Machinery Directive 2006/42/EC Closing of "loopholes" through ...

Klaus Dannecker, LawyerVoith GmbH, HeidenheimDipl.-Ing. Hans-J. Ostermannwww.maschinenrichtlinie.deMachinery Directive 2006/42/ECClosing of "loopholes" throughprivate contracts 1What sellers and buyers have to consider

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/ECContentsIntroduction…………………………………………………………………… 3Demands on the manufacturer………………………………… 3Who is actually the "manufacturer"?................................ 4What has actually to be supplied?....................................... 7When does the conformity documentation have tobe handed over?.................................................................................. 8Points of particular note for partly completedmachinery.................................................................................................. 9The assessment of the contract conformity of thesupply........................................................................................................... 11Conclusion……………………………………………………………….…... 111 First publication "Technical Safety" Springer VDI-Verlag, March 20112

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/ECIntroductionAfter more than 15 years, the EuropeanUnion has decided on a comprehensiveamendment of the European MachineryDirective. As of 29.12.2009, the newMachinery Directive 2006/42/EC 2 wasimplemented in binding German nationallaw. Corresponding nationalimplementations were enacted at thesame time also in all other member statesof the EEA as well as in Switzerland andTurkey. 3While earlier demarcation problemsbetween the Machinery Directive and theLow Voltage Directive were reduced andmore legal security was gained by theinclusion of "partly completed machinery"in the list of products covered by the scopeof the Machinery Directive, a lack of clarityand points of uncertainty can still beobserved in practice even one year afterthe new Machinery Directive came intoforce when it comes to the implementationof the demands of the Machinery Directivein the procurement process betweensellers of machinery on the one hand andthe buyers of machinery on the other, asthe following examples from a quotationfrom a machine manufacturer show:contract parties tips for the drafting ofcontracts with respect to the handling ofthe subjects governed by and thedemands of the Machinery Directive.Demands on the manufacturerAccording to Article 5 of the MachineryDirective, the manufacturer of machinery /partly completed machinery must satisfythe following demands: The machine must satisfy therequirements of Annex I of theMachinery Directive "A CE mark on the machines suppliedby us is not generally covered by thecontract. Should you wish for such amark, this shall require our expresswritten confirmation." "A precondition for the supply inexceptional cases of a product notconforming to the EC directives is thesigning of an "indemnificationdeclaration" with the followingcontent ..."With this paper the authors aim to trackdown public law loopholes in the scope ofthe Machinery Directive and to give the2 DIRECTIVE 2006/42/EC OF THE EUROPEANPARLIAMENT AND OF THE COUNCIL of 17 May2006 on machinery. The Machinery Directive thathas been amended several times in the meantime isavailable in a consolidated version at"www.maschinenrichtlinie.de" (German text only)3 See www.maschinenrichtlinie.de under"Geltungsbereich" The drawing up of a risk assessment ismandatory The technical file on the machinerymust be available The operating instructions (or assemblyinstructions in the case of partlycompleted machinery) must accompanythe machinery The corresponding conformity assessmentprocedure (or special procedures3

