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Germany

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Federal Court of Justice, Decision of 5 February 2013, VI ZR 1/12 (Boiler), NJW 2013, 1302-1304

Topics

Concept of defect

Causal link

Compliance with standards and regulations

Defence of development risk

Instruction/warning defect

Articles

Sec. 1 para. 1 & 2 No 5; 3 para. 1 Product Liability Act (Produkthaftungsgesetz - ProdHaftG)

Facts

The claimant bought in February 2007 a boiler from the German defendant. The latter had brought the boiler, Chinese in its origin, onto the European market. Before the defendant distributed the devices in Germany he had entrusted an authorised centre to test it. Thus the boiler was tagged with the quality mark Geprüfte Sicherheit (tested safety, GS mark) - thus meaning that the device meets German safety standards. The accompanying producer's instructions pointed out that it was essential to fill the boiler with water before connecting it to any power supply and that it should be installed by "qualified personnel". However the claimant himself installed the boiler. It exploded in March 2007 injuring the plaintiff.

The plaintiff sued for damages. The district court dismissed the action. On appeal, the Court of Appeal overturned the district court's judgment and declared the claims to be justified. However, the Federal Court of Justice subsequently reversed this judgment and referred the dispute back based on two legal and two fact-based reasons.

Legal questions:

a) Can the producer invoke the development risk defence according to Sec. 1 para. 2 No 5 Product Liability Act if a product defect is neither discovered during the GS mark procedure nor during a random quality control?

b) What is a justified expectation of safety and by whose standards should it be judged? Can a manufacturer reduce his liability pursuant to Sec. 1 para 1 Product Liability Act via means of instructions for use or installation? Is a product's "mere theoretical potential" to harm an interest protected by law already a defect?

c) Is the standard of proof for the causal relationship between defect and damage pursuant to Sec. 1 para 1 Product Liability Act reduced?

Decision in a nutshell

According to Art. 24 sentence 1 Council Regulation (EC) No 44/2001 (EuGVVO), the German Court was competent. Since the product had been placed on the market before 11 January 2009, then German law was according to Art. 40 para 1 sentence 2 introductory act to the civil code (EGBGB) the relevant jurisdiction. As the claimant had installed the boiler himself and not by means of an instructed qualified personnel he used it inappropriately and consequently the court ruled that the boiler was not defective.

No development risk defence according to Sec. 1 para. 2 No 5 Product Liability Act (Art. 7 (e) Directive 85/374/EEC)

If a product defect is discovered neither during the security check for the GS mark nor during random quality controls, one cannot necessarily conclude that the product's potential hazard, based on the objectively accessible knowledge at the time of its circulation, could not have been detected.

No product defect according to Sec. 3 para 1 Product Liability Act

To assess a defect according to Sec. 3 para 1 Product Liability Act, then not only are the user's subjective expectations of safety relevant, but also the objective expectations of safety as generally accepted.

The test of legitimate expectations of safety in terms of Sec. 3 para 1 Product Liability Act has the general meaning that a product only if employed in accordance with the instructions for use or installation should not cause within its foreseeable normal use any significant hazards - to life and limb of the user or uninvolved third parties. What is more the manufacturer is not required to take precautionary actions in the instructions for each and every case of the product's careless handling, including an unprofessional installation.

A product's "mere theoretical potential" to harm an interest protected by law is no defect within the meaning of Sec. 3 para 1 Product Liability Act..

Requirements to prove the causal relationship between defect and the violation of an interest protected by law

There are no reduced requirements to prove the causal link between defect and the violation of an interest protected by law in product liability case law in Sec. 1 para 1 Product Liability Act. As the general standards of the burden of proof apply the product's "mere theoretical potential" to harm an interest protected by law is not sufficient to prove this very causal relationship.

Comments

No per se development risk defence after successful GS mark and quality controls

Neither the award of the GS mark nor random tests ensure the compliance with the safety standards needed. Thus they do not necessarily give rise to the development risk defence, excluding liability. Nevertheless the awarding procedure and testing are worthwhile. This stands true not only with regard to the product's safety but as well to the legal process. Along the lines of the documented awarding procedure and testing it is easier to give evidence that no product defect existed in the first place.

This decision illustrates the practical application of Sec. 1 para. 2 No 5 Product Liability Act transforming Art. 7 (e) Directive 85/374/EEC liability for defective products. In that sense, it is consistent with another previous judgment, in which "the state of scientific and technical knowledge" were not defined in a broad but a narrow way. There the defence only applied to design defects, and was not extended to manufacturing defects. Again the Federal Court of Justice narrows down the application of the exclusive rule for the user's sake, as neither the award of a GS mark nor random testing are per se a sufficient base for the development risk defence.

Reducing the manufacturer's risk of liability via instructions for use or installation

The manufacturer may reduce his risk of liability via instructions for use or installation. It is only within these boundaries that legitimate expectations of safety may arise. Of course the instructions need to be clear and easy to comprehend. But the manufacturer has neither to caution against any abstract danger nor does he have a duty to point out even the foreseeable misuse. It is sufficient to state in the instructions that only qualified and trained personnel should be involved. If this is done the instructions don't need the minutest details. A manufacturer hence should put every effort in the clear and comprehensible conception of the instructions for use and installation.

So far only Sec. 1 para 3 Product Liability Act, implementing Art. 7 (f) Directive 85/374/EEC liability for defective products, names an exclusion from liability via the means of an instruction: solely for the benefit of the manufacturer of a component. This exclusion was intended to apply in a scenario where the producer is a subcontractor of the manufacturer of a component: If the defect can be traced back to either the design of the finished product in which the component has been fitted, or to defective instructions given to the subcontractor by the producer of the finished product, the producer's liability is excluded. Hence this approach might be contested regarding both, Sec. 1 para 3 Product Liability Act and Art. 7 (f) Directive 85/374/EEC liability for defective products. Any extension or analogy of this rule has to be taken with a pinch of salt.

This new approach bears the risk that the manufacturer easily bypasses his product liability via extended instructions for use or installation. The only tool not to thwart the product liability is an increase in the instructions' precision and comprehensibility.

Causal relationship between defect and damage

The Federal Court of Justice stated clearly that the general standards of the burden of proof apply to the causal relationship between defect and damage according to Sec. 1 para 1 Product Liability Act. In other European countries the standard of proof might be somewhat reduced, though Art. 4 Directive 85/374/EEC requires the injured person "to prove the damage, the defect and the causal relationship between defect and damage". However it was not the Directive's purpose to harmonise Member States' national procedural rules with regard to the required standard of proof.

References:

- Burckhardt, Markus, case note on Federal Court of Justice, Decision of 5 February 2013, VI ZR 1/12 (Boiler), BB 2013, 916;

- Günes, Menderes, The predictable misuse in product liability and product safety law (Der vorhersehbare Fehlgebrauch im Produkthaftungs- und Produktsicherheitsrecht), PHI 2013, 229-233;

- Spickhoff, Andreas, case note on Federal Court of Justice, Decision of 5 February 2013, VI ZR 1/12 (Boiler), LMK 2013, 345600;

- Wagner, Eric/ Mann, Marius, case note on Federal Court of Justice, Decision of 5 February 2013, VI ZR 1/12 (Boiler), EWiR 2013, 525-526.

Dr. iur. Verena Klappstein, M.A., LL.M.

Verena.Klappstein@uni-passau.de

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