Coexistence of Producer Liability Frameworks in Spain and the US: A Comparative Analysis, Summaries of Law

Download Coexistence of Producer Liability Frameworks in Spain and the US: A Comparative Analysis and more Summaries Law in PDF only on Docsity! *** COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 28. 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 modem production. The real challenge for this policy is to ma1timise 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 dio1tin 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 paJ;ties 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 appropri~teness 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 e1ttending 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 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 !!4opt 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 Annexes List of contents INTRODUCTION 1.1 WHY A GREEN PAPER? 1.2 HOW TO REPLY TO IT WHAT ARE THE EFFECTS OF DIRECTIVE 85/374/EEC? THE IMP ACT ON THE SINGLE MARKET 1.1 COMMUNITY TRADE 1.2 THE GLOBAL CONTEXT PROTECTION OF PUBUC HEALTH AND SAFETY 2.3 THE EFFECTS ON INDUSTRY AND THE INSURANCE SECTOR IS A REVISION OF DIRECTIVE 85/374/EEC JUSTIFIED? MAINTAINING THE BALANCE 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 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 products , 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 modem 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 Directi ve; - liability limited in time, by virtue of uniform deadlines; Council Directive of 25 July 1985 (85/374/EEC) (OJ No L21O of7. 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 (Jroducers Defective services are not covered by Directive 85/374/EEC. - As indicated in its Consumer Policy Action Plan for 1999-2001 , 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 2000 . 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 Directive ), 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 products Communication from the Commission - "Consumer policy action plan 1999-2001" (COM(98)696 of 1.12.98). The Commission has to report regularly to the Community institutions on the state of application of the Directive (see Article 21 - every five years on the general application of the Directive; Article 15(3) and 16(2) - ten years after notification of the Directive on development risks and the financial limit; and Article-18(2) - every five years on the revision of the amounts laid down in the Directive). The Commission- presented its first report on the application of the Directive on 13. 12. (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 ofthe Member States concerning liability for defective products (OJ No L 141 of 4.06.99. Using these parameters (or other equivalent ones), operators are invited to make known their experience and to reply to the questions in this Green Paper.. In the field of producer liability, where the positions of principle are well-known, the Commission wishes to obtain factual practical information (if possible quantified) rather than mere declarations, so that it can justify its conclusions, particularly if they are to culminate in a substantial revision of the Directive. 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 pronouncedlO. The aim is more to assess how the Directive meets the objectives it set out to achieve with regard to the various sectors involved: whether it ensures adequate protection for the victims , whether it helps to discourage the marketing of dangerous products, whether it gives operators sufficient legal certainty to foster intra- Community trade, whether the competitiveness of European businesses is jeopardised by the Directive, whether the insurance sector has managed to cope with the risks covered by the Directive, whether the authorities and consumer associations regard the Directive as a useful instrument in their policies towards the victims of defective products, etc. To this end, the operators concemed and administrations are asked to answer the following questions. 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. 1.1 Community trade In Directive 85/374/EEC , the current internal market, with its strong growth in intra- Community trade, II 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 larg~ly 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 aredistributed. The ECl has issued two rulings on the Directive in actions against France (C-293/91, judgment of 13. 1.93, ECR 1993 , p. I- I) 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(l999) 10 of20. 1.99). Directive 85/374/EEC aims to harmonise to a large eJttent national law on producer liability. It does not contain any provision directly concerning conflicts of law. Despite the wide degree of hannonisation 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) 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 years !3 is it) 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 hannonisation can only be achieved a priori upholding the objective of total harmonisation in the present Directive (since no clause allows the Member States to adopt .stricter rules under the Directive). TS Sala Civil , 4. 10.96, No 778/1996 (RJ 1996-7034). See the 18th recital of Directive 85/374/EEC on this point. 1. According to your experience, does the Directive properly function in practice? Ik\S" 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 I)irective? Ik\S"Has the disparity in legislation on producer liability - even potentially - discouraged the marketing in one Member State of products from another Member State? Ik\S" Where ordinary law has been applied rather than the Directive, what do you consider to be the reasons for this? Ik\S" 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)? Ik\S"Do you think that each Member State should be able to adopt stricter liability rules (introduction of a "minimum" clause in the Directive)? 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 eJtported, 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 particular . 