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/ECin the case of partly completedmachinery) must have been performed The EC Declaration of Conformity ordeclaration of incorporation must becompleted and must accompany themachinery The CE mark expressing the conformityof the machinery with all the relevantEC Directives demanding such amarking must be attached to themachineNote:Partly completed machinery, bycontrast, does not bear a CE markunless another EC single marketdirective applicable to the partlycompleted machinery demands such amark The manufacturer of machinery musthave the necessary means tomanufacture the machinery "safely"Note:"Machinery" in the above sense is used forthe sake of simplicity as a generic term forall products in the sense of Article 2 a) to f)of the Machinery Directive, while the term"partly completed machinery" in the senseof Article 2 g) of the Machinery Directive isused separately, see also the correspondingprovisions in Article 2 of theMachinery Directive.Compliance with these requirements is amandatory precondition for the placing ofmachinery (or partly completed machinery)on the market. Failure to comply with thepreconditions can result in stringent measuresbeing taken by the responsibleauthorities in accordance with § 8 (4)GPSG; these cannot, however, becovered in more detail in this paper.In practical application it has beenobserved, however, that the MachineryDirective leaves considerable scope forinterpretation in some area and has loopholesthat lead to legal uncertainty in thedrafting of contracts. This paper aims togive examples as to how these loopholescan be expediently closed within thecontext of the contract drafting.Who is actually the "manufacturer"?The manufacturer or his authorisedrepresentative is responsible for thecompliance with the fundamental healthyand safety requirements of Annex I of theMachinery Directive and for the performanceof the above measures forestablishment / declaration of the "ECconformity" of the machinery. The manufactureror his authorised representative isalso the primary addressee of measurestaken by the responsible authorities.Against this background, the question ofwho the manufacturer of the machinery isin individual cases is of great relevance.While "single source" machinery (in thesense of the design and manufacture ofthe machinery) generally does not pose aproblem (even in the light of the fact thatthe property of "manufacturer" is not lostby the sub-contracting of work) 4 , a lack ofclarity as to the person of the manufacturercan quite conceivably arise in certaincases with "machine plants" (assembliesof machinery in the sense of Article 2 a)4th indent of the Machinery Directive).If we look at the definition of the manufactureras defined in Article 2 i) of theMachinery Directive more closely"... any natural or legal person whodesigns and/or manufactures machineryor partly completed machinery coveredby this Directive and is responsible forthe conformity of the machinery or thepartly completed machinery with thisDirective with a view to its being placedon the market, under his own name ortrademark or for his own use,"then a broad scope for interpretationbecomes obvious, particularly forengineering “assemblies of machinery” 5(machinery plants). The manufacturer canthen be:4 cf. clause 3.1.1 of the European Commission's"Guide to the Implementation of Directives Basedon the New Approach" - Blue Guidehttp://www.maschinenrichtlinie.de/fileadmin/dokumente/Binnenmarktleitfaden%20Blueguide.pdf5 See Machinery Directive, Article 2, paragraph a,fourth indent4

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/EC The plant design engineer The plant construction engineer The person who attaches his name / histrademark to the plant The "in-house manufacturer" whomanufactures the plant for his own useHow can this "dilemma" be resolved?For the question as to who themanufacturer is, the definition of the"manufacturer" in the Machinery Directiveessentially focuses on the question as towho bears the "overall responsibility" forthe safety of the machine plant:"[The person who] is responsible for theconformity of the machinery … with thisdirective with a view to its being placedon the market …."This is also made clear in the Blue Guide 6in section 3.1.1:6http://www.maschinenrichtlinie.de/fileadmin/dokumente/Binnenmarktleitfaden%20Blueguide.pdf„A manufacturer, in the meaning of NewApproach, is the person who isresponsible for designing andmanufacturing a product"At first sight there is a great deal here tosuggest that the "main supplier" (= thesupplier of the main components of theplant) is the plant manufacturer. This is notnecessarily the case, however. It can justas easily be e.g. the engineering officeresponsible for the plant conformity,particularly if it carries out the detailengineering or safety engineering.Also conceivable, however, is the erectioncompany that assembles all the plantcomponents "safely" or the control systeminstaller who integrates the plantcomponents into his control system. Inmany cases the plant operator has alsoappointed a project manager who "keepshold of the reins" so that the plant owneras an "in-house manufacturer" can also beconsidered for the declaration ofconformity of the plant as a whole, as heholds the "project or planning sovereignty"with respect to the plant.5

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/ECOf relevance to the decision, and hence aquestion also to be clarified, is who caninfluence the safety engineering propertiesduring design and construction of the plantup to its placement on the market orputting into service.In order to avoid discussions and highcosts later, the parties involved in a plantproject are therefore well advised to giveconsideration to the question of the overallIf it is not clear who the plant manufactureris, then it is also not clear who isresponsible for drawing up the riskassessment for the plant so that inpractice this is – legally inadmissibly –frequently not carried out. Added to that isthe fact that safety engineering correctionsdue to a delay in drawing up the riskassessment generally entail high costs.With the right approach, these costs- caused by a wrong engineeringresponsibility at the time of conclusion ofthe contract. A later clarification after thestart of the planning or engineeringinvolves great expense and is furthermorelegally inadmissible (cf. Annex I MachineryDirective: „The machinery must then bedesigned and constructed taking intoaccount the results of the riskassessment").approach - can be avoided.Agreement on the person of the plantmanufacturer in the contracts between theparticipating parties is therefore urgentlyrecommended. Agreement could bereached, for example, on the followingcontract clause in the relationshipbetween main supplier and plant owner:6

