COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 28.7.1999 
COM(1999) 396 final 
Green Paper 
Liability for defective products 
(presented by the Commission) 
Summary 
Since 1985, each producer is obliged to make good the damage to health, safety and property 
caused by a defective product, under the terms of Directive 85/374/EEC, the first instrument 
of a Community policy on producer liability. This Directive seeks to protect victims and 
promote improvements in product safety within the internal market through a regulatory 
framework which is as consistent as possible and based on a fair apportionment of the risks 
inherent in modern production. 
The real challenge for this policy is to maximise its positive effects for consumers (and, in 
particular, to ensure the best possible compensation of victims), while keeping costs at the 
most reasonable level possible (and, in particular, not holding back industry's capacity for 
innovation and research). Since there is no such thing as zero risk (like the recent food crisis 
related to BSE and dioxin have shown), any society must adopt a system which is best suited 
to its development with a view to ensuring the best possible compensation of victims 
suffering damage from products. It is therefore essential to establish whether an instrument 
such as Directive 85/374/EEC is continuing to achieve its objectives in the light of the new 
risks which European society will have to face in the new millennium. 
Approach of the Green Paper 
Before contemplating any revision of the Directive, the Commission is proposing to consult 
all those parties concerned on the basis of this Green Paper in order to establish the impact of 
the Directive on victims and on the sectors of the economy concerned, and to reflect on the 
appropriateness and type of reform needed, with a view to ensuring greater legal certainty for 
the parties concerned. The announcement of this move (made during the parliamentary 
debate on Directive 1999/34/EC extending the rules on liability without fault to primary 
agricultural products) naturally aroused the interest of the economic operators, consumers 
and the public administrations. In a context which differs considerably from that in 1985, it is 
essential to establish whether the Directive is still effective and, if not, why and how to 
improve it. The Green Paper thus has two aims: (1) it allows to seek information which will 
serve to asess its application "in the field" in view of the experience of those concerned (in 
particular industry and consumers) and to establish definitively whether it is achieving its 
objectives; (2) it serves to "gauge" reactions to a possible revision as regards the most 
sensitive points of this legislation. 
On the first point, it is more a matter of collecting information to assess how the Directive 
matches the objectives which it set out to achieve with regard to the various sectors involved: 
whether it ensures adequate protection for victims, whether it helps to discourage the 
marketing of dangerous products, whether it gives operators sufficient legal certainty to 
facilitate intra-Community trade, whether the competitiveness of European businesses is not 
being jeopardised by the Directive, whether the insurance sector has managed to cope with 
the risks tackled by the Directive, whether the authorities and consumer associations consider 
the Directive to be a useful instrument in their policies towards the victims of defective 
products, etc. 
On the second point, all those concerned are invited to adopt a reasoned position as to the 
justification of any reform of Directive 85/374/EEC. Adoption of this Green Paper does not 
imply embarking on a legislative revision of its content at this stage. On the contrary, once 
the Commission has analysed the contributions received, it may well propose measures on 
this point in its second report on the Directive planned for the end of 2000. The "options for 
reform" set out below are thus only guidelines for discussion - a basis for an open debate. 
This Green Paper does not prejudge the Commission's position on the future of the 
instrument. Amongst other things, the guidelines for discussion concern the following 
aspects: 
- the details of implementing the burden of proof imposed on the victims 
- implementation of the exemption in the case of "development risks" and assessment of its 
possible abolition 
- the existence of financial limits and their justification 
- the ten-year deadline and the effects of a possible modification 
- assessment of the insurability of risks deriving from defective production 
- improved information on the settlement of cases deriving from defective products 
- the supplier's liability 
- the type of goods and damage covered. 
In the EU, by comparaison with the debate in the United States, Directive 85/374/EEC 
represents a compromise which reconciles the interests involved. The political resolve of the 
Member States, as embodied in the Directive, to have a balanced framework of liability 
governing relations between businesses and consumers, should not be underestimated. The 
Commission wishes to maintain this conciliatory approach. Any move to reform the Directive 
must a priori be guided by the balance resulting from its rules. 
Finally, the Commission wishes the exercise to be guided by the transparency and 
effectiveness of the results. In order to promote reflection and debate, it therefore wishes 
the replies provided to be based on facts, and not on mere positions of principle. The 
Commission invites any concerned party to submit its written observations on the questions 
contained in this Green Paper within four months of its adoption by the Commission. 
Interested parties can reply to any questions they wish, even if some of the questions are 
aimed a priori at other types of operator. In addition, the Commission expects varying 
responses from the same sectors of the economy in the individual Member States: only such 
responses will enable it to assess the real impact of the Directive in the different Member 
States. 
The Green Paper is accessible on the Internet 
(http://europa.eu.int/comm/dgl5/en/index.htm). Those consulted can send their written 
observations to the Commission, by mail or similar, at the following address: 
European Commission 
Directorate-General XV 
Rue de la Loi 200 
B-1049 BRUSSELS 
C 100 4/40 
and/or by e-mail (d3@dgl5.cec.be). If they choose the latter, they are advised to send the 
electronic version in .html format. Observations received by e-mail may be made public on 
the Internet, unless the party consulted explicitly requests otherwise. 
Follow-up to the Green Paper 
Subsequent to the consultation, the Commission will assess the impact of the Directive and 
draw the appropriate conclusions for its possible reform. This will be the subject of a report 
to be presented at the end of 2000 to the Community institutions, eventually accompanied by 
a duly motivated proposal for a revision. 
List of contents 
1. INTRODUCTION 
1.1 WHY A GREEN PAPER? 
1.2 HOW TO REPLY TO IT 
2. WHAT ARE THE EFFECTS OF DIRECTIVE 85/374/EEC? 
2.1 THE IMPACT ON THE SINGLE MARKET 
2.1.1 COMMUNITY TRADE 
2.1.2 THE GLOBAL CONTEXT 
2.2 PROTECTION OF PUBLIC HEALTH AND SAFETY 
2.3 THE EFFECTS ON INDUSTRY AND THE INSURANCE SECTOR 
3. IS A REVISION OF DIRECTIVE 85/374/EEC JUSTIFIED? 
3.1 MAINTAINING THE BALANCE 
3.2 ISSUES FOR A POSSIBLE FUTURE REFORM 
Burden of proof 
Development risks 
Financial limits 
Periods of limitation and liability 
Obligation to take out insurance 
Transparency 
Supplier's liability 
Products covered 
Damages covered 
Access to justice 
Others 
Annexes 
1. INTRODUCTION 
The right to compensation of a victim who has suffered damage through using or 
consuming a defective product, or through exposure to a defective product, is essential 
in a single market open to everyone. Since 1985, this right is recognised by the 
Directive on liability for defective products1, under which any producer of a defective 
movable must make good the damage caused to the physical well-being or property of 
individuals. For instance, a child injured by the explosion of a soft drink bottle, an 
employee who loses a finger by using a defective tool, or a pedestrian knocked down 
by a car with defective brakes, enjoy this right, whether or not there is negligence on 
the part of the producer (principle of objective liability or liability without fault). 
The policy of producer liability established by Directive 85/374/EEC concerns 
producers and victims directly. However, distributors, insurers, courts, public 
administrations and practitioners are involved in varying degrees in its application. 
The liability laid down by this Community legislation is a coherent framework which 
takes account of the various interests involved: 
- on the one hand, those of individuals in coping with the risks to their health and 
physical and material well-being from a modern society marked by a high degree of 
technical complexity, 
- on the other, those of producers in avoiding distortions of competition resulting from 
diverging rules on liability, and in reducing the impact of those differences on 
innovation, competitiveness and job creation. 
This framework of liability is capable of ensuring the well-being of victims (by 
ensuring they are compensated and by discouraging the marketing of defective 
products) and of minimising the costs to industry so as to avoid excessive interference 
in their capacity for innovation, job creation and exporting. Through an equitable 
apportionment of the risks, the framework of the producer liability policy is made up 
of the following elements: 
- liability without fault on the part of the producer in favour of the victim; 
- burden of proof on the victim as regards the damage, the defect and the causal 
relationship between the two; 
- joint and several liability of all the operators in the production chain in favour 
of the victim, so as to provide a financial guarantee for compensation of the 
damage; 
- exoneration of the producer when he proves the existence of certain facts 
explicitly set out in the Directive; 
- liability limited in time, by virtue of uniform deadlines; 
Council Directive of 25 July 1985 (85/374/EEC) (OJ No L 210 of 7.8.1985, p. 29) (full text is 
annexed) 
- illegality of clauses limiting or excluding liability towards the victim; 
- a high ceiling for financial liability, but optional for the Member States; 
- regular review of its content in the light of the effects on victims and 
producers. 
Defective services are not covered by Directive 85/374/EEC. As indicated in its 
Consumer Policy Action Plan for 1999-20012, the Commission intends to examine the 
need to reinforce the safety of services. On the basis of this analysis, the Commission 
will propose initiatives that will address both service safety and the liability of service 
providers. An in-depth consultation with business and consumers will determine the 
Commission's subsequent action. 
1.1. Why a Green Paper? 
This Green Paper is intended to prepare the report on the application of the Directive 
on producer liability planned for the end of 20003. Further to the first report in 1995 
(presented in a context marked by the very small number of cases of application due 
to the late implementation of the Directive4), this Green Paper initiates the second in-
depth analysis of the implementation of Directive 85/374/EEC in a context which 
differs from that in 1985 and 1995, particularly because of the new impetus given to 
the policy for the protection of the health and safety of individuals after the "mad 
cow" crisis. 
In the first report, the Commission had concluded that the lessons to be learnt from the 
implementation of the Directive were still limited. In 1995, the Member States had 
only a very limited case law in the field. In the light of the information available in 
1995, the Commission had considered it unnecessary to submit any proposals for 
amendments. However, certain aspects of the Directive relating to consumer 
protection and the functioning of the internal market called for ongoing attention. This 
was the case, for instance, with the exclusion of unprocessed agricultural products. 
Subsequent to the "mad cow" crisis, and in accordance with Directive 99/34/EC, the 
Member States must now apply the rules of Directive 85/374/EEC to unprocessed 
primary agricultural products5. 
Communication from the Commission - "Consumer policy action plan 1999-2001" 
(COM(98)696 of 1.12.98). 
The Commission has to report regularly to the Community institutions on the state of 
application of the Directive (see Article 21 - every five years on the general application of the 
Directive; Article 15(3) and 16(2) - ten years after notification of the Directive on 
development risks and the financial limit; and Article 18(2) - every five years on the revision 
of the amounts laid down in the Directive). 
The Commission presented its first report on the application of the Directive on 13.12.95 
(COM(95)617), based on an impact study carried out in 1994. 
Directive 1999/34/EC 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 (OJ 
NoL 141 of 4.06.99.) 
The Commission first of all proposes {point 2 of the Green Paper) to obtain the fullest 
possible information on the impact of the Directive on the proper functioning of the 
single market, the protection of health and safety, the competitiveness of industry and 
its capacity for innovation, and the financial sector (insurance). The objective is to 
establish (1) what are the effects brought about by the application of the 
Directive, whether it has brought more benefits than costs, in particular as 
regards the protection of victims and the costs borne by business, and (2) how 
and to what extent the Directive is behind these effects. Subsequently, it proposes 
to establish,on the basis of a number of guidelines for discussion (point 3 of the Green 
Paper), (3) which aspects of the Directive should be reformed in order to increase 
its social benefits while keeping costs at a reasonable level. 
On the basis of the information and observations received, the Commission will then 
present its conclusions to Parliament and the Council in the application report to be 
adopted in 2000. This report will identify the shortcomings in the implementation of 
the current Directive and the fields which need to be improved. If the Commission 
considers that Directive 85/374/EEC has to be amended, a legislative proposal will be 
presented to that end. This Green Paper does not prejudge the Commission's position 
on the future of the instrument. 
The choice of a Green Paper to prepare the report in 2000 is justified because of the 
scale and variety of the interests at stake. It was the Commission's intention that the 
assessment process should be governed by transparency, and that producers, 
consumers, insurers, practitioners and any other sector concerned should be able to 
make known their experience and views on implementation and the subsequent 
development of producer liability. In this spirit of transparency, the replies will not 
be confidential and can be made public unless the participant in the consultation 
process explicitly requests otherwise. 
