superior Court (1988) 751 P.2d 470 (Supreme Court of California) Fish Food (Urteil vom 25.10.1988 VI ZR 344/87) NJW 1989, 707 (BGH) Harvester (Urteil vom 16.8.1988 4 U 268/87) VersR 1989, 1158 (OLG Düsseldorf) Forsikrings Vesta v Butcher [1989] AC 852 (CA) Horse Box (Urteil vom 17.10.1989 VI ZR 258/88) NJW 1990, 906 (BGH) Pickstone v Freemans Plc [1989] AC 66 (HL) Kemp v Miller (1990) 453 NW.2d 872 (Wisconsin Supreme Court) Litster v Forth Dry Dock & Engineering Co Ltd [1990] 1 AC 546 (HL) Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C-106/89) [1992] 1 CMLR 305 (CJEU) Child Tea I (Urteil vom 12.11.1991 VI ZR 7/91 (Frankfurt a.M.)) BGHZ 116, 60 (BGH) R v Immigration Appeal Tribunal ex p Antonissen (Case C-292/89) [1991] 2 CMLR 373 (CJEU) Francovich and Others v Italian Republic (Cases C-6/90 and C-9/90) [1991] ECR I- 5357 (CJEU) Sparking Water Bottle I (Urteil vom 8.12.1992 VI ZR 24/92) NJW 1993, 528 (BGH) Wedding Breakfast (Urteil vom. 19.11.91 VI ZR 171/91) NJW 1992, 1039 (BGH) Handlebar (Urteil vom 8.6.1993 14 U 116/92) VersR 1994, 1118 (OLG Frankfurt a.M.) Medical Product (Urteil vom 17.9.1993 20 U 26/93) VersR 1994, 177 (OLG Köln) Cambridge Water Co v Eastern Counties Leather plc [1994] 2 AC 264 Child Tea II (Urteil vom 11.1.1994 VI ZR 41/93) NJW 1994, 932 (BGH) Mineral Water Bottle (Urteil vom 21/3/1994 32 U 94/93) (OLG Hamm) Blackcurrant Cake (Urteil vom 16.2.1995 1 U 31/94) NJW 1995, 2498 (OLG Frankfurt) Brooks v Beech Aircraft Corp (1995) 902 P.2d 54 (New Mexico Supreme Court) Carpet (Urteil vom 30.1.1995 23 O 634/93) NJW-RR 1996, 501 (KG Berlin)
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Henderson v Merrett Syndicates [1995] 2 AC 145 (HL) Sparkling Water Bottle II (Urteil vom 9.5.1995 VI ZR 158/94 (Hamm)) NJW 1995, 2162 (BGH) White v Jones [1995] 2 AC 207 (HL) Brasserie du Pêcheur SA v Federal Republic of Germany; R v Secretary of State for Transport, ex parte Factortame Ltd (Joined Cases C-46/93, C-48/93) [1996] ECR I- 1029 (CJEU) Re Human Growth Hormone Litigation Unreported 19 July 1996 (QBD) Societe Bautiaa v Directeur des Services Fiscaux des Landes (Case C-197/94, joined with Case C- 252/94) [1996] ECR I- 505 (CJEU) Wood Lacquer (Urteil vom 11.6.1996 VI ZR 202/95) NJW 1996, 2507 (BGH) Bolitho v City and Hackney Health Authority [1997] 4 All ER 771 (HL) Commission v United Kingdom (Case C-300/95) [1997] 3 CMLR 923 (CJEU) Amalgum Fillings (Urteil vom 14.10.1998 4 U 89/95) (OLG Schleswig) Carroll v Fearon [1998] PIQR P416 (CA) Standard of Proof (Urteil vom 18.6.1998 IX ZR 311/95) NJW 1998, 2969 (BGH) Child Tea III (Urteil vom 31.1.1995 VI ZR 27/94) NJW 1995, 1286 (BGH) Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 (HL) Worsley v Tambrands Ltd [2000] PIQR P95 (QBD) Abouzaid v Mothercare (UK) Limited (2000) Unreported Case No. B3/2000/2273 (CA) Foster v Biosil [2000] 59 BMLR 178 (London Central County Court) Foster v Zott GmbH & Co (2000) Unreported B2/1999/1069 (CA) Log Flume (Urteil vom 19.1.2000 3 U 10/99) NJW-RR 2001, 1248 (OLG Hamm) McFarlane v Tayside Health Board [2000] 2 AC 59 (HL) Ministerio Publico v Epson Europe BV [2002] 3 CMLR 4 (CJEU) Richardson v London Rubber Company Products Ltd [2000] Lloyd's Law Reports 280 (QBD) Bowden v Tuffnells Parcels Express Ltd (Case C-133/10) [2001] ECR I- 7031 (CJEU) Council v Hautala (Case C-353-99) [2001] ECR I- 9565 (CJEU) A & others v National Blood Authority [2001] 3 All ER 289 (QBD) Practice Direction (Citation of Authorities) [2001] 1 WLR 1001 (CA) Veedfald v Arhus Amtskommune (Case C-203/99) [2003] 1 CMLR 41 (CJEU) B & others v McDonald's Restaurants Ltd [2002] EWHC 490 (QBD) Chocolate Bar (Urteil vom 20.12.2002 14 U 99/02) (OLG Düsseldorf) Coffee Machine Case (2002) 10 Ob 98/02p (Austrian Supreme Court) Commission v French Republic (Case C-52/00) [2002] ECR I- 3827 (CJEU) Commission v Hellenic Republic (Case C-154/00) [2002] ECR I- 3879 (CJEU) Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 (HL) González Sanchez v Medicina Asturiana SA (case C-183/00) [2002] ECR I- 3901 (CJEU) XYZ v Schering Health Care Ltd [2002] EWHC 1420 (QBD) Bicycle (Urteil vom 23.5.1996 7 U 1317/95) VersR 1998, 59 (OLG Dresden)
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Hepatitis B Vaccination (Urteil vom 18.6.2003 3 U 99/02) NJW-RR 2003, 1382 (OLG Hamm) Johnson v Unisys [2003] 1 AC 518 (HL) Ghaidan v Godin-Mendoza [2004] 2 AC 557 (HL) Marcic v Thames Water Utilities [2004] 2 AC 42 (HL) Pfeiffer & Others v Deutsches Rotes Kreuz (Joined cases C-397/01 to C-304/01) [2005] 1 CMLR 44 (CJEU) Eastwood v Magnox [2005] 1 AC 503 (HL) Commission v French Republic (Case C-177/04) [2006] ECR-I 2479 (CJEU) O'Byrne v Sanofi Pasteur MSD Limited (Case C-127/04) [2006] 2 CMLR 24 (CJEU) Pollard v Tesco Stores Ltd [2006] EWCA Civ 393 (CA) Revenue and Customs Commissioners v IDT Card Services Ireland Ltd [2006] EWCA Civ 29 (CA) Skov Æg v Bilka Lavprisvarehus A/S (Case C-402/03) [2006] 2 CMLR 16 (CJEU) Castor Meal (Urteil vom 16.3.2007 I-17 U 11/06) NJW-RR 2008, 411 (OLG Düsseldorf) Commission v Denmark (Case C-327/05) [2007] ECR-I 93 (CJEU) Dehumidifier (Urteil vom 10.12.2007 8 O 27/07) VersR 2009, 1129 (LG Verden) Dishwasher (Urteil vom 19.10.2007 17 U 43/07) NJW-RR 2008, 691 (OLG Schleswig) EOC v Secretary of State for Trade and Industry [2007] 2 CMLR 49 (QBD, Admin) Re Seamless Steel tubes Cartel (Joined Cases C-403/04; C-405/04) [2007] 4 CMLR 16 (CJEU) 01051 Telecom GmbH v Deutsche Telekom AG (Case C-306/06) [2008] ECR I- 01923 (CJEU) Care Beds (Urteil vom 16.12.2008 VI ZR 170/07) NJW 2009, 1080 (BGH) Coleman v Attridge Law (Case C-303/06) [2008] ICR 1128 (CJEU) Hauptzollamt Hamburg-Jonas v Josef Vosding Schlacht-, Kühl- und Zerlegebetrieb GmbH & Co (Case C-278/07) [2009] ECR I- 457 (CJEU) Ide v ATB Sales Limited [2008] EWCA Civ 424 (CA) OB v Aventis Pasteur SA [2008] 3 CMLR 10 (HL) Vioxx (Urteil vom 1.7.2008 VI ZR 287/07) NJW 2008, 2994 (BGH) Airbag (Urteil vom 16.6.2009 VI ZR 107/08) NJW 2009, 2952 (BGH) Aventis Pasteur SA v OB (Case C-358/08) [2010] 2 CMLR 16 (CJEU) Cherry Cake (Urteil vom 17.3.2009 VI ZR 176/08) NJW 2009. 1669 (BGH) Monro v Revenue and Customs Commissioners [2009] Ch 69 (CA) Moteurs Leroy Somer v Dalkia France (Case C-285/08) [2009] ECR I- 04733 (CJEU) Webster v JG Pears & Others [2009] EWHC 1070 (Comm) (HC) EBR Attridge Law LLP v Coleman [2010] 1 CMLR 28 (EAT) O'Byrne v Aventis Pasteur SA [2010] 3 CMLR 35 (SC) Sienkiewicz v Greif (UK) Ltd [2010] QB 370 (CA) Centre hospitalier universitaire de Besançon v Dutrueux (Case C-495/10) [2011] ECR I- 14155 (CJEU) Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229 (SC)
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Telescopic Nails (Urteil vom 3.8.2011 1 U 316/10 -89) MPR 2011, 156 (OLG Saarbrücken) Ceramic Hip (Urteil vom 4.4.2012 I-5 U 99/11) MPR 2012, 99 (OLG Köln) Edwards v Chesterfield [2012] 2 AC 22 (SC) Opel Astra (Urteil vom 24.4.2012 11 U 123/11) (OLG Schleswig) Window Gluing Machine (Urteil vom 10.4.2012 26 O 466/10) NJW-RR 2012, 1169 (LG Stuttgart) ICD I (Urteil vom 30.7.2013 VI ZR 327/12) (BGH) Levemir I (Urteil vom 6.5.2013 VI ZR 328/11) (BGH) Pacemaker I (Urteil vom 30.7.2013 VI ZR 284/12) VersR 2013, 1450 (BGH) Undersink Water Heater (Urteil vom 5.2.2013 VI ZR 1/12) NJW 2013, 1302 (BGH) Electricity (Urteil vom 25.2.2014 VI ZR 144/13) (BGH) Hainsworth v Ministry of Defence [2014] 3 CMLR 43 (CA) Hufford v Samsung Electronics (UK) Ltd [2014] EWHC 2956 (TCC) Novo Nordisk Pharma GmbH v S (Case C-310/13) [2014] ECR 0 (CJEU) Swift v Robertson [2014] 1 WLR 3438 (SC) ASR-Hip (Urteil vom 19.8.2015 5 O 184/13) (LG Siegen) Boston Scientific Medizintechnik GmbH v AOK Sachsen-Anhalt (Case C-503/13, 504/13) [2015] 3 CMLR 173 (CJEU) ICD II (Urteil vom 9.6.2015 VI ZR 327/12) (BGH) Levemir II (Urteil vom 12.5.2015 VI ZR 328/11) (BGH) Pacemaker II (Urteil vom 9.6.2015 VI ZR 284/12) (BGH) Rich v Hull and East Yorkshire Hospitals NHS Trust [2016] Med LR 33 (QBD) Varicon-Hip (Urteil vom 28.8.2015 4 U 189/11) (KG Berlin) Silage (Urteil vom 2.11.2016 21 U 14/16) (OLG Hamm) Tilley v Secretary of State for Health (2016) Unrep HQ12X01255 (1 July 2016) (QBD) W3 Ltd v Easygroup Ltd [2017] EWHC 3304 (ChD) Wilkes v Depuy International Ltd [2018] QB 627 (QBD) Baker v KTM Sportmotorcycle UK Ltd [2017] EWCA Civ 378 (CA) Coal Staff Superannuation Scheme Trustees Ltd v Revenue & Customs Commissioners [2017] UKUT 137 (TCC) Metal-on-Metal Hips (Urteil vom 24.2.2017 6 O 359/10) (LG Freiburg) Przystupa v Poland [2017] EWHC 2037 (Admin) W & others v Sanofi Pasteur MSD SNC (Case C-621/15) ECLI:EU:C:2017:484 (CJEU) AH v Greater Glasgow Health Board [2018] SLT 535 (Court of Session (Outer House)) Gee & others v DePuy International Ltd [2018] EWHC 1208 (QBD) Richards v Pharmacia Ltd [2018] SLT 492 (Court of Session (Inner House)) Travelers Insurance Co Ltd v XYZ [2018] EWCA Civ 1099 (CA)
16
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P. Cane, Atiyah's Accidents, Compensation and the Law (8th edn Butterworths, 2013) S. Deakin, A. Johnston and B. Markesinis QC, Markesinis and Deakin's Tort Law (7th edn Oxford University Press, 2013) R. S. Goldberg, Medicinal Product Liability and Regulation (Hart, 2013) C. van Dam, European Tort Law (2nd edn OUP, 2013) D. Fairgrieve, G. Howells and M. Pilgerstorfer, 'The Product Liability Directive: Time to get Soft?' [2013] 4 JETL 1 M. Tsui, 'The State of the Art Defence: Defining the Australian Experience in the context of Pharmaceuticals' (2013) 13 QUT Law Review 132 T. Lenz, Produkthaftung (Beck, 2014) C. Baudenbacher, P. Speitler and B. Palmarsdottir (eds), The EEA and the EFTA Court (Hart, 2014) D. W. Stearns, 'Prosser's Bait-and-Switch: How Food Safety Was Sacrificed in the Battle for Tort's Empire' (2014) 15 Nevada Law Journal 106 B. van Leeuwen, 'PIP breast implants, the EU's new approach for goods and market surveillance by notified bodies' (2014) 5 EJRR 338 Eurostat, Largest and most specialised Member States in Manufacturing (NACE Section C) (2014)
26
H. Koziol, 'Introductory Lecture' in H. Koziol and others (eds), Product Liability: Fundamental Questions in a Comparative Perspective (De Gruyter, 2017) H. Koziol, 'Product Liability: Conclusions from a Comparative Perspective' in H. Koziol and others (eds), Product Liability: Fundamental Questions in a Comparative Perspective (De Gruyter, 2017) K. Oliphant, 'Statement from a European Common Law Perspective' in H. Koziol and others (eds), Product Liability: Fundamental Questions in a Comparative Perspective (De Gruyter, 2017) M. Pilgerstorfer, 'EU law and policy on pharmaceuticals marketing and post-market control including product liability' in T. K. Hervey, C. A. Young and L. Bishop (eds), Research Handbook in EU Health Law and Policy (Edward Elgar, 2017) W. H. Van Boom, 'Statement from a Continental European Perspective' in H. Koziol and others (eds), Product Liability: Fundamental Questions in a Comparative Perspective (De Gruyter, 2017) W. H. van Boom and others, 'Product Liability in Europe' in H. Koziol and others (eds), Product Liability: Fundamental Questions in a Comparative Perspective (De Gruyter, 2017) H. Beale (ed), Chitty on Contracts (32nd edn Common Law Library, Sweet & Maxwell, 2017) J. Eisler, 'One step forward and two steps back in product liability: the search for clarity in the identification of defects' (2017) CLJ 233 D. Fairgrieve and M. Pilgerstorfer, 'European Product Liability after Boston Scientific: An Assessment of the Court's Judgment on Defect, Damage and Causation' (2017) 28 EBLR 879 Eurostat, GDP Tables (2017)
P. Verbruggen and B. van Leeuwen, 'The Liability of Notified Bodies under the EU's New Approach: The Implications of the PIP Breast Implants Case' (2018) ELR 394 A. Antelme QC, D. Myhill and R. Sage, Pinnacle Metal on Metal Hip Group Litigation: A landmark decision in field of product liability law and definition of defect (2018)
28
List of Abbreviations
AG Advocate General AMG Arzneimittelgesetz BGB Bürgerlichesgesetzbuch (German Civil Code) BGH Bundesgerichtshof CEMA Committee on Economic and Monetary Affairs CEPHCP Committee on the Environment, Public Health and Consumer Protection CJEU Court of Justice of the European Union CPA Consumer Protection Act 1987 CRA Consumer Rights Act 2015 DRD Development risks defence EEC European Economic Community / EEC Treaty (as the context demands) ESC Economic and Social Committee EU European Union EU(W)A European Union (Withdrawal) Act 2018 GenTG Gentechnikgesetz GMO Genetically modified organism KG Kammergericht LA Limitation Act 1980 LAC Legal Affairs Committee of the European Parliament LG Landgericht OJ Official Journal of the European Union OLG Oberlandesgericht PLD Product Liability Directive ProdHaftG Produkthaftungsgesetz TFEU Treaty on the Functioning of the European Union ZPO Zivilprozessordnung
29
1 Introduction
1.1 The PLD and the Development Risks Defence
In 1985, the PLD1 introduced a new system of liability in Europe under which a producer’s liability was to be dependent upon ‘defectiveness’ rather than fault. There is a special definition of ‘defectiveness’ and liability is extinguished 10 years after a product is put into circulation. It is also subject to a number of defences and this study focuses on one of the most prominent: the so-called ‘DRD’ contained in article 7(e).
Responsibility for development risks has always been one of the most controversial features of a producer’s potential product liability. It is imposed where a producer is responsible for damage resulting from harmful properties present in the product notwithstanding that they were unknowable on the state of science and technology at the time when it was put into circulation2. At the outset of discussions over a harmonised system of product liability, both the Council of Europe and the Commission placed such risks on the shoulders of producers in order to protect consumers. However, as discussions over the directive progressed, others foreseeing adverse effects on innovation, global competitive disadvantage, and problems obtaining insurance cover demanded that this liability be excluded. Various formulations of a defence were considered. The emerging compromise was article 7(e) which required a producer to prove that:
“…the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered”.
As I have identified elsewhere with Professor Howells3, a number of questions arise from this seductively simple wording: What is ‘scientific and technical knowledge’? What is meant by the ‘state’ of knowledge? Does an idea have to be accepted (and what does this mean?) before it enters such knowledge, or is a hypothesis enough? What does the defence mean by ‘to
1 Council Directive of 25 July 1985 concerning liability for defective products (85/374/EEC) Official Journal L 210/29 of 7.8.85 2 See H. C. Taschner, 'Product liability: basic problems in a comparative law perspective' in D. Fairgrieve (ed) Product Liability in Comparative Perspective (CUP, 2005), 163; Council of Europe, Explanatory Report to the European Convention on Products Liability ETS No.91 (1977) §38 3 G. Howells and M. Pilgerstorfer, 'Product liability' in C. Twigg-Flesner (ed) The Cambridge Companion to European Private Law (CUP, 2010), 268 (refined) 30 enable the existence of the defect to be discovered’? What is the significance of it being the ‘existence of’ the defect that needs to be discoverable, and how is the ‘defect’ to be characterised? Is it enough that the producer did all that was reasonably expected to discover the defect given the state of relevant knowledge? And if so, how is reasonableness to be assessed? Alternatively, is the test one of possibility: was it possible on the state of relevant knowledge to have discovered the defect? If the latter, when is a creative leap one of sufficient length or substantive significance to render it impossible to discover the defect (that is, on the state of knowledge at the time the product was put into circulation)?
As those questions, and indeed the wording of the DRD make clear, it is the existence of the defect in the product that must be discoverable. Thus the defence is directly linked to the PLD’s core liability-imposing concept of ‘defectiveness’4. The precise conception of ‘the defect’ matters for the application of the defence because it is ‘the defect’ so defined that must be discoverable. How the Court should approach ‘defectiveness’ is therefore also relevant to the proper interpretation and application of the defence because it is only after it has been determined that the product is defective that the DRD falls to be applied at all.
Since 1985, relatively sparse judicial light has been shone upon the PLD. The CJEU has only considered directly the substance of article 7(e) once in 19975. Whilst some authoritative guidance was given, it acknowledged there was more to give. Even the central concept of ‘defectiveness’ was not examined by the CJEU until relatively recently, in 20156.
A vigorous academic debate has taken place in this twilight, and it is recognised that the answers to the questions posed contribute to the ultimate assessment of the strictness of liability which the PLD imposes. A wide DRD, one which exculpates a producer by reference to a notional reasonable producer’s (with average characteristics and knowledge) expected discoveries, creates a very different system of product liability from one which reserves the defence for when objectively the state of the art did not render it possible to discover the defect.
4 D. Fairgrieve and M. Pilgerstorfer, 'European Product Liability after Boston Scientific: An Assessment of the Court's Judgment on Defect, Damage and Causation' (2017) 28 EBLR 879, 885 5 Commission v United Kingdom (Case C-300/95) [1997] 3 CMLR 923 (CJEU) 6 See generally Fairgrieve and Pilgerstorfer (2017) 31
Diverging domestic implementation across the Union has fuelled this debate. In England and Wales, the implementing legislation grants a defence where “…a producer of products of the same description …might be expected to have discovered the defect”7. In Germany, the language follows article 7(e)8. In the Netherlands, the defence is available where “… it was impossible to discover the existence of the defect”9. Yet the proof of the pudding is in the eating: whilst domestic legislation can diverge on its face, the legal approach in each jurisdiction must be carefully studied10.
1.2 A Tale of Two Jurisdictions
Article 15(1)(b) permits derogation from the DRD and five states have done so11. Finland and Luxembourg do not implement it at all. Hungary excludes application to pharmaceutical products. In Spain, all medicinal products, foods or foodstuffs intended for human consumption are excluded12. Finally, in France, it does not apply to products of the human body13.
Exercising “sober self-restraint”14 recommended in the literature, two jurisdictions have been chosen for this study – (i) England and Wales; and (ii) Germany.
Statistically speaking, these are two of the larger member states. Germany is the largest member state by population, and together with the UK accounts for approximately 29% of the
7 Consumer Protection Act 1987 s4(1)(e) 8 Produkthaftungsgesetz vom 15. Dezember 1989 (BGBl. I S. 2198) §1(2)(5); E. Flügel, ProdHaftG (English Version) (1989)
In Germany, whilst the DRD follows the German language version of the PLD, it was equated on its reception to the standards imposed by pre-existing general tort law. Pharmaceutical products intended for human use are exempt from the scope of the ProdHaftG and compensation is governed by the AMG19 (notably without a DRD). The AMG has been recognised by the CJEU as a special liability system existing when the PLD was notified, permitted to co-exist with the PLD under article 1320. There is a developed line of cases concerning the meaning of ‘defect’ under the defence.
England and Wales was an early implementer. However, the wording of the DRD (rushed through Parliament on the final day of the Session before a General Election) sparked much debate because it diverged from the PLD, and seemingly widened the defence. Subsequent enforcement proceedings led to the only substantive consideration by the CJEU as to the scope of article 7(e)21. The case law since then provides fertile material for comparison. Whilst the number of domestic judgments under the CPA (and concerning the DRD in particular) remains low, there has been a very detailed consideration of the defence at first instance, and recent trends that consider how ‘defect’ should be characterised.
15 Eurostat, Population Tables (2017)
1.3 Aims of this Study
The principal aim of this study is to explore the true scope of the DRD within the PLD by critically and comparatively examining its implementation and interpretation in two particular jurisdictions: (i) England and Wales and (ii) Germany. The different domestic legislation and case law will be considered with the aim of identifying common and divergent approaches, themes and problems as well as the reasons for this. Ultimately, through the lens of that comparison, I intend to provide a coherent theory of the true scope of liability for development risks under the PLD. As the defence concerns the discoverability of the product’s ‘defect’, the interrelation between the defence and the companion concept of ‘defect’ must also be explored both at the EU level and also in the two jurisdictions chosen. This will enable conclusions to be drawn concerning the extent to which each jurisdiction interprets the defence in light of that interrelation.
In its most recent report, published in May 2018, the Commission candidly accepted that certain concepts in the PLD would benefit from clarification, potentially in the form of “guidance”22. This study will consider whether the scope of this particularly significant defence would similarly benefit from soft-law guidance or alternatively, whether more substantive reform of article 7(e) is preferable.
It is also hoped that this work will afford an opportunity to address other matters of concern arising under the PLD: on the question of harmonisation, given the optional status of the defence, to what extent has that agenda been a success? Should the defence now be mandatory, or reserved for particular types of product? Does the revealed width of the defence enable conclusions to be drawn as to whether the European legislators of 1985 delivered on their express objective of imposing “liability without fault”23? Does that in real terms achieve the consumer protection for which the legislators were aiming?
22 Commission's Fifth Report , p8-9; as to the use of ‘soft-law’ guidance in the context of the PLD see D. Fairgrieve, G. Howells and M. Pilgerstorfer, 'The Product Liability Directive: Time to get Soft?' [2013] 4 JETL 1 23 As they set out to do in PLD Recital 2. 34
1.4 Overview of Chapters
This work seeks to achieve those aims as follows. Chapter 2 reviews the literature in relation to appropriate comparative law methodologies, explaining the refinements implemented. Chapter 3 examines the origins and content of the PLD, focusing on ‘defect’ and DRD, taking in the relevant CJEU case-law and the academic debate concerning the scope of article 7(e). Before conducting the comparison, chapter 4 scrutinises the theoretical underpinning of strict liability, and the various justifications that have been put forward in support of it.
Thereafter, in accordance with a functionalist approach, chapters 5 and 6 deal, respectively, with how ‘defect’ and the DRD have been implemented in England and Germany. Within each jurisdiction, there is a broad exposition of the implementing legislation, set within the context of other available causes of action before a more detailed examination of how each legal system deals with the two key concepts. Where applicable, different regimes for different products are outlined. Finally, in chapter 7, I analyse the results of my examination of the two jurisdictions, drawing out similarities and divergences and outlining my own views as to the way articles 6 and 7(e) should be applied.
1.5 Brexit
This study commenced before 23 June 2016 when the UK took the decision to leave the European Union. Since then, on 29 March 2017, notification was given to the EU in accordance with article 50 TFEU and domestic law24. In accordance with article 50(3), European Union law ceases to apply to the UK “from the date of entry into force of the withdrawal agreement, or failing that, two years after” the article 50 notification “unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period”. In March 2018, a political agreement was reached on the terms of a transitional period to run from 29 March 2019 until 31 December 202025. During that period, it was intended that the UK would remain within the single market and customs union, and would continue to be bound by EU law (with the CJEU having jurisdiction as provided for in the Treaties), but that the UK would no longer technically be a member of the EU26. In November 2018, a Withdrawal Agreement was
24 European Union (Notification of Withdrawal) Act 2017 25 See European Commission, Draft UK-EU Withdrawal Agreement: coloured version in negotiation round of 16- 19 March 2018 TF50(2018)35 (2018), articles 121-122, 126. 26 Ibid. article 122. 35 agreed in principle between the EU and UK27, however the UK Parliament has so far refused to ratify that agreement, and a number of extensions to the article 50 period were subsequently agreed28 such that the UK is presently due to leave on 31 October 2019.
At the time of writing, the legal consequences of Brexit, and the future of UK product liability in particular, is a matter of considerable uncertainty. Were the UK to remain part of the EEA Agreement outside of the EU (and join the likes of Iceland, Liechtenstein and Norway29), the PLD would continue to apply30. The EFTA Surveillance Authority could bring enforcement proceedings before the EFTA Court31 and preliminary references could also be made32. Ongoing judicial dialogue between the EFTA Court and the CJEU has ensured that no conflicts of interpretation have arisen to date33. Whether such a model is realistic for the UK post-Brexit remains to be seen. Since the referendum, English Courts have consistently refused to predict what might be the shape of change to come34. In respect of the CPA specifically, one judge has observed that it cannot “be assumed that, even if the United Kingdom exits the Union, that the Act will be revoked or, certainly, revoked quickly”35.
Under provisions of the European Union (Withdrawal) Act 201836 (which are yet to be brought into force), Part I CPA – as “EU-derived domestic legislation”37 – would continue to have effect in domestic law on and after “exit day”38. Thereafter, the meaning of the CPA would be
27 European Commission, Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, as endorsed by leaders at a special meeting of the European Council on 25 November 2018 TF50(2018)55 (2018) 28 See fn 38 below. 29 Switzerland is also an EFTA Member State but not a signatory to the EEA Agreement. 30 Article 23(c) and annex III EEA Agreement 31 See Article 108(1) EEA Agreement and the Surveillance and Court Agreement of 7.3.2012. 32 See Article 34 Court Agreement. Differences: the national court of final instance is not obliged to refer and technically the EFTA court’s judgment is not binding rather “advisory opinions” but generally followed: C. Baudenbacher, P. Speitler and B. Palmarsdottir (eds), The EEA and the EFTA Court (Hart, 2014), 126-128 33 Formally, the EFTA Court has to follow pre-EEA Agreement case law of the CJEU and pay due account of subsequent case law; by contrast the CJEU is not bound to follow EFTA Court judgments: see art 6 EEA Agreement and article 3.1 Surveillance and Court Agreement. This formal position has given way to the practicalities and consistency through judicial dialogue is now practiced: see ibid. , 8-10 34 See e.g. Przystupa v Poland [2017] EWHC 2037 (Admin) §30; Coal Staff Superannuation Scheme Trustees Ltd v Revenue & Customs Commissioners [2017] UKUT 137 (TCC) §§25-30; W3 Ltd v Easygroup Ltd [2017] EWHC 3304 (ChD) §37 35 Tilley v Secretary of State for Health (2016) Unrep HQ12X01255 (1 July 2016) (QBD) §17 36 European Union (Withdrawal) Act 2018 37 EU(W)A s2(2)(b) 38 EU(W)A s2(2). ‘Exit day’ was originally defined in EU(W)A s20(1) as 11pm on 29 March 2019. This was initially amended by the European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) Regulations 2019 (SI 2019/718) to 11pm on 22 May 2019 (if the Withdrawal Agreement was ratified by the UK Parliament), or alternatively 11pm on 12 April 2019 if not. A later amendment by European Union (Withdrawal) Act 2018 (Exit 36 decided in accordance with retained domestic and EU case law, including pre-existing decisions of the CJEU39. However, (i) the Supreme Court would not be bound by retained EU case law40 and (ii) any decision of the CJEU taken on/after exit day would not be binding, but regard could be had to it41. Thus, after exit day, s4(1)(e) CPA would still have to be interpreted in accordance with article 7(e) PLD as required by existing CJEU authority42. In respect of future developments after exit day, under the EU(W)A an English Court could have regard to new CJEU authority but would not be bound by it. This poses a potential question because s1(1) CPA requires Part I to be construed in order to comply with the PLD. Since its enactment, such wording has ensured compliance with CJEU interpretations. Such domestic law linking of the CPA to the PLD might potentially become subject to Ministerial correction under s8(1) EU(W)A as a “deficiency in retained EU law”, although whether that subsection will apply will depend on whether there is an agreement on the terms of Brexit and whether it commits the UK to continued application of EU law in relation to goods43.
Notwithstanding the future impact of Brexit on product liability law in the UK, it is thought that this work continues to have value. The comparative exercise undertaken assesses the position during the UK’s membership of the EU and whatever the potential for divergence in the future, this ought to be irrelevant to the true scope of article 7(e).
Day) (Amendment) (No. 2) Regulations 2019 (SI 2019/859) resulted in the definition now being 11pm on 31 October 2019. 39 EU(W)A s6(3) 40 s6(4)(a); it must apply the same test as deciding whether to depart from its own case law: s6(5). 41 s6(1)(a) and (2) 42 See Commission v UK 43 Such as was contemplated by the “common rule book” referred to in HM Government, Statement from HM Government - Chequers 6 July 2018 (2018)
2 Comparative Law in the Present Work
In Europe, harmonisation of private law was identified as desirable back in 196444, but only more recently “taken up in earnest”45. In that sense, the 1985 PLD was innovative46, being followed by other discrete areas of private law47 and (more controversially) calls for a European civil code48. The fuel for driving and assessing this harmonisation is the comparative method, which now boasts an impressive history49 and continues to gain momentum50.
The purpose of this study is to make comparisons between the English and German implementations of the PLD. It is therefore appropriate to consider briefly the learning surrounding relevant comparative techniques. After doing so, this chapter examines the practical application of comparative work in this field, before justifying refinements to the classical functionalist method.
44 W. Hallstein, 'Angleichung des Privat- und Prozessrechts in der Europäischen Wirtschaftsgemeinschaft' (1964) 28 RabelsZ 211 45 R. Zimmermann, 'Comparative Law and the Europeanization of Private Law' in M. Reimann and R. Zimmermann (eds), The Oxford Handbook of Comparative Law (OUP, 2006), 543 46 See Howells and Pilgerstorfer, Product liability, 255 47 See, generally, C. Twigg-Flesner, The Cambridge Companion to European Union Private Law (Cambridge Companions to Law, Cambridge, 2010) 48 For a flavour see N. Jansen, 'European Civil Code' in J. M. Smits (ed) Elgar Encyclopedia of Comparative Law (Edward Elgar, 2006); S. Weatherill, 'Why Object to the Harmonization of Private Law by the EC?' (2004) 12 ERPL 633; J. M. Smits, 'European private law and the comparative method' in C. Twigg-Flesner (ed) The Cambridge Companion to European Private Law (CUP, 2010); P. Legrand, 'Against a European Civil Code' (1997) 60 MLR 44; U. G. Schroeter, 'Europäischer Verfassungsvertrag und europäisches Vertragsrecht' (2006) 14 ZEuP 515; M. Bussani and U. Mattei, 'The Common Core Approach to European Private Law' (1996) 3 Columbia Journal of European Law 339; R. Schulze, 'European Private Law and Existing EC Law' (2005) 13 ERPL 3; J. Stapleton, 'Benefits of Comparative Tort Reasoning: Lost in Translation' (2007) Journal of Tort Law Volume 1, Issue 3, Article 6 , 40-41 49 Zweigert and Kötz, Comparative Law, chapter 4; C. Donahue, 'Comparative Law before the Code Napoléon' in M. Reimann and R. Zimmermann (eds), The Oxford Handbook of Comparative Law (OUP, 2006); R. B. Schlesinger, 'The Past and Future of Comparative Law' (1995) 43 American Journal of Comparative Law 477 50 Lord Goff, 'The Future of the Common Law' (1997) 46 International and Comparative Law Quarterly 745, 748: “Comparative law may have been the hobby of yesterday, but it is destined to become the science of tomorrow” 38
2.1 Theoretical Approaches to Comparative Law
The ‘functional’51 approach, often associated with Zweigert and Kötz52, remains the dominant53 “classic restatement of methodological orthodoxy”54. It is a useful starting point for building a framework for comparison as the theory anticipates its use for the interpretation of uniform supranational laws, of which the PLD is a good example55. As Sacco observes, “a political decision mandates uniformity, and the comparative study of law makes the uniformity possible”56. In addition, a functionalist approach can facilitate finding superior foreign solutions for those interpreting or imposing law57, or at least give “the benefit of comparative deliberation”58.
The basic method59, refined by trial and error60, involves identifying a question for investigation and functionally comparing the relevant parts of legal systems, focusing on the problem. All sources of law and legal formants61 (including crypotypes62) should be considered, remembering that law does not exist in a vacuum63. Sacco’s example of two identical statutes dealing with product liability regimes in two different systems is enlightening64. If the results of determination of legal disputes were different under the two systems, it is necessary to ask what, if not the statute, was influencing the judges and take account of that formant. Given legal systems often have similar responses to a problem65, results should be checked if diametrically opposite.
51 Sometimes “better solution” comparative law: G. Frankenburg, 'Stranger than Paradise: Identity and Politics in Comparative Law' (1997) Utah Law Review 259, 263 52 Zweigert and Kötz, Comparative Law; chapters 2-3 53 O. Brand, 'Conceptual Comparisons: Towards a Coherent Methodology of Comparative Legal Studies' (2007) 32 Brooklyn Journal of International Law 405, 409 54 Zimmermann, Europeanization of Private Law, 551 55 Zweigert and Kötz, Comparative Law, 21 56 R. Sacco, 'Legal Formants: A Dynamic Approach to Comparative Law (Instalment I of II)' (1991) 39 American Journal of Comparative Law 1, 3 57 Zweigert and Kötz, Comparative Law, 16-20; R. Sacco, 'Legal Formants: A Dynamic Approach to Comparative Law (Instalment II of II)' (1991) 39 American Journal of Comparative Law 343, 395 58 A.-M. Slaughter, 'A Global Community of Courts' (2003) 44 Harvard International Law Journal 191 59 Zweigert and Kötz, Comparative Law; chapter 3 60 Ibid., 33 61 Sacco (1991) and Sacco (1991) 62 Sacco (1991), 384-5: rules not explicitly formulated but forming implicit patterns 63 C. de Scondat (Baron de Montesquieu), The Spirit of Laws (1752), book XXIX, chapters 11 and 13 64 Sacco (1991), 24 65 Zweigert and Kötz, Comparative Law, 39 39
The classical method of presentation involves a series of separate reports, one for each country, so that the basic material is available to the reader prior to the comparative process66. The next formal stage is to “build a system” for analysis: to develop special syntax and vocabulary which hovers above the terminology of the systems being studied. Thereafter, the systems can be compared and evaluated “stripped of their national doctrinal overtones”67 asking why different countries deal with the same legal problem differently, or in the same way68, and seeking (admittedly subjectively) the preferable solution. Such evaluations should be explicit and transparent; “international collaboration will correct”69 any over-subjectivity.
The legitimate axiomatic and methodological critiques of the functional method70 are less applicable to comparison between implementations of an EU directive. Here a praesumptio similitudinis is justified, the issue can be defined in similar practical terms in each jurisdiction, and the comparison takes place within the same cultural and temporal sphere71. Other criticisms of functionalism are more about imperfect application72. Thus, Legrand73 complains results are excessively related to the texts of rules and insufficiently to the practical application of law (or socio-economic and historical circumstances)74. Yet a proper application of the method takes that into account. Further, Legrand’s opposition to the ideals of integration, harmonisation and transplantation through comparative work75 has less force where political decisions have already mandated that result. Additionally, the complaint that functional studies suffer from what Ewald refers to as “externalism”76 (a lack of “immersion” within a foreign legal system) is not, as Brand rightly points out, necessarily a bad thing77. Ingrained assumptions are sometimes more easily detected by lawyers from other legal systems. Nor is
66 Ibid., 43 67 Ibid., 44 68 Contrast “contractive comparison” (focused on differences) and “integrative comparison” (with emphasis on similarities): Schlesinger (1995) cf R. Sacco, 'Legal Formants: A Dynamic Approach to Comparative Law (Instalment I of II)' (1991) 39 ibid.1, 7: “comparison itself has no fear of differences however large they may be ... [it] measures the extent of differences…” 69 Zweigert and Kötz, Comparative Law, 47 (citing E. Rabel, 'Deutsches und amerikanisches Recht' (1951) 16 RabelsZ 340, 359) 70 Brand (2007) 71 Ibid., 417-20 72 Ibid., 412-415 73 P. Legrand, 'How to compare now' (1996) 16 LS 232 74 D. J. Gerber, 'Sculpturing the Agenda of Comparative Law: Ernst Rabel and the Facade of Language' in A. Riles (ed) Rethinking the Masters of Comparative law (2001) and Legrand (1996) 75 See, for example, Legrand (1997) and P. Legrand, 'The Impossibility of "Legal Transplants"' (1997) 4 Maastrict Journal of European and Comparative Law 111 76 W. Ewald, 'The Jurisprudential Approach to Comparative law: A Field Guide to "Rats"' (1998) 46 American Journal of Comparative Law 701, 704 77 See also D. Nelken, 'Legal culture' in J. M. Smits (ed) Elgar Encyclopedia of Comparative Law (Edward Elgar, 2006), 377: “The ability to look at a culture with new eyes is the great strength of the outside scholar”. 40 it always a feature of functional analysis78. Most powerful, however, is Brand’s point that in reality, this is a criticism of any exercise in comparative law, rather than of the functional method per se.
Mattei’s79 “methodological wedding between... Comparative Law and Law and Economics”80 is seen by some as “marginal”81, and others as a focused type of functionalism82. The method compares systems analytically on a scale of efficiency. Central is the role of competition in order to “determine the survival of the most efficient legal doctrine”83. The approach is to create a hypothetical ‘efficient’ legal rule from the pool of solutions84, so that real-world alternatives can then be contrasted with it and inefficiencies (departures from the model) explained. Conditions for policy changes or transplants required to get closer to the hypothetical model can be identified after weighing the cost of adapting the system against the benefits of greater efficiency by so doing85. It is of interest here because as well as having been applied in the field of product liability86, an analogy can be drawn with the present task. The ‘efficiency’ of the implementation adopted by the Member States can be measured by reference to the PLD – the model (albeit not hypothetical) or objective “richtiges Recht”87.
A number of difficulties with the method have been identified88: (i) ‘efficiency’ can be ambiguous and context-dependent89; the comparatist decides at which level (entire system, part of a system) it is assessed; (ii) different components of a system might work against each other so as to conceal the true extent of inefficiencies, (iii) ‘real people’ may differ from the playfully dubbed homo economicus90; and (iv) efficiency, and the cost-benefit analysis
78 Sacco (1991), 387 79 U. Mattei, Comparative Law and Economics (University of Michigan Press, 1998) 80 U. Mattei, 'Efficiency in Legal Transplants: An Essay in Comparative law and Economics' (1994) 14 International Review of Law and Economics 3, 18 81 R. Caterina, 'Comparative law and economics' in J. M. Smits (ed) Elgar Encyclopedia of Comparative Law (Edward Elgar, 2006), 161 82 Frankenburg (1997), 263; Brand (2007), 423-4 83 Mattei (1994), 8 84 Mattei, Comparative Law and Economics, 182 85 U. Mattei and F. Cafaggi, 'Comparative Law and Economics' in P. Newman (ed) New Palgrave Dictionary of Economics and the Law (MacMillan, 1998), 347 86 J. D. Hanson and D. A. Kysar, 'Taking Behavioralism Seriously: The Problem of Market Manipulation' (1999) 74 New York University Law Review 630 87 G. L. Radbruch, 'Über die Methode der Rechtsvergleichung' (1906) 2 Monatschrift für Kriminalpsychologie und Strafrechtsreform 422, 423 88 Brand (2007), 425-28 89 See Mattei and Cafaggi, Comparative Law and Economics, 347 90 C. A. Rogers, 'Gulliver's Troubled Travels, or the Conundrum of Comparative Law' (1998) 67 George Washington Law Review 149, 186 41 envisaged, imports bias when it considers whether the ‘winners’ in the system have sufficient to gain so as to hypothetically compensate the ‘losers’.
Brand’s conceptual comparisons approach aims to meet these and other criticisms of the functionalist method91. There are two stages. Phase 1 is to examine the situation in each legal system to identify relevant rules and principles. Thereafter, concepts (meeting six criteria92) are created by “abstracting common elements from observed phenomena” as a “standard for comparison”. In Phase 2, the concept is compared to the real-world in three steps: (i) descriptively; (ii) so as to identify the extent of differences and similarities; and (iii) explanatorily. Of the different suggested applications, perhaps the most relevant is the prototype study. Here, Brand sees concepts derived from a specific system of geopolitical and economic significance which might form a prototype. The prototype can then be compared with other members of the concept in order to “elucidate the way in which the concept and its members develop”93. Thus in the present context, the systems are compared with the ‘prototype’ of the PLD.
2.2 Practical Comparative Law
Zimmermann has observed94 that many real-world comparative projects undertaken in Europe use variations on this functionalist method. The Common Core Group (including a current project on product liability) compares reports prepared by national respondents to factual hypotheticals95. Reports identify legal and non-legal formants and create a geographical map of applicable law which is then compared. A related methodology is the European Casebook which gathers cases and materials aimed at the student96.
91 Brand (2007), 438ff 92 Ibid., 440: (i) appropriate to the theoretical questions; (ii) effective and address the factual situation chosen for comparison; (iii) properties must not be context-dependent; (iv) named unambiguously; (v) vary as little as possible over time; and (vi) construction falsifiable. 93 Ibid., 462 94 Zimmermann, Europeanization of Private Law, 572 95 Bussani and Mattei (1996); M. Bussani, 'Current Trends in European Comparative Law: The Common Core Approach' (1998) 21 Hastings International and Comparative Law Review 785 96 Bussani and Mattei (1996), 342-343 42
A more normative approach is seen in the many97 projects which identify and analyse ‘common principles’ between legal systems (such as the Lando Commission’s Principles of European Contract Law98 and the European Group on Tort Law’s Principles of European Tort Law99). The methodology is similar to US restatements100 involving preparation of papers, draft articles and commentary which, after discussion and refinement is ultimately approved by the group101. The result consists of articles, commentary and comparative notes detailing the position in the states studied and beyond. Notable is the Draft Common Frame of Reference102 prepared by von Bar’s Study Group on a European Civil Code with the Aquis Group which was completed in October 2009 and resulted in principles and commentary constituting a so-called soft-law “tool-box”103.
In 2001, the Aquis Group presented Common Principles of European Private Law104. Their method105 was to identify principles from within existing EU law to use as a structure for comparison. Existing comparative studies assisted the investigator to avoid assuming parity between EU concepts and those in a member state. Next, the provisions and texts of the acquis communautaire would be compared to each other. A third step involved tracing similarities back to more general Community law principles. Finally, the investigator would formulate the most precise rules based on those principles.
97 For a helpful summary, see Zimmermann, Europeanization of Private Law , 566-568 and I. Schwenzer, 'Development of Comparative Law in Germany, Switzerland, and Austria' in ibid., 103 98 O. Lando and H. Beale (eds), Principles of European Contract Law (Part I) (1995); O. Lando and H. Beale (eds), Principles of European Contract Law (Parts I and II) (2000); O. Lando and others (eds), Principles of European Contract Law (Part III) (2003) 99 European Group on Tort Law, Principles of European Tort Law: Text and Commentary (2005). More recently, the European Group on Tort Law has completed a research project with the Aquis Group analysing the state of the art in European product liability in the era of new technologies: P. Machnikowski (ed), European Product Liability: An Analysis of the State of the Art in the Era of New Technologies (EGTL and Acquis Group, intersentia, 2016) 100 For an overview of US Restatements see: A. T. von Mehren and P. L. Murray, Law in the United States (Cambridge, 2007) , 20-22. Lando himself described the Commission’s as being more radical than the American Restatement on Contracts in the sense that the Commission was not bound to select between extant solutions existing in the legal systems under study, but also was able to use an amalgam or new rules which do not so exist: see O. Lando, 'Principles of European Contract Law: An Alternative to or a Precursor of European Legislation?' (1992) 40 American Journal of Comparative Law 573, 579 101 Zimmermann, Europeanization of Private Law, 562 102 Study Group on a European Civil Code and Research Group on EC Private Law (Aquis Group), Principles, Definitions and Model Rules of European Private Law, Draft Common Frame of Reference (DCFR) (2009)
Such comparative endeavours at the level of principle are not universally accepted. Stapleton argues that comparative work is best directed towards legal argument where it widens the palette of ideas available to the domestic lawyer106. For her, there are dangers with comparisons of outcomes, legal principle (where the value for other jurisdictions is contingent on cultural context) and conceptual arrangements (where the structural effects can distort the picture: e.g. jury, judicial style by reference to a Restatement, constitutionalisation of tort law by the US Supreme Court)107. Further, she identifies specific difficulties arising with “comparative foreign-language law” quite apart from translation and advises “extreme caution”108. These problems include109: (a) an absence of recognisable legal constructs; (b) different structural features, (c) marked divergences of legal style110; (d) contrasting status and form of judicial reasoning (precedential value of decisions, status of codes, judicial pronouncements on codes111 - as Fleming has noted, civil law judgments can be “absorbed with ways to outflank the Code without taking us into their confidence why these manoeuvres are thought desirable”112); (e) relevance and hierarchy of other materials, such as the output of academics113, and their style; and (f) even where rationale is apparent from foreign law decisions, they are culturally contingent114.
Whilst these problems undoubtedly exist, Stapleton rightly recognises that an exception is where the subject matter positively requires knowledge of a foreign system e.g. where EU law is in issue115.
106 Stapleton (2007); see also J. Gordley, 'Comparative Legal Research: Its Function in the Development of Harmonized Law' (1995) 43 American Journal of Comparative Law 555, 560 107 Stapleton (2007), 12-21; cf B. Markesinis QC, Foreign Law and Comparative Methodology: a Subject and a Thesis (Hart, 1997) 108 Stapleton (2007), 3 109 Ibid., 30-33; cf Gordley (1995) 110 As to this, see O. W. Holmes, 'Misunderstandings of the Civil Law' (1871) 6 American Law Review 37: “[civil law] tends to encourage a dangerous reliance... on glittering generalities” to be contrasted with the common law process of an “exhaustive analysis of a particular case with which the common law begins and ends”. 111 Stapleton explains civilian courts “sometimes treat Code text as an impassable obstacle… [and] often …covertly manipulate the Code’s provisions. Typically adopting the direction pointed to by some eminent jurist, these courts are willing to be highly “creative” in their manipulation to reach the desired result”. 112 J. G. Fleming, 'Comparative Law of Torts' (1984) 4 OJLS 235, 242 113 Traditionally more influential within civil law countries, although see Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 (HL), 378A: “Nowadays [the judge] derives much assistance from academic writings in interpreting statutes and, more especially, the effect of reported cases.” 114 E.g. adoption in Turkey: see D. Nelken, 'Book Review: The Enigma of Comparative Law: Variations on a Theme for the Twenty-First Century, by Esin Orucu' (2006) 26 LS 129 115 Stapleton (2007), 44 44
Sacco’s framework116 is helpful in mitigating linguistic difficulties. Translation is attempted with care as some concepts are untranslatable117. It must be remembered that even within a single language the same words can bear different meanings in different contexts118. Thus translation requires the jurist to decide if ideas truly correspond119. Options include not translating (although the point is to make the source text accessible); alternatively picking the closest term120 in “the legal terminology of the target language”121 whilst identifying any differences in sense; or finally creating a special neologism “chosen in such a way that the content of the source term is shown to some extent, [and] without using a term which is already used in the target language legal system”122.
In the present context the various foreign language versions of the PLD, each of which is equally authoritative123, create points of linguistic correspondence which can be applied to the wider legal discourse124. This avoids some of the difficulties discussed, however it must be remembered that terms used in EU legal texts can have autonomous meanings125.
Comparative law is not simply academic. It lies at the very heart of the work of the CJEU as a method of interpretation126, particularly teleological127. The legal basis for its deployment is derived from the Court’s obligation to ensure that in the interpretation and application of the Treaty, the law is observed128. The method involves both a cognitive element (what is the legal
116 Sacco (1991), 10-20 117 Ibid., 10-11 118 Ibid., 12; see also G.-R. de Groot, 'Legal translation' in J. M. Smits (ed) Elgar Encyclopedia of Comparative Law (Edward Elgar, 2006), 423 119 Sacco (1991), 13-20; de Groot, Legal translation, 423 120 With a “a similar systemic and structural embedding”: see de Groot, Legal translation 425; G.-R. de Groot, 'Das Übersetzen juristischer Terminologie' in G.-R. de Groot and R. Schulze (eds), Recht und Übersetzen (Nomos, 1999), 24-25; M. Weston, An English Reader's Guide to the French Legal System (2nd edn Berg, 1990), 21 121 de Groot, Legal translation, 423 122 Ibid., 428 123 Srl CILFIT and Lanificio di Gavardo SpA v Ministry of Health (Case 283/81) [1982] ECR 3415 (CJEU) §18 124 de Groot, Das Übersetzen juristischer Terminologie, 21 125 CILFIT §19 126 K. Lenaerts, 'Interpretation and the Court of Justice: A Basis for Comparative Reflection' (2007) 41 The International Lawyer 1011, 1016ff; K. Lenaerts, 'Interlocking Legal Orders in the European Union and Comparative Law' (2003) 52 International and Comparative Law Quarterly 873, 873. See also J. Mertens de Wilmars, 'Le driot comparé dans la jurisprudence de la Cour de justice des Communautés européennes' (1991) Journal des Tribunaux 37; K. Lenaerts, 'Interlocking Legal Orders or the European Union variant of "E pluribus unum"' in G. Canivet, M. Andenas and D. Fairgrieve (eds), Comparative Law Before the Courts (BIICL, 2004), 99 127 See C. N. Kakouris, 'Use of the Comparative Method by the Court of Justice of the European Communities' (1994) 6 Pace International Law Review 267, 274; Lenaerts (2003), 877 128 Art 220 EC; Brasserie du Pêcheur SA v Federal Republic of Germany; R v Secretary of State for Transport, ex parte Factortame Ltd (Joined Cases C-46/93, C-48/93) [1996] ECR I- 1029 (CJEU)§27; Nold v Commission (Case 4-73) [1974] ECR 491 (CJEU) §13; Art 288 EC; Francovich and Others v Italian Republic (Cases C-6/90 45 position within the relevant member states?) as well as a creative element (what is the common accord, European view, or ius commune?) The goal, at the creative stage, has various names in the literature: “the solution which best suits”129; “the most appropriate rule”130 or “optimum standard”131. As Lenaerts points out, this dovetails with Zweigert and Kötz’s view of comparative law “offer[ing] the scholar of critical capacity the opportunity of finding the ‘better solution for his time and place’”132. Although the comparative method is applied, it has been argued that in the result, the Court commonly concludes that “once a legal concept is embedded within a harmonization Directive it cannot be allowed to depend for its meaning on local preference or tradition”133.
