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General climate and recent developments

State of legal development

In general terms, how developed are the product regulation and liability laws in your jurisdiction?

At least while the United Kingdom remains a member of the European Union, UK product regulation rules and product liability principles are primarily derived from EU law. EU product regulations are generally regarded as among the most robust and developed in the world. 

The level of enforcement of product safety rules in the United Kingdom can vary, with day-to-day responsibility delegated to local government level. In recent years the resources of market surveillance authorities have come under significant strain, as has been the case in many European countries.

In January 2018 the UK government took the significant step of establishing the Office for Product Safety and Standards (OPSS). This is a game-changer for the enforcement of product safety in the United Kingdom, and will strongly influence the future development of this area for product manufacturers and suppliers.  

In the field of product liability, the main rules also derive from EU legislation, but are complemented by common law principles of contract and tort. The practical application of product liability rules is strongly influenced by structural factors, including questions of access to justice and funding options for claimants.

Recent developments

Have there been any notable recent developments in relation to product liability law and product safety law in your jurisdiction, including any regulatory changes and case law?

The product liability and product safety regimes at EU level are currently undergoing a period of review and change. These developments, which are taking place for a range of reasons, are set to change the regulatory and liability landscape for product manufacturers and suppliers.

The United Kingdom’s decision to leave the European Union, effective from March 2019, is an important development. The impact of this decision on the product safety and product liability regime is currently unclear, but has the potential to be significant, particularly in relation to:

  • the applicability of EU-derived products law, depending on the source of that law and its mechanism of implementation in the United Kingdom;
  • the acceptability of UK conformity assessment, ‘CE’ marking and notified bodies processes across wider Europe; and
  • the acceptability in the United Kingdom of products designed, manufactured and labelled to EU standards.

Other important recent developments include the following:

  • In December 2017 the European Commission published a proposed new ‘Goods Package’, comprising legislation intended to significantly increase the level of enforcement of product safety rules across the European Union and further reduce barriers to trade within the European Union.
  • In January 2018 the OPSS – a national body to support the work of local authorities in their enforcement of product safety laws – was established.
  • In January 2018 the government published its response to a report of a working party on product recalls and safety, which broadly accepted recommendations relating to:
    • the development of an incident management capability to respond to national issues and to make information about the same publicly available;
    • the establishment of intelligence capability to collate data sources to better understand product risks;
    • support of the United Kingdom’s ‘primary authority’ regime by which businesses can establish contract-based relationships with their local regulatory authorities; and
    • the establishment of an expert panel of trade associations, consumer representatives and enforcement authorities to support the OPSS. 

After a period of relatively slow developments in the field of product liability in the United Kingdom, there have been some seminal judgments over the course of the past two years, including the following:

  • Wilkes v Depuy ([2016] EWHC 3096 (QB)), in reversing much precedent set in the previously pivotal case of  A v National Blood Authority ([2001] EWHC QB 446), articulated the nuanced process for the determination of defects in a product under the regime and the manner in which assessments for liability must be undertaken under the product liability system.
  • Howmet Ltd v Economy Drives Ltd ([2016] EWCA Civ 847), in reinforcement of early precedents in the same vein, held that the consumer’s knowledge of the defect before the injury or damage occurring can be used by the manufacturer to exclude liability if the consumer continued to voluntarily use the product with knowledge of the defect.

Legal framework

Legislation

What primary and secondary legislation governs product safety and liability in your jurisdiction?

In the United Kingdom, the EU Product Liability Directive is implemented primarily by Part 1 of the Consumer Protection Act 1987. Consistent with the directive, the act sets out a regime of strict liability for defective products. This regime is supplemental to other systems of liability in the United Kingdom, particularly those under the law of contract and tort. Rights and obligations relevant to product liability are also found in the Consumer Rights Act 2015.

