Harmonization of Product Liability Laws in the European Community: A Comparative Analysis of the Approaches of the Federal Republic of Germany and the United Kingdom
Mathewson, Laurie McCutcheon, Law and Policy in International Business
The continuing progress of the European Community (EC) countries toward the formation of a "common market" has been an important element of the globalization of the world economy.(1) A major goal of any common market is the elimination of economic barriers inhibiting the free transfer of goods across national borders.(2) While the goal of the common market is clearly economic, the attempt to create equal opportunities for competitiveness within each Member State for all businesses operating in the EC necessarily involves legal concerns as well. One such concern has been the nature of liability laws relating to defective products.
Differing standards between Member States regarding the definition of a defective product, the extent of liability, responsible parties, and burdens of proof in litigation have made it extremely difficult for businesses to ascertain the degree of care required of them and to predict their exposure to liability when manufacturing and marketing products in countries across western Europe. In response to this concern, the Commission of the European Community(3) proposed a harmonization of Member State product liability laws in July 1976.(4) In 1985 the Council of Ministers adopted and issued a Directive(5) requiring each Member State to pass legislation which would establish a single, new products liability regime within the EC.(6) Since the issuance of the Directive in 1985, there has been much criticism of the compromise position taken by the Directive. Most commentators have taken a dim view of the effectiveness and positive impact the resulting legislation will have on the international competitiveness of European businesses within the borders of the EC.(7)
This article examines in Part II the Directive and its goals, and then explores two examples of the differing national laws generated by the Directive. In Part III, the Consumer Protection Act of 1987 passed by the United Kingdom (the first Member State to enact the required legislation) is compared to the Federal Republic of Germany's Products Liability Act of 1990. These two liability systems are compared to the EC Directive in order to highlight the important areas of conflict and similarity. Part IV discusses the potential impact on U.S. manufacturers of the differences in legislation from country to country within the EC. Part V concludes with a brief discussion of the future of product liability laws in the EC and the implications of these laws for manufacturers.
II. THE EC DIRECTIVE
When the Directive was finally issued by the Council of Ministers, it represented a compromise of different concerns expressed by the Member States. Originally, the Directive was designed to advance three general interests of the Community. The first was the elimination of all distortions in competition. The Council recognized that different national standards of liability for defective products would subject manufacturers to unequal levels of exposure in the different Member States, resulting in unequal and inequitable costs to manufacturers across the Member States.(8) The second goal was the promotion of the free movement of goods within the Community. The Council believed that manufacturers' inability to predict exposure to product liability actions in the different Member States would inhibit the free flow of goods across national borders.(9)
Finally, the Council sought to provide protection to the consumer against personal and property damage. Because the civil codes of the EC countries in general do not specifically address product liability concerns,(10) the laws in these countries have been less favorable to consumers than to industry.(11) Consumers injured by defective products have been forced to rely on theories of contract and negligence. Contractual liability in many EC countries requires privity of contract between the plaintiff and defendant, a relationship which often does not exist between the injured consumer or bystander and the manufacturer. …