The CJEU has conducted comparative analyses of: one, several or all member states; the legal order of third countries; and even international legal orders134. Whilst the comparative method is rarely on the surface of the judgment (which at best makes reference to ‘legal traditions’ or ‘principles’ etc of ‘all’ or ‘several’ member states), Kakouris explains that it is “almost never omitted”135. This is a position supported by Lenaerts who contrasts judgments of the Court and the Opinions of the AGs (who regularly analyse comparative law136). Both Kakouris and Lenaerts point to the procedural ability137 to order an inquiry of the Commission (either as a party or as amicus curiae) to communicate a comparative law study138. More often, the Court will ask its research and documentation service, “composed of lawyers familiar with the respective national legal systems”139, to prepare a comparative survey on a particular issue140. The parties themselves as well as other member states making observations also contribute to the comparative material before the Court. Lenaerts explains “[e]ven if such research rarely transpires directly in the reasoning set forth in the judgement, it nevertheless backs up the decision
and C-9/90) [1991] ECR I- 5357 (CJEU); Art 5 EC; M. Hilf, 'The Role of Comparative Law in the Jurisprudence of the CJEU' in A. L. C. de Mestral (ed) The Limitation of Human Rights in Comparative Consitutional Law (Les Editions Yvon Blais, 1986), 549 129 Lenaerts (2003), 879 130 Kakouris (1994), 279 131 Hilf, Comparative Law in the CJEU, 562-3 132 Zweigert and Kötz, Comparative Law, 15 133 Weatherill (2004), 637; CILFIT §§17-20 134 ECHR, e.g. Art 6(1): Re Seamless Steel tubes Cartel (Joined Cases C-403/04; C-405/04) [2007] 4 CMLR 16 (CJEU) §115; Kakouris (1994), 272, n21 135 Kakouris (1994), 276; note, exceptionally, reference within Algera & Others v Common Assembly of the ECSC (Joined Cases 7/56, 3/57, 7/57) [1957] ECR 39 (CJEU), 55-6, 69, 80 136 Lenaerts refers in particular to A-G Léger in Council v Hautala (Case C-353-99) [2001] ECR I- 9565 (CJEU) 137 Art 45 Rules of Procedure of the Court of Justice 138 M v Commission (Case 155/78) [1980] ECR 1797 (CJEU) §19 139 Lenaerts (2003), 875 140 “since these are never published it is impossible to assess their scope and quality”: Zimmermann, Europeanization of Private Law, 577 46 taken by the Court”. Less formally, the constitution of the Court - drawn from distinguished individuals from an array of different national legal systems - has caused the Court’s deliberations to be described as “living comparative law in action”141.
Comparative law also exists at the level of the courts of the member states and is actively encouraged especially in the context of a harmonised norm142. Von Bar made the plea for supreme courts of EU member states to feel “bound to inquire whether the case before them had not already been decided somewhere else in the Union, and if, supposing there were a sort of “dominant European view” on the matter, the had to say why they were prevented from adopting it by the present state of their own law”143. This is not only a civil law phenomenon. Markesinis argues English judges are generally willing to listen to claims that German law and practice has something to offer them in their daily work144, albeit that this depends on the judge’s own “judicial mentality”145. He identifies ignorance of detail pertaining to another state as lying at the root of “isolation mentality” and time as being an important and often genuine factor146. Also relevant are the judge’s exposure (or lack of it) to foreign languages, culture and life. As particular judges do engage with foreign legal materials, this suggests that it can be done and “all that stops it from being done more frequently is mentality”147.
In fact, some national Courts are now referring to foreign legal materials with increasing regularity148. In England, judges may have “regard, where appropriate, to decisions of judges in other jurisdictions”149 and this is reflected in the Practice Direction on the Citation of Authorities150. Care still needs to be taken, however, to ensure norms are seen in their proper
141 Kakouris (1994), 277; Lenaerts (2003), 876 142 Schwenzer, Development of Comparative Law in Germany, Switzerland, and Austria, 101 143 C. von Bar, 'Vereinheitlichung und Angleichung von Deliktsrecht in der Europäischen Union' (1994) 35 ZfRV 221, 231 144 B. Markesinis QC, 'Judge, jurist and the study and use of foreign law' (1993) 103 LQR 622 145 B. Markesinis QC, 'Judicial Mentality: Mental Disposition or Outlook as a Factor Impeding Recourse to Foreign Law' (2006) 80 Tulane Law Review 1325. See also n159 below. 146 Ibid., 1350 147 Ibid., 1363 148 G. Canivet, M. Andenas and D. Fairgrieve, Comparative Law Before the Courts (British Institute of International and Comparative Law, 2004) 149 Kleinwort Benson Ltd v Lincoln City Council, 378B; McFarlane v Tayside Health Board [2000] 2 AC 59 (HL), 73 and 80-1; Henderson v Merrett Syndicates [1995] 2 AC 145 (HL), 184; White v Jones [1995] 2 AC 207 (HL), 263 150 Practice Direction (Citation of Authorities) [2001] 1 WLR 1001 (CA) §9.1 “Cases decided in other jurisdictions can, if properly used, be a valuable source of law in this jurisdiction” 47 context as the Fairchild case demonstrates151. In Germany, recourse to foreign law materials152 is rarely seen in judgments. It has been suggested153 that on a practical level such materials rarely play a decisive role, and where they are referred to they are ‘Germanised’ with the result that insufficient attention is paid to relevant comparative origins. A more positive assessment is that of Odersky: “the national judge is not only entitled to engage with the views of other courts and legal systems; he is also entitled, when applying his own law and naturally giving full weight to its proper construction and development, to take note of the fact that a particular solution conduces to the harmonisation of European law. In appropriate cases this argument enables him at the end of the day to adopt the solutions of other legal systems, and it is an argument he should use with increasing frequency as the integration of Europe proceeds.”154
In cases decided under the PLD, one can find references to decisions of sister EU courts, and these have been considered of greater relevance and persuasive force than materials from other common law jurisdictions155 which have been afforded weight in some commentaries156. The best example is A v NBA which was remarkable for the scope and depth of the comparative engagement by the parties and the national judge157: submissions in writing and 10 days of argument by leading counsel just on the law, “including authorities and academic writings from France, Germany, Spain, Portugal, Sweden, Denmark, Belgium, Italy, Holland, Australia and the United States, as well as the United Kingdom and the Court of Justice”158. This was unusual even in that jurisdiction159 and posed challenges linguistically160 and methodologically161. Very much as von Bar would wish, the judge recognised that the reasoned European decisions to which he was referred were not binding, but were deserving
151 See e.g. Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 (HL) and the critique in T. Weir, 'Making it more likely v. making it happen' (2002) 61 CLJ 519, 521 152 Does not apply to decisions of the CJEU and EU legal material. 153 Schwenzer, Development of Comparative Law in Germany, Switzerland, and Austria, 98 154 W. Odersky, 'Harmonisierende Auslegung und europäische Rechtskultur ' (1994) 1 ZEuP 1 155M. Burton, 'Afterword to 'The use of comparative law in A & Others v National Blood Authority'' in D. Fairgrieve (ed) Product Liability in Comparative Perspective (CUP, 2005), 39 156 E.g. J. Stapleton, Product Liability (Butterworths, 1994), chapter 4; C. J. Miller and R. S. Goldberg, Product Liability (2nd edn OUP, 2004) 157 M. Brooke QC and I. Forrester QC, 'The Use of Comparative Law in A & Others v National Blood Authority' in D. Fairgrieve (ed) Product Liability in Comparative Perspective (CUP, 2005), 21-22; N. Underhill QC, 'Postscript to The use of comparative law in A & Others v National Blood Authority' in ibid. 158 A v NBA §17 159 Contrast Gee & others v DePuy International Ltd [2018] EWHC 1208 (QBD) in which comparative sources were cited to the judge, but did not feature in her judgment. This perhaps underscores Markesinis’ point concerning judicial mentality. 160 Brooke QC and Forrester QC, Comparative Law in A v NBA, 22 161 N. Underhill QC, 'Postscript to The use of comparative law in A & Others v National Blood Authority' in ibid., 36-7 48 of “particular attention” both on the usual principles of comity and “particularly so where Community courts are applying the directive… harmony is desirable, particularly where it can be said that an autonomous or Community approach or meaning is required…”162.
2.3 Refining a Method for the Present Study
A functionalist approach to the assessment of the implementation of the PLD in England and Germany is justified. The presence of the PLD provides “points of contact and reference between ... systems, around which wider contrasts and comparisons can be explored”163. Accordingly, Brand’s core critique of functionalism either does not apply or is deprived of much of its force.
Nonetheless, some fine-tuning is appropriate. First, as well as objectively describing the implementation of the PLD in England and Germany (see chapters 5 and 6), I shall also include some critical analysis of the law in those jurisdictions in order to indicate where the law is settled and where further challenge may take place. This is particularly relevant to England because the leading cases are mostly decided at first instance level and carry limited precedential value.
Secondly, the PLD as supranational harmonising norm (described in chapter 3) can be adopted as the ‘system’, ‘efficient model’ or ‘concept’ against which to judge the national implementations, without having to build this from scratch. Brand’s prototype approach allows multi-dimensional comparisons in terms of differences and similarities between the national systems in terms of both deviations from the ‘prototype’ and from each other as well as the gradation of any deviation. Thereafter, an explanation for these results will be sought. Given the PLD, one might expect Zweigert and Kötz’s rule of thumb – that different systems ought to provide similar solutions – will hold particularly true in this context, and this will be tested.
Finally, at the evaluation stage, I shall aim to offer conclusions as to the proper scope of the concepts contained within the PLD, based upon the solutions examined in the different systems. Thus in common with the work of the Aquis group, the ascertainment of the meaning autonomous EU norms will be sought both by reference to supra-national European materials
162 A v NBA §44 163 Whittaker, Liability for Products, 4 49 as well as through the insights afforded by material from the member states under consideration.
2.4 Conclusions
As Schulze164 has argued, there is a need for reciprocity and coordination between researchers to compare and if possible to combine results, constructing a more acceptable framework for more coherent European private law rules. It is hoped that this work will contribute to that endeavour, including for those presently engaged in formulating soft-law guidance as contemplated by the Commission’s most recent report165. Whatever the ultimate practical relevance, one can at least agree with Whittaker and regard “the comparative law enterprise as fundamentally possible and worthwhile”166.
164 Schulze (2005), 18 165 See Commission's Fifth Report and European Commission, Evaluation of PLD SWD (2018) 157 (2018) 166 Whittaker, Liability for Products, 2 50
3 The Product Liability Directive
3.1 Introduction
Before comparing the implementation in England and Germany, articles 6 and 7(e) PLD need to be outlined and placed in their historical context. This chapter examines the principal influences operating when the PLD was drafted and how these led to proposals, first from the Council of Europe, and then by the Commission. Thereafter, the scheme of liability created by the PLD will be outlined and the interrelationship between the DRD, and other central concepts such as ‘defect’ and longstop will be considered. Within that discussion, the jurisprudence which has thus far fallen from the CJEU will be examined and orientated within the wider academic debate over the scope of the DRD.
3.2 Background and History
3.2.1 Background
Before the PLD167, the situation in Europe can be described by reference to three legal families168. Code Civile countries (France, Belgium and Luxembourg) embraced strict liability, adapting contractual principles to arrive at a high level of responsibility for producers, including for development risks169. Other countries (Italy170, Greece, Spain, Portugal) used fault to determine tortious liability (the ‘classical law solution’) and contractual actions were limited to remedies in restitution or reduction of the sum paid. Finally, in some countries (UK, Ireland, Germany, the Netherlands and Denmark) the substantive law followed the classical solution, but mitigating solutions were developed e.g. reversal of the burden of proof, special liability schemes etc. There were still differences in the third group. In the UK the Law Commission recommended statutory reform to introduce strict liability (which then awaited
167 For further history see S. Whittaker, 'Introduction to Fault in Product Liability' in S. Whittaker (ed) The Development of Product Liability (Comparative Studies in the Development of the Law of Torts in Europe CUP, 2010) 168 See H. C. Taschner, 'Harmonization of Products Liability Law in the European Community' (1999) 34 Texas International Law Journal 21, 25-28; C. J. Miller (ed), Comparative Product Liability (BIICL, 1986); G. Howells, Comparative Product Liability (Dartmouth Publishing Co Ltd, 1993); Deutscher Bundestag, Entwurf eines Gesetzes über die Haftung für fehlerhafte Produkte Drucksache 11/2447 (1988), 9 169 Taschner (1999), 26 170 N. Coggiola, 'The development of product liability in Italy' in S. Whittaker (ed) The Development of Product Liability (Comparative Studies in the Development of the Law of Torts in Europe CUP, 2010), 208-209; S. Whittaker, 'Introduction to Fault in Product Liability' in ibid., 14-15 51
European reform). In Germany, however, the courts increasingly tried to manoeuvre general tort law towards strict liability171, although their success continues to be debated172. Further, unlike the UK, Germany took legislative action in the form of the AMG to provide for the liability of medicines. Some of the differences between the jurisdictions can be put down to the varying extent to which American jurisprudence influenced that country’s approach prior to European harmonisation173.
3.2.2 Influences from Across the Atlantic
3.2.2.1 The American Experience
The drafting of the PLD took place in the shadow of developments in America174. Scholars in the United States were early to diagnose problems faced by injured consumers of products and to administer novel prescriptions. This was famously seen in the twin developments of the deconstruction of the privity rule, and the emergence of strict liability for products.
The importance of the privity rule was highlighted at the end of the nineteenth century, when US courts began to depart from a strict caveat emptor approach and implied contractual warranties as to quality into sales contracts. The response of manufacturers was predictable: sub-contracting the sales function to a separate entity to avoid being in privity with the purchaser. Pressure gradually increased until an important decision in 1916 when the New York Court of Appeals decided MacPherson175 (some sixteen years before Donoghue176). Owen regards this case as the commencement of the modern era of product liability law177 and Judge Peck has remarked that “[p]robably no other case has been as frequently cited in following decisions
171 See Taschner (1999), 27; Chapter 6 below. 172 G. Wagner, 'The development of product liability in Germany' in S. Whittaker (ed) The Development of Product Liability (Comparative Studies in the Development of the Law of Torts in Europe CUP, 2010), 126-8 173 Ibid., 121ff; N. Coggiola, 'The development of product liability in Italy' in ibid., 208ff, 216-7; I. Giesen, 'The development of product liability in the Netherlands' in ibid., 160-1 174 D. G. Owen, 'The Evolution of Products Liability Law' (2007) 26 The Review of Litigation 955, 957; W. L. Prosser, 'The Assault upon the Citadel (Strict Liability to the Consumer)' (1960) 69 The Yale Law Journal 1099; W. L. Prosser, 'The Fall of the Citadel (Strict Liability to the Consumer)' (1966) 50 Minnesota Law review 791; S. L. Birnbaum, 'Unmasking the Test for Design Defect: From Negligence [to Warranty] to Strict Liability to Negligence' (1980) 33 Vanderbilt Law Review 593; D. G. Owen, Products Liability Law (3rd edn West Academic Publishing, 2015), 17-24 175 MacPherson v Buick Motor Co (1916) 111 NE 1050 (New York Court of Appeals) 176 Donoghue v Stevenson [1932] AC 562 (Scot) (HL) 177 Owen (2007), 965 52 or has made as great an impact on industry”178. Like Donoghue, the Court held that the duty to safeguard life and limb did not only grow out of contract. If a manufacturer knew that a product would be used by persons other than the purchaser then irrespective of the contract, there was a duty to that person to use it carefully179.
Encouraged particularly by the writings of Prosser and others180, in 1944 the Supreme Court of California in Escola181 upheld a res ipsa loquitur plea and, in product cases, shifted the fault standard for negligence to a form of strict liability. The effect of that decision took some time to impact, whilst exceptions to the privity rule continued to emerge, starting with defective foodstuffs and extending to animal foods, products for bodily use, durable products etc.
In 1960, the New Jersey Supreme Court in Henningsen182 took the significant step of rejecting the privity bar in a warranty claim concerning a car and shortly thereafter, in 1963, the Californian Supreme Court in Greenman183 held that strict liability applied in tort to manufacturers irrespective of contractual limitations that might be relevant in a warranty claim.
Around this time, Prosser, in his capacity as Reporter consolidated the case law into what became §402A of the Second Restatement of Torts184. This imposed liability for products “in a defective condition unreasonably dangerous to the user or consumer” irrespective of fault or contractual relationship. Thus strict liability by manufacturers for damage caused to consumers by the use of his products was codified and began to be adopted and applied throughout the United States185. When Europe came to confront the issue of the shape of its own harmonised liability regime for products, the Second Restatement occupied centre stage.
However, just as Europe embarked on its chosen path, reformist movements in the US started to gain traction. In the late 1980s, a reduction in the strictness of liability started to appear,
178 D. W. Peck, Decision at Law (1961) 179 MacPherson, 1053 180 Chapter 4 below. 181 Escola v Coca Cola Bottling Company of Fresno (1944) 24 Cal. 2d 453 (California Supreme Court) 182 Henningsen v Bloomfield Motors Inc (1960) 32 NJ 358 (Supreme Court of New Jersey) 183 Greenman v Yubba Power Products Inc (1963) 377 P.2d 897 (Supreme Court of California) 184 Restatement (Second) of Torts (1965) 185 Owen (2007), 977 53 particularly in design and warning cases186. Where the danger in such cases was unforeseeable at the time of supply, strict liability tended not to be imposed. Thus in Feldman187, the duty to warn was only applied to product dangers that the manufacturer should reasonably have discovered given the state of science and technology. Writing in 2007, Stapleton suggested that of the thousands of design defect cases brought in the prior decades in only 3 was a US court “prepared to follow the logic of its strict liability rhetoric and impose that liability. Not one involved a pharmaceutical!”188 The courts instead increasingly189 turned to cost/benefit and risk/utility as a touchstone, rather than strict consumer expectations, leading them headlong back to a negligence-type enquiry190.
By 1996, legislative efforts191 at reform were the subject of a presidential veto before the Restatement (Third)192 was adopted in 1998. The new approach was to provide that a commercial seller or distributor is liable for harm caused by their defective product (§1). The Restatement then introduced a formal categorisation of defect types in §2: manufacturing, design and instructions/warnings. §3193 was added to permit the inference of product defect without specific proof in cases where the incident which harmed the plaintiff was of a kind that normally occurs as a result of a product defect, and was not solely the result of causes other than product defect existing at the time of sale or distribution.
As respected American commentators have noted, the effect of these changes are that – with some exceptions – the “parlance of defectiveness in sections 1 and 2 merely cloaks a grounding of liability – for design and warning “defects” – in fault”194. The only remaining area of truly strict liability is for manufacturing defects, with a risk/utility approach to the permissibility of dangers posed by products tending to determine the outcome in warning and particularly
186 Feldman v Lederle Laboratories (1984) 479 A.2d 374 (New Jersey Supreme Court); Brown v Superior Court (1988) 751 P.2d 470 (Supreme Court of California); Owen (2007), 979 187 Feldman v Lederle Laboratories 188 Stapleton (2007) , 27 189 Restatement (Third) of Torts: Product Liability (1998) Reporter’s Note, comment (d); D. G. Owen, 'Risk-Utility Balancing in Design Defect Cases' (1997) 30 University of Michigan Journal of Law Reform 239; J. F. Vargo, 'The Emperor's New Clothes: The American law Institute Adorns a "New Cloth" for Section 402A Products liability Design Defects - A Survey of the States Reveals a Different Weave' (1996) 26 University of Memphis Law Review 493 190 Owen (2007), 981-2 191 Common Sense Product Liability Legal Reform Act 1996 HR 956 (104th Congress) 192 Restatement (Third) 193 Owen (2007), 985 194 Ibid., 986 54 design cases. Whilst some195 have welcomed the restatement as reflecting the functional application of products law in various courts, others have bitterly opposed the move away from consumer expectations196.
3.2.2.2 Influence on Europe
As an AG has remarked, it is not surprising that as a response to industrialisation, the theoretical premises of a system of strict liability developed first in the US where industrial growth was strongest197. When the Commission advanced its proposals, that experience provided “inspiration”198. That inspiration can only have been at a relatively high level of generality since, as Stapleton put it, “the State common law versions of the rule in §402A [became] riddled with variables that are daunting for the non-US lawyer”199. In any case, whilst events in America might have provided inspiration, it certainly did not determine the form that European action should take.
In Commission v UK, the AG saw the more recent American trend since the Second Restatement, as being of interest in Europe200. Relying on Priest’s writings, he noted that an “indiscriminate expansion of substantive tort liability” caused a crisis on the insurance market201 and it was “well to bear in mind” Priest’s warning that in light of the retreat seen in Brown, whether “in giving practical implementation to the [PLD] adopting the standard of strict liability twenty-five years after it was introduced in the United States, the European states will accept the original theoretical premises of that system which subsequently caused a crisis in the USA or whether, on the other hand, they will accept the counter-revolution which has just begun”202. Similarly, Stapleton has lamented that if only Europeans had been more sensitive to the retreat in the US, it “may have alerted them to the fundamental political and doctrinal dilemmas of imposing strict tort liability on manufacturers for unforeseeable risks, and they may have balked at agreeing to the
195 Ibid., 989 196 J. W. Little, 'The Place of Consumer Expectations in Product Strict Liability Actions for Defectively Designed Products' (1994) 61 Tennessee Law Review 1189 197 Commission v UK AG§16 198 Ibid. AG§17 199 Stapleton (2007) 200 Commission v UK AG§18 fn 9 201 G. L. Priest, 'The Current Insurance Crisis and Modern Tort Law' (1987) 96 Yale Law Journal 1521, 1550, 1563, 1589 202 G. L. Priest, 'Corte Supreme Della California; sentenza 31 marzo 1988; Giud. Mosk; Brown c. Abbott Laboratories e altri' (1989) 112 Il Foro italiano 119; Commission v UK AG§18 fn 9 55 ambiguous “all-things-to-all-parties” wording of the notorious 1985 Directive on Products Liability”203.
In chapter 7, I shall argue that the tremors resulting from the change in direction in the US ought not to compel European product lawyers to follow their North American colleagues back towards a system driven – at least in warning and design cases – by fault-based considerations. It certainly is not a reason to adopt an interpretation of defect or development risks which is out of step with the aims and structure of the PLD as adopted and that the perceived problems in design and warning cases are either illusory or have European solutions. Accordingly, it is now time to recognise that the initial influence that the US experience had is of less contemporary relevance.
One obvious difference between the US development and the influences which operated in Europe was that the jurisprudence up to the Second Restatement developed mostly through cases dealing with traditional products such as soft-drink bottles, power tools, cars etc. Whilst the application of the regime to products such as pharmaceuticals was acknowledged in the Restatement204, it was only later that the detailed application was worked out. In Europe, however, the case of pharmaceutical products was in everyone’s minds from the outset and affected how the PLD was drafted. This was because one major impetus for reform arose from the shocking consequences of thalidomide.
3.2.3 Thalidomide and other Scandals
There can be little doubt that the thalidomide scandal205 had a profound influence on European thinking in the years leading up to the PLD206. The drug, a tranquiliser, was marketed in 46 countries on the basis that it was non-toxic and was safe for pregnant women. Instead, it was teratogenic and resulted in deformities in the children of the mothers who took it. Around 8,000 thalidomide babies were born around the world.
Many European countries were affected and by the time the PLD was being drafted, some had already responded, and in others the response was on the way. As well as setting up a
203 Stapleton (2007), 27 204 Comment K on unavoidably unsafe products. 205 P. Knightley and others, Suffer the Children - The Story of Thalidomide (Andre Deutsch, 1979) 206 Stapleton, Product Liability, 41ff 56 compensation fund207, in 1976 Germany introduced a form of strict liability for pharmaceutical products208. Special compensation schemes within certain Nordic States were established. In the UK a legal route was taken, accompanied by much delay and frustration for the victims before, eventually, compensation was forthcoming209.
Naturally, the political fall-out was significant, and calls for change arose. The effect of thalidomide on the collective consciousness of Europeans was amplified by other cases which had come to light at around the same time, or shortly thereafter. In the Netherlands, the Planta brand of margarine had to be removed from the market after a new additive seemed to cause headaches and itching, and problems were experienced over a supposed lack of safety of carbonated drinks bottles (Exota affair)210. Further, in Spain, there was mass poisoning resulting from human consumption of contaminated colza cooking oil211.
This all fed into a renewed desire to embrace a strict-liability for products. It is therefore of little surprise to find that thalidomide was expressly raised during the debate about the new harmonised kind of liability212. As a necessary consequence, and unlike in the US, the best way to impose liability for pharmaceuticals directly confronted lawmakers as they set about their drafting tasks.
3.3 European Convention on Products Liability
Any account of the PLD would be incomplete without consideration of work undertaken by the Council of Europe in the early 1970s. Whilst the resultant Convention213 had precious little take-up, its influence on the framing of the directive cannot be underestimated.
207 Taschner (1999), 27 208 See Chapter 6 209 See Knightley and others, Suffer the Children, ch 10-11 210 Giesen, The development of product liability in the Netherlands, 159 211 M. Martin-Casals and J. S. Feliu, 'The development of product liability in Spain' in ibid., 251-256 212 European Commission, Explanatory Memorandum to Proposal for PLD COM(76)372; Bulletin Supplement 11/76 (1976), §24; ESC, Opinion on the proposal for PLD OJ C114/15 (7.5.79) (1978) §2.10.1.2 213 European Convention on Products Liability in Regard to Personal Injury and Death (European Treaty Series - No 91) 27 January 1977 57
3.3.1 The Work Leading to the Convention
Work began after the Council of Europe set up a Committee of Experts to propose measures to harmonise substantive product liability law in its member states214. The Commission attended and participated in the meetings215 (along with other interested organisations). After seven meetings between 1972 and 1975, a draft text of what became the Convention was produced, accompanied by a detailed Explanatory Report.
The landscape identified was one free from special rules governing the liability of producers. Case-law was finding increasingly complex ways to ‘adapt’ general principles, tending to make liability stricter, driven by a desire to protect consumers from the effects of industrial production, marketing and sales, and a recognition that product liability could no longer be confined within national borders216. The Committee expressed the “desire to ensure better protection of the public” coupled with the “advisability of taking producers’ interests into account”, particularly their interest in legal certainty. It sought to ascertain where the fair balance between these interests lay217.
The majority agreed that fault (whether or not combined with a shifted burden of proof) was no longer satisfactory given the risks posed by mass technical production218. Instead, a producer should pay compensation for injury caused by a ‘defect’ in the product and the injured person should prove causation between defect and damage. The producer would escape liability by proving the absence of defect when the product was put into circulation, or that the product was not put into circulation; and could reduce liability by reference to the victim’s own fault.219 The majority did not consider that the system created ‘absolute liability’, describing it as a “mixed system”220.
214 It should be noted that membership of the Council of Europe is (present membership 47 states covering 820 million citizens) and was at the time wider than that of the European Union. 215 CoE Report §2 216 Ibid. §4 217 Ibid. §5 218 Ibid. §10; see also at §60 219 Ibid.§15 220 Ibid. §17 58
3.3.2 The Adopted Convention
A striking feature of the Convention is how much of its structure and content was appropriated to form the PLD. Many similarities221, but also differences222 are beyond the scope of the present work223. However three points can be made.
First, the Convention’s purpose was greater cooperation between member states (recital 1), and better protection of consumers given modern production, marketing and sales methods (recitals 2, 3), whilst taking account of the legitimate interests of producers (recital 3).
More importantly, the central requirements for liability (defect, damage and causation) are the same in both Convention and PLD224 as is the substance of the definition of ‘defect’. Under the Convention “a product has a ‘defect’ when it does not provide the safety which a person is entitled to expect, having regard to all the circumstances including the presentation of the product”225. ‘Safety’ and ‘legitimate expectancy’ were the basic building blocks of an objective criterion226. ‘Reasonableness’ was deliberately eschewed over concerns it could diminish the consumer’s rights. This definition was later lifted almost word-for-word into article 6(1) PLD, albeit with the addition of two further circumstances to be taken into account (reasonably expected use, and the time the product was put into circulation). Additional provision is made in the PLD that a product is not to be considered defective for the sole reason that a better product is subsequently put into circulation (Art 6(2)). These are, however, not significant differences as the Committee deliberately did not enumerate all the circumstances that could be relevant
221 Similarities (Convention/PLD): definition of product (Art 2(a)/Art 2); those liable (Art 3(1)(2)/Art 3(1) (2)); liability of suppliers (Art 3(3)/Art 3(3)); joint and several liability (Art 3(5)/Art 5); defectiveness (Art 2(c) /Art 6); requirements to establish liability (Art 3(1)/Art 4); contributory negligence (Art 4/Art 8(2)) limitation period (Art 6/Art 10(1)); longstop (Art 7/Art 11); three defences (Art 5(1)(a)(b)(c)/Art 7(1)(a)(b)(c)); contracting out prohibition (Art 8/Art12); nuclear damage exclusion (Art 9b/Art 14); prohibition on derogation/gold-plating (Art 10/caselaw, below); preservation of existing law (Art 12/Art 13); optional liability cap (Reservations §2/Art 16(1)). 222 Differences (Convention/PLD): meaning of ‘importer’ (Art 16/Art 3(2)); missing defences (-/Art 7(d)(e)(f)); recoverability of property damage (Art 3/Art 9) 223 F. Albanese, 'Legal Harmonisation in Europe Product Liability: A Comparison Between the Directive of the European Communities and the Council of Europe Convention' in C. J. Miller (ed) Comparative Product Liability (BIICL, 1986) esp 28ff 224 Article 3(1); cf article 4 PLD 225 Article 2(c); cf article 6 PLD 226 CoE Report §35 59 such that there was room for others227; it also considered that the definition gave a judge “sufficient margin of appreciation to enable him to take the time factor into account”228.
The Committee also did not mention time as it did not want to admit an exception for development risks229. The Committee defined these as “damage produced by a cause that could not be foreseen or avoided given the state of scientific knowledge at the time the product was put into circulation. In other words, the defect existed when the product was put into circulation but was not and could not be known to the producer. The defect could be revealed only as the result of a subsequent scientific discovery.”230 The intention was that there would be liability for development risks, and therefore no DRD was included. The committee explained that this was because the Convention was to provide for a system of “strict” liability231. A minority concern was that, particularly for technically advanced products, not admitting a DRD would discourage scientific research and marketing of new products232. The contrary view was that such a defence would render the convention “nugatory” as it would allow the producer to prove an absence of fault on his part. A separate reason saw the defence as permitting the consumer to be used as an effective ‘guinea pig’233. Ultimately the Committee were persuaded by these latter arguments234.
3.3.3 The Convention’s Eclipse
Compliance with the Convention was voluntary and there have only been four signatories: France, Belgium and Luxembourg (all on 27 January 1977) and Austria (on 11 August 1977); none of whom have ratified235. This contrasts with the PLD which, once adopted, became binding European law led to the effective eclipse of the Convention. That said, the Convention’s lasting legacy is surely the profound influence exerted on the negotiations and ultimate text of the PLD.
227 Ibid. §36 228 Ibid. §§37, 42; Albanese, Legal Harmonisation in Europe Product Liability 16-19 229 CoE Report §37 230 Ibid. §38 231 Ibid. §38 232 Ibid. §39 233 Ibid. §40 234 See Albanese, Legal Harmonisation in Europe Product Liability 24-25 235 See Council of Europe, Details of Treaty No.091 (2016)
3.4 Framing the Directive
The PLD had a long gestation period which overlapped with the Convention. Initial research was undertaken in the 1960s, but suspended until after the accession of the UK236. Discussions began again in the 1970s. A first proposal was prepared in 1976 and amended following consultation in 1979. Further consideration was then given to the proposal before it emerged from the Council and was adopted in 1985. This lengthy ex ante consideration of the issues contrasts markedly with approach to the Restatements in the United States.
In this section, after reviewing the legal framework within which the draftsmen were operating, I shall examine the key proposals before concluding with some words on the relevance of the travaux préparatoires.
3.4.1 The Legal Framework
The chosen legal basis for the PLD was Article 100 EEC237. This entitled the Council, acting by a unanimous vote238, to approximate laws to further the “functioning of the Common Market” by removing distortions in competition and impediments to the free movement of goods arising from different national liability rules239.
Whilst it could not have been the legal basis of the PLD, consumer protection was a strong additional impetus240. Three points can be made in relation to this. First, the economic burdens on producers are indivisibly linked to the extent of consumer protection offered. As Taschner puts it241, the level of consumer protection in a particular jurisdiction reflects the burden on the producer. Thus imposing similar burdens will mean protecting consumers to a similar
236 Taschner (1999), 25 237 Art 115 TFEU OJ C 326/1 of 26.10.2012 238 Negotiations preceded Single European Act 1986 Official Journal L 169 of 29.6.1987 which introduced qualified majority voting and a new Article 100a. 239 Taschner (1999), 22 cf Weatherill (2004); CEMA, Opinion of 4 November 1977 PE 51.378/AnnVI/fin. p21 (1977) 240 Following Treaty of European Union 1992 (the Maastrict Treaty) Official Journal C 191 of 29.7.1992, the purposes of the Union were expanded to include “strengthening of consumer protection” (Art 3(s)) alongside ensuring a high level of health protection (Art 3(o)). 241 Taschner (1999), 22 61 extent. It follows that distinguishing between article 100 as the legal basis, and the PLD having the aim of enhancing consumer protection, is false242. They go hand in hand.
Secondly, the Treaty also made it possible to integrate consumer measures into other bases for action. For example Art 2243 provided that the objectives of the Community included not only the promotion of economic activities, but also “raising of the standard of living”244. By October 1972, the reference to raising standards of living was seen to imply the protection of the health and safety of consumers as well as the protection of economic interests245. Further, a Council Resolution in April 1975246 set out a preliminary programme to pursue consumer protection and “a new deal” for the consumer, providing a “better balance in the protection of his interests”247. The consumer was no longer merely a purchaser, but “also as a person concerned with the various facets of society which may affect him either directly or indirectly as a consumer”248. Concerns were raised about the increased abundance and complexity of goods and that the consumer could no longer “properly fulfil the role of a balancing factor”. New methods of production had caused him to become merely a unit in a mass market, weighted in favour of the supplier and producer249. The programme set out five basic consumer rights: the protection of health and safety, of economic interests, the right to take redress, to information and education, and of representation. Invoking the first two of those rights, the programme noted that the consumer must be protected against the consequences of physical injury and damage to economic interests caused by defective products and services supplied by manufacturers of goods and providers of services250 and resolved to harmonize the law on product liability “so as to provide better protection for the consumer”251. Appropriate proposals “on the basis of studies already carried out or in progress” were requested, and the particular importance of the cooperation with the work of the Council of Europe was recorded.
242 Boston Scientific Medizintechnik GmbH v AOK Sachsen-Anhalt (Case C-503/13, 504/13) [2015] 3 CMLR 173 (CJEU) AG§36: harmonising measures adopted under article 100 could additionally have the objective of guaranteeing consumer protection. 243 See now Art 3 TFEU 244 Treaty establishing the European Economic Community (Treaty of Rome) 1957 (preamble): “…constantly improving the living and working conditions of their peoples”. 245 Heads of State, Statement from the Paris Summit Bulletin, October 1972, No 10 (1972) §§3, 6 246 European Council, Council Resolution of 14 April 1975 on a preliminary programme for a consumer protection and information policy OJ C92/1 of 25.4.75 (1975) 247 Ibid. §2 248 Ibid. §3 249 Ibid. §6 250 Ibid. §§15(ii), 19(ii) 251 Ibid. §§26, 48 62
Finally, as AG Geelhoed observed in Commission v France252, the legal base chosen as the foundation for legislative action imposes no limit whatever on the level of protection which the legislature may choose to be bestow on the consumer.
3.4.2 The Initial Proposal: September 1976
The first proposal of 9 September 1976253 was accompanied by a detailed Explanatory Memorandum254. The proposal was for liability “irrespective of fault” because, given increasing technicality, the producer could spread the risk of damage arising from a defective product through his production costs (see recitals 4 and 5). The variability in Member States’ liability standards created differences in costs for manufacturers, and therefore affected competition and free movement of goods255.
Article 1 provided for liability for damage caused by a defect “whether or not [the producer] knew or could have known of the defect. The producer shall be liable even if the article could not have been regarded as defective in the light of the scientific and technological development at the time when he put the article into circulation.” Thus, the very text of the proposal made it clear that there was no room for fault and no escape from development risks256. This was because “otherwise the consumer would be subjected without protection to the risk that the defectiveness of a product is discovered only during use” (recital 6). It was thought unacceptable that the consumer bear development risks which were “extremely rare”: “only the principle of liability irrespective of fault can lead to a universally acceptable solution”257. It was the inability of the producer to raise the ‘state of the art’ defence in this proposal that caused an AG to describe the scheme at that point as going “beyond [a] system of strict liability…. [to] one of absolute liability”.258
The test of defect was set out in article 4: “A product is defective when it does not provide for persons or property the safety which a person is entitled to expect.” The focus was on safety, and not on whether the product could be used as intended: that belonged to the law of sale. Furthermore,
252 Commission v French Republic (Case C-52/00) [2002] ECR I- 3827 (CJEU) AG§39 253 European Commission, Proposal for PLD OJ C241/9 (14.10.76) (1976) 254 Memorandum (First Proposal) 255 Ibid. §1 256 A rebuttable presumption of fault would not give adequate protection as “in most cases …defects cannot, in spite of every precaution, be detected, so that the producer can rebut the presumption of his fault by proof he has taken every precaution”: ibid. , §1. 257 Ibid. §2 258 Commission v UK AG§18 63 the objective nature of the test was emphasised with expectations as to safety judged in light of the circumstances in each case259.
In terms of balance260 towards producers’ interests the proposal included (i) the ability for them to spread risk, (ii) the imposition of a maximum limit on liability (article 7), and (iii) a ten year limit of exposure from the end of the calendar year in which the product was put into circulation (article 9). The Commission was concerned that an “incalculable burden of risk” could lead to producers being afraid to innovate which “would in turn impair or jeopardize economic and technical progress”261. Thus an overall liability ceiling would be appropriate. This was also seen as a positive step to ensure that insurance could be obtained by producers, and premiums spread through the costs of production262. The Memorandum revealed that major disasters would still be included within the limit as such cases were thought to arise “scarcely” and “the assistance of the public may… be forthcoming as was the case with the thalidomide cases”263. Furthermore, the 10 year longstop was justified as part of the compromise that development risks were to fall at the producer’s door264.
3.4.3 Institutional Reaction to the Proposal 1977-1979
The Parliament’s LAC obtained265 two opinions from CEPHCP and CEMA. Whereas the former approved the proposal266, the latter was more critical. It sought evidence to justify the claim that there were distortions of competition and noted there was no research into the costs that would fall to be spread267. It doubted whether liability without fault was appropriate for smaller producers and non-mass produced products and was concerned about the “heavy” nature of the liability for development risks which would “undeniably put a brake on innovation” and “weaken [Europe’s] competitive position viz-a-viz third countries”. The Committee sought a “searching inquiry” into the costs of development risks liability and thought it “would perhaps be useful to look elsewhere for a satisfactory solution to this problem”268.
259 Memorandum (First Proposal) §13 260 Ibid. §28 261 Ibid. §22. 262 Ibid. §22 263 Ibid. §§24-5 264 Ibid. §28 265 LAC, Working Document 3 February 1977 PE 47.746 (1977) 266 CEPHCP, Opinion of 30 March 1977 PE 51.378/Ann VI/fin, p29 (1977) 267 CEMA Opinion 268 Ibid., 26-7 64
By December 1977, LAC had prepared a draft report269 welcoming the proposal and accepting that intervention was justified. It recommended that the limit on liability for personal injury be removed, and that pharmaceutical products should be exempt270. The Committee agreed that development risks should not be a basis to escape liability, otherwise the producer “could in practice claim that he was only liable for fault. The concept of the ‘scientific and technological development’ in connection with the concept of the defect is much too imprecise and open to abuse and could lead to a reversal of the burden of proof.”271
On 13 July 1978 the ESC gave its opinion. After setting out various principles for action (§1.1.2) the ESC considered that a directive “may be based on a system of liability irrespective of fault” (§1.1.3.3). The Committee recorded that insurers had maintained that premiums constituted a very small part of the sales price of products, but nonetheless stated the effect of liability without fault on production costs would have to be studied. The Committee offered a number of comments on the provisions of the draft. There was a split as to whether the definition of defect needed to be more explicit and less ambiguous272 and the Committee was also divided regarding whether development risks should be excluded (due to the inhibiting effect on innovation) or included (on the basis that it was appropriate consumer protection which could be covered by insurance)273. The ESC was also split over whether property damage should be excluded (§2.7.2), and whether there should be an overall limit on liability, and if so at what level (§2.10). A 10 year longstop period was considered appropriate (§2.12).
A month later, LAC produced its 10 August 1978 report274. In a change of heart, the Committee opined that a new legal system would be confusing for the consumer, and might distort competition between industries. It favoured following the Convention. The Committee thought more analysis was required and that Art 100 was not the appropriate legal basis for the proposal.
269 LAC, Draft Report of 1 December 1977 PE 51.378 (1977) 270 Ibid., 12-14; 18 271 Ibid., 16-17 272 ESC Opinion §2.3.2 273 Ibid. §§1.2 274 LAC, Report of 10 August 1978 Document 246/78 PE 51.278.fin (1978) 65
By April of 1979, however, LAC reported275 proposing amendments, including importantly – and by 14:12 votes - to exclude liability for development risks stating this was “justified both from the point of view of equity (how is it possible to justify the manufacturer’s liability for a product which at the time it was manufactured was considered perfect in the light of the state of science and technology?) and by economic consideration[s]...”. The minority considered the DRD “was essential for consumer protection and was not likely to constitute a bar on innovation, for liability arises not from the newness of a product but from damage.”276
The Report recommended that the definition of defect be amended so that the Court take into account all the circumstances, in line with the draft Convention. It also stated “special attention should be paid to the time at which it (the product) was put into circulation. No one can reasonably expect the same degree of safety from an old product as from a new product”. The LAC also recommended that a product should only be considered defective where it was “being used for the purpose for which it was apparently intended”, the word ‘apparently’ being included to signify that the use to which the product is put is determined by the consumer, not producer277.
The very next month, the European Parliament resolved to welcome the proposed directive as a measure designed to achieve undistorted competition and free movement of goods “and as an essential component of a Community policy for consumer protection”278 and invited the Commission to adopt a series of amendments279, including to the definition of defect to include all the elements contained in the final version of article 6, albeit in a slightly different structure.
In terms of development risks, the Parliament invited deletion of the recital and amendment of Article 1, sentence 2, to read as follows:
The producer shall not be liable if he can produce evidence that the article cannot be considered defective in the light of the state of scientific and technological development at the time when the article was put into circulation.
275 LAC, Report of 17 April 1979 Document 71/79 at PE 57.516/fin (1979) 276 Ibid. §§19-20 277 Ibid. §§25-6 278 European Parliament, Report on the proposal for PLD OJ C127/61 of 31.5.79 (1979) 279 Ibid. from 127/62 66
This was proposed to be coupled with a new Article 1a excluding liability in the case of properly conducted recalls. Minor amendments were also made inter alia for the longstop duration to run from the date the product was put into circulation, rather than the end of the calendar year in which that occurred.
3.4.4 The Amended Proposal: October 1979
The Commission produced an Amended Proposal on 1 October 1979280 accompanied by a further Explanatory Memorandum281. A number of the Parliament’s suggestions were acceptable, including (for the most part) the proposed approach to defect282. However, the Commission was not minded to accept the Parliament’s proposal to exclude development risks from liability283. It repeated that such risks were “extremely rare” but on those occasions, the consumer would have to bear the risk of the unknown. The Commission considered no- fault liability should apply. The Commission had received information from the European Committee of Insurers which indicated that insurance cover for such risks was unlikely to lead to appreciably greater costs of insurance than would otherwise be the case.
The Commission also rejected the proposed new Article 1a284. As for the liability ceiling, the Commission considered the flexibility introduced by the LAC was an acceptable compromise285. The amendment changed the relevant recital to include that it was not appropriate to impose a ceiling “which the Council can revise and eventually eliminate in relation to personal injuries”286. It was also content to adopt the Parliament’s suggestion that the 10 year longstop period commence from the date on which products were put into circulation, rather than the end of that calendar year (which, it said, had been included to make the calculation in any litigation easy)287.
280 European Commission, Amendment of the Proposal for PLD OJ C 271/3 of 26.10.79 (1979) 281 European Commission, Explanatory Memorandum: Amendment of the Proposal for PLD COM(79)415 (26.9.79) (1979) 282 Ibid., 4 283 Ibid., 1 284 Erroneously referred to as “Article 1b” on page 3 of ibid. Recalls were not considered and gave rise to insurance problems. 285 Ibid., 6 286 Amended Proposal, 271/6 287 Ibid., 7 67
3.4.5 The Negotiation Period: 1979-1984
After the Commission’s amendment of October 1979, the proposal was considered by working parties within the Council. The negotiation period was extremely long and commentators were somewhat taken by surprise when the PLD emerged288. As AG Geelhoed recognised “the Member States differed widely in their approach to the question where precisely [the] balance should be struck”289, and as each had an effective veto on the proposal, matters took time to negotiate. There is a general lack of publically available information concerning the events during the negotiation period. As Stapleton has observed “Once the second draft Directive entered the secretive maze of European negotiations in 1979, political bargaining, largely behind closed doors, seemed to take over.”290
3.4.6 The relevance of the travaux préparatoires
The extensive travaux préparatoires contain, in places, opposing views as to the aims and means of the proposal. May these documents permissibly guide the interpretation of the PLD?
The CJEU requires every provision of EU law to be placed in its context and interpreted in light of EU law as a whole291. Recourse to legislative history, such as the travaux, has been said to be useful, albeit on an ancillary basis292. The travaux cannot contradict the clear wording of the legislation293. This can be seen in the context of the PLD in Skov294 where two statements in Council minutes were held to be incapable of extending, contrary to the text of the PLD, the class of persons liable under the directive. The CJEU held: “where a statement recorded in Council minutes is not referred to in the wording of a provision of secondary legislation, it cannot be used for
288 G. Howells, 'Implications of the Implementation and Non-Implementation of the EC Products Liability Directive' (1990) 41 NILQ 22 289 Commission v France , AG§35; see also D. G. Smith, 'The European Community Directive on Product Liability: A Comparative Study of Its Implementation in the UK, France and West Germany' (1990) 17 Legal Issues of European Integration 101, 101-2 290 Stapleton, Product Liability, 48 291 CILFIT §20 292 Bowden v Tuffnells Parcels Express Ltd (Case C-133/10) [2001] ECR I- 7031 (CJEU) AG§30 293 Hauptzollamt Hamburg-Jonas v Josef Vosding Schlacht-, Kühl- und Zerlegebetrieb GmbH & Co (Case C- 278/07) [2009] ECR I- 457 (CJEU) AG§48 294 Skov Æg v Bilka Lavprisvarehus A/S (Case C-402/03) [2006] 2 CMLR 16 (CJEU)H. J. Kullmann, ProdHaftG Kommentar (6th edn Erich Schmidt, 2010) §43 68 the purpose of interpreting that provision”295; such declarations have no legal significance296. The true meaning of provisions can be derived only from the wording adopted in light of the context297. Where, however, a proposal has been adopted without substantive changes, the statement of reasons for the proposal can be referred to cast light on the aim, purpose or context for the purposes of interpretation298. It cannot be the only reference, but must be used in conjunction with others. Relevant travaux can be used as an interpretive aid even though the materials were not expressly referred to in the relevant directive, or its recitals, but in circumstances where they were relevant to interpretation and the text did not contradict them299. Recourse to the travaux can be seen in Boston300.
3.5 The Adopted Directive
The PLD in its final form was adopted by the Council by unanimity on 25 July 1985. The Member States were given until 30 July 1988 to effect transposition into their national legal systems301. The drafting process outlined above has been described by one AG as “laborious” and one which “undoubtedly left its mark on the recitals and on the provisions of the Directive”302. Another noted how the wording “differs considerably from the … Commission’s original proposal”303.
Before examining how article 7(e) has been implemented in England and Germany, it is necessary to examine it in its final form, placing it in context within the adopted directive’s other provisions. In this section I shall also consider how, in the relatively sparse case-law since 1985, the Court has interpreted a number of relevant provisions and the academic debate that has attempted to fill that void.
295 Skov §42, AG§75 296 R v Immigration Appeal Tribunal ex p Antonissen (Case C-292/89) [1991] 2 CMLR 373 (CJEU) §18 and Ministerio Publico v Epson Europe BV [2002] 3 CMLR 4 (CJEU) §26; see also Societe Bautiaa v Directeur des Services Fiscaux des Landes (Case C-197/94, joined with Case C-252/94) [1996] ECR I- 505 (CJEU) §51. 297 See Re the Business Transfer Directive: EC Commission v Belgium (Case 237/84) [1988] 2 CMLR 865 (CJEU) §17. 298 §§27-9; see also Ministere Public v Vincent Auer (Case 136/78) [1979] 2 CMLR 373 (CJEU) §§25-7 cited at Skov AG§75 299 01051 Telecom GmbH v Deutsche Telekom AG (Case C-306/06) [2008] ECR I- 01923 (CJEU) §§23, 25 300 Boston AG§§28, 30 esp. §35 301 Article 19 PLD 302 Commission v France AG§35 303 Commission v UK AG§17 69
3.5.1 Preliminary Remarks
Before turning to the adopted provisions of the PLD themselves, five preliminary remarks about the liability regime should be made.
3.5.1.1 The Fair Apportionment of Risks
First, the adopted text recognised that a balance needed to be struck between the interests of producers and of consumers. This is inherent in the concept of “fair apportionment of risks” referred to in the recitals, including importantly at Recital 2304:
Whereas liability without fault on the part of the producer is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of a fair apportionment of the risks inherent in modern technological production;
That concept has been criticised by some as being imprecise305, yet in Recital 2 the European legislators mandated that a liability regime without fault is the fair apportionment which the PLD imposes306. This was underscored in 1999 when the amending directive307 referred to the PLD as having established a fair apportionment of risks and a reasonable balance between interests including “consumer health, encouraging innovation and scientific and technological development, guaranteeing undistorted competition and facilitating trade”308.
This was a consistent feature of the legislative proposals and, since adoption, has been recognised and emphasised by the CJEU309. Thus liability is not fault-based but defect- based310.
304 The numbering is to sequential ‘whereas’ clauses. 305. Whittaker, Liability for Products, 438-439; G. Howells (ed), The Law of Product Liability (2nd edn Butterworths Common Law Series, Lexis Nexis Butterworths, 2007) 306 Gee §76 307 Directive of the European Parliament and of the Council of 10 May 1999 amending Council Directive 85/374/EEC on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (1999/34/EC) Official Journal L 141/20 of 4.6.1999 308 Recital 2 309 See e,g. Commission v UK AG§16; Skov §19 310 Taschner, Product liability: basic problems in a comparative law perspective , 161 70
The concept of “fair apportionment of risks” runs like a thread through the various provisions of the PLD. It will be argued that once the fair apportionment is properly understood as being a system of liability without fault, interpretation becomes easier. Thus in Recital 7, the fair apportionment is said to imply that a producer should be able to exculpate himself from liability if he may prove the existence of certain defences. In light of recital 2, it would be surprising if concepts of fault were reintroduced in the form of defences.
However it is clear that the balancing is not tilted entirely in one direction. A complex balancing of different interests has been referred to on a number of occasions by the Court311, particularly when justifying its maximum harmonisation approach. One example is the temporal expiration of claims after a 10 year period (see recital 11 and Article 11). In Aventis v O’Byrne312 the Court referred the ‘long stop’ as being one side of the balance of interests between producer and injured person. This quid pro quo was for the fact the strict liability system represented for the producer a greater burden than traditional systems of liability. The AG explained in that case that the counterbalance was required in order not to restrict technical progress, to keep the additional burden on the producer within bounds, and to make sure it was possible to insure against liability (AG§49).
3.5.1.2 The Aim of Consumer Protection
Whilst the PLD invoked Art 100 EEC as a legal base, it also clearly exhibited the aim and objective of improving consumer protection which is prayed in aid in no fewer than 12 of the final recitals313.
Whilst some have downplayed this feature314, the case-law of the CJEU tells a different story315. In Aventis v O’Byrne the AG ascribed equal status to the three legislative aims (avoiding distortions in completion, promoting the free movement of goods, and consumer
311 See e.g. Commission v France and Commission v Hellenic Republic (Case C-154/00) [2002] ECR I- 3879 (CJEU) §§29-30; Novo Nordisk AG§19 312 Aventis Pasteur SA v OB (Case C-358/08) [2010] 2 CMLR 16 (CJEU) §§38-43, 46, AG§§47-49 313 Recitals 1, 4, 5, 6, 8, 9, 12, 13, 15, 16, 17, 19. 314 It has been observed (see Whittaker, Introduction to Fault in Product Liability, 9) that the PLD is in a technical sense ambivalent in its attitude to protection of consumers, protecting (as it does) all injured persons, and not merely consumers (see Article 4). However, in terms of recoverable property damage, it is only consumer property that is covered (Article 9). As Whittaker puts it, “while the Directive protects everyone’s personal integrity, it protects the economic interests only of consumers”. 315 Commission v UK §2 71 protection), whilst underlining that it followed from this that consumer protection did not take priority316. In Boston, the AG did not depart from that view. He relied on consumer protection as being “also one of [the PLD’s] main objectives”317 when justifying his interpretation of Article 6. Interestingly in that case, and given that it concerned medical device products, consumer protection concerns emboldened the AG to go further, and have regard to the requirement for a high level of human health protection in the definition and implementation of all Union policies and activities (Art 168(1) TFEU and Art 35 of the Charter of Fundamental Rights of the EU) and reasoned that this must also be an objective of the Directive318.