Product safety regulations, most of which derive from EU law, are found in a range of legislative measures, the most important of them including:

  • the General Product Safety Regulations, which deal generally with consumer products; and
  • sector-specific legislation (eg, medicines, electrical equipment, cosmetics, toys, cars, medical devices and personal protective equipment). Most of these measures rely on the development of standards, which help to define the specific design and testing requirements for products covered by the regulations. This is an important feature typical of the structure of EU product regulation.

Regulatory and enforcement authorities

Which government authorities regulate and enforce product safety and liability laws in your jurisdiction, and what is the extent of their powers?

Enforcement of product regulations falls within the ambit of local authorities, which operate under the supervision of the Department for Business, Energy and Industrial Strategy. Broadly, the authorities are empowered to:

  • seize documents and products;
  • inspect products;
  • search premises;
  • issue a requirement to warn; and
  • issue a recall notice

In January 2018 the government announced the establishment of the Office for Product Safety and Standards, which will play an important role in the development of policy and in the enforcement of product safety in the United Kingdom.

Liability

Product defects

How is a ‘product defect’ defined in your jurisdiction?

Under the Consumer Protection Act – a no-fault liability regime – “producers” are responsible to compensate for damages caused by a “defect” in a product. The concept of ‘defect’ is therefore central to a determination of liability. Section 3 of the act specifies that a product is defective if it does not provide the “level of safety to which consumers are generally entitled to expect”. This expected level of safety is determined with reference to:

  • the purpose for which the product is to be used;
  • any accompanying instructions or warnings; and
  • the time in which the product was supplied (notably, a product will not be deemed unsafe just because industry standards subsequently changed and developed safer product alternatives).

As is the case throughout the European Union, for products subject to extensive regulation, the concept of a ‘defect’ in a product liability case should not be assessed without reference to the rules and standards under the applicable regulations. This is a controversial area, particularly on the question of whether compliance with safety regulations can effectively amount to a defence to any challenge that the product has as defect for the purposes of the Consumer Protection Act.

Causation and burden of proof

How is causation of loss or damage established in relation to product liability claims and where does the burden of proof lie? Can this burden be shifted in any way?

The burden of proof is on the claimant in product liability matters. Under the Consumer Protection Act, the claimant must prove the defect, the damage and the causal link between the defect and the damage. The standard of proof is “on the balance of probabilities”. It can be controversial as to what matters need to be proven in order to establish a defect. Is it enough to prove that the product failed, causing injury, or does the claimant need to prove what caused the product to fail (ie, the specific defect)?

The defendant bears the burden of proving any of the statutory defences. Again, the balance of probabilities applies.

Legal bases for claims

On what legal bases can a product liability claim be brought?

There are distinct causes of action in regards to claims for damages caused by dangerous products, as follows. These causes of action can be pursued simultaneously, separately or in the alternative (as is most common).

Negligence If a claimant brings an action under the common law tort of negligence, the following four elements must be established:

  • The manufacturer owed the claimant a duty of care;
  • The manufacturer breached that duty;
  • The breach caused the damage in question; and
  • The damage was not too remote from the breach.

Contract For an action brought under breach of contract, the claimant must make out the breach of an express or implied term and that the damage caused was also not too remote. There are different thresholds of foreseeability and remoteness applicable as compared to tortious claims.

Consumer Protection Act Finally, where a claim is brought under the Consumer Protection Act, the claimant must prove that:

  • the product was defective;
  • the claimant has suffered damage; and
  • there is a causal link between the defective product and the damage suffered.

Criminal liability

Can a defendant be held criminally liable for defective products?

There is criminal liability for defective products in England and Wales, in respect of specific offences, under the General Product Safety Regulations and certain sector-specific legislation.

There is a general obligation that a manufacturer will not introduce an unsafe product into the consumer marketplace. Doing so is a criminal offence, as is introducing to the market products that do not comply with specific mandatory regulations.

Criminal offences also arise where there is failure to comply with other requirements of relevant regulations, such as failure to notify the relevant authority when a company becomes aware that it has placed a dangerous product on the market.

Liable parties

Which parties can be held liable for defective products?

