Introduction

Product liability has today in Germany established itself as a separate niche of tort law that is of particular relevance for consumers and business. In both doctrine and practice it is a field that is inextricably linked to global developments. The fundamental change in case law in 1968 which practically focussed the issue of negligence liability on the question of defect was no doubt influenced by the developments in the United States surrounding Henningsen v Bloomfield Motors Inc., Greenman v Yuba Powers and the adoption of §402A of the Restatement of Torts Second (1965). With the implementation of the European Directive on Product Liability in 1990, a second pillar of liability was added to the existing system. The question since then is whether and to what extent the Directive has made an impact. The current product liability debate in the Unites States is particularly helpful in this context, for the Third Restatement of Torts: Products Liability (1998) describes the situation under negligence law quite accurately, while the Directive at first sight shows more similarity to Section 402A of the Restatement Second of Torts. This is not to say that product liability is an American or European import. That a producer is liable if it fails to adopt a reasonable alternative design was decided by the Stuttgart Court of Appeal in 1907, and the Reichsgericht found in the Brunnensalz case of 1915 that proof of a manufacturing defect was sufficient to establish a prima facie case of negligence.

Introduction

The question how the regime of liability without fault which the Product Liability Directive 85/374/EEC (‘the Directive’) sought to deal with unforeseeable defects has evoked considerable political debate amongst Member States and controversy among commentators. This chapter seeks to describe the issues arising in determining the meaning and scope of the defence, the light shone upon them by reported decisions and the questions which are yet to be resolved whether by the jurisprudence of Community courts or by legislative reform.

History

The protracted and inadequately transparent negotiations over the terms of the Directive have been covered before. It is, however, of relevance to recall the fact that the presence of the development risks defence inspired such disagreement among Member States as to result in the derogation permitting them to omit it from their implementing legislation.

After the publication of the first draft of the Directive in 1976 the Council of Europe produced the Strasbourg Convention on Product Liability in 1977. In the same year the English and Scottish Law Commissions produced Reports on Product Liability. All four recommended the omission of the defence. The first two were eclipsed by publication in 1979 of the second draft, leading to the final form of the Directive and the latter two by the Pearson Royal Commission on Civil Liability and Compensation for Personal Injury which rejected comprehensive reform in favour of sectoral change limited to personal injury cases and excluding damage to property.

Mitsubishi, mad cows and Minamata

One of Japan's premier brand names, Mitsubishi, has come under severe pressure. On 24 March 2004, the Mainichi newspaper reported that Mitsubishi Fuso Truck and Bus Corporation (‘Fuso’, until recently part of Mitsubishi Motors Corporation or ‘MMC’) had announced the recall of an astonishing 113,000 large vehicles, admitting that defective hubs were the cause of wheels coming off and dozens of accidents. Over June, Fuso revealed that it had failed to report 159 cases of vehicle defects, causing 24 accidents resulting in injuries, 63 resulting in property damage, and 101 fires. On 6 May, seven former and current senior MMC executives were arrested on charges of false reporting to regulatory authorities, and professional negligence causing a death and injuries in Yokohama. On 10 June, moreover, other former MMC executives (including former president Katsuhiko Kawasoe) were arrested for professional negligence, involving another fatal truck accident in Yamaguchi Prefecture. Several, including Kawasoe, maintain their innocence, but Japanese prosecutors select their cases very carefully and therefore almost always succeed. Also in June, MMC announced a recall of another 170,000 smaller vehicles, involving seventeen passenger car models. MMC was reported to have confessed that it ‘hid twenty-six defects in its cars from regulators – in addition to four problems it publicised in 2000 – to avoid issuing recalls for the vehicles’. Déjà vu?

Pressure had actually been building on MMC from July 2000 when, after an insider tip-off, Japan's Transport Ministry conducted a spot inspection.