That said, greater consumer protection is not to be achieved at all costs. The economic objective of harmonisation was permitted to undermine consumer protection by preventing stricter implementations by national legislators319. Similarly, in Novo Nordisk the fact that amendments to a pre-existing special liability system might enhance consumer protection did not justify going beyond the words of article 13 and permitting a wider derogation from full harmonisation320. So too in Sanofi, presumptions as to causation could not undermine the burden of proof imposed by the PLD in order to achieve greater consumer protection (of course, on the other hand, such rules could not make it excessively difficult for consumers to exercise their directive rights321).
3.5.1.3 An Effective, Simplified Remedy
Another preliminary matter is the real concern outlined in the in the travaux préparatoires about the complexity and burden on a consumer of establishing fault in legal proceedings, and that in comparison with large manufacturing companies, an individual will struggle to discharge his burden of proof322. Imbalances in access to information continue to be a concern to this day323. The PLD was designed to change that. In Sanofi, the CJEU indicated a willingness to police the effectiveness of the liability system as implemented, including those areas (such as
316 OB (No 2) AG§§74-5; similarly Novo Nordisk AG§20 317 Boston AG§35 318 Ibid. AG§§40-1 319 W. H. van Boom and others, 'Product Liability in Europe' in H. Koziol and others (eds), Product Liability: Fundamental Questions in a Comparative Perspective (De Gruyter, 2017), 257 (and see below under harmonisation). 320 Novo Nordisk AG§41 321 Ibid. §28-30; W & others v Sanofi Pasteur MSD SNC (Case C-621/15) ECLI:EU:C:2017:484 (CJEU) §28-38 322 Memorandum (First Proposal), 13; see also Law Commission, Liability for Defective Products (Law Com No 82, Scot Law Com No 45) Cmnd 6831 (1977) §38e 323 Novo Nordisk AG§46 72 the rules of evidence) which were left to national law. Those rules cannot undermine the burden of proof or the effectiveness of the system of liability produced by the PLD (either by making proof too difficult or too easy)324. The EU principles of effectiveness and equivalence apply325.
3.5.1.4 Insurance
As has been seen above, the availability of insurance was regarded as important during the legislative process326. This remains implicit in the adopted directive, as was recognised by AGs in Commission v UK327 and Aventis v O’Byrne328. That said, the tail does not wag the dog. The liability imposed by the directive is just that and whether or not there is insurance cover in place for a particular producer does not affect whether the claimant should recover. Considerations of insurance are more apposite on a macro level given that it was plainly intended that the liability imposed by the PLD was insurable. Throughout the adoption process, the insurance industry made it clear that cover would be available, and reports since adoption continue to confirm that position, at least with the presence of the DRD329.
3.5.1.5 Harmonisation and its use as a guide to Interpretation
The PLD sought to achieve harmonisation in a rather special way which has led to debate as to whether the harmonisation achieved is properly described as complete, total, exhaustive or maximum330. Article 13 preserves rights deriving from contractual or non-contractual liability or from special liability systems existing at the moment when the PLD was notified.
In a trio of judgments all promulgated together on 24 April 2002 (Commission v France331, Sanchez332 and Commission v Greece333) the CJEU ruled that the PLD sought to achieve total
324 Sanofi §§27-32, 34, 37; Gee §§79-80 325 Sanofi §§25-6 326 First Proposal recital 5; Memorandum (First Proposal), 13-4 327 Commission v UK AG§18 fn 9 328 OB (No 2) AG§49 fn 19. 329 Fondazione Rosselli, Analysis of the Economic Impact of the Development Risk Clause as provided by Directive 85/374/EEC on Liability for Defective Products (2004); the Law Commission thought it would be without a DRD: Law Commission Report §§39-41 330 The debate is summarised in Novo Nordisk AG§23 331 Commission v France §§13-23; AG§§45-56 332 González Sanchez v Medicina Asturiana SA (case C-183/00) [2002] ECR I- 3901 (CJEU) §§23-33 (AG’s Opinion combined with France) 333 Commission v Greece §§9-19 73 harmonisation of strict product liability and that only pre-existing liability based other than on strict liability was preserved by article 13. The Court held that a member state’s discretion on implementation was entirely determined by the PLD “and must be inferred from its wording, purpose and structure”334. Given recital 1 and the absence of express authorisation to adopt more stringent provisions, it was not possible to maintain or establish provisions departing from Community harmonising measures335. Complete harmonisation was required in the matters regulated by the PLD336. Whilst the PLD did not regulate all matters, derogations were only applied “to the matters exhaustively specified and … narrowly defined” and simply meant the harmonisation was not complete337. Thus in Sanchez, article 13 did not permit the maintenance of a system of strict product liability different from that under the PLD, but did not preclude one “based on other grounds, such as fault or a warranty in respect of latent defects”338.
In France it was argued that it was permissible to add extra conditions before the article 7(e) defence applied because the whole defence could be derogated from. The Court disagreed: nothing in article 15(1)(b) authorised a Member State to alter the conditions under which the DRD applied, and it did not apply at all to the article 7(d) defence339.
The Court has maintained a consistent stance towards harmonisation since those cases340 and also adopted another technique: to insist on autonomous EU law concepts for the purpose of maximum harmonisation. Thus a separate concept of “damage” was recognised in Veedfald341 which national implementing measures must achieve. However, some concepts were left for national law, as the AG recognised in Novo Nordisk. Some are expressly mentioned by the PLD (joint and several liability, remedies, contributory negligence, suspension or interruption of time bars) and others are not (quantification of damage, presumptions of fact, transferability of the right to compensation)342. That case concerned a right to disclosure of information about
334 Sanchez §25; Moteurs Leroy Somer v Dalkia France (Case C-285/08) [2009] ECR I- 04733 (CJEU) §§20-1; OB (No 2) AG§69 335 Sanchez §23 336 Commission v France §20, Centre hospitalier universitaire de Besançon v Dutrueux (Case C-495/10) [2011] ECR I- 14155 (CJEU) §20, Novo Nordisk §23, AG§21 337 Sanchez §29; see also Novo Nordisk AG§24 338 Sanchez §§30-1 339 Commission v France §47 340 Commission v French Republic (Case C-177/04) [2006] ECR-I 2479 (CJEU); Skov §§33-34, §48; see also subsequently Commission v Denmark (Case C-327/05) [2007] ECR-I 93 (CJEU). This finding was relied upon by the Court in the subsequent case of O'Byrne v Sanofi Pasteur MSD Limited (Case C-127/04) [2006] 2 CMLR 24 (CJEU), §§35-37; OB (No 2) §§37, 39-40; Dutrueux §20 341 Veedfald v Arhus Amtskommune (Case C-203/99) [2003] 1 CMLR 41 (CJEU) , AG§30 342 Novo Nordisk AG§24 74 medicinal products. The Court held that such a right was not covered by the PLD and provided it did not undermine the burden of proof contained in article 4, or undermine the effectiveness of the system as a whole, was not precluded by the PLD343.
Pulling these strands together, it is clear that the Court has adopted an approach to the Directive by which it seeks full harmonisation of strict product liability on all regulated areas. This has been achieved by recognising the harmonisation objective of the PLD, and then “interpret[ing it] in accordance with the purpose and aim pursued by the directive”344 as well as – in the context of mainly enforcement provisions – finding offending provisions of national law incompatible with the PLD’s scheme.
The PLD’s provisions permit certain derogations345: e.g. from the development risk defence (Art 15(1)(b)), and to impose a ceiling on damage resulting from death or personal injury (Art 16(1)). The PLD contains a process in respect of the former anticipating its repeal but as yet that has not occurred346. For its part, the Court has taken a restrictive approach to those (and other) derogations. Nonetheless, until any repeal, and notwithstanding the relatively low take-up of the options amongst the member states, the very existence of the derogations limits the level of harmonisation that is possible. As recital 18 recognises, harmonisation is a work in progress but as yet is ‘incomplete’347 and ‘non-exhaustive full harmonisation’348.
3.5.2 Basic Structure
The basic structure of the PLD is to make a producer “liable for damage caused by a defect in his product”349, whilst placing the burden on the claimant “to prove the damage, the defect and the causal relationship between defect and damage”350.
343 Ibid. §§25-33 344 Veedfald , §14 345 Smith (1990), 102; Howells (1990), 25-27 346 See Article 15(3) and 16(2). 347 Novo Nordisk AG§24 348 Howells and Pilgerstorfer, Product liability, 258 349 Article 1 350 Article 4 75
The rules of causation are ultimately for the national legal order of each member state351 but are subject to the EU principles of effectiveness and equivalence352. It would make it too difficult to prohibit recourse to circumstantial methods of proof and require proof with scientific or medical research353. Conversely national rules cannot make it too easy and thus evidence must be “sufficiently serious, specific and consistent” to establish that defect as the most plausible explanation for the damage354.
Under the PLD, ‘Producers’ are manufacturers (producers strictu sensu)355, those who present themselves as producers (quasi-producers) and those who import products into the EU for commercial purposes (importers)356. A fourth category is suppliers who can be treated as a producer where the producer cannot be identified by the claimant357 and the supplier fails to provide the identity of the producer, EU importer or his own supplier within a reasonable time period from a demand358. The products covered are “all movables even if incorporated into another movable or into an immovable. ‘Product’ includes electricity.”359 There has been debate, but no EU case law, as to whether or not intellectual products, such as information within a book or map, or software may constitute a product for the purposes of the PLD360.
The PLD does not define who may be an “injured person”, and leaves the concept of damage to define who may bring a claim under its provisions361. Included is death or personal injury362 and damage to private property (the latter subject to a EUR500 minimum). Damages can be
351 Sanofi §25; R. S. Goldberg, Causation and Risk in the Law of Torts: Scientific Evidence and Medicinal Product Liability (Hart, 1999), 23 (cf S. Whittaker, 'The EEC Directive on Product Liability' (1985) 5 Yearbook of European Law 233: “semi-autonomous”) 352 Sanofi §§26-27 353 Ibid. §§30-32; see also §43 and AG§§42-51 (distinguishing between judicial and scientific assessments of causation). 354 Ibid. §37 355 AG Trstenjak in OB (No 2) AG§35; see the discussion in that case of when wholly owned suppliers of the producer can be treated as the producer. 356 Article 3 357 See OB (No 2) AG§97 – the usual case is of unlabelled products, or products with no accompanying information on packaging or instructions. 358 Ibid. AG§98 359 Article 2; in 1999, an exclusion for primary agricultural products and game was repealed. 360 For a discussion see S. Whittaker, 'European Product Liability and Intellectual Products' (1989) 105 LQR 125 and more recently, from a German perspective, P. Rott, Rechtspolitischer Handlungsbedarf im Haftungsrecht, insbesondere für digitale Anwendungen – Gutachten im Auftrag des vzbv (Verbraucherzentrale Bundesverband e.V., 2018) esp at 15ff. 361 Although some have suggested that strict product liability should be restricted to users of products rather than bystanders (Prosser (1966), 817), a better view is that this would lead to arbitrary restrictions amongst groups of injured persons (see Whittaker (1985), 264-5). 362 It is an autonomous EU concept: Veedfald §§27-9, AG§30. It is to be given a broad interpretation and can include the costs of explant operations: Boston §§46-50, AG§§58-62. 76 awarded for “all that is necessary to eliminate harmful consequences and to restore the level of safety which a person is entitled to expect”363. Pure economic loss flowing from the defect, damage to commercial property, damage to the product itself, and damage from nuclear accidents is excluded364.
If the claimant can satisfy the article 4 burden, focus shifts to the producer, who has the burden of proving one of the defences set out in Article 7. According to the CJEU the defences “must, in accordance with established case law, be interpreted strictly”365. This interpretive principle is required “to protect the interests of the victims of damage caused by a defective product.”366. As well as the DRD, the list includes: (a) that he did not put the product into circulation367; (b) that the defect did not exist when the product was put into circulation by him; (c) that the product was not produced nor distributed for economic purposes or in the course of his business368; (d) that the defect was due to compliance with mandatory regulations; and (f) in the case of a manufacturer of a component, the defect is attributable to the design of the product in which the component has been fitted or to instructions given by the manufacturer of the product.
Thus, the regime imposes both objective liability (no need to prove fault) and relative liability (due to defences)369, but it may not be limited or excluded by a producer370.
Claims to compensation must be instituted371 before they extinguish 10 years after the date on which a producer puts the product which caused the damage into circulation372. This happens when the product leaves the production process and enters a marketing process in the form in which it is offered to the public373. This uniform and non-discretionary 10 year rule has been held to be part of the harmonised balance between the interests of consumers and producers374
363 Boston §49; AG§§70, 75 (adding the word ‘proportionate’) 364 Articles 9, 14. 365 Veedfald §15; OB (No 1) §25 366 OB (No 1) §25 367 Veedfald §§16-17, AG§23 368 Ibid. §21 cf AG§26 369 European Commission, First Report on the Application of PLD COM(95)617 (1995), 18 and European Commission, Second Report on the Application of PLD COM(2000) 893 (2001), 16 370 Article 12 371 Against the correct producer, as procedural rules may not allow substitution after the expiry of the article 11 time period: OB (No 2) §§49, 62 372 Article 11. The period ends at the end of the day in the 10th year which bears the same number as the day on which the product was put into circulation: ibid. AG§89, fn 37 373 OB (No 1) §27 374 See OB (No 2) §§38-47; AG§§61, 69-79; Skov AG§29: part of the balance “in the interest of producers” 77 and to ensure the insurability of the liability imposed375. In addition, there is a harmonised limitation period of 3 years from the date on which the claimant becomes aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer376. It has been recognised that the date of knowledge (or negligent lack of knowledge) means the period may not start running until “many years” after the first use of the product377. The laws of the individual member states apply to the suspension or interruption of this period378.
By Article 16, Member States had the option of placing a ceiling of not less than EUR 70 million on damages for death or personal injury “caused by identical items with the same defect”. Germany, Portugal and Spain have chosen to do so.
3.5.3 Defectiveness
3.5.3.1 Generally
Article 6 describes when a product will be considered “defective”. The European cases have not drawn a distinction between the words ‘defect’ and ‘defective’ in the PLD379. Article 6 reads:
1. A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, including: (a) the presentation of the product; (b) the use to which it could reasonably be expected that the product would be put; (c) the time when the product was put into circulation.
2. A product shall not be considered defective for the sole reason that a better product is subsequently put into circulation.
375 J.-S. Borghetti, La Responsabilité du Fait des Produits: Etude de Droit Comparé (LGDJ, 2004), 491-2; Kullmann, ProdHaftG-Kom ProdHaftG§13/1 376 Article 10 377 See OB (No 2) AG§45. 378 Article 10(2) 379 See Sanofi §22 where the Court held the concept of ‘defect’ was defined by the meaning of defectiveness in article 6. 78
This wording does not follow that of s.402A of the US Second Restatement applicable at the time of adoption. Nor does it follow the Third Restatement and require a claimant to categorise the alleged defectiveness so as to distinguish between manufacturing, design or information defects. Rather, it was always understood that each case would turn on its own circumstances380.
It took some 30 years before the CJEU had the opportunity to consider the operation of this central liability-imposing concept381. In Boston, the issue facing the CJEU was how to approach the question of defect where a product emanated from a group in which a proportion were known to have a safety fault, but where it was not known whether the index product also had that fault. Could the index product be defective without the need to prove that the safety fault is in fact present?
In order to answer the question, the AG and Court needed to take a step back and consider more fundamentally382 what it means to say that a product is defective383. The CJEU – expressly adopting the AG’s analysis – found that a product is defective where it has an “abnormal potential for damage”384. This, according to the AG, “must be understood to refer to a product that poses risks jeopardising the safety of its user and having an abnormal, unreasonable character exceeding the normal risks inherent in its use”. Thus defectiveness is characterised as a risk of harm “of such a degree of seriousness that it affects the public’s legitimate expectations in so far as concerns safety”385. Accordingly, what the Court was endorsing was the equation of the article 6 test (when the level of safety is less than that persons are entitled to expect) with when a product’s potential for damage, or risk of harm, is “abnormal”.
380 Memorandum (First Proposal), 16: “It is impossible to determine in advance for all conceivable products the measure of safety that the whole range of consumers is entitled to expect.” 381 For a detailed review, see Fairgrieve and Pilgerstorfer (2017) 382 The AG recognised he was dealing with a fundamental concept (Boston AG§27) noting that as defined it was “relatively imprecise” and “of indeterminate content” that left “scope for interpretation” (AG§30). 383 Whilst some seek to confine the decision to the question posed (Gee §§120-217 or the products in issue (M. Kaufmann, ECJ rules on liability for life-sustaining implants with elevated risk of failure Freshfields (2015)
The AG and the Court had regard to three key principles as aids to interpretation386: the fair apportionment of risks387, the aim of harmonised consumer protection388, and the preventative function of the PLD389. Further, the AG drew on the writings of Borghetti which argue that the failure of the product to meet “normal” levels of safety is central to the concept of defect390.
Neither the Court, nor the AG considered in any detail when a risk of damage should be classified as abnormal. It was said (somewhat circularly) that it does so when it affects entitled expectations as to safety391. That could be interpreted as a relatively low standard, but later in his opinion, the AG posed the question of whether the risk of failure was “significantly higher than normal”392 and whether the risks inherent in the product’s use were “of such a degree of seriousness”393 that it affected entitled expectations as to safety.
Drawing on recital 6, the Court and the AG emphasised that the assessment was an objective one, conducted “in the abstract with reference not to a specific user, but to the public at large, having regard to [the] standard of safety which the consumer may reasonably expect”394. The focus is on the “objective characteristics and properties of the product”395 tempered by considering specific factors identified in article 6.
As has been pointed out396, the Court varied somewhat in its description of whose expectations fell to be assessed, on occasions pointing to those of the public at large, yet also to the “requirements of the group of users for whom the product is intended”397. More importantly, the Court distinguished between “special medical circles” whose members might accept it was not possible for a medical device to be entirely safe, and the patient who “may in
386 Fairgrieve and Pilgerstorfer (2017), 882-885 387 Boston §§40, 42; AG§30; Sanofi §32 388 Boston AG§§34-7, AG§63; Sanofi §32 389 Boston AG§38 390 Borghetti, La Responsabilité du Fait des Produits §451, referred to Boston AG§30 fn10. See also P. Jourdain, 'Commentaire de la Loi No 98-389 du 19 mai 1998 sur la Responsabilité du Fait des Produits Défectueux' (1998) Juris-Classeur Périodique 1204 §14 and Fairgrieve and Pilgerstorfer (2017), 887-888 391 Boston AG§30 392 Ibid. AG§25 393 Ibid. AG§30 394 Ibid. §37-8; AG§§28-9 (quotation from AG§29) 395 Ibid. §38. First Proposal, 9; Memorandum (First Proposal), 17 396 Fairgrieve and Pilgerstorfer (2017), 894-5 397 Boston §38 80 principle reasonably expect the implanted device to have a failure rate of close to zero”398. It was the latter’s expectations that were relevant to article 6.
The AG and Court then turned to the specific question referred. The AG accepted that a product could be defective as a result of its membership of a group of products which had a higher than normal risk of failure. Even if the index product turned out not to have the safety fault in question, it could be defective because of being associated with the other products in the group399. Similarly the Court held that
“…where it is found that such products belonging to the same group or forming part of the same production series have a potential defect, it is possible to classify as defective all the products in that group or series, without there being any need to show that the product in question is defective.”400
As has been noted, the concept of a ‘potential defect’ is rather unfortunate, but it is unlikely that the Court intended to detract from the AG’s analysis or to introduce a distinction between cases where the safety fault has manifested itself and those where it is present but latent401. The point simply is that an abnormal risk can emanate from the fact of membership of a group and even in the absence of proof of a specific safety fault402. Whilst the Court noted that the products were defective by virtue of “belonging to the same group or forming part of the same production series”403, no attempt was made to define the group or production series. Whilst the AG referred to what has been called the ‘group defect doctrine’404 applying where a product has “exactly the same characteristics as other products” and where a product’s design and manufacture is “identical”405, much definitional specificity is left to be worked through in subsequent cases.
398 Ibid. §26 399 Ibid. AG§§3, 54 400 Court §41 401 Fairgrieve and Pilgerstorfer (2017), 891 402 In Boston, the contrary argument, taken to its extreme, would require the injured person to have died in order to claim reparable loss or injury and such an “absurd and iniquitous outcome… would be completely contrary to the effectiveness” of the Directive (AG§68). 403 Ibid. §41 (and §§36, 43) 404 Fairgrieve and Pilgerstorfer (2017), 896 405 Boston AG§33, see also reference to “same characteristics” AG§3 and “devices of the same model” AG§54 81
The Court’s conclusion on the question referred can only have been reached as a result of the conceptualisation of defect in terms of risk406. Since Boston, that same way of viewing defect can be seen in the Court’s judgment in Sanofi. Unlike Boston, that case concerned a product (a vaccination which was alleged to have caused multiple sclerosis) which was argued to be defective without referring to a wider product group. Nonetheless, the CJEU applied the Boston view – of defect as abnormal risk – in that situation407. The main issue concerned whether the burden of proof provisions in article 4 PLD precluded French evidential rules which allowed defect and causation to be established by virtue of presumptions, even in the absence of a medically established link between the vaccine and the occurrence of the disease. As we have seen, the Court permitted national rules to determine matters of proof provided the principle of effective remedy was respected and they did not undermine the burden of proof or wider system of liability established by the PLD.
3.5.3.2 Relevant Circumstances
There has been some debate about whether the circumstances that the Court takes into account when conducting its article 6 assessment are at large, or whether certain matters are irrelevant and ought not to be considered. None of the CJEU cases have directly considered to what extent matters are relevant or irrelevant circumstances when undertaking the defectiveness enquiry. Nonetheless, some guidance is available.
3.5.3.2.1 Avoidability and Risk-Utility
A question that has occupied commentators for some time is the extent to which it is permissible to consider the benefits or utility of the product, or the avoidability of a defect, as relevant circumstances when applying article 6.
The traveaux préparatoires give perhaps an early indication that such notions were deliberately excluded. During the preparation of the PLD, the American Chamber of Commerce suggested to the Commission that the definition of defectiveness “…should be amended to include specific language concerning unavoidably unsafe but useful products, such as explosives, selective weed killers, pesticides and prescription pharmaceuticals, and that this language should address a benefit-to-risk
406 Indeed, the AG turned to this question “[i]n the light of [the] definition” of defect he had espoused: AG§31 407 Sanofi §§23, 32, 41 82 evaluation of the product.”408. The Commission declined that invitation and followed the model of the Council of Europe. Further, since that time, there have been calls for reform to introduce a risk:utility criterion which might tend to demonstrate that such a criterion is not already a feature of a proper analysis.
Further, the resultant text of article 6 does not speak in terms of product benefits, rather it is exclusively focused on entitled safety expectations and recital 6 exhibits no rationale to ensure products have benefits, are of enhanced utility or even fit for use409. Equally, Boston did not refer to product benefits anywhere in the analysis (thus there was no balancing of the benefits of a functional pacemaker being set against the risk that it might have the safety fault, nor even were the benefits of the ICD with the safety fault which could have the magnetic switch deactivated considered).
Nonetheless, some commentators have argued that there is a role for a risk:utility analysis particularly in light of the US experience in design and warning cases410. The AG’s references to this experience in Commission v UK might be thought to support these views.
However, they must be set against the views of the AG in Sanofi. As we have seen, that case was not centrally about the relevance of a product’s benefits to the defectiveness enquiry. Nonetheless, in the context of a claim concerning a vaccine (where much might be said in terms of the product’s benefits both to the user and non-users), the AG rejected the submission that a broad assessment of the cost/benefits of the product type was required. There it was argued that French evidential rules used to establish a causal link by virtue of the temporal proximity between use of the vaccine and damage were being used indirectly to establish defect. This was held as impermissible and that a “broader assessment of the cost/benefits of the product is required, going beyond the concrete case”411. The AG disagreed. Article 6 did not require the product more generally (i.e. beyond the specific case) to be harmful or potentially harmful or to require a broader analysis of costs and benefits of the product to society. Article 6 “does not mean that where the product is used normally and causes serious harm in an individual case, that a conclusion of defectiveness necessarily requires a balancing of the costs and
408 A v NBA §§43(i), 35(i) 409 See Recital 6 where fitness for use is expressly said not to be a reference point for the article 6 assessment. 410 J. Stapleton, 'Restatement (Third) of Torts: Products Liability, An Anglo-Australian Perspective' (1999) 39 Washburn Law Journal 363 411 Sanofi AG§85 83 benefits of the product… imposing such a requirement with regard to defect would … amount to creating (or at least boldly deducing) new conditions of liability”412.
3.5.3.2.2 Regulatory Compliance
Another issue, not specifically addressed by the CJEU, is the extent to which compliance with regulatory standards, or for those products that require it, regulatory approval, either provides a full defence to the suggestion the product is defective413, or alternatively is a relevant factor when applying the test under Article 6. This has been a topic of debate for some time414 and commentators’ views have tended to follow the relevance they ascribe to considerations of product benefits (because risk/benefit tends to be the way most regulatory assessments are made)415.
There is no authority at EU level which specifically determines the relevance of regulation, however in Boston, the AG did corroborate his conclusion both by “the need for the integration of health concerns in EU policy” and fact the products were subject to regulation and indeed classified within that system as in the group of “the most critical devices for which explicit prior authorisation with regard to conformity is required for them to be placed on the market”416. He considered that the expected degree of safety will be “greater for a device implanted in the human body… than for a bottle of water or for a cleaning product”417. This has led some to conclude that the relevance of the regulatory scheme therefore lay in the fact of regulation rather than the particular regulatory outcome for the product (obviously in Boston the products which were found defective had received market authorisation)418.
Without engaging specifically in this debate, and when assessing the “coherence” of the PLD in the wider EU legal framework, in its most recent report, the Commission referred to the
412 Ibid. AG§§87-88 413 This is generally accepted not to be the case. Article 7(d) applies where the defect is due to compliance with mandatory regulations, but that would apply to a rare set of facts. 414 See e.g. Whittaker (1985); C. Newdick, 'The Impact of Licensing Authority Approval on Pharmaceutical Product Liability: A Survey of American and UK Law' (1992) 47 Food & Drug LJ 41; M. Mildred, 'Pharmaceutical Products: The Relationship between Regulatory Approval and the Existence of a Defect' (2007) EBLR 1267; R. S. Goldberg, Medicinal Product Liability and Regulation (Hart, 2013) chapter 7; and M. Pilgerstorfer, 'EU law and policy on pharmaceuticals marketing and post-market control including product liability' in T. K. Hervey, C. A. Young and L. Bishop (eds), Research Handbook in EU Health Law and Policy (Edward Elgar, 2017) 415 See Pilgerstorfer, EU law and policy on pharmaceuticals, 190 416 Boston AG§§39-42, AG§44 417 Ibid. AG§45; or a mobile phone whose battery becomes depleted: see AG§46. 418 Fairgrieve and Pilgerstorfer (2017) 901; contrast the views in Gee below, chapter 5. 84
PLD being consistent with EU product safety rules and said: “The EU product safety rules describe the safety levels that products placed on the EU market must meet. In turn, they represent the safety levels for these products that an injured person is entitled to expect under the Directive. Producers are also exempt from liability if they can prove that a defect is due to compliance with these rules.”419 This document appears to equates the level of safety a person is entitled to expect with that prescribed by EU safety regulations, but were that so, a product could never be found to be defective after a relevant EU safety rule had been complied with. It is perhaps unlikely that such a radical consequence was contemplated by the report’s authors.
3.5.4 Development Risks Defence
The development risks defence is rightly described as having had “a difficult gestation”420. Notwithstanding the inclusion of development risks within the liability concept of the convention and both proposals of the Commission, the PLD emerged from the negotiations in the Council with a defence in the form of Article 7(e).
3.5.4.1 An Optional Defence
Before examining its content, it is right to note the defence is optional. Member States are permitted to derogate from it provided they follow the procedure set out in Article 15(2). The derogation procedure itself is unusual, requiring prior notification to the Commission in order that proposals to amend the PLD can be considered before the derogation would come into force. Most Member States have chosen to implement the development risks defence into their national legal order. Luxembourg and Finland chose to exclude it in total. Germany adopted the defence save for pharmaceuticals and for certain GMOs421. Hungary excludes application for pharmaceutical products. France eventually adopted the defence save for products constituting elements of the human body or derivatives422 and Spain adopted the defence, except for medicines, food or food products intended for human consumption423. Thus overall, the take up of the defence has been pretty widespread.
419 Commission's Fifth Report, 7 420 Commission v UK AG§19 fn 11. 421 See chapter 6 below. 422 French Code Civile, Art 1386-11(4) and 1386-12 423 See Spanish Law No 22/94, Arts 6(1)(e) and 6(3) 85
3.5.4.2 Court Guidance
Notwithstanding that the Court has determined in respect of the PLD’s defences generally that they “must, in accordance with established case law, be interpreted strictly”424, a number of difficult questions of interpretation and application are inherent in Article 7(e)425, as was acknowledged by the CJEU in Commission v UK426
In Commission v UK, infringement proceedings were brought against the UK contending that article 7(e) was not properly implemented by section 4(1)(e) CPA. The detail of this domestic implementation is described in chapter 5 below. However in order to determine those proceedings, the CJEU had to engage in a process of interpreting article 7(e).
Whilst the system of strict liability adopted did not require negligence to be proved on the part of the producer, it was (in contrast to the initial proposal) “no longer absolute, but limited, in deference to a principle of the fair apportionment of risk between the injured person and the producer, the latter having to bear only quantifiable risks, but not development risks which are, by their nature, unquantifiable”427. From that general starting point, the following more concrete conclusions were drawn.
First, in a paragraph428 expressly endorsed by the Court, the AG explained that what is relevant in terms of knowledge is “solely”429 or “unreservedly”430 the state of ‘scientific and technical knowledge’. The conduct of the producer and other producers is irrelevant. The defence is not determined by reference to practices and safety standards in use in the industrial sector and it is thus of no consequence that no producer in the particular class or sector takes the measures necessary to avoid the defective nature of the products provided that such measures are capable of being adopted on the basis of the relevant knowledge. Equally, whether or not the producer actually appraises himself or keeps up to date with the state of scientific and technical knowledge (or even whether he could or ought so to do) is of no
424 Veedfald §15; OB (No 1) §25 425 See chapter 1 426 Commission v UK §29 427 Ibid. AG§19, cited in Gee §65 428 Commission v UK AG§20, endorsed §§26-7 429 Ibid. AG§20 430 Ibid. §26 86 consequence431. According to the AG “the producer’s conduct should be assessed using the yardstick of the knowledge of an expert in the sector. E.g. if a chemist or pharmacologist has to keep up to date with the characteristics of a given substance, similar knowledge will be required for present purposes of an industrialist producing pharmaceuticals containing the same substance”432. The Court preferred to express the matter in terms of there being a legal presumption as to the state of scientific and technical knowledge “of which the producer is presumed to have been informed”433. A further irrelevant factor identified expressly by the AG was the practicability and expense of avoiding the defect. The focus is instead on the state of the relevant knowledge and what it enables to be discovered.
In the same paragraph, the AG went on to observe by reference to Art 7(e)’s wording that the state of relevant knowledge is limited both temporally and in terms of content. The knowledge that mattered was that as it was at the time the product was put into circulation and that of a particular type: “scientific and technical knowledge” as opposed to general or other knowledge.
This latter point required consideration of the nature of scientific and technical advancement and discovery. The AG recognised that it “does not develop linearly”: studies and discoveries can be criticised and regarded as unreliable by most of the scientific community at one point in time, and yet subsequently receive almost unanimous endorsement (AG§21). Thus isolated opinions, contrary to the majority of scientific opinion, may exist at the time a product is put into circulation to the effect that the product is defective. The AG, endorsed by the Court, was clear that the state of scientific and technical knowledge is that at its most advanced state, even if in the form of an isolated opinion, rejected by the mainstream expert community. For the AG “[t]he state of scientific knowledge cannot be identified with the views expressed by the majority of learned opinion, but with the most advanced level of research which has been carried out at a given time” (AG§21). The Court succinctly endorsed this approach holding that what mattered was the state of scientific and technical knowledge “including the most advanced level of such knowledge” (§26). This was relevant to the Court’s finding that the wording of s.4(1)(e) CPA
431 See to this effect per the Court at §27 432 Commission v UK AG§20, including fn 12. 433 Ibid. §27. Later The AG referring to the CPA comments that reference to the producer’s ability to discover the defect is “an objectively verifiable and assessable parameter, which is in no way influenced by consideration of the actual subjective knowledge of the producer or by his organisational and economic requirements” (AG§26). He goes on (AG§27) to make the point that interpreting the defence in this way prevents “the substantial transformation of the system of liability introduced by the Directive into negligence liability”. 87 did not put any limits on the knowledge which could form part of the state of knowledge: see §35.
The AG explained that the consequence of this conclusion was that “the producer has to bear the foreseeable risks, against which he can protect himself by taking either preventive measures, by stepping up experimentation and research investment or measures to cover himself by taking out civil liability insurance against any damage caused by defects in the product” (AG§22). The reference to “foreseeable” risks in that citation has proved significant for a number of commentators who have been tempted to read into it fault based notions. If (as seems to me unlikely) such a reading could withstand the very clear express statements, earlier in the opinion, that the system of liability was a no-fault system under which “quantifiable risks” had to be borne by the producer (see AG§19), and that the conduct of the producer was irrelevant, the AG’s subsequent description of what he meant by foreseeable risk puts the matter beyond realistic argument. In his view where there was, amongst the “whole gamut of scientific opinion… one isolated opinion… as to the potentially defective and/or hazardous nature of the product, the manufacturer is no longer faced with an unforeseeable risk” (AG§22). Thus the term ‘foreseeability’ is used in the sense of an absolute possibility to foresee.
Next, both the AG and the Court addressed the problem of accessibility of knowledge and information and whether this affected whether it properly formed part of the corpus or ‘state’ of scientific and technical knowledge referred to in the defence. The AG recognised that objective factors affect the circulation of information such as “its place of origin, the language in which it is given and the circulation of the journals in which it is published”. He contrasted the speed and scale of dissemination of information contained in research done in the US by a researched publishing in an English-language international journal to that of an academic in Manchuria publishing in a local scientific journal in Chinese, which is not distributed outside the boundaries of the region (AG§23). He regarded it as unrealistic and unreasonable to view the Chinese study as having the same chances of being known to a manufacturer and therefore construed the state of knowledge as including all “data in the information circuit of the scientific community as a whole, bearing in mind, however, on the basis of a reasonableness test, the actual opportunities for the information to circulate”(AG§24).
For its part, the Court simply endorsed the conclusion that scientific and technical knowledge must have been accessible (§28), and that it was objectively assessed at the most advanced
88 level (§29). Thus there was no express endorsement of the accessibility question in terms of reasonableness.
Since that decision in 1997, the development risk defence has not been considered by the Court. The only material observation that has been is that of AG Trstenjak in Aventis v O’Byrne434 in which the relationship between the defence and the longstop is identified. The AG saw the longstop in Article 11 as a “counterweight” to no-fault liability435.
3.5.4.3 The Academic Debate Thus Far
Much ink has been spilled by academic writers over the scope of the defence both before, and after, the decision in Commission v UK.
Many commentators (most nailing their initial colours to the mast before the CJEU’s views were known) considered436 or simply assumed437 that notions of fault or reasonableness must have a role to play through the development risks defence. For example, Whittaker opined that the defence would be “a knock-out blow to the Directive’s pretension of introducing truly strict product liability”438. For Hodges, the concept of reasonableness “must surely regulate discoverability: knowledge of certain observed facts …does not imply that all conclusions which might subsequently be postulated, deduced or proved from those facts are “discoverable” at that time”439. In respect of the knowledge concerned, he went on: “It could not have been the intention to set such an impossibly high standard so as to render the defence meaningless. The purpose of this defence is to allow a balance to be struck between providing compensation for damage and not stifling innovation”. In the same work, he argued that this dovetailed with social policy considerations: that it was unjust and inappropriate social policy for producers to be held liable where they have carried out reasonable research testing, literature review, monitoring and warning about their products, particularly where official licensing or legally required standards conformity
434 OB (No 2)AG§§49-50 435 Ibid. AG§49, fn 18 436 See e.g. Newdick (C. Newdick, 'The Future of Negligence in Product Liability' (1987) 103 LQR 288; C. Newdick, 'The Development Risk Defence of the Consumer Protection Act 1987' (1988) 47 CLJ 455; and C. Newdick, 'Risk, Uncertainty and "Knowledge" in the Development Risk Defence' (1991) 20 Anglo-American Law Review 309) and Stapleton (Stapleton, Product Liability; J. Stapleton, 'Products Liability in the United Kingdom: The Myths of Reform' (1999) 34 Texas International Law Journal 45); Whittaker (Whittaker (1985)); C. Hodges (ed), Product Liability - European Laws and Practice (Sweet & Maxwell, 1993) 437 Smith (1990) at 109 438 Whittaker (1985) 439 Hodges (ed), Product Liability - European Laws and Practice 89 assessment has taken place. This led him to conclude that unless the concept of reasonableness is to be relevant to the standard set under strict liability, there is a risk that the defence will not achieve its object in the balancing exercise of consumer and industrial interests. The logical alternative would then be for producers being forced to test products almost indefinitely and at great expense before marketing in order to reduce the risk of liability to an acceptable level and avoid unaffordable insurance premiums.
Newdick also argued that the UK Government’s view was of the defence was likely to be correct440 for two reasons, (a) when a court assesses the relevant state of scientific and technical knowledge, it will not require the defendant to prove conclusively and absolutely, a worldwide absence of knowledge of the defect: it would be impracticable to insist on proof that all the libraries of the world had been scoured and all the unpublished theses in universities, in every language, had been read. More probably, the Court will make a judgment on the basis of expert evidence. A strong presumption in favour of the defence will arise once a selection of such experts have said they had no knowledge of the defect in question. Further, (b) it is conceivable that a claimant could present information which revealed the existence of the defect but which could not reasonably be expected to have been known to the producer.
In her early writing, Stapleton argued that “the directive rarely imposes more than a negligence regime on manufacturers”441. She argued first, that the article referred to discoverability of a ‘defect’ not a risk and secondly that in many cases the DRD will be redundant because by article 6(2) a product would not have been found defective for the sole reason a better product is subsequently put into circulation442. Further, she contended that unless a reasonableness approach were adopted to the defence, it becomes nugatory because in virtually all cases the bare tools of discoverability will exist at the relevant time443 and that a fault criterion was ultimately needed444. After the Court’s judgment in Commission v UK, Stapleton’s position was that the defence remained ambiguous. Although it had been held that the state of knowledge is the most advanced state of scientific and technical knowledge, the limit found by the CJEU turned on accessibility. For Stapleton this was a reasonableness factor and therefore other
440 Newdick (1988) 441 Stapleton, Product Liability, 236ff 442 Ibid., 237 443 Ibid., 240 444 Ibid., 241 90 reasonableness factors should also be implied into the application of the defence such as: whose ideas are relevant, the weight to be afforded to them, what creative leaps of application and methodology are acceptable445. A broadly similar conception of the defence for Australia has been put forward recently by Tsui446.
Others, whilst generally receptive to that position, have been somewhat more cautious. Mildred thought that the reference to “foreseeability” within the AG’s opinion in Commission v UK indicated – albeit that it was not expressly acknowledged – that a wide interpretation of the defence was contemplated447, and was open to this being preferable if innovative industries are to be encouraged to research and market their own products and insurance premiums are to be kept at reasonable levels448. He, too, saw the force in the argument that “In fact the reliance of the Court on the criterion of accessibility moves the fulcrum of the debate well towards the wide interpretation”449.
There is, however, a group who have argued that the true width of the defence is narrow. Such contributors include Taschner who states that in fact the CJEU misunderstood Article 7(e) because “the sense of this article is precisely that scientific and technical knowledge did not exist at the time of production, therefore it could not have been accessible. Otherwise the producer could have been accused of not using all available expertise.”450 For Taschner, the issues raised under the defence “in practice …are almost exclusively confined to the chemical sector, and in particular to pharmaceutical products. In the future cases may arise in the field of genetic engineering”. In response to Stapleton’s argument that the defence must be wide, because it was regarded at the time as a defence worth fighting for, and that therefore the Commission’s view at the time was irrelevant451, Taschner points to the fact that the Commission has not sought to repeal the provision pursuant to Art 15(3). He argues it would have done so if the defence had departed, as Stapleton suggests, from the vision of liability set out in the proposal.
445 Stapleton (1999) 446 M. Tsui, 'The State of the Art Defence: Defining the Australian Experience in the context of Pharmaceuticals' (2013) 13 QUT Law Review 132, 152ff 447 M. Mildred, 'The development risks defence' in D. Fairgrieve (ed) Product Liability in Comparative Perspective (CUP, 2005) 448 M. Mildred (ed), Product Liability: Law and Insurance (Insurance Law Library, LLP, 2000) 449 Mildred, The development risks defence; see also G. Howells and M. Mildred, 'Infected Blood: Defect and Discoverability - A First Exposition of the EC Product Liability Directive' (2002) 65 Modern Law Review 95, 103-4 450 Taschner (1999) 451 J. Stapleton, 'Products Liability in the United Kingdom: The Myths of Reform' ibid.45 91
For Pugh and Pilgerstorfer452, a narrow defence accords with the aims of the directive and the natural reading of the words used. They argue that the Court’s approach in Commission v UK accords with this view. For them, Stapleton was incorrect to imply other so-called ‘reasonableness factors’. First, accessibility did not necessarily rely on reasonableness. In any event, the Court did not identify any other such factors which it would have done given the nature of the abstract task before it. Furthermore, it was unnecessary to imply non-essential features of the regime, and in any event, the first two of Stapleton’s ‘reasonableness factors’ had been expressly negated by the AG §21 and court §29. They reason that in relation to creative leaps, there is no need for such a further reasonableness factor as there are express temporal limitations in the wording of the directive’s defence (indeed, as Stapleton acknowledges). Furthermore, the issue only arises (i) if the product was defective after taking into account factors including the time it was put into circulation, and (ii) over the period specified within the long-stop provision.
3.6 Conclusion
Whilst the contents and impulses of the EU measure are reasonably clear, the foregoing discussion illustrates that the interpretation of the DRD remains uncertain, highly controversial and ultimately bound up with the test of defectiveness. Despite the passage of over 30 years since the PLD, relatively little definitive case-law has developed, although some principles emerge in particular from Boston and Commission v UK.
452 C. Pugh and M. Pilgerstorfer, 'The Development Risk Defence - Knowledge, Discoverability and Creative Leaps' [2004] Journal of Personal Injury Law 258 92
4 Strict v. Fault-based Liability: A Theoretical Framework
4.1 Introduction
Assessing the ‘strictness’ of the PLD’s liability raises a priori questions. What is strict liability and is it synonymous with ‘liability without fault’? How does it differ from absolute liability? Is the choice binary between fault and its absence, or are there degrees of strictness? In this chapter the reader will find a brief review of the literature concerning these questions. Further, as the justification for strict liability under the PLD “is by no means self-evident”453, there follows a succinct consideration of the theoretical justifications of strict product liability.
4.2 The Problem of Definition
Strict liability has been described as “probably the oldest tort principle in history”454, yet how should it be understood? At first blush distinguishing between fault and strict liability appears simple. Definitions “embedded”455 in tort law provide that the former involves a failure to take reasonable care, whereas strict liability involves imposing liability even when care has been exercised456. Failure to take reasonable care is often understood in the sense of the negligence calculus within Judge Learned Hand’s test for fault457, although it appears in other forms in different systems. The test involves a cost-benefit analysis where the probability of harm occurring is set against the costs of the accident and its avoidance. As van Dam notes, fault is generally a synonym for intentional or negligent conduct, with the consequential implication that strict liability “is liability without intentional or negligent conduct”458. He also observes that
453 H. Koziol, 'Introductory Lecture' in H. Koziol and others (eds), Product Liability: Fundamental Questions in a Comparative Perspective (De Gruyter, 2017), 21 454 V. Palmer, 'A General Theory of the Inner Structure of Strict Liability: Common Law, Civil Law, and Comparative Law' (1988) 62 Tulane Law Review 1303, 1309 455 K. S. Abraham, 'Strict Liability in Negligence' (2012) 61 Depaul Law Review 271, 274 456 Ibid., 274; R. A. Epstein, 'A Theory of Strict Liability' (1973) 2 The Journal of Legal Studies 151, 152: “where a defendant intended to harm or failed to take reasonable steps to avoid harm” 457 Conway v O'Brien (1940) 111 F.2d 611 (Court of Appeals 2nd Circuit): (i) the probability of occurrence, (ii) the gravity of harm that will result, and (iii) the ‘cost’ of precautions. In England see Glasgow Corporation v Muir [1943] AC 448 Paris v Stepney Borough Council [1951] AC 367 ; Bolton v Stone [1951] AC 850 ; S. Deakin, A. Johnston and B. Markesinis QC, Markesinis and Deakin's Tort Law (7th edn Oxford University Press, 2013), 200 458 C. van Dam, European Tort Law (2nd edn OUP, 2013), 297 93
“[s]trict liability is … referred to as objective liability (responsabilité objective) or risk liability (Gefährdungshaftung)459, where liability is to be established independent of the tortfeasor’s conduct”460.
The concept of strict liability is thus defined in terms of being the antithesis of fault: “a way of determining when injurers and when victims should bear losses regardless of fault”461. However that does not reflect that strict liability is not imposed in all cases of damage arising in connection with the relevant duty. It is not ‘absolute’ or akin to an insurer’s liability462, where liability is imposed based on pure factual causation463. Such an approach was not adopted with the PLD464. It is when distinguishing between strict and absolute liability that the definition of the former has been said to break down. Palmer has been particularly scathing: “We all share an intuitive understanding that ‘strict’ must refer to some higher level of liability. We intuit that it must be more rigorous than negligence law, yet less rigorous than making the defendant an insurer. But the word ‘strict’ is not self-defining nor indicative by itself of any particular rung on the ladder of liability: there are strict parents whom others may regard as permissive…”465. He concludes that “[n]o adequate definition exists”466.
Furthermore, the definition depends upon ‘fault’ being understood in the negligence sense467; yet as Whittaker has demonstrated in respect of French law468, the notion can differ considerably between different legal traditions. As between England and Germany, the treatment is substantively similar, albeit that the analysis in Germany is more theoretical469. Nonetheless, recital 2 PLD’s reference to “liability without fault” may lead to misunderstanding
459 As to which, see J. Oechsler, J. von Staudingers Kommentar zum Bürgerlichen Gesetzbuch (Sellier - de Gruyter, 2003) ProdHaftG Einl/27; OB (No 2) AG§48 fn 17 460 van Dam, European Tort Law, 297; see also J. E. Montgomery and D. G. Owen, 'Reflections on the Theory and Administration of Strict Tort Liability for Defective Products' (1976) 27 South Carolina Law Review 803, 809 461 G. Calabresi, 'Commentary on Toward a Test of Strict Liability' (1991) 100 The Yale Law Journal 1501, 1502. 462 G. Calabresi and J. T. Hirschoff, 'Toward a Test for Strict Liability in Torts' (1972) 81 ibid.1055, 1056 and C. R. Hickey, 'Comparative Fault and Strict Products Liability: Are They Compatible?' (1978) 5 Pepperdine Law Review 501, 506. Escola did refer to “absolute” liability for products, however, since then Traynor J has underlined the liability was strict and not absolute: R. J. Traynor, 'The Ways and Meanings of Defective Products and Strict Liability' (1965) 32 Tennessee Law Review 363, 366-367 463 van Dam, European Tort Law, 306: absolute liability “requires no more than a causal connection between a certain event and the damage; even the defence of force majeure is not accepted”. 464 CoE Report §17 465 Palmer (1988), 1305-6 466 Ibid., 1310 467 Study Group on a European Civil Code and Research Group on EC Private Law (Aquis Group) (2009) VI.- 3:102: Negligence. 468 Whittaker, Liability for Products, chapter 3 469 B. S. Markesinis and H. Unberath, The German Law of Torts: A Comparative Treatise (Hart, 2002), 83-85 94 because fault may be understood either in an objective or subjective sense470. Clarifying that the liability is imposed without only subjective fault471 would not necessarily exclude a requirement of objective negligence. It seems to the present author that it is highly unlikely that the intention was simply to impose liability without subjective fault, and this appears to be how the PLD is understood at the CJEU472. Palmer’s objection that such an approach might leave “neither a distinction nor a definition”473 ultimately comes down to his more theoretical difficulty with objective fault having no moral content per se.
4.3 From Categories to a Continuum
It follows474, that a binary approach to fault and strict liability is too simplistic. Rather, there is “a continuum between pure subjective negligence liability and absolute liability”475. Different solutions are – relatively speaking - “stricter” than others. Such an approach is confirmed by the Common Core survey of European systems: not all liability rules examined could be classified in either of the two categories476. There were “hybrid” or “midway” positions, positioned according to the extent to which fault or factual causation was dominant477. Accordingly, Palmer regards strict liability as “a genus of liability and not a species”478. Such a view dovetails with van Dam’s conclusion that a clear distinction between negligence and strict liability is not possible479.
The issue is not only theoretical. There are ample examples in the literature where elements of fault-based liability play a role in strict liability480 and where “pockets”481 of strict liability are to be found in negligence law, serving some of the purposes of strict liability482.
470 Palmer (1988), 1305 471 Where a person “is personally to blame for his conduct, because he personally knew better and had the skills and ability to act differently”: van Dam, European Tort Law, 306 472 OB (No 2) AG§48 fn17: “no-fault” as understood in Community law is what matters 473 Palmer (1988), 1305 474 See also the discussion in Abraham (2012), 272 475 van Dam, European Tort Law, 306 476 F. Werro and V. V. Palmer, The Boundaries of Strict Liability in European Tort Law (Common Core of European Private Law, Staempfli, 2004), 3, 5 477 Palmer (1988), 1311 478 Ibid., 1310-1 479 van Dam, European Tort Law, 298 480 Ibid., 297; e.g. Rylands v Fletcher (1865) 3 H&C 774 (Exch) post Cambridge Water Co v Eastern Counties Leather plc [1994] 2 AC 264 ; van Dam, European Tort Law, 305. 481 See Abraham (2012), 272 482 Ibid., 301; e.g. Nettleship v Weston [1971] QB 691 Abraham (2012), 272; Grant v Australian Knitting Mills Ltd [1936] AC 85 (PC); Chicken Pest (Urteil vom 26.11.1968 VI ZR 212/66) BGHZ 51, 91 (BGH); van Dam, European Tort Lawat 304 Epstein (1973) 95
As a result of intermingling concepts, there have been times in the history of the development of product liability law in the US when prominent commentators have wondered why plaintiffs have clamoured for strict liability, and why defendants were vociferous in opposition483 when the reality was that the stricter product rule was no real cause for alarm484. Indeed, Schwartz described it as “merely an intelligent rounding off of the rights independently available under a mature negligence system”485 and as we have seen, Palmer thought it “almost impossible to distinguish between liability based on fault and strict liability”486. Similar sentiments have been expressed in Europe. Van Dam speaks of the waters of stricter liability running into the waters of negligence liability, and it being impossible to indicate the exact line between the two487. What is more, modern solutions are reached by the balancing of elements of fault- based enquiry with stricter concepts to provide the correct solution488.
4.4 System Strictness
It follows that the assessment of the strictness of a system requires consideration of the whole. As Schwartz puts it in the context of the US debate: “The strictness of the existing ‘defect’ rule … is subject to testing in the rare case in which a product defect has not been brought about by manufacturer negligence; in these cases, may courts have waffled on strict liability by recognising a “defence” of unavoidability or unknowability”489. It is thus key to consider defences along with the liability imposing concepts of a system. The Common Core Group put it this way in light of their survey: “comparison of national liability regimes … requires an overall evaluation of their scope of application, of the liability-triggering event, of the available defences and of the relevant causation test”490.
483 Prosser (1960), 1115 484 Prosser (1966), 842 485 G. T. Schwartz, 'The Vitality of Negligence and the Ethics of Strict Liability' (1981) 15 Georgia Law Review 963, 971, 976; Abraham (2012), 297 486 Palmer (1988), 1304 487 van Dam, European Tort Law, 302 488 Ibid., 306 489 Schwartz (1981), 972 490 Werro and Palmer, Boundaries of Strict Liability, 455 96
4.5 Justifications for Strict Liability
One cannot properly consider strictness without also contemplating the justification for such liability. This section therefore contains a brief summary of the arguments for and against strict liability for products as advanced in the literature.
One justification for imposing strict liability would be consent. Whilst this can justify strict contractual obligations, it has less practical application to tortious liability in the absence of a prior relationship. A more powerful related point is that strict liability short circuits the chain of strict contractual liability that already exists from the consumer, through suppliers, to the producer. In one national system, Chile, a chain of such contracts can be the reason to allow the victim to claim on the contract with the producer despite a lack of privity491. Imposing direct tortious strict liability avoids “an expensive, time-consuming, and wasteful process, [which] may be interrupted by insolvency, lack of jurisdiction, disclaimers, or the statute of limitations, anywhere along the line”492. This justification was relied upon in early US cases493 and in Europe by the AG in Commission v UK494.
An alternative argument is that strict liability reflects reality. In the US it was argued that the courts were in effect applying strict liability and it would be better if this were overtly applied495. This might also describe the German experience in relation to manufacturing defects. This justification is controversial as it fundamentally depends on there being accepted reality. Thus in the US, Plant regarded “[n]ot all courts as reckless as the California courts in using res ipsa. And even in that plantiff’s paradise there is an occasional hint of limitation on the doctrine”496. Moreover there is a legitimacy point497 that it should be the legislature that makes that choice, rather than the courts. Here, the presence of the PLD assists but the point might also apply to creative judicial interpretations.