Under the Consumer Protection Act, liability rests with the “producer” of the product. This is generally the manufacturer, where the product is manufactured in the European Union. Where the product is manufactured outside the European Union, the importer of the product will bear the responsibility of the producer. A party can also be deemed to be a producer if it places its trademark on its product so as to hold itself out as the manufacturer, or if a distributor fails to disclose the identity of the party from which it acquired the product when asked to do so.

Similar but not identical rules apply when it comes to responsibility under product safety regulations. Generally, the parties with the main responsibilities are the manufacturer and importer of the product into the European Union (where applicable). Other responsibilities rest with distributors of products, including retailers.

Limitation of liability

Can liability be excluded or mitigated in any way?

While the general common law position is that parties have scope to limit or exclude their liability through contractual terms, there are various statutory restrictions to that right.

For example, the Consumer Protection Act imposes restrictions on parties seeking to limit or exclude liability to consumers for any damages arising through a defective product. More broadly, the Unfair Contract Terms Act 1977 prohibits businesses from incorporating terms into their contracts with consumers that are deemed to be overly prejudicial to the rights of the consumer. Specifically, this act restricts businesses from being able to limit or exclude liability for damage occasioning personal injury or death under any circumstances.

There is greater scope for companies to limit their liabilities in business-to-business transactions and it is worthwhile taking care to carefully consider the terms of contracts with supply chain partners, as UK courts will generally – in the absence of statutory protections – be slow to overturn the terms of contracts between commercial parties, especially where each is considered to have had an opportunity to negotiate with the other to protect its position.

Litigation

Procedure

What is the procedure for filing a product liability claim before the courts in your jurisdiction?

Litigation procedure in England and Wales is governed by the Civil Procedure Rules. Before commencing litigation, the courts expect parties to partake in certain pre-action procedures and failure to do so can have significant consequences, particularly in terms of costs. Following appropriate engagement with the pre-action protocol, the claimant commences proceedings by filing its claim form with the applicable court and serving it (in the prescribed format) on the defendant(s).

Interlocutory motions

Can the court issue interlocutory orders or judgments in product liability cases? If so, what rules and procedures apply?

In England and Wales there is a wide range of possible interim orders (eg, interim injunctions and orders for security for costs). Civil Procedure Rule Part 25 provides a non-exhaustive list of all potential interim orders that can be applied for. Each order has a distinct threshold in regards to what evidence is required and what burden is to be discharged. Accordingly, the Civil Procedure Rules should be consulted before making any such application.

Pre-trial disclosure

What pre-trial disclosure/discovery mechanisms are available in product liability cases, if any?

In England and Wales the standard form of disclosure, as required under the Civil Procedure Rules, is that parties disclose all documents (including electronic documents) that:

  • they intend to rely on at trial;
  • adversely affect their own case;
  • adversely affect another party’s case; and
  • support another party’s case.

This requirement is an ongoing duty which must be complied with throughout the course of litigation, meaning that any newly discovered documents subsequently unearthed after the initial exercise must be disclosed promptly. The courts also reserve the power to make orders for specific disclosure where a specific document or specific class of documents has been identified as being within a party’s possession.

While these general principles exist, the courts have broad powers to manage the conduct of litigation to ensure efficiency and proportionality, and they often impose limitations on the extent of disclosure to be given in any case.

Generally, pre-trial depositions are not used in the United Kingdom, although the parties will normally be required to exchange with the other party the witness statements and expert reports on which they intend to rely.

Evidence standards

What evidence is accepted to support claims in product liability cases? What formalities apply to evidence submission?

In litigation in UK courts, evidence can be adduced by way of fact witnesses, experts and documentary evidence.

The Civil Procedure Rules state that any fact which needs to be proved by the evidence of a witness is generally to be proved at trial by his or her oral evidence given in public. This oral testimony must have previously been submitted to the court as a written witness statement before the trial, with any referenced exhibits accompanying that statement. It is highly unlikely that the court will allow new testimony to be orally submitted at trial that was not part of the witness’s written statement.