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/ECThe contract parties are agreed that[name of the company] is manufacturer ofthe complete plant in the sense of Article2 lit. i of the Machinery Directive2006/42/EC and assumes the duties ofthe manufacturer defined in Article 5clause 1 of this Directive for the completeplant to be placed onto the market." 7Where necessary, contractual cooperationobligations of the other contract partyshould also be defined. If, for example, themain supplier is the manufacturer of theplant and the plant owner purchases partsof the plant himself, the relationshipbetween manufacturer and plant owner'ssub-supplier must also be clarified. Themain supplier must, for example, be giventhe possibility by the plant owner in hiscontracts with his suppliers to consultthese suppliers and, where necessary, toexamine the conformity documentation asthe main supplier has no contractualrelationship with the plant owner'ssuppliers.What has actually to be supplied?The machinery manufacturer's public lawscope of supply is described in Article 5 ofthe Machinery Directive.It states that together with the machinery,the following must be handed over to thebuyer:The EC Declaration of Conformity inaccordance with Annex II part 1Section A The necessary information (Annex I,No. 1.7 Machinery Directive), such asthe operating instructions (Annex I, No.1.7.4 Machinery Directive)In addition, the technical file must beavailable for examination / inspection bythe responsible market supervisoryauthorities (Article 5(1) b in conjunctionwith Annex VII part A No. 2 MachineryDirective).7 See www.maschinenrichtlinie.de on the subject"Responsible persons / plant manufacturer"7

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/ECWhat does this mean with respect to therisk assessment?Under public law the buyer of machinery(including machine plants) / partlycompleted machinery has no right todemand the handover of the seller's riskassessment. It is intended as part of thetechnical file only for examination by theauthorities.In individual cases, e.g. with complexplants where the plant owner as "in-housemanufacturer" has to evaluate theCE conformity of given interfaces or insituations where existing plants aremodified, however, it is quiteunderstandable that the buyer demandsthe handover of the risk assessment ofmachinery / partly completed machinery.This can only be agreed upon by privatelaw within the scope of the supplycontract. In view of the private autonomy,the contract parties have the possibility todefine the subject of supplies andservices.Example of a contract clause:"The documents to be handed over by theSeller shall also include the riskassessment in accordance with theGeneral Principles of Annex I of theMachinery Directive 2006/42/EC for themachinery / partly completed machinery tobe supplied."Without such an "agreement on condition",however, the buyer has no entitlement toclaim the handover of the risk assessment.Alternatively it can be agreed, for example,that the machinery owner / buyer canexamine the manufacturer's / seller's riskassessment at his company premisesinstead of the handover. In both casesagreement on an obligation to confidentialhandling of the manufacturer's technicalsolutions is justified, as it isunquestionable that this constitutes knowhowof the manufacturer / seller that is notyet in the public domain and is thereforeworthy of protection.When does the conformity documentationhave to be handed over?The Machinery Directive prescribes inArticle 5 (1) that the EC declaration ofconformity must be handed over to theowner / user together with the machinerywhen it is placed on the market or put intoservice. While the time of placement ontothe market or putting into service ofindividual machines generally raises noquestions, this is often seen as a complexprocess of long duration in the case ofmachine plants, as the "trial operation" bythe plant manufacturer is regularly carriedout after the end of the erection work, i.e.the machine plant is adjusted, run in, etc.The trial operation by the plantmanufacturer is, however, regularlycharacterised in that the machine plantdoes not yet satisfy the demands of theMachinery Directive in all respects, inparticular Annex I, as e.g. guards have notyet been fitted, covers have to be removedagain, etc. An issue of the EC declarationof conformity and the attachment of theCE marking is not yet admissible at thispoint, so that this does not represent a"placement on the market". This trialoperation consequently takes place on amachine plant that is still in themanufacturing phase. The trial operationat this time is therefore subject to theoccupational safety provisions under theresponsibility of the plant manufacturer.The machine plant must satisfy theprotection goals of Annex I MachineryDirective only at the time of placement onthe market or of putting into service. Likewith a single machine this is a "point intime" and not a "period of time.There is therefore a need for clarificationof the "safety-related", i.e. the point atwhich the plant manufacturer's trialoperation has been concluded, themachine plant satisfies the public lawrequirements such as the MachineryDirective and the machine plant can beplaced on the market or put into service.Private law measures can be taken here,e.g. in the form of a commissioningprotocol to be signed by both contractparties in which the owner / buyer not onlyconfirms that e.g. the mechanical function8