491 Koziol, Conclusions, 517 492 Prosser (1960), 1124; Hickey (1978), 503 493 Escola and in the implied warranty jurisprudence 494 Commission v UK AG§16 495 Prosser (1960), 1119 496 M. L. Plant, 'Strict Liability of Manufacturers for Injuries Caused by Defects in Products - An Opposing View' (1957) 24 Tennessee Law Review 938 497 As was by the BGH in Chicken Pest 97
Strict product liability is often justified by reference to it easing the burdens of establishing a claim. This concern featured prominently in the work leading to the PLD498. A claim in negligence focuses on the reasonableness of the actions of the producer499. A claimant will generally not have knowledge of what was done and will require disclosure (which may be voluminous) and perhaps expert assistance to investigate. In civil law countries, criminal pre- trial investigations by the state can assist in securing evidence against a defendant500 and even claimants in other European countries may benefit501. Nonetheless, investigation can be expensive and time consuming. Strict liability can focus instead on the product. In theory, at least, trials can be shorter, less burdensome and expensive (and therefore less risky), although even then the burden can be considerable and it has been held that arguments for simplification of the claims process cannot justify action beyond removing fault from the analysis502. Some analogise by reference to loss adjustors applying strict rules when considering claims of negligence because it is more cost effective than conducting a full enquiry503. The justification is less persuasive where the procedural environment is such that parties are incentivised to hedge and bring parallel claims under negligence and strict liability504. Further, some of the saving (at least from the point of view of the defendant) may be offset by a claimant in a cost-shifting jurisdiction being more certain of winning and therefore encouraged to spend more on the litigation505, and there being more claims under strict liability506, although strict liability rules may lead to greater efficiency in settling claims507. It has also been argued that the justification really supports only a reversal of the burden of proof, albeit this was considered insufficient by those framing the convention508. Finally, there is a concern that the floodgates will be opened to a deluge of false claims based upon fictitious defects and pretend injuries509, although this objection is weakened by the fact
498 CoE Report §17; Memorandum (First Proposal), 13 §1 499 Koziol, Conclusions, 510 500 F. P. Schuster, 'Main Structures of Product Liability in German Private and Criminal Law' (2009) 20 Stellenbosch Law Review 426, 427-8 501 Using Regulation (EC) No 1206/2001 on the taking of evidence in civil or commercial matters OJ L 174/1 of 27.6.2001; done in the UK PIP Breast Implant Group Litigation 502 Gee §78 503 Epstein (1973), 188 504 D. W. Stearns, 'Prosser's Bait-and-Switch: How Food Safety Was Sacrificed in the Battle for Tort's Empire' (2014) 15 Nevada Law Journal 106, 141 505 R. A. Posner, 'Strict Liability: A Comment' (1973) 2 The Journal of Legal Studies 205 506 Ibid., 209 507 van Dam, European Tort Law, 298 508 Koziol, Introductory Lecture, 23; cf CoE Report §17 509 Plant (1957), 949 98 a fraudulent claim can also be framed in terms of negligence. Of course liability under the PLD is not unlimited510 and therefore concerns on that basis may be assuaged511.
A related justification is that strict liability helps reduce error costs: there is greater room for error when making a negligence enquiry than in applying a strict liability rule. Accordingly, costs associated with making errors should decrease by moving to a strict liability regime512. Clearly the extent this holds true depends on the nature and simplicity of the strict liability regime put in place.
A moral responsibility justification rests on strict liability reflecting the ethical notion that the producer who benefits from his activities, should be responsible for the costs513. There are numerous expressions of this principle in the US cases514, literature515, and the notes to the Third Restatement516, sometimes under the term ‘enterprise liability’: advantages and risks being brought together in the same enterprise517. An alternative way of advancing this is to see the relational norm linking the claimant and defendant as justifying the responsibility518. A number of problems have been identified519: these theories cannot decide outcomes in individual cases, cannot differentiate between types of enterprises, nor can they deal with customers who have beneficial interests in the enterprise activity520. More fundamentally, moral fairness is said to require that liability be grounded in fault, otherwise freedom of action is unjustifiably curtailed521, although this is not especially convincing as it overlooks that fault
510 PLD article 11; Memorandum (First Proposal), 13 §2 511 Calabresi and Hirschoff (1972), 1055 512 Abraham (2012), 277; Calabresi and Hirschoff (1972), 1061 and 1076 513 See F. H. Bohlen, 'The Basis of Affirmative Obligations in the Law of Tort' (1905) 53 The American Law Register 209, 273, 337 514 Brooks v Beech Aircraft Corp (1995) 902 P.2d 54 (New Mexico Supreme Court), 58; Kemp v Miller (1990) 453 NW.2d 872 (Wisconsin Supreme Court), 879 515 E.g Koziol, Introductory Lecture, 21; G. C. Keating, 'The Theory of Enterprise Liability and Common Law Strict Liability' (2001) 54 Vanderbilt Law Review 1285, 1286-9, citing G. Calabresi, 'Some Thoughts on Risk Distribution and the Law of Torts' (1961) 70 Yale Law Review 499, 500 516 Restatement (Third) Reporters’ Notes §2 517 Koziol, Introductory Lecture, 22 518 J. C. P. Goldberg and B. C. Zipursky, 'Tort Law and Moral Luck' (2007) 92 Cornell Law Review 1123, 1161 519 Keating (2001); G. C. Keating, 'Rawlsian Fairness and Regime Choice in the Law of Accidents' (2004) 72 Fordham Law Review 1857 520 D. G. Owen, 'The Moral Foundations of Products Liability Law: Toward First Principles' (1993) 68 Notre Dame L Rev 427; cf Koziol, Introductory Lecture, 25; Koziol, Conclusions, 525-528 521 Plant (1957), 940 99 does not always mean subjective fault or imply moral culpability522 and in any event simply prompts the question as to what is fair523.
One of the early justifications was that strict liability allowed risks to be spread across a relevant community524. The idea is that the ‘cost’ of a risk eventuating is disproportionate for the individual, but can be distributed by the producer across the entire consumer group by raising the price or insuring525. It is sometimes said that this price effect can help correct the over- and underestimation of product risks by consumers and ultimately discourage consumers from buying risky products526. Insurance is relevant to this and the producer of a product is generally in a better position than the user to obtain insurance at an optimal price, for he best knows the nature and probability of the risks, as well as possessing the capacity to control risk527. Some criticise this justification as being arbitrary and disconnected with justice and doubt whether all producers can distribute costs this way (e.g. products with elastic demand)528. Whilst insurance can distribute losses, it cannot determine whether the group should bear those losses and other justifications are argued to be required529, or at least that the choice of who should insure should be an explicit policy choice530. Others raise concerns in the absence of a limitation on recoverable damages531. Further, there is a danger that risk spreading may raise prices to excessive levels in economic efficiency terms and in that sense not be ‘socially desirable’: the price-signalling benefit associated with the misperception of product risk will be less than the litigation cost-related price distortion unless consumers underestimate risks by > 50% or overestimate them by > 100%532. A further issue has been the group across which the risk to be spread (the ‘risk community’). A producer can spread costs via the price to purchasers, but these are not necessarily the same as users and thus the risk might not be shared amongst the relevant members of the risk community533. A wider spread might be obtained by an insurer spreading risk across its portfolio.
522 P. Cane, Atiyah's Accidents, Compensation and the Law (8th edn Butterworths, 2013), chapter 7; Epstein (1973), 153; Abraham (2012), 273 523 Koziol, Conclusions, 515 524 Prosser (1960), 1120 525 See van Dam, European Tort Law,299; Koziol, Introductory Lecture, 23 526 A. M. Polinsky and S. Shavell, 'The Uneasy Case for Product Liability' (2010) 123 Harvard Law Review 1437, 1459-1461 527 Abraham (2012), 281; Posner (1973), 210 528 Plant (1957), 946 529 Prosser (1966), 1121 530 Calabresi and Hirschoff (1972), 1069 531 Birnbaum (1980) 532 Polinsky and Shavell (2010), 1473 fn146, 1486-7, 1491 533 Koziol, Introductory Lecture, 23; Koziol, Conclusions, 534-6 100
As a justification, risk spreading was invoked by the early US cases534, the Law Commission535, the Commission when proposing the PLD536 and by the AGs in both Commission v UK537 and Novo Nordisk538.
A related justification is that strict liability can redistribute wealth to achieve greater economic equality from rich to poor, in our context from producer to consumer539. However, it is generally acknowledged that such considerations are difficult without democratic mandate. Further, risk spreading can redistribute amongst victims in the wrong direction given that the high losses of high earners are redistributed to all through price540. Then one has to add the costs of the system (in the US the transfer of $1 to a plaintiff was found to cost typically $1 in legal expenses541), although this relates to the system as a whole, not just its strictness542.
Next is justification due to preventative effect543: the higher the likelihood of liability, the more a manufacturer will tend to do to avoid it. This was one of the justifications referred to in Boston: the PLD “manifestly pursues a preventive function” by imputing the liability on the producer who created the risk most directly and who is in the best position to minimise it and prevent damage at the lowest cost544. Some have doubted those unmotivated by negligence will be stimulated where liability cannot be avoided with all reasonable care545; instead market forces, reputational concerns and the need to comply with regulation may be more influential546. Further, where the cost of prevention exceeds the accident cost, there will be no incentive547. Some of these points are met by introducing a further factor: strict liability can influence the amount of an activity engaged in by a potential injuror548. Whilst negligence
534 Escola (Justice Traynor), 462 535 Law Commission Report §38(a), (c) 536 Memorandum (First Proposal), 13-4 537 Commission v UK AG§§16-17 538 Novo Nordisk AG§18 539 Calabresi and Hirschoff (1972), 1078 540 Koziol, Introductory Lecture, 24 541 Polinsky and Shavell (2010), 1438 542 Calabresi and Hirschoff (1972); G. Calabresi, 'Commentary on Toward a Test of Strict Liability' (1991) 100 ibid.1501 543 Koziol, Conclusions, 532-4 544 Boston at AG§38 545 Prosser (1960),1119; Plant (1957), 945; Birnbaum (1980), 645; van Boom and others, Product Liability in Europe, 315 546 Polinsky and Shavell (2010), 1443-1454 547 Posner (1973), 209 548 Abraham (2012), 279-80; S. Shavell, 'Strict Liability Versus Negligence' (1980) 9 The Journal of Legal Studies 1, 2-5 101 influences rational participants to take care549, it fails to influence how much of an activity is appropriate – as long as care is taken, the amount of activity is irrelevant. By contrast, where strict liability is imposed, the product of the amount of the activity and the risk of an accident will affect the adverse cost. There is a real cost incentive to drive down liability costs by substituting alternative – better – methods of production (even those requiring research and development)550. Further, manufacturers, are incentivised to circumvent avoidable accidents, and to build into the product price the ‘accident cost’ so that consumers face the “socially correct” price for the product. This in turn affects purchases causing them to settle at an appropriate level yielding an efficient outcome regardless of whether customers misperceive risks.
Against that, it is sometimes argued that producers may become over-deterred, and innovation and economic growth affected, because no matter how much care is deployed, liability is imposed for defects551. Where liability is too strict, insurability becomes a problem552 thereby defeating risk spreading aims.
Related to prevention is the justification that strict liability places the risk on the person best able to make a costs/benefit analysis. The idea is that strict liability does not justify a particular cost-benefit outcome, but only a decision as to which of the parties is in the best position to make and act on that analysis553. This “search for the cheapest cost avoider” determines who is “more likely to find out whether avoidance is worth it”554. In product cases, this is usually the producer who can compare the cost of occasional harm with the cost of further research designed to produce alternatives which are either less risky, have the same level of risk but of less severe consequences, or which impose a risk on a different group of users555. Efficiency concerns have been expressed: the consumer’s incentive to adopt more economical prevention methods are removed556. Thus not only must the party best able to make the cost benefit analysis be identified, he must also be able to act on that assessment once made557.
549 Abraham (2012), 278, fn 21 550 Ibid., 280 551 Plant (1957), 950; Koziol, Conclusions, 512 552 D. Fairgrieve and others, 'Product Liability Directive' in P. Machnikowski (ed) European Product Liability: An Analysis of the State of the Art in the Era of New Technologies (intersentia, 2016), 25 553 See Calabresi and Hirschoff (1972), 1060-1 554 Ibid., 1060-1 555 Ibid., 1062-3, 1065-6 556 Posner (1973), 213-4, 216 557 Ibid., 215 102
This justification has been relied on in a number of early US cases558, the Law Commission559, and perhaps in part lies behind the PLD’s reference, in recital 2, to the “problem … of increasing technicality” and the “risks inherent in modern technological production”.
That recital chimes with another potential justification: that strict liability is justified due to the dangers arising from the industrialised mass production560. Recital 2 PLD prescribes liability without fault as the sole means of adequately solving this problem. Yet this cannot justify strict liability where a product is not mass-produced561. More fundamentally, the justification depends on an analogy with strict liability for those who keep or release dangerous things; ultimately it can be doubted whether products are sufficiently dangerous to merit this treatment562, indeed many are not dangerous at all563.
Notions of reliance are sometimes said to lie behind the PLD imposing liability on those who hold themselves out as the producer, and in the entitled expectation test for defect564. However, as a concept, reliance has been connected to misbehaviour and therefore fault which might undermine its use as a strict liability justification565.
Another line of argument is that strict liability is justified for reasons of consumer protection and the interests at stake. As seen above, this featured prominently as an objective of the PLD566 and was invoked in Boston567 and by the AG in Commission v UK568. Where human life, health and safety are at stake, a higher protection can justify producers of unsafe products having to compensate for the damage they cause irrespective of fault569. This justification can
558 Escola, 467-8; Henningsen, 379; H. Kalven Jr, 'Torts: The Quest for Appropriate Standards' (1965) 53 California Law Review 189, 206; cf Calabresi and Hirschoff (1972), 1065 559 Law Commission Report §38b 560 van Boom and others, Product Liability in Europe, 316-7; H. Koziol, 'Product Liability: Conclusions from a Comparative Perspective' in ibid., 515-6 561 J. Stapleton, 'Bugs in Anglo-American Products Liability' (2001-2) 53 South Carolina Law Review 1225, 1241- 2; Koziol, Conclusions, 524-5 562 Plant (1957), 941 563 Koziol, Introductory Lecture, 21-22; Koziol, Conclusions, 514, 522-3 564 Koziol, Conclusions, 529-30 565 Ibid., 530 566 Ibid., 530-1; see also 567 Boston AG§§34-5, 37, 63 568 Commission v UK AG§§16-7 569 Prosser (1960), 1122; Traynor (1965), 366 103 be seen in transition in the US from fault to strict liability where the rules were developed in foodstuff cases and then extended to other dangerous products570.
4.6 Conclusions
The argument for strict liability is not universally accepted in the literature; indeed it has even been portrayed as a “rule of liability characteristic of medieval times”571. A more recent analysis by Koziol in the context of the PLD regarded even the interplay of all the traditional theories as insufficient to justify strict producer liability introduced by that measure. For him, a more coherent justification lies in its imposition for industrially mass-produced products amongst members of the risk community (consumers, not bystanders), bolstered by notions of reliance572. Others regard that theory as being somewhat too quick to reject the impact of deterrence and risk spreading, and also being problematic in its limit to industrially produced products and only consumers573. Agreeing with those observations, for my part I would add that at least in respect of the consumer, the ability to short circuit chains of strict contractual liability helps broaden the justification to a wider group of product types.
Ultimately, the strictness of the ‘liability without fault’ introduced by the PLD, assessed on the continuum between absolute and fault based liability, can only properly be by reference to the system as a whole. This will include taking account of defences such as the DRD and it is to this task I now turn.
570 See Prosser (1960); Owen (2007), 970-971; Stearns (2014); Henningsen at 83; cf van Dam, European Tort Law at 225-6 571 Plant (1957), 939 572 Koziol, Conclusions, 536-8 573 K. Oliphant, 'Statement from a European Common Law Perspective' in ibid., 571-3; W. H. Van Boom, 'Statement from a Continental European Perspective' in ibid., 592 104
5 England and Wales
5.1 Introduction
The purpose of this chapter is to examine how the PLD has been implemented in England and Wales, and particularly how the Courts have applied the concepts of defect and development risks, to facilitate a comparison with Germany.
The English experience of the directive has long been influenced by a single, “elegant”574, first- instance judgment arising in group litigation: A v NBA. The number of claimants justified significant resources in terms of research, representation and judicial time and the decision truly broke new ground in construing the CPA purposively, in light of the travaux and a wide array of comparative law materials. The judge’s analysis of defect and development risks, and the structure he erected for that purpose dominated the landscape for the 15 years following 2001. In 2016-18, however, two judgments have challenged that orthodoxy, at least in so-called ‘standard’ product cases. The analytical method in A v NBA was described as unhelpful and emphasis has instead been placed on flexibility, allowing the judge greater discretion in terms of the factors that can be considered in a given case.
The way the ‘defect’ was conceptualised in the most recent case may have knock-on effects for the DRD. In Gee the court moved away from characterising it as a ‘harmful characteristic’ and instead saw the defect as the combination of circumstances which made the product unsafe. This would be important if applied to the DRD because it is the defect as defined which must be discoverable: the more features that are folded into the definition of defect, the easier it is for the producer to show that combination to be undiscoverable. Hitherto the ‘defect’ for the DRD has been seen as the generic risk of harm.
As for the DRD, following a Parliamentary tussle, the CPA’s wording differs from the PLD and was subject to enforcement proceedings in Commission v UK. One of the major issues was whether the test of discoverability had been correctly implemented by wording that implied reasonableness. Following rather light-touch examination by the Court of Appeal in Abouzaid,
574 Howells and Mildred (2002), 97 105 that was ultimately rejected in A v NBA. Since then, however, comments in Gee have suggested that the debate may not be over, and have renewed the focus on the characterisation of defect.
In this chapter, I start with an overview of how the PLD was implemented into English law by the CPA, before placing that implementation within the context of other causes of action available to consumers harmed by dangerous products. In light of that context, I move on to examine in more detail how the CPA has been approached by English Courts and then the concepts of defect and development risks in particular.
5.2 Overview of the CPA
The UK was the first member state to implement the PLD. Ahead of the deadline575, Part I CPA (along with required amendments to the LA) came into force on 1 March 1988. The CPA created a new cause of action in English law, creating liability where damage is caused “wholly or partly by a defect in a product”576. A “product” is defined as “goods or electricity”577 and includes products supplied within other products as components578. It is not yet settled whether the information contained in a physical product (e.g. a book or digital content) constitutes a ‘product’579. Those potentially liable are: a “producer” (defined to be who manufactured, won or abstracted the product, or carried out an industrial or other process so as to produce its essential characteristics580); a person who holds himself out as the producer; or an EU importer581. Further, suppliers are liable if, within a reasonable period after the damage, and if it was not reasonably practicable for the claimant to identify those primarily liable, they fail to an answer a request from the claimant within a reasonable period either identifying such a person or their own supplier582.
Liability under the CPA is made out where the claimant can establish the product was defective and that the defect caused recoverable damage, subject to the defendant establishing a defence.
575 30 July 1988: article 19 576 CPA s2(1) 577 Stapleton (1999), 51 578 CPA s1(2) 579 Whittaker (1989) 580 CPA s1(2) 581 Ibid. s2(1) 582 Ibid. s2(3) 106
The meaning of defect is set out in s3:
“(1) Subject to the following provisions of this section, there is a defect in a product for the purposes of this Part if the safety of the product is not such as persons generally are entitled to expect; and for those purposes “safety”, in relation to a product, shall include safety with respect to products comprised in that product and safety in the context of risks of damage to property, as well as in the context of risks of death or personal injury.
(2) In determining for the purposes of subsection (1) above what persons generally are entitled to expect in relation to a product all the circumstances shall be taken into account, including— (a) the manner in which, and purposes for which, the product has been marketed, its get-up, the use of any mark in relation to the product and any instructions for, or warnings with respect to, doing or refraining from doing anything with or in relation to the product; (b) what might reasonably be expected to be done with or in relation to the product; and (c) the time when the product was supplied by its producer to another; and nothing in this section shall require a defect to be inferred from the fact alone that the safety of a product which is supplied after that time is greater than the safety of the product in question.”
Damage that gives rise to liability is “death or personal injury or any loss of or damage to any property (including land)”583. That said, a number of types of damage are excluded: (i) damage to the product, or to a product supplied with the index product comprised in it584; (ii) damage to property not of a description ordinarily intended for private use, occupation or consumption and not intended by the claimant mainly for his own private use, occupation or consumption585; and (iii) damage to property which (excluding interest) does not exceed a threshold of £275586.
583 Ibid. s5(1) 584 Ibid. s5(2); Smith (1990), 113 585 CPA s5(3) 586 Ibid. s5(4): a threshold not a deductible amount 107
The CPA does not prescribe how causation is to be determined587. In simple cases the issue may be unproblematic, but this is not always so. Where there are competing potential causes, the judge must be satisfied that the defect in the product was the more probable; he is not compelled to choose between theories advanced by the parties and may not simply opt for what remains after eliminating the impossible588. In complex cases where a product, even if it were not defective, would still have an underlying risk of harm, the issue is tied in with the meaning of defect589 and it is controversial590 whether claimants must prove the elevated risk is more than double the underlying risk (so-called ‘relative risk > 2’)591. Recent cases have doubted such a requirement would be a “bright line test”592 but left it for future determination593.
Liability under the CPA cannot be limited or excluded594 but can be defeated by the defendant making out a defence set out in s4 CPA. These follow the PLD.
As explained below, the UK elected to implement a DRD alongside those defences in s4(1)(e) CPA in the following form:
“(1) In any civil proceedings by virtue of this Part against any person (“the person proceeded against”) in respect of a defect in a product it shall be a defence for him to show— (e) that the state of scientific and technical knowledge at the relevant time was not such that a producer of products of the same description as the product in question might be expected to have discovered the defect if it had existed in his products while they were under his control ...”
587 Gee §179 588 Ide v ATB Sales Limited [2008] EWCA Civ 424 (CA) 589 Gee §180 590 R. S. Carruth and B. D. Goldstein, 'Relative Risk Greater than Two in Proof of Causation in Toxic Tort Litigation' (2001) 41 Jurimetrics 195, 199 noting that US courts are not agreed on whether to adopt RR>2 as a threshold, or what such a threshold means and questioning the scientific basis for using RR>2 as a bright line test; R. Jay, 'Standards of Proof in Law and Science: Distinctions Without a Difference?' [2016] Journal of Personal Injury Law 1 591 Adopted by consent in XYZ v Schering Health Care Ltd [2002] EWHC 1420 (QBD) §20(1), §21 592 Gee §186 593 Wilkes v Depuy International Ltd [2018] QB 627 (QBD) §§135-137; Gee §§179-186. Cases permitting: Sienkiewicz v Greif (UK) Ltd [2010] QB 370 (CA) §23. More cautious: Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229 (SC) §§76, 78, 90, 121, 160-3, §§85-89. Broader assessment: Rich v Hull and East Yorkshire Hospitals NHS Trust [2016] Med LR 33 (QBD) §§142-3, 170, 171, 175, 181, 184 594 CPA s7 108
Even if none of these defences apply, a defendant may rely on the ‘fault’595 of the claimant because the Law Reform (Contributory Negligence) Act 1945 applies to liability under the CPA596. A ‘longstop’ for claims is created such that no claim under the CPA can be brought after the period of 10 years has expired from the “relevant time”597, viz the time of supply of the product by the defendant to another, or if the defendant is not producer/importer, the time when the product was last supplied by such a person598. A 3 year limitation period is imposed with time limit commencing on the later of the date of accrual of the cause of action or the ‘date of knowledge’ (as defined)599. Finally, there is no limit on the producer’s total liability under the CPA.
5.3 The Wider English Product Liability Context
The CPA was introduced alongside existing remedies for damage caused by unsafe products. In this section, a brief contextual survey of these preserved600 causes of action is undertaken.
5.3.1 Contract
Claims for breach of contract are available in respect of products where privity exists between the parties. Historically this has confined the remedy to buyers of products who could sue the seller for losses they themselves have sustained601. The harshness of this rule was significantly mitigated by the Courts finding privity by reference to agency relationships or by finding collateral contracts based on ‘guarantees’ or ‘warranties’. Now, statute602 provides that guarantees take effect as a contractual obligation and other statutory intervention has expanded the circumstances where third parties can take the benefit of contractual rights603. Furthermore, in modern times, consumers increasingly find themselves in contractual privity
595 Ibid. s6(5) 596 Ibid. s6(4) 597 Limitation Act 1980 s11A(3) 598 CPA s4(2) 599 LA s11A(4) 600 CPA s2(6) 601 Winterbottom v Wright (1883) 10 M & W 109 (Exch); Preist v Last [1903] KB 148 (CA) husband’s wife injured by hot-water bottle - contractual action limited to his “expenses incurred in the treatment of his wife” and not her personal injury. 602 Consumer Rights Act 2015 s30(3), implementing article 6 of Directive of the European Parliament and of the Council on certain aspects of the sale of consumer goods and associated guarantees (1999/44/EC) 603 Contracts (Rights of Third Parties) Act 1999 109 with a manufacturer through direct sales or in the healthcare sphere, private medical care604. Consumers can also acquire “like” causes of action based on the same contractual theory against credit providers e.g. when using their credit cards to make payment in respect of the goods605.
Actions in contract can be in respect of express terms, but are more frequently advanced based on terms implied by statue606, particularly that goods should be of satisfactory quality and fit for their particular purpose. The CRA also implies into contracts to supply digital content (data produced and supplied in digital form) a term requiring the quality of the digital content to be satisfactory607. The quality of goods is satisfactory if they meet the standard that a reasonable person would consider satisfactory, taking into account their description, price and other relevant circumstances608. Relevant circumstances include public statements about the specific characteristics of the goods made by the trader or producer, including in advertising or labelling609. The concept of ‘quality’ includes the state and condition of goods and “(a) fitness for all the purposes for which goods of that kind are usually supplied; (b) appearance and finish; (c) freedom from minor defects; (d) safety; (e) durability”610. It therefore overlaps with the concept of defect under the CPA because it includes safety considerations, but also covers aspects beyond safety, not included with the PLD’s conception of defect, such as fitness for purpose. Safety problems have resulted in goods being found of unsatisfactory quality due to an absence of necessary instructions/warnings611, and conversely of satisfactory quality where such information was included612. The concept of satisfactory quality is not limited to intrinsic quality of the product such that an established risk going to the aspects of quality can result in product’s quality being unsatisfactory overall613. No breach of the satisfactory quality clause
604 E.g. the PIP Breast Implant Group Litigation - claims against private medical clinics on the basis of contractual theory: see B. van Leeuwen, 'PIP breast implants, the EU's new approach for goods and market surveillance by notified bodies' (2014) 5 EJRR 338; P. Verbruggen and B. van Leeuwen, 'The Liability of Notified Bodies under the EU's New Approach: The Implications of the PIP Breast Implants Case' (2018) ELR 394; Travelers Insurance Co Ltd v XYZ [2018] EWCA Civ 1099 (CA) 605 Consumer Credit Act 1974 s75 (s75 does not apply to non-commercial agreements or in respect of claims relating to single items valued £100 or below or more than £30,000) 606 CRA, replacing similar terms implied by Sale of Goods Act 1979 and Supply of Goods and Services Act 1982 607 CRA s34 608 Ibid. s9 609 Ibid. s9(7) 610 Ibid. s9(3) 611 Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 (HL), per Lord Pearce at 119: “the absence of a warning was in itself a serious defect, which can make goods unmerchantable even though they would have been merchantable if sold with due notice of the hidden defect” 612 Wormell v RHM Agricultural (East) Limited [1987] 1 WLR 1091 (CA) 613 Webster v JG Pears & Others [2009] EWHC 1070 (Comm) (HC) §38 110 will be established in respect of anything drawn to the consumer’s attention before the contract, or where the consumer examines the goods and the examination ought to reveal614 the issue.
A fitness for particular purpose clause is implied615 into a contract if, before the contract is made, the consumer makes known to the trader (expressly or by implication) any particular purpose for which the consumer is contracting for the goods. Goods must be reasonably fit for that purpose, whether or not that is a purpose for which goods of that kind are usually supplied. This does not apply if the consumer does not rely, or if it is unreasonable for the consumer to rely on the skill or judgment of the trader. There is considerable overlap616 between claims based on the two implied terms and they are often pleaded in the alternative617.
Once the contractual term is breached, there is no list of defences to apply: liability is strict. In particular, it is no defence to prove that all due care was taken, or that it was not known (nor could it be known) that the goods were of unsatisfactory quality or unfit for purpose when supplied618. The defence of contributory negligence may be raised by a defendant only if the claim in contract is founded on an act or omission by the defendant which would also have given rise to liability in tort619.
Damages for breach of contract include, in principle, damages in respect of death and injury, as well as economic losses620, including (unlike the CPA) damage to the product itself. Further, a consumer has a right to reject, a right to require repair or replacement, and a right to a price reduction621. Although the limitation period for contractual actions is usually 6 years from the accrual of the cause of action622, where personal injuries are claimed, a 3 year limitation period applies623.
614 See C. Twigg-Flesner, 'Examination prior to purchase: a cautionary note' (2005) 121 LQR 205 615 CRA s10 616 C. Twigg-Flesner, 'The relationship between satisfactory quality and fitness for purpose' (2004) 63 CLJ 22 617 H. Beale (ed), Chitty on Contracts (32nd edn Common Law Library, Sweet & Maxwell, 2017) §44-112 618 Australian Knitting Mills; Henry Kendall; van Boom and others, Product Liability in Europe, 271 619 Forsikrings Vesta v Butcher [1989] AC 852 (CA) 620 Australian Knitting Mills 621 CRA ss19-24 622 LA s5 623 Ibid. s11; Foster v Zott GmbH & Co (2000) Unreported B2/1999/1069 (CA) 111
5.3.2 Negligence
An alternative claim is available in common law negligence. As famously established by reference to a snail in a bottle of ginger beer, manufacturers owe a duty to the end user to take reasonable care in the production of their product notwithstanding a lack of contractual privity624. Subsequent cases extended the duty beyond the manufacturing process to cover the design of the product, information (labelling, warnings, instructions) that accompanies the product, its container and packaging, and also post-marketing surveillance and recall625. Further, the range of those owing the duty has widened to include (amongst others) designers626, developers627, assemblers628, suppliers of components629, wholesalers/distributors630, retailers631, builders632, erectors633, assemblers634, repairers635, and hirers636. The scope of those eligible to sue has also expanded from end users to others who foreseeably come into contact with the product637.
A key feature of a claim in negligence is the requirement on the claimant to prove fault. The claimant will succeed only where he can show that the manufacturer failed to take the care that would have been taken by a hypothetical reasonable manufacturer. This requirement often makes it a very lengthy, intricate, expensive and ultimately difficult exercise to establish fault against a manufacturer, and a fortiori on the part of others in the supply chain who have no duty to inspect etc and merely supply the product on638.
A claimant is unlikely to have access to all relevant materials and is likely to have to obtain and analyse (often with expert assistance) extensive disclosure from the defendant. The fault- finding exercise involves the Court considering risks and benefits: a defendant is not under a
624 Donoghue 625 C. Walton and others (eds), Charlesworth & Percy on Negligence (14th edn Common Law Library, Sweet & Maxwell, 2018) §§16-90 to 16-100; Howells (ed), The Law of Product Liability §§3.13-3.22 626 Independent Broadcasting Authority v EMI Electronics Ltd [1981] 14 BLR 1 (HL) 627 Vacwell Engineering Company v BDH Chemicals [1971] 1 QB 88 628 Malfroot v Noxal Ltd (1935) 51 TLR 551 629 Barnes v Irwell Valley Water Board [1939] 1 KB 21 630 Watson v Buckley, Osborne, Garrett & Co [1940] 1 All ER 174 631 Fisher v Harrods Ltd [1966] 1 Lloyd's Reports 500 632 Sharpe v ET Sweeting & Sons Ltd [1963] 1 WLR 665 633 Brown v Cotterill (1934) 51 TLR 21 634 Howard v Furness Houlder Argentine Lines Ltd [1936] 2 All ER 781 635 Hazeldine v CA Daw & Son Ltd [1941] 2 KB 343 636 Griffiths v Arch Engineering Company (Newport) [1968] 3 All ER 217 637 Stennett v Hancock & Peters [1939] 2 All ER 578 638 Prosser (1960) at 1117 112 duty in negligence to make a product absolutely safe; rather the Courts acknowledge that reasonable manufacturers will take greater care as the risk involved increases639. The Court assesses the conduct of the defendant at the time of that conduct, without the benefit of any hindsight640.
In many product cases, the defendant will be possessed of special skills or expertise. For example, the manufacturer of a drug will have expertise in several relevant medical disciplines including toxicology. In such cases, it is only where the defendant fails to adhere to the standard of a reasonably competent person possessed of the relevant skill that liability will be imposed. For these purposes, where the defendant’s product development decision is supported by a reasonable body of expert opinion, it will not be a negligent choice641. That said, the body of expert opinion relied upon must be reasonable, logical and be based on the professional’s view of the risks and benefits; otherwise it will be rejected642. Not infrequently, a manufacturer will have consulted bodies of relevant experts at various stages during the development phase of products, with the result that establishing breach can become difficult.
Although the common law insists upon the claimant establishing fault to succeed in negligence, it has shown a willingness to infer breach of duty from the circumstances, particularly in cases involving manufacturing defects. For example, in Grant643, where it was alleged that sulphites in the claimant’s underpants caused him to develop dermatitis, the Court inferred negligence from the presence of a method of manufacture intended to be fool proof in avoiding excess sulphites being left in garments coupled with a finding of fact that sulphites were in fact present in the garments in question. Lord Wright held that “Negligence is found as a matter of inference from the existence of the defects taken in connection with all the known circumstances”644.
Those claimants who can establish negligence are able to recover for personal injury and damage to property, although not damage to the product itself645. There is a 3 year limitation
639 Bolton v Stone; see also, in a drugs case, Re Human Growth Hormone Litigation Unreported 19 July 1996 (QBD) 640 Roe v Ministry of Health [1954] 2 QB 66 641 Bolam v Friern Hospital Management Committee [1957] 2 All ER 118 642 Bolitho v City and Hackney Health Authority [1997] 4 All ER 771 (HL) 643 Australian Knitting Mills 644 Ibid., 101. See also Carroll v Fearon [1998] PIQR P416 (CA) 645 Such damage would be purely economic loss and only recoverable in contract: see Walton and others (eds), Charlesworth & Percy on Negligence §16-92. 113 period where personal injury damages are included in the claim (running from the date of accrual or date of knowledge), otherwise a 6 year period applies where no personal injury damages are sought646.
5.3.3 Introduction of the CPA
Before the CPA was introduced, therefore, the protection for consumers against dangerous products was dependent upon the presence of a contractual nexus or being able to establish fault, or at least persuade the court to infer it, so as to rely on remedies in contract or negligence. The lack of a coherent law focusing on products led to it being said that “England had no ‘product liability law’ but only laws relating to liability for defective products”647.
Thus in the 1970s product liability received attention in England from the Law Commission648. The final report in 1977649 recommended a regime of strict liability be introduced because of the inadequacies of existing remedies650. Other options of providing additional rights in contract, or reversing the burden of proof in tort were considered inadequate651. Liability was to be imposed based on defectiveness assessed in terms of safety652. There was to be no defence for development risks because “the injured person should be compensated by the producer however careful he had been”653. The Law Commission supported the Council of Europe convention654 but identified a number of technical issues with the proposed PLD655. In 1978, the Royal Commission chaired by Lord Pearson also reported and favoured a system of liability as contained in the Convention and the Commission’s then (initial) proposal.
These domestic reviews fed into the national reaction to the proposed directive but did not lead to change in themselves. That only came when the PLD was implemented by the CPA.
646 LA s11 and s2 647 Lord Griffiths, P. De Val and R. Dormer, 'Developments in English Product Liability Law: A Comparison with the American System' (1987-1988) 62 Tulane Law Review 353 at 355 648 The Law Commission’s Working Paper 64 and Memorandum 20 considered by the Commission: Memorandum (First Proposal), 20 (bibliography) 649 Law Commission Report 650 Ibid. §§29, 38 651 Ibid. §§30-37 652 Ibid. §§45-49 653 Ibid. §105 654 Ibid. §165; the Scottish Law Commission took a different view: §166 655 Ibid. §§131-138, 162 114
5.4 The CPA as applied in the Courts
Although the CPA came into force in 1987, surrounded by academic discussion about its scope656, it took a very long time before a trickle of cases came to prominence in 1999 and 2000657, ultimately leading to A v NBA in 2001. This was not, perhaps, unexpected by those practitioners who pointed to the “general ambiguity” and “looseness in drafting”658 which to English eyes had a different feel and style.
This section examines the jurisprudence that has developed since then, focusing on the approach to defect and development risks. Before turning to the detail of those matters, however, I shall consider how the Courts in England and Wales treat Part I CPA by virtue of its European origins, and the extent to which they were prepared to apply different principles from those they were used to under the existing causes of action.
5.4.1 CPA as European Law
In England, it has been recognised for some time that when interpreting domestic measures that implement EU directives, the Court must, so far as is possible, interpret the measure so as to achieve the result of the directive659. A purposive interpretation660 is adopted even in the absence of ambiguity661 so that “the court must not only keep faith with the wording of the Directive but must have closely in mind its purpose”662 . In Ghaidan663, the House of Lords confirmed the exercise is not one of semantics or linguistics664 and words can be implied into domestic
656 E.g. Whittaker (1985); H. C. Taschner, 'European Initiatives: The European Communities' in C. J. Miller (ed) Comparative Product Liability (BIICL, 1986); Newdick (1987); Howells (1990); Smith (1990); J. Stapleton, 'Products Liability Reform - Real or Illusory?' (1986) 6 Oxford Journal of Legal Studies 392; Stapleton, Product Liability 657 Howells and Mildred (2002), 96 658 C. S. Newell, 'Product liability after the Consumer Protection Act 1987' (1988) 9 Company Lawyer 210 659 Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C-106/89) [1992] 1 CMLR 305 (CJEU) 660 Pickstone v Freemans Plc [1989] AC 66 (HL), 112D 661 Ibid.; Litster v Forth Dry Dock & Engineering Co Ltd [1990] 1 AC 546 (HL), 559; Ghaidan v Godin-Mendoza [2004] 2 AC 557 (HL) §31 662 Swift v Robertson [2014] 1 WLR 3438 (SC) §22. Where, as there, the purpose was “to enhance consumer protection, that overarching principle must guide interpretation of the relevant national legislation”. 663 Ghaidan, applied to EU law in Revenue and Customs Commissioners v IDT Card Services Ireland Ltd [2006] EWCA Civ 29 (CA) 664 Ghaidan §§31, 35, 48-9, 110-115 115 provisions665; the precise form of words does not generally matter666 (in contrast to the result). It only becomes “impossible” to construe domestic legislation compatibly where the Court is asked to “adopt a meaning inconsistent with a fundamental feature of legislation” or to go against the “grain” or “underlying thrust of the legislation being construed”667.
These general principles apply to the CPA “…in accordance with the fundamental policy of implementing a strict liability system as set out in the Preamble of the product liability Directive.”668 That said, there is an additional feature of the CPA. Section 1(1) CPA states that Part I “shall have effect for the purpose of making such provision as is necessary in order to comply with the product liability Directive and shall be construed accordingly”669. By the underlined words, Parliament provided an express domestic law mandate that the provisions of the CPA were to be construed so as to comply with the PLD. Thus, the underlying thrust of Part I is to comply with the PLD. It follows that whatever other interpretive techniques might be available in English law, s1 CPA gives a clear domestic law basis for a conformist interpretation. It follows that it will always be possible for the domestic court to comply with the Pfeiffer judgment and “do whatever lies within its jurisdiction, having regard to the whole body of rules of national law, to ensure that [the PLD] is fully effective”670.
This very point was made by the CJEU when the compatibility of the CPA with the PLD was examined in Commission v UK. Differences in wording were not an “irremediable conflict” and whilst s4(1)(e) CPA “could be interpreted more broadly than it should”671 the interpretive obligation could resolve any difficulties of incompatibility672: “s1(1) of the Act expressly imposes such an obligation on the national courts”673.
665 See e.g. EBR Attridge Law LLP v Coleman [2010] 1 CMLR 28 (EAT) following Coleman v Attridge Law (Case C-303/06) [2008] ICR 1128 (CJEU) cf EOC v Secretary of State for Trade and Industry [2007] 2 CMLR 49 (QBD, Admin) and Hainsworth v Ministry of Defence [2014] 3 CMLR 43 (CA) §38. See generally S. Forshaw and M. Pilgerstorfer, 'Taking Discrimination Personally? An Analysis of the Doctrine of Transferred Discrimination' (2008) 19 KLJ 265; M. Pilgerstorfer and S. Forshaw, 'Transferred Discrimination in European Law: Case C-303/06, Coleman v Attridge Law' (2008) 37 ILJ 384 666 Ghaidan §122; IDT §113 667 Ghaidan §§33, 110-113, 115; IDT §113. 668 A. Stoppa, 'The Concept of Defectiveness in the Consumer Protection Act 1987: A Critical Analysis' (1992) 12 Legal Studies 210 669 Extended by LA s11A(8) 670 Pfeiffer & Others v Deutsches Rotes Kreuz (Joined cases C-397/01 to C-304/01) [2005] 1 CMLR 44 (CJEU) §118 671 Commission v UK AG§25 672 Ibid. §§33, 37, AG§§26-7 673 Ibid. §38 116
Domestic courts have followed that message, but done so in different ways. In Abouzaid674, the Court of Appeal emphasised the need to interpret the CPA “in the light of the wording and purpose of the Directive so as to achieve the result which it has in view”675. Burton J, however, took matters further “by common consent”676 in A v NBA by relying directly on the wording of the PLD as opposed to the CPA: “in so far as the wording of the CPA differs from the equivalent articles in the directive, it should not be construed differently from the directive; and consequently the practical course was to go straight to the fount, the directive itself”677. Since then, in both Wilkes and Gee the court preferred to return to the domestic wording of the CPA, emphasising that the PLD was not directly applicable: whilst the interpretive obligation applied, the “focus is … on the [CPA] and not the [PLD]”678. In both of those cases, however, the court was concerned with the issue of defect where no difference in the wording mattered679. Whilst this latter approach accords with strict orthodoxy, s1 does make the CPA a special case amongst implementing measures, and although controversial680, there is much to commend Burton J’s approach in those statutory circumstances.
In terms of the emphasis placed on the underlying rationale of the PLD, again the picture is mixed. The high-water mark of consumer protection can be seen in A v NBA, where the judge with “reformist zeal” and lacking intoxication by negligence681, recognised that he was to construe the regime by reference to the recitals to the PLD, could look at the travaux préparatoires and had to bear in mind that autonomous Community meanings may be ascribed to certain concepts682. As a result, the Court accepted that the purpose was to increase consumer protection, to introduce objective or strict liability irrespective of fault and to make compensation of the injured consumer easier by removing the need to prove negligence683. Some criticisms of that emphasis684 were echoed in Gee, where the judge pointed to harmonisation as the “first justification” and regarded it as an “economic one”685 (even though
674 Abouzaid v Mothercare (UK) Limited (2000) Unreported Case No. B3/2000/2273 (CA). 675 Ibid. §22 676 Brooke QC and Forrester QC, Comparative Law in A v NBA, 17 677 A v NBA §§2, 21 678 Wilkes §53; Gee §67 679 Andrews J held in Gee §§85-6 that the subtle linguistic differences between s3 CPA and article 6 PLD could be reconciled: the reference to “a defect” and “persons generally” (CPA) in place of “defective” and “a person” (PLD) was unproblematic 680 van Boom and others, Product Liability in Europe, 263 681 Howells and Mildred (2002), 98 682 A v NBA §§13, 15, 43; see Gee §§74-75 683 A v NBA §31 684 Stapleton (2001-2), 1249 685 Gee §69 117 in the European cases harmonisation is seen both in terms of burdens on a producer and protections for the consumer). For that judge, whilst consumer protection was also a “key objective”, a much greater emphasis was placed on it being part of a “complex balancing between numerous competing policy considerations”686. The judge held that liability without fault was the balance which the PLD had struck687, but beyond that, PLD did not seek to provide a simple or straightforward route to redress688. The Judge also concluded that an interpretation of the CPA which operated in a way that obviated the necessity for the claimant to prove defect, damage and causation would be as much contrary to the objectives as a provision that widened the defences available to a producer689.
Given that difference in emphasis, it is perhaps unsurprising to see that in A v NBA, there was more extensive reference to the travaux préparatoires, although noting that it should be done “…always chary of early discussions or disputations which may have been overtaken by later events, or of documents which may always have been internal or confidential and not reflected in the decisions”690. The judge in Gee was even more cautious, concerned as to whether “any views or objectives expressed at an earlier stage of the long drawn-out legislative process were in fact adopted or reflected in the final decisions taken”691. She placed particular weight on the fact the original regime (without a development risk defence) was ultimately rejected and justifications for that original proposal would not be reliable aids of interpretation.
Whilst the emphasis and interpretation placed on various rationales for the PLD have changed over time, the context of that debate has always been separate from the other remedies in contract and negligence. Indeed, it has been emphasised that when analysing liability under negligence and the CPA, “it is necessary to consider the two bases for liability separately and discretely”692.
686 Ibid. §§71-3 687 Ibid. §76 688 Ibid. §§78, 142 689 Ibid. §80 690 A v NBA §15 691 Gee §74; although the judge appears to have incorrectly confused the Council of Europe for the relevant legislative body for the EU 692 Abouzaid §§15-16; 50. 118
5.4.2 Defect
There was no common law concept of ‘defect’ developed in the negligence jurisprudence; the analysis there was conducted in terms of breach of duty. As such, the English court has had to apply s3 CPA as a novel legal provision. Whilst it has been generally accepted that a ‘defect’ for the purposes of s3 has a special legal meaning, different from that to be found in the dictionary693, the changes in emphasis concerning the purpose of the PLD which we have seen above has had an impact on the approach adopted over the years since 1987.
In this section, I shall discuss these developments thematically, starting with questions arising on the general approach, and moving on to consider the factors which the Courts have considered relevant to the assessment of defectiveness.
5.4.2.1 Features of the General Approach
5.4.2.1.1 Safety Expectations
The test in s3 CPA refers to the safety of the product being not such as persons generally are entitled to expect. This was first taken up in Worsley v Tambrands694, a claim which was dismissed using a summary procedure on the basis there was no case to answer. The case concerned warnings accompanying tampons which were alleged to have caused toxic shock syndrome. The judge referred to the test of defectiveness being “objective” and “imposing a form of strict liability” and framed her enquiry as whether the warning was “adequate to warn the claimant of the potential risk associated with tampon use, having regard to the nature of the risk and the potentially life-threatening consequences of TSS?” On the facts, the manufacturer had done all that a menstruating woman was entitled to expect: there was a warning on the box and a leaflet that warned of the risk and it made no difference that the claimant had lost the leaflet.
Shortly after, in Richardson v LRC695, a condom was alleged to be defective because the teat became detached. The case was advanced in two ways: (i) that the condom fractured because of weakening of the latex because of ozone damage occurring before the condom left the factory; or (ii) that the fact there was a fracture shows that there was a defect, albeit that it was
693 Gee §87 694Worsley v Tambrands Ltd [2000] PIQR P95 (QBD) 695 Richardson v London Rubber Company Products Ltd [2000] Lloyd's Law Reports 280 (QBD) 119 not possible to suggest precisely what the defect was. The Court rejected the first argument on the evidence. In relation to the second point, the Court rejected the claim because whilst the user did not expect the condom to fail, “no-one has ever supposed that any method of contraception intended to defeat nature will be 100 per cent effective. This must particularly be so in the case of a condom where the product is required, to a degree at least, to be “user friendly””. As a subsequent judge696 remarked, whilst this did not expressly refer to the difference between actual expectations and entitled expectations, it appears that this was what lay behind his reasoning.
That distinction between actual and entitled expectations was developed further in A v NBA. When assessing entitled safety, “the expectation was objectively assessed, the Court acting as “an informed representative of the public at large”697. Accordingly, entitled expectations could accord with actual expectation, but it could be lesser or greater, and indeed could be assessed even in the absence of an actual expectation698. One could not rule out the public expecting the unattainable (unless informed as to what was impossible) and one could not reformulate the expectation in terms of merely expecting the producer not being negligent or taking all reasonable steps699.
This had been one of the consequences of the Court of Appeal’s finding in Abouzaid that ‘cozytoes’, a fleece lined sleeping bag for children, was defective because of the risk that an elasticised fastening strap and metal buckle could recoil and impact with the eye. The Court held that it was wrong to ask what the level of safety was that consumers could reasonably expect700, and rather the assessment was as to what persons generally were entitled to expect. Thus, the absence of previous incidents was not a point for the defendant. The assessment of defectiveness there was reached on the basis that the risk arose on the design without there being a warning, and that the vulnerability of the eye was such that consequences of impact could be serious; it was not necessary to determine precisely what more should have been done by the manufacturer701.
696 A v NBA §44(i) 697 Borrowed from Dr Harald Bartl: §31(vii) 698 A v NBA §31(iv)-(vii); B & others v McDonald's Restaurants Ltd [2002] EWHC 490 (QBD) §73(b) 699 A v NBA §56 700 Abouzaid §39 701 Ibid. §27 120
In A v NBA it was recognised that entitled expectations did not impose an absolute level of safety702. Burton J used the touchstone of considering whether there was public understanding or acceptance of the risk of infection with hepatitis C from blood products, and therefore whether that risk was socially acceptable (or sozialadäquat to use the term used by Taschner, Riesch and von Westfalen)703. In the result there, the consumer had an entitled expectation that the blood would be safe and not infected; the risk was not inherent in the blood and was not generally known.
Whilst the objective approach to entitled expectations has been followed in subsequent cases704, two further points should be made. First, in the analysis, sometimes the language of actual expectation has been allowed to creep back in without qualification705. Such missteps do not, however, constitute a change in direction. Secondly, a linguistic argument has surfaced following Burton J referring to “legitimate” rather than “entitled” expectation as being a preferable formulation, and corresponding to the other language versions of the PLD706. Burton J was clear that his use of the phrase was not intended to import administrative law concepts, and indeed subsequent European cases have used the same terminology707. The judges in Wilkes and Gee both criticised that, and preferred the “entitled expectation” formulation708, although the disagreement appears to be one entirely of semantics rather than substance709.
5.4.2.1.2 Categories of Case
Having identified the entitled expectation test, the next issue is to consider how that has been applied in different case types. In general terms, the English case law has not sought to differentiate cases by reference to the type of defect that might be alleged, viz the types of defect that one sees in the US Third Restatement of Torts (manufacturing, design and warning defects). Indeed, such categorisation, or ‘boxing’, has been rejected in numerous cases for fear that it might require the Court to engage in inappropriate considerations of the production
702 A v NBA §31(iv) 703 Ibid. §55 704 Gee §§86, 94 705 E.g. B v McDonalds §80 706 A v NBA §31(vi) 707 Boston AG§30 708 Wilkes §71; Gee §95 709 See Wilkes §71 121 process710. The Court has also emphasised the need for the concept of defect to be sufficiently flexible to apply to the full range of consumer products711.
The rejection of boxing by defect type marks a significant point of departure from the German approach712, however the desire to provide a structure to the analysis through categories proved irresistible and the Court in A v NBA came up with its own taxonomy distinguishing between ‘standard’ and ‘non-standard’ products. Leaning on the concepts of ‘rogue’ and ‘lemon’ products in US law, and the Ausreißer concept in German law, Burton J held “a standard product is one which is and performs as the producer intends. A non-standard product is one which is different, obviously because it is deficient or inferior in terms of safety, from the standard product: and where it is the harmful characteristic or characteristics present in the non-standard product, but not in the standard product, which has or have caused the material injury or damage”713.
Burton J recognised that a number of European jurisdictions when implementing the directive specifically distinguished between products on this basis in order to impose automatic liability for ‘non-standard’ products.714 Accepting that the distinction was not express on the face of the PLD or CPA, it was introduced as a tool for analysis: “the distinction… would not be absolute. Non-standard products would not be automatically defective. A product may be unsafe because it differs from the standard product, or because the standard product itself is unsafe, or at risk of being unsafe. It may, however, be easier to prove defectiveness if the product differs from the standard product”715.
For some commentators the fact that this approach would render non-standard products defective in the absence of warnings was a criticism716. For others, it “seem[ed] sound” that production errors should more easily justify compensation and it also covered the rogue product situation717, although the result of the standard/non-standard distinction would depend on whether the product is characterised as the one which caused the damage or one of many products in a series, each with a risk of being non-standard718.
710 A v NBA §§39-40; Wilkes §§90-1; Gee §93 711 Gee §93 712 Chapter 6, below. 713 A v NBA §§36, 67 714 Italy, Spain, Belgium: ibid. §38 715 Ibid. §38 716 Stapleton (2001-2), 1250 717 Howells and Mildred (2002), 98-9 718 Ibid., 99 (arguing that the judge’s analysis of defect picked and chose from both characterisations) 122
In the Wilkes and Gee cases, the distinction was described as “unnecessary and undesirable”719, yet it was not discarded altogether. In Wilkes the judge accepted that the status of a product as standard/non-standard may be a relevant circumstance in relation to the level of safety that persons are entitled to expect, but “to raise the distinction to a rigid categorisation is positively unhelpful and potentially dangerous”. Further, the judge then used the distinction as a basis for deciding the proper weight to give to risk/benefit factors in the different types of case.720 In Gee, Andrews J agreed with these points721: inquiring whether a product met its specification may be appropriate when assessing safety but was not obligatory as some products (prototypes) might not fall into either category, and some might fall into both. However, for Andrews J the distinction between standard/non-standard products could have a significant bearing on those circumstances that are relevant to the evaluation of safety. Whilst it would be easier to establish defectiveness with an out of specification product, the status was not determinative. Thus, although Burton J’s classification was formally criticised in the later cases, it is unlikely that it will be abandoned in future cases as a tool. As even those later judges found, the distinction facilitates the analysis.