Generally, the courts will also exercise control over the extent to which parties can adduce evidence by experts. Permission of the court is usually needed and in some cases the court may direct that the parties jointly appoint a single expert to deal with a particular topic.

Expert evidence

Under what circumstances will the court appoint an expert to assist it in examining the merits of the case? What rules and procedures apply?

Generally, experts are engaged by the parties to the case, with the court exercising control under its case management powers.

Can the parties rely on expert witness testimony to support their claims? If so, what rules and procedures apply?

Expert witnesses can be relied on where doing so is reasonably required to resolve the dispute. The expert must provide his or her evidence in the form of a written report and the other side must be afforded the opportunity to submit written questions to the expert.

With a view to controlling unnecessary costs being incurred, the courts can use their discretion to disallow the appointment of an expert or to require that a single joint expert be appointed by the parties.

Any expert that intends to submit evidence in this jurisdiction must acknowledge that his or her duty is to the court and his or her analysis must be impartial and independent.

Class actions

Are class actions or any other collective proceedings available for product liability claims in your jurisdiction? If so, what is the procedure for their formation and what benefits do they afford claimants? Are class actions formed on an opt-in or an opt-out basis?

Class actions as such are not available in England and Wales, but certain procedural mechanisms exist that have similar effect. The courts have broad case management powers and can order that proceedings be consolidated where appropriate. This is assisted by the fact that there is no particular limit in this jurisdiction to the number of claimants and defendants that can be joined to such a consolidated claim, provided that they have “the same interest… at all stages of the proceedings and not just at the date of judgment at the end” (Emerald Supplies Ltd v British Airways plc [2010] EWCA Civ 1284).

In England and Wales there is also the possibility of proceedings being managed under a group litigation order (GLO). The GLO will establish a group register into which any claims to be consolidated will be placed. Any judgment subsequently passed on the group register is therefore binding on all of the claims which have been ordered to be a party to that group register.

Appeals

What rules and procedures govern appeals of court decisions?

Permission is required to appeal a decision of a county court or High Court judgment in England and Wales. An application will generally be heard solely on the basis of written submissions (ie, without an oral hearing), unless it is deemed that this will unfairly prejudice such an application.

An appeal must be grounded on the fact that the first-instance court’s judgment is wrong or that there was some form of serious procedural irregularity warranting an appeal. A judgment is deemed ‘wrong’ for the purposes of an appeal if it can be shown that it contains an error of law, error of fact or error of jurisdiction. Appeals grounded on the judgment’s error of fact rarely succeed, as appellate courts are reluctant to find fault with a finding of fact that was open to the first-instance court.

Statute of limitations

What is the statute of limitations for filing product liability claims?

The Limitation Act 1980 is the relevant statute for limitation periods in regards to product liability claims in England and Wales. For claims brought under contract or tort (for damages other than personal injury) there is a limitation period of six years. This period is reduced to three years for tortious claims where the damages are for personal injury, with that period running from the date when the cause of action accrues or the claimant gains knowledge of the injury.

For claims brought under the remit of the Consumer Protection Act, the action must be commenced within three years of the date when the cause of action accrues or the claimant gains certain knowledge connected with the injury. In addition to these rules, an absolute long-stop of 10 years from when the particular product was “first put into circulation” applies for Consumer Protection Act claims. This is accepted to mean the date on which the particular product was removed from the manufacturing process and entered the marketing process in the form in which it was to be consumed.

Timeframe

What is the typical duration of proceedings in product liability cases?

The duration of proceedings in England and Wales in respect of product liability claims is highly variable depending on the product in question, the nature of damages, the factual matrix involved and any subsequent appeals, as well as any permissible recesses for settlement negotiations or court timetables.

Costs, fees and funding

Can the successful party to the litigation recover court and attorneys’ fees and any other related expenses from the losing party? If so, what rules and procedures apply?

Litigation in England and Wales generally operates under a ‘loser pays’ system. That is, the general position – including in relation to product liability litigation – is that the successful party can recover from the unsuccessful party the costs and expenses incurred in the course of the dispute. However, any such recovery is ultimately up to the court’s discretion and the court will take a holistic approach to such awards.

