Opinion of the Economic and Social Committee on the 'Green paper - Liability for defective products'
Date: 2000-03-01
Institutions: European Economic and Social Committee
Subjects: civil liability, defective product, indemnity insurance, national implementing measure

26.4.2000

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Official Journal of the European Communities

C 117/1

II

(Preparatory Acts)

ECONOMIC AND SOCIAL COMMITTEE

Opinion of the Economic and Social Committee on the ‘Green paper — Liability for defective
products’

(2000/C 117/01)

On 30 July 1999, the Commission decided to consult the Economic and Social Committee, under Article
262 of the Treaty establishing the European Community, on the ‘Green paper — Liability for defective
products’.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 15 February 2000. The rapporteur was
Mr Vever.

At its 370th plenary session on 1 and 2 March 2000 (meeting of 1 March), the Economic and Social
Committee adopted the following opinion by 97 votes to 1, with 2 abstentions.

1.

Introduction

1.3.

Currently, the three main issues are:

1.1.
The Green Paper on liability for defective products,
issued by the Commission in July 1999, provides the first
real opportunity to assess the implementation of Directive
85/374/EEC (1) in the European Union. This was not possible
at the time of the last Commission report, published in May
1995, owing to delays in transposition of the directive in the
Member States.

1.2.
The Economic and Social Committee hosted a hearing
on the Green Paper in Brussels on 22 November 1999,
in order to listen to the experiences and viewpoints of
socio-occupational organisations, companies and consumers’
associations. This Committee opinion is broadly based on the
discussions that took place at that hearing.

— evaluation of the implementation of the 1985 directive,

— possibilities for its revision,

— how to improve monitoring and prevention.

2. Comments on the implementation of the 1985 direc-

tive

2.1.
The 1985 directive was designed to establish a Euro-
pean model that would be applicable in all the Member States.
The model relies on a balance between consumers and
producers, which, as the Commission stresses, needs to be
preserved. This European scheme is based on six principles:

— objective liability, no need to prove fault;

(1) OJ L 210, 7.8.1985, p. 29.

the damage;

— liability linked to a cause, requiring proof of the defect and

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— legal liability, that cannot be waived at the wish of the

parties;

— relative liability, giving the producer exemption from
liability in a certain number of explicitly listed cases;

— liability affecting first and foremost

the producer or

otherwise the supplier or importer by default;

— liability limited in time, with a time limit fixed at 10 years
into
from the date on which the product was put
circulation.

complex product is at fault, in the case of motor vehicles for
instance, to call products back for checks and corrective action.
Awareness and prevention campaigns have also been launched
to good effect by the European Union; the Ehlass programme,
for instance, addresses accidents in the home. Furthermore,
most cases are apparently settled out of court, inter alia by
mutually agreed compensation.

2.6.
Although it is difficult to assess the exact impact of the
directive on the European internal market, it seems to have
been positive overall, inasmuch as it offers greater security by
drawing together a common core of principles and evaluation
methods for liability. Furthermore, the divergent situations
that exist owing to specific national provisions being based on
other liability systems, covered by either contract or tort law,
do not appear as yet to have had a negative effect on trade.

2.2.
The 1985 directive has gradually been implemented
not only in the 15 Member States, but also in other non-EU
European countries (the applicant countries, Switzerland and
Norway). In view of the balance it offers the various parties
concerned, the directive’s provisions have also inspired liability
schemes in third countries such as Japan, where this approach
has been given preference over the US system.

3. Comments on a possible revision of the directive

The potential revision of the 1985 directive raises a

3.1.
number of prior concerns which demand attention.

2.3.
However, there were delays in implementing the 1985
directive within the EU, owing to slow transposition in certain
Member States. As a result, there has been very little time to
monitor the current situation. Furthermore, it would appear
that judges, lawyers and other interested parties are not always
very familiar with the directive; steps must be taken to remedy
this situation.

3.1.1.
As mentioned above, given the short time since the
directive was transposed in all the Member States, there is not
yet enough information to provide a clear overall picture of
how it has been implemented, the problems raised by genu-
inely important cases and any shortcomings in the common
system;
the simultaneous existence of divergent national
provisions that go further than the common rules is another
factor here.

2.4.
Although the directive has contributed to the upward
harmonisation of national liability systems, court cases and
judgements are founded first and foremost on national pro-
visions, which are sometimes considerably more stringent than
those in the directive. The directive does not preclude more
stringent national provisions, and the victim of damage may
invoke a national contractual or non-contractual liability law
or a special liability system. In most of the Member States,
victims can even obtain compensation for corporal damage
via the social security system.

2.5.
The overall cost/benefit balance established by the
directive was designed to reconcile the interests of consumer
protection, business competitiveness, motivation to innovate
and liability.
Improved product quality and the desire to
prevent damage meant that it was possible to define damage
and liability within fairly narrow parameters. It is becoming
more and more common for companies to withdraw allegedly
defective products or series, or, if a specific component of a

3.1.2.
This lack of visibility hampers a reasoned analysis of
any areas potentially requiring revision with a view to assessing
and reconciling the viewpoints of the parties concerned.