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/ECof the machine plant is assured or e.g. theproduction over a 24-hour period ofoperation has been successfullydemonstrated, but also that the machineplant satisfies the public law requirementsof the Machinery Directive ("CEacceptance"). From this point in time, theowner / buyer is responsible in accordancewith Article 4(2) of the Directive2009/104/EC for ensuring that this safetylevel is not infringed during the furtheroperation of the machine plant.Example of a contract clause in thecommissioning protocol:"With the commissioning of the subject ofsupply, it shall be placed at the Buyer'sdisposal for the first time for its intendeduse. The Buyer confirms that at this timethe subject of supply satisfies the safetyand health protection requirements of theMachinery Directive 2006/42/EC and ofthe other relevant European directives ofthe Community and therefore functionsand can be operated safely."This does not preclude the necessity forfurther contractual provisions, e.g. on thequality of the machine plant over andabove this "safety-related transfer ofperils". The "CE acceptance" musttherefore not necessarily constitute a"quality acceptance" at the same time.This can and will as a rule take place later,e.g. when the product-specificperformance values of the machine planthave been demonstrated, e.g. in the formof test or guarantee runs. The advantageof such a split acceptance is that after the"CE acceptance", the owner can producewith the plant from a public law point ofview because it is "safe".Points of particular note for partlycompleted machinery1. Declaration of incorporation instead ofEC declaration of conformitySince 29.12.2009, certain manufacturer'sobligations in accordance with Article 5 (2)and Article 13 Machinery Directive applyalso to "partly completed machinery" asdefined in Article 2 g) Machinery Directive.In particular a special procedure (not aconformity assessment procedure) inaccordance with Article 13 in conjunctionwith Annex VII B Machinery Directive hasto be carried out which includes also thedrawing up of a risk assessment. Thedeclaration of incorporation in accordancewith Annex II Part 1 Section B MachineryDirective to be drawn up and handed overto the buyer, however, requires themanufacturer only to indicate whichfundamental requirements of theMachinery Directive in the sense of theprotective goals of Annex I MachineryDirective are applied and fulfilled. Themanufacturer of the partly completedmachinery can therefore limit himself inthe declaration of incorporation toindividual safety and health protectionrequirements which in his view areapplicable to the partly completedmachinery.For the buyer, however, who integratesthe partly completed machinery into acomplete machine, or assembles ittogether with other machinery or partlycompleted machinery, it is often importantthat the manufacturer of the partlycompleted machinery confirms that thisconforms to all the safety and healthprotection requirements in the sense ofAnnex I Machinery Directive relevant andapplicable to the partly completedmachinery up to the interfaces indicated inthe documentation.This can be achieved in that themanufacturer of the partly completedmachinery undertakes contractually toissue an "extended declaration ofincorporation" 8 in which he certifiesprecisely this statement.In this way the buyer who installs thispartly completed machinery in the finalmachine / plant receives a high degree oflegal security.8 See www.maschinenrichtlinie.de “ErweiterteEinbauerklärung”9