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 federallegislation ; (3) it is State legislators and judges who have set out the major principles governing liability ("warranty , " negligence , " strict liability ), - For a comparative examination of legislation in the fiekt.see OECD, Product liability rules in DECD countries, 1995. In Japan, the new law on product liability, in force since 1 July 1995, has been applied in a large number of cases (see www.law.kyushu- ac j p/-Iuke/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 648), and one bill in 1998 (Product Liability Reform Bill of 1998, Senate, S. 2236, 105'h Congress). The latter failed because of lack of agreement in the Senate. 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. 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? -In 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 . substantial revision of Directive 85/374/EEC so that it better meets the objective of protecting health and safetyZ5 . 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 agriculturalproducts 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 experience when adopting the Directive, and that of other countries which are currently debating producer liability (as in the United States), show that arriving at a balanced framework for producer liability calls for a serious and in-depth debate on the advantages and drawbacks of each rule governing liability. If producer liability policy is to be strengthened, this must be done by building on the strengths of Directive 85/374/EEC, and in particular on its balanced approach to the apportionment of risks. That does not rule out improving it in order to make it more effective, provided the solutions chosen are equally balanced. As the Commission has had occasion to recognise in general terms, "consumer policy must therefore ensure an equitable reconciliation of consumer interests and the interests of other stakeholders (...J consumers themselves can recognise and accept such compromise because they are not only consumers but taJtpayers , 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). 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'Z Opinion of5.11.98(0J No C 359 of23. 11.98). Decision of 23.03.99 on the common position EC No 3/1999 (OJ No C 177 of 22.06.99). Communication from the Commission - "Consumer Policy Action Plan 1999-2001" (COM(98)696 of 1.12.98, pA. 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 clvil codes of the 19th century, the Directive is in fact part of the civil law on eJttra-contractualliability 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 qnder 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 ID 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? I&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. 97 (see Actualidad Juridica. Aranzadi 313 16/10/97 and La Ley de 05/1 I/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. 85 also set up a compensation fund for the victims of blood marketed bYNovo Nordisk AtZ, subsequent to the judgment of the f2fstre Landsret of 14.2. 85 (confirmed by the judgment of the Hll!iesteret 10.96 -Case No I 155/1995, 1156/1995 , I 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. 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 ora 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 Europe . The Commission very much wants to establish to what extent application of the Directive is affecting industry. 6. Are you aware of any cases of defective products in which the Directive was actually applied and how this affected your activities? . Have you undertaken any research or studies on the Directive s potential impact on your activity? With regard to the cover for risks associated with defective products, there are) schemes to cover such eventualities set in an individual (product liability insurance policies) or collective basis (e.g. the "Pharma Pool" for the German pharmaceutical industry, or the "LakemedelsfOrsakringen , set up by the pharmaceutical industry and Swedish insurers.) The Directive leaves it to the Member States to regulate the extent to which industry should be covered for these risks, although the implementation of the Directive in certain countries includes a requirement for financial cover: in Austria, the producer and importer must take out cover for product liability in the form of an insurance policy or in any other appropriate form3! (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. 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 $//7 billion Produkthaftungsgesetz, 9 16. Article 30, Law 26!l984, of 19 July (BOE No 176 of 24. 84), in the wording of the second final provision , Law 22/1994, of 6 July (BOE No 161 of\i.1, 94). 'this provision empowers the government to prescribe producer liability insurance and the establishment of a fund for personal damages (death, poisoning, bodily injuries). 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 . 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. Do you agree that the siJt principles listed above constitute the basis that needs to be maintained in order not to upset the internal balance of Directive 85/374/EEC? 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 plan , is acting to bolster this trust. In this Casso lere civ., 3 March 1984 SA Les Laboratoires Leo C. Scovazzo et a. (order No 432 PJ. Counsel M. Sargos had asked the court to follow the directive, on Article 6. Casso lere civ., Cts C C. Centre regional de transfusion sanguigne de Bordeaux (order No 736 P+B+RJ, The directive does not follow the criterion of "reasonable alternative design (RAD) requirement" to define design faullt. This criterion was followed in the latest version of Restatement" in the United States, insofar as a product is defective if these risks could have been avoided if the producer had designed the product differently. It is up to the victim to prove that there was such an alternative design. Communication from the Commission "Consumer policy action plan 1999-2001" (COM(98)696 of 1.12.98. 