Apart from access to information on the application of the Directive6, the Green Paper 
invites operators to take part in the consultation on the future of the legislation under 
examination, with a view to gaining a better idea of the costs of any revision. The 
Green Paper thus fulfils the Commission's undertaking to consult the representatives 
of consumers, producers, distributors, insurers, public administrations and any other 
circles involved, before substantially revising the provisions of Directive 85/374/EEC. 
This commitment to transparency was entered into vis-a-vis Parliament and the 
operators involved when adopting Directive 99/34/EC extending the 1985 Directive to 
primary agricultural products7. 
The consultation exercise launched with the Green Paper is also opened to operators, 
consumers and administrations coming from the countries which are candidates to 
accede to the EU. 
When reference is made to "application of the Directive", this of course refers to application 
of the national measures implementing the Directive (e.g. the national transposing laws). 
The Commission (see SEC( 1998)2232 of 6.1.99) did not share the EP's favourable opinion, at 
first reading, of the revision of the Directive at the same time as its extension to the 
agricultural sector. 
1.2 How to reply to it 
The credibility and quality of the results of the consultation depend on the degree of 
involvement of the participants in this consultation. One of the difficulties in assessing 
the impact of the Directive remains the lack of reliable data because of the absence of 
an analysis methodology to measure its effects. To partly remedy this shortcoming, it 
is proposed that operators take account of the following parameters in order to 
contribute as effectively as possible to the exercise: 
* The index of complaints (number and content of judgments, proceedings settled out 
of court, number of claims made, etc.) 
The aim is to establish how the Directive is used in disputes of all types (legal proceedings, 
claims submitted for arbitration, claims lodged with insurers, etc.) Operators are invited to 
provide all types of information on this field. 
* The availability of safe products on the market 
It will be useful to know whether and how the Directive is one of the factors conditionning the 
market entry, maintenance and withdrawal of a product (for instance, has the producer decided 
to withdraw or not to market a product because of the risk of his liability being invoked?). At 
Community level, the accidents caused by a product and/or involving a product can be identified 
and quantified thanks to the former Community system, EHLASS - European Home and Leisure 
Accident Surveillance System. However, the former system could not identify the defective 
nature of the product in question. The new Community system for compiling information on 
injuries set up under the programme of Community action on injury prevention is looking into 
this approach in order to meet this need. However, it might be possible to find this information at 
national level9. 
* The trend in costs, production and selling prices 
The aim is to establish the real costs inherent in the system of liability, and the extent to which 
they are in fact passed on in the prices of products. 
* Differentiation between markets 
The aim is to establish whether and to what extent the differences between the liability schemes 
in force in the different export markets (inside and outside the EU) are taken into account by 
economic operators (e.g. change in the production process, supplementary insurance to cover 
new risks in the export market, etc.) 
* Innovation/research 
The aim is to learn about operators' experience in order to know how the Directive has 
influenced industry's capacity to innovate (e.g. has the Directive discouraged the development of 
a particular sector?). 
OJ No L 46 of 20.02.99 
According to the Spanish Instituto Nacional de Consumo (informe Sistema EHLASS 1997, 
www.consumo-inc.es/Estudios). the Spanish victims surveyed stated that the cause of the 
accident was chance (45.2%), lack of attention (21.4%), their own negligence (15.4%), the 
action of a third party (7.0%), a design or production defect (2.8%), lack of information from 
the manufacturer (0.2%) and failure to follow the instruction manual (0.4%). 
Using these parameters (or other equivalent ones), operators are invited to make 
known their experience and to reply to the questions in this Green Paper.. In the field 
of producer liability, where the positions of principle are well-known, the 
Commission wishes to obtain factual practical information (if possible quantified) 
rather than mere declarations, so that it can justify its conclusions, particularly if they 
are to culminate in a substantial revision of the Directive. 
2. WHAT ARE THE EFFECTS OF DIRECTIVE 85/374/EEC? 
Evaluating the impact of the Directive means not just listing the cases brought before 
national courts or taken to arbitration, or even those on which the Court of Justice has 
pronounced10. The aim is more to assess how the Directive meets the objectives it set 
out to achieve with regard to the various sectors involved: whether it ensures adequate 
protection for the victims, whether it helps to discourage the marketing of dangerous 
products, whether it gives operators sufficient legal certainty to foster intra-
Community trade, whether the competitiveness of European businesses is jeopardised 
by the Directive, whether the insurance sector has managed to cope with the risks 
covered by the Directive, whether the authorities and consumer associations regard the 
Directive as a useful instrument in their policies towards the victims of defective 
products, etc. To this end, the operators concerned and administrations are asked to 
answer the following questions. 
2.1 The impact on the internal market 
Applicable throughout the European Economic Area, and taken as a model by non-
member countries (in particular those which have applied for membership of the 
European Union) (see annexes), the Directive on producer liability is a major element 
of the legal environment in which intra- and extra-Community trade is conducted. The 
Commission would like to know how those concerned view its impact in the light of 
their experience since 1985. 
2.1.1 Community trade 
In Directive 85/374/EEC, the current internal market, with its strong growth in intra-
Community trade,11 has a consistent and avowedly balanced framework of producer 
liability in Europe. It is intended to ensure adequate protection for victims, to promote 
trade in goods and to largely harmonise the conditions of competition in the internal 
market. The existence of harmonised legal conditions is intended to make trade easier, 
since the producer is in the same legal position no matter where his products are 
distributed. 
The ECJ has issued two rulings on the Directive in actions against France (C-293/91, judgment 
of 13.1.93, ECR 1993, p. 1-1) and the United Kingdom (C-300/95, judgment of 30.5.97, ECR 
1997, p. 1-2649). 
Since 1985, trade in products between Member States has increased significantly. In 1997, 
intra-Community trade in industrial goods was estimated at 31.5% of GDP (European 
Commission, Report on the functioning of Community product and capital markets, 
COM( 1999) 10 of 20.1.99). 
10 
Directive 85/374/EEC aims to harmonise to a large extent national law on producer 
liability. It does not contain any provision directly concerning conflicts of law. 
Despite the wide degree of harmonisation achieved by it, there are still divergences at 
national level. When a defective product causes damage in the Member State or it has 
been marketed within the internal market, the victim can be compensated under the 
uniform liability rules contained in the Directive. As regards the non-harmonised 
aspects, it is important that the victim and the producer establish which law is 
applicable. An intergovernmental convention was signed in 1973 to law down the law 
applicable to product liability. However, most of the Member States are not parties to 
this agreement, which has been ratified only by Spain, Finland, France, Luxembourg 
and the Netherlands. In the absence of any other applicable instrument, conflicts of 
law relating to product liability are governed by the legislation of each Member State. 
It must nevertheless be acknowledged that the legal certainty of the victim and the 
producer is far from being assured in this field, since the Directive is both incomplete 
and complementary to any other national producer liability scheme. In 1985, the 
disparity in legislation was perceived by the Community legislator as being such as to 
affect the level of intra-Community trade, so that it warranted an approximation of the 
legal conditions governing liability - an approximation which was partly achieved by 
Directive 85/374/EEC 
On the one hand, the Directive does allow the Member States - in the case of certain points 
clearly defined in the Directive - to legislate differently in each Member State (see the options 
set out in Articles 15 and 16 of the Directive). 
On the other hand, the general national law on liability based on fault, which naturally also 
applies to producers, is not harmonised and thus continues to apply. The situation in Spain 
illustrates this coexistence of the legal frameworks for producer liability which may well hamper 
the legal certainty of the parties in practice: on 4 October 1996, in a case involving the explosion 
of a bottle, the Spanish supreme court delimited the field of application of the transposing law of 
1994 vis-a-vis the general consumer protection law of 1984, by ruling that the former establishes 
a special and closed system of liability, while the latter establishes a general system of quasi-
objective liability with a reversal of the burden of proof. Although it did not apply it in the case 
in question (since the product was put into circulation before 1994), the Court ruled that the 
principle of liability under the law of 1994 extends to the distributor (which is the case only in 
the specific circumstances set out in Article 3(3) of the Directive) and entitles the victim to lodge 
the claim against one of the persons responsible, but not against all the persons jointly and 
severally (which runs counter to the principle of joint and several liability set out in Article 5 of 
the Directive)12. 
The Directive is only an initial step towards establishing a genuine producer liability 
policy at Community level. One of the reasons for reviewing it every five years13 is in 
fact to proceed towards greater harmonisation with a view to establishing a regulatory 
framework which is as comprehensive, coherent, balanced and effective as possible 
for protecting victims and ensuring legal certainty for producers. However, it would 
appear that the objective of greater harmonisation can only be achieved a priori by 
upholding the objective of total harmonisation in the present Directive (since no 
clause allows the Member States to adopt stricter rules under the Directive). 
12 TS Sala Civil, 4.10.96, No 778/1996 (RJ 1996-7034). 
13 See the 18th recital of Directive 85/374/EEC on this point. 
11 
1. According to your experience, does the Directive properly function in practice? 
"3" Given the importance for consumers and economic operators to rely on a stable 
legal framework of product liability, do you think it would be justified to modify 
the Directive? 
fS'Has the disparity in legislation on producer liability - even potentially - discouraged 
the marketing in one Member State of products from another Member State? 
"S" Where ordinary law has been applied rather than the Directive, what do you 
consider to be the reasons for this? 
"®" Do you think the Directive should be revised to become the common and sole 
system of liability for defective products (deletion of Article 13 of the Directive)?. 
«®"Do you think that each Member State should be able to adopt stricter liability rules 
(introduction of a "minimum" clause in the Directive)? 
2.1.2 The global context 
In accordance with the principle of equality of treatment for products imported from 
non-member countries and put into free circulation in the Community, the legislation 
at stake applies in toto to imports. Products exported, on the other hand, are subject to 
the legislation of the country of distribution in which they may cause damage. The 
Directive thus helps to define the legal and economic environment for European 
operators in the global context, where the producer liability policies of many countries 
are equivalent to that set out in Directive 85/374/EEC, since it served as a model for 
Japan, Australia and Switzerland, in particular14. However, this equivalence is not 
total, and the conditions governing liability sometimes depend to a large extent on the 
legal framework of which they form part. On this point, the situation in the United 
States calls for a separate commentary. 
In the United States, producer liability is framed by three elements: (1) the legal 
system encourages the parties to go to court (the level of damages awarded by juries, 
arrangements making it easier to search for proof, the "no win, no fee" principle under 
which victims who lose their case do not pay their lawyers any fees); (2) there is no 
uniform federal legislation15; (3) it is State legislators and judges who have set out the 
major principles governing liability ("warranty", "negligence", "strict liability"), -
For a comparative examination of legislation in the field, see OECD, Product liability rules in 
OECD countries, 1995. In Japan, the new law on product liability, in force since 1 July 1995, 
has been applied in a large number of cases (see www.law.kyushu-
u.ac.jp/~luke/pllawcases.html). 
Since the 1970s, the American federal legislator has been trying to establish a uniform and 
balanced legal framework for its large market. In May 1996, President Clinton blocked a 
federal bill passed by Congress. Subsequently, two bills were introduced in the Senate in 1997 
(Bill S. 5 and Bill S.648), and one bill in 1998 (Product Liability Reform Bill of 1998, US 
Senate, S.2236, 105lh Congress). The latter failed because of lack of agreement in the Senate. 
12 
principles which were approximated in practice under the "Restatement"16 (a kind of 
standard law drawn up by the American Law Institute). 
In 1992, litigation involving producer liability was as follows in the 75 largest counties in the 
US: 12 763 cases of producer liability were decided; 358 cases went to a jury; 142 cases were 
won by the plaintiff. Of that total, the average award was 727 000 dollars, and compensation 
exceeded one million dollars in only 15.4% of the cases. The jury awarded punitive damages in 
only three of the 142 cases won by the plaintiff. The total for such damages, for the three cases, 
was 40 000 dollars17. 
According to the National Center for State Courts, of the 19.7 million civil cases dealt with each 
year by state judges, 40 000 cases involve producer liability. Only 10% of victims take legal 
action to obtain compensation. Between 1965 and 1994, punitive damages were awarded in 379 
cases (or 13 per year). In the United States, insurance costs for American businesses seem to be 
decreasing. Premiums fell between 1987 ($4 billion) and 1993 ($2.6 billion). The premium per 
$100 cover is 26 cents18. 