The core reason for this is that at the heart of the assessment of defectiveness is the exercise of comparing. It is, after all, how the test is expressed: a comparison between the level of safety offered and that persons are entitled to expect, and it has become more important after Boston Scientific722. It is not only the ultimate legal question that is comparative but in order to ascertain what persons are entitled to expect, a comparison with the safety offered by other products is permitted. Burton J’s distinction provides a structure for that evidential comparison. Non-standard products can be compared (principally, but not exclusively) to the standard, whilst standard products to others on the market723. The latter comparison was explained further by Burton J: “If there are any comparable products on the market, then it will obviously be relevant to compare the offending product with those other products, so as to identify, compare and contrast the relevant features”724.
719 Wilkes §94 720 In ibid. §96: in a non-standard case the risk-benefit of a standard product was unlikely to have much weight 721 Gee §§157-160 722 Fairgrieve and Pilgerstorfer (2017), 889-892 723 A v NBA §41 724 Ibid. §71 123
For some after the A v NBA decision, there was insufficient structural framework for future decisions725. Post Wilkes and Gee that position can only have been exacerbated. Whilst one can agree that the effect of the recent cases is to have abandoned one structure without advancing a helpful alternative726, it is in my view too early to conclude that Burton J’s distinction will not endure, at least as a tool with which to analyse the evidence in a case.
5.4.2.1.3 Timing of the Assessment
Technically the time when the product was supplied by its producer to another is a circumstance for the Court to take into account under s3(2)(c) CPA, however in A v NBA, the Court recognised that this meant that the entitled expectations as to safety fell to be determined as at the date on which the product was put into circulation727.
In Abouzaid the defendant relied on the time the product had been on the market without incident as tending to show the index product was not defective. This was not relevant, contrary to the position in negligence: “[k]nowledge of previous accidents is not an ingredient necessary to a finding that a defect”728. There had been no change in the entitled expectation of the public as to safety between when the product was put into circulation and the date of the incident.
The approach described above has been adopted in the subsequent case-law, and it has been made clear that whilst the level of entitled safety expectations are assessed at the time the product was put into circulation, when subsequently considering whether or not the product offered that level of safety, the Court may take into account the characteristics, properties and risks associated with the product as they are known at the date of assessment. If scientific and technical knowledge has developed since the product was put into circulation the producer might be able to have recourse to the DRD. In Gee, the Court held this was “obviously the correct approach, otherwise a claimant would never be able to establish that a product, whose lack of safety only comes to light one or two years after it was first marketed, was defective at the time of its initial circulation”729.
725 Howells and Mildred (2002), 98 726 J. Eisler, 'One step forward and two steps back in product liability: the search for clarity in the identification of defects' (2017) CLJ 233, 234 727 A v NBA §31(ix) 728 Abouzaid §§29, §44 729 Gee §84 124
5.4.2.1.4 Burden of Proving Defect and Definitional Issues
Whilst it has never been controversial in England that the claimant must prove on the balance of probabilities that a product is defective730, there has been much debate as to what exactly this entails.
The first issue to arise was whether this means that the claimant had to prove the technical cause of the defect or whether proving the product failed to provide the entitled level of safety expectation was sufficient. The early County Court case of Foster v Biosil731 held that the former was required on the basis of the judge’s reading of article 4, the defences, two works of commentary and Richardson. The conclusion was built on shaky foundations: article 4 merely requires the claimant to prove the ‘defect’, not its cause. Further, the judgment in Richardson provided little support: the secondary argument discussed above did not fail because it had not identified the precise cause of condom failure, but because persons generally were not entitled to expect a condom never to fail.
Ultimately, the decision in Foster was overturned by the Court of Appeal in Ide. The CPA was intended to make the Court’s task simpler, and whilst the claimant had to prove the defect, “it is unnecessary to ascertain the cause of the defect”732. This approach has been followed in other cases since Ide733 including recently by the Court of Appeal in Baker v KTM734: “the precise mechanism by which [the] defect arose” 735 does not need to be proven. This new orthodoxy is now generally accepted, although there are hints in the later cases that in some circumstances more might be required. As the judge put it in Gee, the claimant must “establish what it is about the state or behaviour of the product or the risks that it posed that led it to fall below the level of safety that persons generally were entitled to expect at the time the product entered the market”. It was recognised that failure following normal use and in circumstances where a standard product would not have failed may give rise for an inference of defectiveness (examples were given was of an electrical appliance that burst into flames, or an exploding fridge), but in other cases
730 CPA s2(1); PLD art 4; A v NBA §31(iii); B v McDonalds §73(a); Gee §81 731 Foster v Biosil [2000] 59 BMLR 178 (London Central County Court) 732 Ibid. §§7, 19-20; M. Mildred, 'Case and Comment: Ide v ATB Sales Ltd; Lexus Financial Services (t/a Toyota Financial Services (UK) Plc) v Russell' [2008] Journal of Personal Injury Law C117 733 Hufford v Samsung Electronics (UK) Ltd [2014] EWHC 2956 (TCC) §25; Wilkes §73; Gee §86 734Baker v KTM Sportmotorcycle UK Ltd [2017] EWCA Civ 378 (CA) 735 Ibid. §26 125 more specificity might be required: “Thus the claimant may have to establish that the failure of a product or a component in it was not due to ordinary wear and tear, but to something abnormal that caused it to fail when it should not have done; or that something must have happened to elevate the inherent risk to a level that was higher than the public was entitled to expect”736.
Whilst the precise mechanism of the defect might not need to be established, there has been a vigorous debate concerning both the analytical method to be adopted under s3 and how the defect in a product must be characterised. These issues can assume considerable importance because it is the defect as characterised that must be causally connected to the damage and there may be knock-on effects for the DRD.
In A v NBA, the analysis was for a “harmful characteristic” to be identified in the product acknowledging that this might or might not be a defect within the meaning of the CPA737. Whether that harmful characteristic amounted to a defect depended on the Court’s assessment of all the legally relevant circumstances. If, when those circumstances were considered, the product did not offer the level of safety persons generally were entitled to accept, the product would be defective, and the harmful characteristic the ‘defect’. Burton J observed in this context that some products had harmful characteristics about which no complaint could be made e.g. knives, guns, poisons, alcohol, tobacco etc and in some cases the dangerous characteristics would not be desired (e.g. carcinogenicity in tobacco)738.
Although this approach effectively mirrored that of the Law Commission identifying a product’s “propensity for harm” under its identical test of defect739, others criticised the identification of a ‘harmful characteristic’ at the outset. Miller and Goldberg, for instance, regarded the method as giving primacy to causation before any investigation of defect could take place740. This critique was embraced by judges in both Wilkes and Gee where the approach was said to be circular and to involve backwards reasoning from harm to find defect in a normal characteristic of a product741.
736 Gee §§99-100 737 A v NBA §§31(i), 67 738 Ibid. §31(viii) 739 Law Commission Report §59 740 Miller and Goldberg, Product Liability §10.92 741 Wilkes §58; Gee §§106, 108, 119 126
It is doubtful whether this criticism is right. Identifying the alleged ‘defect’ in the product is the proper first step: this is what it is about the product that is alleged to render it not to offer the level of safety that persons generally are entitled to expect. This can be labelled a ‘harmful characteristic’ (as Burton J would) or ‘potential for damage’ (as the CJEU might following Boston). The claimant must then prove that the product has the harmful characteristic at all; in other words, that it has a potential to cause damage. Nothing thus far requires any concluded view to be formed that as a matter of causation the product did in fact cause the damage. The focus instead is on a potential or risk of harm: was there this risk with the product at all? Where such a characteristic, potential or risk exists, then the Court will objectively assess whether the product is thereby defective (had an abnormal potential for damage) considering all the relevant circumstances. If the product is defective, one next turns to causation in the individual case and the Court enquires whether the defect as found resulted in any recoverable damage. Furthermore, the critique in Wilkes might be thought to create its own problems. First, some have considered that the Wilkes approach itself exacerbates the circularity of defectiveness because it effectively relies on consumer behaviour to identify whether a product is defective742.
Quite apart from methodological analysis, there has been debate on how precisely the defect in the product should be characterised. This came to the fore in Gee, where the issue was whether the alleged defect in hip implants could be defined simply as the propensity for them to fail due to an adverse reaction to debris when that was also a risk of other implants (on the claimants’ case a lesser risk)743. The judge rejected that suggestion744 holding that “the defect is not the inherent risk, but whatever gives rise to the abnormal, or increased, risk”745. Thus, the defect was “whatever it is about the condition or character of the product that elevates the underlying risk beyond the level of safety that the public is entitled to expect”746.
As with Wilkes, characterising the defect in this way views it as something more than simply the risk of harm. It includes the detail of the circumstances and gives rise to a more precise definition of how the potential manifests itself. This has the significant consequence that more
742 Eisler (2017), 234 743 Gee §§101-103 744 She also rejected the argument that there was no need to define the defect for the purposes of a defectiveness assessment: ibid. §98 745 Ibid. §115 746 Ibid. §112; see also §§87, 97 127 must be proved by the claimant in terms of causation, namely that it was the particular combination of factors giving rise to the precise risk (rather than the general risk of harm) that caused the damage. Equally, if adopted as the defect for the purposes of the DRD, that defence would be easier to establish because it is less likely that the precise combination of factors (as opposed to the general risk) will be discoverable. These consequences were specifically relied upon by the judge in Gee as a reason to adopt this course. She was concerned that to find otherwise would result in causation becoming “virtually self-evident” and the producer “would never be able to raise a development risk defence”747. Even if those characterisations were correct as a matter of generality748, the judge provided little grounding for what was a rather overt policy choice. When it came to the European jurisprudence, for example, she took a rather narrow reading of Boston and Sanofi, concluding that the former only decided whether defectiveness could be established by reference to membership of a group and the latter concerned procedural causation requirements involving no characterisation of defect749.
Furthermore, the judge reasoned that to label the propensity as the ‘defect’ would result in all products with that characteristic being defective (in that case, all hip implants) 750. Yet that is not the consequence of the A v NBA method as Burton J demonstrated by reference to knives and tobacco. Just because there is a harmful characteristic, that does not make a product defective, nor does a finding of defectiveness in one product with that characteristic mean that all possessing it will also be defective. In Gee, the judge pointed to an example of a drug X which had an underlying 1% risk of causing stroke, which when taken in combination with drug Y, there was an 80% risk of causing stroke751. The judge rightly held that the defect could not simply be the underlying risk of stroke, but had to be the potential of X to cause stroke when taken in combination but tellingly she did not suggest that the quantum of the risk in combination (80%) had to form part of the definition. The logic of her decision with the implants would be that the 80% risk must form part of the definition of defect in order to prevent another drug Z, which has the same 1% underlying risk, but only a 2% risk when used in combination, also being found to be defective.
747 Ibid. §§107, 132 cf how DRD was approached in A v NBA 748 This is doubtful as a claimant would still need to establish that the risk eventuated because of the product, and the DRD would still have a role in respect of genuinely unknowable risks. It appears these comments were heavily influenced by the facts. 749 Gee §§120-129 750 Ibid. §96 751 Ibid. §§113-115 128
Ultimately, the debate concerning the precise definition of defect raises similar issues as arose over whether a claimant is required to prove the cause of the defect752. In that context, the outcome in Gee can be contrasted with the Court of Appeal’s approach in Baker. There, the defect was “a susceptibility for galvanic corrosion to develop… when it should not have done”753 and the claimant was under no obligation to go further and prove a specific design or manufacturing defect. It had been open to the judge below to conclude that the susceptibility was a defect in the circumstances754. In Gee the judge rejected this view, seeing the defect in Baker not as the normal susceptibility of the brakes to corrode, but the abnormal susceptibility: the fact that the corrosion occurred when it should not have done was not part of the circumstances because it was “the essential aspect of their condition that made those brakes unsafe”755. This interpretation puts somewhat of a gloss on the Appeal Court’s judgment. It remains to be seen whether in future cases where the definition makes a difference the issue will be approached in the same way.
5.4.2.2 Relevant Circumstances
5.4.2.2.1 Listed factors and ‘all the circumstances’
The CPA requires defectiveness to be assessed taking “all the circumstances” into account including those listed at s3(2)(a) to (c). The first is the CPA’s paraphrase of the product’s presentation. Following A v NBA it was pointed out that warnings and information accompanying a product would play an increased role for producers who wanted to protect themselves against known risks756. This remains the position, and the product’s presentation remains a very important feature in the analysis. The second statutory factor is what might reasonably be expected to be done with or in relation to the product. This factor allows the court to delineate expected use from misuse. The final factor, time, has been discussed above.
Beyond these statutory factors, what else might “all the circumstances” entail? In A v NBA, Burton J concluded that the statutory list of factors was not exhaustive757. However, he regarded the statutory circumstances as being the most important because of the use of the
752 Fairgrieve and Pilgerstorfer (2017), 886 753 Baker v KTM §§36, 39 754 Ibid. §§36-7 755 Gee §131 756 Howells and Mildred (2002), 100 757 A v NBA §34 129 words notamment and insbesondere in the French and German language versions of the PLD758. Further, the Judge held that certain matters were properly to be excluded from consideration because they fall outwith the purpose of the PLD: all the circumstances falls to be construed as all relevant circumstances759.
Whilst some commentators regarded this as reformulating the article 6 test in favour of only pro-consumer goals760, there is now general consensus in England that at least some factors must be excluded. One clear example is the fault (or non-fault) of the producer. The Court of Appeal held this was irrelevant in Abouzaid761, and that issue was common ground in A v NBA762 on the basis that it was one of the main aims of the liability regime created by the PLD. This has not been contested in more recent cases, which have generally accepted that it is only legally and factually relevant circumstances that fall to be considered763.
Whilst subsequent cases have accepted that it is only legally and factually relevant circumstances that fall to be considered764, they have exhibited a very different approach to what is legally and factually relevant. In Wilkes a more “flexible approach to the assessment of the appropriate level of safety, including which circumstances are relevant and the weight to be given to each”765 was preferred. This has been followed both inside and outside766 this jurisdiction. In Gee, the Court was concerned that its “hands should not be artificially tied”767. Failing to exclude particular considerations would not render the PLD “toothless [or] pointless”. Rather “[d]ictating that certain circumstances can never be considered relevant in law or taken into consideration (however relevant they may be in fact), undermines the flexibility of the Act and the Directive, which caters for the fact that the suitable approach for one product may be inapposite for another.”768 Thus the judge’s approach was one of ultra-flexibility and she depreciated the “complexity” and “rigidity” of A v NBA769. For Andrews J, the words of the PLD would not have been “all the circumstances” had the intention been to exclude certain circumstances from
758 Ibid. §§34ii, §63 759 Ibid. §§35, 57, 63, 68, 71-2 760 Stapleton (2001-2), 1250 761 Abouzaid §43 762 A v NBA §§35, 57, 71 763 Gee §138, 140 764 Wilkes §§76-8; Gee §§94, 139 765 Wilkes §78; Gee §143 766 See in Scotland AH v Greater Glasgow Health Board [2018] SLT 535 (Court of Session (Outer House)) §114 767 Gee §156 768 Ibid. §154 769 Ibid. §155 130 consideration770 and she could find nothing to compel the court to disregard a circumstance that has a bearing on the level of safety which the public is entitled to expect. The only qualification she added to this view was that “[t[he Court simply needs to be vigilant not to let notions of negligence or other irrelevant considerations creep in to that assessment”771.
Since A v NBA therefore, there has been a fundamental shift away from rules governing what can be considered towards a situation where the matter is simply left to the judge to determine, as was predicted by some French commentators772. This sacrifices principle and certainty for an approach that is so flexible and considers so many circumstances that the court “must simply weigh competing factors intuitively”773.
In what follows, three factors which have proved particularly controversial in the cases are examined.
5.4.2.2.2 Avoidability and Risks v Benefits
Since the CPA became law, the question of whether it is open to a judge assessing defectiveness to have regard to the possibility and reasonableness of avoiding the risk in the product, and to weigh the risks of the product against the benefits that it offers, has been hotly contested. When the directive was promulgated, some commentators were convinced that a risk benefit analysis was required, particularly for design cases774, the only issue being whether it was from the point of view of the claimant or the public775. Reliance was placed on theoretical underpinnings stemming from US law and based on responsibility for products that do more harm than good776.
A v NBA was the first case to grapple with the issue and Burton J gave a resounding answer in the negative. Avoidability of the harmful characteristic (there the infection), or the impracticability of cost of precautionary measures were irrelevant when assessing defectiveness because they fell outside the purpose of the PLD and would have been so
770 Ibid. §156 771 Ibid. §160 772 Fairgrieve, Howells and Pilgerstorfer (2013), 6 773 Eisler (2017), 235 774 Miller and Goldberg, Product Liability §§11.41ff 775 Stapleton (1986), 393 776 D. G. Owen, Products Liability Law (Thomson, 2005), 307 131 important to have merited inclusion in the list of statutory factors had that been what was intended777. Similarly, the benefit to society or utility of the product (there, blood products) fell to be excluded, except in the context of whether, with full information and proper knowledge, the public does and ought to accept the risk 778.
Commentators assessing that decision frequently took the view that the benefits of a product could not be excluded, at least in a standard product case779, or alternatively that excluding the impracticability or cost or difficulty of avoidance measured did not sit with taking into account the price of the product and allowing more expensive products to have higher safety levels780. Others wondered whether there was a compromise between the extreme views, and whether a result could be achieved whereby benefits in terms which did not involve examining the producer’s conduct but were more focused on questions of social acceptability could be taken into account781.
These tensions can perhaps be illustrated by reference to the case of B v McDonalds in which the judge said he was adopting the approach in A v NBA782, yet when applying them to whether hot drinks from McDonalds were defective, he took into account the producer’s conduct in terms of staff training and risk assessments783 rather than the circumstances of the product784. Further, and of particular relevance, safety expectations to guard against spillage did not extend “to the point that [persons] are denied the basic utility of being able to buy hot drinks to be consumed on the premises from a cup with the lid off”785. Thus, avoidability of risk and utility of the product enter the equation786.
It is not clear, however, that the analysis needed to be that way. The reason the hot drinks (which obviously presented a risk of harm if spilled) were not defective was that they were produced with various features including a removable lid (some with warnings). In all the
777 A v NBA §§63, 68, 72; B v McDonalds §73(d) 778 A v NBA §§68-9, 71 779 Stapleton (2001-2), 1251 780 Howells and Mildred (2002), 100 781 Mildred (2007), 1281ff 782 B v McDonalds §73 783 Ibid. §77 784 Cf §78 785 B v McDonalds §80 786 See Wilkes §88; Gee §§165-6 132 circumstances the risk of scalding was not abnormal and was as socially acceptable as a knife’s propensity to cut.
The relevance of these factors came again to the fore in both Wilkes and Gee in the context of hip implants. In the former787, the judge thought that there was a potential role for risk-benefit (albeit not a US style risk-utility analysis788) in a “standard” product case (the judge accepting that the risk-benefit of an in-specification product was unlikely to have much, if any weight, where the index product was out of specification789) and therefore distinguished A v NBA on the basis that it concerned non-standard products. He reasoned that as no device was free from risk, safety was relative790 “any assessment of … safety will necessarily require the risks involved in use of that product to be balanced against its potential benefits including its potential utility. As such a product will almost always involve design compromises, the effects of eliminating or reducing a particular risk can only be seen in the context of any adverse consequences of doing so, in the form of increased risks of a different sort or reduced benefit and utility. Consequently, the practicability of producing a product of risk-benefit equivalence must therefore potentially be a relevant circumstance in the assessment of a product’s safety. It is inherent in the relative nature of safety.”791 Whilst the conduct of the producer fell outside the court’s consideration, and avoidability created a “danger of unduly focusing upon” them, avoidability could still “in appropriate cases” be relied upon. However, “…in respect of a medicinal product such as a prosthesis, I consider a detailed consideration of the discrete question of whether a particular risk is or is not ‘avoidable’ is unlikely to be fruitful” 792.
Gee broadly followed that analysis. Whilst it was accepted that in many cases these factors would be irrelevant793 there were cases where “wider benefits might properly have a bearing”794 e.g. where a product included a functional advantage which necessarily introduced a risk795 and the exercise could be distinguished from taking into account fault796. Andrews J rejected an argument that the AG’s Opinion in Sanofi was contrary to this conclusion: all the AG was
787 It was not argued the factor was irrelevant per se: Wilkes §95 788 Ibid. §67; A v NBA §§35, 43(i) 789 Wilkes §96 790 Ibid. §§13, 65-6; AH §144 791 Wilkes §82 792 Wilkes §85 793 Gee §§144-5, 147-8, 154 794 Ibid. §161 795 Ibid. §152-3 796 Ibid. §146 133 saying was that balancing costs and benefits were not necessarily required as had been submitted797. Further, the lack of reference to risk/benefit in Boston was understandable798.
These conclusions remain contentious and, as the main authorities are decided at first instance, are likely to be challenged in the future. As with the precise definition of defect, there is little more in the Wilkes and Gee decisions to justify the conclusion other than a policy choice. Three examples can be given. First, the invocation of the relative nature of safety does not take the argument any further forward. It simply is the converse of accepting that an absolute level of safety is not guaranteed. It does not require that the relation be with product benefits any more than it does with anything else. It merely poses the question as to the factors the relation is with. Secondly, there is a non sequitur in the judge’s reasoning that because the expected use of the product is a relevant circumstance under s3(2)(b), then so too are the benefits arising from such use799. This simply does not follow and there is no basis for suggesting that this provision engages with any more than the risks that arise from expected use (as opposed to those that might arise from misuse). Finally, the judge set aside what she accepted was a purpose of the PLD (ensuring the economic risk of producing a defective product should fall on the person best equipped to avoid/spread that risk) because she thought that the Court could conclude in an appropriate case that the public cannot expect the impossible or prohibitively expensive or impossible to insure against800. It all just depended on the circumstances.
The judge in Gee placed emphasis on the example of a new chemotherapy drug which has proven advantages over other such drugs on the market, but has a rare and serious side effect801. The judge considered Court could not properly evaluate the entitled safety expectations without considering the benefits and were this not to take place, a defectiveness finding would be difficult to avoid.
This conclusion should not be accepted uncritically. Imagine two types of chemotherapy which both pose the same rare but serious known side-effect, and yet one is accompanied by a warning about that risk. Why should the other not be held defective on the basis that it did
797 Ibid. §§149-50; Sanofi AG§86 798 Gee §151 799 Ibid. §164 800 Ibid. §167 801 Ibid. §§162-3 134 not provide the safety persons were entitled to expect? On the judge’s approach its benefits would have to be set against the lack of warning and it might therefore be found to offer the entitled level of safety even if the rare known risk was far from obvious. Even taking the judge’s example, and postulating a therapy with greater efficacy accompanied by a rare side effect not present in other therapies, where the side-effect is warned about the prospects of a defectiveness finding would be minimal even without recourse to the benefits of the product. Thus it might be said that there are compelling reasons to adjudicate upon such products in this way as it increases the significance of warnings which in turn enable product users to be more fully appraised of risks so that they may exercise greater autonomy by making informed decisions personal to them.
5.4.2.2.3 Regulatory Compliance
Questions have also arisen as to whether compliance (and non-compliance) with standards or regulatory requirements can be relevant factors under s3. Whilst this debate has continued for some time802 it has only received direct attention in three English cases.
The first is Pollard v Tesco, in which the Court of Appeal had to decide if the failure to meet a British Standard (there the torque required to unscrew a dishwasher powder bottle) was relevant in a case involving a small child opening the bottle and ingesting the powder. The Court decided that the meaning of defect was “not given, or informed, by any cross-reference to any other provisions (such as the British Standard regime) which impose precise objective requirements which have to be met for safety purposes. The test is, and is only, “what persons generally are entitled to expect””803. In the absence of any reference to the British Standard on the bottle, the required safety level could not be framed in terms of expectations to function in accordance with applicable standards804. The public was “unlikely to have the faintest idea to what safety standard the product they are buying has been designed, if it has been designed to any”805. Such an approach would require a “radical rewriting of the statute”. All the Court considered persons generally were entitled to expect was that “the bottle would be more difficult to open than if it had an ordinary screw top”806, anything more specific runs into the difficulties
802 See, e.g. Newdick (1992); Mildred (2007); and Pilgerstorfer, EU law and policy on pharmaceuticals 803 Pollard v Tesco Stores Ltd [2006] EWCA Civ 393 (CA), §15. 804 Ibid. §16 805 Ibid. §17 806 Ibid. §18 135
Thus in Pollard, the test of defectiveness and non-compliance with standards were distinguished (at least where the packaging did not indicate there was an applicable standard; the argument was left open in a case where the packaging made specific reference to manufacture in accordance with a standard). This separation was then further underlined by Burton J’s brief reference in A v NBA to “…it [being] clear from the travaux préparatoires that when submissions were made that a United States style formulation should be adopted, it was not: the rejected suggestions including (from a body called UNICE in 1980) that ‘the fact that a product conforms with generally accepted standards should be prima facie evidence that the product is not defective’”807.
Whilst the Pollard case concerned a product that did not meet a standard, in Wilkes, the judge was concerned with the converse situation: where a product does meet a standard, or has regulatory authorisation granted by a public authority. The point was not specifically argued (it was “common ground” between the parties808) and the Pollard case was not analysed in any depth, yet the court concluded that compliance with standards, and the fact of regulatory approval, whilst not an automatic defence under the Act809, nor even a prima facie defence, “may be evidence (and, in an appropriate case, powerful evidence) that the level of safety of the product was that which persons generally were entitled to accept”810. That conclusion was reached by reference to two works of commentary which argued by analogy with the position in the tort of negligence where it is said that the common law tort should not impose different requirements to those required by statutory regulation imposed by Parliament811. Such juridical foundations were perhaps somewhat shaky given that the cause of action under the CPA, unlike negligence, is itself statutory.
They were nonetheless fortified in Wilkes in which the judge rejected an argument that a distinction between the fact of regulation (relevant) and the regulatory decisions (not relevant) should be adopted following Boston Scientific812 despite the AG distinguishing a dangerous
807 A v NBA §35 808 Wilkes §§97, 99 809 The only defence engaging regulation is that in s4(1)(a) CPA but that can only apply where the defect is attributable to requirements imposed by an enactment or EU obligation. 810 Wilkes §101 (in relation to compliance with the regulatory regime), §98 (in respect of standards); Gee §176 (with the rider that standards must have a relevance to the defect ); Richards v Pharmacia Ltd [2018] SLT 492 (Court of Session (Inner House)) §52; AH §146 811 See e.g. Johnson v Unisys [2003] 1 AC 518 (HL), Eastwood v Magnox [2005] 1 AC 503 (HL), Edwards v Chesterfield [2012] 2 AC 22 (SC); Marcic v Thames Water Utilities [2004] 2 AC 42 (HL); Monro v Revenue and Customs Commissioners [2009] Ch 69 (CA) 812 Gee §170-3; cf Boston AG§§39-45 136 product for the purposes of regulation from an unsafe one, and highlighting past health scandals which had not been prevented by regulation813. For the judge, the defence in s4(1)(a) did not mean compliance could not be relevant under s3 or that issues of fault would enter the enquiry: all matters could be dealt with as questions of weight814. Furthermore, the judge emphasised the focus was on the statutory test, and in some cases the level of safety persons were entitled to expect would be lower than a standard (Pollard) and in others higher than that which regulation imposes (Boston Scientific): the weight for compliance was one of fact and degree815.
That is unlikely to be the final word on this issue. As I have argued elsewhere816, it is deeply entwined with the issue of whether (and if so the extent to which) risk/benefit considerations are relevant to the defect enquiry. Most regulatory decisions are reached based on such considerations. If a product’s benefits are relevant to defectiveness, then one can more readily accept a relevance for evidence of regulatory compliance than where benefits fall to be excluded from the enquiry. Commentators have tended to follow their position on that issue817 and one can see that in the Wilkes judgment also818. 5.4.2.2.4 Learned Intermediary
The entitled safety expectations that are relevant under s3 CPA are those of “persons generally, or the public at large”819. How is it relevant to the assessment of those expectations whether the consumer obtains the product, or information about the product, through a professional intermediary such as a doctor? Does this transfer the knowledge of the intermediary to the consumer, or otherwise make the intermediary’s expectations as to safety relevant?
The issue arose in A v NBA because whilst the medical community knew of the risks of hepatitis C infection, this was not generally known. Burton J refused to transfer this knowledge of the intermediary to the patient: “Doctors and surgeons knew, but did not tell their patients unless asked, and were very rarely asked. It was certainly, in my judgment, not known and
813 Boston AG§73 fn 30 814 Gee §§171, 174 815 Ibid. §175 816 Pilgerstorfer, EU law and policy on pharmaceuticals, 190 817 Mildred (2007), 1281; Goldberg, Medicinal Product Liability and Regulation, 21; Newdick (1992) 818 Wilkes §§7-23 esp §13 819 A v NBA §31(v) 137 accepted by society that there was such a risk”820. Relevant was the “consumer’s legitimate expectations”821 (despite blood products only being given by doctors)822.
In Wilkes, by agreement with both parties, the Court regarded the presence of an intervening healthcare professional as a relevant circumstance823. There was no interaction between the manufacturer of the hip implant and the claimant because the information was passed to the treating surgeon who would then advise the patient. Whilst not a complete defence, the judge considered it “unarguable that the fact that there is a learned intermediary (who has chosen a particular prosthesis for a particular patient and has available not only his general professional knowledge, but also the specific [instructions] including warnings) is other than a relevant circumstance”824. Similarly in Gee, the existence of an intermediary, and information provided to them, was deemed “plainly relevant”, but the weight would “depend upon the circumstances of each case”. Whilst the focus should be on what the public are entitled to expect, and not what the clinician is entitled to expect, “the latter may have a considerable bearing on the former”825.
Again this is unlikely to be the end of this debate in domestic law not least given the indications in Boston that the focus is on the safety expectations of consumers rather than learned intermediaries. Thus the Court assessed the entitled safety expectation in light of, inter alia, “the specific requirements of the group of users for whom the product is intended826 and whether the requirements “such patients are entitled to expect are particularly high”.827 That specialist medical circles recognised it was not possible for a medical device to be 100% safe was “of little consequence” because “the patient may, in principle, reasonably expect the implanted device to have a failure rate of close to zero”.828
5.4.2.3 Conclusion
The law on defect in England is dominated by comparatively few first-instance judicial determinations. As we have seen the initial impulse was to construct a structure for analysis
820 Ibid. §55 821 Ibid. §56 822 Ibid. §65 823 Wilkes §106 824 Ibid. §108; AH §125 825 Gee §§168-9 826 Boston §38 827 Ibid. §39, and AG§29 828 Ibid. §26, and Sanofi §41 138 whereby the alleged harmful characteristic, or risk posed by the product, was identified and then tested against circumstances that were legally relevant given the directive’s purposes. This approach created a real distinction with negligence claims and furthered the consumer protection aim of the directive. In more recent times, however, concerns as to how that might apply in cases of standard products has caused the pendulum to swing back. The criticism of the structure for analysis, and the acceptance of a wide range of factors as potentially relevant ‘in appropriate cases’ (many mimicking the factors that would be taken into account in a negligence action) has resulted in an approach where the role played by judicial discretion has increased and only lip service is paid to the exclusion of fault-based considerations. This ultra-flexible approach has results in the judge making “ad hoc product-by-product determinations”829 in a way which has been recognised by those representing producers as offering “greater scope for defending product liability actions”830. The law remains, however, in flux and case law with greater authoritative value is awaited.
5.4.3 Development Risks
The implementation of the DRD in England has an interesting history owing to a deviation in wording of the implementing measure. In this section, I examine those differences in light of the passage of the Consumer Protection Bill through Parliament. Thereafter, I consider the various strands of the DRD and how it has been construed in the handful of English cases that have considered it, most particularly A v NBA. Whilst that case described a generally narrow defence, more recent judicial pronouncements indicate a willingness to revisit that ruling, at least in respect of standard product cases.
5.4.3.1 Wording of s4(1)(e) CPA
The wording of the DRD in s4(1)(e) CPA is different from that contained in article 7(e) PLD. The most critical deviation is the focus in the CPA on whether “a producer of the same description as the product in question might be expected to have discovered the defect”. This discoverability question is determined by reference to a hypothetical producer endowed with characteristics
829 Eisler (2017), 234 830 A. Antelme QC, D. Myhill and R. Sage, Pinnacle Metal on Metal Hip Group Litigation: A landmark decision in field of product liability law and definition of defect (2018)
Before considering the reasons for that deviation, there is another subtle way in which the CPA’s implementation of the DRD has deviated from the PLD. Section 4(1)(e) invokes the concept of “relevant time” as the time at which the state of science and technology relevant to the defence is to be judged. This is defined under the CPA in a way that distinguishes between those liable under s2(2) CPA (producers/EU importers) and s2(3) CPA (suppliers). Although it has not created issues in the case-law to date, the implementation could yield a different date from the directive in the case of supplier liability835.
To understand the rationale for these differences, it is necessary to descend into the legislative history of the provision and consider the political backdrop operating at the time836. Part I Consumer Protection Bill, was introduced into Parliament by the Conservative Government only a few months before the general election of June 1987 with the policy of implementing the PLD but not going beyond it: implementation “no more and no less”837. Following strong lobbying from industry838, the Government chose to retain the DRD as part of the “important
831 Hodges (ed), Product Liability - European Laws and Practice, 670 832 CPA s1(2) cf PLD article 3(2) 833 Stapleton (1999), 57 834 A. Geddes, Product and Services Liability in the EEC - The New Strict Liability Regime (Sweet & Maxwell, 1992), 33 835 CPA s4(2) 836 Newdick (1988); Smith (1990), 111-112; Howells (1990), 33-4; Whittaker, Liability for Products, 466-468 837 Per Lord Lucas, Hansard, HL Vol 482 - 8 December 1986 (1986), col 1055; per Michael Howard MP, Hansard, HC Vol 115 - 27 April 1987 (1987), col 88. 838 Lord Lucas, Hansard, HL Vol 483 - 20 January 1987 (1987), cols 840-841 140 balance” between the interests of industry and the consumer839. More interestingly, as we have seen, the Government opted not to adopt the text of article 7(e) verbatim, but rather re-worded it. During the CPA’s passage through Parliament, the House of Lords was concerned that the PLD’s wording of the DRD should be retained and passed an amendment to that effect840. In the Commons, the Minister (Michael Howard MP) indicated he would listen to debate as to whether the original wording of the bill should be reinstated841.
The diverging contributions842 focused both on whether there should be a DRD and whether the bill’s original wording should be restored. Points made in favour of restoring the wording were that the defence was of importance to industry and the PLD’s wording was open to a number of interpretations which “puts the [DRD] in jeopardy”843; that the CBI had argued that the wording of the PLD was “unworkable in the context of a British statute”844; and the method of interpretation in the UK is somewhat different to the EC such that it was vital that the DRD was precisely worded, and the UK should not take the PLD’s wording “lock, stock and barrel”845. Others argued that there were important difficult issues on the precise wording which should be rehearsed in more detail before a decision is reached846, however ultimately, the Government did not allow further time and accepted that the original wording should be reinstated847. The reasons given were because of vagueness about the PLD’s wording; the redraft was “so as to make clear the intentions of the directive” in a way which could be understood by producers and insurers848. It was even said that:
“The only plausible interpretation of the directive is that the information that is to be taken into account is information that any reasonable person, looking at the matter in an objective way, would say that a producer of products of that kind should be expected to act upon.”849
839 Per Lord Lucas, ibid., col 840 840 Hansard, HL Vol 485 - 9 March 1987 (1987), cols 848–855 841 Hansard, HC Vol 115 (27 April 1987), col 52-3 842 Some argued DRD might allow another thalidomide (ibid., col 60); insurance would cover the liability (col 61, contrast the views at col 85-6, 89) other countries did not allow defence (col 57, 60, 67). 843 Ibid., col 72 844 Ibid., col 75 845 Ibid., col 88 846 Ibid., col 61 847 Hansard, HC Vol 116 - 13 May 1987 (1987), cols 363-4, 366 848 Hansard, HL Vol 487 - 14 May 1987 (1987), col 784-5: “It is important… that the precise nature of the risk is clarified so that premiums can be quantified”. 849 Ibid., col 785 141
Whilst voices such as Newdick argued at the time that the Government’s interpretation of the DRD might be right850, not everyone was convinced. The Lords reluctantly accepted the original wording of the Bill in order to avoid the risk of losing the whole measure in the haste to complete the legislative programme before the general election in June 1987851. Lord Allen noted in debate that “the substitution of a subjective for an objective test is doubtfully consistent with the directive” and that “the Government may be laying up trouble for themselves in the European Court”852. The “surrender to the arguments of industry” was “misconceived” and “pretty deplorable”853.
Even on the wording ultimately adopted, the Government was keen to emphasise during the passage of the bill that the defence would not be established too easily. Thus, Lord Lucas explained:
“[i]t will be of no help to the producer to plead how difficult or how expensive it had or it might have been for him to have found the answers to that defect. If other producers of products of that type had the knowledge available to them, then the defence is of no use to the producer of the product. Neither will it necessarily be of any use to that producer if he shows that he manufactured the products to an accepted national or international safety standard. Neither can that producer point to what other producers of products like his are doing in the manufacture of their products. Only if the producer can prove to the court that he took all the steps that a producer of products of that kind might reasonably have been expected to take, and that the state of scientific and technical knowledge would have allowed him to take, will this defence be of any value.”854
This statement is problematic and somewhat internally inconsistent. On the one hand the defence is said to be blind to the expense or difficulty in discovering the defect, and complying with standards. Yet in the latter part of the citation, the defence is framed in terms of the steps a reasonable producer would have taken, and what other producers are doing is said to be relevant.
850 Newdick (1988), 459-60; as it turned out, apart from accessibility they were not: A v NBA §54(i) 851 Hansard, HL Vol 487 (14 May 1987), cols 785-6 (see the references to the timetable at col 786, and the desire not to lose the whole bill at col 788) 852 Ibid., cols 787-8 853 Ibid., col 788 854 Hansard, HL Vol 483 (20 January 1987), col 841 142
As Lord Allen foresaw, it was perhaps inevitable that ultimately the CJEU would have to rule on the compatibility of s4(1)(e) with the PLD. The Commission was deeply concerned by the implementation and brought enforcement proceedings. By the time of those proceedings, the UK Government’s position had shifted somewhat. It accepted that the test in article 7(e) was objective and not subjective, but maintained “that s4(1)(e) of the Act sets out the same test as art 7(e) of the directive and does not provide for liability founded on negligence.”855. Given the CJEU’s ensuing decision in Commission v UK856, the UK legislative history in introducing the implementing measure is perhaps now of less value in determining the true scope of s4(1)(e). What is clear is that the CPA must be moulded to achieve result prescribed by article 7(e).
5.4.3.2 Application in the Courts
Since Commission v UK, a small number of cases have touched on the meaning of the DRD, but in only two has that been because it has been necessary to decide whether the defence applies. The jurisprudence in those, Abouzaid and A v NBA, has recently been referred to in Gee. In this section, how the various elements of the defence have been approached in those cases are considered thematically.
5.4.3.2.1 Relationship with the Defectiveness Enquiry
In Abouzaid, the Court emphasised that the question of the application of the DRD is a separate question to that of whether the product is defective and the different analytical questions should not be elided857, an approach that was adopted in A v NBA. In Abouzaid, the defendant relied on the fact that there had been a passage of time since the generic product was first produced prior to the index product being put into circulation during which there had been no previous incidents. The Court held this could not affect entitled expectations as to safety (the defect question) because there were no advances in that time which might affect legitimate safety expectations858. That was, however, a separate question from whether on the state of knowledge when the index product was put into circulation the defect had been
855 Commission v UK §19 856 Chapter 3, above. 857 Abouzaid §43; M. Mildred, 'Case Comment: consumer - product liability - defective product (Abouzaid v Mothercare (UK) Ltd)' [2001] Journal of Personal Injury Law 180 858 Abouzaid §§25, 41 143 discoverable. In respect of that, knowledge of previous accidents was not a necessary ingredient859.
Not only are the analyses separate, but there are different burdens of proof that apply to establishing defect and the DRD. Whereas the claimant must prove defect, s4(1) is clear that the burden is on the defendant to make out the DRD.
There does, however, remain a relationship between defect and the DRD because it is the discoverability of the existence of the defect which is critical under the defence and, as we shall see, the fact that the product must be defective before the defence is a matter of assistance in determining how the DRD should operate. This is considered further below.
By contrast with the situation in Germany860, the English cases have not sought to restrict the DRD to only certain cases based on the type of defect that is alleged. In A v NBA, Burton J recognised that the German experience was different but remained of the view that there was no scope for boxing in respect of the PLD’s application and that there were scenarios in which the DRD could apply to what he labelled ‘non-standard products’. He held that such products may qualify “once”. That is to say, “if the problem which leads to an occasional defective product is (unlike the present case) not known” (and he might have added, not knowable). He accepted that this was more unusual than with a standard product, but not impossible. “However, once the problem is known by virtue of accessible information, then the non-standard product can no longer qualify for protection under art 7(e)”861.
5.4.3.2.2 The Relevant Time
The relevant time at which to assess the state of scientific and technical knowledge is defined by the CPA in s4(2) as the time the s2(2) CPA defendant supplied the product to another, or if that does not apply, the time when the product was last supplied by a person to whom s2(2) CPA applies. As noted above, this creates some divergence from article 7(e) in the case of suppliers in particular. Under the PLD the date is when the producer defendant (which can be a supplier) put the product into circulation. Under the CPA, in the case of a supplier, the
859 Ibid. §§29, 43 cf C. Hodges, 'Product Liability for Old Products' (2001) 151 NLJ 424 860 Chapter 6, below. 861 Ibid. §77 144 date is when a producer defendant last put the product into circulation. Whilst this technical issue exists, it has not yet posed any particular difficulties in practice or been considered in the case law.
Assessing the time when the product was put into circulation has, for the purposes of ascertaining the state of science and technology under the DRD, not posed difficulties in practice. As happened in A v NBA, the court generally approaches the issue in line with the CJEU’s judgment in Commission v UK862. That is not to say that the precise point in time is always easy to ascertain. When the same concept was considered for the purposes of calculating the longstop end-date (10 years from the date the product is put into circulation), two references to the CJEU were required because of the relationship between manufacturer and distributor863. That said, a precise calculation of timeframe is generally less essential when applying the DRD.
5.4.3.2.3 Knowledge
The question posed by s4(1)(e) is one of discoverability on the “state of scientific and technical knowledge”. The case law can be considered under two headings:
Scientific and Technical Knowledge
The first point is that the knowledge in question must be scientific or technical in nature. Generally, there has been little consideration in the cases as to what distinguishes such knowledge from other forms. This did, however, merit some attention by one of the judges in Abouzaid. There, it was argued that a DTI database of accidents amounted to “technical knowledge” and the absence from that database of a comparable accident meant the defect was not discoverable. Pill LJ was “very doubtful” that a record of accidents was knowledge of the requisite type: “The defence contemplates scientific and technical advances which throw additional light, for example, of the propensities of materials and allow defects to be discovered”864. There were no such advances and so the defence did not apply.
862 Commission v UK §29; A v NBA §49 863 OB v Aventis Pasteur SA [2008] 3 CMLR 10 (HL); O'Byrne v Aventis Pasteur SA [2010] 3 CMLR 35 (SC); G. Howells, 'O'Byrne v Aventis Pasteur SA - how many trips to Luxembourg are necessary?' (2009) Journal of Business Law 97 864 Abouzaid §29 145
The State of Science and Technology
The second issue concerns the “state” of that knowledge. In accordance with Commission v UK, Burton J in A v NBA held that the “state” of knowledge was that at the most advanced level anywhere in the world, however it must be “accessible”865. This broadly mirrored Richardson (which pre-dated the CJEU’s judgment). There the judge had rather presciently described “the leading edge of available scientific knowledge” contained in the “state of research and all available literature sources”866.
Returning to A v NBA, the relevant knowledge was not limited to the subjective knowledge of individual producers, or of a producer taking reasonable care867. It was the most advanced state of knowledge (anywhere in the world, and including minority opinions). In that sense, the CPA’s enactment was “inappropriate”: “the risk ceases to be a development risk and becomes a known risk not if and when the producer in question (or, as the CPA inappropriately sought to enact in s 4(1)(e) ‘a producer of products of the same description as the product in question’) had the requisite knowledge, but if and when such knowledge were accessible anywhere in the world outside Manchuria.”868. As to accessibility, the AG’s guidance869 was applied, which looked to the opportunities of the material in question to circulate and identified the ‘Manchuria exception’. Burton J held “the right approach is to look at ‘accessibility’ and to regard as Manchuria perhaps an unpublished document or unpublished research not available to the general public, retained within the laboratory or research department of a particular company”870.
None of the cases since A v NBA, have looked at this aspect of the DRD in any depth. However in Gee, Andrews J described the CJEU’s decision in Commission v UK in a way which perhaps illustrates that the variance of wording between s4(1)(e) and art 7(e) continues to prove somewhat problematic. Although the defence was not before the Court in Gee, the judge said the CJEU had decided “that the ‘state of scientific and technical knowledge’ is a reference to the state of knowledge which producers of the class of the producer in question, understood in the generic sense,
865 A v NBA §49(i) 866 Richardson, 285 867 A v NBA §49 868 Ibid. §75 869 Commission v UK AG§§22-24 870 A v NBA §49 146 may objectively be expected to have, and that was precisely the meaning of s4(1)(e)”871. This paraphrase comes from the paragraph of the Court’s judgment which sets out the UK Government’s submission872 but it puts matters in a rather different light from the way the Court interpreted article 7(e)873; in particular that the article was “not specifically directed at the practices and safety standards in use in the industrial sector in which the producer is operating, but, unreservedly, at the state of scientific and technical knowledge, including the most advanced level of such knowledge” and that the knowledge was not that “which the producer in question actually or subjectively was or could have been apprised, but the objective state of scientific and technical knowledge of which the producer is presumed to have been informed.”874. The result of the enforcement proceedings in Commission v UK was that the Commission had not established that the English Courts would interpret s4(1)(e) so that it depended on subjective knowledge of a producer taking reasonable care in the light of standard precautions in the industrial sector in question. The Court “was anxious to stamp upon [the] prospect”875 of them doing so.
This return to the wording of the CPA contrasts with Burton J’s reliance on the language of article 7(e) in A v NBA and makes is significantly more difficult for the Court to achieve the interpretation of article 7(e) prescribed by the CJEU. “Knowledge which producers of the class of the producer in question – understood in a generic sense – may objectively be expected to have” is an unnecessary concept when the article is concerned with all accessible knowledge.
5.4.3.2.4 Characterisation of the ‘defect’ to be discovered
The defence under s4(1)(e) concerns the discoverability of “the defect if it had existed in [the producer’s] products while they were under his control”. This language is different from article 7(e) which speaks of the discoverability of the “existence of the defect”.
Plainly, the way ‘the defect’ is conceptualised for these purposes is of importance. It is perhaps helpful to distinguish two scenarios. First, where a generic risk of harm concerning a product series is known, but what is unknown is which of the products is faulty. An example of this kind of case is A v NBA: there the risk of hepatitis C infection was known, but which of the blood products was infected was not. Is the ‘defect’ the infection in the individual bag of
871 Gee §90 872 Commission v UK §20 873 Ibid. §29 874 Ibid. §§26-7 875 A v NBA §53(i) 147 blood, or the risk of infection generically? The second kind of case is where the risk of harm is not known at all, whether on an individual or generic level. How is defect to be defined here? The generic risk or does something more need to be built in?
In A v NBA, addressing the first kind of case, the Court held that as the generic risk of hepatitis C was known, that was sufficient to remove the defence from the producer876. The ‘defect’ for the purposes of article 7(e) was different from the ‘defect’ in article 7(b) (defect not present when product put into circulation). In the latter case, the defect meant that in the index product, whereas under article 7(e), the Court held it was concerned with the existence of a defect generically877. In this way because the generic risk was known, the DRD was not available even if it was unknowable whether an individual bag of blood was infected.
This result was welcomed by some commentators who noted that a consumer is thereby not defeated by a risk known in general to exist but undiscoverable in the particular product without destroying it878. It was wondered, however, whether a different approach might be adopted for standard products, where the way defect is characterised would be critical: a definition in terms of capacity to cause an outcome would result in the defence being lost as soon as the capacity is known, but where the characterisation involved an adverse comparison with alternative products, the defence would be emasculated879.
There is limited case-law available on this question. In Gee the Court emphasised that the word “defect” must be interpreted consistently between s4(1)(e) and s3 CPA880. As we have seen, had the products been defective, it would not have been because of their capacity to fail, but rather their increased risk of failure as compared to other products881. On that basis, more would have needed to be discoverable in order for the defence to be lost.
Whether this is right both (i) in terms of the characterisation of defect per se; and (ii) in terms of the characterisation under the DRD is debatable. The authorities do not currently allow one to say that English law has settled on a particular position.
876 Newdick (1988), 472; Stoppa (1992), 212-3 877 A v NBA §74; Howells and Mildred (2002), 102 878 Howells and Mildred (2002), 102 879 Ibid., 103 880 Gee §91 881 Ibid. §115 148
5.4.3.2.5 Discoverability
The final feature of the DRD pulls the other elements together. As we have seen, the different wording of s4(1)(e) poses a test of whether a producer of products of the same description might be expected to have discovered the defect. By contrast, article 7(e) asks whether the existence of the defect was discoverable. But how do the English Courts approach this requirement? Do they adopt a reasonableness approach, or a possibility approach?
In Abouzaid the Court considered it unnecessary to consider Commission v UK in any detail and was able to hold the defence did not apply without any consideration of the differences in wording. As we have seen Pill LJ doubted that the accident database amounted to technical knowledge, and for his part, Chadwick LJ held that the defect could have been discovered by a simple practical test: “No advance in scientific or technical knowledge since 1990 was required to enable that test to be carried out. The only reason that it was not carried out before 1990 was that manufacturers (it seems) had not thought of doing so.”882 That conclusion dovetailed with the obiter comments of Ian Kennedy J in Richardson who held that the defence was “not apt to protect a defendant in the case of a defect of a known character merely because there is no test which is able to reveal its existence in every case”883.
Such a conclusion might lead one to think that the Court had not injected a reasonableness standard into the defence. However, the picture is more mixed. It was perhaps unfortunate that the Court did not consider the CJEU’s ruling in any detail because the words it chose to describe the defence sit rather unhappily with it. Not only did the judges use the CPA form of words, but they went further and referred to whether “the producer might have been expected to have discovered the defect”884, rather than a notional producer of products of the same description. No doubt based on this misconception, Chadwick LJ even referred to the defence as enabling “a producer to escape strict liability if he can show that, having regard to the state of scientific and technical knowledge at the time, he was not at fault in failing to discover the defect”885. Nowhere did Chadwick LJ qualify or explain what he meant by fault, but it is highly unlikely
882 Abouzaid §46 883 Richardson, 285 884 Abouzaid §§28, 46 885 Ibid. §43 149 that were that the view to be taken of the defence, it would survive a further challenge before the CJEU.
A v NBA certainly did consider the CJEU’s judgment. The issue there was not the discoverability of the abstract risk of infection with hepatitis C in general terms (which was known) but whether a DRD could be employed by the defendant on the basis that the presence of the infection in a particular bag of blood products was unknown and unknowable. Burton J adopted an interpretation of the defence that was far removed from negligence, concluding that the CJEU “plainly intended to limit the escape clause”886 and that “Article 7(e) provides a very restricted escape route” with “very restricted conditions, whereby a producer who has taken all possible precautions ... remains liable unless that producer can show that ‘the state of scientific and technical knowledge [anywhere and anyone’s in the world, provided reasonably accessible] was not such as to enable the existence of the defect to be discovered’.”887 Thus concepts of “fault” did not enter the analysis. The judge put it this way: “If there is a known risk, ie the existence of the defect is known or should have been known in the light of non-Manchurianly accessible information, then the producer continues to produce and supply at his own risk”888. Reliance was placed on the AG in Commission v UK having explained that a producer must bear the foreseeable risks in a product and can protect himself either by stepping up research and development or by taking out insurance889.
This did not change because there was no way of testing for the presence of the hepatitis C virus in the blood such that the producer was unable to discover whether a particular product contained the virus. The DRD did not exculpate a producer for a known but unavoidable risk.
In Gee, whilst the Court recognised that s4(1)(e) should “not be interpreted in a manner that would re-introduce the need for proof of fault by the back door”, thereby distancing itself from the reference to fault by Chadwick LJ in Abouzaid, Andrews J said it was “equally important that the [CPA] should not be interpreted in a manner which unjustifiably circumscribes the defence, to the detriment of the producer”890. This was rather left hanging without further explanation (but of course no final determination on the application of the DRD was necessary in this case).
886 A v NBA §53 887 Ibid. §64 888 Ibid. §74 889 Ibid. §53(i); Commission v UK AG§22 890 Gee §92 150
5.4.3.3 Conclusion
The law on the application of the DRD is notable for its lack of authoritative case-law, particularly in a standard product case. The Courts have generally followed the Commission v UK guidance, although recent case law suggests a preparedness to consider emasculating the defence by (i) returning to the wording of the CPA over that in the directive; and (ii) adopting a characterisation of defect which requires more to be discovered before the defence is lost.
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6 Germany
6.1 Introduction
The German law of product liability is characterised by the intermingling of concepts developed under general fault-based tort law with those introduced by the PLD. This chapter seeks to examine that relationship and in particular reveal how the German Courts determine whether, under the ProdHaftG, a product is defective and the DRD applies.
