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No C 269/40 Official Journal of the European Communities 14. 10. 91

Opinion on the proposal for a Council Directive on the Liability of Suppliers of Services (*)

(91/C 269/14)

On 15 January 1991 the Council of the European Communities decided to consult the
Economic and Social Committee, under Article 100 A of the Treaty establishing the European
Economic Community, on the abovementioned proposal.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing
the Committee's work on the subject, adopted its Opinion on 5 June 1991. The Rapporteur
was Mr Salmon.

At its 288th plenary session (meeting of 3 July 1991) the Economic and Social Committee
adopted the following Opinion by 67 votes to 62 with 2 abstentions (vote by name).

1. Introduction

1.1. The Commission proposal is based on the observation that service activities account for more than half
of the added value produced in the Community each
year (ECU 1 396 791 million in 1986), and that many
services, if defective, can injure the health or physical
integrity of persons or the physical integrity of the
material goods of the consumers using these services.
This obviously applies to health care, but also to services relating to products, like repairs of products or
their installation in houses, or relating to installations
such as hotels or leisure centres. It also applies to nonmaterial services, like monitoring systems, and combined services like transport and holidays.

1.1.1. The aim of the proposal is worthwhile, but
difficult to achieve, mainly because of the number and
complexity of the questions concerning liability of suppliers of services, which are very diverse.

1.2. _Principle_

1.2.1. The proposal lays down that the supplier of a
service shall be liable for damage to the health and
physical integrity of persons or the physical integrity
of moveable or immoveable property, including the
persons or property which were the object of the service,
caused by faults committed by him in the performance
of the service.

1.2.2. 'The burden of proving the absence of fault
shall fall upon the supplier of the service.'

1.2.3. 'In assessing the fault, account shall be taken
of the behaviour of the supplier of the service, who, in
normal and reasonably foreseeable conditions, shall
ensure the safety which may reasonably be expected.'

(!) OJ No C 12, 18. 1. 1991, p. 8.

1.2.4. '... the mere fact that a better service existed
or might have existed at the moment of performance
or subsequently shall not constitute a fault'.

1.3. _Definition of service_

1.3.1. For the purpose of the proposal, 'the term
'service' means any transaction carried out on a commercial basis or by way of a public service and in
an independent manner, whether or not in return for
payment, which does not have as its direct and exclusive
object the manufacture of moveable property or the
transfer of rights in rem or intellectual property rights'.

1.4. _Definition of damage_

1.4.1. The term 'damage' means:

— death or any other direct damage to the health or
physical integrity of persons,

— any direct damage to the physical integrity of
moveable or immoveable property, including animals.

2. General comments

2.1. The Study Group of the Section for Industry,
Commerce, Crafts and Services, feeling insufficiently
informed by the documents which the Commission
thought fit to send it, held a hearing on 9 April 1991
of the representatives of the following European organizations:

— BEUC (European Bureau of Consumers' Unions),

— ETUC (European Trade Union Confederation),

— UEAPME (European Union of Craft industries and
Small and Medium-Sized Enterprises),

— UNICE (Union of Industries of the European Community),

14. 10. 91 Official Journal of the European Communities No C 269/41

— SEPLIS (European Secretariat of the Liberal Professions),

as well as Professor Roger O. Dalcq, lawyer, Professor
of liability law at the UCL, and Professor Bourgoignie,
Director of the Centre for consumer law at the UCL.

2.2. In order to protect consumers, national and
Community legislation has shifted away from fault
(which is about conduct) to provention (which is about
the outcome). This proposal, however, is based on fault
but seeks to reverse the burden of proof.

2.3. The present proposal seeks to attack and destroy
the general principles of the law and the rules of procedure, which involve first and foremost obligation
regarding the means and obligation to give proof of the
facts which are alleged in legal proceedings; liability is
not presumed but should be proved. The legal distinction between obligation regarding means and obligation
regarding ends is directly linked with the difference
between the services of the liberal professions and the
practical services provided by manufacturers of products.

2.4. We note that professionals who provide intellectual services do not reject the principle of their liability;
on the contrary they assert it in the legal framework
which currently exists in all Member States of the
Community. The few legal disparities which may exist
do not justify a legal revolution on such a scale, which
would be a source of litigation for years in all the
countries of the Community; it would take decades to
determine the legal rules ensuring safety of consumers.