There is a great similarity between liability conditions in Europe and the United 
States, although there are some notable individual differences (the American rules 
concern the liability of the professional vendor, while the Directive applies only to the 
(real or apparent) producer, the importer and the distributor in the case of an 
unidentified producer; the period of liability in the EU is ten years, while the 
American legislation lays down a period of 18 years19). However, the lack of federal 
legislation laying down inter alia a ceiling for punitive damages is regarded by the 
Transatlantique Business Community as hampering trade between the EU and the 
United States. That is why the Community and business circles have always supported 
American efforts at reform.20 Seen in this light, the European producer is better off, as 
the European Directive establishes a uniform and coherent framework of liability, 
without the most criticised elements of the American system (the role of the jurys, 
punitive damages, etc.). 
The truth is that, although the European and American legislations are very close in terms of 
principles, this is not the case with their practical application. Practical application of the 
European legislation does not appear to have the same results and consequences for those 
concerned as in the United States. The litigation involving the liability of the tobacco industry in 
Europe and the United States is a good example of this point. In Sweden, on the basis of liability 
without fault, Mrs Gustafsson had claimed compensation from the Swedish tobacco company 
Swedish Match for the damage caused to her health because of failure to provide information on 
the risks associated with tobacco, and in particular a warning of the risk of cancer. The case was 
rejected by a court in Stockholm in 1997. Upon appeal, the supreme court referred the case back 
18 
19 
20 The principle of "liability without fault", for instance, recognised in 1963, was adopted by 
most states and consolidated in the Institute's "section 402A of the Second Restatement of 
Torts". This Restatement was revised in the light of 30 years' experience (ALI, Restatement of 
the Law, Third, Torts: Product Liability, xxxi, 382 pp., 1998). 
US Department of Justice, Office of Justice Programs, Bureau of Justice Statistics Special 
Report, Civil Justice Survey of State Courts, 1992: Civil Jury Cases and Verdicts in Large 
Counties (July 1995). 
The Public citizen, The Facts about Products Liability, www.citizen.org. 
See Section 107, Bill S. 2236. The federal period of 18 years already applies to the aerospace 
sector by virtue of the General Aviation Revitalization Act of 17 August 1994 (49 U.S.C. 
§40101). 
Transatlantic Business Dialogue, Statement of Conclusions, 1998 CEO Conference, Charlotte, 
5-7 November 1998 and TABD Mid Year Report, Washington, D.C., 10 May 1999. 
13 
on a point of procedure. The tobacco company, however, considered that the case was politically 
motivated and unfounded21. Two similar cases were lodged against SEITA in France by victims 
of tobacco addiction22 
In contrast, litigation against the tobacco industry in the United States has met with unparalleled 
success, inter alia on the basis of the companies' liability for selling defective products23. This 
litigation has increased because of the cases brought by the state authorities to recoup the 
medical expenditure incurred by their health services for smokers . 
2. Do you think that the Directive weakens the position of European businesses vis-a­
vis their foreign competitors because of the conditions governing liability for 
defective products? 
«3"What are the main reasons for this, and how can it be avoided? 
•^What is the impact on European businesses of exporting products to markets with 
stricter legislation (or legal practice), such as the United States (in terms of costs, 
production methods, insurance, level of litigation, etc.)? 
2.2. Protection of public health and safety 
The Commission believes that public health and safety must be afforded the most 
effective and best protection possible within the internal market. The Directive helps 
to increase the level of protection against defective products for two reasons: it is a 
"sword of Damocles" which encourages producers to do their best to produce without 
unnecessary risks to health (it thus complements the regulatory measures and checks 
to prevent the marketing of defective products), and once these preventive measures 
21 
22 Swedish Match, Press Release, 14 May 1998, www.swedishmalch.sv/news. 
In December 1996, two victims of tobacco addiction brought legal proceedings against the 
French manufacturer for failure to provide information on the dangers of Gauloises cigarettes. 
Invoking the manufacturer's liability without fault, the victims claimed damages and interest of 
FRF 2 668 090 and FRF 1 158 499 respectively (see he Monde, 20, 27 and 28 December 
1996). 
Tobacco litigation is currently marked by both damage awards in first instance, although these 
judgments are frequently overturned on appeal (on 30 March 1999, for instance, Philip Morris 
was ordered to pay $81 million to the family of a smoker who had died of cancer, the largest 
sum yet awarded until the verdict of 7.07.99 in the Engle class action), and by out-of-court 
settlements (in the Broin v. Philip Morris, et al. class action, for example, the representatives 
of the flight attendants and the tobacco companies reached an agreement which, amongst other 
things, makes the burden of proof easier for each individual victim initiating legal proceedings 
and establishes a $300 million fund for medical research - see 
www, cnn. com/US/9903/30/tobacco. trial. 02/) 
It took a settlement reached in November 1998 between the producers and the American 
authorities to put an end to the cases brought by the state administrations, estimated at 
$206 billion. That still leaves legal proceedings brought by the victims either individually or as 
class actions (see www.tobaccoresolution.com.). It is only recently that the sickness insurance 
scheme in France has approached the tobacco industry to demand the reimbursement of the 
sums incurred in treating the consequences of tobacco addiction. The local sickness insurance 
fund in Saint-Nazaire decided in February 1999 to bring charges against all companies 
distributing their products in France (see www.lemonde.fr, 17.2.99). 
14 
have failed and accidents have happened (since there is no such thing as zero risk), it 
allows the victims to obtain redress from the producers. 
3.What percentage of victims has been compensated either on the basis of ordinary 
liability law or on the basis of application of the principles of Directive 
85/374/EEC? 
"S'ln the case of application of the Directive, was it easy to obtain the compensation 
awarded in terms of speed and efficiency? 
Doubts have been expressed recently about the Directive's effectiveness in attaining 
its objectives, and there have been calls for its content to be revised. At the first 
reading of Directive 99/34/EC, Parliament called for a substantial revision of 
Directive 85/374/EEC so that it better meets the objective of protecting health and 
safety25. At the second reading, however, this call for a revision did not receive the 
majority needed for the Directive to be amended on the occasion of its extension to 
primary agricultural products26. 
The Commission has taken note of these criticisms and is preparing to examine their 
justification on the basis of the results of this Green Paper. The Community's 
experience when adopting the Directive, and that of other countries which are 
currently debating producer liability (as in the United States), show that arriving at a 
balanced framework for producer liability calls for a serious and in-depth debate on 
the advantages and drawbacks of each rule governing liability. 
If producer liability policy is to be strengthened, this must be done by building on the 
strengths of Directive 85/374/EEC, and in particular on its balanced approach to the 
apportionment of risks. That does not rule out improving it in order to make it more 
effective, provided the solutions chosen are equally balanced. As the Commission has 
had occasion to recognise in general terms , "consumer policy must therefore ensure 
an equitable reconciliation of consumer interests and the interests of other 
stakeholders [...] consumers themselves can recognise and accept such compromise 
because they are not only consumers but taxpayers, employees and beneficiaries of 
public policies too"27. This reconciliation of interests also applies to the Directive and 
its further development (see point 3 of the Green Paper as regards justifying its reform 
and maintaining the balance). 
4.How has the Directive impacted on the victim's interests because of the balance 
established in the Directive? 
"^.Should the Directive be amended to give greater protection of victims' interests, 
even if this involves changing its present balance? 
25 
26 
27 Opinion of 5.11.98(OJ No C 359 of 23.11.98). 
Decision of 23.03.99 on the common position EC No 3/1999 (OJ No C 177 of 22.06.99). 
Communication from the Commission - "Consumer Policy Action Plan 1999-2001' 
(COM(98)696 of 1.12.98, p.4.) 
15 
Knowing how to compensate the victims of a defective product, and who should 
compensate them, is a matter for both the private and the public domains, since it is 
the victims and the producers who have to settle the problem of compensation for 
damage by applying the rules of liability, such as those in Directive 85/374/EEC. 
Drawing on the liberal tradition of the civil codes of the 19th century, the Directive is 
in fact part of the civil law on extra-contractual liability or liability under the law of 
tort. This socio-economic approach is the reason why the state intervenes only in 
specific - even exceptional - cases where society has been obliged to "assume" the 
task of compensating victims in view of the catastrophic nature of the problem . 
Without prejudice to exceptional situations, the situation of the victims also comes 
under the heading of social protection (after a domestic accident caused by a defective 
product, for instance, the social security scheme generally covers the medical 
expenses, earnings during sick leave, etc., before any approach to the producer 
responsible by the victim). One of the reasons why litigation under Directive 
85/374/EEC has not reached the same proportions as in the United States appears to 
be the widespread existence of social security schemes in Europe: the greater the 
likelihood of being covered by social security, the less incentive there is to claim the 
producer's liability. In this respect, producer liability is regarded as an instrument for 
compensation which is complementary to the other ways in which the victim can 
obtain redress . 
5.In your experience, how do you assess the relationship between the possibilities to 
award damages to the victim by Directive 85/374/EEC and those of the social 
security schemes? 
«®\ Can you indicate any cases in which the social security schemes took 
proceedings against the producer on the basis of the rights conferred upon the 
victim under Directive 85/374/EEC, after having covered his expenses? 
fc^Can you indicate any cases in which the producer liability scheme set up by 
Directive 85/374/EEC was insufficient to fulfil its compensatory role, so that it was 
then necessary to fall back on the solidarity of society as a whole to compensate the 
victims? 
This was the case in France (where the national authorities regarded compensation of the 
haemophiliacs infected with the HIV virus as a public problem to be resolved by means of a 
compensation fund) and in Spain (in the rapeseed oil case, the second chamber of the Spanish 
supreme court ordered the state on 26.9.97 (see Actualidad Juridica. Aranzadi 313 de 
16/10/97 and La Ley de 05/11/97) to pay damages to all the victims of the poisoning as having 
subsidiary liability under civil law). In Denmark, Law No 40 of 14.6.85 also set up a 
compensation fund for the victims of blood marketed by Novo Nordisk A/Z, subsequent to the 
judgment of the 0stre Landsret of 14.2.85 (confirmed by the judgment of the Hetjesteret of 
3.10.96 -Case No I 155/1995,1 156 /1995,1 157/1995) which found the producer not liable in 
the absence of negligence (as the law transposing Directive 85/374/EEC was not applicable). 
This is set out explicitly in the Belgian legislation of 1991 (Article 14), under which the 
beneficiaries of a social security scheme must first take advantage of the rights deriving from 
such a scheme. If there are any damages not covered, the victim must then enforce his rights as 
a victim vis-a-vis the producer under his liability. 
16 
2.3. The effects on industry and the insurance sector 
Because of the very nature of producer liability (one single defective product can give 
rise to numerous cases or "mass litigation"), application of Directive 85/374/EEC 
gives rise to direct and indirect costs for operators: premiums for product liability 
insurance, capital reserves and financial guarantees to cover any compensation, 
damages with interest actually paid out under an out-of-court settlement or a court 
decision, fees for lawyers and experts, time and energy involved in defending against 
the charges, loss of value of the brand or shares in the company found guilty, etc. 
However, it is quite difficult to put an exact figure on these costs and to assess their 
impact on competitiveness, commercial and financial capacity, innovation and 
research efforts, design, manufacturing and packaging methods, and on job creation 
by businesses producing in Europe30. The Commission very much wants to establish 
to what extent application of the Directive is affecting industry. 
6. Are you aware of any cases of defective products in which the Directive was 
actually applied and how this affected your activities? 
«®\ Have you undertaken any research or studies on the Directive's potential impact 
on your activity? 
With regard to the cover for risks associated with defective products, there are) 
schemes to cover such eventualities set in an individual (product liability insurance 
policies) or collective basis (e.g. the "Pharma Pool" for the German pharmaceutical 
industry, or the "Lakemedelsforsakringen", set up by the pharmaceutical industry and 
Swedish insurers.) The Directive leaves it to the Member States to regulate the extent 
to which industry should be covered for these risks, although the implementation of 
the Directive in certain countries includes a requirement for financial cover: in 
Austria, the producer and importer must take out cover for product liability in the 
form of an insurance policy or in any other appropriate form31 (a similar requirement 
is planned but not implemented in Spain ). 