Any costs and expenses related to the dispute which were unnecessarily or unreasonably incurred by the successful party will unlikely be recoverable. Nevertheless, the ‘loser pays’ system is a powerful disincentive to bringing weak claims and is a factor that can significantly incentivise parties to seek an early settlement, as the risks of litigation increase over time.

What rules and restrictions (if any) govern contingency fee arrangements?

Full contingency fee arrangements are not permitted in product liability claims. Partial damage-based agreements and conditional fee arrangements are permitted and becoming increasingly popular; however, there are particular rules governing their construction which should be consulted before entering into such arrangements.

Is third-party litigation funding permitted in your jurisdiction? If so, do any rules or restrictions apply?

Third-party litigation funding is permitted in England and Wales and is a rapidly developing area. Historically, concerns have been raised about aspects of certain funding arrangements, such as champerty, conflicts of interest and confidentiality/privilege. There is a range of case law on each of these points and solutions developed to enable more widespread use of third-party funding to support litigation.

Is legal aid (ie, public funding) available to claimants in product liability cases? If so, what rules, restrictions and procedures apply?

While until relatively recently many significant product liability claims were brought with the assistance of legal aid funding, the rules have changed and generally legal aid is no longer available for personal injury claims, apart from certain exceptional circumstances.

Settlement

What rules and procedures govern the settlement of product liability cases?

Parties are free to discuss potential settlement throughout the entirety of a dispute and are encouraged to do so by the Civil Procedure Rules in England and Wales. The courts will generally accept any settlement that is mutually agreed by the relevant parties. Typically, such settlement discussions are conducted on a ‘without prejudice’ basis, which means that the contents of the correspondence cannot be disclosed to the court except for the ultimate assessment of costs at the end of the matter. Settlements involving a child will generally require approval of the court in order to be binding on the child.

How common are settlements in product liability cases?

Most product liability cases in the United Kingdom are settled before trial, mainly because settlement can be conducted confidentially and it removes the possibility of the defect or liability becoming public knowledge in open court. The ‘loser pays’ costs rule is also a strong incentive for parties to settle their claim at an early opportunity.

Alternative dispute resolution

Are any alternative dispute resolution (ADR) methods required or advised before or in lieu of proceeding with litigation?

In respect of litigation in England and Wales generally, parties are encouraged in the pre-action phase of any potential litigation to attempt to reach a settlement – and part of this process is entertaining the prospect of ADR mechanisms, such as mediation or neutral evaluation. However, they are generally not compulsory.

How commonly is ADR used in relation to product liability cases in your jurisdiction?

ADR is expected, at a minimum, to be considered under the Civil Procedure Rules pre-action protocol. There is no comprehensive data that quantifies the successful use of ADR to resolve product liability claims pre-litigation. In our experience the use of ADR options is relatively common in high-value and high-stakes cases, but less common in smaller cases, although some courts offer a mediation service that can be used to seek to resolve small claims.

Defences

Available defences

What defences are available to defendants in product liability cases?

Under the Consumer Protection Act, a defendant will not be liable if it can prove, for example, that:

  • it did not supply the product to another;
  • the defect did not exist in the product at the time it was supplied;
  • the product was not supplied in the course of business; or
  • the producer could not reasonably have been expected to discover the defect given the state of scientific and technical knowledge at the time (ie, the ‘development risks’ defence).

Liability can also be reduced or eliminated if it can be shown that the damage was partly or wholly due to the fault of the claimant.

Preliminary actions

What preliminary procedural mechanisms are available to defendants, if any?

Defendants to product liability suits have recourse to a few procedural mechanisms during preliminary procedures – two of the most frequently used being applications to strike out and summary dismissal. Both of these mechanisms provide a form of a summary judgment of the claimant’s case before a full trial, affording defendants the opportunity to quickly dispose of frivolous actions before incurring unnecessary costs in defending them.

Parties can apply for pre-action disclosure of documents in some circumstances.