Prior to the PLD, the German Courts innovatively adapted fault-based tort law, facilitating injured consumers by making the liability stricter. That innovation categorised cases by type of defect (manufacturing, design, warning) and within those groups, developed precise duties owed by the manufacturer and altered the operation of the burden of proof. In parallel, and following thalidomide, statutory strict-liability was introduced to compensate those injured by medicinal products.
Right from the outset, the ProdHaftG was thought to give rise to little substantive change891. It contains a carve-out for medicinal products which remain subject to the AMG (see Novo Nordisk). Further, general tort law is preserved, creating a “co-existence of fault based and strict liability”892. Perhaps more notably, the previous general tort jurisprudence was carried over to the ProdHaftG, both as to categorisation and duty-based analysis. The PLD can certainly be described as having been Germanised upon reception. An area where the ProdHaftG has been felt is in manufacturing defects cases involving Ausreißer (rogue, runaway) products where detection of the defect was unknowable. In design and warning cases, however, the analysis remains similar to that under general tort law. Categorisation has also resulted in rules being developed so that certain features of the PLD can only apply to certain types of defect; thus the DRD has been held by the BGH not to apply at all in manufacturing defect cases.
Turning specifically to the DRD, this has been applied by the BGH in three leading cases: Sparkling Water Bottle II, Airbag and Undersink Water Heater. Again here, the approach to discoverability has been equated to that employed under §823(1) BGB and accordingly fault based considerations to its application have not been ruled out. However, one interesting
891 Drucksache-11/2447 p11 892 D. Looschelders, 'Liability for Unknown Risks in German Law' (2016) 7 JETL 143, 147 152 point of comparison is how the German courts characterise defect for these purposes. In both the BGH, and recently in Metal-on-Metal Hips, this has been done more loosely than in England, perhaps indicating that for the DRD this characterisation has a more significant practical impact than the precise standard of discoverability adopted.
A more recent general trend is a greater tendency to look to European harmonising norms underpinning the PLD and to apply the recent Boston Scientific decision in particular893.
In this chapter, I commence with an overview of the liability imposed by both the ProdHaftG and AMG, before placing that within the wider context of other bases of civil liability for damage caused by products. Thereafter, there is a more detailed consideration of how the courts in Germany have applied the defectiveness standard and DRD under the ProdHaftG. Finally, I examine the approach to how liability has been imposed under the AMG, considering in particular the apparent inclusion of liability for development risks.
6.2 Overview of the ProdHaftG and AMG
In Germany, lawmakers decided to implement the PLD (over a year late) using a new statute, the ProdHaftG, rather than by amendments to the BGB894. The new regime applies to products put into circulation after 1 January 1990895. It was accompanied by an official explanatory document which welcomed the PLD’s intervention in the context of the literature having proposed strict liability on many occasions previously896. The new law was, however, subject to an important exception. Relying on article 13 PLD, §15 ProdHaftG exempted from its scope certain medicinal products intended for human use, which remain subject to liability imposed by §84 AMG897. In order to facilitate comparison with English law, there follows an overview of both systems.
893 van Boom and others, Product Liability in Europe, 266 894 For how integration into the BGB might have been done, see F. Greller, Produkthaftung im deutsch- amerikanischen Rechtsvergleich (Diplomica, 2015), 77-8 895 ProdHaftG §§16, 19. For the legislative history see H. C. Taschner and E. Frietsch, Produkthaftungsgesetz und EG-Produkthaftungsrichtlinie (2nd edn Beck, 1990) Einf./6ff 896 Drucksache-11/2447, 8 §III 897 ProdHaftG §15(1) 153
6.2.1 ProdHaftG
The ProdHaftG imposes an obligation on a producer to compensate a person where a defect in his product has caused death, injury or property damage898. The liability is imposed on the basis that the producer should be responsible for all defects that come into being within his operational sphere of responsibility899.
A product includes all movables (even if incorporated into another movable) as well as electricity900, but as stated, excludes certain medicinal products intended for human use901. It is not thought that the concept covers information contained in books or printed material, but the position with computer software (including more modern forms of digital coding, including self-learning software or artificial intelligence systems) is more complicated902. A producer is the person who produced the final product, raw material or component part, or who presented himself as the producer by putting his name or trademark on the product903. The definition is widened to include anyone who imports or brings into the EU a product for sale, hire, leasing or distribution with an economic purpose in the course of his business904. Further, suppliers can be deemed to be producers where the producer905 cannot be identified unless the supplier, within one month of receipt of a demand, identifies the person who supplied him with the product906. Liability between tortfeasors is joint and several907.
The ProdHaftG spells out the burden of proof that applies908: the claimant must prove the defect, the damage and the causal relationship between the two. This is done by reference to domestic rules of causation, which permits relationships to be established by reference to
898 Ibid. §1(1) S.1 899 H. J. Kullmann, 'Die Haftung nach dem Produkthaftungsgesetz in Deutschland' (1994) 2 ERPL 215, 221 900 ProdHaftG §2 901 Ibid. §15(1) 902 Kullmann (1994), 222-224; Kullmann, ProdHaftG-Kom §2/15-19; T. Lenz, Produkthaftung (Beck, 2014), 187- 8; compare fn579 above 903 ProdHaftG §4(1) 904 Ibid. §4(2); see further Rott, Rechtspolitischer Handlungsbedarf im Haftungsrecht, insbesondere für digitale Anwendungen – Gutachten im Auftrag des vzbv at 15ff. 905 Including the importer 906 ProdHaftG §4(3) 907 Ibid. §5 908 Ibid. §1(4) 154 presumptions909. Where there is a dispute as to the applicability of a defence under §1(2) or (3) ProdHaftG, then the producer bears that burden of proof.
The concept of ‘defect’ is defined by §3 ProdHaftG:
(1) A product has a defect when it does not provide the safety which one is entitled to expect, taking all circumstances into account, in particular a) its presentation, b) the use to which it could reasonably be expected that it would be put, c) the time when it was put into circulation.
(2) A product does not have a defect for the sole reason that a better product is subsequently put into circulation
This broadly follows the terms of the German language version of the PLD910; one point of departure is that by article 6 a product is defined as being “fehlerhaft” (defective) whereas under §3 ProdHaftG, the product “hat einen Fehler” (has a defect). This difference has not featured in the case law and is unlikely to be of significance.
Recoverable damage911 may include death912, injury to body or health913, and property damage, this being limited to property of a type ordinarily intended for private use or consumption and so used by the injured person. It also excludes damage to the product itself914. The first 500 Euros of property damage is the responsibility of the injured person915. The ability to claim non-pecuniary losses came about as a result of reform introduced in 2002, thereby enhancing the attractiveness of the PLD as a liability regime916.
909 See e.g. Chicken Pest; Chocolate Bar (Urteil vom 20.12.2002 14 U 99/02) (OLG Düsseldorf) §42-3; Airbag §33; Kullmann, ProdHaftG-Kom §1/102 910 Kullmann, ProdHaftG-Kom §3/2 911 ProdHaftG §1(1) S.1 912 Ibid. §7 913 Ibid. §§8-9 914 Ibid. §1(1) S.2 915 Ibid. §11: a deductible 916 Zweites Schadensersatzrechtsänderungsgesetz vom 19. Juli 2002 (BGBl. I S. 3394) 155
Where liability is made out, it is mandatory and cannot be excluded or limited; any agreement that seeks to do this is null and void917. However, a producer can seek to rely on any one of the defences provided for by §1(2) and (3) ProdHaftG. These follow the PLD.
In addition to these defences, Germany elected to implement the DRD by virtue of §1(2)(5) ProdHaftG:
(2) The producer’s liability is excluded if …
5. The state of scientific and technical knowledge at the time when the producer put the product into circulation was not such as to enable the defect to be discovered
The extent of liability can also be reduced where there is contributory fault on the part of the injured person, or on the part of the person who exercises control over property918.
A limitation period of 3 years applies with time running from when the claimant became aware, or should reasonably have become aware of the damage, the defect, and the identity of the defendant919 (but is suspended during negotiations over compensation920).
A longstop operates such that the cause of action created by §1 expires 10 years after the product which caused the damage was put into circulation, but this does not apply if a legal dispute or summary proceedings are pending921. Further, the producer’s liability for personal injury is subject to a maximum amount in respect of a product, or by identical products with the same defect922. This was a feature of the PLD on which Germany placed particular importance923. The maximum amount is 85 million euros. Where compensation payable to multiple claimants exceeds this amount, it is reduced on a pro-rata basis924. This is a typical feature of other German strict liability laws925.
917 ProdHaftG §14 918 Ibid. §6 919 Ibid. §12(1) 920 Ibid. §12(2) 921 Ibid. §13(1) 922 Ibid. §10(1) 923 Kullmann (1994), 218 924 ProdHaftG §10(2) 925 See e.g. Haftpflichtgesetz vom 4. Januar 1978 (BGBl. I S. 145) at §§9-10; Gentechnikgesetz in der Fassung der Bekanntmachung vom 16. Dezember 1993 (BGBl. I S. 2066) at §33. 156
6.2.2 AMG
In 1976 Germany introduced a form of strict liability under the AMG following the events of thalidomide926 . It has been described as an “inevitable concession to a public demand” in a “particularly damage-prone sector”927. Along with contract law, and general tort law (discussed below), the AMG provides a third basis of liability for relevant medical products928.
§84 AMG (“Gefährdungshaftung” (strict liability)) applies to medical products929 intended for human use which have been distributed to the consumer930 within the purview of the AMG and which are subject to compulsory marketing authorisation (or exempt by ordinance from needing such authorisation)931 (hereafter “relevant medical products”).
By §84(1), the pharmaceutical undertaking932 that placed a relevant medical product on the market is obliged to compensate an injured person in respect of death933 or injury to body or health934 caused as a result of the administration of that relevant medical product. Accordingly, liability of the pharmaceutical undertaking is limited to users of the relevant medical product935.
§84 only imposes liability if936:
(1) when used as intended, the medicinal product has harmful effects in excess of what is considered acceptable in the light of medical knowledge; or
926 See e.g. Borghetti, La Responsabilité du Fait des Produits, 134-6, N. Jenke, Haftung für fehlerhafte Arzneimittel und Medizinprodukte: Eine vergleichende Untersuchung des deutschen und US-amerikanischen Rechts (Springer, 2003), 22-25 927 S. Simitis, 'Products Liability: The West-German Approach' in C. J. Miller (ed) Comparative Product Liability (BIICL, 1986), 113 928 The “Dreispurigkeit des deutschen Produkthaftungsrechts”: M. Wandt and P. Geiger, 'Haftung für fehlerhafte Arzneimittel - Deutsches und europäisches Recht (Teil 1)' (2004) Produkthaftung International 163 929 AMG §2; Wandt and Geiger (2004) 930 For the concept of ‘consumer’ see Bürgerliches Gesetzbuch in der Fassung der Bekanntmachung vom 2. Januar 2002 (BGBl. I S. 42, 2909; 2003 I S. 738) §13 931 AMG §21 932 Ibid. §4(18); W. A. Rehmann, Kommentar zum Arzneimittelgesetz (Beck, 2003) §84/2; Wandt and Geiger (2004), 164 933 AMG §86 934 Ibid. §87 935 Wandt and Geiger (2004), 165 936 AMG §84(1) S.2 157
(2) the damage has occurred as a result of labelling, or specialist information or instructions for use which do not reflect medical knowledge.
The requirements of these two provisions are considered below.
In general, a claimant is obliged to prove the causation required by §84(1)937, however, by §84(2), if the relevant medicinal product is capable of causing the damage in the circumstances pertaining to the individual case938, the damage will be presumed to have been caused by that product939. This (rebuttable) presumption does not apply where, in light of those circumstances, another factor is capable of causing the damage940. Furthermore, where the facts suggest that a medicinal product has caused the damage, the claimant can request information from the pharmaceutical undertaking unless that information is unnecessary to make out the right to compensation941. Subject to certain exemptions942, the pharmaceutical undertaking is then obliged to disclose known and suspected effects, adverse reactions and interactions and further knowledge which could be of significance in assessing the justifiability of harmful effects. A similar right of disclosure exists from all regulatory authorities responsible for the authorisation and supervision of medicinal products943.
Where liability arises, it is mandatory and cannot be excluded or limited and any agreement to do so is void944. There is, however, a defence under §84(3) to liability arising under §84(1) S.2 (1) if the facts indicate that the damaging effect of the medicinal product was not attributable to the pharmaceutical undertaking’s development and manufacturing process945: the Fehlerbereichsnachweis. It is generally accepted that the burden of establishing this lies with the defendant946. In addition, under §84 a defendant can rely on the contributory negligence of the injured party947.
937 Rehmann, AMG-Kom §84/7-9 938 Vioxx (Urteil vom 1.7.2008 VI ZR 287/07) NJW 2008, 2994 (BGH): patient’s burden cannot be too high: §3 939 AMG §84(2) S.2 940 Ibid. §84(2) S.3. See also S.4 941 Ibid. §84a; Jenke, Haftung für fehlerhafte Arzneimittel, 93ff 942 AMG §84a(1) S.4 943 Ibid. §84a(2) 944 Ibid. §92 945 Ibid. §84(3) 946 Wandt and Geiger (2004), 168 947 AMG §85 158
The AMG imposes a cap on the liability of a defendant948. The maximum liability to an individual is a capital sum of 600,000 euros or an annuity of 36,000 euros per year. Further, the maximum global liability in respect of the same medicinal product, notwithstanding the individual claim limits, is a capital sum of 120 million euros or an annuity of 7.2 million euros per year. Where compensation paid to several claimants would exceed this, then individual compensation is reduced pro-rata. Pharmaceutical undertakings must be covered by insurance covering their potential maximum liability under this cause of action949.
6.2.3 The AMG and the PLD
For some time it was debated whether subjecting relevant medicinal products to a different system of strict liability under §84 AMG, and excluding them from the scope of the ProdHaftG, was compatible with the PLD950. The German Government justified its approach by reference to article 13(2), whereby the PLD does not affect rights under “a special liability system existing at the moment when this Directive is notified”951. That appeared to be confirmed when the reference to “a special liability system” in article 13 PLD (and recital 13), was found by the CJEU to refer specifically and only to the AMG952. It was to be distinguished from “producer liability founded on the same basis as that put in place by the Directive and not limited to a given sector of production”953.
However, a complication arose from the fact that the causal presumption, and the disclosure obligation (contained in §84 and §84a) were introduced into the AMG by way of amendment in 2002954, after the PLD had been notified. A direct challenge came before the CJEU by way of preliminary reference in Novo Nordisk, and the Court recognised the chronological point as
948 Ibid. §88 949 Ibid. §94 950 Kullmann, ProdHaftG-Kom §15/6-8; Taschner and Frietsch, Produkthaftungsgesetz §15/25, Art 13/5; G. Schiemann, Erman Handkommentar BGB (Otto-Schmidt, 2008) ProdHaftG§15/1; G. Wagner, Münchener Kommentar zum Bürgerlichen Gesetzbuch (Beck, 2017) ProdHaftG§15/1, 4-5; R. Krause, Soergel Kommentar zum Bürgerliches Gesetzbuch (Kohlhammer, 2005) ProdHaftG§15/1; Oechsler, Staudinger-Kom ProdHaftG§15/2-4; M. Wandt and P. Geiger, 'Haftung für fehlerhafte Arzneimittel - Deutsches und europäisches Recht (Teil 2)' (2004) Produkthaftung International 234. In practice, German Courts have tended to accept the validity of §15(1): see e.g. Medical Product (Urteil vom 17.9.1993 20 U 26/93) VersR 1994, 177 (OLG Köln), Amalgum Fillings (Urteil vom 14.10.1998 4 U 89/95) (OLG Schleswig) and Lenz, Produkthaftung, 270-1 951 Drucksache-11/2447, 26 952 See Commission v France AG§34; R. Schaub, 'Abschied vom nationalen Produkthaftungsrecht? Anspruch und Wirklichkeit der EG-Produkthaftung - Zugleich Besprechung der Urteile des EuGH vom 25.4.2002 Rs. C-52/00, C-155/00, C-183/00' (2003) ZEuP 562; Novo Nordisk §§12, 21, AG§26, AG§34 953 Sanchez §33 954 2. SchadÄndG 159 one that would ultimately need to be addressed955. However, as the disclosure obligation did not trespass on ground covered by the PLD, and as it did not reverse the burden of proof or undermine the effectiveness of the system, it was not precluded by EU law956. As well as reaching that conclusion, the AG considered matters more widely. For him it was significant that article 13 referred to “rights”: it was not that the PLD was replaced by a pre-existing system, rather article 13 “merely maintain[ed] the rights conferred… by that system”957 and then only “rights…existing at the moment when the directive is notified”958. New rights could not be conferred (e.g. by amendment) even as part of a pre-existing system. The derogation was “solely historic… and its scope must also remain historical, that is to say, limited to rights already existing at the moment when that directive was notified”959. Accordingly, the AG did not see the rules under the AMG as being excluded from the harmonisation carried out by the PLD, simply that Germany had the right to maintain the rights in force at the moment the PLD was notified going beyond the rights conferred by that directive960.
Whilst the disclosure obligation escaped criticism on the basis that it did not cover the same ground as the PLD, it is notable that the Court did not specifically consider the provisions concerning causation. These might, on the AG’s analysis, be more vulnerable, but ultimately will probably survive if the Court approaches the question as it did in Sanofi and notes that the presumption is not irrefutable and requires evidence that the product is capable of causing the damage in the circumstances of the individual case before it can apply.
6.3 The Wider German Product Liability Context
In addition to the causes of action under the ProdHaftG and AMG, German law enables consumers to claim in contract and under general tort law. These parallel, concurrent, bases of liability are founded on the German Civil Code (“BGB”961), sometimes in conjunction with other statutory or regulatory acts, and are preserved by article 13 PLD. They are discussed below to provide context.
955 Novo Nordisk §22 956 Ibid. §§25-33 957 Ibid. AG§28-9 958 Ibid. AG§§30-32 959 Ibid. AG§37, AG§43 960 Ibid. AG§36 961 Langenscheidt Translation Service, BGB (English Version) (2002)
6.3.1 Contract
In order to bring a contractual claim962, a claimant must establish a breach of contractual duty pursuant to §280(1) BGB: “If the obligor breaches a duty arising from the obligation, the obligee may demand damages for the damage caused thereby. This does not apply if the obligor is not responsible for the breach of duty.” Relevant contractual duties are imposed by the BGB including that the seller must “procure the thing for the buyer free from material and legal defects.” (§433(1) S.1 BGB). The meaning of defect here is explained by the BGB: a product will be free from material defects963 if it has the agreed level of quality, or (if quality has not been agreed) it is (i) suitable for the use intended under the contract; and (ii) suitable for customary use and “its quality is usual in things of the same kind and the buyer may expect this quality in view of the type of thing” (§434(1) BGB). For the latter purposes, quality includes characteristics which the buyer can expect based on the seller or producer’s public statements (§434(1) BGB). A material defect can also arise where the seller improperly assembles the product, or where the product is intended for assembly, the instructions are defective (save where that did not result in incorrect assembly): §434(2) BGB. Supply of a different product or a lesser amount of product is also a material defect: §434(3) BGB.
Importantly, a contractual claim can be defeated where the seller is not responsible for the breach of duty; thus a ‘fault’ requirement exists. This often has a role to play in practice as a seller will generally not be required to check the quality of each product, and examination may not be reasonable in the circumstances964. Thus fault can often only be established in the context of direct sales from the producer.
Where a material defect is established, a buyer may rely on remedies set out in §437 BGB including cure of the defect, revocation of the agreement or reduction in price, and damages including futile expenditure. A 2-year limitation period applies from the date of supply (§438(1)(3) BGB) save where the seller fraudulently concealed the defect (the standard period of 3 years from the date the buyer became aware of the defect and damage: §438(3)) or where the property in question is immovable (5 years: §438(2)). A claim in contract generally requires contractual privity and despite a number of creative arguments965 to overcome this
962 Lenz, Produkthaftung, 39ff; Taschner and Frietsch, Produkthaftungsgesetz Einf./13ff 963 “legal defects” concern defects to title: see §435 BGB 964 Diesel Fuel (Urteil vom 25.9.1968 VIII ZR 108/66) NJW 1968, 2238 (BGH) 965 Schuster (2009), 428-30; generally §311(3) BGB will not apply 161 requirement, it has generally been maintained: see Chicken Pest966. In some cases, guarantee claims can also be made by reference to §443 BGB.
The significance of direct contractual claims in respect of product damage is thought to be comparatively small967 and the fact the liability is not strict is a downside for consumers. Nonetheless it can have its attractions, e.g. by avoiding the rule under §831 BGB enabling an employer to avoid vicarious liability for tort where he exercised reasonable care in selecting his employees968 or in terms of the compensation that can be claimed for pecuniary loss969.
6.3.2 General Tort Law
Far more significant development has occurred as a matter of general tort law970 under §823 BGB971. Two types of claim can be brought under that paragraph. The first is under the general fault-based duty to make good damage intentionally or negligently caused (Verkehrspflicht). §823(1) BGB puts it this way: “A person who, intentionally or negligently, unlawfully injures the life, body, health, freedom, property or another right of another person is liable to make compensation to the other party for the damage arising from this.” This applies to a producer at all stages of the product life cycle: design, manufacture, instruction and post-marketing surveillance. The focus is on the objectively assessed duty that a producer owes (hence the use of the nomenclature Produzentenhaftung (producer liability)), with the essence being the obligation to take possible and reasonable measures to only place on the market products which have risks that are controlled or avoided. The precise nature of the duty has been moulded in different case-types as discussed below. Assessments of whether a producer ought to have taken a particular safety precaution involves considering the costs and benefits of that measure and the magnitude of the risk972.
966 There have been developments on the doctrine of third party contracts since then: see S. Lenze, 'German product liability law: between European Directives, American Restatements and common sense' in D. Fairgrieve (ed) Product Liability in Comparative Perspective (CUP, 2005), 101 fn10 967 H. P. Westermann, 'Product Liability in Germany and Israel Against the Background of European Legal Standardization' (1997) 13 Tel Aviv University Studies in Law 205, 208; Lenze, German Product Liability, 101 968 See Simitis, The West-German Approach, 101 969 Compensation for pecuniary loss (Vermögensschaden) and consequential damage (Mangelfolgeschaden) is in principle recoverable in contract. 970 Lenz, Produkthaftung, 101ff; Taschner and Frietsch, Produkthaftungsgesetz Einf./30ff 971 See the discussion in Simitis, The West-German Approach, 105ff 972 Wagner, Münchener-Kom §823/42, 249 162
As the text of §823(1) makes clear, there is a requirement for negligent or intentional conduct and this has been said to mark out the main difference with liability under the ProdHaftG973. Negligence generally consists of the failure to exercise reasonable care (§276(2) BGB), but as we shall see, it is here that the German case-law has had a significant effect.
Additionally, a claimant may rely on the Schutzgesetz provision: §823(2) BGB (negligent breach of statutory duty) which provides that “The same duty is held by a person who commits a breach of a statute that is intended to protect another person. If, according to the contents of the statute, it may also be breached without fault, then liability to compensation only exists in the case of fault.” Breach of product safety laws such as the ProdSG974, AMG and MPG975 will trigger liability under §823(2) BGB976, however in practice this route to liability plays little role.
One feature to note in relation to the case-law that has developed is that the courts divide defective product cases into categories akin to those seen in the US Third Restatement: manufacturing, design and informational/instruction defects. The way the jurisprudence has developed under each reflects the consequences that might follow for a defect of that type: more limited for a manufacturing defect, yet more extensive where a design defect affects an entire production series977. Another critical aspect is how the cases have eased a claimant’s path to proving fault by shifting the burden of proof. These developments, briefly summarised below, increasingly brought liability for products under §823 BGB closer towards a non-fault system978. Some have described the case law as having “practically focused the issue of negligence liability on the question of defect”979, although the issue technically remains one of breach of duty980.
973 Lenz, Produkthaftung, 103 974 Produktsicherheitsgesetz vom 8. November 2011 (BGBl. I S. 2178, 2179; 2012 I S. 131) 975 Medizinproduktegesetz vom 7. August 2002 (BGBl. I S. 3146) 976 By way of example, see Folding Bicycle (Urteil vom 11.12.1979 VI ZR 141/78) NJW 1980, 1219 (BGH), Vehicle Lift (Urteil vom 18.1.1983 VI ZR 270/80) VersR 1983, 346 (BGH), Chisel (Urteil vom 17.1.1984 VI ZR 35/83) VersR 1984, 270 (BGH) and Harvester (Urteil vom 16.8.1988 4 U 268/87) VersR 1989, 1158 (OLG Düsseldorf) (under previous enactments of what is now contained in §3 ProdSG); Window Gluing Machine (Urteil vom 10.4.2012 26 O 466/10) NJW-RR 2012, 1169 (LG Stuttgart) (on §4 of the Geräte- und Produktsicherheitsgesetz (GPSG)); and Telescopic Nails (Urteil vom 3.8.2011 1 U 316/10 -89) MPR 2011, 156 (OLG Saarbrücken) (on §4 MPG). 977 Simitis, The West-German Approach, 106 978 See Taschner (1999), 27. 979 Lenze, German Product Liability, 100 980 Wagner, Münchener-Kom §823/572 163
Manufacturing defects are generally said to exist in products which differ from the way they were intended to be by the manufacturer981. In the well-known Chicken Pest case, bottles of vaccine contaminated by bacteria which caused a fowl pest outbreak had a manufacturing defect982. In that case, which some have described as being “basically preoccupied with finding a legal basis for this essentially new heading of [product] liability”983, the BGH refused to apply an overt strict-liability approach (that being a matter for the legislature)984 but went on to reach significant conclusions on the burden of proof. Formally, it was the claimant who must prove damage caused by a defect in the product985, however the BGH recognised that there were difficulties in proving fault, and producers could point to alternative causes which were difficult to refute. The BGH reasoned that the producer could bear the consequences of uncertainty if they lie in their area of responsibility986. Accordingly, where it is proved that a person or thing is damaged by the intended use of an industrial product987 with a manufacturing defect, it is the manufacturer that must prove he is not to blame for that defect988. In Chicken Pest, the manufacturer could not discharge this reversed burden. The conclusion in respect of §823(1) was supported by the Court’s reasoning under §823(2). Delivering dangerous bottles of vaccine infringed a Schutzgesetz (the AMG). Once this had been proved, the Court held that a presumption arose that this should be seen as involving fault, which the defendant would have to disprove989. Accordingly, that basis of liability was also sound.
This shift in the burden of proof has been regarded as significantly enhancing the effectiveness of general tort law as a basis for manufacturing defect claims990. The jurisprudence shifted the emphasis away from the details of the manufacturer’s fault991 and to the structure of the entrepreneurial activity so as to focus on the responsibility of the producer to reduce risks by
981 Ibid. §823/584, the Sollbeschaffenheit: see Schuster (2009), 432. 982 Not a consumer case: Simitis, The West-German Approach, 118 983 See, e.g. Markesinis and Unberath, The German Law of Torts: A Comparative Treatise, 94 984 Chicken Pest §II(1)(a); U. Diederichsen, Die Haftung des Warenherstellers (Beck, 1967) 985 Chicken Pest §III(1) 986 Ibid. §III(3)(bb) 987 Extended to non-industrially produced products: Wedding Breakfast (Urteil vom. 19.11.91 VI ZR 171/91) NJW 1992, 1039 (BGH) 988 Sparking Water Bottle I (Urteil vom 8.12.1992 VI ZR 24/92) NJW 1993, 528 (BGH) §2(III); Handlebar (Urteil vom 8.6.1993 14 U 116/92) VersR 1994, 1118 (OLG Frankfurt a.M.) 989 Chicken Pest §III(3)(aa) 990 See Schuster (2009), 431-433; Wagner, Münchener-Kom §823/307 991 See Simitis, The West-German Approach, 108: “The assumed compatibility with the fault principle is in fact a mere fiction”; C. Bloth, 'Aspects of Scandinavian and German Products Liability - A Comparison' (2000) 39 Scandinavian Stud. L. 231, 254 164 adequate organisation992. This principle applies both to industrial and non-industrial production, and irrespective of the size of the undertaking993. One point of departure from the ProdHaftG is that under general tort law, the claimant must prove the product is defective at the time of marketing. Under the ProdHaftG, however, the claimant can simply prove defect at the time of injury and leave it to the producer to prove (as a defence) that the defect did not exist when the product was put into circulation.
The BGH has also been willing to extend this liability where the claimant has difficulty establishing that the defect arose within the defendant’s sphere of responsibility. In the Lemonade Bottle994 case, a child was injured when a bottle exploded yet the Court could not establish whether the defect arose when the bottle was the responsibility of the manufacturer or the company that had filled the bottle with lemonade. Nonetheless, liability was imposed on the bottling company. In a controversial decision995, the BGH held that in particular circumstances the burden of proving that the defect arose in the sphere of responsibility of the defendant could be reversed. That applied because the defendant who filled the bottle with lemonade, and was therefore the producer of the finished product, owed a duty under tort law (to the limits of what is technically possible and economically reasonable) to ensure that the consumer suffered no damage as a result of every bottle. That was not limited to the contents of the bottle, but also the containers into which the beverage was placed. The defendant had a duty to verify that each bottle it filled was harmless before it left its sphere of control and this had not been complied with. This Befundsicherungspflicht is a duty to ascertain the condition of the product and correct it if defective before it leaves the defendant’s sphere of responsibility and has been applied since996. Exacting proof from the manufacturer can be required to discharge this as Sparkling Water Bottle II demonstrates997. There, the lower court was found to have erred by accepting expert evidence that the system of quality control could not have included a machine to detect faults beyond the base or neck of the bottle. Further, the court ought to have required direct evidence as to the adequacy of the defendant’s pressure-testing measures.
992 Simitis, The West-German Approach, 106-7 993 H. Sprau, Palandt Kommentar zum Bürgerliches Gesetzbuch (77th edn Beck, 2018) §823/184 994 Lemonade Bottle (Urteil vom 7.6.1988 VI ZR 91/87) BGZH 104, 323 (BGH) 995 Westermann (1997), 213 996 Sparkling Water Bottle I 997 Sparkling Water Bottle II (Urteil vom 9.5.1995 VI ZR 158/94 (Hamm)) NJW 1995, 2162 (BGH) §2ff 165
The reversal of the burden of proof also applies in defective design cases998, although it is recognised as having less of an impact than in manufacturing defect cases999. Here, the focus tends to be on what safety precautions the manufacturer failed to take when designing the product and whether such a precaution was necessary and reasonable in light of the safety expectations of the average consumer1000. As in Horse Box, in practice that exercise involves weighing the costs and benefits of the safety measure in light of the harm in question1001. Where the consumer can prove an alternative design which is safer (usually because of a precaution), it is then for the producer to prove that it was unreasonable to adopt that alternative1002. Whilst a producer who uses a component in the design of a product is not responsible for the design of the component per se, he is responsible for ensuring that it will be safe to use as part of the design of the final product: see Floating Switch1003 (where damage to the product itself was also found to be recoverable). Standards play a role in determining whether a producer has discharged his duty but are not determinative.
It is usually in design or informational defect cases that the issue of liability for development risks has arisen. The general rule adopted under §823(1) BGB is that where the presence or extent of a danger or risk was not detectable or avoidable on the state of science and technology at the time the product was put into circulation, then there will be no liability on the part of the producer were that danger or risk to eventuate1004. This is because, as Lenz explains, the determination of whether there has been a breach of the duty of care is judged at the time at which the product is put into circulation rather than on an ex post basis after the damage has occurred: did the manufacturer then comply with his duties1005. The lack of Pflichtwidrigkeit (breach of duty) is the reason for the lack of liability1006. Thus the examination is conducted by reference to whether at the relevant time the manufacturer complied with the duties he was under. What the Courts have done, however, is to require that the producer prove the presence of a so-called ‘development defect’1007. In Child Tea I, the BGH held the
998 Floating Switch (Urteil vom 24.11.1976 VIII ZR 137/75) BGHZ 67, 359 (BGH); Child Tea I (Urteil vom 12.11.1991 VI ZR 7/91 (Frankfurt a.M.)) BGHZ 116, 60 (BGH) §II(2)(b) 999 Lenze, German Product Liability, 103 1000 Horse Box (Urteil vom 17.10.1989 VI ZR 258/88) NJW 1990, 906 (BGH) 1001 Precaution technically easy, possible and not economically unreasonable. 1002 Horse Box 1003 Floating Switch see §II(2)(b); Bloth (2000), 240 1004 Drucksache-11/2447, 7; Sprau, Palandt-Kom §823/173; Wagner, Münchener-Kom §823/579, 617, 626; Lenz, Produkthaftung 120; Schuster (2009) 431; Cooling Machine (Urteil vom 18.10.1960 VI ZR 8/60) VersR 1960, 1095 (BGH) 1005 Lenz, Produkthaftung 120 1006 Sprau, Palandt-Kom §823/173 1007 Airbag §28 166 defendant manufacturer liable on the basis that an article in a Swiss publication had identified an extreme example of potential problems of sugar contact with the teeth and thereafter the defendant, as a leading producer of child tea, was obliged to investigate this and other sources. Whilst Lenze has argued that this is an example of tort law imposing a higher degree of care (requiring research) than under the ProdHaftG1008, this is perhaps rather overstates the position. The presence of the Swiss article in effect took the case out of the class of development risks as at that stage the defect became knowable upon investigation. Further, as discussed below, the DRD under the ProdHaftG also turns on discoverability rather than whether the defect has been discovered.
In warning/informational defect cases a manufacturer is also required to take steps to avoid damage to third parties arising from the product. Warnings may be required in respect of dangers which arise during the expected use of the product, as well as reasonably foreseeable misuse1009 but not matters which are of general knowledge1010. The manufacturer must be guided by the user group that is least informed and most at risk. In Derosal1011 the BGH ruled that a reversal of the burden of proof does not take place if the allegation of a defective warning can only be made based on post-marketing acquired knowledge. Subsequently in Child Tea I, the BGH explained that where the case concerns a warning which is alleged could have been made at the time the product was marketed, a reverse burden of proof applies. Accordingly, the claimant has to prove that a warning was necessary and the burden shifts to the producer to prove that the absence of the warning occurred without fault on his part1012. Warnings about hazards must clearly highlight the nature of the threat and in cases where significant adverse health effects can be caused by the product, the warning must explain why the product can be dangerous1013.
In terms of post-marketing, German law recognises a Produktbeobachtungspflicht (product monitoring duty)1014. A producer who learns after his product has been placed onto the market that it can produce dangers is obliged to do everything that is reasonable to prevent it. He
1008 Lenze, German Product Liability 105 1009 See Expansion Coupling (Urteil vom 3.6.1975 VI ZR 192/73) NJW 1975, 1827 (BGH); Child Tea I; Child Tea II (Urteil vom 11.1.1994 VI ZR 41/93) NJW 1994, 932 (BGH); Child Tea III (Urteil vom 31.1.1995 VI ZR 27/94) NJW 1995, 1286 (BGH) 1010 Log Flume (Urteil vom 19.1.2000 3 U 10/99) NJW-RR 2001, 1248 (OLG Hamm); Chocolate Bar 1011 Derosal (Urteil vom 17.3.1981 VI ZR 191/79 (Celle)) BGHZ 80, 186 (BGH) §II(3)(bb); Child Tea I §II(2)(b) 1012 Child Tea I §II(2)(b) 1013 Ibid. 1014 See generally Bloth (2000), 258-60 167 must ensure he is well informed about risks arising from the use of his products and take active steps to become informed, not relying on accidental reports coming to his attention; he must then warn users of the product1015. He must monitor the progress of science and technology. Enterprises of sufficient size who sell their products throughout the world must monitor international scientific congresses, special events and the evaluation of the entire international specialist literature1016. In this sphere there has been no general shift in the burden of proof1017. More controversially, the BGH has held that the duty can extend to ensuring that products that have left a manufacturer’s sphere of influence are withdrawn from circulation, no longer used or are repaired (the BGH held the duty is sensitive to the particular circumstances of the case)1018. Whether it is right that §823(1) extends to a duty to recall remains controversial in German law1019.
6.4 The ProdHaftG as applied in the Courts
This section examines in more detail how the concepts of defect and development risks have been applied under the ProdHaftG. First, the general approach to the ProdHaftG in Germany is briefly considered.
6.4.1 General Approach to the ProdHaftG
The ProdHaftG has been slow to play a significant role in the German case law1020 and some have regarded it as lagging behind liability in tort1021. Probably the most important reason is that until 2002, compensable harm under the ProdHaftG was limited to pecuniary losses and thus victims of personal injury needed to look elsewhere1022. Since 2002, recovery for non- pecuniary losses has been available and a number of technical differences between heads of damage were abolished. There may also have been a philosophical reason. In Chicken Pest, the BGH was unwilling to introduce strict liability without legislative action. Once that
1015 Benomyl (Urteil vom 17.3.1981 VI ZR 286/78) BGHZ 80, 199 (BGH); Derosal 1016 Benomyl 1017 Derosal; Lenze, German Product Liability, 17 1018 Care Beds (Urteil vom 16.12.2008 VI ZR 170/07) NJW 2009, 1080 (BGH) and see M. Molitoris, 'Kehrtwende des BGH bei Produktrückrufen?' (2009) NJW 2009, 1049. See further Castor Meal (Urteil vom 16.3.2007 I-17 U 11/06) NJW-RR 2008, 411 (OLG Düsseldorf). 1019 Lenz, Produkthaftung 273ff and 289ff; Wagner, Münchener-Kom BGB§823/848ff. 1020 Kullmann (1994), 219 1021 Westermann (1997), 209 1022 2. SchadÄndG; ProdHaftG §8 S.2; BGB §253(2) 168 intervention came, it was predicted that the German Courts would remain less than enthusiastic about embracing strict liability as the organising principle1023. An additional practical reason lies in the fact that the Drucksache specifically stated that the ProdHaftG introduced only marginal change1024 and would be augmented (ergänzt) by the previous fault- based product liability jurisprudence1025. Whilst there are technical differences between the regimes1026, strict liability under the ProdHaftG was said to be “largely identical” to that under the BGB with differences being more “dogmatic than practical”1027. The Drucksache features prominently in the leading academic commentaries on the ProdHaftG and has guided thinking in this respect, and has repeatedly been cited by the BGH1028.
This equivalence manifested itself in the case law even though liability under §1 ProdHaftG is independent of fault, and liability under general tort law is fault dependent (even if developed in such a way to allow the manufacturer to disprove fault). One exception has been in respect of liability for unavoidable Ausreißer products, imposed by the ProdHaftG but not under general tort law1029.
Whilst from the outset it was appreciated that the ProdHaftG was the way in which Germany implemented PLD, this fact has had far less impact than the relationship of the new law to §823 BGB. As we shall see, in more recent times there is a growing appreciation that concepts such as ‘defect’ can have autonomous European meanings which are not necessarily to be concretised by reference to national law or jurisprudence1030. Accordingly, as an implementing measure, and whilst not of horizontal direct effect, the German court must place the text side by side with the PLD and in the event of conflict, a solution that is in accordance with the PLD must be found1031.
1023 Bloth (2000), 251 1024 The burden on industry was therefore considered modest: Drucksache-11/2447, 11 1025 Ibid., 2; Schuster (2009), 442-4; cf Taschner and Frietsch, Produkthaftungsgesetz Einf./144 1026 For example: statutory basis of burden of proof (§1(4)); concept of product (includes electricity §2); compensation limits for death and personal injury (§10) cf unlimited compensation; limit to private property damage and contribution required towards property damage claims (§11); 10 year longstop (§13) cf 30 year longstop; prohibition on excluding or limiting liability (§14); post marketing liability generally. See Sprau, Palandt-Kom §823/172ff and ProdHaftG Einf./5; Lenz, Produkthaftung 183; Westermann (1997), 217-8; Kullmann, ProdHaftG-Kom §3/17 1027 Schuster (2009), 452 1028 E.g. Sparkling Water Bottle II 1029 Lenz, Produkthaftung, 203 1030 Ibid. 182; Wagner, Münchener-Kom ProdHaftG Einl./8-12; Sprau, Palandt-Kom ProdHaftG Einf./2 1031 Lenz, Produkthaftung, 182 169
These principles have not featured in the early jurisprudence under the ProdHaftG essentially for three reasons. First, the text of the ProdHaftG was modelled significantly on the German language version of the PLD, leaving less scope for obvious deviation from the European norm. Secondly, and until more recently, the BGH as the court of final instance has been less willing to refer concepts for interpretation by the CJEU. Thus in Sparkling Water Bottle II the BGH refused to make a reference on the basis that the issue did not turn on the concept of ‘state of science and technology’ but rather whether and how far the German legislator used the freedom under article 15(1)(b) PLD to deviate from article 7(e). That unwillingness to refer has been rightly criticised1032. There was no deviation on the face of §1(2)(5) ProdHaftG from the text of article 7(e), but even if the German legislator had sought to derogate from article 7(e) in part (i.e. for manufacturing errors) that in turn raises questions of EU law as to the appropriateness of doing so. The final reason is related to the second. The relative paucity of jurisprudence stemming from the CJEU has slowed the development of the autonomous European concepts and accordingly their recognition and reception in national German law.
What can be seen in more recent times is that German Courts, and the BGH in particular, have been more willing to refer product cases to the CJEU and generally extend their horizons to consider the objectives of the PLD. The CJEU’s Boston Scientific judgment resulted from a German reference in 2013 because the BGH accepted that it was decisive whether the devices’ “possibility of premature failure alone”, without specific findings of defect in the index product, could constitute a defect within the meaning of article 6 and in turn §3 ProdHaftG1033. When the case returned, the Court not only applied the CJEU’s judgment but made specific reference to the consistency of the approach with the recitals to the PLD1034. Equally, in 2013 the BGH made the reference which resulted in the CJEU’s Novo Nordisk decision1035 .
Further, even in cases where references are not made, there has been a greater willingness to look at underlying European law when applying the ProdHaftG. Thus in Electricity, the ProdHaftG was considered by reference to the PLD in order to find a “directive-compliant interpretation”, meaning one “based as far as possible on the wording and purpose of the Directive in
1032 Stapleton (1999) 1033 Pacemaker I (Urteil vom 30.7.2013 VI ZR 284/12) VersR 2013, 1450 (BGH) §17; see also ICD I (Urteil vom 30.7.2013 VI ZR 327/12) (BGH) §§22, 25 1034 Pacemaker II (Urteil vom 9.6.2015 VI ZR 284/12) (BGH); ICD II (Urteil vom 9.6.2015 VI ZR 327/12) (BGH) 1035 Levemir I (Urteil vom 6.5.2013 VI ZR 328/11) (BGH); Levemir II (Urteil vom 12.5.2015 VI ZR 328/11) (BGH) 170 order to achieve the objective pursued by the Directive”. The Court noted the PLD sought inter alia to achieve protection for consumers and had regard to travaux préparatoires referred to by the CJEU in its case law1036. Accordingly, the position has moved towards the position described by Cahn in 1997: “the aim of harmonisation of the law can only be achieved if the traditional methods of interpretation and the conventional legal theories of product liability are not transferred without reflection to the new law”1037.
6.4.2 Defect
The definition of defect in §3 ProdHaftG broadly follows that in article 6 PLD. It focuses upon a lack of safety offered by a product1038. Here the intention of the German legislator was that the new safety standard would correspond to the duties imposed on a producer as had been fleshed out in the case-law under §823(1) BGB1039. It remains the prevailing opinion that the test of ‘defect’ essentially imports into the analysis the concepts developed in the earlier jurisprudence in respect of the different classes of manufacturing, design, and informational defects1040. This view has also been accepted and applied by the BGH in the Cherry Cake case: “the relevant safety expectations under §3(1) ProdHaftG are essentially to be judged by reference to the same objective standards as the duties of the manufacturer in the context of tort liability under §823(1) BGB”1041. That said, following the Boston Scientific reference made to the CJEU, there are signs that the analysis is now shifting away from an analysis of the duties of the manufacturer, more orientated around safety expectations.
6.4.2.1 Features of the General Approach
6.4.2.1.1 Safety Expectations
The relevant safety expectations under §3 ProdHaftG are not the subjective safety expectations of the individual recipient of the product, rather objective expectations generally. Further, the standard is limited to those expectations that are legitimate. There is general consensus on
1036 Electricity (Urteil vom 25.2.2014 VI ZR 144/13) (BGH) §§13-4; 19-21 1037 Cahn, Münchener Kommentar (Beck, 1997), 2132 1038 Wagner, Münchener-Kom ProdHaftG§3/2; Kullmann, ProdHaftG-Kom §3/3 1039 Drucksache-11/2447, 17 1040 Sprau, Palandt-Kom ProdHaftG§3/2; Kullmann, ProdHaftG-Kom §3/6; Wagner, Münchener-Kom ProdHaftG§3/3; Oechsler, Staudinger-Kom ProdHaftG§3/19; Westermann (1997), 216-7 1041 Cherry Cake (Urteil vom 17.3.2009 VI ZR 176/08) NJW 2009. 1669 (BGH) §6; Airbag §12; Electricity §8 171 these points in the literature1042 and cases1043 and that this approach reflects the position under general tort law1044.
There has been some debate as to whose legitimate objective expectations should be taken into account. For some, the emphasis is on the wording of the provision – persons generally1045; for others, the only way this can be applied in practice is to focus on the average user or consumer of the product1046. Another group of commentators either adopt an amalgam of the two or find it unnecessary to be dogmatic about the issue1047. For its part the BGH has referred to the debate and suggested that in the first instance the focus should be on the group towards whom the producer targets his product, but as the protection of the ProdHaftG extends beyond those who purchase or use products, regard can be had to the entitled expectations of third parties who might come into contact with the product1048. Since Boston Scientific, reference has been made to taking into account legitimate expectations of the user group for whom the product is intended1049. It is generally accepted that one must consider the expectations of those consumers who might be at increased risk from the product, such as children. Further, where a product is targeted at multiple groups, the manufacturer must orient himself towards the group who is least well informed and least able to tolerate the risk in order to achieve the highest standards of safety1050.
Whatever the precise formulation of the group, there is clarity that under §3 ProdHaftG, absolute safety cannot legitimately be expected from every product in every situation1051. In Cherry Cake (followed more recently in Undersink Water Heater), the BGH rejected the claim that a cherry cake was defective when a customer bit into a cherry stone within the filling. Whilst the cake was intended for the final consumer and in principle that imposed a higher duty on the manufacturer, it was presented as having a cherry filling, which was a natural
1042 Sprau, Palandt-Kom ProdHaftG§3/3; Kullmann, ProdHaftG-Kom §3/5 1043 Cherry Cake; Airbag §12; Undersink Water Heater (Urteil vom 5.2.2013 VI ZR 1/12) NJW 2013, 1302 (BGH) §12; Electricity §8 (cf Sparkling Water Bottle II - actual expectations). Recently: Metal-on-Metal Hips (Urteil vom 24.2.2017 6 O 359/10) (LG Freiburg) §§67ff 1044 Drucksache-11/2447, 18 1045 Taschner and Frietsch, Produkthaftungsgesetz Art6/4; Oechsler, Staudinger-Kom ProdHaftG§3/15 1046 Kullmann, ProdHaftG-Kom §3/6 1047 Krause, Soergel-Kom ProdHaftG§3/3; Wagner, Münchener-Kom ProdHaftG§3/5 1048 Cherry Cake §6 by reference to Wagner, Münchener-Kom ProdHaftG§3/5 and Oechsler, Staudinger-Kom ProdHaftG§3/15-20 1049 Metal-on-Metal Hips §72 1050 Cherry Cake §7; Undersink Water Heater §12 1051 Schiemann, Erman-Kom ProdHaftG§3/2; Sprau, Palandt-Kom ProdHaftG§3/3; Undersink Water Heater §15; Chocolate Bar §58 172 product, and the consumer was not entitled to expect that it would be free from stones or stone fragments. The Court indicated that the answer might have been different had the presentation given the impression that it only contained entirely pitted cherries1052.
6.4.2.1.2 Categories of Case
Like the PLD, the ProdHaftG does not distinguish between different types of defect. Nonetheless, the taxonomy of case types developed under §823(1) BGB remains relevant to the determination of the level of entitled expectations in different cases1053. The BGH so held in Airbag: the categorisation “has not become obsolete”1054. Accordingly, the analysis of whether a product is defective has “largely echo[ed] the questions arising in negligence”1055 and has even been described in one case as being “identical”1056.
One of the consequences of the rigid categorisation of cases is that bright-line rules have sprung up in respect of the applicability of certain provisions. Thus the time that the product was put into circulation (§3(1)(c)) and particularly the rule that a product is not to be regarded as defective for the sole reason that a better product is subsequently put into circulation (§3(2)) have been described as only applying to design defect cases. Similar views apply to the defences. The defence in §1(2)(2) (that the defect which caused the damage was not present in the product at the time the defendant put it into circulation) is often said to only (or mostly) have practical application in cases of manufacturing defects1057, although some commentators recognise a wider scope across all types1058. The scope of §1(2)(4) (that the defect was due to compliance with mandatory regulations) is said only to apply to design defects1059. The DRD in §1(2)(5) has been held to only apply in design and warning cases, and §1(3) (relevant to component manufacturers) is thought only to apply in design defect cases1060.
1052 Cherry Cake §12; Lenz, Produkthaftung 195 fn 1411 1053 Kullmann, ProdHaftG-Kom §3/9ff; Krause, Soergel-Kom ProdHaftG§3/9ff; Sprau, Palandt-Kom ProdHaftG§3/8-12; Oechsler, Staudinger-Kom ProdHaftG§3/38; Wagner, Münchener-Kom ProdHaftG§3/29; Metal-on-Metal Hips §74 1054 Airbag §12; Sparkling Water Bottle II; Chocolate Bar §86; Log Flume 1055 Lenze, German Product Liability, 108 1056 Opel Astra (Urteil vom 24.4.2012 11 U 123/11) (OLG Schleswig) §31 1057 Drucksache-11/2447, 14; Sprau, Palandt-Kom ProdHaftG§1/17; Taschner and Frietsch, Produkthaftungsgesetz Art7/10 1058 Lenz, Produkthaftung, 229; Oechsler, Staudinger-Kom ProdHaftG§1/82-3 1059 Kullmann, ProdHaftG-Kom §1/57; Lenz, Produkthaftung, 231 1060 Taschner and Frietsch, Produkthaftungsgesetz §1/123; Kullmann, ProdHaftG-Kom §1/74; cf Sprau, Palandt- Kom ProdHaftG§1/23 (only manufacturing errors excluded) 173
Manufacturing defects
In manufacturing defect cases, the assessment of the entitled safety expectations is generally oriented around the norm set by the manufacturer1061. In other words, corresponding to that offered by a product which is manufactured as planned, in accordance with its design1062.
This approach can be seen in Sparkling Water Bottle II1063. There a child was injured when a recyclable sparkling mineral water bottle exploded and splinters of glass caused an eye injury. The evidence showed a system of manufacture whereby recycled bottles were subject to human and machine inspection. Prior to filling, they were pressure tested to 133% of that expected once filled. The index bottle was found at first instance to have had a very fine hairline crack which rendered it liable to explode even on very slight contact1064. The Court accepted that the system of quality control was state of the art, and no system of control can ensure absolutely that no bottles with such cracks would leave the factory1065. There was, therefore an “irreducible residual risk” and the index bottle was one which unavoidably got away (an Ausreißer) despite the exercise of all appropriate precautions.
The BGH held the bottle defective: consumers expect water bottles to be free from faults such as hairline cracks and this was not diminished even if it were technically impossible to identify and remove such faults. The presence of a hairline crack therefore constituted a manufacturing/production defect (Fabrikationsfehler), even if the bottle was an Ausreißer. The clear basis for this decision was the deviation from the manufacturer’s intended product and therefore level of safety was insufficient.
1061 Kullmann, ProdHaftG-Kom §3/10 1062 Italian implementing measure (Art 5(3) “A product is defective if it does not offer the level of safety that would normally be offered by others in the same production series”: ibid. ProdHaftG§3/10 fn 28 1063 Sparkling Water Bottle II; see T. Weir, English Translation of Sparking Water Bottle II (1995)
Design defects
The assessment of safety expectations in design cases is recognised as being more difficult1066 and has wider consequences because the manufacturer is liable for the entire production series1067.
The Courts have described entitled safety expectations in these cases as corresponding to an absence of unusual or unexpected risk to the user/third party during normal use (in accordance with instructions) or foreseeable misuse1068. When assessing whether a risk is unusual, however, the German legal discourse looks back to the jurisprudence under §823(1) BGB and frames the analysis in terms of whether there was an alternative safer design, viz a safety precaution that the manufacturer failed to take when designing the product, and whether that was reasonable and necessary in light of the expectations of a reasonable consumer given the state of science and technology at the time the product was put into circulation.
One sees that in the Airbag case, in which the BGH held that in order to provide the expected level of safety, the manufacturer must take those measures that are “objectively necessary and reasonable” in order to avoid the dangers in the product1069. Safety measures are necessary if they are possible on the basis of the state of the art of science and technology and are suitable and sufficient to prevent the risk. The state of science and technology in this respect is not that adopted in the industry in question (because standards of safety adopted can lag behind those which are legally required)1070. It is a higher standard, although, as Lenze has observed, the reference to ‘state of the art’ in this jurisprudence and by commentators1071 is somewhat vague and can mean different things to different people1072. The BGH went on to hold that safety measures will be possible to avoid the risk where, on the basis of expert knowledge, a practical alternative design is available, although there is no obligation to implement measures still in development or testing1073.