3.1.3.
Any revision must therefore be approached with the
utmost care in order to avoid upsetting the balances that the
directive has sought to achieve and to provide sufficient
perspective, while accommodating changes in the field.

In the Committee’s view, the necessary conditions for

3.2.
this process include:

— drawing from a more in-depth study of

the current

situation and the changes afoot;

— maintaining an overall balance between the concerns of
the interested parties, which is critical for the general good;

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— ensuring that the single market operates properly and that

enlargement-related requirements are met;

be made to make it easier for victims of damage to prove their
case.

— defining the respective roles of law-makers and the econ-
omic players, especially regarding prevention (voluntary
and contractual approaches).

The specific comments below must be viewed in the context
of these preconditions.

As regards the exclusiveness of the directive, it would
3.3.
seem preferable during the current monitoring phase to
maintain the common European scheme, set up under the
directive in tandem with national provisions, which may where
necessary be more stringent. A European framework for these
national provisions is an option as a means of preventing
further disparities, but a more detailed study of the impact
of disparities would be required.
It must not, under any
circumstances, upset the balance achieved by the directive.

3.4.
Regarding the burden of proof, the directive relieves
victims of damage from the need to prove the manufacturer’s
fault, but it obliges them to demonstrate a causal link between
the damage and the product defect. In the Committee’s view
this arrangement is balanced on the whole.

3.4.1.
The causal link is a vital element in liability without
fault arrangements. It is a key part of the balance achieved by
the European directive and, as such, must be preserved in the
interests of all the parties concerned.

legal

3.4.2.
This balance and the legal concept that underlies
it are not compatible with the alternative ‘market share
liability’-type scheme introduced by the US courts for certain
cases. There are no grounds for introducing such arrangements
in the European context insofar as the 1985 directive gives the
plaintiff
always be
that
apportioned. On the contrary, this type of scheme would
fracture the very concept of liability, by distorting competition
It
between companies in accordance with market share.
would make insurance schemes difficult to apply under strict
conditions, and would be a major disincentive to individual
responsibility and preventative action in companies, which is
more critical than ever and should be promoted accordingly.

liability will

assurance

Companies should be encouraged to apply, on a
3.4.3.
voluntary basis, the criteria of transparency, availability and
attentiveness to the views of the plaintiffs. Efforts should also

3.5.
The development risk exemption clause has been
adopted by 10 of the 15 Member States. A case of this nature
has yet to arise in the five Member States where the clause
does not apply. The Committee believes the clause is justified
mainly by the need to preserve capacity for business inno-
vation; the victim, meanwhile, can always invoke another
basis for liability. Furthermore, development risks are either
impossible to insure or insurable only at enormous cost, which
would be crippling or out of the question for companies, and
for SMEs in particular.

3.6.
There do not appear to be grounds for changing the
optional ceiling, which three Member States have chosen to
apply. Raising it could complicate the use of insurance, while
abolishing it would make it more difficult still.

The Committee notes that

3.7.
the 10-year period of
limitation is part of the overall balance in the directive’s
common provisions and should be retained, given that it
does not preclude longer periods based on other provisions.
Lengthening the period would mean shifting the cost of the
risk to society, with all the collective constraints and financial
burden that entails, while possibly leading insurers to terminate
certain policies.

3.8.
The Committee is in favour of developing insurance
schemes to facilitate the settlement of damages, but would
stress nonetheless
the introduction of compulsory
insurance provisions would pose problems regarding cost.
Extensive measures in this field must not be allowed to curtail
companies’ capacity for innovation by exerting an excessive
cost pressure, especially on SMEs.

that

3.9.
The scope of the 1985 directive stretches beyond
products; in 1999 it was extended to cover primary agricultural
materials. Liability for defective services is not covered by the
1985 directive owing to the specific nature of the issues
involved. The Commission is consequently planning a new
measure to accommodate those particularities. Buildings are
not covered by the directive either as they too have very
specific characteristics (highly standardised sector, wide range
of integrated products, immobility, etc.); they are regulated
mainly by national provisions. It would be useful to take the
opportunity afforded by increased monitoring of the EU
liability system to update evaluation of the legal situation,
specific issues and developments in the industry in the various
Member States.

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3.10.
regarding any revision of the 1985 directive:

All in all, there are a number of reasons for caution

— the legal application of the directive in the European

Union;

— as already mentioned, the balance struck by the directive
appears to be satisfactory in the main and care must be
taken to ensure that it is not disrupted by piecemeal
changes;

— there has not yet been enough time to monitor the
application of the directive thoroughly, and that process
must be completed;

— very few cases have given clear cause for the directive to

be revised;

— the introduction of new European provisions would
require another long and hazardous process in the national
parliaments;

— the implementation of the corpus of Community legis-
lation is already placing a considerable burden on the
applicant countries, and that is a further argument for not
changing the European arrangements at present.

