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Published online by Cambridge University Press: 30 October 2024
To provide protection against harm caused by defective, unsafe products and to promote product safety, the law of product liability has developed as a specialized area of the law of delict (tort). The vexing question is, who should bear such liability? This contribution interrogates the notorious EU development risk defence, which exonerates manufacturers that meet certain stringent requirements for undiscoverable development risks in products that consequently inflict harm on consumers. In particular, it considers the election by South Africa, which recently adopted a “strict” product liability regime with the introduction of the Consumer Protection Act 2008, not to adopt such a defence. The purpose of this contribution is to consider the nature and scope of the development risk defence as contained in article 7(e) of the European Union (EU) Product Liability Directive and to determine whether it was prudent for South Africa to steer clear of incorporating a similar defence in its new statutory product liability regime.
LLB LLM LLD
B Proc LLB LLM LLD
1 Geistfeld, M Principles of Product Liability (1st ed, 2011, Foundation Press) at 7Google Scholar. See also Van Eeden, E and Barnard, J Consumer Protection Law in South Africa (2nd ed, 2017, LexisNexis) at 381Google Scholar.
2 Riordan, BJ “Unravelling the mystery: A comparative introduction to product liability law in the US and Europe” (2013) 1 South Carolina Law Journal of International Law 27Google Scholar at 27.
3 DG Owen “Products liability: Principles of justice for the 21st Century” (1990) 11 Pace Law Review 63 at 63.
4 RW Wright “The principles of product liability” (2007) 26 The Review of Litigation 1067 at 1067 remarks that more than any other area of tort (delict) law, the law of product liability has been the subject of continuing debate regarding the interrelated issues of its proper rationales and grounds of liability.
5 DG Owen “Moral foundations of product liability” (1993) 68 Notre Dame Law Review 427 at 461 (emphasis added).
6 G Howells “The new product liability law: The relevance of European and United Kingdom reforms for the development of the Australian law” (1996) Competition and Consumer Law Journal 1 at 7 remarks that there are essentially four types of product liability standards. The contractual or warranty standard involves products which fail to meet the promised standard or to comply with a term implied by law. The negligence standard judges the conduct of the defendant in light of the risks and benefits which result from his conduct. The strict liability standard focuses on the product and not on the conduct of the producer. The last standard is the absolute liability standard, although he submits this standard is not applied in practice.
7 European 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, available at: <https://europa.eu/european-union/eu-law/legal-acts-eu.pdf> (last accessed 5 April 2022).
8 C Murray “Product safety: The new Directive” (1992) 3 International Company and Commercial Review 426 at 426.
9 Id at 427.
10 M Ueffing “Directive 85/374: European victory or a defective product itself?” (2013) 4 Europeanisation of Private Law, Marble Research Papers 373 at 375.
11 PJ Lachmann “The penumbra of thalidomide, the litigation culture and the licensing of pharmaceuticals” (2012) 105 International Journal of Medicine 1179 at 1179; and N Vargesson “Thalidomide-induced teratogenesis: History and mechanisms” (4 June 2015) National Library of Medicine: National Center for Biotechnology Information at 140, available at: <https://pubmed.ncbi.nlm.nih.gov/26043938/> (last accessed 25 August 2023).
12 Lachmann “The penumbra of thalidomide”, above at note 11 at 1197.
13 J Stapleton “Restatement (Third) of Torts: Products liability, an Anglo-Australian perspective” (2000) 39 Washburn Law Journal 363 at 367. See also Ueffing “Directive 85/374”, above at note 10 at 373.
14 Ueffing, id at 375.
15 See EC (CCJ), TS No 91, Strasbourg 27.l.1977. See also Ueffing, id at 375.
16 Ueffing, id at 376.
17 Ibid.
18 Ibid.
19 See the European Council, Council Resolution embodying the Opinion on the Proposal for a Council Directive Relating to the Approximation of the Laws, Regulations and Administrative Provisions of the Member States Concerning Liability for Defective Products – OJ No C 114, 7.5 (1979) as updated by COM/2018/246.