1066 Kullmann, ProdHaftG-Kom §3/13 1067 Sprau, Palandt-Kom ProdHaftG§3/8; Lenz, Produkthaftung, 202 1068 Undersink Water Heater §14; Metal-on-Metal Hips §122 1069 Airbag §15; Metal-on-Metal Hips §126 1070 Airbag §16 1071 Taschner and Frietsch, Produkthaftungsgesetz Art6/20; Sprau, Palandt-Kom ProdHaftG§3/9 1072 Lenze, German Product Liability, 110 1073 Airbag §16 175
Turning to the reasonableness of a safety measure, the BGH held that this falls to be assessed in light of all the circumstances of the individual case, in particular the size of the risk and extent of the harm that might eventuate1074. The Court specifically referred to the risk/utility test in US law and held that the reasonableness of a safety measure is assessed in light of its economic effects, including consumer habits, production costs, the sales opportunities for the modified product, and its cost/benefit ratio.
Where the risks of using a product cannot be avoided by the use of a safety precaution, whether the product should be put into circulation is to be considered by weighing up the probability of the risks eventuating with the benefits of the product.1075 The Log Flume case is an example of where the Court found a safety risk inherent in the product, but one which was generally accepted by users therefore precluding the finding of a design defect1076.
Warning defects
The assessment of alleged defective warning cases has parallels with the analysis in design cases, however an added feature is that §3(1)(a) ProdHaftG provides the Court should consider the presentation of the product1077. Ultimately, the result is thought to be similar to that under §823(1) BGB1078.
Having considered whether design safety precautions are necessary, applying Airbag1079, the manufacturer is generally obliged to warn about those risks that remain which are not generally known1080, including those which might arise from misuse1081. Defectiveness can result from the complete absence of an instruction or due to deficiencies in the content of instructions/warnings provided1082. This obligation allows users to decide for themselves whether advantages associated with the use outweigh the risk of harm. Accordingly, the
1074 Ibid. §18 1075 Ibid. §17; Wagner, Münchener-Kom ProdHaftG §3/32; Metal-on-Metal Hips §125 1076 Log Flume 1077 Sprau, Palandt-Kom ProdHaftG§3/10 1078 Oechsler, Staudinger-Kom ProdHaftG§3/47; Lenz, Produkthaftung, 205 1079 Airbag §23, applying Cherry Cake 1080 See Log Flume: no obligation to warn that those with osteoporosis might be endangered by a log flume impacting with water – that was general knowledge which required no special emphasis 1081 Airbag §23; Kullmann, ProdHaftG-Kom §3/17 1082 Airbag §23; Metal-on-Metal Hips §156 176
Court held the content and scope of the informational obligation is determined by the size of the risk and the nature of the harm that might result1083. Generally, the Court imposes an obligation on the claimant to identify the nature of the risks about which it is contended there should be a warning1084.
6.4.2.1.3 Timing of the Assessment
The time that the index product is put into circulation (not when the production series commenced1085) is one of the factors listed in §3(1)(c) ProdHaftG. Whilst technically it ranks as one of the circumstances, it has always been recognised as being “crucial”1086. It falls to be contemplated alongside §3(2) which provides that a product is not to be considered defective for the sole reason1087 that a better product is subsequently put into circulation. This means that where a product is placed on the market and is not defective, it will not later become defective as a result of the progression of the state of science and technology, or because expectations of the degree of safety have subsequently increased1088. In the literature, commentators have argued that the word verbessert in §3(2) ProdHaftG means that the discussion must be focused upon design defects and that therefore this provision has no impact for manufacturing or warning defects1089.
6.4.2.1.4 Burden of Proving Defect and Definitional Issues
A statutory burden of proof applies to claims under the ProdHaftG. By §1(4), the claimant must prove that the product is defective, that he has sustained damage and that the two are causally related. Thus there is no doubt that the burden of proving defect is on the claimant. The standard of proof that applies is that under the general Zivilprozessordnung (“ZPO”). By §286 ZPO (Freie Beweiswürdigung), the Court must decide whether a fact is true based on the so-called ‘free conviction’ of the judge who must then give reasons in the judgement. Free conviction does not require absolute, incontrovertible or unattainable certainty. Rather the judge must be satisfied on the basis of “a degree of certainty that is useful for practical life [which]
1083 Airbag §§23-4 1084 Ceramic Hip (Urteil vom 4.4.2012 I-5 U 99/11) MPR 2012, 99 (OLG Köln) 1085 Metal-on-Metal Hips §73 1086 Drucksache-11/2447, 18 1087 Kullmann, ProdHaftG-Kom §3/68 1088 Drucksache-11/2447, 16, 18; Kullmann, ProdHaftG-Kom §3/68 1089 Taschner and Frietsch, Produkthaftungsgesetz Art6/32; Kullmann, ProdHaftG-Kom §3/70 177 is sufficient to silence doubts without completely excluding them”1090. Whilst this standard is more exacting than a balance of probabilities approach, when it comes to proving defect, it is eased by operation of the prima facie doctrine1091 as seen in the cases below.
A number of aspects to the requirement to prove defectiveness must be considered. First, is the issue as to whether the technical cause of the danger needs to be established, or – less onerously – establishing a lack of entitled safety expectations suffices. In Dehumidifier, the Court held that it was not necessary to prove the exact nature of the technical fault which resulted in a dehumidifier catching fire in circumstances where causality between the product and the damage had been established1092. It was significant that the product failed in circumstances where it was not expected to fail; this gave rise to a prima facie case of defect which the defendant could not rebut. This chimes with the similar decision of the Austrian Supreme Court in its Coffee Machine judgment1093. A recent example can be seen in the Metal- on-Metal Hips case where a claim was based on the wear produced by metal articulating surfaces of an implant. The Court there accepted that abrasion and corrosion occurred at various places within the implant, that the process was multifactorial, and the causes were not reliably ascertained in isolation. It did not require the claimant to prove the precise cause of the wear because it had been established that all were within the zone of responsibility of the manufacturer1094.
This approach is subject to the claimant establishing that the safety problem arose within the zone of responsibility of the producer. A good example is Opel Astra1095 in which the claimant was unable to prove that a vehicle fire had been due to a problem (whatever its precise cause) which arose within the zone of responsibility of the manufacturer. The vehicle was 9 months old and had travelled 25,000km and in the view of the OLG Schleswig, it was not possible to rule out that modifications (intentional or unintentional) had been made to the electrics so that the above approach could not apply. Dehumidifier was not doubted, but was distinguished on basis that the concrete technical defect in the dehumidifier could not have been
1090 Standard of Proof (Urteil vom 18.6.1998 IX ZR 311/95) NJW 1998, 2969 (BGH) §2(II)(a); applied in Metal- on-Metal Hips §161 1091 Lenze, German Product Liability, 114 1092 Dehumidifier (Urteil vom 10.12.2007 8 O 27/07) VersR 2009, 1129 (LG Verden); Bicycle (Urteil vom 23.5.1996 7 U 1317/95) VersR 1998, 59 (OLG Dresden) 1093 Coffee Machine Case (2002) 10 Ob 98/02p (Austrian Supreme Court) 1094 Metal-on-Metal Hips §§80-5 1095 Opel Astra was a case under §823(1) BGB due to commercial property damage (§28). Not as a basis for distinguishing the approach. 178 demonstrated due to the fire which had taken place. It is unlikely, however, that the reason why the precise problem cannot be established is pertinent; the better point in Opel Astra was that it was not sufficiently established that the vehicle caught fire in circumstances which it would not be expected to and that those circumstances would have been within the producer’s zone of control.
A second issue is how the German cases conceptualise the ‘defect’ in the product. As stated, the traditional approach, originating in general tort law, has been to look at the duties owed by a producer. In the jurisprudence those duties have evolved by defect category based on the source of the risk of harm (the production process, design, information accompany the product). However in whichever category, the duties imposed are responding to the fact that a product exhibited a risk of harm.
Since the Boston Scientific case, which as we have seen conceptualised defect in terms of risk, German courts have started to embrace that approach. This has continued after the BGH’s implementation of the Boston judgment in Pacemaker II and ICD II. Thus in Varicon Hip, the KG Berlin held that the Boston case defined the term ‘defect’ in a binding manner1096 and it fell to be applied in the case of a hip implant even if the consequences of failure were not as dramatic as a pacemaker1097. The Court held that a “defect giving rise to liability lies in the abnormal potentiality of personal injury” and it was the “propensity to cause injury” which leads to a finding of defect1098. There a failure rate of 4-5% (compared with lower failure rates for other implants) was sufficient to lead to a finding of defectiveness in respect of the whole series of implants. It was not critical that the Varicon hip had extra modularity and increased comfort for the patient; it still did not correspond to entitled safety expectations. The system had been sold as having improved on previous products and patients were entitled to expect that the product was in all respects better than those that were on the market1099. Thus the defect in the product was seen in terms of the risk of the product failing.
Similarly, in Metal-on-Metal Hips, the court was concerned with the failure of two large head metal-on-metal hip prostheses implanted bilaterally into the claimant. The implants were found defective as a result of their design because when used, they caused metal debris
1096 Varicon-Hip (Urteil vom 28.8.2015 4 U 189/11) (KG Berlin) §17 1097 Ibid. §§13, 18, 19; cf distinguishing of Boston in ASR-Hip (Urteil vom 19.8.2015 5 O 184/13) (LG Siegen) 1098 Varicon-Hip §§19-20 1099 Ibid. §26 179 through abrasion which was detrimental to the patient and this fell short of the entitled expectations as to safety1100. Thus although analysed as a design defect case, the operative paragraph indicates that defect was seen in terms of the implants causing metal debris that could be harmful.
It is helpful to look at the Court’s reasoning in a little more detail to aid comparison with the English case of Gee. In Metal-on-Metal Hips, the Court’s starting point was that legitimate safety expectations in respect of hip implants were “particularly high” given the vulnerable situation of those who need them1101. Expectations were judged as at the date the index implants were placed on the market (2005 and 2006 respectively)1102. The implants were found to cause metal debris through abrasion1103. The causes of this, whilst multifactorial, were all within the area of responsibility of the defendant, including when due to following the surgical technique1104. Metal debris was potentially hazardous to health, and these and other large head metal-on- metal prostheses from various manufacturers had been withdrawn1105. Although the Court recognised that all implants experienced some wear1106, the ones in question failed to meet the entitled safety levels1107. It was important that the defendant had presented the product in a way which suggested a low level of abrasion, which was in reality exceeded1108. Further, it had been possible to carry out clinical studies which would have shown the sources of wear and that large head implants were associated with higher concentrations of metal ion values in the blood1109. This was therefore seen as case where there was unavoidable metal abrasion and ultimately the potential disadvantages of the prostheses outweighed their benefits such that they should not have been on the market1110. The Court further took into account the fact the disputed prosthesis system (along with others) had been removed from the market1111.
In addition, the Court identified warning defects arising from (i) inadequate surgical instruction when describing the impaction force required to insert the stem into the head and
1100 Metal-on-Metal Hips §66 1101 Ibid. §72 1102 Ibid. §73 1103 Ibid. §75-84 1104 Ibid. §§85-115 1105 Ibid. §§116-121 1106 Ibid. §76 1107 Ibid. §122 1108 Ibid. §§127-136 1109 Ibid. §§137-148 1110 Ibid. §§149-150 1111 Ibid. §152 180 for sterilising the stem, and (ii) warnings about the higher level of metal abrasion during the bedding-in period of the implant1112.
The defect is also conceptualised for the purpose of the DRD and this is discussed further below.
6.4.2.2 Relevant Circumstances
6.4.2.2.1 Listed factors and ‘all the circumstances’
§3 ProdHaftG provides that when assessing defect “all the circumstances” must be considered and “in particular” (insbesondere) the three set out. §3(1)(a) (presentation) includes all the ways in which the product is presented to the general public or specific user, including information, instructions and warnings accompanying the product as well as advertising1113. As we have seen, presentation can be critical: see Cherry Cake and Metal-on-Metal Hips1114. Safety expectations can be influenced by praising safety aspects in an exaggerated way or leaving essential negative features unmentioned1115. That said, the case law has prevented this from being taken too far: thus advertising concerning confectionary did not fundamentally alter the assessment1116. §3(1)(b) (reasonably expected use)1117 covers both intended and predictable use or misuse (as we have seen, contributory negligence can be taken into account), and requires the Court to have regard to the type of user or person who might come into contact with the product1118. A lack of warning against predictable misuse can result in liability1119. That said, the BGH has held that a manufacturer is not responsible for all cases of misuse of the product (including installation or failure to take proper precautions)1120. §3(1)(c) (time product put into circulation) has been discussed above.
These constitute “the three main criteria” but the list is “by no means exhaustive”1121. There is general consensus that all relevant circumstances must be taken into account1122. The
1112 Ibid. §§157-8 1113 Lenz, Produkthaftung, 196-8 1114 Metal-on-Metal Hips §§127-8 1115 Drucksache-11/2447, 18; Kullmann, ProdHaftG-Kom §3/22 1116 E.g. Chocolate Bar §§77-8 1117 E.g. Lenz, Produkthaftung, 198-200 1118 Again, as seen in Cherry Cake 1119 Drucksache-11/2447, 18 1120 Undersink Water Heater 1121 Drucksache-11/2447, 18 1122 Kullmann, ProdHaftG-Kom §3/21; Schiemann, Erman-Kom ProdHaftG§3/2 181
Drucksache explained that such an approach was necessary because the concept of ‘defect’ could not be restricted compatibly with the PLD, nor could the ProdHaftG otherwise deal with the multitude of conceivable product defects that might arise1123.
This of course prompts the question as to what is relevant. Kullmann has argued that because the §3(1) factors are objective, other potential criteria should have the same character. He concludes that in general, the same factors will be relevant as determine whether a product is unreasonably dangerous in US law1124. For Schiemann, having regard to all the circumstances corresponds to the reasonableness enquiry under general tort law such that in practice the Courts tend to have regard to the same factors in their assessment of defect as they do when assessing breach of duty under §823(1) BGB1125.
But what about fault itself, is that relevant? Some have pointed to the recitals of the PLD which indicate that the liability was to be without fault1126. On this view, fault or blameworthiness would have no role to play in the assessment of defectiveness. Others, such as Lenze, argue that the ‘fault’ referred to in the recitals is not defined, and the expressed purpose only rules out ‘personal blameworthiness’ and does not indicate whether the objective conduct of the manufacturer is to be disregarded1127. In practice the issue tends to divide down the lines of defect type. In manufacturing defect cases, where there is a deviation from that which the manufacturer intended to produce, provided that can be shown to arise within the area of responsibility of the manufacturer, liability will be established. That liability extends to the undetectable Ausreißer situation underlines in practical terms, fault is not material. The position in design and warning cases is more difficult. As we have seen, under the ProdHaftG (as under the BGB) the analysis is conducted in terms of whether it would have been reasonable for the manufacturer to have utilised a particular safety precaution in relation to the design or used a particular warning. This puts the manufacturer’s conduct centre stage.
What is generally accepted is that the nature of the product is relevant1128. This would include inherent dangers, the obviousness of those inherent dangers, any safety features included and
1123 Drucksache-11/2447, 19 1124 Kullmann, ProdHaftG-Kom §3/21 1125 Schiemann, Erman-Kom ProdHaftG§3/2 1126 Taschner and Frietsch, Produkthaftungsgesetz Art 1/1 1127 Lenze, German Product Liability, 109; Wagner, Münchener-Kom ProdHaftG Einl./16 1128 Taschner and Frietsch, Produkthaftungsgesetz §3/53ff; Oechsler, Staudinger-Kom ProdHaftG§3/85 182 their effect. However as noted in recital 6 PLD, and as explained in the Drucksache, a product’s non-safety related quality, or its fitness for purpose, is not relevant to the defectiveness standard1129.
Most writers also agree that the price of the product is also relevant to the assessment because “the consumer cannot expect that the product with the cheapest price will offer him the highest possible degree of security against adverse effects”1130. Certain safety features (such as ABS on a vehicle) might be price-dependent and therefore in this context, the price of the product will play a role, usually alongside presentation. However, it has been pointed out that price is not always a good indicator of safety, and a bystander will often not know the price so the weight of this feature may vary1131.
6.4.2.2.2 Avoidability and Risks v Benefits
German law traditionally weighed up risks against benefits of a product, and considered the possibility and practicability of avoiding risks, when deciding whether to impose liability. Under §84 AMG, a risk benefit analysis is express on the face of the statute and these considerations feature in design and warning cases under §823(1) BGB. But what about §3 ProdHaftG?
It is perhaps helpful to separate out the various considerations. First, there is the consideration of avoidability of the risk. The question that the Courts pose in design and warning cases (both under the ProdHaftG and general tort law) is whether a particular protection measure (or warning) is necessary and reasonable to avoid the risk. This contemplates not only the extent to which the risk is avoidable, but whether it is objectively reasonable. In Cherry Cake the issue of defectiveness was considered through the question of whether adopting a preventative measure (a straining mesh) would have been reasonable to avoid the risk of a cherry stone getting in the cake. The BGH held that the reasonableness of a precaution was to be judged by objective standards. Thus the greater the risk and the greater the harm that might result, the more it would be reasonable to expect of the manufacturer in terms of
1129 Drucksache-11/2447, 17; Schiemann, Erman-Kom ProdHaftG §3/3; Sprau, Palandt-Kom ProdHaftG§3/1 1130 Drucksache-11/2447, 18-9; Sprau, Palandt-Kom ProdHaftG§3/4; Taschner and Frietsch, Produkthaftungsgesetz §3/55ff 1131 Lenze, German Product Liability, 111 183 precautions1132. Applying this proportionality approach, the Court held that the protective measure was not objectively reasonable because the risk of harm upon biting a cherry stone was insufficiently serious to be avoided or limited at all costs1133.
For some time there has not been a single view amongst commentators as to whether such a reasonableness enquiry encompasses economic considerations of the producer1134. The issue was addressed by the BGH in Airbag: when the reasonableness of a potential safeguard measure is considered it would be important to consider its “economic impact, consumer habits, production costs, the sales opportunities for a correspondingly modified product and a cost/benefit ratio”1135. The BGH expressly referred to the “risk-utility-test according to US law”. Thus from the perspective of the Court, at least, all aspect of reasonableness are in play. Of course that does not always work in the producer’s favour. In Dishwasher liability was imposed where a circuit breaker would have avoided the damage, despite arguments from the producer that competitors did not install them, partly because it was economically reasonable for the defendant: the circuit breaker was known to the manufacturer and could have been fitted at no great cost1136 .
The next part of the analysis, as the extract from Airbag foreshadowed, involves the Court assessing the product’s risks in light of the benefits it offers. An early indication that the benefits (efficacy) of a product should be considered appeared in the Drucksache where a parallel with general tort law was made1137. The relevance of the factor was then sanctioned by Airbag. Ultimately, where a risk could not be avoided by a protection measure, there should be a “consideration of the nature and extent of the risks, the likelihood of their realisation and the benefits associated with the product”1138 in order to determine defectiveness. One even sees this in the Cherry Cake decision: the BGH noted that using a straining mesh would result in juice and not pulp for the filling, in effect placing the utility of the product into consideration (the cherry cake would be changed with a non-pulp filling). Similarly in Varicon Hip, (and Metal-
1132 Cherry Cake §8; Undersink Water Heater §13 1133 Cherry Cake §§10-11 1134 Some think it does e.g. Wagner, Münchener-Kom ProdHaftG§3/24, Oechsler, Staudinger-Kom ProdHaftG§3/89; others disagree e.g. Taschner and Frietsch, Produkthaftungsgesetz Art 6/22ff, Kullmann, ProdHaftG-Kom §3/54-5 1135 Airbag §18 1136 Dishwasher (Urteil vom 19.10.2007 17 U 43/07) NJW-RR 2008, 691 (OLG Schleswig) 1137 Drucksache-11/2447, 18 1138 Airbag §17 184 on-Metal Hips1139) the additional benefits of the product as compared with comparators were considered but were insufficient to displace the added risk of failure1140.
An alternative approach in cases where the product has unavoidable risks, and perhaps less obvious benefits, is to consider whether the product should be placed on the market at all: viz the product’s social acceptability (Sozialadäquanz). One sees this in Chocolate Bar: the risks posed by refined sugar and cocoa in the bars (there said to have caused diabetes) were not considered objectionable. Those ingredients were present in a number of different foods and it was the individual’s responsibility to put together his diet according to his needs. Were the legal system to go further, and render impossible any danger voluntary accepted, that would be unacceptable from the point of view of freedom and self-responsibility1141. The Court’s reasoning (which is in the first instance by reference to §823(1) BGB and then simply applied to the ProdHaftG) focuses on the social acceptability of sugary chocolate bars. This is the assessment applies to other products which contain inherent risks, such as alcohol, tobacco etc1142.
6.4.2.2.3 Regulatory Compliance
The contents of applicable regulations and standards have generally been considered relevant in the assessment of legitimate safety expectations in design defect cases, but they do not constitute an absolute defence beyond the situation covered by §1(2)(4) ProdHaftG (defects caused by compliance with mandatory regulations).
The importance of compliance with regulations and standards was stated in the Drucksache, although it went on to say a case-by-case assessment was required because standards do not always correspond to current technological possibilities. Although compliance was not determinative, it tended to suggest the product meets entitled safety expectations1143. This reflects the current thinking1144.
1139 Metal-on-Metal Hips §151ff 1140 Varicon-Hip §26 1141 Chocolate Bar 1142 Kullmann, ProdHaftG-Kom §3/18 1143 Drucksache-11/2447, 19 1144 Sprau, Palandt-Kom ProdHaftG§3/4; Taschner and Frietsch, Produkthaftungsgesetz §3/15ff; Lenz, Produkthaftung 202; Kullmann, ProdHaftG-Kom §3/13; Oechsler, Staudinger-Kom ProdHaftG§3/94ff; Wagner, Münchener-Kom ProdHaftG§3/22ff 185
A number of early cases expressly referred to this factor1145. In Log Flume, the approval certificate obtained from TÜV, and the evidence that the flume had met applicable standards allowed the Senate to conclude that the system was designed in such a way that it would be safe under normal use1146. In Chocolate Bar, the requirements of food labelling regulations were referred to when assessing entitled expectations. The Court held that the consumer cannot expect to receive comprehensive information and warnings from the manufacturers of individual foods when there are multiple sources of information concerning the fundamentals of a balanced diet. Rather, it is usually enough for food labelling regulations to be complied with such that the ingredients are listed in descending order of proportion by weight1147. The case was different from the Child Tea cases because there hazards were not obvious1148.
More recently, the relevance of standards has been endorsed by the BGH in Electricity: in assessing entitled safety expectations “compliance with legal safety regulations or compliance with technical standards, such as DIN standards or other technical standards, may be important, although this does not mean that a product must be considered non-defective if such standards were followed”1149. Similarly, DIN and VDE standards were relevant, but not determinative, in the analysis of defectiveness in Metal-on-Metal Hips1150 and in the Dishwasher1151 case.
6.4.2.2.4 Learned Intermediary
Whilst the concept of a ‘learned intermediary’ is not expressly invoked in German law, it can impact in the way cases are practically determined. This is particularly so in warning defect cases. Like in England, this issue has arisen in the context of hip implant litigation.
In Ceramic Hip Head, the claimant argued inter alia that he had not been warned about the risk of the ceramic head fracturing or advised of the alternative materials available for bearing surfaces. He argued that there was a risk of fracture that arose in certain situations, including
1145 See also Lenze, German Product Liability 109; Goldberg, Medicinal Product Liability and Regulation 142- 3; D. Fairgrieve and G. Howells, 'Rethinking Product Liability: A Missing Element in the European Commission's Third Review of the European Product Liability Directive' (2007) 70 MLR 962, 973-4 1146 Log Flume 1147 Chocolate Bar §69 1148 Ibid. §§70-1; Child Tea I; Child Tea II; Child Tea III 1149 Electricity §8 1150 Metal-on-Metal Hips §124 1151 Dishwasher (Urteil vom 19.10.2007 17 U 43/07) §73 186 obesity and the playing of certain sports which ought to have been warned about. The manufacturer argued that ceramic heads had benefits (lower abrasion, less aseptic loosening), was not contraindicated in the present case, and the decision concerning material lay with the surgeon who there had advised the claimant about the risk of the head fracturing. It contended that the claimant had not identified the precise risk that should have been warned about.
The OLG Köln dismissed the claim. It held the manufacturer had fulfilled its obligation to provide information about the product in the product literature sent to the treating doctors about risks arising from obesity and physical activity. Thus warnings to a learned intermediary were taken into account. Further, it was for the claimant, at his own expense, to identify circumstances which gave rise to further risks which should have been warned about, and this he had not done1152. The lower court had been entitled to conclude on the evidence that the doctor had followed the written information sheet when discussing the case with the patient and this had included the risk of fracture1153.
The OLG concluded that the informational duty did not extend to providing information about alternative head materials1154. The risk of fracture existed with both ceramic and other head materials – the difference was the extent of the risk and whilst the ceramic head had a higher risk of breakage, the metal head caused greater abrasion and loosening. Furthermore, decisions on the choice of the material may have to be made intraoperatively depending on the anatomical conditions of the patients and advice about a variety of conceivable combinations would often overburden the claimant and not facilitate appropriate decision making1155.
Thus for the Court, the informational duty of the manufacturer could be satisfied through the conduit of the intermediary doctor. The role of that intermediary in advising, selecting and implanting the implant product was relevant to assessment of the defectiveness of the implant by virtue of its informational qualities. This analysis leant upon the position in general tort law for its foundation.
1152 Ceramic Hip §47, by reference to Sprau, Palandt-Kom §823/183ff 1153 Ceramic Hip §55 1154 Ibid. §56 1155 Ibid. §§59-60 187
Even where there is an intermediary, a warning will be assessed for its adequacy. In the Metal- on-Metal hips case, the information accompanying the product in the surgical technique brochure amounted to warning defects because of insufficient instructions to the doctor about the impaction force to use when implanting, and about sterilisation1156.
6.4.2.3 Conclusion
The law on defect in Germany under the ProdHaftG remains heavily influenced by general tort law, both in terms of the categorisation by defect type and by equating the entitled level of safety expectation with duties owed by the manufacturer. This has resulted in broadly the same factors being considered in the assessment of defectiveness as in general tort law.
6.4.3 Development Risks
Under both general tort law and the ProdHaftG, liability is excluded where the state of science and technology at the time the product was put into circulation, was not sufficiently advanced to enable the defect to be discovered1157. In claims under §823(1) BGB this is because no development defect (Entwicklungsfehler) will be established, and this is necessary in order to establish the objective breach of duty on the part of the manufacturer. Similarly, in claims under §1 ProdHaftG, this is because the DRD in §1(2)(5) will thereby be established.1158
The various strands making up the DRD have been examined by the BGH in three leading cases: Sparking Water Bottle II, Airbag, Undersink Water Heater, and these principles were recently applied in some detail by the LG Freiburg in Metal-on-Metal Hips. In this section, the jurisprudence emerging from those decisions, and learned commentary, is considered.
6.4.3.1 Wording of §1(2)(5) ProdHaftG
The German legislature elected under article 15(1)(b) PLD to maintain a defence for development risks. The language broadly1159 follows that of article 7(e) PLD.
1156 Metal-on-Metal Hips §§107-110 1157 Airbag §28; Sparkling Water Bottle II, Fish Food (Urteil vom 25.10.1988 VI ZR 344/87) NJW 1989, 707 (BGH); Metal-on-Metal Hips §185 1158 Metal-on-Metal Hips §185 1159 “betreffende” (relevant) before “Produkt” was removed: Drucksache-11/2447, 28 188
The thinking behind the inclusion is apparent from the Drucksache: general tort law did not impose liability for risks arising from products that, applying all reasonable care, were not recognisable during the development and design phase. An exception was where a specific law (such as the AMG) imposes such liability1160. The legislature did not intend to depart from that position1161. The Drucksache reasoned that the inclusion of development risks within the liability regime was not necessary because it was “rare” in practice for such risks to emerge, and because the AMG imposed liability for them in the pharmaceutical sector where it was most likely to arise1162.
Deciding to include the defence was by no means universally accepted1163. Writing shortly before the Drucksache, Simitis argued that development risks were “the really crucial point” and were “part of the dangers accompanying the use of everyday products by perfectly normal consumers in equally perfectly normal situations”. For him the credibility of product liability rules depended on their ability to ensure a convincing allocation of damages for development risks: “As long as compensation is avoided, any solution offered remains incomplete and provisory.”1164
Nonetheless, the defence was included and with one exception applies to all products falling within the scope of the Act. Of course relevant medical products fall outside the ProdHaftG and therefore the purview of this defence. They are subject to the AMG in which there is no statutory defence for development risks. The exception for products falling within the ProdHaftG applies to certain genetically modified products. By §37(2) GenTG1165, where a product containing or consisting of GMOs is placed on the market in accordance with the GenTG, with a defect which is due to genetic engineering, then the manufacturer to whom the marketing authorisation has been granted cannot escape liability even in respect of development risks1166.
1160 Ibid., 15 1161 Ibid. p12 §VI(4)(a) 1162 Ibid. p12 §VI(4)(a) 1163 H.-J. Behrens, Produkthaftung in Ausfüllung der EG-Richtlinie nach den englischen und deutschen nationalen Regeln (VVF, 1991), 114-5 1164 Simitis, The West-German Approach, 110 1165 GenTG 1166 Kullmann, ProdHaftG-Kom §1/71; Looschelders (2016), 160 189
6.4.3.2 Conceptual Issues and some Terminology
Whilst the Drucksache drew an equation between §1(2)(5) ProdHaftG and the jurisprudential position reached under §823(1) BGB, there are real conceptual differences between the two approaches.
Under the PLD and the ProdHaftG, development risks are dealt with by way of a defined defence. This has the effect of creating a negative rather than positive conception of development risks because the strict liability that would otherwise be imposed on a producer is only excluded where the requirements of the legal rule constituting the DRD is made out and proved by the manufacturer.1167 Further, the wording of the provision is centrally focused not on the conduct of the producer, whether subjectively (what he did do) or objectively (what he might have done/ought to have done), but on whether the existence of the defect was discoverable on the state of science and technology. The only mention of the producer is in order to fix the time at which the state of science and technology is assessed: the point at which the producer put the product into circulation.
By contrast, under §823(1) BGB the discourse is based around duties: most fundamentally whether the producer breached his Verkehrspflicht1168. Whilst the jurisprudence has shaped the nature of those duties (and methods of establishing breach) for particular situations in response to a perceived need to provide greater protection, the point is that the discussion remains oriented around duties: whether there was a breach of duty in producing the product with the danger given the state of science and technology1169.
In the general literature1170, a number of descriptions of Entwicklungsrisiko (development risks) have been advanced. As Kühn-Gerhard observes, some orient the issue around the damage that results1171. Thus Hager speaks of development risks where a product causes damage from a danger which was not recognisable according the state of science and technology at the time
1167 See F. Kühn-Gerhard, Eine ökonomische Betrachtung des zivilrechtlichen Haftungsproblems 'Entwicklungsrisiko' (Springer, 1999) 27 1168 Taschner and Frietsch, Produkthaftungsgesetz Einf./55-6 1169 Kühn-Gerhard, Entwicklungsrisiko 30 1170 Ibid. 27 1171 Ibid. 27 190 of marketing1172. Kühn-Gerhard argues that a focus on damage can tends to confine the concept of development risks. One can agree with that observation because plainly a product can have risks which are properly classified as development risks prior to them crystallising into damage.
Other thinkers have spoken of the issue arising in relation to problems with the design of or information accompanying a product where the problem could not have been discovered on the state of science and technology at the time1173. Thus the encapsulation of the phenomenon is already suggestive of categorisation of product defects.
Another concept that appears in both learned writings and the case-law1174 is that of an Entwicklungsfehler (development defect). Taschner and Frietsch1175 use this term synonymously with development risks. For them, the discussion concerning liability for development risks is a legal/political question of whether a manufacturer should be liable for unforeseeable risks (to be contrasted with design defects where a producer is liable for foreseeable risks). Thus they distinguish between (i) the product with dangerous properties which could not be detected using any scientific or technical method available at the time, which only becomes detectable later due to a technological advancement (the case of a Development Defect) and (ii) the product with dangerous properties which could be detected using scientific or technical methods available at the time, but was not because those methods were e.g. economically unreasonable or posed real practical difficulties so as to make them unacceptable (e.g. only detectable with destructive testing on each product). This second case is said not to be one of development defect at all, but of non-culpable manufacturing, design, or instruction defect. Taschner and Frietsch contend that in general an allegation of breach of the duties imposed under §823(1) will not succeed in that second scenario.
Kühn-Gerhard has depreciated the term Entwicklungsfehler for development risks because the ‘defect’ element has the tendency to lead to confusion with the contractual conception of defect, because the term overlaps with design defects, and because it tends to neglect the risk
1172 G. Hager, 'Deutschland: Fehlerbegriff, Entwicklungsrisiko und Produktbeobachtungspflicht bei der Produkthaftung' (1991) 1/91 PHI 2, 5ff; I. Schwenzer, 'Rückruf- und Warnpflichten des Warenherstelles' (1987) 22 JZ 1059., 1061 1173 G. Brüggemeier, 'Produkthaftung und Produktsicherheit' (1988) 152 ZHR 511, 516 1174 See e.g. Airbag §28 1175 Taschner and Frietsch, Produkthaftungsgesetz Einf./95-97 191 element1176. One can perhaps have sympathy with those points of terminology. It is apparent in the literature that the term Entwicklungsfehler is sometimes used synonymously with design defects, not only in the sense of the second type of case identified by Taschner and Frietsch, but also in the case of culpable design1177. One can therefore agree that the term Entwicklungsrisiko (development risks) is preferable and the distinction between the two types of case is a helpful way of illuminating the concept properly so called.
Another term that is used is that of Entwicklungsgefahr (development danger). This looks at the problem from the perspective of a product having been viewed as safe on the basis of state of knowledge up to a point in time when it then unexpectedly causes damage, thus focusing on the limits of human understanding of a problem. One downside of this notion, is that it loses the sense of risk by failing to encapsulate the potential for danger.
Finally, the term Entwicklungslücke (development gaps) appears in the writing. According to Taschner and Frietsch1178, this term is applicable where a danger or defect is known or knowable, but on the state of science and technology, the danger or defect cannot be avoided. They argue that such cases are not truly development risks issues and concern the safety expectation of a product, and in particular the sufficiency of the information and instructions for is use concerning residual risks. They contend that where a product fails to offer sufficient safety due to a development gap, it should not be placed on the market.
6.4.3.3 Application in the Courts
6.4.3.3.1 The Influence of §823(1) BGB and Categorisation
It is not only the Drucksache that drew a connection between §1(2)(5) ProdHaftG and the approach under general tort law. The first cases that came before the Courts under that provision did likewise, taking a step back from the wording of the provision.
In both Sparkling Water Bottle II and Airbag, the starting point for the BGH was to equate the exclusion from liability of development risks under §823(1) BGB with the DRD. Thus in Airbag
1176 Krause, Soergel-Kom 27-28 1177 See e.g. Jenke, Haftung für fehlerhafte Arzneimittel, 49 1178 Taschner and Frietsch, Produkthaftungsgesetz Einf./97 192 the Court started by examining tortious product liability law, noting that no liability arose for development risks because it does not involve the manufacturer breaching its objective duty1179. Objective wrongfulness is required under §823(1) BGB and is missing where the defect is not recognisable at the time the product is put into circulation on the then state of science and technology. From there, the Court held that this was also the case under the ProdHaftG because of §1(2)(5)1180.
From that starting point, it was perhaps inevitable that the strict categorisation of defects would enter the analysis of the DRD. What is notable from the two leading BGH decisions is the central role that the categorisation of defect has on the application of the DRD.
Sparkling Water Bottle II concerned the discoverability of a defect in the form of a hairline crack in a bottle of carbonated water that rendered the bottle liable to explode. That was a manufacturing error because it was not how the bottle was intended to be. The bottle had ‘got away’ – was an Ausreißer – despite suitable prevention measures being employed. The BGH held1181 that Ausreißer production defects do not constitute undiscoverable defects on the current state of science and technology simply because they cannot be avoided by suitable precautions1182. The judgment therefore laid down a bright-line rule that the DRD had no application to manufacturing defects and this has been followed since1183. Whilst Sparkling Water Bottle II referred to the DRD being applicable to design defect cases, it had not mentioned warning cases. This issue was subsequently clarified in Airbag. There, the BGH was concerned with the driver’s side airbags on a BMW which had triggered incorrectly resulting in injury to the driver. The BGH categorised the case as one involving design and informational defects. The Court reasoned that the DRD was just as applicable in cases of warning defects as it was with the design defects1184.
1179 Airbag §27; Chicken Pest and Wood Lacquer (Urteil vom 11.6.1996 VI ZR 202/95) NJW 1996, 2507 (BGH); also Wagner, Münchener-Kom §823/626 1180 Airbag §27, referencing Sparkling Water Bottle II; Drucksache-11/2447 p15; Kullmann, ProdHaftG-Kom §1/68; Wagner, Münchener-Kom ProdHaftG§1/49; Oechsler, Staudinger-Kom ProdHaftG§1/118; Taschner and Frietsch, Produkthaftungsgesetz ProdHaftG§1/106 1181 Sparkling Water Bottle II §1(bb) 1182 fn 1065 above. 1183 Silage (Urteil vom 2.11.2016 21 U 14/16) (OLG Hamm) and Metal-on-Metal Hips §189 1184 Airbag §27; Wagner, Münchener-Kom ProdHaftG§1/52; Oechsler, Staudinger-Kom ProdHaftG§1/119. See also Sprau, Palandt-Kom ProdHaftG§1/21 193
The Commission’s Fourth Report noted that other EU courts (in the UK and Netherlands) had disagreed with this interpretation of the BGH1185. Certainly, academic discussion has been split as to whether it is correct to limit the DRD to cases of non-manufacturing defects1186.
Whilst the BGH stated in terms that article 7(e) did not apply to manufacturing defects1187, when considering this case in England, Burton J did not see that categorisation as critical. What mattered was that the undiscoverable crack in the bottle made it an Ausreißer, or as Burton J called it “a rogue product or non-standard product”. He thought the BGH had been working on the assumption that non-standard products are always manufacturing defects. For him, “[w]hat the BGH was primarily saying is that if the risks are known, unavoidability of the defect in the particular product is no answer.”1188 This analysis is supported by the concept of an Ausreißer having arisen in general tort cases to deal with where an “unplanned divergence from the Sollbeschaffenheit (the requisite composition of the product)”1189 arose during the manufacturing process, which was not discovered before the product was put into circulation.
Whilst traditional tort law has thus had a significant influence over the application of the DRD, in more recent times, German courts have emphasised the place of §1(2)(5) ProdHaftG within the wider PLD regime. Thus in Electricity, the BGH applied the principle that the defences in article 7 of the PLD, where the producer can exempt himself from liability, “must be interpreted strictly in the interests of those harmed by a defective product”1190.
6.4.3.3.2 Relationship with Defect
German commentators make the point that the application of the DRD needs to be seen in the context that the product will have been found defective under §3 ProdHaftG on the basis of the level of entitled expectation as to safety at the historical point in time when the product was put into circulation1191. Further, in contrast to establishing defect, the burden of proving
1185 European Commission, Fourth Report on the Application of PLD COM(2011)547 (2011), 8; Lenz, Produkthaftung, 181 1186 Oechsler § 1/118 and U. Foerste, 'Produkthaftung für explodierende Mineralwasserflaschen' JZ 1063 (who argues the sources relied upon by the BGH did not support the conclusion) Stapleton (1999), 383 (arguing the court merely asserted the outcome); cf Wagner, § 1/56ff 1187 And this is how the decision has been understood: European Commission, Green Paper Liability for Defective Products COM(1999)396 (1999) at 23 1188 A v NBA §53(iii) 1189 Schuster (2009) 432; Infusion Liquid (Urteil vom 3.11.1981 VI ZR 119/80) NJW 1982 699 (BGH) 1190 Electricity §§19, 21; Veedfald and OB (No 1); see also Silage 1191 Wagner, Münchener-Kom ProdHaftG§1/55; Oechsler, Staudinger-Kom ProdHaftG§1/121 194 the DRD is on the producer: §1(4) ProdHaftG. The BGH has confirmed that this is similar to the position under general tort law when a ‘development defect’ needs to be established1192.
6.4.3.3.3 The Relevant Time
The time at which the state of scientific and technical knowledge is assessed for the purposes of the DRD is the time when the product was put into circulation. It has been noted that the product for these purposes is that which caused the damage to the claimant (sometimes referred to as ‘the index product’). This can be of importance where a product type is manufactured, unchanged, over a considerable period of time during which developments in science and technology take place. In Germany it is recognised that the relevant time for the assessment is not the time when the producer placed the first product in the series into circulation, rather it is when that occurred with the index product1193. It follows that, in respect of a production series, as soon as the time is reached where the existence of the defect becomes discoverable, products placed into circulation from that point on will not be able to rely on the DRD.
This principle is in evidence in Metal-on-Metal Hips1194. There, the two implants in question were put into circulation in 2005 and 2006 respectively, whereas the production series had started producing implants in 2003. The Court held that the relevant state of knowledge was that in 2005 and 2006 rather than 20031195.
6.4.3.3.4 Knowledge
The discoverability of the defect must be assessed by reference to the state of science and technology at the time the product was put into circulation. This can be considered in sub- divided form as follows.
1192 Airbag §28 1193 Kullmann, ProdHaftG-Kom §1/66, §3/34; Wagner, Münchener-Kom ProdHaftG§1/24ff; Oechsler, Staudinger-Kom ProdHaftG§1/117, §3/51 1194 Metal-on-Metal Hips §186 1195 Ibid. §§184, 186 195
Scientific and Technical Knowledge
The distinction between scientific and technical knowledge has not featured substantively in the case-law. In the literature, it has been said that scientific knowledge constitutes theoretical findings on product safety, and technical knowledge the practical findings1196 and for some commentators, meaning can be ascribed by reference to other statutory provisions1197.
The State of Science and Technology
The meaning ascribed to the ‘state’ of science and technology is obviously one of some importance for the operation of the DRD. When §1(2)(5) was enacted, the Drucksache sought to clarify that the requisite state of science and technology was the “epitome (Inbegriff) of the expertise that exists in the scientific and technical field, i.e. the sum of knowledge and technology that is generally (allgemein) recognised and generally available”1198. Whilst it was always clear that the state of knowledge was not to be equated with the producer’s subjective knowledge, that explanation was problematic in that it appeared to equate the pinnacle of expertise with a lower standard governed by recognition and availability. Soon, however, the domestic jurisprudence was overtaken by the judgement of the CJEU in Commission v UK and German courts have embraced and followed that ruling since1199, albeit with one refinement.
There are two key features of note. First, the state of knowledge in question is knowledge at the most advanced level. It is not necessary for a particular technology or piece of knowledge to be practiced or generally recognised. All research is included, even if not accepted and if forming an isolated or dissenting opinion1200. New scientific findings are often the work of those with minority opinions, and if not included a manufacturer could be exonerated until they were accepted generally1201. Further, there are no geographical limits to the information that forms part of the state of knowledge. In this connection, German commentators have referred to the “objective transnational state of science and technology”1202. The standard is
1196 Oechsler, Staudinger-Kom ProdHaftG§1/124; Taschner and Frietsch, Produkthaftungsgesetz art7/43 1197 Lenz, Produkthaftung, 237 (§3(6) BImSchG) 1198 Drucksache-11/2447, 15 1199 Airbag §28; Wagner, Münchener-Kom ProdHaftG§1/58; Kullmann, ProdHaftG-Kom §1/68 1200 Metal-on-Metal Hips §190; Kullmann, ProdHaftG-Kom ProdHaftG§1/68; Wagner, Münchener-Kom ProdHaftG§1/59-60; Oechsler, Staudinger-Kom ProdHaftG§1/128 1201 Metal-on-Metal Hips §190 1202 Taschner and Frietsch, Produkthaftungsgesetz §1/103 196 therefore independent of the subjective knowledge of the manufacturer, or his ability to grasp such knowledge1203.
The one refinement to the approach of the CJEU is that in Germany it is often said that an individual or minority opinion should only form part of the state of knowledge where there is an underlying basis for it, viz they should be theoretically plausible and scientifically comprehensible, or as some say (more strongly) based on serious empirical evidence such as testing1204. It is argued1205 that this refinement is necessary because in respect of emerging risks, there is usually at least one expert who points to possible dangers without verifying them, and if this were enough the DRD would be of little practical effect. It is, however, not universally accepted and others argue that once the view is expressed the onus to test it is on the producer1206.
Secondly, and by way of limiting factor, the knowledge must be accessible. This requirement, imposed by the CJEU in Commission v UK has been thought by German commentators to reflect the obligations imposed by §823(1) BGB1207. However, lest there was doubt, the BGH made clear in both Airbag and Undersink Water Heater that what is relevant is objectively accessible knowledge concerning the risk, not the subjective question whether it was possible for the individual manufacturer to gain that knowledge1208. That objectively accessible knowledge extends beyond the material in the producer’s own country, but there must be a “minimum level of publicity”1209 so that is generally available and capable of being considered by an “ideal manufacturer” 1210.
1203 Drucksache-11/2447 p15-16 1204 Wagner, Münchener-Kom ProdHaftG§1/60 1205 Looschelders (2016) 157 1206 Oechsler, Staudinger-Kom ProdHaftG§1/128 1207 Kullmann, ProdHaftG-Kom ProdHaftG§1/69 1208 Airbag §28, inter alia referencing Commission v UK; Drucksache-11/2447 p15; Wagner, Münchener-Kom ProdHaftG Einl/15 §1/53; Oechsler, Staudinger-Kom ProdHaftG§1/126; Kullmann, ProdHaftG-Kom §1/67; Taschner and Frietsch, Produkthaftungsgesetz §1/104; Undersink Water Heater §9 and Metal-on-Metal Hips §189 1209 Wagner, Münchener-Kom ProdHaftG§1/59; Taschner and Frietsch, Produkthaftungsgesetz §1/102.; Kullmann, ProdHaftG-Kom, §1/69; Oechsler, Staudinger-Kom ProdHaftG§1/127 1210 Carpet (Urteil vom 30.1.1995 23 O 634/93) NJW-RR 1996, 501 (KG Berlin). As is pointed out in Kullmann, ProdHaftG-Kom ProdHaftG§1/69, this case wrongly placed the burden of proving publicity on the claimant. 197
6.4.3.3.5 Characterisation of the ‘defect’ to be discovered
An important issue concerning the application of the DRD is how the courts characterise the ‘defect’ that must be undiscoverable. The German courts have now adopted a consistent line since 19951211.
In Sparkling Water Bottle II, the BGH held that the DRD applied only when the “potential dangerousness of the product”1212 was undiscoverable. Thus the characterisation was not that the specific defect in the index product must be discoverable, but rather the underlying risk associated with the chosen concept of production1213. In that case, the DRD had no place because the potential danger posed by hairline cracks in recyclable glass bottles filled with carbonated liquids had long been recognised.
The same approach was taken in Airbag, where the BGH held that both under §1(2)(5) and under general tort law, it was the potential dangerousness of the product that needed to be discoverable. The Court explained: “the potential dangerousness of the product is not the specific defect of the product which caused the damage, but the underlying general risk of defectiveness associated with the chosen design”1214. There the manufacturer knew at the time the index vehicle was put into circulation that there was a risk of accidental deployment of airbags in cars fitted with electronic sensors, but it argued that the defect in the particular car was unknowable because it had installed modified software after a previous recall and had no reason to think this had not solved the problem. The BGH disagreed and held that the lower court had erred by assessing the discoverability of the concrete defect in the particular product: it was enough for the defence to be lost that the underlying general risk of danger was known to the defendant1215.
The BGH in Undersink Water Heater repeated the same point of principle1216. There, the defect identified by the lower court was the risk of a device explosion due to an insufficient fill level. The fact that this was not discovered either during a safety inspection to obtain the kite-mark or during random quality control did not mean that the potential underlying danger was not
1211 Lenz, Produkthaftung, 236-7; Kullmann, ProdHaftG-Kom §1/65 1212 Sparkling Water Bottle II §1(b)(bb): “die potentielle Gefährlichkeit des Produkts” 1213 Looschelders (2016), 152-3 1214 Airbag §28, referencing inter alia Oechsler, Staudinger-Kom ProdHaftG§1/120 1215 Airbag §31 1216 Undersink Water Heater §9 198 discoverable at the time the product was put into circulation and on the level of objective accessible hazard knowledge1217.
As we have seen, in Boston, ‘defect’ was conceptualised in terms of risk, and this is similar to how the BGH has conceptualised that term for the purposes of the DRD. When Boston returned from the CJEU, in Pacemaker II, the BGH held that the DRD did not apply because the defendant had not established that defect in those terms (the risk the hermetic seal might disintegrate) was not discoverable1218.
This approach has also been consistently applied in cases involving other medical devices. In Varicon Hip, the KG Berlin was concerned with a modular hip implant system which was found to have an increased probability of corrosion which could lead to hip failures. The manufacturer argued that the increased failure rate was not discoverable when the product was put into circulation. The Court disagreed. What mattered for the DRD was the discoverability (there, knowledge) of a “higher corrosion risk”. Once that was known, the DRD could not apply. Any remaining ambiguity or uncertainties could and should have been clarified by the defendant through clinical studies which the defendant had omitted to carry out1219.
Similarly in Metal-on-Metal Hips, the LG Freiburg repeated the statement of principle concerning the characterisation of ‘defect’ in the BGH cases1220 and applied it to large head metal-on-metal hips which suffered from higher rates of metal wear leading to implant failure. On the facts, the defendant knew (or it was at least knowable) that there was a risk of abrasion and corrosion at the bearing surfaces and at the head/stem junction, that the larger head size and nature of the head/stem connection influenced wear rates, and that metal ions and metal debris had the potential to have negative health effects1221. Thus the general risk of harm was known.
Further, it was insufficient (following Airbag) for the manufacturer to argue that it had made improvements to an existing system and therefore the defect in the hips was unknowable.
1217 Ibid. §10 1218 Pacemaker II §15 1219 Varicon-Hip §29 1220 Metal-on-Metal Hips §188 1221 Ibid. §§193-4 199
Applying Varicon Hip, the Court held that once the general risk of harm was known, any remaining ambiguities or uncertainties could and should be clarified through clinical trials and a defendant who refrains from such studies in the knowledge of uncertainty is not exonerated by the DRD. On the facts, there was no reason why certain studies carried out after 2005 could not have been done before the product was put into circulation. Further, it did not matter that the expert evidence showed such clinical trials were not generally carried out prior to the market introduction of hip implants.1222 Nor did the grant of a CE mark give rise to a DRD1223. The mere fact that the possibility of abrasion was not discovered during the safety review did not mean that the potential hazard of the product could not have been identified on the basis of objectively available knowledge at the relevant time.
In conclusion, the court found that the large head metal-on-metal implants were a novel design which needed strict testing. The experts identified testing that could have been done at the time, but which was not done.1224 As the general risk of harm was known, no DRD was available.
This approach to defect under the DRD has led to the Courts accepting that where safety risks arise from a particular design or method of production and these were recognised, but the state of science and technology at the relevant time did not enable those risks to be avoided, or fully avoided (Entwicklungslücken, developmental holes) then the DRD is of no application and a producer can only escape liability by establishing the product was not defective1225. Similarly, the DRD will not apply where the defect in the index product is not discovered either because state of the art quality control methods rely on sampling and therefore cannot detect every defect, or even where there is no method of quality control in place at all1226. In each case, the underlying risk was known or knowable.
1222 Ibid. §196 1223 Ibid. §197 1224 Ibid. §198 1225 Kullmann, ProdHaftG-Kom §1/64; Oechsler, Staudinger-Kom ProdHaftG§1/123; Taschner and Frietsch, Produkthaftungsgesetz §1/100; Foerste 1226 Kullmann, ProdHaftG-Kom ProdHaftG§1/65, referencing Blackcurrant Cake (Urteil vom 16.2.1995 1 U 31/94) NJW 1995, 2498 (OLG Frankfurt) and Mineral Water Bottle (Urteil vom 21/3/1994 32 U 94/93) (OLG Hamm) 200
6.4.3.3.6 Discoverability
The final part of the analysis is to consider whether the general risk of harm was discoverable. The Drucksache highlighted that the issue is discoverability and it did not matter that the defect had not been discovered if it was discoverable.1227 This is plain on the formulation of the defence: “nicht erkannt werden konnte”.
The analysis under this heading in the German jurisprudence has addressed two points: (i) whether the assessment looks at discoverability from the point of view of the particular producer (subjective discoverability) or whether the standard is objective; and (ii) the standard of discoverability that falls to be applied: is it reasonable discoverability or a higher standard?
On the first question ahead of the German implementing measure, the original Referentenentwurf spoke of excluding liability only where the potential danger was discoverable “by nobody (niemand)”1228. That was, however, dropped by the time the ProdHaftG came to be enacted. Nonetheless, it soon became clear that the approach was an objective one. In Airbag, the BGH held that the lower court had erred because it determined the application of the DRD by reference to whether subjectively the particular producer was able to discover the defect1229. Rather, discoverability fell to be assessed objectively1230. Where a defect is discoverable by that standard, it matters not that a particular producer has not discovered it, or could not discovered it because of his subjective limitations.1231
In the commentary, the standard of discoverability has been recognised as a political issue1232. Some have taken a strict view, arguing that it is only if a danger could not be objectively recognised because the state of science and technology offered no possibility of discovering it that liability is excluded1233. Others have viewed it as depending on the nature of the danger – the greater the danger, the more is to be expected of the manufacturer1234, thus drawing
1227 Drucksache-11/2447, 15 1228 Taschner and Frietsch, Produkthaftungsgesetz §1/104; Kullmann, ProdHaftG-Kom §1/64, 67 1229 Airbag §30 1230 Ibid. §28; Oechsler, Staudinger-Kom ProdHaftG Einl/33, 44 §1/122, 125; Wagner, Münchener-Kom ProdHaftG Einl./15 1231 Kullmann, ProdHaftG-Kom §1/64; see also Blackcurrant Cake 1232 Wagner, Münchener-Kom ProdHaftG§1/58 1233 Taschner and Frietsch, Produkthaftungsgesetz §1/102 1234 Oechsler, Staudinger-Kom ProdHaftG§1/122 201 parallels with the standard of negligence required under §276(1) S.1 BGB. Others, however, argue the standard is not quite the same because failing to comply with a duty of care under general tort law merely makes behaviour unlawful. For negligence to be ascribed, the person in question must also have been aware of the breach of duty. It is an objectively assessed fault- based standard that is introduced1235.