Nevertheless, the Committee is fully in favour of
3.11.
actively developing more
soundly-based and thorough
arrangements to monitor the implementation of the directive
and the development of liability systems in the various Member
States by setting up an effective mechanism for collating data,
while also launching new measures to strengthen European
safety and prevention policy.

4. Recommendations for improving monitoring and pre-

vention

4.1.
In view of the above-mentioned difficulties in gaining
a true picture of the current situations in the Member States,
the Committee would stress that common tools are required
to monitor the implementation of the 1985 directive, changes
in national liability schemes and measures for the prevention
and compensation of damage. The European Commission
should promote this monitoring process as it is a sine qua non
for any future reform of the directive.

To that end,

the Commission should set up an
4.2.
observatory to monitor the situation in a pragmatic and
workable manner. The observatory should involve all the
interested parties (such as governments, the legal professions,
socio-occupational groups and consumers’ associations) and
would be supplied with information by a regularly-updated
database accessible on the Internet. It would examine:

— specific problems posed in the various areas and industries

not covered by the directive;

— the information supplied by national and Community
safety promotion programmes, such as the EHLASS pro-
gramme which addresses accidents in the home;

— comparative developments in the Member States, especially
in areas that are new in relation to the directive or go
beyond its remit;

— the development in particular of case law in the various

Member States;

— the comparative situation in the applicant countries and in

the countries of the European Economic Area;

— the impact of this legal situation and its development on

the operation of the European internal market.

4.3.
This would provide the Commission with an analytical
tool enabling it to prepare a detailed report within a maximum
of five years on the implementation of the directive and
reasoned proposals for updating or supplementing it.

The Committee also stresses the vital role of an
4.4.
effective, coordinated prevention policy at European Union
level and in the Member States. It must involve a number of
elements:

4.4.1.
appropriate incentives must be maintained to
strengthen prevention; ensuring that liability can be clearly
apportioned is a great help;

4.4.2.
the imminent European directive on product safety
should provide for a greater guarantee of reliability and safety,
including the withdrawal of products to prevent damage;

4.4.3.
standardisation should be further developed at Euro-
pean level, mirroring the basic requirements of the directives;
this will
involve bolstering the resources of the European
standards bodies, especially the European Committee for
Standardisation (ECS), the European Committee for Electro-
technical Standardisation (Cenelec), and the European Tele-
communications Standards Institute (ETSI);

4.4.4.
certification and mutual recognition of certification
also play a critical part in improving product safety and
consumer information; this too is an area requiring further
attention;

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4.4.5.
codes of conduct, targeted quality assurance cam-
paigns, and contractual provisions at company or industry
level can also make a major contribution to European preven-
tion policy.

Furthermore, improvements must be made in various

4.5.
areas of training:

— general education and training, from school age up through

the various levels of education;

— awareness raising and training for all players in companies
(company directors, managers, employees, trade unionists,
etc.) in product quality and safety requirements;

— training for the public and consumers, via information

campaigns in particular;

— training for judges and legal professionals, not least on the

provisions of the 1985 directive.

Guarantee of compensation for damages could be
4.6.
improved by developing insurance schemes. These would have
to apply to identifiable and homogeneous risks, especially in
specific sectors. This guarantee of compensation would also
have to be linked to the continuation and development of
incentives for liability and prevention; the insurance option
would therefore be preferred to the use of guarantee funds.

5. Conclusions

5.1.
The cost-benefit ratio achieved through the 1985
directive appears to be satisfactory overall despite the difficult-
ies in ascertaining its full impact. These difficulties are the
result of delays in implementing the directive and the occasion-
ally patchy development of national systems, exceeding the
common provisions, in spite of the harmonisation achieved
by the directive. Although the possibility of future changes to

Brussels, 1 March 2000.

the European directive cannot be ruled out, priority must
currently be given to maintaining the overall balance already
struck, improving the monitoring of the implementation of
the directive and changes in the national systems, and enhanc-
ing the common prevention policy.

5.2.
To that end, the Committee recommends that the
Commission set up an observatory to monitor the situation,
in conjunction with all the interested parties (governments, the
legal professions, socio-occupational groups and consumers’
associations), with a view to presenting a detailed report,
within a maximum of five years, on:

— the legal application of the directive in the European

Union;

— comparative developments and case law in the Member
States, especially in areas that are new in relation to the
directive or go beyond its remit;

— the comparative situation in the applicant countries and in

the countries of the European Economic Area;

— the impact of this legal situation and its development on

the operation of the European internal market.

The Committee also believes that the Commission
5.3.
should launch an ambitious and consistent prevention policy
at European level during the same period:

— updating basic safety requirements by means of directives;

— extending and tightening up European standards;

— developing certification and mutual recognition;

— promoting codes of conduct, contractual provisions and

campaigns to favour product quality and safety;

— doing more to support training endeavours in all the

sectors concerned.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI