All questions

Litigation

i Forum

Product liability claims are determined in civil court proceedings before state courts by professional judges. Austria does not have jury trials in civil proceedings.

Provided there is an arbitration agreement between the parties involved, product liability (related) claims may also be determined in arbitration proceedings. Under Austrian arbitration law, arbitration agreements between an entrepreneur and a consumer can only be validly concluded for disputes that have already arisen. Consumers normally assert product liability claims in civil proceedings before state courts.

ii Burden of proof

If the claim is based on the Product Liability Act the plaintiff has to prove the damage, the defect and the causal relationship between the defect and the damage. As liability under the Product Liability Act is based on strict liability, the issue of fault is of no relevance.

If the defendant raises the defence that it has not put the product into circulation or not acted as entrepreneur, the burden of proof for that rests with it. Further, if the defendant relies on the defence that the defect that caused the damage did not exist at the time it put the product into circulation, it has to show that with regard to all circumstances this is plausible (prima facie evidence).

If the claim is based on liability in tort, the plaintiff has to prove the damage, causation, unlawfulness, that the conduct causing the damage was unlawful and that the conduct causing the damage was at least negligent. The same holds if the claim is based on breach of contract or on contract with protective effect for third parties, with the exception that the defendant has to prove the absence of fault (negligence or intent).

In civil proceedings the general standard of proof is 'highly probable'.

For causation the conditio sine qua non test is applied, by asking the hypothetical question of whether the damage would have occurred irrespective of the conduct (or, respectively, the product defect) at issue. If this were the case, the conduct (or, respectively, the product defect) was not causal. However, doctrine and case law in addition apply the theory of adequate causation, meaning that damage that is the result of a totally atypical and extraordinary chain of circumstances of cause and effect are excluded from liability.

On the other hand, prima facie evidence may serve to the benefit of the plaintiff. If facts are established that according to general experience allow conclusions on a certain course of events, such as the existence of a product defect and the causal relationship between defect and damage, the judge may regard this as proven, unless the defendant can show that the damage may have occurred owing to an atypical course of events.

iii Defences

Under the Product Liability Act, liability can be excluded by proving:

  1. that the defect can be attributed to a specific mandatory legal provision or official instruction with which the product had to comply;
  2. that the state of scientific and technical knowledge at the time the product was put into circulation by the person against whom an action is brought was not such as to enable the existence of the defect to be discovered (state-of-the-art defence); or
  3. that – if the person against whom an action is brought has produced merely a raw material or a component part – the defect was caused by the design of the product in which the raw material or component part was fitted, or by the instructions given by the producer of the product.

Further defences available to the defendant are that it did not put the product into circulation or did not act as entrepreneur, or that the defect that caused the damage did not exist at the time it put the product into circulation.

Outside the Product Liability Act, the defendant can invoke any defences that may serve to disprove the allegations of the plaintiff and fault.

A further defence both under and outside the Product Liability Act is contributory fault by the damaged party or a person for whose conduct the damaged party is responsible, which – if successful – may lead to a reduction of the damage the defendant has to compensate.

Further, the defendant may plead the statute of limitation.

There are relative and absolute statutes of limitations. The relative statute of limitations is three years and begins to run from the time the damaged party became aware (or at least could reasonably have become aware) of the damage and the person causing the damage. The absolute limitation period under the Product Liability Act is 10 years, starting from the time the party liable for compensation put the product into circulation. For damage claims outside the Product Liability Act the absolute statute of limitation is 30 years, starting from the time the damage occurred.

iv Personal jurisdiction

Austrian jurisdiction for product liability(-related) claims is an issue if the defendant does not have its seat in Austria, or (as is the case in most product liability cases) there is no contractual relationship between the damaged party and the defendant from which Austrian jurisdiction (e.g., because of a jurisdiction clause in favour of Austrian courts) derives.

If the defendant has its seat outside the European Union or not in a state party to the Lugano Convention (i.e., in a third state) the question of Austrian (international) jurisdiction is to be determined on basis of the Austrian Jurisdiction Law. Pursuant to Section 92a of the Law, Austrian jurisdiction for damage claims is given if the act causing the damage occurred in Austria. According to the Austrian Supreme Court, within the meaning of this provision, if the place where the act causing the damage and the place where the damage occurred are not identical, solely the place where the act causing the damage occurred is of relevance. In product liability cases this is basically the place where the defective product was manufactured. This is without prejudice to any liability of the importer of the product.

Notwithstanding the above, jurisdiction for claims against a producer based in a third state might be given in the case of a 'joinder of parties', for instance, if the producer is sued together with the importer who has its seat in Austria. A precondition for the establishment of a place of jurisdiction based on 'joinder of parties' is that the parties in the joinder are joined parties within the meaning of Section 11 of the Austrian Code of Civil Procedure, meaning that they are linked by equal legal or factual grounds, or that they are jointly and severally liable. In such a case the applicable law may also have to be looked into. According to Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), the law applicable to a non-contractual obligation arising out of damage caused by a product shall be:

  1. the law of the country in which the person sustaining the damage had its habitual residence when the damage occurred, if the product was marketed in that country; or, failing that
  2. the law of the country in which the product was acquired, if the product was marketed in that country; or, failing that
  3. the law of the country in which the damage occurred, if the product was marketed in that country.

However, the law applicable shall be the law of the country in which the person claimed to be liable is habitually resident if it could not reasonably foresee the marketing of the product, or a product of the same type, in the country the law of which is applicable under (a), (b) or (c).

As regards claims against a defendant domiciled in a Member State of the European Union, the provision that a person domiciled in a Member State may be sued, in another Member State, in matters relating to tort, delict or quasi-delict 'in the courts for the place where the harmful event occurred or may occur' is of main relevance in product liability cases lacking a contractual relationship between the damaged party and the defendant. Regulation (EU) No. 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) contains this provision in Article 7(2), its predecessor, Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters in Article 5(3). Likewise, the Lugano Convention (in Article 5(3)) refers to the courts of the place where the harmful event occurred or may occur.

According to the interpretation of the European Court of Justice (ECJ), in a case where the place of occurrence of the event that may give rise to liability in tort, delict or quasi-delict and the place where that event results in damage are not identical, the expression 'place where the harmful event occurred' must be understood as being intended to cover both the place where the damage occurred and the place of the event giving rise to it, so that the defendant may be sued, at the option of the plaintiff, in the courts for either place.

The Austrian Supreme Court, in a decision of 28 November 2012, made a request for a preliminary ruling to the ECJ regarding the determination of the 'place of the event giving rise to the damage' in relation to product liability, by posing the question of whether this is the place where:

  1. the producer is established;
  2. the product was put into circulation; or
  3. the product was acquired by the end user.

The case underlying this request involved a dispute between a bicycle producer based in Germany and an Austrian plaintiff (a consumer) who had bought the bicycle from an Austrian-based company. While riding this bicycle in Germany the plaintiff suffered a fall and was injured. He subsequently sued the German producer for damages under the Product Liability Act before a court in Austria. According to the plaintiff, his fall from the bicycle was caused by the fact that the fork ends had detached themselves from the wheel fork owing to a manufacturing defect. For the purpose of establishing jurisdiction of the Austrian court, the plaintiff relied on Article 5(3) of Regulation No. 44/2001, claiming that the place of the event giving rise to the damage would be located in Austria as the bicycle was bought there, in the sense that the product was made available to the end user by way of commercial distribution.

In its judgment of 16 January 2014, the ECJ ruled upon the request by the Austrian Supreme Court that Article 5(3) of Regulation No. 44/2001 must be interpreted as meaning that, where a producer faces a claim of liability for a defective product, the place of the event giving rise to the damage is the place where the product in question was manufactured. Given that Article 7(2) of Regulation No. 1215/2012 is identical to Article 5(3) of Regulation No. 44/2001, it seems safe to say that the same interpretation applies. This also holds for Article 5(3) of the Lugano Convention.

v Expert witnesses

The judge can appoint experts at its discretion to assist in establishing the facts of the case. In product liability cases, it is usual that the judge appoints an expert. The parties may propose experts and reject an expert on the grounds of bias; however, the final decision rests with the judge.

The parties may present private expert opinions but courts regard a private expert opinion only as a private document attesting to the author's opinion. A private expert opinion might serve as an instrument to question or to raise doubt as to the court-appointed expert's opinion.

vi Discovery

Austrian law does not provide for (pretrial) discovery proceedings.

In Austrian civil proceedings, it is each party's responsibility to produce the evidence necessary to support its case. There are only very limited conditions under which a party may be obliged to disclose certain evidence upon the other party's request. These conditions are specified in the Austrian Code of Civil Procedure according to which documents are subject to disclosure if:

  1. the opponent itself relied on the document in the course of the proceedings;
  2. the opponent is obliged to hand the document over by a substantive law; or
  3. the document is qualified as a joint deed between the parties.