The Drucksache addresses this issue in terms of the duty of a manufacturer to observe and draw conclusions from trials of the product as well as any further development of science and technology during the manufacturing process1236 and this was referred to by the BGH when it addressed the question in Airbag. There the BGH said: “the standard imposed under tortious product liability for the objectively assessed discoverability of the defect, and therefore for objective breach of duty does not differ from the standard imposed by §1(2)(5) ProdHaftG”1237. The burden in each case was on the manufacturer: to prove a development defect (in tort law) or the applicability of the DRD (under the ProdHaftG)1238.
When this has been applied, the courts have held that the more serious the dangers that are highlighted by minority views, the more the manufacturer is required to pursue these views before it can be said that the defect was not discoverable. The position is a fortiori when applied to a product breaking new ground1239.
6.4.3.4 Conclusion
How German law deals with development risks is of real importance in the context of the many ‘emerging risks’ now presented by new technology1240. Whilst most commentators, and the Courts, have equated the standard of discoverability to one of objectively assessed reasonable discoverability, there are other aspects of the implementation which indicate that the escape-route for producers is actually rather more narrow. First, German courts have broadly embraced that CJEU jurisprudence that it is knowledge at the highest accessible level that falls to be taken into account. Even more importantly, however, is the way the courts have
1235 Kullmann, ProdHaftG-Kom §1/70; 1236 Drucksache-11/2447 p15-16 1237 Airbag §28 1238 Ibid. §29 1239 Metal-on-Metal Hips §190 1240 Looschelders (2016), 146; Machnikowski (ed), European Product Liability: An Analysis of the State of the Art in the Era of New Technologies, 3-8 202 conceptualised defect. By (correctly in my view) regarding it as the generalised potential for harm, as – I would add – did the CJEU when looking at defect question in Boston, what needs to be discovered is that underlying risk rather than the minutiae of the circumstances applying to the index product or product series. Further, although objectively assessed reasonableness applies to discoverability, the courts adjust that standard based on the potential danger in question and where novel products are developed, imposing in reality quite a strict standard.
6.5 The AMG as applied in the Courts
Under §84(1) S.2 AMG, there are two ways in which a pharmaceutical undertaking can be liable for harm resulting from the administration of a relevant medical product. In the literature these two bases have been described as the ‘Fehlerbegriff’ (defect concept)1241 operating under the AMG. In this section the operation of these provisions is examined, including how it deals with the issue of development risks.
6.5.1 Route 1: harmful effects in excess of that which is acceptable
The first way liability can be imposed is under §84(1) S.2 No 1. There are two elements. Liability is imposed where (i) there were harmful effects that occurred when the product was used as intended; and (ii) the effects were in excess of what is considered acceptable in light of medical knowledge.
The law relating to the first element need not be set out. The harmful effects must have occurred when the product was used as intended. The second requirement1242 is that the harmful effects must be in excess of what is considered acceptable in light of medical knowledge. This involves the Court carrying out an assessment of the therapeutic benefits of the product (its efficacy) set against the harmful effects in order to determine whether that ratio is “acceptable”1243. The likelihood, nature and durability of the benefits as well as the type, seriousness, intensity, durability and reversibility of any harmful (side) effects all go into the mix, as does the presence of less harmful alternatives. Where a medicine has multiple indications for use, the risk/benefit balance is limited to that particular indication.
1241 See Wandt and Geiger (2004); P. Geiger, Deutsche Arzneimittelhaftung und EG-Produkthaftung: Die deutsche verschuldensunabhängige Arzneimittelhaftung aus europäischer Perspektive (Duncker & Humblot, 2006) 1242 Geiger, Deutsche Arzneimittelhaftung 80ff 1243 For details see Jenke, Haftung für fehlerhafte Arzneimittel, 52-55 203
What constitutes medical knowledge is not defined1244. Judges can of course rely on those medical findings which are known and accepted as correct by the majority of scientists engaged in teaching, research and practice, but what about minority views or new opinions in a developing field? Whilst there is no definitive view in the jurisprudence, the prevailing opinion is that the language of §84 AMG does not limit a judge to accepted scientific findings; rather minority opinions and new views can also constitute medical knowledge in the same way as we have seen above1245.
6.5.2 Route 2: damage due to labelling/information which does not reflect medical knowledge
The second route to liability is where the damage has occurred as a result of information accompanying the medicine and that information does not reflect medical knowledge1246.
The information in question is limited to that obliged to be included under §§10-11a AMG. Problems can be that the information does not meet the formal requirements of the AMG or that qualitatively the information does not reflect medical knowledge. There must be a causal connection between the damage and problem with the information. The precise detail of that jurisprudence is complex and not necessary for current purposes1247.
6.5.3 Development Risks
Is liability is imposed under §84 AMG in respect of development risks?
Under route 1, the question is whether liability is imposed for ‘harmful effects’ which were not detectable on the state of science and technology at the time when the medicine was put into circulation, but have become so since. The key to unlocking the answer to this question is whether the risk/benefit acceptability assessment is when the product is put into circulation, when the relevant risk was not known, or is it to be performed at a later date, when there is an appreciation of the risk1248.
1244 See discussion in Geiger, Deutsche Arzneimittelhaftung, 92ff 1245 Ibid. 100; Jenke, Haftung für fehlerhafte Arzneimittel, 56 1246 See Jenke, Haftung für fehlerhafte Arzneimittel 62ff 1247 Summarised in ibid. 67ff 1248 See the detailed discussion in Geiger, Deutsche Arzneimittelhaftung, 95ff 204
Some have argued that the consumer-protection purpose behind §84 AMG justifies the assessment taking place entirely in the present, when the judicial decision falls to be made1249. Others have argued that this would impede the development of new medicines1250. The prevailing view1251, however, is more nuanced. Whilst the notional moment in time when the acceptability of the harmful effects is judged is that when the product was put into circulation, the recognisability of those harmful effects, and the nature of those effects, is judged on the basis of the state of medical knowledge at the time of the judicial determination.
One can think of this as loading a metaphorical pair of weighing scales in order to measure the acceptability of the harmful effects. Those scales are located at the point in time when the product was put into circulation. However, all the features of the risk of harm as are understood by medical knowledge at the time of the judicial proceedings can be placed on the scales.
Thus one can conclude, as do the leading commentators1252, that route 1 does impose liability for development risks. The thalidomide situation, were it to be repeated, would attract compensation1253. As Kullman explains, the situation is that pharmaceutical undertakings are liable for development risks which are undiscoverable on the state of science and technology whereas the producers of all other products may seek to rely on the DRD within the ProdHaftG.
Under route 2, the position is different. The key question here is whether the standard of the information accompanying the medicine needs to reflect current medical knowledge or the state of medical knowledge at the time the product was put into circulation? Here, the prevailing view is the latter1254. In this way, liability under this head is more like tort liability. Where
1249 As recounted in Jenke, Haftung für fehlerhafte Arzneimittel, 58 1250 E.g. H. Weitnauer, 'Die Produkthaftung für Arzneimittel' (1978) 40 Pharmazeutische Industrie 425 1251 Deutscher Bundestag, Zweite Beschlußempfehlung und Schlußbericht Drucksache 12/8591 (1994), 170 §2.6.1.1.2.1; Jenke, Haftung für fehlerhafte Arzneimittel, 59; Geiger, Deutsche Arzneimittelhaftung, 100 1252 See inter alia Geiger, Deutsche Arzneimittelhaftung, 100; Jenke, Haftung für fehlerhafte Arzneimittel, 49; E. Deutsch and D. Lippert (eds), Kommentar zum Arzneimitelgesetz (Springer, 2007) §84/12; Kullmann (1994) 217- 8 1253 Looschelders (2016) 158 1254 Geiger, Deutsche Arzneimittelhaftung, 134; Deutsch and Lippert (eds), Kommentar zum Arzneimitelgesetz §84/17; Rehmann, AMG-Kom §84/6; Jenke, Haftung für fehlerhafte Arzneimittel, 66 205 information, warnings concerning use or side-effects etc are judged necessary based on the knowledge at the time the product is put into circulation, then liability is established.
6.5.4 Conclusions
The AMG was described as the “first unequivocal case of a no-fault enterprise liability”1255. On its face, there is no fault requirement and instead liability is imposed on risk/benefit analysis or by inadequate labelling/instructions. The practical effect of this regime is, however, more limited because where the risk/benefit profile of a medicinal product is unfavourable, that amounts to grounds for the regulatory authorities to refuse marketing authorisation for the product before it goes to market1256. Thus in practical terms advancements in the knowledge about the risks or benefits of the product is a necessary precursor to liability being established under the AMG1257.
The standard of liability, particularly under route 1, has parallels with the defect enquiry under the ProdHaftG as understood in German law because both involve considerations of preventative measures and ultimately risk/benefit considerations. Amongst other distinctions between the regimes1258 no DRD is available in respect of liability under route 1 AMG.
1255 Simitis, The West-German Approach 114 1256 AMG §25(2) No. 5; see also Hepatitis B Vaccination (Urteil vom 18.6.2003 3 U 99/02) NJW-RR 2003, 1382 (OLG Hamm). 1257 By way of example of the practical effect, almost no claims have ever been brought under §84 AMG in respect of vaccines: see E. Rajneri and others, 'Remedies for Damage Caused by Vaccines: A Comparative Study of Four European Legal Systems' (2018) 26 European Review of Private Law 57. 1258 Oechsler, Staudinger-Kom ProdHaftG§15/1 206
7 Analysis and Conclusions
7.1 Introduction
In light of the legal position set out in Chapters 5 and 6 above, it is now possible to compare the implementation of the PLD in both England and Germany, and draw some conclusions concerning the harmonising norms.
In this chapter, I start by offering some general comparative remarks concerning the reception of the PLD in both jurisdictions, how uncertainty in the European norm has been tackled, and the implications for harmonisation agenda. I shall argue that the Commission’s current proposal to produce soft-law guidance, provided it grapples with the controversial issues and has a firm authoritative legal basis, is to be welcomed as a possible solution to uncertainties in the PLD and divergences in national implementations.
Thereafter, I shall consider points of similarity and difference in the way the two jurisdictions treat (i) the assessment of defectiveness, and (ii) the question of whether the DRD applies. I will seek to show that whilst there are real distinctions of method and analysis, there is often a common notion to which the jurisdictions are responding, or that in substance the outcome is similar. A good example is perhaps the approach to discoverability under the DRD. Whilst in Germany this is approached through an analysis of the duty on the manufacturer and what is objectively reasonable for him to achieve, the level of strictness imposed is in substance similar to that achieved in England where questions of the manufacturer’s conduct and reasonableness are ruled out of account.
One point of substantive difference is how the two systems approach the characterisation of the defect for the purpose of the DRD. Whilst the position in Germany is well settled that it is the underlying risk presented by the product that must be discoverable, and this seems to chime with principles outlined by the CJEU in Boston Scientific, in England the jurisprudence appears to be swimming against that tide. There, the courts have recently rejected the previous approach of identifying a ‘harmful characteristic’ and instead included within the conception of defect (which therefore determines what must be discoverable) the critical combination of circumstances that rendered the safety below that which persons were entitled to expect.
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In light of these comparisons, I proceed to outline my view of scope of the harmonising EU norms, and in particular the DRD. I argue that there is no proper basis to temper discoverability with notions of reasonableness, and that the German approach to conceptualising what must be discoverable is correct.
Finally, I make some more general comparative remarks concerning the strictness of liability imposed by the PLD.
7.2 Reception of the PLD into National Law
Many of the detailed differences in approach in Germany and in England have their origins in assumptions made upon the PLD’s reception in the relevant country, and the responses of each jurisdiction to resolving uncertainty in the directive’s normative content. Whereas in Germany, the prevailing view was that the PLD for the most part imposed liability in accordance with the status quo as had been developed in general tort law, in England the directive was seen as a new and distinct European cause of action which required a ‘clean start’ and a separate analysis from negligence (A v NBA, Abouzaid).
In both countries, the initial impact of the implemented PLD was limited, but for different reasons. In Germany, the equation with existing tort law, and the exclusion of the ability to claim non-pecuniary damages until 20021259, limited the ProdHaftG’s attraction, whereas in England, it took time for litigants and practitioners to overcome a wariness of a novel regime with uncertain concepts in a litigation environment with heavy cost penalties for failure.
When the courts did grapple with the PLD’s system of liability, in England the initial tendency was to look to the European norm (e.g. in A v NBA) and seek to overcome uncertainty in the regime by building a structure for analysis by reference to the purposes of the directive. In more recent times, however, at least in the context of ascertaining defectiveness, the Courts have dismantled those principles, stressing the need for the regime to be ultra-flexible so as to apply to all products (Wilkes, Gee). This has led to an enhanced role for judicial discretion in terms of the factors that may be considered and their weight. Uncertainty in the underlying EU norms, coupled with the court taking a narrow construction to CJEU jurisprudence1260
1259 2. SchadÄndG 1260 If it is considered at all, cf Wilkes. 208
(Gee) – viz one which does not seek out the underlying principles - has allowed this process to happen, moving the assessment of defectiveness (at least) closer to a negligence assessment. In addition, the Courts have approached the characterisation of defect in a given case in a technical way going beyond identifying simply the risk of harm that is posed and including the combination of circumstances that are said to elevate the risk of harm so as to pass the threshold set by s3 CPA.
The picture in Germany has been seen to be different. Uncertainty was reduced by the new tort being equated to the duties imposed on producers which had been developed in the context of fault-based tort rules. This was done at the outset by the Drucksache and soon came to be endorsed in the commentaries and the BGH. Whilst over time the duties imposed within the fault-based jurisprudence had become stricter, particularly in manufacturing defect cases, and developments with a reversed burden of proof assisted claimants to establish their claims, the liability was still fundamentally and theoretically based on objective culpability. The increased strictness of the liability allowed its equation with the new ProdHaftG despite the PLD’s mantra of liability without fault. Inevitably, the rigid categorisation of defects, and the analysis in terms of manufacturer duties, was carried over to the ProdHaftG. But the ebb of the tide in Germany appears to run opposite to that in England. In more recent times, the German jurisprudence has exhibited an increased sensitivity to the idea that the PLD’s norms have autonomous meanings and has sought guidance from the CJEU. Accordingly, German courts have started to apply the concept of defect as risk on the basis of Boston (Varicon Hip, Metal-on-Metal Hips); however, the analysis remains dominated by questions about compliance with manufacturer duties.
7.3 Uncertainty and Harmonisation
This experience of the reception of the PLD in both England and Germany underlines that there were uncertainties with some of the core concepts of that legislation. It is perhaps surprising that the PLD ended up this way because the framers recognised that legal certainty was one of the interests of producers that the PLD was intended to further1261. The uncertainty
1261 CoE Report, §5 209 has been recognised by commentators for some time1262. The CJEU identified it in respect of the DRD in 19971263 and more recently in respect of defect in 20151264.
It has been said many times that there is limited guiding case law under the PLD1265. In the Commission’s latest review governing the period 2011-2018, only 4 CJEU decisions were identified1266. In addition, the majority of the established case law of that Court, with notable exceptions, has not dealt with core concepts, but rather the legitimacy of implementing measures taken by the member states. Of course there is much at stake for producers and consumers and each will want the ‘right’ case before urging a domestic court to make a reference to the CJEU. In Germany, the BGH has made more references recently (Boston, Novo Nordisk) but has been less willing in the past (Sparking Water Bottle II). In England, whilst two references were made (in the same case: OB) this concerned ascertaining the precise moment a product entered circulation for the purposes of a procedural question concerning the substitution of a defendant outside the longstop period. The realities of English procedural law make it more difficult for a reference to be made on the more central concepts. Whilst courts at first instance can refer, and identify questions on assumed or agreed facts1267, where one party opposes a reference it can make obtaining the necessary consensus on the factual basis very difficult and there is a general reluctance on the part of the Court to do so until after trial. Further, for an appeal court to be seized of the case and identify a question for a reference, a full and expensive trial will have taken place, and the unsuccessful party (already faced with paying his own costs and (in the absence of qualified one-way costs shifting1268) the other side’s costs) must then decide to double-down and gamble on winning on appeal or face an even higher bill.
In the absence of significant CJEU case law, there has also been very little cross-pollination between the case law of the respective member states. With the exception of A v NBA, it has generally not been done, either in Germany or subsequent English cases (despite, e.g. in Gee,
1262 Howells and Mildred (2002), 105: “not built on any clear principles” and “fashioned by pragmatic compromise rather than principle”; 106 1263 Commission v UK §29 1264 Boston AG§30 1265 Fairgrieve, Howells and Pilgerstorfer (2013) 1266 Commission's Fifth Report 1267 CJEU, Recommendations to National Courts and Tribunals in relation to the Initiation of Preliminary Ruling Proceedings OJ C439/1 (25.11.2016) (2016); Coleman v Attridge Law (Case C-303/06) 1268 Qualified one-way costs shifting or QOCS was introduced for personal injury claims commenced after 1 April 2013: see Civil Procedure Rules 1998 (SI 1998/3132) Part 44 II 210 foreign cases being cited to the judge). Markesinis’ observation about judicial interest appears to be on point here. The hope expressed that a body of case law would emerge to enable clarification of the PLD’s principles has therefore not been realised1269.
Whilst rather trite, legal certainty is rightly identified as necessary within developed legal systems. In the present context too it has a hugely important role to play. Greater certainty surrounding the PLD’s core concepts of defect and development risks allows producers to know the standards against which their products will be judged as well as allowing consumers to know when they have a valid claim. Insurers too can more accurately predict when they will be exposed which in turn will assist with the availability and costing of cover. All of this helps to lower litigation costs by creating an atmosphere in which out of court settlements are more possible, or at least reduce the issues in dispute between the parties.
Furthermore, and importantly in the context of the PLD, uncertainty is the enemy of harmonisation. As we have seen, it was a core policy objective of the PLD, upheld by the CJEU, to harmonise the private law of strict product liability in the member states. There are features of the directive, such as the ability to opt out of the DRD, and the preservation of pre-existing liability regimes, which makes full harmonisation impossible on the current formulation of the PLD; however, this has been unnecessarily exacerbated by the uncertainty surrounding the directive’s core concepts. As shown by this study, where there is a lack of certainty, national courts have to provide certainty in concrete cases. This leads to them looking elsewhere for guidance and ultimately divergences, which then undermine the whole purpose of the PLD. Accordingly, both in terms of providing harmonisation, and proper consumer protection, certainty is essential.
The difficult question facing the EU is how such certainty may be achieved. It seems unlikely that the position regarding the case law of the CJEU or cross-pollination from other member states’ courts will change. Thirty years is long enough to have given that a chance. New techniques are required.
One option would be for the Commission to take legal action through enforcement proceedings as it did in Commission v UK; however, as that case shows, even where there is
1269 Lovells, Product Liability in the European Union - A report for the European Commission (2003) 211 clearly divergent wording in the implementing measure, latitude is granted in the expectation of a compliant future interpretation and there is a limit to which the Court can engage in substantive interpretation in the context of such a challenge. Enforcement action is also more difficult where the implementing norm does not overtly deviate from the directive, although the Court can of course look behind that to how a norm is in fact applied in the member state in question.
Another option is to provide certainty through legislative reform of the directive. This would undoubtedly be required for certain matters, for example if the arguments for abolishing the DRD (or the ability to derogate from it) were to find favour. These would require amendment to the directive itself. Additionally, legislative reform could also spell out, or define in greater detail, how the provisions of the directive are to work. The concern here, however, is that consensus for such reform might politically be difficult to attain.
A more modest goal of providing clarity as to the breadth and scope of the current legislative regime, including particularly the DRD, could alternatively be achieved by guidance and it is this option which has received much contemporary attention. The Commission identified it as a possible option in its Fourth Report1270 but has become more enthusiastic in the Fifth, after recognising the scale of the uncertainty problem1271:
…we need to clarify the legal understanding of certain concepts (such as product, producer, defect, damage and the burden of proof) and look closely at certain products such as pharmaceuticals, which may pose a challenge to the performance of the Directive. … the Commission will consult broadly to reach a common understanding with all stakeholders. The aim is to draw up comprehensive guidance on how to apply the Directive today.
Much will depend upon the status of any guidance that is produced1272. What is unlikely to assist is guidance that is not regarded by the courts of the member states as authoritative. That authority might, of course, be provided by legislative reform of the directive providing a firm legal basis for the guidance. Alternatively, it could be provided by the CJEU recognising it in its interpretation of the directive. Further, the success of any guidance will depend upon the
1270 Commission's Fourth Report 1271 Commission's Fifth Report 1272 For a review of the issues, see Fairgrieve, Howells and Pilgerstorfer (2013) 212 extent to which it actually grapples with the controversies that have thrived in the void of the uncertainty. Whilst of course the document will be done at the level of generality, from the perspective of the present author, what is not required is another document that avoids the controversies and sets out consensus. The whole point is for it to provide guidance on the areas of the directive which are open to competing interpretations.
In the following sections, I examine how the Courts in Germany and England have approached the question of defect, and the application of the related development risks defence, with a view to drawing lessons for the understanding of the overarching European norm.
7.4 Defect
7.4.1 Conclusions from the Two Jurisdictions
7.4.1.1 The Defectiveness Analysis
In both the English and German implementing statutes ‘defect’ is defined in a broadly similar way and faithfully to article 6 PLD, with the emphasis on whether the product lacks the safety that persons generally are entitled to expect.
In terms of the goal of the analysis (that is the assessment of entitled safety expectations), whilst there have been quibbles over language of ‘entitlement’ (including within English cases), in substance both jurisdictions assess expectations objectively, appreciating that entitled expectations are not necessarily the same as actual expectations. Further, in both jurisdictions the court does not interpret the test in a way to guarantee absolute safety in the product. This seems to accord with article 6, as interpreted in Boston.
There is, however, a major point of departure in terms of the analytical method. This has two aspects. First, whereas in England the case-law does not equate the level of entitled safety expectation to the producer taking all reasonable steps1273, in Germany this is expressly done because the standard of liability under the ProdHaftG is equated to that imposed by general
1273 A v NBA §56, a point that has not been challenged in the more recent cases 213 tort law1274. Accordingly, in Germany much of the analysis concerns whether the producer complied with the ‘duty’ he was under. It is then reasoned that where a producer complies with such duties, he will produce a product that meets entitled safety expectations. In England, by contrast, the cases have interpreted the PLD as requiring considerations of fault to be put to one side and (with the odd exception1275) have therefore focused on the product rather than the manufacturer’s conduct.
The second aspect is that in Germany, the equation of the ProdHaftG’s liability with that imposed under general tort law has imported a taxonomy by defect-type. The precise duties that manufacturers owe are tailored to the circumstances under those defect types, and indeed the application of parts of the ProdHaftG are dependent upon the nature of the defect alleged. Both the classification system, and the nature of the duty under each class, was heavily influenced by the description of defect types in §2 of the US Restatement (Third). Such a classification is not apparent on the face of the PLD, has not featured in any of the CJEU’s case law to date, and was rejected by the Council when the directive was being framed1276. In England, the German approach was considered in A v NBA and was also rejected. However, the temptation to classify could not be resisted. A rival classification system was proposed in A v NBA which divided products into ‘standard’ and ‘non-standard’ depending on whether the product turned out to be as the producer intended. In more recent cases, this has been formally disapproved but then referred to for the purposes of determining which circumstances might be more or less relevant in a given case (or at least being a basis on which to distinguish A v NBA having ruled certain factors out of account).
One way in which these seemingly stark differences in approach are similar is that they respond to a methodological impulse to take different features into account in certain situations. In Germany, those factors are determined by reference to defect category and the nature of the manufacturer’s duty. In England, which circumstances are relevant have been said to be affected by whether the product is standard/non-standard. In the absence of clear rules in the PLD and ProdHaftG, the German courts have determined the factors by reference to the previous jurisprudence and hence framed the discussion in terms of duty. In England, the exclusion of certain considerations in A v NBA has been subsequently clarified as being
1274 Cherry Cake §6; Airbag §12; Electricity §8 1275 B v McDonalds 1276 Taschner, Product liability: basic problems in a comparative law perspective, 161 214 more applicable to non-standard products, with the position in standard product cases being more flexible, ruling no factor out of account (save fault).
Further, in terms of the categories utilised in the two jurisdictions, there is a parallel to be drawn between ‘non-standard’ cases and cases involving ‘manufacturing defects’ (at least where the context is mass-produced products). Each involves a deviation from the manufacturer’s set standard. In this way, and particularly given the commonality of approach in German law to design and warning cases, it might be thought that the Courts are ultimately distinguishing between (i) cases involving non-conformity in the context of mass production; and (ii) cases where the issue is risks posed by the generic product. In the former case, both jurisdictions show a desire to impose more exacting, stricter, liability (be that in terms of the duties expected of the manufacturer or irrelevance of exculpatory circumstances). By contrast, where the focus is on generic products a lesser standard is imposed through those methods.
7.4.1.2 The Relevant Circumstances
Employing the different analytical methods described above, both jurisdictions take into account the three statutory factors: presentation, foreseeable use, and the time the product was put into circulation. In Germany, the wording of the ProdHaftG indicates that these are to be taken into account ‘especially’, and that was also the view reached in A v NBA. There are examples of cases where presentation has been critical. Both jurisdictions approach the question of time in such a way whereby the defectiveness assessment is carried out as at the time the product is put into circulation.
More controversial are the circumstances that can be taken into account beyond the listed three. There is consensus between the jurisdictions that the list is not exhaustive and features such as the nature of the product and its price may feature and that non-safety aspects of quality and fitness for purpose do not. More difficult is fault itself. In England, all the case law has ruled that out, but in Germany the position is more equivocal due to the fact that the analysis looks at the duty of the manufacturer and equates the standard of liability to that under fault-based tort law. Ultimately, that debate in Germany depends upon the extent to which one subscribes to the view that the pre-ProdHaftG case law had come to impose strict liability.
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As indicated, whilst the analysis is conducted differently, the relevant factors for defectiveness in both jurisdictions seem generally to differ according to the categorisation of the case. In Germany, once a manufacturing defect is established, neither the risk/benefit profile of the product nor the practical and economic proportionality of avoidance are matters which can avoid a liability finding. The manufacturer is effectively required to achieve the standard it has imposed upon itself. By contrast, in design/warning case, the analysis looks specifically at avoidability, risk/benefit, regulatory compliance and where appropriate information given to intermediaries. In England the exclusion is not so clear cut. Whilst A v NBA excluded considerations of avoidability, risk/benefit, regulatory compliance etc in a non-standard case, subsequent standard cases (Gee, Wilkes) opened the door to their consideration in that context, but perhaps also (although it was recognised to be less likely) in the non-standard case. Thus in both jurisdictions, in cases concerned with the generic product (design, warning, standard cases) all three of the particular features studied are permitted to have a role: (i) avoidability of the defect, and risk/benefit considerations; (ii) regulatory compliance; and (iii) the presence of a learned intermediary. Yet in cases involving manufacturing defects or non-standard products, liability is imposed generally without recourse to these factors.
7.4.1.3 The Concept of Defect
Although under article 6 it might be said that there is no strict need (at least at that point in the analysis) to pinpoint what the ‘defect’ in a product is (that comes later when looking at causation etc), both the CPA and ProdHaftG define defectiveness in terms of whether there is “a defect” in the product. Accordingly, a challenge for both jurisdictions is how to characterise the defect in the product. Both jurisdictions accept that there is no need for the claimant to identify the technical cause of the defect, but recent hip litigation has highlighted a difference in approach to characterisation.
In England, the Gee case rejected the notion that one could describe the ‘defect’ in a defective product as its potential to cause harm (analogous to the concept of ‘harmful characteristic’ seen in A v NBA). Instead, for the court, it was whatever it was that gave rise to the abnormal or increased risk of harm. In other words, it is the combination of circumstances that rendered the safety of the product to be such to fall below the defectiveness line. Depending on the product, this might be quite a complicated set of circumstances, which then, according to that case, would have implications for causation and the application of the DRD. There the level of 216 the increased risk had to form part of the characterisation of defect. Whilst this approach remains controversial in England for the reasons set out in chapter 5 above, it contrasts with the approach in Germany in similar cases. There, in Varicon Hip the German court accepted that it was the propensity to cause injury which led to the finding of defectiveness. Similarly, in Metal-on-Metal Hips the court effectively encapsulated defect in the way Andrews J had rejected in Gee.
One difference between the jurisdictions is the purpose for which the characterisation takes place. In Gee the court proceeded from the view that ‘defect’ would have the same meaning throughout the CPA: when assessing defectiveness, going to causation and applying the DRD. In Germany, however, a precise characterisation of defect is only really required when considering the defences because causation is effectively established once the claimant can prove the defect arose from something within the manufacturer’s sphere of influence.
7.4.2 Assessment
In light of the above results, one can step back and ask what this might mean for the EU norm.
7.4.2.1.1 Conceptualisation of defect
In my view, the first step is to consider the correct conceptualisation of ‘defect’ under the PLD. Contrary to the views in Gee, the principles upon which the decision in Boston was reached did involve the court considering how defect should be considered1277. The court there endorsed an approach whereby the alleged defect in a product is seen as its risk of harm. Where – in light of all the circumstances - that risk is deemed “abnormal” then the product can be described as defective, and the ‘defect’ is conceptualised as the risk.
It must be recognised that conceptualising defect in this way has consequences. There is no need to focus on precise technical cause of the problem with the product, nor whether its source lies in manufacturing or design etc. One simply looks to the risk and asks whether it is “abnormal” using the method I shall describe.
1277 Fairgrieve and Pilgerstorfer (2017) 217
As we have seen, one point that is raised against this approach (at least in the context of its use in A v NBA) is that it is circular and affords primacy to causation before defect has been demonstrated. Moving to the language of risk post Boston helps to alleviate these concerns, but more fundamentally this objection is not well taken. Identifying an alleged risk, and then testing (i) whether it exists and (ii) if so whether all the circumstances of the product are such that the product is to be regarded as defective as a result of the risk, does not involve assuming causation in a claimant’s favour. An analogy with the causation provisions of the AMG are helpful here. Where a medicine is shown to be capable of causing the harmful effects, the burden then swings to the defendant. The fact capability is established does not lead one to assume individual causation – that remains to be established, but with a different burden of proof.
7.4.2.1.2 From Categories to Comparison
Having conceptualised the alleged or potential defect in terms of risk one can next pose the question as to whether, in the assessment of whether the product is in fact defective, some form of case categorisation is required. That has been the impulse in England and Germany, both grappling with a distinction between non-conformity of mass produced products and cases of risk posed by the generic product. Those categorisations have resulted in different approaches in the two types of case which perhaps reflect Koziol’s argument that strict liability is justified more by the feature of mass production.
In my view creating a distinction in approach on this basis is not justified either by the content of the EU norm (which does not create any distinction for case type), nor the wider underlying theories justifying stricter liability for products, particularly placing weight on the goals of risk spreading, deterrence, placing the risk on the person best able to make the cost/benefit decisions, and short circuiting contractual warranty chains.
Rather, it seems to me that the directive envisages a common method: one of comparison. The safety offered by the index product is compared to the level that persons generally are entitled to expect; where it is “abnormal” the product will be defective.
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In my view, Borghetti is correct in identifying the criterion of legitimacy of safety expectations as the real issue1278. Assessing the level of safety persons generally are entitled to expect involves considering all the relevant circumstances (see below) and particularly the safety offered by other products which may be different. These other comparator products can be described as evidential because they are unlikely to have exactly the same combination of circumstances as the index product. The evidential comparator facilitates the court assessing what for the particular product being assessed is the entitled level of safety expectation.
That basic method is the same in all cases. I recognise, however, that when one is concerned with the non-standard mass produced product, the court will have an additional evidential comparator to look to. Not only will there be other products on the market, but the court might also look to how the particular product was meant to be produced had it been ‘standard’. That evidential comparator is likely to be particularly powerful and weighty because its circumstances will be much closer to the index product than other evidential comparators that might be pointed to. However, the presence of an additional comparator does not mean the method is not essentially the same: one is constructing from these evidential comparators what persons generally are entitled to expect.
7.4.2.1.3 Circumstances?
That leads me to consider the circumstances that ought to be relevant. As we have seen, when dealing with a product which departs from the norm that a manufacturer has set itself, both jurisdictions studied tend to exclude factors such as avoidability, cost/benefit ratio, regulatory compliance, and information given to learned intermediaries. Yet these same factors are then admitted when considering the safety of a standard product.
Why should this distinction in defect/product type justify admitting new criteria? For my part I do not see a principled juridical basis, a requirement, nor satisfactory outcome by doing so.
Even in so-called standard cases, entitled safety expectations can be assessed in a principled way without recourse to the benefits of a product, or the practicability or economic sense of
1278 J.-S. Borghetti, 'La responsabilité du fait des produits oblige-t-elle le producteur à prendre en charge le remplacement d'un produit défectueux?' (2015) Recueil Dalloz 1247§8. 219 avoidability. In carrying out the assessment in this way, greater emphasis is placed on the presentation of the product, and any warnings which accompany it. However, this seems to me to be justified by the fact that (i) presentation is a circumstance that has been identified on the face of article 6 as one particularly to take into account; (ii) a focus on warnings tends to enhance the personal autonomy of the user of the product in question, allowing him to make informed decisions based on his particular circumstances; (iii) that had the benefits of a product been intended as a feature to be taken out of account, it would have been a particularly significant matter, and therefore its absence from the article 6 list is surprising; and (iv) more fundamentally, many benefits of a product are focused on efficacy and have nothing to do with safety.
This approach does not tar useful products as defective where warnings properly make users aware of their dangers. Thus the cancer drug discussed in Gee may be non-defective if a suitable warning is given, but defective if put into circulation without. Why should the PLD relieve a manufacturer from liability when a product has a known or knowable risk of harm which is not warned about simply on the basis that the product is very useful? That puts the risk of the side-effect on the consumer without him choosing to undergo that risk. Similarly, where a new product is developed offering greater functionality than another, but is accompanied by a new risk of harm, there is no need to take into account the functionality in order to avoid a defectiveness finding. If the risk of harm is warned about, users can make their choice and entitled safety expectations will be affected accordingly. Users can choose in an informed manner whether to run the risk for the increased functionality. Where no warning is given, why should the manufacturer avoid liability by reference to function and benefits?
Taking benefits and avoidability out of account, results in the risk in a product placed on a producer who is in the best position to spread the risk through price/insurance, decide to change aspects of the product, or importantly warn about the risk so as to neutralise the discrepancy of knowledge between producer/consumer.
Conversely, introducing risk benefit and avoidability considerations introduces problems into the analysis. First, it raises the question: benefit to whom? The individual user? The wider potential user group (e.g. with a drug which is effective in a percentage of those who take it)? Or the wider public (e.g. a vaccine creating herd immunity)? Further, it naturally draws the court to consider the choices made by the producer when producing the product in terms of 220 the trade-offs that were before him, pulling the court into the territory of fault-based analysis, which was plainly intended to be eschewed by the PLD.
In terms of the relevance of regulatory compliance, the general consensus in the jurisdictions under test is that, at least in standard product cases, it is relevant but not a complete defence. This too can be seen in the equation in the Commission’s recent report between the safety standards imposed by regulation and the safety that persons generally are entitled to expect1279.
For reasons I have more fully set out elsewhere1280 it seems to me that, notwithstanding the contrary views expressed in Gee, the presence of regulation in a field is an indicator of heightened expectations as to safety, and such an approach is entirely consistent with Boston Scientific. As far as the relevance of a particular regulatory decision is concerned, the weight of this factor (if any) seems to me highly sensitive to whether risk/benefit considerations are admitted into the analysis. Regulatory compliance decisions are frequently based on such criteria. There can be little relevance to a decision based on criteria that do not fall to be assessed under the PLD.
Further, taking into account pre-marketing regulatory decisions may well give rise to a host of difficulties. Those decisions – frozen in a moment in time – may lag behind safety expectations which fall to be judged at a later point in time. Regulatory decisions are taken in light of known risks, whereas the article 6 assessment is made on a full risk basis as it appears at trial, leaving the knowability of the risk to article 7(e). Further, investigating the basis of such a decision may open up satellite enquiries which are not desirable in the context of the PLD. One would at least need to establish that the regulatory decision was taken in response to the risk that transpired and with which the court is concerned when assessing civil liability. Then there is the issue of variance of regulatory decisions in different countries. Taking different outcomes into account in different jurisdictions does not fit with the idea of a harmonised standard of defectiveness across the member states. Were regulatory decisions to weigh in the balance, one would need to decide on the weight that is properly attached to that factor. In Wilkes it was thought that it could be almost decisive where a regulator has made a considered determination, yet at least under the AMG in Germany, that the medicine be put
1279 Commission's Fifth Report 1280 Pilgerstorfer, EU law and policy on pharmaceuticals 221 on the market in accordance with the AMG is a prerequisite for liability1281. Again, this could lead to major variances in outcome across member states.
For all of these reasons, it seems to me that the preferable approach is that outlined in Boston whereby the regulatory decision itself is not a factor of any weight.
Standing back from the above, although the consumer expectations test for defect has been criticised as posing the “very question a definition of defect should be answering”1282, most of the problems can be dealt with by ensuring that a rigid focus is maintained on factors relating to safety. The risks posed by the product when used as expected fall to be assessed alongside the presentation of the product and its other safety-related features in order that the Court can come to an assessment of whether the safety offered meets that which persons generally are entitled to expect. There is no reason in principle why the test in the directive by necessity should suffer from the same difficulties as the US Restatement (Second) which caused US courts to return to fault-based considerations in design and warning cases. Indeed, the mandate of liability without fault is a strong indicator that European courts should not follow suit.
7.5 Development Risks
7.5.1 Scope of Implementation and Harmonisation
Both England and Germany exercised their option to include a DRD when implementing the PLD. However, the scope of application of the defence in the two jurisdictions is rather different.
In England, the DRD was implemented in the CPA so that it would apply across all product and defect types and in all industrial sectors. By contrast, in Germany, the DRD does not apply to liability imposed on relevant medicinal products by the different regime of the AMG (liability which falls outside of the ProdHaftG). Importantly, where liability is imposed under route 1 of §84 AMG (on the basis that the medicine produces harmful effects in excess of that which is acceptable), the statutory risk/benefit analysis is done in light of the risks as known
1281 See fn 1256 above. 1282 Stapleton, Product Liability, 234 222 at the time of the assessment. Thus risks that were not known about at the time the product was put into circulation can be taken into account in that assessment and there is no defence available to a pharmaceutical undertaking on the basis of the risk being a development risk. This result, which plainly does not harmonise liability for development risks in an important sector, is nonetheless in accordance with the PLD’s current scheme because the rights under the AMG constitute rights existing under a special liability system within the meaning of article 13 PLD.
A further area of divergence is that in Germany, the DRD does not apply to products containing GMOs where the defect is due to genetic engineering. There again, liability for development risks is imposed and the position is not harmonised with that in England. The justification for German position here lies in the fact that the application of the DRD is optional and therefore it is open to the legislature to decide not to apply it to certain sectors.
Quite apart from those statutory deviations, an important judicial limit on the scope of application of the DRD exists in Germany. Since Sparkling Mineral Water II, the DRD has been held not to apply to manufacturing defect cases. As we have seen, Burton J would not go that far in A v NBA but did indicate that the DRD might have less application in non-standard cases.
This result raises a serious question as to whether the aim of harmonising strict liability for products in these two jurisdictions can be regarded as successful. However, ultimately that determination must also consider how the defence is applied.
7.5.2 Application of the Defence
The first striking difference that one notices between s4(1)(e) CPA and §1(2)(5) ProdHaftG is how the wording of the former departs from the PLD, whereas that of the latter is more faithful. We have seen how in England a tussle between the House of Commons and House of Lords resulted in the amended wording yielding a result thought by commentators to allow for a considerably less stringent test to the benefit of producers. The seemingly overt injection of subjective concepts into the defence was only saved from a finding of incompatibility by the CJEU being persuaded that English Courts would adopt an article 7(e) compliant interpretation. In the main decision after Commission v UK, the domestic court complied by
223 applying the wording of the PLD direct and the guidance of the CJEU, although more recently in Gee the defence was described in terms of the domestic wording.
But all is not always as it seems. In Germany, although the language was faithful to the DRD in article 7(e), first the Drucksache and then the courts (Sparkling Water Bottle II, Airbag) equated the result of applying the negative conception of development risks in §1(2)(5) ProdHaftG with how general tort law positively imposed liability for so-called Entwicklungsfehler analysed in terms of whether the producer had complied with his duty in producing the product with a risk given the state of science and technology at the time.
In light of this, I now turn to look compare how the elements of the defence have been applied in the two jurisdictions.
7.5.2.1 Similarities
Certain matters are treated in a very similar way. First, the burden of proof is placed upon the producer to establish the defence. Second, the time at which the ‘state’ of scientific and technical knowledge is assessed is the same: the time when the index product was put into circulation. Third, the approach to ‘knowledge’ is broadly similar. In both jurisdictions, it is objectively assessed and differentiated from the knowledge of the actual producer, or class of producers (cf the wording of s4(1)(e)). Further, it is scientific and technical knowledge that matters (although in neither jurisdiction has the outer limits of these concepts been tested). The ‘state’ of relevant knowledge is, applying Commission v UK, taken to include knowledge at the most advanced accessible level, including minority opinions. There are some variations in style here. In England, accessibility has been discussed in particular by reference to the Manchurian exception discussed by the AG in Commission v UK. In Germany, some commentators have invoked the notion of the ‘ideal manufacturer’, but it seems unlikely that there are substantive differences. Of potentially more significance is the German refinement on the ‘state’ of knowledge concerning minority opinions. As we have seen, it has been argued that only those opinions which are theoretically plausible, or have an empirical basis should be admitted. This approach is not universally accepted, even in Germany (where others would say that the producer is then obliged to test) and it does not form part of the English case-law. It may be born of the fact that the analysis is conceptualised in terms of duty and the courts are preoccupied with what the manufacturer should do in response. The better view is that 224 such an approach should not be adopted. There is little basis for it in Commission v UK and it would open up further difficult questions concerning the time at which, and the extent to which, the opinion should be plausible (is it at the time it was expressed, or at the time the product is put into circulation, or the date of assessment by the court, and how plausible?). It is also a refinement that does not sit easily with the guiding principle behind the defence that liability is to be excused for risks that were genuinely unknowable. When the risk is knowable, even on a hypothesis with little foundation, the person best positioned to avoid or spread the risk is the manufacturer, who can decide whether to conduct further research and development in order to ascertain whether modifications should be made or whether to increase insurance or price to factor in the risk. The injured person, by contrast, is not in a position to take any action in light of the hypothesis. Neither does this refinement properly take into account the nature of scientific knowledge. As Popper1283 (amongst others) has highlighted, scientific knowledge develops by creative imagination, the creation of hypotheses which are tested to see if they are falsifiable. The approach of the CJEU in Commission v UK is to envelop all stages of that scientific process within the concept of knowledge.
7.5.2.2 Differences
There are other areas, however, where the operation of the defence in the two jurisdictions is different. First is the test of discoverability, and whether this imposes a reasonableness standard of a more absolute standard of discoverability. In Germany, the court has expressly equated the standard of discoverability with that in general tort law such that it equates to the objectively assessed breach of duty under tort law (Airbag). By contrast, in England, the analysis in A v NBA excluded fault from the assessment and regarded the escape route as very narrow. Similarly, in Gee the Court held that the defence should not re-introduce concepts of fault. These positions appear to be diametrically opposed, but when one considers the strictness of the duties imposed as a matter of general German tort law, the gap narrows. In Child Tea I, a duty to investigate was imposed as a result of a Swiss publication and those duties have been held to be more intensive where the potential dangers are more serious and where the product is being developed in a novel area1284. Thus in this area, German law has strengthened the strictness of general tort law to a considerable extent. Some have portrayed
1283 K. Popper, The Logic of Scientific Discovery (Routlage, 1992) 1284 Metal-on-Metal Hips §190 225 this as a development resting on firm foundations because just as strict liability tends to be imposed in response to larger risks, the level and complexity of risk are factors which tend to lead to stricter standards of diligence in tort law1285.
A second (perhaps more practically significant) area concerns how, for the purpose of the DRD, the ‘defect’ falls to be conceptualised. This question has been addressed, in part, above in terms of the defect analysis. Whilst A v NBA identified a ‘harmful characteristic’ in the product and considered whether that was discoverable, in the most recent decision (Gee) the court, having considered those authorities, held that a common definition of ‘defect’ falls to be applied throughout the Act. In the context of a standard product, it could not be the inherent risk, but rather whatever it was about the condition or character of the product that elevates the underlying risk beyond the level that the public is entitled to expect. Thus in the Gee case (which concerned metal-on-metal hips) the claimants were not entitled to say that it was the propensity of the implants to fail through an adverse reaction to debris because all hips had that capacity. That was the underlying risk. Whilst the Court was not applying the DRD in Gee it is clear it was that conception of ‘defect’ that would have been applied.
By contrast, in Germany, the Courts have described the defect in similar hip cases as the propensity to cause injury (Varicon Hip) and the ability to cause metal debris through abrasion that was detrimental to health (Metal-on-Metal Hips), assessing whether that risk amounted to a defect by reference to the circumstances. The courts there are generally less fixated with the precise definition of defect at the stage of determining defectiveness (because they consider that in terms of the nature of the defect alleged: design, warning etc) or causation (because claimants can simply establish that the type of defect in question (e.g. design) must have arisen from the sphere of influence of the defendant). Rather, the issue comes to the fore when applying the DRD. Here in a consistent line of jurisprudence (Sparkling Mineral Water II, Airbag, Undersink Water Heater etc) the courts have determined, contrary to the approach in Gee, that what must be discoverable is the underlying general risk of harm associated with the chosen design rather than the combination of circumstances that were considered to have elevated that risk into a defect.
1285 Looschelders (2016) 156 226
7.5.3 Assessment
7.5.3.1 General
The true meaning of article 7(e) can be approached by considering those elements which are clear and settled, and those in respect of which uncertainty remains. In the former category is the burden of proof: this clearly falls on the producer. Similarly, although it may be difficult to pin-point with precision1286, the time at which the state of science and technology falls to be assessed is that when the product was put into circulation. Further, considerable certainty is now provided concerning the ‘state of science and technology’ as a result of the CJEU’s ruling in Commission v UK. Knowledge means that at the most advanced level, including minority opinions, provided that knowledge is accessible. This accords with the principle that once a risk is recognised by e.g. a minority opinion, and thereby falls to be included in the global bank of relevant knowledge, it is not unknown, even if unquantified. The concepts of ‘science’ and ‘technology’ have not been subject to clarification, but have not posed particular difficulties in practice, at least in the jurisdictions studied here.
7.5.3.2 Discoverability
Of much greater significance is the correct approach to the test of discoverability, and how the ‘defect’ falls to be encapsulated for these purposes (i.e. what needs to be discoverable?). As we have seen, in England (A v NBA and comments in Gee) a strict approach to discoverability is taken, eschewing fault. In Germany, as a matter of substance, the approach has been strict (even if the language of reasonableness remains as a result of the duty based analysis). In my view this general impulse is correct.
Whilst many commentators have argued for a wider reasonableness standard to be applied to discoverability, it seems to me that this is the wrong approach. The fundamental problem that advocates for the wider approach have is the language of the provision. Article 7(e) does not make the defence available where the defect was not reasonably discoverable, it speaks only in terms of discoverability. Had reasonableness been intended it could easily have been included following the negotiations which framed the directive. Instead, when one looks to
1286 OB (No 1); OB (No 2) 227 the travaux, the language used throughout is more absolute in nature: e.g. risks which “could not be known to the producer”1287; where the product “cannot be considered defective”1288 and ultimately the text of article 7(e). A further indication in support of this view is that the purpose of the DRD was to facilitate the obtaining of suitable insurance by excluding those risks which were not possible to calculate or quantify1289. That was not a question of reasonable quantifiability. Perhaps more important than these points is the established case-law of the CJEU for the defences in article 7 to be construed restrictively1290. A reasonableness construction would do the opposite and construe the defence expansively.
Advocates for a reasonableness approach often point to the accessibility requirement introduced by the CJEU in Commission v UK. As I have argued elsewhere1291, that does not imply (i) that what is required is reasonable accessibility, nor (ii) that it follows that reasonableness must govern the question of discoverability. That argument ignores the fact that in the same case a strict approach was taken to what is to be regarded as the pinnacle of knowledge for the purposes of the DRD.
A further point in favour of the narrow approach is the context. It must be remembered that the DRD only falls to be applied where a product has been found to be defective. The level of safety expectations, as we have seen, is judged as at the time the product is put into circulation, and a product is not judged defective for the sole reason that a better product comes along later (see articles 6(1)(c) and (2)). This approach is, in my view, capable of governing traditional products, as well as more modern products – such as those containing systems which spontaneously develop new algorithms in response to stimuli. The question in all cases is whether the product offered the entitled level of safety judged at the time it was put into circulation. Where the relevant safety risk was knowable at that point the DRD will have no application.
This point must be combined with the fact liability under the PLD extinguishes after 10 years. Thus there is a real tangible limit to the extent to which it can be said possible to make a creative scientific leap between existing knowledge, to discoverability of the defect.
1287 CoE Report §38 1288 Parliament Report on Proposal for PLD from 127/62 1289 Memorandum (First Proposal) §22; Commission v UK AG§19 1290 Veedfald 1291 Pugh and Pilgerstorfer (2004) 228
Accordingly, producers are not measured to an impossible standard1292 that can only be controlled by reaching for reasonableness levers. Seen in this way, the scope for development risks (properly so called) to arise can be said to be rare, as was recognised when the ProdHaftG was enacted1293.
The DRD, as a critical constituent part of the directive, thus forms part of the fair apportionment of risks. As recital 2 indicates, that fair apportionment involves liability without fault. Introducing reasonableness into the DRD through the concept of discoverability would strike at the heart of that aim and ultimately disturb that apportionment set by the legislator.
In my view this is the correct approach to the DRD and reflects the impulses (if not the express reasoning) of both jurisdictions under study to regard the DRD as a narrow, strict exception to the liability imposed by the directive.
7.5.3.3 What must be Discovered?
Article 7(e) requires the existence of the ‘defect’ to be undiscoverable for the defence to apply. This again raises the question of how defect should be conceptualised. I have explained above that in my view, the correct approach, in light of Boston Scientific, is to regard as the ‘defect’ the risk of harm which was found, in light of the circumstances, to be abnormal on the article 6 assessment.
When one looks to the jurisdictions under test here, German courts have consistently conceptualised defect in this way when applying the DRD. This has resulted in the defence being lost where the underlying risk of harm is known or knowable. Those courts have not required, for example, the precise level of the risk of harm to be discoverable in order for the defence to be lost.
The position in England is more complicated. In A v NBA, Burton J identified the product’s ‘harmful characteristic’ which seems to me, in essence, to be a concept analogous to the potential for a product to cause harm identified by the CJEU in Boston. Since then, however,
1292 See the examples in ibid., 267 1293 Drucksache-11/2447 p12 §VI(4)(a) 229 as set out above, the concept of ‘defect’ for the purposes of the article 6 assessment has been defined differently so as to pull in the relevant combination of circumstances that pushed the defectiveness assessment across the line. Whilst Gee was only concerned with whether the products in question there were defective, and not whether the DRD applied, the logic of the decision is that a common approach to defect applies throughout the act. If Gee were applied, more needs to be discoverable in order for the defence to be lost.
In my view, the German approach is to be preferred. It provides a more coherent application of ‘defect’ throughout the PLD, fitting well with Boston Scientific. Further, were the alternative approach to be adopted, the defence would still apply in cases where the risk was known but the precise combination of features that applied in the particular case were unknowable. Had the producer in Gee been unsuccessful on the question of defectiveness, it would have been argued that the precise revision rates of the implants were unknowable until sufficient passage of time (measured in years and decades) for the national joint registries to have measured and published them. This effectively would permit a manufacturer to produce in light of a known risk, but the risk being carried by the consumer.
7.6 Final Conclusions
It is well to recall Keating’s observation that ultimately law is “theory laden and reflexive”: “What it is and what it becomes depend, in important part, on what we think it is and what we think it should be”1294. As he points out, if one conceives of fault as the general unifying principle of tort law, then particular strict liability doctrines will seem a set of anomalous exceptions. By contrast, if strict liability is seen as a competing general principle, there is no reflexive inclination to prefer fault liability.
In the context of the PLD, liability without fault has been mandated by political decision. That is the result that the PLD states, in terms, that it intends to achieve. So how successful has it been?
This study tells the story of a missed opportunity to bring in a system of liability that was clear and unambiguous in the standards it introduced in order to achieve strict liability. Instead,
1294 Keating (2001) at 1289 230 the compromises reached during the negotiation phase of the PLD resulted in uncertainty which in turn has elicited different responses to core areas of liability under the PLD.
In my view, there is an opportunity for the liability to be clarified to be strict in the way that the PLD was intended to be. This will involve clarifying how a defect in a product falls to be characterised, what circumstances fall out of account when undertaking that assessment, and the standard to be applied to the determination of discoverability under the DRD.
The question is: will the Commission now take that opportunity?
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