2.5. The 'political' aim of the Commission has led
it to adopt solutions which would tend to disturb the
whole harmony of our legal systems.

Was it not the consumers' wish to have laws against
unfair clauses, harmonization of compensation
amounts and the assumption of responsibility by society
at large for the rare serious cases where the providers
of the service are not at fault and irreparable bodily
damage has occurred?

2.6. It is surprising that the present proposal makes
no mention of compulsory insurance for all providers
of services, in certain fields.

2.7. The question can be raised as to whether the
Commission does not go beyond its powers and its
tasks of formulating European policy in accordance
with the Treaty of Rome when it seeks to impose
uniformity on the civil law of the Member States and
change current laws in each of the States to create a

new European civil law, thereby infringing the basic
principle of subsidiarity.

2.8. When one examines this proposal it is clear that
its implementation would put a brake on any research
and innovation in the fields of activity of the liberal
professions. It would lead to defensive medicine, defensive legal, commercial and fiscal consultation, and
defensive advisory work by architects, engineers and
building contractors. This was not the aim which consumers had in view.

2.9. It would lead to additional costs for services,
which the social security systems and consumers would
find impossible to bear. Investigations, audits and
appeals to experts would proliferate to surround each
service with all the precautions necessary to safeguard
it, since it would be too easy to question the service.
Above all, sizeable additional premiums would be
necessary for liability insurance, and these have been
underestimated or ignored by the Commission (the
figure of 250 000 US dollars has been mentioned for a
neurosurgeon in the United States to cover cases where
a fault is proved; what would the likely costs be in
other cases?).

2.10. The Committee also wonders whether the proposed directive applies only to contractual liability or
to quasi-criminal liability as well.

3. Specific comments

3.1. _Explanatory memorandum_

3.1.1. The proposal refers to Article 100 A of the
EEC Treaty on 'a high level of protection' for health,
safety, environmental protection and consumer protection. The Commission justifies its action by stating that
in the field covered the differences in the legal systems
between countries of the Community have economic
effects which can affect the competitive position of
suppliers of services on the market. This statement is
questionable, since it is usually possible to compensate
for these differences through contractual freedom,
while promoting laws against unfair terms.

3.1.2. The differences in existing liability systems do
not prevent tourism from developing in Europe, people
settling in Member States other than that of their origin,
or car-hire firms etc. establishing themselves in towns
throughout the Community.

3.1.3. The theory of risk can only be applied to
homogeneous sets of circumstances. There is no simi

No C 269/42 Official Journal of the European Communities 14. 10. 91

larity between traffic or industrial accidents and those
occurring in the consumption of services.

Examination of the proposal shows that its philosophy
can be summed up as placing the burden of risk entirely
on the supplier and not at all on the consumer of
services.

3.1.4. On the basis of studies of national laws and
legal precedents on the civil liability of suppliers of
services, the Commission notes that the situation is
changing all the time in favour of persons injured by
defective services, although to different extents in the
different Member States.

3.1.5. The Commission regrets the fact that the trend
in favour of victims should be through the courts,
yet proposes a very extensive system which from the
Commission's viewpoint can only be fully implemented
through the Court of Justice and future case law.

3.2. _Article 1_

3.2.1. The Committee has doubts about the concept
of the physical integrity of immovable property, which
is a vague one.

3.2.2. The Committee cannot support the principle
of reversing the burden of proof, since:

a) it is almost impossible to provide rigorous proof of
a negative fact;

b) the presumption of fault is a legal concept which
gives rise to great ambiguity in its case-law applications.

Moreover, as the Economic and Social Committee
asserted in its Opinion of 24 April 1991 (*) on the
proposal for a Directive on Unfair Terms in Consumer
Contracts [COM(90) 322 final — SYN 285] (Rapporteur: Mr Hilkens), it is undesirable to harmonize contract law as such, on which relations between the consumer and the supplier of a service are based.

The main thrust of the proposal conflicts with Article
_6{2)_ of the European Convention on Human Rights and
Article 14(2) of the International Covenant on Civil and
Political Rights.

Consumers will note that the proposal makes only a
slight improvement on current case law.

