Product liability law in Central Europe
(A draft of the paper to be published by the British Institute of International and Comparative Law in a monograph: ‘Product Liability in Comparative Perspective’.)
Magdalena Sengayen[1]
Introduction:
The paper presents the crucial features of the product liability regimes of Central Europe. The countries included in the analysis are: Poland, the Czech Republic[2] and Hungary. The Central European countries, in the efforts to approximate their laws to the laws of the European Union, have already implemented the Product Liability Directive.[3] The paper discusses the changes which necessarily had to be introduced into their legal systems in order to give effect to the provisions of the Directive, the manner in which the newly introduced regimes have been operating, as well as the relationship between the new regimes and the regimes existing before the implementation.
The background of the Central European product liability regime – Central European legal systems – the return from the ‘Socialist’ back to the civil law family (‘hybrid legal systems’):
It is considered necessary to introduce the peculiar background of the Central European product liability regimes, especially for the Western European listeners. Central Europe has always had very strong ties with the Western European legal systems, with its laws being modelled on the French, Austrian and German laws. There is no doubt that the Central European jurisdictions have traditionally belonged to the civil law family. Civil Codes of Central Europe were, however, enacted during the times of Socialism (Hungary in 1959, Czechoslovakia and Poland in 1964), and its philosophy has had impact upon the shape of the Codes. In Socialist legal systems law has been perceived to be merely a tool assisting the governing party in shaping the desired social order. Central European Civil Codes, although retaining many of the civil law features, did reflect such a tendency. Black letter law was to be of a general nature, capable of being interpreted and re-interpreted for the needs of the system. The role of the courts, therefore, was quite significant in the Socialist jurisdictions. This could be seen in the product liability case law, which in Poland and in Hungary has been substantial in number and scope. Czech law and legal doctrine has suffered from very peculiar handicap, which caused lack of a consistent approach to basic legal issues. Frequent, very significant, changes of the main sources of civil law (amendments of the civil code, or introduction of new civil codes) had a different character than the legal changes in other jurisdictions, even other Socialist jurisdictions. ‘The new’ entirely replaced ‘the old’, and hence even the case law and the doctrine of law established under the operation of ‘the old’ kept loosing their value. For the reason of lack of valuable sources of reference in case law and writings of the doctrine, the legal profession (the judges and the lawyers) are being forced to only have recourse to the written law. The positivism and formalism so created have manifested themselves through lack of creativity of the legal profession and this, in the opinion of Tichy, has led almost to the denegation of law (denegatio justitiae) (2002: 106). Tichy refers directly to the regime of the manufacturers’ liability for defective products as the area suffering from the passive attitude of the legal profession, not willing to creatively interpret the available legal provisions. Tichy criticizes both sides of the Czech legal profession - the lawmakers for the unavailability of the continuous basis for forming opinions and judgements, and the judges and legal writers for lack of thorough research and lack of any inspirational conceptions (2002: 106). He goes as far as referring to the “impotence of the Czech legal community” (ibid.). This very peculiar state of affairs is the reason why the analysis of the Czechoslovak and Czech product liability doctrine and case law in this paper is far from comprehensive.
Implementation of the Product Liability Directive:
Accession Agreements (Europe Agreements), signed by the European Union with the ‘Visegrad Three’ in December 1991 introduced an obligation to ‘approximate’ their law to the acquis communautaire. The formal obligation to implement the Directive into the Central European legal systems arises with the accession to the European Union (1 May 2004) and the new accession states are then given 3 years for formal implementation, but it has been considered useful for the process of implementation to commence earlier – so that the society and legal profession can become accustomed to the new regime of liability.
Poland has adopted the Act of 2 March 2000 on the protection of certain rights of consumers and liability for damage caused by an unsafe product in order to implement the Product Liability Directive. The Act inserted Articles 449.1 to 449.11 into the Polish Civil Code of 1964 (title VI.1 introduced into Book III ‘Obligations’ of the Code). The Act came into force on 1 January 2001. The rules in force before the implementation remained applicable to the claims which arose before 1 July 2000, as well as to cases in which the Directive does not apply. An interesting fact is that the place in which the new regulation is situated in the Code does not indicate tortious liability (covered by Title VII). This has already raised questions of some prominent representatives of the doctrine of law as to the true nature of this new category of liability.
Hungary and the Czech Republic decided to implement the Directive by enacting separate acts instead of incorporating the provisions into their Civil Codes. The decisions were taken for technical reasons (possibility of updating the act quicker) and greater ‘transparency’ for consumers (Maczonkai 1996).
Hungary has implemented the Directive the earliest – Act X of 1993, came into force on 1 Jan 1994. The amendments of the Directive have been enacted later – in 2002. Until 1998 injuries caused by medicines did not fall under the Product Liability Act (manufacturers were liable according to a fault liability regime, but in case of lack of fault if death or lasting health injury occurred – the state compensated the injured or the family of the deceased). Since 1998 Hungary has had an Act on Medicines for Human Use. The Act included the injuries and deaths caused by medicines into the scope of application of the Product Liability Act. Only if the manufacturer of a drug would escape liability relying on the development risk defence – the state takes over the obligation to compensate the victims.