It is equally difficult to put a figure on the degree to which the insurance market is 
affected by the Directive in terms of the number of claims covered by a "product 
liability - defective products" guarantee, the level of premiums, the amount of 
compensation paid, etc. The insurance sector is invited to provide information on the 
impact of implementation of the Directive on the insurance sector. 
31 
32 The reform of the American law is justified, amongst other things, by the high costs of the 
present system (see US Senate, Report No 105-32 of 19.6.97 on the Product Liability Reform 
Act of 1997, Bill S. 648, p. 3 : "the US tort system is by far the world's most costly tort 
system...A study conducted by the insurance industry in 1989 - the Tillinghast study -
estimated the current overall annual cost of the US tort system at a staggering $117 billion ".) 
Produkthaftungsgesetz, § 16. 
Article 30, Law 26/1984, of 19 July (BOE No 176 of 24.7.84), in the wording of the second 
final provision, Law 22/1994, of 6 July (BOE No 161 of 7.7.94). This provision empowers the 
government to prescribe producer liability insurance and the establishment of a fund for 
personal damages (death, poisoning, bodily injuries). 
17 
7.Have you any data - if possible with figures and broken down by year - on the 
number of claims which the insurance sector has dealt with after accidents caused 
by defective products since 1990? 
BS". If so, is it possible to know whether the guarantee given by the insurer is 
related specifically to the producer's liability under Directive 85/374/EEC? 
"®\ Is it possible to know whether the insurance market has seen an increase in 
demand for this type of guarantee after application of the Directive and, if so, what 
has been the impact on costs for the sector (in terms of compensation paid) and for 
the beneficiaries (level of premiums)? 
«§\ In the claims made, what was the percentage breakdown by type of defect 
(defect in design, manufacturing and/or information)? 
3. IS A REVISION OF DIRECTIVE 85/374/EEC JUSTIFIED? 
In this part of the Green Paper, the Commission calls on all those involved to take a 
reasoned stance concerning the justification for any revision of Directive 85/374/EEC. 
The idea is not at this stage to undertake a legislative revision of its content. On the 
contrary, once the Commission has analysed the implementation of the directive on 
the basis of the contributions to be received, it may propose actions on this matter in 
its second report on the directive scheduled for the end of 2000. Consequently, the 
"revision options" mentioned below are solely guidelines for open discussion, without 
prejudice to any future Commission initiative. 
3.1 Maintaining the balance 
As recent political discussions on extension to the agricultural sector have shown, the 
policy of product liability provokes conflicting views on the part of producers and 
consumers. Victims want the greatest protection at the lowest cost, while producers 
ask in particular for ceilings and for the shortest possible liability period. 
It is not easy to reconcile the interests involved. Sometimes, neither industry nor 
consumer representatives can fully back up their interests on various points of the 
discussion (costs of the system and its repercussions on the prices of goods, length of 
legal procedures, lack of predictability, effect on undertakings' capacity for innovation 
and development, impact on their external competitiveness, etc). 
The way in which the debate on product liability has gone in the United States 
confirms this analysis. In the Senate the advocates of reform have put forward the 
view that " the present [US product liability] system adversely affects producers, 
product sellers, consumers and individuals injured by products. Reform by the states 
cannot fully address the problems with the current product liability system. Reform at 
the federal level is urgently needed", while the opponents of reform take the view that 
"before we make dramatic changes in product liability law, we should, at the least, 
have information to demonstrate that the current system needs fixing. It is not 
achieving its purpose of fairly and properly compensating victims of defective 
products, or of deterring the marketing of unsafe products. As each additional piece of 
objective data becomes available, it becomes more clear that the system is working. 
The number of non-asbestos product liability cases is actually declining, punitive 
damages are a rare occurrence, and compensatory awards are reasonably related to 
the cost of the injuries involved32 bis. " 
In the EU, by comparison with the debate in the United States, Directive 85/374/EEC 
represents a compromise reconciling the interests at stake. The Member States' 
political determination, set out in the provisions of the directive, to have a balanced 
framework of liability governing relations between firms and consumers must not be 
underestimated. The Commission is keen to see this conciliatory approach retained. 
Any attempt to revise the directive should be guided a priori by a balance which is 
rooted in the following principles: 
• the producer's civil liability is (1) objective (no need to prove the fault), (2) 
relative (the producer is exempt from liability when he proves the existence of 
certain facts, these facts being subject to re-examination (see below, for example, 
"development risks"), (3) limited in time (the producer is not liable for an 
indefinite period, even though the practical arrangements for this principle deserve 
to be re-examined, especially the period of cessation of liability) and (4) liability 
that cannot be waived at the wish of the parties; 
The courts in the Member States have shown their attachment to the principle of no-
fault liability recognised by the directive, even before its transposition into positive 
law. In 1989, the Swedish Supreme Court in a case dealing with food poisoning 
(salmonella) considered the principle of no-fault liability; it was accepted for the first 
time, and this solution was reinforced by the act of 1992. In 1989, in the Halcion case 
(a tranquilliser that has been very popular on the American market since it was 
approved in 1982) the Dutch Supreme Court had anticipated the implementation of the 
transposition bill in the Netherlands by applying the idea of "defect" to the sedative in 
question33. 
It is in France that such a legal approach has been most in evidence, because of the 
lack of any legislative transposition for ten years. The situation there was marked by 
very complicated jurisprudence on guarantees for hidden defects, on the basis of which 
judges gradually moved towards the terms of the directive. Jurisprudence of this kind, 
however, has not absolved France of its obligation to transpose the directive. Indeed, 
in 1993 it was censured by the Court of Justice for failure to transpose the directive 
within the period laid down (30 July 1988). In the absence of any transposition, the 
Commission had decided in March 1998 to refer the matter to the Court a second time 
for non-implementation of the 1993 order, asking for a daily fine of ECU 158 250 to be 
imposed in accordance with Article 171 of the Treaty of Rome. Following this 
decision by the Commission, France adopted on 19 May 1998 Law No 98-389 in order 
to comply with its obligations. This law applies, among others, to primary agricultural 
products and products derived from the human body. However, it is the view of some 
commentators that transposition of the entire directive, including the possibility of 
development risk exemption, would have represented a step backwards. This issue of 
development risk exemption has been at the centre of discussion in France and 
explains, to some extent, the delay in transposing the directive. 
32' 
33 bis US Senate, Report No 105-32, pp. 2, 44, 71, 75. 
HR 30.6.89 No 13 564, NJ 1990/652. 
19 
Lastly, it was the Cour de Cassation which, a few months before the adoption of the 
transposition bill in France, gave implicit effect to the directive in adopting its 
definition of fault with regard to a product (by affirming the liability of a laboratory 
concerning the damage caused by the non-digestible coating of a medicinal product on 
the grounds that the producer is required to provide a product which ensures the safety 
that can be legitimately expected34). On 28 April 1998 the Court explicitly interpreted 
the Civil Code (Articles 1147 and 1384) in the light of the directive to affirm that 
every producer is liable for damages caused by a defect in his product, with regard to 
victims who are both directly and indirectly affected, without the requirement to 
distinguish whether they are contracting or third parties. Consequently, a blood 
transfusion centre, providing tainted plasma, was declared liable not only with regard 
to the direct victim but also with regard to the family for the non-material damage 
caused35. 
• (5) it is the victim's task to prove that damage has occurred, that the product was 
defective and that there is a causal relationship between the defect and the damage 
suffered. This principle applies even if the conditions of proof are subject to re­
examination (see below "burden of proof"). The "defective" nature of a product is 
determined by the lack of safety which the general public is entitled to expect, 
given the circumstances of the product and the occasion 6. In the event of there 
being several producers who are liable, the liability remains (6) joint and several 
(allowing the victim to approach any of those liable without prejudicing his right of 
complaint). This absolves the victim of the need to approach all those who are 
jointly liable in order to be fully compensated. 
8.Do you agree that the six principles listed above constitute the basis that needs to be 
maintained in order not to upset the internal balance of Directive 85/374/EEC? 
3.2 Ideas for possible reform 
Consumer trust is vital for the success of firms and, consequently, for the proper 
operation of the internal market. Measures to bolster trust are vital for producers' 
prosperity, and any extra costs that are incurred are generally offset by the overall 
benefit accruing from greater consumer trust in the market. The Commission, in 
implementing its consumer policy action plan37, is acting to bolster this trust. In this 
34 Cass, lere civ., 3 March 1984, SA Les Laboratoires Leo c. Scovazzo et a. [order No 432 P]. 
Counsel M. Sargos had asked the court to follow the directive, on Article 6. 
Cass, lere civ., Cts C c. Centre regional de transfusion sanguigne de Bordeaux [order No 736 
P+B+R]. 
The directive does not follow the criterion of "reasonable alternative design (RAD) 
requirement" to define design faullt. This criterion was followed in the latest version of 
"Restatement" in the United States, insofar as a product is defective if these risks could have 
been avoided if the producer had designed the product differently. It is up to the victim to 
prove that there was such an alternative design. 
Communication from the Commission "Consumer policy action plan 1999-2001", 
(COM(98)696 of 1.12.98.) 
20 
regard, it hopes to ensure that Directive 85/374/EEC has the necessary effectiveness to 
bolster consumer trust. If analysis of how the directive is applied shows that this is 
not the case, it will propose the necessary amendments. 
Already, politicians, operators and experts have highlighted several aspects of the 
directive as deserving special analysis with a view to possible reform: 
Burden of proof 
Without prejudice to the principle whereby the burden of proof lies with the victim, 
there is a need to look at the arrangements for its application. The fact of the victim 
having suffered an accident is not enough to bring an action against the producer 
within the meaning of the directive. The victim must prove that the damage is the 
result of a defect in the product. This burden may be great when such proof turns out 
to be technically complicated and/or expensive on account of the expert opinions 
required. The directive does not define a standard of required proof for a complaint to 
succeed. The trickiest task for the victim is always to convince the producer (or the 
judge in the case of a dispute) of the existence of a defect and of the link between this 
defect and the damage suffered, while noting that usually there is a lack of balance 
between the two with regard to access to information (the producer is in a better 
position than the victim to detect how the problem occurred since he controls the 
process of production). In this situation, making proof easier turns out to be a way of 
improving the situation of the victim, especially in cases where it is difficult to track 
down the origin of the damage. The difficulties involved in proof (origin of the 
product, defect, causal relationship) increase when it comes to products that are 
ingested or no longer available (e.g. food, medicinal products). 
There are several options: 
1) To infer a causal relationship when the victim proves the damage or defect, or 
the defect when the victim proves the existence of damage resulting from a product. 
In the first case decided in Belgium on the basis of the directive, the judge ruled that 
the explosion of an aerated beverage bottle was indeed evidence of an abnormal 
feature of the product which was incompatible with the safety that consumers were 
entitled to expect. The defect could be deduced from the abnormal behaviour of the 
product, according to the judge, in determining the proof that the victim had to bring. 
The producer had to consider the probable conditions of use of the product. 
Consequently, in the case of a beverage that was supposed to be consumed cold 
throughout the year, the producer had to consider the effects of temperature variations 
on the structure of the glass38. 
During the debate about extending Directive 85/374/EEC to primary agricultural 
products, the European Parliament eventually decided not to endorse the proposal from 
Case Riboux v S.A. Schweppes Belgium, 21.11.96, Civ. Namur, 5e. ch. 
21 
its relevant committee to make any presumption with regard to the appearance of 
damage in the case of a "typical course of events"39. 
2) To establish the degree or standard of necessary proof of the three elements 
required by Article 4 of Directive 85/374/EEC (damage, defect, causal relationship). 
It is not a question of including a presumption of proof in the directive, but of 
establishing that the victim should prove these three elements to a high degree of 
probability, without the standard needing to be very high (for example, it would be 
sufficient for probability to be above 60%). However, this option proves complicated 
in practice. 
During the debate on extension, the European Parliament, on the basis of a proposal 
from the relevant committee, examined the possibility of requiring that it be necessary 
only for the causal relationship to be "sufficiently probable". Parliament, however, 
rejected this idea40. 
3) To impose on the producer the obligation to provide all useful documentation 
and information so that the victim can avail himself of concrete facts to prove his 
case. 
4) With a view to facilitating the victim's burden of proof, to make the producer 
bear the costs of expert opinion under certain circumstances: for example, the victim 
could ask the judge for the producer to advance the costs incurred in the proof 
proceedings, on condition that the victim reimburse the costs (plus any interest) in the 
event of failure. 
