Green paper - Liability for defective products
Date: 1999-07-28
Institutions: European Commission
Subjects: civil liability, consumer protection, defective product, producer's liability, product safety

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. 

the  Commission  -  "Consumer  policy  action  plan  1999-2001" 

Communication  from 
(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 
the 
of  producer 
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. 

the  positions  of  principle  are  well-known, 

liability,  where 

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 
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. 

legal  certainty  to  foster 

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 
13 

TS Sala Civil, 4.10.96, No 778/1996 (RJ  1996-7034). 
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"),  -

a 

in 

been 

applied 

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 
(see  www.law.kyushu-
number 
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. 

cases 

large 

of 

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 

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. 

18 

19 

20 

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 
see 
a 
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). 

$300  million 

for  medical 

establishes 

research 

fund 

- 

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 
interests  of  other 
an  equitable  reconciliation  of  consumer 
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). 

interests  and  the 

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  - 
(COM(98)696 of  1.12.98,  p.4.) 

"Consumer  Policy  Action  Plan  1999-2001' 

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. 

Are  you  aware  of  any cases  of  defective  products  in  which  the  Directive  was 

6. 
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. 

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). 

31 

32 

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, 
It  is  not 
have  information  to  demonstrate  that  the  current  system  needs  fixing. 
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. 

bis  US Senate, Report No 105-32, pp. 2, 44, 71, 75. 

32' 

33 

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 
(COM(98)696 of  1.12.98.) 

the  Commission  "Consumer  policy  action  plan  1999-2001", 

from 

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: 

To  infer  a causal  relationship  when  the  victim  proves  the  damage  or  defect,  or 

1) 
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. 

To  establish  the  degree  or  standard  of  necessary  proof  of  the  three  elements 
2) 
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, 
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. 

(ROTH-BEHRENDT 

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 
If  it  is  to  be  a  valid  argument  against  the  producer,  the  relevant 
discovered. 
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 

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) 

45 

46 

47 

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. 

the 

that 

liability 

limitation  of 

ten  years  might  not  be  enough 

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 
to  cover 
out 
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 
In  view  of  the 
up  a  compensation  fund  like  the  one  in  Sweden  (and  Finland). 
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 
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. 

in  the  directive  for  any  means  of  making 

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. 
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. 

There  are,  however,  ways  that  allow  such 

information 

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 

dispute  resolution  means  ,  specially  setfor 
85/374/EEC? 

for  court  proceedings  or  out-of-court 
the  implementation  of  Directive 

^Would  injunctions,  provide a solution71? 

it  be  feasible 

the  common 
"^Would 
representation  of  similar  interests,  like  the  group  actions  in  France  and  the  people's 
actions in Portugal? 

introduce  better  arrangements  for 

to 

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 

Adoption 

Entry into 
force 

Liability for defective 
agricultural products 
(art. 15.1.a)* 

Liability for 
development  risks 
(art. 15.1.b) 

Financial 
ceiling 
(art. 16) 

Belgium 

Law of 25.2.91 

1.4.91 

Denmark 

Law No 371 du 
7.6.89 

10.6.89 

Germany 

Law of  15.12.89 

1.1.90 

Greece 

Law 2251/1994 
(replacing decree-
law of  1988) 

NO 

NO 

NO 

YES 

Spain 

Law No 22/1994 du 
6.4.94 

8.7.94 

NO 

France 

Law No 389-98 du 
19.5.98 

23.5.98 

YES 

Ireland 

Law No 28 of  1991 

16.12.91 

Italy 

Decree-Law  No 224 
of 24.5.88 

24.5.88 

NO 

NO 

Luxembourg 

Law of 21.4.89, 
amended  by Law of 
6.12.89 

2.5.91 

YES 

Netherlands 

Law of  13.9.90 

1.11.90 

NO 

1.7.88 

NO (apart  from 
GMOs) 

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 

NO 

YES 

NO 

YES 

NO 

NO 

NO 

NO 

NO 

NO 

Austria 

Portugal 

Finland 

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 

21.11.89 

NO 

NO 

YES 

1.9.91 

YES 

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 

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 

1.1.93 

YES 

NO 

NO 

Law of  15.5.87 

1.3.88 

NO 

NO 

NO 

Sweden 

United 
Kingdom 

36 

Annex 2 : 

Directive on liability for defective  products 

Alignment of non-Member States' laws 

State 

Adoption 

Entry into 
force 

Liability for 
defective 
agricultural 
products 
(art.  15. La) 

Liability for 
development 
risks (art. 
15.1.b) 

Financial 
ceiling 
(art. 16) 

Iceland 

Law No 25 of 
27.3.91 

1.1.92 

YES 

Liechtenstein 

Law of 12.11.92 

1.5.95 

Norway 

1.1.89 

Law No 104 of 
23.12.88, 
amended by Law 
No 62 of 25.11.91 

Malta 

(draft law) 

--

Cyprus 

Law No  105 of 
1995 

1.1.97 

Estonia 

(draft law) 

--

Hungary 

1.1.94 

Law No 10 of 
16.2.93, amended 
by Law No 25 of 
16.3.98 

Poland 

(draft law) 

--

Czech  Republic 

Law No 59 of 
5.3.98 

1.6.98 

Slovenia 

Law of 6.3.98 

28.3.98 

Bulgaria 

Law of  18.3.99 

3.7.99 

Latvia 

Law of 8.10.96 

8.10.96 

Lithuania 

(draft law) 

Slovakia 

(draft law) 

Romania 

(draft law) 

--

--

--

NO 

YES 

--

NO 

--

NO 

-

NO 

YES 

YES 

NO 

--

--

--

NO 

NO 

YES 

--

NO 

--

NO 

--

NO 

NO 

NO 

NO 

--

--

--

YES 

NO 

NO 

--

NO 

--

NO 

--

NO 

NO 

YES 

NO 

--

--

--

Turkey 

Law of 23.2.95 

8.9.95 

NO 

NO 

NO 

37 

Annex  3: 

Legislation of 

non-Member States on liability for defecti1 

ye products 

State 

Adoption 

Entry into 
force 

Liability for 
defective 
agricultural 
products 
(art.  15. La) 

Liability for 
development 
risks (art. 
15.Lb) 

Financial 
ceiling 
(art. 16) 

Australia 

Israel 

Japan 

United States*** 

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) 

Brazil 

Codigo de defesa do 
Consumidor 
(11.9.90) 

Switzerland 

Federal law on 
liability for 
defective  products 
of  18.6.93 

9.7.92 

YES 

1.9.80 

NO 

NO 

NO 

— 

— 

1.7.95 

NO 

NO 

NO 

11.3.91 

--

-

NO 

1.1.94 

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 ) O J N o C 2 4 1,  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 

DOCUMENTS 

EN 

10  06  08  15 

Catalogue number : CB-CO-99-414-EN-C 

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