20 Ueffing “Directive 85/374”, above at note 10 at 381.
21 Stapleton “Restatement (Third) of Torts”, above at note 13 at 367. Ueffing “Directive 85/374”, above at note 10 at 373 remarks that “in recent years the EU Product Liability Directive has become something of a global smash hit, providing not only a template for EU Member States but also an international blueprint used by countries worldwide, including South Africa, Australia, Brazil and countries in the ASIA Pacific Region when reforming their product liability regimes”.
22 See the preamble to the Directive, recital 18.
23 T Verheyen “Full harmonization, consumer protection and products liability: A fresh reading of the case law of the ECJ” (2018) 26 European Review of Private Law 119 at 121 indicates that the EU Product Liability Directive is a “maximally harmonising directive”.
24 Arts 19 and 20. The Directive is binding by virtue of the Treaty of Rome (Treaty establishing EEC (1957) U.N.T.S 11). See Stapleton “Restatement (Third) of Torts”, above at note 13 at 370 and 373.
25 However, C Hodges “The product liability Directive” (2000) 6 European Lawyer 33 at 33 states that despite the member states being required to implement the Directive into their national laws by March 1988, most countries were late, with France as late as 1998.
26 Recital 4 read with art 3(1).
27 See C Hodges “Product liability of suppliers: The notification trap” (2002) 27(6) European Law Review 758 at 759.
28 Directive, art 3(3). EC Staff Working Paper Evaluation of Council Directive 85/374/EEC (May 2018) 51 (EC Green Paper (1999)) available at: <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52018SC0157> (last accessed 25 August 2023) at 4 points out that the victim is obliged to formally notify the supplier concerned so that he can, within a reasonable time, provide details of the producer or previous supplier. Note should be taken of the decision in Commission v France Case C 52-00 where it was held that a supplier will be free from liability under the Directive where such supplier identifies the producer or upstream supplier and that member states cannot restrict this “defence” through any provisions of domestic law.
29 Recitals 4 and 5; and art 5.
30 C Kriek “The scope of liability for product defects under the South African Consumer Protection Act 2008 and common law: A comparative analysis” (LLD thesis, University of Stellenbosch, 2017) at 153.
31 EC Green Paper (1999).
32 Directive, art 2.
33 Ibid.
34 Medically termed “bovine spongiform encephalopathy”. See P Salzmann and LM Tierney “Mad cow disease. An opportunity for preventive medicine?” (1997) 167/6 Western Journal of Medicine 417.
35 EC Green Paper (1999) par 1.1[2]. Directive 1999/34/EC of the European Parliament and of the Council of 10 May 1999 amending Council Directive 85/374/EEC. Article 1 of the 1999 Directive amends the Product Liability Directive by replacing the original article 2 with the following article: “For purposes of this Directive, ‘product’ means all movables even if incorporated into another movable or into an immovable, ‘Product’ includes electricity”.
36 Preamble, recital 14.
37 Art 9(b)(i).
38 Art 9(b)(ii).
39 [2009] ECR l-04733, paras 2 and 9–11. This case was heard in France in 2006 prior to the ECJ being approached for a preliminary ruling. Damage was caused to a hospital generator due to the alternator overheating. The alternator was manufactured and put into circulation by Leroy Somer. Dalkia France installed the product, whereas Ace Europe was the insurer. Upon Dalkia France and Ace Europe compensating the hospital, they reclaimed the money from Leroy Somer.
40 [2009] ECR 1-04733, paras 17 and 28.