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 ina better position than the victim to detect how the problem occurred since he controls the process of production). In this situation, making proof easier turns out to be a way of improving the situation of the victim, especially in cases where it is difficult to track down the origin of the damage. The difficulties involved in proof (origin of the product, defect, causal relationship) increase when it comes to products that are ingested or no longer available (e.g. food, medicinal products). There are several options: 1) To infer a causal relationship when the victim proves the damage or defect, or the defect when the victim proves the existence of damage resulting from a product. In the first case decided in Belgium on the basis of the directive, the judge ruled that the explosion of an aerated beverage bottle was indeed evidence of an abnormal feature of the product which was incompatible with the safety that consumers were entitled to expect. The defect could be deduced from the abnormal behaviour of the product, according to the judge, in determining the proof that the victim had to bring. The producer had to consider the probable conditions of use of the product. Consequently, in the case of a beverage that was supposed to be consumed cold throughout the year, the producer had to consider the effects of temperature variations on the structure of the glass 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 SA. Schweppes Belgium, 21.11.96, Civ. Namur, 5e. ch. its relevant committee to make any presumption with regard to the appearance of damage in the case of a "typical course of events"39 2) To establish the degree or standard of necessary proof of the three elements required by Article 4 of Directive 85/374/EEC (damage, defect, causal relationship). It is not a question of including a presumption of proof in the directive, but of establishing that the victim should prove these three elements to a high degree of probability, without the standard needing to be very high (for example, it would be sufficient for probability to be above 60%). However, this option proves complicated in practice. During the debate on .extension, the European Parliament, on the basis of a proposal from the relevant committee, examined the possibility of requiring that it be necessary only for the causal relationship to be "sufficiently probable . Parliament, however, rejected this idea 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 beab~e 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" thateJtists in American law (see European Parliament, report by the Committee on the Environment, Public Health and Consumer Protection, (ROTH-BEHRENDT report, doc. A4-0326/98, accessible at http://www.europar\.eu.int/plenary/enldefault.htm), amendment No 3. European Parliament ROTH-BEHRENDT report amendment No 12. 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. this respect, the experience of countries where there is no eJtemption (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 market . 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. l1.Do you have information about the actual application of the exemption clause in case of "development risks" (Article 7(e) of the directive)? UW . 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 UWShould 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 Opinion of 26.4.79 (OJ C 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 bean immdiate upheaval in relations between producers and their insurers" (LEGRAND, B: impact de la directive sur l'industrie des assurances La directive 85/374/CEE relative a la responsabilite dufait des produits: dix ans apres, Louvain~la neuve, 1996. 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 hystorical value . With regard to the current directive and contrary to the opinion of some Member States , 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? Would you modify the Directive as regards the € 500 threshold andlorthe optional upper limit of € 70 million? ~.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 producers liability is not unlimited with regard to time. According to Articles 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. damages because of a defective product, he must claim for the recovery of damages within three years after the date on which he bec;ame aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer (prescription period). Liability limited in time is justified mainly on grounds of fairness: for producers, no-fault liability involves a heavier burden than that laid down in the usual systems of contractual and extracontractual liability. This must be offset by a limitation in time so that technological innovation is not discouraged and insurance cover is available. The prescription period is not always fully understood when it comes to its application. On 21 June 1996, the civil chamber of the Spanish Supreme Court ruled, in a .case dealing with compensation for a garage mechanic s loss of a finger when using a defective spanner, that the directive had no horizontal effect between private parties in accordance with Community jurisprudence Faccini Dori and that, consequently, it was not applicable to the product that had been put into circulation before the entry into force of the implementing law. In this particular case, the judge added that, even if the 1994 law had been applicable ratione temporis, the proceedings were prescribed in view of the fact that the accident had occurred three years after the spanner had been purchased. But the fact is that, according to the directive, the prescription period for instituting proceedings begins from the day on which the plaintiff became aware of the damage, defect and the identity of the producer, and not from the date on which the product was purchased52 With regard to the time limit for instituting proceedings (three years), there is no priori reason for thinking that the limit should be changed. On the other hand, it turns out that the liability limitation of ten years might not be enough to cover circumstances in which damage appeared after ten years (which is what the European Parliament had advocated in proposing an extension of the time limit to 20 years for hidden defects . 