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/EC2. Assembly instructions instead ofoperating instructionsAccording to the procedure for partlycompleted machinery described inArticle 13 Machinery Directive, themanufacturer must ensure that assemblyinstructions in accordance withAnnex VI Machinery Directive are drawnup and that these are included with thepartly completed machinery. According toAnnex VI Machinery Directive, theassembly instructions for partly completedmachinery must contain a description ofthe conditions which must be met with aview to correct incorporation of the partlycompleted machinery into the finalmachinery, so as not to compromisesafety and health of persons.These are therefore installation orassembly instructions for the owner/buyer.The question must be permitted at thispoint as to where the stipulations for theintended use of the partly completedmachinery (this is by no means exhaustedby the simple installation in final machinery,as the partly completed machineryalso has to fulfil certain functions) or eventhe reasonably foreseeable misuse of thepartly completed machinery are contained,and in particular what risks exist during theuse of the partly completed machinery- after installation - and how users canprotect themselves against these risks.Strictly speaking, this information does notform part of the assembly instructions. Thebuyer is therefore neither informed aboutthe intended use of the partly completedmachinery, nor does he receiveinformation on (residual) risks which canarise during such an intended use orreasonably foreseeable misuse of thepartly completed machinery. Theconclusions drawn by the EU Commissionon the stipulations in the assemblyinstructions in § 390 of the EU Guide tothe Machinery Directive 9 therefore go toofar, even if this would be desirable for thepractical application.9 Guide to Application of the Machinery Directive2006/42/EC, 2 nd Edition June 201010

Dannecker / Ostermann: Loopholes in the Machinery Directive 2006/42/ECBut the manufacturer of the partlycompleted machinery exposes himself toproduct liability law risks if he limits thedocumentation to be supplied with thepartly completed machinery to therequirements of Annex VI MachineryDirective. Both the manufacturer liabilityunder tort law in accordance with § 823 (1)German Civil Code (BGB), and the liabilityof the manufacturer under the GermanProduct Liability Act (§ 3 (1) lit. a) ProdHGwhich is based on the Council Directive85/374/EEC) sanction faulty or the lack ofoperating instructions or instructions foruse and / or a lack of warnings againstpotentially hazardous properties of aproduct (keyword: "faulty instruction") 10 .The contract parties to the purchase ofpartly completed machinery are thereforewell advised to also include the point"operating instructions" in their contractdocuments. See also the "extendeddeclaration of incorporation" mentionedabove.The assessment of the contractconformity of the supplyWe should expressly point out once againhere:The CE marking on machinery / plantsmakes no statement about the (agreed)quality of a product. The CE marking hasto fulfil a different function, namely that ofassuring the freedom of the movement ofgoods within the European single market.Thus it is like an “European-single-marketpassport”for goods and not a qualitysymbol with respect to safety.The assessment of the agreed condition /quality of a product, and hence thecontract conformity of the supply, isperformed purely under private law. If thepurchase is e.g. a commercial transactionfor both parties, the buyer must ensure inaccordance with § 377 GermanCommercial Code (HGB) that the goodsare examined for visible defectsimmediately on arrival in his "domain", and10 See www.maschinenrichtlinie.de under theheading "Produkthaftung” (Product liability)that notice of any defects discovered isgiven immediately.Failure to meet this obligation regularlyresults in the loss of the rights with respectto material defects, at least as far as thedefects not discovered or not reported areconcerned (the question as to what extentthe buyer can assign this obligation to theseller is not the subject of this paper).In the case of contracts for work (which isregularly the case for contracts for theconstruction of a complex machinery planttailored individually to the needs of theowner / buyer), the ordering party has toaccept the work manufactured by thecontractor:(§ 640 BGB)"Acceptance" means here the receipt ofthe manufactured work and itsrecognition as being in conformity withthe contract.In the case of contracts for the purchase of(individual) machine or partly completedmachinery, however, it is recommendedthat tests for the proof of the agreedquality are also agreed. This can beachieved contractually through the termsfor the acceptance of the goods / services.In the case of long-term supplyrelationships it is recommended – also inthe light of minimising the product liabilityrisks – that "quality assuranceagreements" are concluded.A quality assurance agreement is to beunderstood as quality assurancemeasures contractually agreed with asupplier in which i.a. the following pointscan be defined in concrete terms: Quality goals for the individual parts /components Proof of quality by the supplier, such ase.g. quality control measures to beperformed, presentation of testcertificates, etc. Quality assurance Exchange of quality data Demands on the supplier's qualitymanagement systems11