Liability for Defective Products

ECJ opinion clarifies producer liability period

Advocate General Geelhoed has given his opinion on the period during which producers are liable for defects in their products under Council Directive 85/374/EEC of 25 July 1985. His opinion, delivered on 2 June 2005, concerns the commencement of the ten-year period during which producers remain liable and in which actions may be brought against them. In particular, the advocate general considered the meaning of ‘put into circulation', which constitutes the start of a product's period of liability.

The case in question, referred to the European Court of Justice (ECJ) by the UK High Court of Justice, concerns a severely brain damaged claimant who says his injury was caused by a vaccine received on 3 November 1992 which was manufactured by Pasteur Mérieux Sérums et Vaccins SA; subsequently renamed Aventis Pasteur SA (APSA).

The vaccine in question was, however, supplied to the UK National Health Service (NHS) by Mérieux UK Limited, an English company and a wholly-owned subsidiary of APSA. Mérieux UK Limited was the UK distributor of products manufactured by APSA and subsequently changed its name to Aventis Pasteur MSD (APMSD).

Confusion arose, however, over whether the date that liability began was when the product was sold to APMSD by APSA or when the vaccine was subsequently sold to the NHS. According to Article 11 of the directive, action must be brought within ten years of the product being put into circulation. If this was taken to be the product being sold to APMSD then the case in question against APSA would be outside the ten-year limit and therefore statute-barred. If the commencement date was when APMSD sold the product to the NHS then the case would be allowed.

Adding to the confusion, the claimant had previously brought proceedings against APMSD in the mistaken belief that it was the producer. This was not corrected until almost two years later, outside the ten-year liability period (if the transaction between APMA and APMSD is taken as the start date). Thus again confusion arose over whether the action should be allowed even though filed against the wrong company.

The UK court referred to the ECJ to seek answers to three questions:

• At what stage should a product be considered to have been put into circulation for the purpose of calculating the period of liability?
• In situations where the claimant mistakenly brings action against a company in the belief it is the producer, should the court be able to use discretionary powers to treat such proceedings as ‘proceedings against the producer’ within the meaning of Article 11 of the directive? and
• Does Article 11 confer discretionary powers to substitute the supplier's name for the producer's name in situations as above in circumstances where:
• the period of ten years has expired;
• the relevant proceedings were initiated originally before the ten-year period expired; and
• no proceedings were initiated against the real producer before the expiry of the ten-year period?

Advocate general's opinion

Advocate General Geelhoed opined that the basis for the commencement of the ten years’ liability should be a balance of the interests of the producer and consumer. He said that in line with this, the producer should not be able to manipulate the length of the liability period by way of its organisation. Thus, a transaction within a group, as between APMSD and its parent company, APSA, should not be treated as simply the same as a transaction with a third party otherwise a producer may be able to artificially reduce the period of time its product is liable. This could be done by putting the product ‘into circulation’ by selling it to a subsidiary. The subsidiary could subsequently store the product for a number of years which would constitute part of the liability period.

Thus, the advocate general said, the point at which the product should be considered ‘in circulation’ is when the producer voluntarily relinquishes control to some unrelated third-party, not merely a transaction to a subsidiary.

Answering the second and third questions together, the advocate general referred to Article 3(3) of the directive which states that in situations where it is impossible to identify the producer, the supplier of the product shall be liable. Furthermore, if a supplier is erroneously sued, it should immediately tell the suing party the identity of the true producer, particularly if the supplier is a subsidiary of the producer, as in the case above. If the supplier fails to do so, it shall be liable for the product.

Mr Geelhoed said that in the case in question, APMSD, while being neither an independent supplier nor the actual producer, was the legal person who placed the product into circulation. Thus, as APMSD failed to duly inform the claimant of the real producer, it could be sued as supplier under the auspices of Article 3(3) of the directive.

He said that: ‘It would be unacceptable if the victim's claim were to be rejected because the limitation period had expired, which might be the case if the supplier, erroneously sued as the producer, neglected to provide the information known by it as to the identity of the producer within a reasonable time.’

References

1. Advocate general's opinion in case C-127/04, 2 June 2005, www.curia.eu.int

2. Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products, OJ, L210, 29-33