Lawrence Allen & Others v Deputy International Limited [2014] EWHC 753 (QB)

The English High Court handed down judgment in a case concerning the applicable law in relation to product liability claims and the territorial scope of the Consumer Protection Act 1987 (“CPA“) which transposes the Product Liability Directive (85/374/EEC and 1999/34/EC) into UK law. 

Background

The Claimants, all non-EU domiciled, claimed that they had suffered injury as a result of defective prosthetic hip implants manufactured in England by the Defendant company registered in England.  The Claimants had undergone implant operations in New Zealand, Australia and South Africa and allegedly suffered injury as a result of an adverse reaction to metal debris in the implants.

The Claimants issued proceedings in England alleging that the implants were defective and that English law, and specifically the CPA, applied to these actions. There was a hearing of preliminary issues before Mr Justice Stewart on the applicable law and, if English law applied to any claim, whether the CPA applied.

Preliminary issues

The High Court was asked to consider the following preliminary issues:

  1. Whether the events giving rise to damage occurred on or after 11 January 2009 such that Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (“Rome II“) applied to determine the applicable law?
  2. What was the applicable law under the Private International Law (Miscellaneous Provisions) Act 1995 (“the 1995 Act“) in relation to claims where the events giving rise to damage occurred prior to 11 January 2009 ?
  3. If English law was found to be applicable to the claims, whether the CPA extends to damage outside the UK/EEA?

Issue 1

Rome II concerns the conflict of laws on the law applicable to non-contractual obligations and applies to events giving rise to damage which occur on or after 11 January 2009 (Article 31).  On the Claimants’ case the events giving rise to damage occurred before 11 January 2009.  On the Defendant’s case the events giving rise to damage might have occurred after 11 January 2009 in relation to a number of the Claimants.

The Claimants submitted that the event giving rise to damage was either (1) the date of manufacture and despatch of the defective prostheses, or alternatively, (2) the date of the hip operations implanting the prostheses. The Defendant submitted that the event giving rise to damage was (1) the date of adverse reaction to metal debris i.e. the biological reaction leading to injury, or alternatively, (2) if it was not possible to identify a relevant event other than the damage,  the date of damage.

The High Court held that the event giving rise to the damage should be the date of the manufacture/distribution of the defective prostheses, or if that was wrong, the date of implantation – both of which occurred pre-11 January 2009.  In doing so the High Court relied upon the recent decision Kainz v Patherwerke AG (C-45/13) concerning Regulation (EC) No. 44/2001 (Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters) (“Brussels I“) in which the European Court of Justice held that in a case where a manufacturer 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. The High Court held that whilst the conflict of law provisions of Rome II must be interpreted independently, it was important where possible to achieve consistency between the implementation of Rome II and Brussels I.

Issue 2

The High Court noted that it was for the Defendant to plead and prove the applicability of foreign law in each case.  The Defendant pleaded that New Zealand/South African law applied on all issues.

As these were personal injury cases where elements of the event constituting the tort occurred in different countries, the general rule under Section 11(2)(a) of the 1995 Act is that the applicable law is the law of the country where the individual was when he sustained the injury.  However, the general law can be displaced pursuant to Section 12 of the 1995 Act where it is substantially more appropriate for the applicable law to be the law of another country.  By Section 12(2) the factors that may be taken into account as connecting a tort or delict with another country include, in particular, factors relating to the parties, to any of the events which constitute the tort or delict in question or to any of the circumstances or consequences of those events. However, the general rule is not to be displaced easily and a clear preponderance of the relevant factors must point towards the law of the other country.

The High Court found that the applicable law to the claims under the general rule pursuant to Section 11(2) of the 1995 Act was the law of New Zealand or South Africa (and in one case that of Fiji) since it was in those countries where each of the Claimants was at the time injury was sustained.

The High Court then compared the significance of the factors connecting the tort with New Zealand/South Africa/Fiji and the significance of the factors connecting the tort with England so as to determine whether it was substantially more appropriate for the applicable law to be the law of England.  Looking at the factors under Section 12(2), the High Court could see no good reason for displacing the general rule in those cases where the applicable law under section 11(2)(a) was that of New Zealand/South Africa.  In the case where the general rule yielded the applicable law being that of Fiji and having regard to the high threshold test, the High Court was nonetheless persuaded that the general rule should be displaced in favour of New Zealand having regard to the relevant factors.

Issue 3

The High Court concluded that, even if English law was the applicable law under the 1995 Act, the CPA would not apply to the Claimants’ actions as in order for the CPA to apply the damage had to occur within the UK or within the EEA. There was nothing in the language of the CPA or the Product Liability Directive to suggest territorial effect beyond the UK/EU/EEA.  The High Court found that it was insufficient that the Defendant was resident and manufactured the goods in the UK, even if English law happened to be the applicable law. 

Mr Justice Stewart further commented that in his judgement: “consumers who suffer damage outside the EEA and who have no connection with the EEA, and where marketing and supply of the defective product was outside the EEA are not within the scope of CPA.”

Comment

This is an interesting case in that it is the first decision by the English courts in a product liability claim on (1) the temporal application of Rome II, (2)  the law applicable to non-contractual obligations under the  Private International Law (Miscellaneous Provisions) Act 1995 and (3) the territorial scope of the Consumer Protection Act 1987.

In the context of the territorial scope of the Consumer Protection Act, it is significant that the High Court held that, even if English law applies, consumers who suffer damage outside the EEA and who have no connection with the EEA fall outside the territorial scope of the Consumer Protection Act, at least where marketing and supply of the defective product was outside the EEA.  However, where and how the line it is to be drawn in terms of the territorial scope of the Consumer Protection Act in difficult cases will have be to determined upon the facts of these cases.