Remedies

Damages

What types of damages may be awarded in product liability cases? What rules and standards govern their calculation? Are damages capped?

The principle of damages varies depending on the cause of action for product liability issues which is brought by a claimant. In a tortious claim, the principle is to restore the claimant as if the alleged tort had never occurred. Damages are not recoverable for pure economic loss. Generally, similar principles apply to claims under the Consumer Protection Act. In the case of a contractual claim, the principle is to place the claimant in the position that it would have been in had the contract been fulfilled faithfully.

Are punitive damages allowed?

Punitive and exemplary damages are generally not awarded in the United Kingdom. They will be awarded only in the most egregious breaches, and while they are often claimed in product liability cases, they are rarely – if ever – awarded.

Other remedies

Are any other remedies available?

Generally, the remedy for a cause of action grounded in product liability in England and Wales is compensatory damages, on the principles described above.

Product recalls

General requirements

Are there any statutory criteria under which a product must be recalled or other corrective action be taken?

Manufacturers of consumer products have obligations to place only safe products on the market. They also have obligations to report to the authorities and conduct appropriate corrective actions to deal with unsafe products that they have marketed. These obligations arise primarily under the General Product Safety Regulations.

Under the regulations, product recall is considered a last resort and other corrective measures may be considered sufficient depending on the circumstances (eg, withdrawal from the supply chain or sending warnings to consumers).

The measures to be taken must be commensurate to the risk. A risk assessment must be carried out to determine the necessary corrective action. The regulations do not say how that risk assessment is to be conducted. However, the European Commission has issued guidance that lays out the methodology in some detail.

Ultimately, deciding the appropriate corrective action is a matter of judgement as to whether a particular risk scenario requires a company to undertake a product recall or other corrective action.

Notification

What rules and procedures govern notification of the product recall to government authorities and the public?

Article 9 of the General Product Safety Regulations obliges manufacturers, importers and distributors to report any dangerous consumer products that they have put into circulation in the consumer market. Failure to make this notification is a criminal offence under Section 20(3) of the regulations, which is punishable by imprisonment of directors and/or a statutory fine for the company.

These procedures derive from the EU General Product Safety Directive and similar obligations exist throughout the European Union. Manufacturers, importers and distributors may need to deal with these obligations in multiple countries, and while mechanisms are available to streamline the process, the information-sharing procedures that exist between the authorities can make this a challenging process.  

As for the publication of information about recalls, this is assessed on a case-by-case basis, having regard to the risk assessment and other considerations. Specific advice should be sought on these matters before finalising a corrective action plan.

Under the supervision of the UK government, and with the support of British Standards, a code of practice is to be published providing guidance on the conduct of product recalls.

Repairs, replacements and refunds

What rules and procedures govern repairs, replacements and refunds for defective products?

The Consumer Rights Act affords consumers certain minimum statutory warranties which cannot be contracted out of. For example, consumers are afforded the right to reject the product for a full refund in the first 30 days from taking delivery and ownership of the goods where the product is unsatisfactory, unfit for purpose or not as described.

Consumers are also afforded the right to require the relevant retailer to repair or replace a defective product within the first six months of the goods being delivered to the consumer. During this time, the onus is on the retailer to prove that the product is not defective. After this period, the onus shifts to the consumer to prove that the product was defective at the time of purchase. If the attempt at repairing or replacing the product is ineffective after it has been triggered, the consumer is entitled to a refund or a price reduction (if the consumer wishes to retain the product).

These rights are subject to it not being unfairly disproportionate on the retailer, or simply impossible. For example, a retailer can replace a defective product rather than attempt to repair it, if doing so is a more cost-effective course of action.

Non-compliance

What penalties apply for non-compliance with the legal provisions governing product recalls?

There are no mandatory legal provisions or any other specific regulatory requirements in relation to the way that companies conduct their product recalls. However, companies are required to report a defective product that has entered the consumer marketplace and to place only safe products on the market, non-compliance with which carries statutory penalties. It is also an offence to fail to comply with certain orders issued by the authorities.