3.2.3. There is a certain illogicality where the third
paragraph mentions 'assessing the fault', since the fault
is presumed.

3.3. _Article 2_

3.3.1. Consumers' organizations are pleased that the
proposal also applies to public services, and does not
wish package travel to be excluded.

3.3.2. It must be pointed out that liability arrangements governed by international agreements, which
take the 'no-fault' liability system into account, automatically and reciprocally entail limitation of the risk.

3.4. _Article 3_

3.4.1. This definition of the supplier of services is
too broad, since it seems to include all those who act
independently, such as company directors, judges, etc.,
and to some extent officials, since subordinate status is
not incompatible with maintaining a certain freedom
in the way work is carried out.

3.4.2. An employee based in the Community will
assume liability for a service undertaken by the supplier
in a non-member country, on the same basis as the
representative or independent intermediary.

3.5. _Article 4_

3.5.1. What will become of professional confidentiality in the case of a suicide which is held to be direct
damage caused by a supplier?

3.5.2. Here again, the concept of physical integrity
of property is dubious.

3.6. _Article 5_

3.6.1. Given that the causal relationship is assessed
on a different basis in each country, implementation of
the directive is likely to diverge considerably from one
Member State to another.

3.7. _Article 7_

If liability were not limited, as proposed here, can
insurance companies be expected to provide unlimited
cover for damage, and if so on what financial terms for
suppliers, consumers and society at large?

3.8. _Articles 9 and 10_

(!) OJ No C 159, 17. 1. 1991, p. 34. The time-limits for claims seem totally unreasonable.

14. 10. 91 Official Journal of the European Communities No C 269/43

4. Conclusions

Noting:

4.1. that the Commission has not carried out consultation and concertation with all the representative bodies of the Community concerned with the proposal
submitted to the Committee,

4.2. that the proposed text does not meet the wishes
of consumers, but on the contrary runs the risk of
reversing the courts' current favourable tendency,

4.3. that it does not tend towards a better relationship between the client/patient and the professional/
supplier of service—quite the reverse,

Done at Brussels, 3 July 1991.

4.4. that its legal basis is unsound and goes beyond
the task of the Commission,

4.5. that it will considerably increase the economic
costs of supplying services,

4.6. that it jeopardizes the legitimate expectations of
consumers with regard to research, experiments and
risks in the fields of law, construction and health,

4.7. that the text gives no clarification or certainty
as to the need for or possibility of special arrangements
or exclusion of certain suppliers of services,

4.8. that the Commission proposes no guarantee for
professional insurance,

the Committee rejects the text.

_The Chairman_

_of the Economic and Social Committee_

Francois STAEDELIN

_APPENDIX 1_

to the Opinion of the Economic and Social Committee

The following Members, present or represented, voted for the Opinion:

Mr/Mrs/Miss: Andrade, Arena, Aspinall, Barrow, Beale, Bell, Berns, Bredima-Savopoulou, Cavaleiro Brandao, Ceyrac, Chevalier, Connellan, van Dam, Dawson, Delorozoy, De Tavernier, Donck, Douvis, Frerichs,
Gafo Fernandez, Gardner, Germozzi, Ghigonis, Giacomelli, Giesecke, Guillaume, Hovgaard Jakobsen, Kaaris,
Kafka, Laur, Little, Low, Lustenhouwer, Lyons, Machado von Tschusi, Matteoli, McGarry, Merce Juste,
Meyer-Horn, Mobbs, Moreland, Noordwal, Ovide Etienne, Panero Florez, Pardon, Pearson, Pelletier, R.,
Petersen, Petropoulos, Pricolo, Proumens, Rebuffel, Robinson, Romoli, Sa Borges, Sala, Salmon, Sauwens,
Schleyer, Solari, Stecher Navarra, Stokkers, Thys, Tiemann, Tukker, Tyrie, Wick.