THE COUNCIL OF THE EUROPEAN COMMUNITIES

Having regard to the Treaty establishing the European Economic Community, and in particular Article 100 thereof,

1. Having regard to the proposal from the Commission,

2. Having regard to the opinion of the European Parliament,

3. Having regard to the opinion of the Economic and Social Committee,

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 liability 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;

Introduction

This study investigates the process of evolution of Central European product liability regimes, with particular attention to the effect of the implementation of the Product Liability Directive in the context of the 2004 Enlargement of the European Union. Central Europe has been chosen as an example of a region which, although remaining under a strong Socialist influence until 1989, has had a long and relatively close relationship with the West. This relationship placed the Central Europeans in a position described by Alan Mayhew as ‘floating dangerously between East and West’. David and Brierley, in 1985, classified the Central European countries, together with Slovenia and Croatia, as the ‘countries of western tradition’ among the Socialist jurisdictions. They pointed out the common historical development of the ‘western tradition’ with Germany, Austria and France – the tradition of Romano-Germanic law. Central European countries seemed to have been too highly developed for a direct implementation of the Communist concepts from Soviet Russia. They were the first nations to break free from the Socialist grip, and the first post-Socialist nations to have concluded Association Agreements with the European Union. The region, so distinct from the West but also so deeply linked to it, is a particularly fertile ground upon which analyses of the post-Socialist transformations can be carried out.

Product liability law, like every other new, specialised discipline of law, has created some confusion within legal science more generally.

This is an extraordinary book, in which I am honoured to be included, and which I am even more privileged to be able to introduce. It contains contributions from an array of the leading thinkers in the field of product liability; and it provides substantial food (non-standard, and certainly not defective) for thought for practitioners, academics and students alike. The British Institute of International and Comparative Law has been in the forefront of debate in the field of product liability, organising conferences from which no self-respecting practitioner or academic in the area could afford to be absent, and now, after ‘rounding-up all the usual suspects’, producing this totally riveting book.

As the judge in the Hepatitis C litigation, I had the opportunity of climbing a steep learning curve, supervised by Counsel, but educated by leading academics not only from the United Kingdom, but from Europe and of course Australia. Now they are all collected together in one place. They may not agree (either with each other, or – even! – with the Hepatitis C judgment) but, taken together, their views constitute the corpus of present thinking, and it makes a stimulating and enlightening read.

Product liability and overlapping interests

The essence of product liability is the apportionment of the risks inherent in the modern mass production of consumer goods. A choice must be made as to who should bear these risks: the victim, the state or the manufacturer?

Despite this apparent simplicity, the law of product liability is indeed a complex one, lying as it does on the overlap of a series of different matrices. In terms of substantive law, the law of contract and the law of tort make up one layer of rules, with oft-conflicting concepts and approaches. To this, a supranational stratum has been added. The European Directive on Product Liability has brought an important dimension of European Community law, with the introduction of terms often alien to the national systems, such as ‘putting into circulation’ or ‘defect’, as well as the technical debates over competence and levels of harmonisation brought about by the European legislation. The law of product liability is further complexified due to the superposition of a myriad of other domestic rules stemming from the broader legal framework of consumer law, procedures governing damages claims, and, in some scenarios, the application of notions of public law.

This complex legal framework must also be set within the broader policy debate. The framing of product liability regulation has been underpinned by a stark debate with conflicting viewpoints, on occasion characterised as a struggle of consumer versus industry.

Introduction

The Dutch Act to implement the European Directive on Product Liability (PL) entered into force on 1 November 1990. Since 1 January 1992 the relevant provisions can be found in art. 6:185–193 BW. According to these provisions the producer may invoke the development risk defence (art. 6:185 s. 1 sub e) but the liability of the producer is not limited (art. 16 Directive).

Since the Directive had to be implemented on 30 July 1988 (art. 17 Directive), the Netherlands exceeded this term by more than two years. There are two published cases as regards damage caused by products which were put into circulation between 30 July 1988 and 1 November 1990. In one case the court (Hof Leeuwarden) explicitly interpreted Dutch law in accordance with the PL Directive. In another case the Hoge Raad did not make clear whether or not it did so.