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 safety . 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 a safe product, as laid down in Directive 97/59/EEC, includes a reference to the foreseeable period of a product's use, which can of course be greater than ten years. 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 th~Hiability of a car manufacturer. The Supreme Court usually rules in connection with legislation on consumer protection (Law 261l984), which establishes liability with regard to a consumer s use and consumption of a product (order of 23. 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- of the 1984 law (vid. SAP Tarragona, 18.07. , n. 3471l998). Opinion of 5. 11.98 (OJ C 359, of 23. 1 1.98). OJ L 228 of 11.8.92, p. 24. 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 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 productS? In Germany the time limit for communicating the required information is restricted to one month , and in Belgium the time limit will be decided by the court 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 lil!bility. As for Directive 92/59/EEC on general product safety, it .states that producers shall be obliged to place only safe products on the market , 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 ill 1985 by Directive 85/374/EEC 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. 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)? D:W 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 eJtcluded defective services (for which the Commission is considering a possible specific initiative ), 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. I 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 itseU-62 Examples of non-application of the directive in the case of damage to the defective product can be found in Portuguese jurisprudence: in the riding of 26 October 1995 by the Supremo Tribunal de J usti~a 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/~9 by virtue of the fact that he was considered the "producer" and that the damage had been caused to the product itself3 On 23 May 1995, in another case dealing with the repair of a vehicle damaged by fire, the judge disregarded the national legislation itp.plementing the directive on the Communication from the Commission - "Consumer policy (COM(98)696 of 1. 12.98). Product compensation is covered by the legislation on sales 99/44/EC on after-sales guarantees, OJ No L 171, of 7.07.99). Acordiio No 87.397, Co!. De Jur., 1995, III-84. action plan 1999-2001" guarantees (see Directive 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 itself4. 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 issueconcems 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 professionais. 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 eJtpenses incurred by consumers in enforcing their rights , measures to make it easier for consumers to take legal action collectively, etc) , 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 Recurso No 7653, Co!. De JUT. 1995, III- l13. COM(98) 696 of 1.l2.98, p. 21. Directive 98/27fEC of the European Parliament and of the Council of 19 May 1998, OJ 166/51 of 11.6.98. Annex I :Directive on liability for defective products Transposition in domestic law Member State Adoption Entry into Liability 'for defective Liability for Financial force agricultural products development risks ceiling (art. IS. Car (art. IS.I. (art. 16) Belgium Lawof25. 1.4. Denmark Law No 371 du 10. Gennany Law of 15. 12. 1.1.90 YES Greece Law 225111994 YES (replacing decree- law of 1988) Spain Law No 221l994 NO (apart from YES food and medicinal products) France Law No 389-98 du 23. YES NO (apart from 19. products derived from the human body) Ireland Law No 28 of 1991 16. 12. Italy Decree-Law No 224 24. NON of24. Luxembourg Law of 2 1.4.89, YES YES amended by Law of 12. Netherlands Law of 13. 1.l1.90 Austria Law No 99 of 1.7. NO (apart from 21. 88, amended GMOs) by Law No 95 of 11.2.93, Law No 917 of29. 12.93 and Law No 510 of 12. Portugal Decree-Law No 383 21.11.89 YES of6. 11.89 Finland Law No 694 of 1.9. YES YES 17.08.90, amended by Law No 99 of 1.93 and Law No Following the adoption of Directive 99134/EC, the Member States are obliged to extend Directive 85/374/EEC to primary agricultural products. 879 of 22. 10. Sweden Law No 18of 1.1.93 YES 23. 1.92, amended by Law No 1137 of 12.92 and Law No 647 of 10. United Law of 15.5. 1.3. Kingdom Annex 2 : Directive on liability for defective products Alignment of non-Member States ' laws State Adoption Entry into Liability for Liability for Financial force defective development ceiling agricultural risks (art. (art. 16) products 15. Lb) (art. 15. La) Iceland Law No 25 of 1.1.92 YES YES 27. Liechtenstein Law of 12. 11.92 1.5. Norway Law No 104 of 1.1.89 YES YES 23. 12.88, amended by Law No 62 of25. 11.91 Malta (draft law) Cyprus Law No 105 of 1.1.97 1995 Estonia (draft law) Hungary Law No 10 of 1.1.94 16. 93, amended by Law No 25 of 16. Poland (draft law) Czech Republic Law No 59 of 1.6. 5.3. Slovenia Law of 6. 28. YES Bulgaria Law of 18. YES YES Latvia Law of 8. 10.96 10. Lithuania (draft law) Slovakia (draft law) Romania (draft law) Turkey Law of 23. 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-contractualliability 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 fora 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 acc9unt the legal traditions in most of the MemberStates, 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 011 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-whoi.Q1ports 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 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 compone~t 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. 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. InthiNight 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.