The following Members, present or represented, voted against the Opinion:

Mr/Mrs: Ataide Ferreira, Bleser, Boisseree, Bonvicini, Vasco Cal, Carroll, Cassina, Christie, Decaillon, d'Elia,
D'Hondt, van Dijk, Draijer, Drilleaud, Dunkel, Elstner, Etty, Eulen, Flum, Forgas i Cabrera, Frandi, Gaffron,
Geuenich, Gredal, Green, Groben, Hagen, Hilkens, Jaschick, Jenkins, Kanellopoulos, de Knegt, Landaburu
de Silva, Lappas, Larsen, Liverani, Maddocks, Margalef Masia, Masucci, Mayayo Bello, Morris, Miiller,
Nielsen, B., Nielsen, P., Nierhaus, Pellarini, Quevedo Rojo, Ramaekers, Rangoni Machiavelli, Santos,
Schmitz, von Schwerin, Sequeira, Silva, Smith, Theonas, Tixier, Verboven, Vidal, Wagenmans, Waldack,
Whitworth.

The following Members, present or represented, abstained:

Mrs Bordes-Pages and Pompen.

No C 269/44 Official Journal of the European Communities 14. 10. 91

_APPENDIX_ _2_

to the Opinion of the Economic and Social Committee

After the vote by name on the Opinion as a whole, the consumers' interest group, which voted against the
Opinion, made the following declaration:

'The Opinion expresses an attitude which is neither particularly constructive nor comprehensible. The
consumers' representatives have repeatedly stressed the need for a Community instrument to protect those
injured by defective services, since the existing rules contain serious loopholes. Although the draft Directive
does not fully come up to the consumers' expectations, and its wording can be improved, from the consumers'
viewpoint it is an important step towards appropriate protection of consumers' rights.

Moreover, the Opinion constitutes a clear break with the Committee's tradition of consistently supporting
Community initiatives in this field to improve the protection of injured parties. The Opinion contradicts
earlier ESC Opinions, where, in connection with risk liability for defective products, the principle of liability
independent of fault was recognized, and, in the context of the work on the draft directive on general product
safety, a case was made for a Community initiative on the safety of services.

The proposed amendments are the necessary minimum to correct the legal arguments used in the Opinion in
such a way as to make them acceptable to consumers. In addition, it should be clearly stated that the
Committee wishes to see a Directive aiming at a certain degree of harmonization and making it possible for
the Member States to retain or introduce even stricter legal provisions to protect consumers.

In a European society where liability for a risk caused by the supplier of a service is more and more widely
accepted, this Opinion is a retrograde move.

It is essential for the Economic and Social Committee, which has hitherto represented a spirit of dialogue
between the various economic and social groups, to continue to have a constructive attitude.'

The consumers' interest group proposes that the Commission should give careful consideration to its proposal
and amend it so as to set up a liability regime which:

— provides clear rules, thereby avoiding unnecessary litigation,

— is based on equitable consideration of the interests of suppliers of services and consumers,

— contributes to expanding the principle of prevention and stimulates further thinking on safety of services,

— can effectively and practically secure compensation for the victims of defective services.

Mr/Mrs: Ataide Ferreira, Boisseree, Bonvicini, Elstner, Gredal, Hilkens, Jaschick, Landaburu de Silva,
Rangoni Machiavelli.

14. 10. 91 Official Journal of the European Communities No C 269/45

_APPENDIX_ _3_

The following amendment (counter-opinion), which obtained at least a quarter of the votes cast, was rejected

in the course of the debate:

Replace points 1—4.8 with the following text:

'The Section endorses the Commission proposal subject to the following general and specific comments:

I. Introduction

The aim of the proposal is better protection of the physical integrity of the consumer and his property.
Services which cannot impair the health or physical integrity of persons and/or the integrity of private
property (financial, legal and banking advice) are therefore not covered by the Draft Directive. In this Opinion
it is assumed that medicine and the building sector are in any case to be excluded from the field of application
of the Directive. It is to be welcomed that Commission representatives have given assurances that the
Commission has nothing in principle against excluding both these sectors and has already initiated work and
studies on the matter. Under the Draft Directive the principle of liability still applies in the event of damage,
but the burden of proof is reversed in favour of the consumer of services, who often has no specialized
knowledge. The proposed directive is therefore restricted to the protection of the physical integrity of persons
and their property.