In the implementation Act, the Netherlands did not provide a limitation of the liability of the producer, which would have been possible according to art. 16 of the Directive. Neither did the Act derogate from Article 7(e); this provision implies that the producer can invoke the development risk defence (see also para. 2).

The previous Dutch case law with regard to product liability did not differ much from the PL Directive. In the Halcion decision the Hoge Raad held that it is unlawful (onrechtmatig) to put a defective product into circulation, using the same definition of defect as in art. 6 of the PL Directive.

The essential components of product liability

In considering the state and nature of product liability, one needs to remind oneself that several different areas need to be examined:

• substantive law on liability

• mechanisms for funding lawyers and court costs, and the extent and proportionality of the financial risk to claimant and defendant

• rules of procedure

• law on damages

• sometimes, conflict/jurisdictional issues such as proper law, jurisdiction and enforcement of judgments.

This is fertile ground for comparative lawyers, which is made more interesting since all of these areas are potentially subject to reform. But one's ardour is somewhat dampened by the consistent evidence that product liability is not a major phenomenon in any EU state. This is also my personal experience over the past ten or so years in handling claims for a number of manufacturers, covering a range of consumer and industrial product sectors, and their insurers, that may arise in any European jurisdiction. One of the jurisdictions that has consistently been most active for individual claims is Russia, where there are unregulated contingency fees, few controls on the accuracy of media statements, and questionable standards in the judicial system.

Substantive law

The rules on strict liability for defective products are relatively stable (Directive 85/374) and firmly implemented into national provisions of member states and applicant states. There has been a small number of instances of incorrect implementation but the Commission and ECJ are well advanced in sorting these out.

Freedom of speech has a prominent place in both the European and the US constitutional order and the changes since the 1960s in the judicial interpretation of this freedom have been substantial. Half a century later it is time to assess the legal evolution on both sides of the Atlantic; to note differences and convergences and to link them to deeper historical, political and social trends.

This contribution is divided into two sections. The first section (I) examines the impact of two major developments in Europe since the 1950s on freedom of speech, the spread of judicial review and the creation of a system of European law, namely the European Convention on Human Rights with the case law of the Strasbourg court, and EC-EU law with the case law of the Luxembourg court. The second section (II) studies freedom of speech in Europe, in particular areas of political speech (1), libel of officials and of public figures (2), as well as personality rights and privacy (3). Comparisons with US-American constitutional law will be made as we go along.

The development of judicial review and its impact on freedom of speech

Judicial review

The creation and the development of judicial review represents one of the most important changes in the legal and political history of European countries since 1945. Starting in Western Europe, in countries such as Germany, France, and Italy, it has spread since the 1990s to Central and Eastern European countries.

The different approaches in German and US constitutional law

The question whether the state must only respect or also actively protect fundamental rights still divides US and German constitutional doctrine and practice. In its First Abortion Decision of 1975, the German Constitutional Court explicitly recognised that the Grundgesetz imposes a duty on the state to protect fundamental rights against intrusions by third parties. The court argued: ‘The obligation of the state to furnish protection is comprehensive. It forbids not only – self-evidently – direct state attacks on developing life, but also requires the state to take a position protecting and promoting this life, that is to say, it must, above all, preserve it against illegal attacks by others.’ In sharp contrast, Chief Justice Rehnquist wrote for the US Supreme Court in DeShaney v. Winnebago County: ‘Nothing in the language of the due process clause requires the state to protect the life, liberty, and property of its citizens against invasion by private actors…. Its purpose was to protect the people from the state, not to insure that the state protected them from each other. The framers were content to leave the extent of governmental obligation in the latter area to the democratic political processes.’

The German Court left no doubt as to whose task it was to fulfil the duty to protect. The decision concerned an amendment to the Penal Code permitting abortions during the first three months of pregnancy.