Personal Liability

In a decision dated December 12 2000,(1) the German Supreme Court ruled on the product liability of directors, officers and other company employees. It confirmed that under certain circumstances the victim or its legal successors have claims against the company in its role as producer and against members of the management team or employees of the company. In these cases the company and its directors and employees will be jointly and severally liable with respect to third parties. The Supreme Court has further confirmed that the limitation periods run independently for each claim. Therefore, the claim against the company in this case was held to have become time barred, while the claim against the directors or employees was held to be available for legal pursuit. This decision is likely to open the door for plaintiffs pursuing a two-step strategy against producers.


The plaintiff, born in 1982, sued a producer of sweetened baby tea which was sold in special tea bottles for damages. The claim was based on product liability and sought to compensate the plaintiff for damage to his teeth that he had allegedly suffered as a result of consuming the tea. The law suit was filed against the producer, its legal representatives and its key employees. The plaintiff's mother had learned about the causal link between baby tea, bottles and the damage to her son's teeth in 1985, and about possible claims against the producer in 1993. The Frankfurt District Court dismissed all claims based on limitation. The plaintiff pursued his claims further against the company's representatives and key employees, and the Frankfurt Court of Appeal confirmed the first-instance decision. The plaintiff's mother filed a further appeal to the German Supreme Court. The Supreme Court set aside the Court of Appeal decision and referred the case back to the district court for further litigation on the cause of action and the relevant facts. It was held that the claims against the producer were time barred, whereas the claims against the company's representatives and key employees were still available for pursuit. Since the district court and the court of appeal had focused on limitation in their decisions and had not taken evidence on the facts regarding the causes of action, the Supreme Court had to refer the cases back for further litigation on the facts.


Under German product liability law the producer is liable towards the end user for damages caused by a defective product to persons or other goods. Two courses of action are available: (i) a strict liability under the provisions of the Product Liability Act from January 1 1990,(2) which incorporates the EU Product Liability Directive of July 25 1985(3) into German law, and (ii) the law of tort, which grants a liability for fault. Claims under both causes of action become time barred after a period of three years as of the point in time when the claimant obtained sufficient knowledge regarding the damage, the defect and the tortfeasor (Section 852 of the Civil Code and Section 12 of the Product Liability Act).

In general, it has always been clear that the victim can pursue a claim against directors, officers or employees of the producer under the law of tort if such person negligently caused or failed to prevent the marketing of a defective product.(4) Such claim becomes time barred according to the rule set out in Section 852 of the Civil Code. As a result, a claim against the producer could under certain circumstances become time barred at a different point in time to that for a claim against any member of the management or an employee.

Personal Liability

The German courts have not yet clarified which directors and employees owe a duty of care to third parties, and whether this duty of care is dependent on the respective person's assignment or rather mirrors the general duty of care owed by the producer itself. The decision at hand did not have to deal with this issue, since it referred the case to the first-instance judge for further litigation on the facts. It can be expected that the case may well go again to appeal once it has been decided at first and second instance on the merits. However, it appears likely that the Supreme Court will not apply the producer's general duty of care to each employee and member of the board, but will rather decide the individual duty of care on a case-by-case basis, according to the position and actions of each person.

The decision confirms that the commencement date of the limitation periods for the respective claims against the producer and against any directors or employees may be different, depending on when the victim becomes aware of the role played by the respective tortfeasor. In the Supreme Court's view, knowledge regarding the producer does not necessarily include knowledge regarding individual directors or employees. The limitation period will not begin until the name, address and job description of the individual director or employee is known. It is still unclear whether and under what circumstances the victim will be treated as having knowledge of the details of certain employees and directors if he did not use the available options to track down this information. Where the victim has asked the producer to disclose the names and details of directors and/or employees who have been involved and the producer has refused to disclose this information, the victim will obviously not be treated as having had the necessary information. On the other hand, however, where a victim does not ask the producer these obvious questions there are some indications in German case law that the victim will be treated as having had the necessary information, thus triggering the limitation periods with regard to claims both against the company, and against individual directors and employees.(5)

These rules on the limitation period have also had an impact on any claims for reimbursement which an employee or director may raise against the company or his employee. Where a victim successfully claims damages from a director or an employee, the respective defendant has, as a general rule, a claim for reimbursement against the employer or, in the case of the director, against the company.(6)

Where the product liability claim against the company becomes time barred before the claim against the director or employee, the liability of the company is effectively extended, as happened in this case. The claimant filed the lawsuit against the employees in 1996, although it had suffered the damages in 1982. Since German product liability law does not yet allow for claims for discovery and disclosure, a claimant who is still ignorant as to the details of the producer's personnel involved should first file a lawsuit against the producer in order to learn as much as possible about the product, the reasons for its failure, the personnel and the internal structure of the producer. Based on this further information, he can then file a second lawsuit against specific employees and directors, thus triggering a later limitation period. Legal commentators have noted that this decision may thus open an additional route for claimants in product liability cases.(7)

For further information on this topic please contact Detlef Hass at Lovells by telephone (+49 89 290 120) or by fax (+49 89 290 12 222) or by email ([email protected]).


(1) BGH, Kindertee, ZIP 2000, 372.

(2) Bundesgesetzblatt I 1989, 2198.

(3) Directive 1985/374/EC of July 25 1985, OG 1985 L 210/29.

(4) For cases of general liability of the management see BGH NJW 1975, 1827 - Spannkupplung (1975); BGHZ 109, 297 - Baustoff (1989); BGHZ 1996, 786 - Lamborghini-Nachbau (1996). The Supreme Court has applied the same rules in various product liability cases (eg, BGHZ 116, 104 - Hochzeitsessen (1991)).

(5) In a transportation case, BGH Versicherungsrecht 2001, 866 (867).

(6) There is one important exception for directors of companies limited by shares, who must not claim reimbursement of damages they owe towards third parties as a result of their performance as director of the company, see sec. 93 Company Law (Aktiengesetz, AktG).

(7) Wagner, Persönliche Haftung der Unternehmensleitung: Die zweite Spur der Produkthaftung? Versicherungsrecht 2001, 1057.