II. General comments

1. The effort to guarantee the consumers a uniform, better level of protection in the field of safety of
services is based on the following considerations:

a) The same level of protection must be offered to consumers throughout the Single Market, in whichever

Member State they happen to be. The valid liability rules of individual Member States, however, diverge
considerably, particularly in relation to basis of liability, burden of proof, causal relationship and
protection of third parties.

b) In this field no Community measures have yet been taken, while measures in the field of product safety

are already widespread (Directive on product liability, standardization, draft directive on general product
safety, etc.). Such a measure is, however, even more necessary in the field of services than in the product
field, since before the services are performed they can hardly be checked by the state, and the risk of
accident is increasing because of increasingly complicated technology. In this connection, the preventive
effects expected from this directive should be emphasized.

c) Consumers and suppliers of services do not hold the same assumptions in their relationship, but there
can be an unbalanced relationship between the rights and obligations of the parties to the contract,
framework conditions, inadequate information for the consumer on the nature and conditions of
application of the service provided, the products used in the service, etc.). Above all, consumers frequently
do not have relevant specialized knowledge.

2. In many national legal systems the principle of reversal of the burden of proof—at the level of legal
provisions (horizontal or vertical), but above all at thelevel of case law—is already established; the rules
envisaged in the draft directive would therefore in no way disturb the legal provisions in force, but would
establish a common basis for liability. This would provide more legal security both for consumers and for
suppliers of services. The introduction of this 'safety net' would not automatically entail additional financial
burdens, since suppliers of services are already well insured against this risk.

III. Specific comments

1. According to the explanatory memorandum, the draft directive constitutes a minimal solution, so that
the Member States can retain or adopt national legal provisions which guarantee an even higher level of
consumer protection.

1.1. This minimal nature of the proposal should be made explicit by adding an article which includes the
possibility of retaining or adopting more favourable legal provisions.

No C 269/46 Official Journal of the European Communities 14. 10. 91

2. The proposed rules are in accordance with the existing legal provisions of Member States based on the
principle of liability, but attenuate the burden of proof for the injured parties, who frequently do not have
relevant specialized knowledge or financial means and are confronted with a service about which they have
been informed imperfectly or not at all (personal relationships are tending to disappear increasingly from
the provision of services) and of which frequently nothing remains once the damage has been done. The
concept of fault should be interpreted in relation to the concept of justified expectation, which already exists
in some national legal systems (e.g. those of France or the United Kingdom), and which allows for the
provision of dangerous services. The injured party must still prove the damage and the causal connection
(which in itself is not a simple matter). For his part the supplier of services must prove that he is not at fault.
The mechanisms envisaged by the Commission rule out the submission of unjustified claims for compensation.

3. A number of improvements could undoubtedly be made to the legal wording of the draft directive; the
Economic and Social Committee indicates some basic alternatives to it below:

3.1. Thus the question arises as to what alternatives there are, in connection with the basis of liability, to
reversing the burden of proof, and it should be considered whether a liability independent of fault could be
provided for, as in the Directive on product liability. This possibility would offer the advantage of uniform
treatment of faulty products and services. The consumers' organizations favour this solution.

3.2. It should also be considered whether a compulsory insurance for suppliers of services should be
introduced, without making it dependent on proof of direct damage—a condition which might complicate
the uniform assessment in legal cases of the damage to be repaired.

3.3. As already mentioned under point III, 1, the minimum nature of the measure should be made explicit.

4. The building sector and medicine should be dealt with in a separate directive. The Commission is urged
to submit proposals on this as soon as possible.

4.1. It is impossible to draw up an exhaustive list of the services covered by the proposed directive. They
include the fields of transport, hotels and guest houses, repairs, renovation, cleaning, electricity and gas
supply, sanitary and electrical installations, hairdressing, etc.

4.2. The services covered are thus very numerous, and are used by consumers in everyday life.

4.3. These services can involve three kinds of risk:

— risk to a consumer from a product offered or used in the supply of a service (e.g. food in a restaurant,
repair of products),

— risk from installations (buildings, equipment or machines), which are owned by the suppliers of the
service and used to supply the service,

— risk from the supply of the service itself, i.e. simply through the activity of a person (supervision of
children, etc.).'

_Results of voting_

For: 73, against: 81, abstentions: 2.

