Product Liability 2009 - Arnold & Porter LLP

154
Chapter 21
Germany
Lovells LLP
1 Liability Systems
1.1 What systems of product liability are available (i.e. liability
in respect of damage to persons or property resulting from
the supply of products found to be defective or faulty)? Is
liability fault based, or strict, or both? Does contractual
liability play any role? Can liability be imposed for breach
of statutory obligations e.g. consumer fraud statutes?
The law of product liability in Germany is based on three grounds:
the law of contract; the traditional (fault based) law of torts; and
strict liability law. These regimes form concurrent legal bases.
Article 13 of the European Directive 85/374/EEC on liability for
defective products (‘the Directive’) preserves this coexistence.
Most product liability claims in tort are based on negligence
(section 823 (1) of the Civil Code). This requires the breach of a
duty of care (Verkehrspflicht). The Federal Supreme Court
characterises putting a defective product on the market as indicative
of a breach of duty (see also question 2.1). In this context, the
Supreme Court has identified three types of defects: design defects;
manufacturing defects; and instruction defects (i.e. failure to
warn/provide proper instructions). The producer is also obliged to
monitor the product and to take appropriate measures once the
product is in circulation.
German tort law further includes liability for breach of a statutory
or regulatory provision (section 823 (2) of the Civil Code).
Important examples of such provisions can be found in the Product
Safety Act, the Food Act, the Drug Act, the Medical Devices Act
and the Criminal Code.
Strict liability for products in Germany includes the Product
Liability Act 1989 (‘PLA’), the Drug Act 1976 (the ‘Drug Act’) and
the Genetic Engineering Act 1990 (the ‘Genetic Engineering Act’).
The PLA implements the Directive to introduce liability for defective
products. While the PLA was rarely applied during the first years of
its existence, more and more claims are now brought on the basis of
this regime. One of the reasons for this development, besides a
general increase in product liability claims in Germany, lies in a
reform of the law in 2002 that made it possible to recover
compensation for pain and suffering under strict liability regimes.
The Drug Act is an important strict liability regime for
pharmaceutical products, which takes priority over the PLA. The
Drug Act includes liability for development risks (see question 3.2)
and renders insurance compulsory. The Genetic Engineering Act
provides for liability for damage caused by genetically manipulated
organisms (GMO). This also includes liability for development
risks.
Ina Brock
Dr. Sebastian Lach
Contract law is only relevant where the injured person and the
defendant have a contractual relationship. The law of contract
provides for compensation for damage caused by a product, in
particular, where the product is not in conformity with the contract,
although this will in most cases, additionally, require fault on behalf
of the defendant. However, according to statutory contract law,
fault may be presumed if the defendant delivered a defective
product.
1.2 Does the state operate any schemes of compensation for
particular products?
Thalidomide victims have a right to benefits provided by a public
foundation established in 1971. Another public foundation has
been set up to help patients who were infected with HIV through
contaminated blood products before 1 January 1988. In both cases,
the endowments are shared by the state and the relevant
pharmaceutical companies. There is also financial aid available for
a specific group of people who have been infected with the
Hepatitis C Virus through particular batches of vaccine.
1.3 Who bears responsibility for the fault/defect? The
manufacturer, the importer, the distributor, the “retail”
supplier or all of these?
Under the PLA the responsibility for a defective product is on the
‘producer’. The term producer includes the manufacturer of the
product or a component, the producer of raw material, the ownbrander
and the person importing into the EU (EEA). The supplier
of the product is only liable if the producer cannot be identified.
The supplier can also exonerate himself by informing the injured
person, within one month, of the identity of the producer or any
other person higher up in the chain of supply, provided this person
is located within the EU/EEA. The same applies if the importer
cannot be identified even if the identity of the producer is known.
The Drug Act assigns responsibility to anyone who, in his own
name, puts the drug into circulation in Germany. This also includes
any marketing authorisation holder who is not the manufacturer of
the product. A similar rule applies under the Genetic Engineering
Act for liability for products incorporating GMOs.
A duty of care in tort can rest on all persons who are involved in the
production and marketing of a product, although the characteristics
of the duty may vary, depending on the role the individual person
has in this process. In contrast to the situation under the PLA, the
supplier may be liable in tort, regardless of whether the producer
can be identified. A duty of care can also rest on managers and
other qualified persons of a company. Liability for breach of
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