In Italy there exists an example akin to this possibility. Article 8.3. of the 1988 decree 
transposing Directive 85/374/EEC allows the judge to order the producer to advance 
the costs of expert opinion if it is likely that the damage has been caused by a defect in 
the product. 
9. Do you think that the experience of implementing the directive justifies its being 
amended in order to make easier to determine the burden of proof? How? 
One special problem affecting the burden of proof concerns determining the identity 
of the producer when the same product is made by several producers (for example, a 
medicinal product manufactured under licence by several laboratories). Indeed, in 
some cases, the victim would be able to prove the damage, the defectiveness of the 
product and the causal relationship, but would not however be able to identify the 
producer of the product that caused the damage. According to the directive, in this 
case the buyer will have no possibility of recourse. 
A solution to this problem, for which there is no provision in the directive, would be 
to follow the principle of "market share liability" that exists in American law (see 
39 European Parliament, report by the Committee on the Environment, Public Health and 
Consumer Protection, (ROTH-BEHRENDT report, doc. A4-0326/98, accessible at 
http://www.europarl.eu.int/plenary/en/default.htm), amendment No 3. 
European Parliament, ROTH-BEHRENDT report, amendment No 12. 
22 
DES case in the Netherlands)41. The American theory of "market share liability" is 
used in particular with regard to liability involving medicinal products. The plaintiff 
is required solely to prove that there is a link between the damage and the 
incriminated product, without indicating the manufacturer's name. It is enough for a 
firm to enjoy the profits from the sale of the product for its liability to be invoked. 
The plaintiff will thus be able to involve several producers on account of their link 
with the incriminated product. He will be able to ask for the full amount of damages 
and interest from the most solvent defendant, regardless of his degree of liability. The 
latter can then claim against his competitors. The payment of the damages will then 
be shared among all the producers according to their market share. 
lO.Would "market share liability" be be feasible in Europe for this type of cases? 
Development risks 
Technological innovation has given rise to increasingly complicated product design 
and manufacturing processes, the long-term effects of which cannot be foreseen with 
certainty. This lack of certainty in connection with the state of the art raises the 
existence of "development risks", one of the most controversial aspects of the debate 
on product liability. 
The extent of the problem of "development risks" needs to be circumscribed: in 
accordance with Article 7(e) of Directive 85/374/EEC, the producer of a defective 
product is absolved of liability if he can establish that the objective state of technical 
and scientific knowledge, at its most advanced level, at the time when he put the 
product into circulation was not such as to enable the existence of the defect to be 
discovered. If it is to be a valid argument against the producer, the relevant 
knowledge must have been available when the product was put into circulation42. An 
initial evaluation of the practical application of this waiving of liability indicates that 
it is not so easy to prove that the defect could not be detected on the basis of the 
knowledge that was available when the product was marketed. 
In 1995 the German Bundesgerichtshof gave its first ruling on the basis of the directive 
and found that the waiving of liability under Article 7(e) of the directive did not apply 
to manufacturing defects (but solely to design defects)43. The case concerned the 
explosion of a recycled mineral water bottle. The state of the art made it possible to 
know that the type of bottle in question contained microscopic fractures that caused 
explosions. The Court ruled that a bottle with such a fracture had a manufacturing 
HR, 9.10.92, No 14 667, NJ 1994/535. This case is the follow-up to the legal battle in the 
United States, conducted mainly in California {Sindell v Abott Laboratories, 607 P. 2ed 924 
(Cal.), cert, denied, 449 US. 912 (1980)), dealing with the medicinal product diethylstilbestrol 
(a female hormone against miscarriages, and a source of cancer among children of women who 
have taken it). The Supreme Court in California ruled that any producer who had placed this 
trademarked product on the market was liable to the extent of his market share, the reason 
being to avoid any problems in tracing the origin of the product. 
Commission v the United Kingdom, C-300/95, judgement of 30.5.97, ECR [ 1997], p. 1-2649, 
point 29. 
BGH, 9.5.95, VI ZR 158/94 and NJW 1995, 2162. 
23 
defect for which the producer was held liable. The Austrian Oberste Gerichtshof has 
also ruled on "development risks"44. 
In the Belgian case mentioned earlier, the producer offered no evidence of abnormal 
use of the bottle nor any other evidence for which there is provision under Article 7 of 
the directive. In particular, the judge ruled that, whatever the quality checks the 
defendant claimed to have implemented, he did not offer any proof of the "absolute 
impossibility" of detecting the existence of the defect that caused the damage. 
Exemption from liability in the case of "development risks" has been at the centre of 
parliamentary debate in France on the transposition of the directive since 1990. On 9 
July 1996, in connection with the "contaminated blood" affair45, the Cour de Cassation 
ruled on the applicability of this exemption before the transposition of the directive. It 
stated that the blood transfusion centre was required to provide products that were 
untainted, without being able to claim exemption from liability for any reason other 
than external cause, and that the internal defect of the product, even if undetectable, 
did not constitute for the supplier an external cause. The supplier tried to invoke the 
exemption clause under Article 7(e), to counter the application of this principle, in 
spite of the lack of transposition in France. The Court replied that, even if the judge 
was required to interpret domestic law in the light of the purpose and text of the 
directive, it was on condition that the latter was binding on the Member State and did 
not allow any option in adapting national law to Community law. The Court added 
that the directive actually prescribed nothing on the matter, since Article 15(l)(b) 
allowed the Member States the option of deciding whether or not to introduce 
exemption for development risks. Following the adoption of Law No 98-389, the new 
Article 1386-12 of the French Civil Code confirmed this jurisprudence, by making no 
provision for producers of products derived from the human body to be able to claim 
exemption for development risks46. 
In 1985, European lawmakers dealt with the problem provisionally: exemption was 
possible for a period of ten years, although the Member States had the option of 
abolishing it unilaterally. Under Article 15(3) of the directive, it had been agreed that 
the Commission would assess whether producers should be liable for "development 
risks" after the transition period. 
The sensitive nature of the issue became apparent during the parliamentary debates on 
extending the directive to primary agricultural products. A large majority of MEPs 
were not in favour of abolishing the exemption without an assessment of its effect. 
The two amendments seeking to change the arrangements for "development risks" 
did not get the support of a majority of the Chamber47. Already in 1979, when the 
original Commission proposal (which did not contain such an exclusion) was 
considered, the European Parliament was divided on the matter. Although it had 
proposed excluding these risks, it had nevertheless recommended examining, after a 
45 
46 
47 OGH, 20.6.91, 6 Ob 568/91 (relevant jurisdiction); OGH, 30.6.92, 7 06 581/92, ecolex 1992, 
842 (exploding Coca Cola bottles); OGH and ecolex 1992, 842 (liability of distributor); OGH, 
11.11.92, 1 06 644/92 (unslaked lime); OGH, ecolex 1994, 384 (damage caused by 
component to final product) ; OGH and JB1 1995, 592 (liability if importer) ; OGH and JB1 
1996, 188 ("development risks"). 
Cass, lere civ., Cts X... c. GAN Incendie accidents et mitres, [order No 1395 P]. 
Article 13, Law No 98-389 of 19 May. 
Opinion of 5.11.98 (OJ C 359, of 23.11.98) 
24 
transitional period, the advisability of transferring, wholly or in part, generally or for 
certain risks only, the producers' liability to a guarantee fund, with a view to insuring 
both consumers and producers against this kind of risk . 
The question is whether the abolition of the exemption clause in Article 7(e) would 
have very damaging consequences for the manufacturing and/or insurance sectors. In 
this respect, the experience of countries where there is no exemption (as in 
Luxembourg, Finland and Spain in the case of food and medicinal products, Germany 
for pharmaceutical products and France for products derived from the human body 
and for those marketed before May 1998) ought to help in assessing whether and how 
liability for development risks involves insurmountable consequences for producers at 
the European level. The removal of this exemption clause could create problems with 
regard to the insurability of such risks, because of the lack of criteria on which to 
assess the probability of a risk, the existence of which is not known when the product 
is put on the market4 . However, if a risk is too great to be covered by an insurer, will 
it not be equally insurmountable for consumers? 
In view of the fact that the Commission does not have all the information that is 
needed to conclude that liability for "development risks" would be insurmountable for 
producers, it has called on operators to provide accurate information on the 
application of the exemption in order to make an objective assessment (1) whether the 
removal of the exemption would discourage producers from innovation, especially in 
the sectors that are most sensitive in this regard (e.g. pharmaceuticals) and (2) whether 
it would still be feasible to insure this kind of risk in the insurance market. 
11.Do you have information about the actual application of the exemption clause in 
case of "development risks" (Article 7(e) of the directive)? 
"^.Have you any information on specific extra costs incurred by industry in countries 
where producers are liable for development risks? 
"^.Do you think that producers should be liable for "development risks"? 
•^Should damages caused by development risks be borne by society as a whole (by 
means of a compensation fund using government revenue) and/or by the 
manufacturing sector in question (by means of a fund to which those in the sector 
contribute)? 
Financial limits 
48 
49 Opinion of 26.4.79 (OJC 127 of 21.5.79). 
In this connection, the deputy secretary-general of the European Insurance Committee said in 
1996: "The resulting conclusion is that the insurability of development risk poses a serious 
problem, and if European lawmakers, in their desire to harmonise civil liability for products, 
stopped it from being a reason for exemption in the future, it is certain that there would be an 
immdiate upheaval in relations between producers and their insurers" (LEGRAND, B : 
"L'impact de la directive sur l'industrie des assurances", La directive 85/374/CEE relative a la 
responsabilite dufait desproduits : dix ans apres, Louvain-la neuve, 1996.). 
25 
A producer's liability is not unlimited in financial terms under the current directive. 
The threshold indicated in Article 9 allows a producer not to compensate the victim 
for damage to property with a lower threshold of ECU 500. Council Directive 
85/374/EEC formally refers to ECU as a hysterical value50. With regard to the current 
directive and contrary to the opinion of some Member States51, the Commission is of 
the opinion that this threshold is not optional. There is provision in Article 16, on the 
other hand, for the possibility (not the obligation) to fix a maximum ceiling for 
product liability in the case of damage to persons caused by identical items with the 
same defect. This ceiling is set at ECU 70 million (an amount which, in practice, is 
seldom reached) but may be higher. Only Germany, Spain and Portugal have 
provided for such a limit. 
As for the threshold, the lawmakers had justified it in 1985 on the grounds of wanting 
to avoid improper court cases against producers under the directive, by restricting its 
field of application to material damage above a certain amount. This justification 
should be revised if experience provides no reason for believing that its removal 
would result in a surge of cases against producers, with the interests of SMEs kept in 
mind in this regard. On the other hand, the Article 16 limit is a transitional and 
exceptional solution, since no-limit liability ought to be revised, following a 
transitional period of ten years (see in this regard Article 16.2 of the directive). This 
explains why the limit has not been introduced in most Member States. 
In its opinion on extending the Directive 85/374/EEC to primary agricultural products, 
Parliament had initially supported the idea of removing the threshold of € 500 and 
increasing the option for a ceiling to € 140 million. The question is whether the 
existence of financial limits is strictly justified, especially with regard to the Article 16 
ceiling (which only three Member States have adopted). 
12.Do you have any information on the percentage of cases involving material damage 
of less than € 500? 
«s\Would you modify the Directive as regards the € 500 threshold and/orthe optional 
upper limit of € 70 million?. 
BS°.If you have opted for product liability with regard to development risks (question 
11), do you think that there is justification for keeping the optional upper limit for 
this kind of risk? 
Prescription and liability periods 
A producer's liability is not unlimited with regard to time. According to Articles 10 
and 11 of the directive, a producer's liability ceases ten years (term of extinction of 
liability) from the date on which the product was put into circulation, unless there are 
any claims or proceedings pending. During this ten-year period, if a person suffers 
The reference is not to the euro but to the ecu, the currency that was used before 1999; the 
value of the ecu in national currencies is that fixed on 25.07.85 (see Article 18, Directive 
85/374/EEC). 
There is no threshold in the French and Greek laws. 