14. 10. 91 Official Journal of the European Communities No C 269/47

_APPENDIX 4_

to the Opinion of the Economic and Social Committee

The following amendments, which obtained at last a quarter of the votes cast, were rejected in the course of
the debate:

Page 4 — point 2.3

Reword 2.3 to read:

'This approach has the undesirable effect of expecting business to prove a negative. Legally the proposal is
flawed as it repeatedly fails to recognize the need for a defect/fault in order to prove causation. More
importantly, in practice this proposal will be difficult to implement, will do little to improve safety and will
increase litigation.'

_Reasons_

This amendment, like the former, sets out to avoid exaggerated wording and assumption of bad faith.

_Results of voting_

For: 55, against: 63, abstentions: 4.

Page 4 — point 2.5

Delete the second paragraph of point 2.5 and replace with the following:

'Consumers (the intended beneficiaries) feel that this proposal does not go far enough, particularly in that it
contributes little to harmonizing compensation amounts and fails to facilitate victims' access to legal redress.'

_Reasons_

It emerged from the hearing that consumers recognize the need for a Community initiative along these lines,
but also that they feel that it fails to go far enough in establishing practical machinery to enhance their
protection and eliminate distortions to competition.

_Results of voting_

For: 42, against: 75, abstentions: 5.

Page 5 — point 2.8

Delete 2.8 and replace with the following:

'It is very possible that this proposal will have a more detrimental effect on business than a strict liability
regime. In order to refute allegations, businesses and professions will need to keep detailed records of every
transaction, however small, for five or more years so as to establish they were without fault. This bureaucracy
will benefit no-one.'

_Reasons_

The text of the Draft Opinion is based on a misinterpretation of both the field of application and the scope
of the provisions set out in the proposal.

_Results of voting_

For: 32, against: 64, abstentions: 13.

No C 269/48 Official Journal of the European Communities 14. 10. 91

Page 5 — point 2.9

Delete the third and last sentence of 2.9 and replace with the following:

'There could be a large increase in insurance premiums to meet the possible increase in claims. Although
increases are acceptable in order to enhance protection for the victims of defective services, the proposal
encourages price rises while failing to facilitate the processing of cases involving defective services.'

_Reasons_

The reference to the situation in the United States is inappropriate, since legal practice in that country is
fundamentally different.

_Results of voting_

For: 44, against: 66, abstentions: 16.

Opinion on the Second Amendment to the proposal for a Fifth Council Directive based on
Article 54 of the EEC Treaty concerning the structure of public-limited companies and the

powers and obligations of their organs

(91/C 269/15)

On 13 February 1991 the Council decided to consult the Economic and Social Committee,
under Article 54 of the Treaty establishing the European Economic Community, on the
abovementioned proposal.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing
the Committee's work on the subject, drew up its Opinion on 5 June 1991. (Rapporteur:
Mr M.G. Bell.)

At its 288th plenary session (meeting of 3 July 1991) the Economic and Social Committee
adopted the following Opinion by a large majority vote in favour, 5 against with
27 abstentions.

1. Introduction

This proposal is closely linked with another current
proposal relating to the Second Directive, on which the
Committee has also prepared an Opinion (*), and to the
amended proposal for a Thirteenth Directive which is
currently before the Council of Ministers, and on which
the Committee has adopted an Opinion on 28 February
1991 ( [2] ).

2. General remarks

2.1. The Committee agrees with the broad thrust of
the Commission's intention to reduce existing barriers
to takeovers in order to create a 'level playing field'
for takeover activity across the Member States of the
Community.

_(_ _[1]_ _)_ Opinion adopted on 3 July 1991.
( [2] ) OJ No C 102, 18. 4. 1991, p. 49.

2.2. However, takeovers do not themselves necessarily bring benefit to companies or shareholders if
they take place without good cause. Unnecessary
takeovers can damage long-term planning, and
research and development, can have undesirable
regional effects, can endanger jobs, and can cause
financial instability. Extremes of takeover activity
such as seen in the United States are not beneficial,
and changes to the EC legal regime should not
encourage such activity.

2.3. The Committee is also concerned that a proper
balance should exist as between the takeover regime
of the Community and those of external countries.
While external investment into the Community is to
be encouraged, this should not be a one-sided affair.
It should be possible for the Community to impede
hostile takeovers emanating from countries that themselves erect significant barriers to foreign takeovers,