41 In NW v Sanofi Pasteur MSD SNC [2017] Case C-621/15, the ECJ examined the requirement in article 4 of the Directive requiring a claimant to prove a causal link between his damage and the defect in a product. This matter concerned a hepatitis vaccine which the plaintiff claimed caused his subsequent contraction of multiple sclerosis. The French courts had previously allowed proof of causation by way of evidentiary presumptions in similar types of matters where the plaintiff had no family history of the disease and the onset of the disease occurred soon after the vaccine was administered to the plaintiff. These presumptions thus enabled plaintiffs to establish causation even though there was a notable lack of scientific or medical evidence that hepatitis could actually cause multiple sclerosis. The ECJ held that national courts have a wide discretion to determine what evidence a plaintiff must present to prove causation, subject only to ensuring that the evidential requirements do not have the effect of reversing the onus of proof under article 4. Accordingly, the ECJ held that the use of presumptions to establish causation was permissible under article 4. See further Verheyen “Full harmonization, consumer protection and products liability”, above at note 23 at 123–26 for a discussion of this case.
42 Art 6(1).
43 Art 8(2) (emphasis added).
44 Art 9(a) and (b).
45 Recital 9.
46 Kriek “The scope of liability”, above at note 30 at 156.
47 Art 10(1).
48 The EC Green Paper (1999) paragraph 3.2.4 states that “this limitation of liability is mainly justified by the fact that strict liability puts a higher burden on producers than liability under the traditional systems of contractual or extra-contractual liability. Therefore, the liability period is limited in order not to discourage technical innovation and to allow insurance cover”.
49 Art 13.
50 Art 16(1).
51 Emphasis added.
52 CJ Stolker “Objections to the development risk defence” (1990) 9/2 Journal of Medicine and Law 783 at 783. See further M Arbour's “Portrait of development risk as a young defence” (2014) 59 McGill Law Journal 913 at 913 who refers to the “infamous” development risk defence.
53 Recital 7 in the preamble of the Directive.
54 Arbour “Portrait of development risk”, above at note 52 at 927.
55 Art 15(1)(b).
56 Art 7(e).
57 C Hodges Product Liability: European Laws and Practice (1993, Sweet & Maxwell, UK) at 78.
58 M Mildred “The development risk defence” in D Fairgrieve Product Liability in Comparative Perspective (2nd ed, 2005, Oxford University Press) 167 at 170.
59 Hodges Product Liability, above at note 57 at 79.
60 J Stapleton “Bugs in Anglo-American product liability” in D Fairgrieve (ed) Product Liability in Comparative Perspective (2nd ed, 2005, Oxford University Press) 295 at 332.
61 Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland [1997] C-300/95 ECR 1-2649.
62 Commission v United Kingdom, paras 10–17. The UK Consumer Protection Act 1987, sec 4(1), which purports to implement article 7(e) of the Directive, reads as follows:
“In any civil proceedings by virtue of this Part against any person … in respect of a defect in a product it shall be a defence for him to show. … (e) that the state of scientific and technical knowledge at the relevant time was not such that a producer of products of the same description as the product in question might be expected to have discovered the defect if it had existed in his products while they were under his control”.
The UK argued that, although the wording of section 4(1) was different from that of article 7(e); member states were entitled to choose appropriate wording when implementing a Directive, provided that the intended result of the Directive was achieved. The Commission argued that the UK legislature had broadened the defence under article 7(e) of the Directive to a considerable degree and had converted the strict liability imposed by article 1 of the Directive into a mere liability for negligence. It submitted that the test in article 7(e) is objective in that it refers to a state of knowledge and not the capacity of the producer of the product in question or to that of another producer of a product of the same description to discover the defect. However, the Commission's view was that, by using the words “a producer of products of the same description as the product in question [who] might be expected to have discovered the defect”, the UK Consumer Protection Act 1987, section 4(1)(e) presupposed a subjective assessment based on the behaviour of a reasonable producer. Under section 4(1)(e), it was easier for a producer to demonstrate that neither he nor a producer of similar products could have identified the defect at the material time, “provided the standard precautions in the particular industry were taken and there was no negligence” other than to show, under article 7(e), “that the state of scientific and technical knowledge was such that no-one would have been able to discover the defect” (emphasis added). The UK government did not challenge the Commission's interpretation of article 7(e) as setting out an “objective” and not a “subjective” test but argued that section 4(1)(e) introduced an objective test and did not provide for liability founded on negligence. The court eventually rejected the Commission's view as it opined that the Commission selectively stressed particular terms in section 4(1)(e) without having demonstrated that the general legal context of section 4(1)(e) failed effectively to secure full application of the Directive. See also G Howells “Defect in English law: Lessons for the harmonisation of English product liability” in D Fairgrieve (ed) Product Liability in Comparative Perspective (2nd ed, 2005, Oxford University Press) at 149; and Mildred in “The development risk defence”, above at note 58 at 173.