Joint deeds are documents created in the interest of the party requesting disclosure, documents that contain information regarding reciprocal rights and obligations between the parties, or any documents that are in fact written negotiations between the parties.

The party requesting disclosure has to clearly specify the evidence (i.e., the document or documents) it wishes to see; requests to produce 'all relevant' documents are prohibited. If the above criteria are met, the court can order the opposing party to produce the requested documents. However, a court order to the opposing party to produce documents is non-enforceable. Failure to comply with the order may only be sanctioned inasmuch as the court can take this behaviour into account in its evaluation of the entire case.

Witnesses have the duty to appear before the court and to answer truthfully. Parties (these include a company's statutory representatives, such as the CEO) are generally treated as witnesses but they are under no duty to appear before the court or to give testimony. Further, Austrian law provides for grounds of refusal by parties or witnesses to answer questions during testimony in specific circumstances (e.g., confidentiality, business or trade secrets, examination exposes the party or witness to the risk of criminal prosecution, etc.).

vii Apportionment

The Product Liability Act provides for joint and several liability where two or more persons are liable for the damage caused by a defective product. As explained in Section I, this can be the producer of the finished product, a raw material or component part, or the person who presents itself as producer, the importer, or any supplier who did not (in a timely fashion) make the required naming for exempting itself from liability. Thus, if there is more than one person liable under the Product Liability Act the person who has suffered losses can choose whether it seeks redress against one, or all, of them. If a person liable for compensation under the Product Liability Act has paid damages, though neither the person itself nor one of its employees has caused the defect, it is entitled to claim full reimbursement from the producer of the defective finished product, raw material, or component part. If several parties are liable for reimbursement, then the liability towards the person compensating the damage is again joint and several. If several parties liable under the Product Liability Act have contributed to the defect, the extent of the claim for reimbursement of the person that has compensated the damage against the other parties depends on the circumstances, in particular on the extent to which one or the other party is responsible for the damage or to which the damage was caused by bringing about a product defect.

Outside the Product Liability Act, joint and several liability may, inter alia, arise if two or more persons unlawfully and negligently contributed to the damage but the proportion to which each contributed cannot be determined.

Austrian law does not provide for market share liability.

The Product Liability Act does not contain a provision regarding successor liability for companies that have acquired the product manufacturer or other persons in the distribution chain. Thus, the general rules apply.

Section 1409 of the Austrian Civil Code contains a mandatory provision that provides for the statutory assumption of liabilities by the acquirer of a business or substantial part of assets for debts pertaining to the business or assets of which the acquirer knew or should have known at the time of the transfer. The acquirer becomes jointly liable with the seller for such debts; however, the acquirer's liability is limited to the market value of the acquired assets.

Pursuant to Section 38 of the Austrian Commercial Code, a person who acquires (by way of singular succession) and continues a business assumes all business-related relationships of the seller, including all connected rights and liabilities, as of the date of the transfer of the business. The seller, on the other hand, remains liable for these liabilities only as far as they become due during a period of five years from the date of the transfer. The acquirer's liability is not limited; however, the acquirer and the seller may agree on exclusions of liability. Such an agreement is effective in relation to third parties only if it was registered in the commercial register, or published in a commercially customary manner, or notified to the third party on an individual basis.

viii Mass tort actions

Austrian law does not (yet) provide for mass tort actions; however, the Austrian Procedural Code offers instruments that permit the bundling of a series of related claims or proceedings under certain conditions, thus enabling a number of plaintiffs to bring their claim against one defendant. This instrument is in particular a formal joinder of parties, which presupposes that the subject matter of the claims is based on similar factual grounds and jurisdiction of the court is given for each individual claim.

Further, Austrian case law has in the preceding years developed the 'class action of Austrian style' under which, if the claims are first assigned to another person or legal entity, this person (legal entity) may then bring the claims as sole plaintiff in one action provided that the bases of the claims, as well as the questions of fact and law are in principle the same.

ix Damages

In cases of personal injury both under the Product Liability Act and fault-based liability under general civil law, compensation covers medical treatment costs, loss of income and appropriate damages for pain and suffering (which may also include mental damage and suffering owing to the loss of a close relative). In the praxis of courts, as measurement criteria for damages for pain and suffering, certain amounts for days of severe, moderate and mild pain and suffering are applied, and these are usually calculated by a court-appointed medical expert.

As regards damage to property, under the Product Liability Act, there is a deductible amount of €500, and damage to the defective property itself are not covered. Further, under the Product Liability Act pure financial losses are not recoverable.

Austrian law does not allow for punitive or exemplary damages.

For criminal liability, see Section III.