26 
damages because of a defective product, he must claim for the recovery of damages 
within three years after the date on which he became aware, or should reasonably have 
become aware, of the damage, the defect and the identity of the producer (prescription 
period). Liability limited in time is justified mainly on grounds of fairness: for 
producers, no-fault liability involves a heavier burden than that laid down in the usual 
systems of contractual and extracontractual liability. This must be offset by a 
limitation in time so that technological innovation is not discouraged and insurance 
cover is available. 
The prescription period is not always fully understood when it comes to its application. 
On 21 June 1996, the civil chamber of the Spanish Supreme Court ruled, in a case 
dealing with compensation for a garage mechanic's loss of a finger when using a 
defective spanner, that the directive had no horizontal effect between private parties in 
accordance with Community jurisprudence Faccini Dori and that, consequently, it was 
not applicable to the product that had been put into circulation before the entry into 
force of the implementing law. In this particular case, the judge added that, even if the 
1994 law had been applicable ratione temporis, the proceedings were prescribed in 
view of the fact that the accident had occurred three years after the spanner had been 
purchased. But the fact is that, according to the directive, the prescription period for 
instituting proceedings begins from the day on which the plaintiff became aware of the 
damage, defect and the identity of the producer, and not from the date on which the 
product was purchased52. 
With regard to the time limit for instituting proceedings (three years), there is no a 
priori reason for thinking that the limit should be changed. On the other hand, it turns 
out that the liability limitation of ten years might not be enough to cover 
circumstances in which damage appeared after ten years (which is what the European 
Parliament had advocated in proposing an extension of the time limit to 20 years for 
"hidden defects")53. But the matter needs to be looked at again to see if such is the 
case. On the other hand, a longer period of liability involves a greater financial 
burden for producers and insurers. It is in any case useful to note that there is a 
difference on this matter between Directive 85/374/EEC and Council Directive 
92/59/EEC of 19 June 1992 on general product safety54. In the case of the former, a 
producer's civil liability for damage caused by a defective product ceases ten years 
after the date on which the product was put into circulation. However, Directive 
92/59/EEC requires producers to place only safe products on the market. The idea of 
a safe product, as laid down in Directive 92/59/EEC, includes a reference to the 
foreseeable period of a product's use, which can of course be greater than ten years. 
52 
53 
54 TS Sala Civil, 21.6.96 (RJ 1996/6712). The directive is also referred to in an order of 21.1.90 
(RJ 1990-69) on the liability of the distributor concerning a defective bathroom cabinet 
(Article 3.3); order of 23.5.91 (RJ 1991-3784) on the liability of a car manufacturer. The 
Supreme Court usually rules in connection with legislation on consumer protection (Law 
26/1984), which establishes liability with regard to a consumer's use and consumption of a 
product (order of 23.6.93, RJ 1993-5380). When the proper implementing conditions are 
satisfied, the courts will apply Law 22/94 of 6 July from 8 July 1994, instead of Articles 25-28 
of the 1984 law (vid. SAP Tarragona, 18.07.98, n. 347/1998). 
Opinion of 5.11.98 (OJC 359, of 23.11.98). 
OJL228of 11.8.92, p. 24. 
27 
13.Does the time limit of ten years need tochanged, either generally or specifically for 
certain products or sectors? 
BS". Should and could that change be borne in terms of cost by industry, especially 
SMEs, and the insurance market? 
Insurance requirement 
As already stated, the directive does not require producers to have any kind of 
financial cover, and in particular it does not impose any requirement to take out 
liability insurance for an amount that is adequate to cover any damage caused by a 
defective product. At the moment, it is up to the Member States to decide on the 
terms of such a requirement, unless there are cross-sectoral agreements between 
industry and insurers (e.g. in the field of pharmaceuticals). Operators' experience can 
help the Community to justify whether it should act in this regard by demanding from 
producers a financial commitment, either individually or collectively, to ensure that 
victims will be compensated, especially in connection with damages caused by 
identical items with the same defect, as referred to in Article 16 of the directive. 
It is not always easy to arrive at voluntary arrangements. The Government in Denmark 
endeavoured to persuade members of the pharmaceutical industry to agree on setting 
up a compensation fund like the one in Sweden (and Finland). In view of the 
impossibility of reaching a quick agreement, Parliament had to pass legislation in 1995 
on compensation for damages caused by medicinal products, which allowed 
consumers, regardless of any proof of fault or liability, to obtain compensation for 
personal injury caused by medicinal products obtained after 31 December 1995 by 
contacting a fund managed by the patient insurance association. This fund is financed 
by reducing reimbursement of medicinal products from 75% to 74.7% and from 50% 
to 49.8%. 
14.Are you aware of any cases whereby lack of insurance made it impossible for 
victims to obtain reimbursement for damages? 
^Do you think that there is a need to require producers to have insurance cover for 
risks linked to production or, alternatively, to encourage voluntary arrangements 
between producers and the insurance market? 
More transparency 
The lack of transparency and information concerning cases in which the liability 
provisions of Directive 85/374/EEC have been applied is a disrupting factor when it 
comes to looking at the implementation of the directive, especially with regard to the 
way in which victims have actually been compensated (amount of compensation, 
duration of claim procedure, difficulties in proving their case, etc). There is no 
provision in the directive for any means of making its implementation more 
transparent, apart from the regular assessment by the Commission. There is no 
obligation on producers to keep records of claims against them; nor are the national 
authorities obliged to keep track of the number of cases reported. 
Directive 92/59/EEC on general product safety, setting up a system of notification and 
exchanges of information between the Member States and the Commission to deal 
28 
with the withdrawal of unsafe products from the market, does not make it possible to 
remedy this shortcoming. In spite of the obligation on a producer to provide 
consumers with the relevant information on the risks inherent in a product and to take 
appropriate action including, if necessary, withdrawing the product from the market to 
avoid such risks, the legislation imposes no obligation requiring specific information 
on the actual application of Directive 85/374/EEC. 
The question is not an easy one, given producers' concern to keep business matters 
confidential. There are, however, ways that allow such information to be 
disseminated. Experience in the United States shows information on the issue of 
product liability is increasingly available as a result of two kinds of initiative. 
Firstly, there are research undertakings ("jury verdict reporters") that exist to elicit and 
disseminate information on the number of cases, amount of compensation, products 
and people involved, courts dealing with the case, etc. This kind of economic venture 
is becoming very widespread thanks to the Internet. 
This commercial activity does help the fact-finding work of the attorneys representing 
parties to disputes, for example by making available extracts of the latest decisions in a 
particular field or by categorising the kind of compensation paid. The National 
Association of Slate Jury Verdict Publishers is the organisation of American publishers 
who collect information directly from attorneys involved in such cases. A wide range 
of services is available on request (search for cases by category of product or damage, 
recent cases, lists of experts, review of out-of-court settlements, statistical analyses, 
etc)55. 
Secondly, lawmakers have imposed on producers the obligation to announce cases 
involving defective products and to notify the Consumer Product Safety Commission. 
Producers (and importers as well) have to notify this authority of circumstances in 
which a product that has allegedly caused death or serious injury is the subject of at 
least three court cases, as soon as the cases have been settled by a ruling in favour of 
the plaintiff or as the result of an out-of-court agreement56. 
15.Do you think that the directive needs to be revised in order to include means of 
increasing the transparency of the way in which operators apply the rules, 
especially by identifying the cases involving defective products that are still on the 
market? 
Supplier's liability 
Formal notification of supplier: Article 3(3) of Directive 85/374/EEC states that 
where the producer of a defective product cannot be identified, the supplier of the 
55 See www.jurYverdict.com. 
Section 37 of the Consumer Protection Safety Act (15 USC Sec. 2084, "Notification of 
settlements or judgments"). 
29 
product shall be treated as its producer unless he informs the injured person, within a 
reasonable time, of the identity of the producer or of the person who supplied him 
with the product. The same applies in the case of a product imported into the 
Community, if this product does not indicate the identity of the importer, even if the 
name of the producer is indicated. The victim is therefore obliged to notify the 
supplier formally, so that he can within a reasonable time provide details of the 
producer or previous supplier. This procedure of "formal notification" is justified 
inasmuch as the directive lays down as a principle that it is the producer who is liable 
for damage caused by a defect in his product. 
Experience shows, however, that the method of formally notifying a supplier of his 
liability can vary tremendously depending on the Member State, and this does not 
seem to be very satisfactory in view of the aims of the directive. In Italy, for instance, 
a supplier has three months in which to supply the required information (producer's 
name and address). The victim is responsible for making a written request for the 
information, by informing the supplier of the product in question and the date and 
place of its acquisition. The victim cannot refuse to let the supplier check the 
product57. In Germany the time limit for communicating the required information is 
restricted to one month58, and in Belgium the time limit will be decided by the court 9. 
The Commission asks those involved in the consultation to submit what they know on 
this point. 
Extent of supplier's liability: The directive puts forward as a principle that it is the 
producer who is liable for the damage caused by a defect in his product. Article 3(1) 
defines a producer as "the manufacturer of a finished product, the producer of any raw 
material or the manufacturer of a component part and any person who, by putting his 
name, trade mark or other distinguishing feature on the product presents himself as its 
producer". By way of exception, a professional acting as simple supplier is liable in 
only three cases: when he is the importer of the product into the Community - within 
the meaning of Article 3(2) of the directive - and, in certain circumstances, when the 
producer of the product cannot be identified by the victim of the damage caused by the 
product or when the identity of the aforementioned importer is not indicated on the 
product: Article 3(3). In other words, and apart from the limited instances referred to, 
the liability of professionals acting as simple suppliers is not governed by the 
provisions of Directive 85/374/EEC. In order to invoke the possible liability of the 
supplier, the victim of the damage caused by the defective product must use the 
system governing liability laid down in the legislation of the Member State in 
question. As a rule, it is the general system of extracontractual fault liability. 
As for Directive 92/59/EEC on general product safety, it states that producers shall be 
obliged to place only safe products on the market60, and it includes in its definition of 
producer other professionals in the supply chain, insofar as their activities may affect 
the safety properties of a product placed on the market. The question thus arises as to 
whether the no-fault liability system introduced in 1985 by Directive 85/374/EEC 
57 
58 
59 
60 Article 4, Decree-Law of 24 May 1988. 
§4 Produkthaftungsgesetz 1989. 
Article 4.2 of the Law of 25 February 1991. 
See Article 2(b) of Directive 92/59/EEC for the definition of a safe product. 
30 
should not be applicable to every professional in the product supply chain, when his 
activities have affected the safety properties in question of a product placed on the 
market, such as, for instance, specific activities involving repackaging, transport or 
storage. The Commission asks those involved in the consultation to comment on this 
point. 
16.Should the victim prove that he provided the supplier with the opportunity to 
inform him of the identity of the producer, at the risk of having his claim declared 
inadmissible, and, on the other hand, should the supplier inform him of the identity 
of the producer within a maximum time limit (e.g. three months)? 
"®\Should the Directive be applicable to any professional in the product supply chain 
when his activities have affected the safety properties in question of a product 
placed on the market? 
Products covered by the directive 
The directive applies only to products (namely material movables, whether for private 
use or not, including electricity). 
Having excluded defective services (for which the Commission is considering a 
possible specific initiative61), the Commission has received questions on whether real 
estate property should be included in the scope of the directive, insofar as there is no 
constructor liability system at Community level. 
17.Do you think that the directive needs to be extended to cover real estate property? 
Damage covered by the directive 
Article 9 of Directive 85/374/EEC refers to damage caused by death or personal 
injury, as well as damage to property, provided that it is intended for non-professional 
use, with the exception of the defective product itself62. 
Examples of non-application of the directive in the case of damage to the defective 
product can be found in Portuguese jurisprudence: in the ruling of 26 October 1995 by 
the Supremo Tribunal de Justica in a case dealing with the repair of a vehicle after an 
accident, the Portuguese Supreme Court held that the dealer of SEAT cars built in 
Spain was not liable under Decree-Law 383/89 by virtue of the fact that he was 
considered the "producer" and that the damage had been caused to the product itself53. 
On 23 May 1995, in another case dealing with the repair of a vehicle damaged by fire, 
the judge disregarded the national legislation implementing the directive on the 
62 Communication from the Commission - "Consumer policy action plan 1999-2001" 
(COM(98)696 of 1.12.98). 