The Czech Republic implemented the Directive by the Act No. 59/1998 on Liability for Damage caused by a Defective Product. The Act came into force on 1 June 1998. It was amended by the Act No 209/2000, reflecting the amendments of the Directive in 1999.
Possible problems and inconsistencies:
The Acts implementing the Directive do not comply with it entirely. The Polish Act is more beneficial for the victims as regards the time limits for bringing claims (both the 3 and the 10-years’ periods required by the Directive are in Poland not extinguishing periods, but limitation periods), and the more narrow understanding of the exonerating factor of the defect not existing at the time of introducing the product into circulation [the defect must have not existed in the product at the time, even in a rudimentary form, and the mere ‘probability’ of its non-existence (Article 7(b) of the Directive) does not exonerate the defendant – Article 449(3) of the Civil Code]. The latter discrepancy with the text of the Directive is also present in Hungary.
The Czech Republic rather tried to follow the wording of the Directive exactly – hence no particular inconsistencies appear there at first sight. It is, however, curious to see that Section 1 of the Czech Act on Responsibility for Damage due to Defect of a Product, when defining damage which can be recovered, refers to “other goods which are primarily used for purposes other than business”, and not, after Article 9(b) of the Directive, the property “of a type ordinarily intended for private use or consumption, and (…) used by the injured person mainly for his own private use or consumption”.
Some provisions of the Directive have not been translated literally, probably for a better compliance with the spirit of the Codes and other sources of civil law. Further, certain issues mentioned in the Directive have not been mentioned by the Central European regulation. For instance, causal link or burden of proof, were referred to in other parts of the Polish Civil Code (and regulated there similarly with the requirements of the Directive) and there was no need to consider them in detail again. The Czech and Hungarian regulations are more explicit, as they are placed outside the Civil Codes. For better clarity they do contain most of these issues, only on a small number of occasions referring to the Codes.
Optional provisions of the Directive and their implementation:
The development risk defence (Articles 7(e) and 15.1(b) of the Directive):
Poland has inserted the development risk defence into the new regulation, and hence the defendant can prove that “it was impossible to foresee the existence of the dangerous qualities of the product, taking into account the state of knowledge and science at the time of introduction of the product into circulation.” (Translated by Sengayen) (Article 449(3).2) Czech Republic and Hungary also did the same. The wording of the Hungarian and Czech provisions does not differ significantly from the Polish provision.
The producer’s total liability resulting from ‘identical items’ (Article 16 of the Directive):
Poland did not introduce this limitation of the producer’s liability. Neither did the Czech Republic and Hungary.
Central European product liability regime before the implementation of the Directive and its relationship to the new regulation:
Comparison of the old with the new regime to determine whether a true revolution has taken place there. It should be clear that as far as the substantive content of the regimes is concerned, no revolution could be observed. The true revolution lays elsewhere.
As seen from above, Central European states have implemented the Product Liability Directive already and, apart from certain inconsistencies which shall most probably be dealt with, if not by the states themselves, by the European Court of Justice, the law of product liability now resembles the law envisaged by the Directive. It is, however, deemed necessary to introduce the product regimes as they functioned before the implementation. Such an operation is considered useful for a number of reasons. It is common knowledge that the regime introduced by the Directive does not apply to all the possible cases of damages and injuries caused by defective products (Article 13 of the Directive), hence in order to have a full picture of the Central European product liability regimes one must learn the tortious and contractual product liability as it was before the implementation. Further, it shall be seen from the analysis below that in some aspects the tortious liability rules developed by the Central European courts did not differ significantly from the provisions of the Directive, and in other aspects the Central European regimes were even more comprehensive and advantageous for victims of defective product than the Directive. Thus the case law from the period before the implementation can still remain invaluable.
Introductory remarks:
The Central European product liability regimes were developed by the courts, as an express provision regarding liability for defective products in general did not exist in these legal systems (there existed limited-use provisions concerning liability linked to defective goods, but they were not used in any general manner). The regimes derived from the contractual liability of the sellers. In Central Europe it was possible to declare the seller liable in tort even though his conduct amounted also to a breach of contract (although the Czech courts never attempted doing this). Because of significant advantages of tortious over contractual liability (no restraints of privity – both in the horizontal and vertical dimension; the possibility, not available in contractual liability, of recovering non-pecuniary damages, recovery of lucrum cessans; longer, resembling the regulation of the Directive, periods for bringing an action) contract was very early abandoned as a possible avenue of action for victims of defective products in Poland and Hungary. In Czechoslovakia and the Czech Republic it still remains very much a crucial avenue of redress if there was a contract between the seller and the victim.
Contractual liability:
Contractual liability has been the primary form of product liability, both in the Western and in the Central Europe. It is frequently considered more advantageous for victims of defective products, mostly as it allows recovery of pure economic loss (particularly the damage or loss of the defective product itself). However, while in the common law systems liability in contract is strict, in the continental legal systems it has traditionally been based upon fault. In Central Europe fault is presumed, hence the defendant can exonerate himself if he shows he exercised due care in fulfilling the contractual obligations.
In Poland it was made clear very early by the courts that, although the level of care required of the professionals was the ‘maximum level of care’, the sellers were not held liable for damages which occurred beyond their control (the ‘Fiat Multipla case’).