63 Commission v United Kingdom, para 27–28 (emphasis added).
64 Authors’ emphasis.
65 Commission v United Kingdom, para 29 (emphasis added).
66 Id, para 34.
67 Authors’ emphasis.
68 Mildred “The development risk defence”, above at note 58 at 188.
69 K P Borra “Products liability in the 21st Century” (2013) 3 Juridical Review 1 at 6.
70 Commission v United Kingdom.
71 [2001] 3 All ER 289.
72 See 3 February 1999, unreported, County Court of Amsterdam; and Borra “Products liability”, above at note 69 at 6.
73 Analysis of the Economic Impact of the Development Risk Clause as Provided by Directive 85/374/eec on Liability for Defective Products: Final Report (2004, Fondanzione Rosselli) available at: <https://ec.europa.eu/docsroom/documents/7104?locale=en> (last accessed 17 July 2024).
74 J Stapleton “Restatement (Third) of Torts”, above at note 13 at 383.
75 Mildred “The development risk defence”, above at note 58 at 188 (emphasis added).
76 The product liability provisions in the Consumer Protection Act 2008 came into operation on the Act's “early effective date”, which was 24 April 2010. See GN 467 in GG 32186.
77 This is by virtue of sec 10(2) that preserves the common law rights of consumers.
78 Consumer Protection Act 2008, sec 53 contains the definitions of the concepts of “defect”, “failure”, ‘hazard” and unsafe”, which serve to interpret the concept of defectiveness for purposes of product liability under sec 61.
79 Emphasis added.
80 Sec 61(2).
81 Sec 61(3).
82 Sec 61(5) (emphasis added).
83 Section 61(6)(a)–(c).
84 See also Sec 5(1)(d). Sec 60 deals with safety monitoring and recall.
85 Consumer Protection Act 2008, sec 1 defines “market” as “to promote or supply any goods or services”.
86 Consumer Protection Act 2008, sec 1 defines a distributor as a “person who, in the ordinary course of business - (a) is supplied with those goods by a producer, importer or other distributor; and (b) in turn, supplies those goods to another distributor or retailer”.
87 Consumer Protection Act 2008, sec 1 defines a retailer as “a person who, in the ordinary course of business, supplies those goods to a consumer”.
88 Consumer Protection Bill B 19 of 2008.
89 Green Paper on the Consumer Policy Framework 2004 available at: <https://www.gov.za/documents/consumer-policy-framework-green-paper-draft> (last accessed 27 August 2023).
90 Consumer Protection Bill B 19 of 2008.
91 Loubser, M and Reid, E Product Liability in South Africa (1st edition, 2012, Juta Publishers) at 133Google Scholar.
92 Ibid.
93 Id at 134.
94 Loubser, M and Reid, E “Commentary on Section 61 of the Consumer Protection Act 68 of 2008” in Naude, T and Eiselen, S (eds) Commentary on the Consumer Protection Act (2014 et seq, Juta Publishers) 61-11Google Scholar.
95 Loubser and Reid Product Liability, above at note 91 at 136.
96 Id at 135.
97 Loubser and Reid “Commentary”, above at 94 at 61-12.
98 Gowar, C “Product liability: A changing playing field?” (2011) 32 Obiter 521Google Scholar at 534.
99 Goldring, J and Richardson, M “Product liability and the conflicts of laws in Australia” (1977) 3 The Australian Law Journal 135Google Scholar at 135.