Product compensation is covered by the legislation on sales guarantees (see Directive 
99/44/EC on after-sales guarantees , OJ No L 171, of 7.07.99). 
Acordao No 87.397, Col. De Jur., 1995,111-84. 
31 
grounds that the decree-law was not applicable at the moment when the product in 
question was placed in circulation and that it did not cover damage caused to the 
product itself6 . 
Non-material damage (any damage not affecting property, moral damage, mental 
suffering, etc) is not at present covered, even though most national legislations take it 
into account. In its opinion at the first reading of Directive 99/34/EC, the European 
Parliament recommended including mental suffering in the scope of the directive, 
although at the second reading Parliament failed to secure the majority needed to 
amend the directive accordingly. 
Another issue concerns damage caused to products intended normally for professional 
or commercial use, which are not covered by the directive. This means that when 
property in an office is destroyed by fire caused by a defective product, the owner 
(whether a firm or a professional) cannot invoke the directive against the producer to 
claim compensation for damage. The reason for this is that the directive covers 
damage to only one type of property: consumer goods. However, there is nothing in 
principle to prevent the directive being applied to help other types of victim, such as 
professionals. 
In France the law transposing the directive also covers damage to property intended for 
non-private use (commercial goods). 
18..Should the directive cover other damage caused by defective products, such as 
non-material damage, moral damage, mental suffering and/or damage to property 
intended for professional use, which would allow firms, and especially SMEs, to 
invoke the directive against producers of defective goods? 
Access to justice 
In addition to the ongoing initiatives concerning consumers' access to justice, 
announced by the Commission in its consumer policy action plan (implementation of 
the directive on injunctions, out-of-court settlement of disputes, recovery of legal 
expenses incurred by consumers in enforcing their rights, measures to make it easier 
for consumers to take legal action collectively, etc)65, the question is whether the 
implementation of Directive 85/374/EEC requires special measures to improve 
victims' access to justice. In this connection, two measures need to be considered: 
injunctions and group actions. 
Community legislation does not afford victims the opportunity to apply for an 
injunction when consumers' health and safety are harmed by a dangerous or defective 
product: the directive on injunctions for the protection of consumers' interests66 does 
not cover the field of Directive 85/374/EEC. However, it may be useful to see if a 
64 
65 
66 Recurso No 7653, Col. De Jur. 1995, III-113. 
COM(98)696of 1.12.98, p. 21. 
Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998, OJ L 
166/51 of 11.6.98. 
32 
solution similar to that proposed in Directive 98/27/EC is called for, in addition to a 
victim's right to compensation under Directive 85/374/EEC. In fact, according to 
Directive 92/59/EEC, a product can be withdrawn from the market only on order of 
the public authorities and not of private individuals. 
On the other hand, Community legislation does not cover group actions in this field 
either, even though this is a means that is often used in cases of product liability, 
albeit without any guarantee of success. 
An example of multi-party action in this field is shown by the benzodiazepines case in 
the United Kingdom, which involved 5 000 separate proceedings against Roche 
Products Ltd and John Wyeth and Brother Ltd for damage caused by the tranquillisers, 
Valium and Ativan. The case depended on the financial support of the Legal Aid 
Board, which subsequently withdrew its funding on account of the costs that such a 
case involved. Seventy plaintiffs nevertheless continued the proceedings, until their 
cases were struck out in a High Court judgement on 19 July 1996 . 
In the United States there is a special procedure, which has never been used much in 
Europe. If it is likely that a case will become almost impossible to conduct because 
there are so many plaintiffs or defendants who may be required to appear, one or more 
plaintiffs may be selected to represent the others if questions of fact or of law are of 
common interest to all of them. These are known as "class action suits". The party 
that is selected to represent the others must have certain typical features that make him 
the ideal representative. The judgement delivered at the end of a class action suit 
serves as res judicata for all the parties who had elected to participate in the 
representative action, and also for anyone else who suffered the same kind of damage 
but who had not explicitly indicated his wish not to participate in the action . 
However, American courts are demonstrating increasing caution with regard to class 
action suits. According to the Federal Rules of Civil Procedure, these suits are 
possible on condition that the class represented in the action is "certified", i.e. 
identified. When a case involves a producer's liability, the court must ensure that the 
group is very large and has the same questions of fact and law, that the representatives 
of the group are serving and defending the group's interests in an appropriate manner, 
that the individual arguments are less significant than the collective arguments and, 
lastly, that a class action suit is the most suitable means of action when compared with 
other ways of settling the dispute69. The Supreme Court showed this kind of "legal 
scepticism" in the dispute concerning asbestos70. The Court did not acknowledge the 
common identity of the group of asbestos victims because of the lack "common" 
interest in the case in question. This decision confirms a growing reluctance among 
American courts involved in "mass tort litigation" against the tobacco or asbestos 
industries. 
67 
68 
69 
70 See details at www.gidleigh.com/alert 
Rule 23 of the US Federal Rules of Civil Procedure: "...the judgment, whether favorable or 
not, will include all members who do not request exclusion;" 
Rule 23 of the US Federal Rules of Civil Procedure. 
Amchem Products Inc. v Windsor , 117 S.Ct. 2231 (1997), delivered on 25 June 1997. 
33 
In Europe, although some national systems allow cases to be grouped (as in France, 
where group actions allow consumers' individual interests to be pooled - and this has 
to be distinguished from collective actions or injunctions, the purpose of which is to 
serve the general interest rather than individual interests), there has been a legal 
procedure which seems somewhat similar to class action suits only in Portugal since 
1995 (Law No 83/95 on people's action). 
19.Should Community legislation provide for court proceedings or out-of-court 
dispute resolution means , specially setfor the implementation of Directive 
85/374/EEC? 
^Would injunctions, provide a solution71? 
"^Would it be feasible to introduce better arrangements for the common 
representation of similar interests, like the group actions in France and the people's 
actions in Portugal? 
Other 
There are a number of issues relating to liability for defective products which are not 
dealt with by Directive 85/374/EEC. These include the liability of the management 
and workers of the firm producing the product, criteria to evaluate damage and 
arrangements for compensation, apportionment of responsibility among those who are 
jointly and severally liable, and so on. The Commission asks those parties involved to 
identify any additional topics that might warrant legislative action at Community level 
and to give the reasons for such action. 
This could be done by including the 1985 Directive in the list of Directive 98/27/EC on 
injunctions. 
34 
Annex 1 : Directive on liability for defective products 
Transposition in domestic law 
Member State 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland Adoption 
Law of 25.2.91 
Law No 371 du 
7.6.89 
Law of 15.12.89 
Law 2251/1994 
(replacing decree-
law of 1988) 
Law No 22/1994 du 
6.4.94 
Law No 389-98 du 
19.5.98 
Law No 28 of 1991 
Decree-Law No 224 
of 24.5.88 
Law of 21.4.89, 
amended by Law of 
6.12.89 
Law of 13.9.90 
Law No 99 of 
21.1.88, amended 
by Law No 95 of 
11.2.93, Law No 
917 of 29.12.93 and 
Law No 510 of 
12.7.94 
Decree-Law No 383 
of 6.11.89 
Law No 694 of 
17.08.90, amended 
by Law No 99 of 
8.1.93 and Law No Entry into 
force 
1.4.91 
10.6.89 
1.1.90 
8.7.94 
23.5.98 
16.12.91 
24.5.88 
2.5.91 
1.11.90 
1.7.88 
21.11.89 
1.9.91 Liability for defective 
agricultural products 
(art. 15.1.a)* 
NO 
NO 
NO 
YES 
NO 
YES 
NO 
NO 
YES 
NO 
NO (apart from 
GMOs) 
NO 
YES Liability for 
development risks 
(art. 15.1.b) 
NO 
NO 
NO 
NO 
NO (apart from 
food and 
medicinal 
products) 
NO (apart from 
products derived 
from the human 
body) 
NO 
NON 
YES 
NO 
NO 
NO 
YES Financial 
ceiling 
(art. 16) 
NO 
NO 
YES 
NO 
YES 
NO 
NO 
NO 
NO 
NO 
NO 
YES 
NO 
Following the adoption of Directive 99/34/EC, the Member States are obliged to extend 
Directive 85/374/EEC to primary agricultural products. 
35 
Sweden 
United 
Kingdom 879 of 22.10.93 
Law No 18 of 
23.1.92, amended 
by Law No 1137 of 
3.12.92 and Law No 
647 of 10.6.93 
Law of 15.5.87 1.1.93 
1.3.88 YES 
NO NO 
NO NO 
NO 
36 
Annex 2 : Directive on liability for defective products 
Alignment of non-Member States' laws 
State 
Iceland 
Liechtenstein 
Norway 
Malta 
Cyprus 
Estonia 
Hungary 
Poland 
Czech Republic 
Slovenia 
Bulgaria 
Latvia 
Lithuania 
Slovakia 
Romania 
Turkey Adoption 
Law No 25 of 
27.3.91 
Law of 12.11.92 
Law No 104 of 
23.12.88, 
amended by Law 
No 62 of 25.11.91 
(draft law) 
Law No 105 of 
1995 
(draft law) 
Law No 10 of 
16.2.93, amended 
by Law No 25 of 
16.3.98 
(draft law) 
Law No 59 of 
5.3.98 
Law of 6.3.98 
Law of 18.3.99 
Law of 8.10.96 
(draft law) 
(draft law) 
(draft law) 
Law of 23.2.95 Entry into 
force 
1.1.92 
1.5.95 
1.1.89 
--
1.1.97 
--
1.1.94 
--
1.6.98 
28.3.98 
3.7.99 
8.10.96 
--
--
--
8.9.95 Liability for 
defective 
agricultural 
products 
(art. 15. La) 
YES 
NO 
YES 
--
NO 
--
NO 
-
NO 
YES 
YES 
NO 
--
--
--
NO Liability for 
development 
risks (art. 
15.1.b) 
NO 
NO 
YES 
--
NO 
--
NO 
--
NO 
NO 
NO 
NO 
--
--
--
NO Financial 
ceiling 
(art. 16) 
YES 
NO 
NO 
--
NO 
--
NO 
--
NO 
NO 
YES 
NO 
--
--
--
NO 
37 
Annex 3: 
State 
Australia 
Israel 
Japan 
United States*** 
Brazil 
Switzerland Legislation of 
Adoption 
Trade Practices 
Amendment Act 
1992 (24.6.92) 
Defective Products 
(Liability) Law 
1980 
Product Liability 
Law (1.7.94) 
S 2236 (federal bill 
tabled on 25.6.98 
and rejected on 
9.7.98) 
Codigo de defesa do 
Consumidor 
(11.9.90) 
Federal law on 
liability for 
defective products 
of 18.6.93 non-Member States on liability for defecti1 
Entry into 
force 
9.7.92 
1.9.80 
1.7.95 
11.3.91 
1.1.94 Liability for 
defective 
agricultural 
products 
(art. 15. La) 
YES 
NO 
NO 
--
NO Liability for 
development 
risks (art. 
15.Lb) 
NO 
NO 
NO 
-
NO ye products 
Financial 
ceiling 
(art. 16) 
— 
— 
NO 
NO 
NO 
In the absence of a harmonised federal law, civil liability for defective products is a matter of 
States law. 
