Danish EU Presidency Tables Proposal on Product Liability of Intermediary Suppliers

Confusion has arisen over the extent to which the liability of intermediaries for defective products is covered by Directive 85/374/EEC on product liability or is a matter for individual member states. When the Directive was adopted, a joint Declaration of the Council and the Commission concerning the scope of the Directive was inserted in the Council minutes, saying that with regard to the interpretation of Articles 3 and 12, the Council and the Commission are in agreement that:

“there is nothing to prevent individual member states from laying down in their national legislation rules regarding liability for intermediaries, since intermediary is not covered by the Directive. There is further agreement that under the Directive the member states may determine rules on the final mutual apportionment of liability among several liable producers (see Article 3 and intermediaries)”.

Exactly what the first sentence of this Directive meant is curious given the clear wording of Article 3(3) of the Directive, which provided that each supplier of a defective product shall be liable on the same basis as if it were its producer unless he informs the injured person, within a reasonable time, of the identity of the producer or of a person who supplied him with a product.

In a judgment of 25 April 2002 (Case C-52/00) the Court of Justice of the European Communities held that the French legislation implementing the Directive was in violation of the Directive in 3 respects, one of which related to the liability of suppliers. The French Law No 98-389 inserted various provisions in the French Civil Code, including Article 1386-7, first paragraph, which provided:

“the vendor, hirer, except a lessor under a hire-purchase or a hirer assimilable thereto, or any other supplier in the course of business shall be liable for safety defects in their products on the same basis as the producer.”

The Court of Justice had no difficulty in finding that this provision was contrary to Article 3(3) of the Directive. The Court noted that the French Government did not deny the discrepancy, but claimed that it resulted from a rule of national procedure which did not come within the scope of Community competence, and that the Civil Code provisions achieved the result sought by the Directive since the supplier sued by the victim could join the producer as a party, who would then be liable to pay the compensation precisely as intended by the Directive. In response, the Court held that the possibility of the supplier in joining the producer has the effect of multiplying proceedings, which was a result which the direct action afforded to the victim against the producer was specifically intended to avoid. This comment is slightly curious, since there would seem to be no reason why national provisions that permit the joinder of parties and third-party claims or perhaps even apportionment of liability between defendants and third parties.

In the event, the Danish Presidency of the EU proposed in October 2002 a draft Council Resolution that the Directive should be amended so as to clarify the position on liability of intermediaries. Denmark noted that the implication of the judgment is that a system of intermediary liability based on strict liability is precluded. This situation, if continued, is a matter of general concern as regards the consequences to consumer protection within the EU. The draft Resolution requested the Commission to present before 1 July 2003 a proposal in order to provide that intermediary liability is not covered by the existing Directive.

For further information, please contact Chris Hodges by telephone on +44(0) 207 367 2738 or by email at [email protected]