The German civil courts increasingly seem to have to deal with 'quasi-manufacturer' cases. The main reason for this is that an ever-growing range of consumer products are imported into the European Union from emerging markets. Increasingly, such imported products are technical products such as vehicles. Hidden manufacturing defects of a motor vehicle and the potential responsibility of the importer for hazards resulting from such defects formed the core subject of a Hamm Court of Appeal decision, which was issued in late 2011 (File 28 W 36/11). This court is the largest state appeal court and also one of the most influential.
A German motorcycle dealership purchased motor scooters from a German wholesale dealer which had imported the scooters from China. The dealership sold the scooters to consumers after branding them with one of its own trademarks. One of the buyers was involved in a collision while operating a scooter. Subsequently, the buyer withdrew from the purchase and sued the dealership for repayment of the purchase price and damages. During litigation, an expert called by the court found that the proximate cause of the accident was a manufacturing defect in the scooter. As a result, the second instance court finally awarded the plaintiff the requested compensatory damages.
In a subsequent recourse action, the owner of the dealership filed suit against the importer and requested compensation for the amount it had paid to the customer as a result of the award in the previous litigation. Since the plaintiff dealer was in financial distress, it requested legal aid. The first instance court, finding the dealer's case meritless on the basis of res judicata (ie, a matter already judged), denied the requested legal aid. The Hamm Court of Appeal fully affirmed the decision of the first instance court denying legal aid and rejected the dealer's appeal.
Despite the fact that the case was a legal aid matter, the appeal court took the opportunity to make several general statements and remarks on the duties of importers with regard to hazards related to defective products.
The Hamm Court of Appeal clearly stated that the dealer's appeal for compensation of damages had no merit since the importer had not violated its duty of care under Section 280 of the Civil Code. In order to define the scope of the importer's duty of care with regard to potential product hazards, the court resorted to the terminology of Section 1 of the Product Liability Statute. The decision first pointed out the established rule whereby the statute generally views importers as so-called 'quasi-manufacturers'. From this differentiation the court deduced that the importer's duty of care to inspect the product for potential hazards was less than that of the manufacturer. The court held that while an importer also has a general duty to detect product hazards, such duty will (in the absence of any obvious indications of potential hazards) usually be limited to an external visual inspection of the product. Thus, the court generally exonerates quasi-manufacturers from the duty to inspect products for hidden construction defects. In the court's opinion, the appellant would have had the burden of proving that the construction defect that had caused the accident would reasonably have been detected by the importer during a visual inspection. In order for the plaintiff dealer's legal aid request to succeed, its underlying claim would have had to be reasonably meritorious pursuant to Section 127(1) of the Civil Procedural Code.
With regard to this requirement, the court expressly considered the probability of the plaintiff being able to provide sufficient evidence that the construction defect in question would have been detected during an external visual inspection. Since, in the view of the court, the appellant could not present sufficient evidence to this effect, the court denied the appeal.
The decision seems correct with regard to both the conclusion and the reasoning of the court. The court correctly stated that the standard to be applied in determining whether the duty of care has been met varies depending on whether the defendant is a manufacturer or a quasi-manufacturer. The requirement that a defect be detectible in the course of a visual inspection seems to be a reliable limit for the duty of care imposed on the importer. The decision provides a reasonable and straightforward limitation of importers' responsibility for hazardous products and – although in dicta – a useful and easily applied guideline for courts in subsequent cases. Further, the general limitation of the importer's duties to an external visual inspection of a vehicle acknowledges the importer's different role and ability compared to the position of the original manufacturer of a product.
For further information on this topic please contact Joerg Staudenmayer or Marla Weston at CBM International Lawyers LLP by telephone (+49 7031 439 9600), fax (+49 7031 439 9602) or email ([email protected] or [email protected]).