38 
Annex 4 
85L0374 
Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative 
provisions of the Member States concerning liability for defective products 
(Official Journal L 210 , 07/08/1985 p. 0029 - 0033) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, and in particular Article 100 thereof, 
Having regard to the proposal from the Commission (1), 
Having regard to the opinion of the European Parliament (2), 
Having regard to the opinion of the Economic and Social Committee (3), 
Whereas approximation of the laws of the Member States concerning the liability of the producer for damage caused 
by the defectiveness of his products is necessary because the existing divergences may distort competition and 
affect the movement of goods within the common market and entail a differing degree of protection of the consumer 
against damage caused by a defective product to his health or property; 
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; 
Whereas libility without fault should apply only to movables which have been industrially produced; whereas, as a 
result, it is appropriate to exclude liability for agricultural products and game, except where they have undergone a 
processing of an industrial nature which could cause a defect in these products; whereas the liability provided for in 
this Directive should also apply to movables which are used in the construction of immovables or are installed in 
immovables; 
Whereas protection of the consumer requires that all producers involved in the production process should be made 
liable, in so far as their finished product, component part or any raw material supplied by them was defective; 
whereas, for the same reason, liability should extend to importers of products into the Community and to persons 
who present themselves as producers by affixing their name, trade mark or other distinguishing feature or who 
supply a product the producer of which cannot be identified; 
Whereas, in situations where several persons are liable for the same damage, the protection of the consumer 
requires that the injured person should be able to claim full compensation for the damage from any one of them; 
whereas, to protect the physical well-being and property of the consumer, the defectiveness of the product should be 
determined by reference not to its fitness for use but to the lack of the safety which the public at large is entitled to 
expect; whereas the safety is assessed by excluding any misuse of the product not reasonable under the 
circumstances; 
Whereas a fair apportionment of risk between the injured person and the producer implies that the producer should 
be able to free himself from liability if he furnishes proof as to the existence of certain exonerating circumstances; 
Whereas the protection of the consumer requires that the liability of the producer remains unaffacted by acts or 
omissions of other persons having contributed to cause the damage; whereas, however, the contributory negligence 
of the injured person may be taken into account to reduce or disallow such liability; 
Whereas the protection of the consumer requires compensation for death and personal injury as well as 
compensation for damage to property; whereas the latter should nevertheless be limited to goods for private use or 
consumption and be subject to a deduction of a lower threshold of a fixed amount in order to avoid litigation in an 
excessive number of cases; whereas this Directive should not prejudice compensation for pain and suffering and 
other non-material damages payable, where appropriate, under the law applicable to the case; 
Whereas a uniform period of limitation for the bringing of action for compensation is in the interests both of the 
injured person and of the producer; 
Whereas products age in the course of time, higher safety standards are developed and the state of science and 
technology progresses; whereas, therefore, it would not be reasonable to make the producer liable for an unlimited 
period for the defectiveness of his product; whereas, therefore, liability should expire after a reasonable length of 
time, without prejudice to claims pending at law, 
39 
Whereas, to achieve effective protection of consumers, no contractual derogation should be permitted as regards 
the liability of the producer in relation to the injured person; 
Whereas under the legal systems of the Member States an injured party may have a claim for damages based on 
grounds of contractual liability or on grounds of non-contractual liability other than that provided for in this Directive; 
in so far as these provisions also serve to attain the objective of effective protection of consumers, they should 
remain unaffected by this Directive; whereas, in so far as effective protection of consumers in the sector of 
pharmaceutical products is already also attained in a Member State under a special liability system, claims based on 
this system should similarly remain possible; 
Whereas, to the extent that liability for nuclear injury or damage is already covered in all Member States by adequate 
special rules, it has been possible to exclude damage of this type from the scope of this Directive; 
Whereas, since the exclusion of primary agricultural products and game from the scope of this Directive may be felt, 
in certain Member States, in view of what is expected for the protection of consumers, to restrict unduly such 
protection, it should be possible for a Member State to extend liability to such products; 
Whereas, for similar reasons, the possibility offered to a producer to free himself from liability if he proves 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 a defect to be discovered may be felt in certain Member States to restrict unduly the 
protection of the consumer; whereas it should therefore be possible for a Member State to maintain in its legislation 
or to provide by new legislation that this exonerating circumstance is not admitted; whereas, in the case of new 
legislation, making use of this derogation should, however, be subject to a Community stand-still procedure, in order 
to raise, if possible, the level of protection in a uniform manner throughout the Community; 
Whereas, taking into account the legal traditions in most of the Member States, it is inappropriate to set any financial 
ceiling on the producer's liability without fault; whereas, in so far as there are, however, differing traditions, it seems 
possible to admit that a Member State may derogate from the principle of unlimited liability by providing a limit for the 
total liability of the producer for damage resulting from a death or personal injury and caused by identical items with 
the same defect, provided that this limit is established at a level sufficiently high to guarantee adequate protection of 
the consumer and the correct functioning of the common market; 
Whereas the harmonization resulting from this cannot be total at the present stage, but opens the way towards 
greater harmonization; whereas it is therefore necessary that the Council receive at regular intervals, reports from 
the Commission on the application of this Directive, accompanied, as the case may be, by appropriate proposals; 
Whereas it is particularly important in this respect that a re-examination be carried out of those parts of the Directive 
relating to the derogations open to the Member States, at the expiry of a period of sufficient length to gather practical 
experience on the effects of these derogations on the protection of consumers and on the functioning of the common 
market, 
HAS ADOPTED THIS DIRECTIVE: 
Article 1 
The producer shall be liable for damage caused by a defect in his product. 
Article 2 
For the purpose of this Directive 'product' means all movables, with the exception of primary agricultural products 
and game, even though incorporated into another movable or into an immovable. 'Primary agricultural products' 
means the products of the soil, of stock-farming and of fisheries, excluding products which have undergone initial 
processing. 'Product' includes electricity. 
Article 3 
1. 'Producer' means the manufacturer of a finished product, the producer of any raw material or the manufacturer of 
a component part and any person who, by putting his name, trade mark or other distinguishing feature on the 
product presents himself as its producer. 
2. Without prejudice to the liability of the producer, any person who imports into the Community a product for sale, 
hire, leasing or any form of distribution in the course of his business shall be deemed to be a producer within the 
meaning of this Directive and shall be responsible as a producer. 
3. Where the producer of the product cannot be identified, each supplier of the product shall be treated as its 
producer unless he informs the injured person, within a reasonable time, of the identity of the producer or of the 
person who supplied him with the product. The same shall apply, in the case of an imported product, if this product 
does not indicate the identity of the importer referred to in paragraph 2, even if the name of the producer is indicated. 
Article 4 
40 
The injured person shall be required to prove the damage, the defect and the causal relationship between defect and 
damage. 
Article 5 
Where, as a result of the provisions of this Directive, two or more persons are liable for the same damage, they shall 
be liable jointly and severally, without prejudice to the provisions of national law concerning the rights of contribution 
or recourse. 
Article 6 
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. 
Article 7 
The producer shall not be liable as a result of this Directive if he proves: 
(a) that he did not put the product into circulation; or 
(b) that, having regard to the circumstances, it is probable that the defect which caused the damage did not exist at 
the time when the product was put into circulation by him or that this defect came into being afterwards; or 
(c) that the product was neither manufactured by him for sale or any form of distribution for economic purpose nor 
manufactured or distributed by him in the course of his business; or 
(d) that the defect is due to compliance of the product with mandatory regulations issued by the public authorities; or 
(e) 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; or 
(f) in the case of a manufacturer of a component, that the defect is attributable to the design of the product in which 
the component has been fitted or to the instructions given by the manufacturer of the product. 
Article 8 
1. Without prejudice to the provisions of national law concerning the right of contribution or recourse, the liability of 
the producer shall not be reduced when the damage is caused both by a defect in product and by the act or 
omission of a third party. 
2. The liability of the producer may be reduced or disallowed when, having regard to all the circumstances, the 
damage is caused both by a defect in the product and by the fault of the injured person or any person for whom the 
injured person is responsible. 
Article 9 
For the purpose of Article 1, 'damage' means: 
(a) damage caused by death or by personal injuries; 
(b) damage to, or destruction of, any item of property other than the defective product itself, with a lower threshold of 
500 ECU, provided that the item of property: 
(i) is of a type ordinarily intended for private use or consumption, and 
(ii) was used by the injured person mainly for his own private use or consumption. 
This Article shall be without prejudice to national provisions relating to non-material damage. 
41 
Article 10 
1. Member States shall provide in their legislation that a limitation period of three years shall apply to proceedings for 
the recovery of damages as provided for in this Directive. The limitation period shall begin to run from the day on 
which the plaintiff became aware, or should reasonably have become aware, of the damage, the defect and the 
identity of the producer. 
2. The laws of Member States regulating suspension or interruption of the limitation period shall not be affected by 
this Directive. 
Article 11 
Member States shall provide in their legislation that the rights conferred upon the injured person pursuant to this 
Directive shall be extinguished upon the expiry of a period of 10 years from the date on which the producer put into 
circulation the actual product which caused the damage, unless the injured person has in the meantime instituted 
proceedings against the producer. 
Article 12 
The liability of the producer arising from this Directive may not, in relation to the injured person, be limited or 
excluded by a provision limiting his liability or exempting him from liability. 
Article 13 
This Directive shall not affect any rights which an injured person may have according to the rules of the law of 
contractual or non-contractual liability or a special liability system existing at the moment when this Directive is 
notified. 
Article 14 
This Directive shall not apply to injury or damage arising from nuclear accidents and covered by international 
conventions ratified by the Member States. 
Article 15 
1. Each Member State may: 
(a) by way of derogation from Article 2, provide in its legislation that within the meaning of Article 1 of this Directive 
'product' also means primary agricultural products and game; 
(b) by way of derogation from Article 7 (e), maintain or, subject to the procedure set out in paragraph 2 of this Article, 
provide in this legislation that the producer shall be liable even if he proves 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 a defect to 
be discovered. 
2. A Member State wishing to introduce the measure specified in paragraph 1 (b) shall communicate the text of the 
proposed measure to the Commission. The Commission shall inform the other Member States thereof. 
The Member State concerned shall hold the proposed measure in abeyance for nine months after the Commission is 
informed and provided that in the meantime the Commission has not submitted to the Council a proposal amending 
this Directive on the relevant matter. However, if within three months of receiving the said information, the 
Commission does not advise the Member State concerned that it intends submitting such a proposal to the Council, 
the Member State may take the proposed measure immediately. 
If the Commission does submit to the Council such a proposal amending this Directive within the aforementioned 
nine months, the Member State concerned shall hold the proposed measure in abeyance for a further period of 18 
months from the date on which the proposal is submitted. 
3. Ten years after the date of notification of this Directive, the Commission shall submit to the Council a report on the 
effect that rulings by the courts as to the application of Article 7 (e) and of paragraph 1 (b) of this Article have on 
consumer protection and the functioning of the common market. In the light of this report the Council, acting on a 
proposal from the Commission and pursuant to the terms of Article 100 of the Treaty, shall decide whether to repeal 
Article 7 (e). 
Article 16 
1. Any Member State may provide that a producer's total liability for damage resulting from a death or personal injury 
and caused by identical items with the same defect shall be limited to an amount which may not be less than 70 
million ECU. 
42 
2. Ten years after the date of notification of this Directive, the Commission shall submit to the Council a report on the 
effect on consumer protection and the functioning of the common market of the implementation of the financial limit 
on liability by those Member States which have used the option provided for in paragraph 1. In the light of this report 
the Council, acting on a proposal from the Commission and pursuant to the terms of Article 100 of the Treaty, shall 
decide whether to repeal paragraph 1. 
Article 17 
This Directive shall not apply to products put into circulation before the date on which the provisions referred to in 
Article 19 enter into force. 
Article 18 
1. For the purposes of this Directive, the ECU shall be that defined by Regulation (EEC) No 3180/78 (1), as 
amended by Regulation (EEC) No 2626/84 (2). The equivalent in national currency shall initially be calculated at the 
rate obtaining on the date of adoption of this Directive. 
2. Every five years the Council, acting on a proposal from the Commission, shall examine and, if need be, revise the 
amounts in this Directive, in the light of economic and monetary trends in the Community. 
Article 19 
1. Member States shall bring into force, not later than three years from the date of notification of this Directive, the 
laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith inform 
the Commission thereof (1). 
2. The procedure set out in Article 15 (2) shall apply from the date of notification of this Directive. 
Article 20 
Member States shall communicate to the Commission the texts of the main provisions of national law which they 
subsequently adopt in the field governed by this Directive. 
Article 21 
Every five years the Commission shall present a report to the Council on the application of this Directive and, if 
necessary, shall submit appropriate proposals to it. 
Article 22 
This Directive is addressed to the Member States. 
Done at Brussels, 25 July 1985. 
For the Council 
The President 
J. POOS 
(1)OJNoC241, 14. 10. 1976, p. 9 and OJ No C 271, 26. 10. 1979, p. 3. 
(2)OJ NoC 127,21.5. 1979, p. 61. 
(3) OJ No C 114, 7. 5. 1979, p. 15. 
(1)OJNoL379, 30. 12. 1978, p. 1. 
(2) OJ No L 247, 16. 9. 1984, p. 1. 
(1) This Directive was notified to the Member States on 30 July 1985. 
43 
ISSN 0254-1475 
COM( 1999) 396 final 
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