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General product obligations

Basic laws

What are the basic laws governing the safety requirements that products must meet?

There are various EU rules and regulations on certain food and non-food products. Many of these European directives and regulations are structured as follows.

The EU directives and regulations specify basic safety requirements. European norm-organisations set detailed technical norms. There is no legal requirement to adhere to those norms. If, however, a product is produced in accordance with the technical norms it is presumed that such product is in accordance with basic safety requirements. If a product is not produced in accordance with the technical norms, the producers have to prove that the product is nevertheless in accordance with basic safety requirements.

For those products that are not within the scope of the EU regulations on certain food and non-food items, the EU has enacted the European Product Security Directive. This Directive is not directly applicable. Thus the Austrian legislature has enacted the Austrian Federal Act on Protection Against Dangerous Products 2004 (the Product Safety Act).

Under the Product Safety Act, a product is deemed to be safe when, provided that it is put to its proper or any reasonably foreseeable use, it harbours no dangers or dangers of such a low level as is acceptable for human safety with a view to its use and to safeguarding a high level of protection. The meaning of ‘use’ includes the period of service and, where applicable, its start-up, installation and maintenance requirements.

In evaluating safety, consideration is primarily given to:

  • consumers (consumer categories), including, without limitation, children, older or disabled people who are exposed to a higher risk by the product when it is used as reasonably foreseeable;
  • the product’s properties, in particular its composition, design and finish, packaging, the conditions for its assembly and its behaviour when maintained, stored and transported;
  • its effect on other products when its use jointly with other products can be reasonably foreseen; and
  • its layout, presentation, labelling, its instructions for use and operation if any, instructions for its maintenance, storage and disposal, and any other data or information given by the manufacturer or importer.

A product is deemed to be dangerous when it does not meet the safety requirements as stated above. The capacity to achieve a higher degree of safety or the availability of other products that are less dangerous, however, is insufficient reason to consider a product to be dangerous (section 4 of the Product Safety Act).

Traceability requirements

What requirements exist for the traceability of products to facilitate recalls?

Under the Product Safety Act, manufacturers and importers have to take measures that are suitable and appropriate to, if necessary, withdraw the products from the market, giving reasonable and effective warning to consumers and, if so required, recalling the products from their customers (section 7, paragraph 2 of the Product Safety Act).

Within the scope of their business activities vendors have to contribute to monitoring the safety of the products marketed, especially by passing on indications of any danger that may be posed by the product, by keeping and making available documentation required to trace products and by cooperating with measures by the manufacturers and competent authorities to avoid any danger. Within the scope of their business activities, they should ensure efficient cooperation with other marketers, consumers and authorities (section 7, paragraph 2 of the Product Safety Act).

To enable traceability, the product or its package must report the producer’s name and address or, insofar as it is not based in the European Economic Area, the name and address of the EU representative or the importer. Moreover, unambiguous product identification information must be provided on the product or package.

Non-compliance penalties

What penalties may be imposed for non-compliance with these laws?

There are civil, criminal and administrative repercussions if a manufacturer, importer or vendor fails to comply with product safety legislation.

Under Austrian tort law, anyone can lodge a claim for damages, if the non-compliance led to harm. The Austrian Product Liability Act even provides for a non-fault-based liability of the producer or importer of a defective product. Claims based on the Product Liability Act can be lodged if a person is killed, suffers an injury to his or her body or health, or if any tangible property other than the product itself is damaged because of the defect of a product (deductible by €500). Austrian tort law does not provide for punitive damages.

There is a possible administrative fine of up to €25,000. For the first violation, the fines are significantly lower than that (eg, €2,500), thus they do not provide an adequate incentive to comply with product safety regulations.

Under Austrian law, corporations can be held criminally liable (ie, be fined severely) if a ‘decision-maker’ (eg, board member) committed a criminal offence him or herself or under certain preconditions, if an employee committed a criminal offence (eg, if a decision-maker facilitated the criminal offence by not acting with the necessary due diligence).

Reporting requirements for defective products

Government notification

What requirements are there to notify government authorities (or other bodies) of defects discovered in products, or known incidents of personal injury or property damage?

Once a product has been brought into circulation, producers, importers and vendors are required to inform the competent authority if they become aware of (or are made aware of) hazards their product poses to the consumers. Manufacturers and importers have to take measures that are suitable and appropriate for the product to enable them to recognise any dangers that may be posed by such products and take appropriate action to avoid such dangers. Vendors have to contribute to monitoring the safety of the products marketed, especially by passing on indications of any danger that may be posed by the product, by keeping and making available documentation required to trace products and by cooperating with measures by the manufacturers and competent authorities to avoid any danger within the scope of their business activities.

Within the scope of their business activities, they should ensure efficient cooperation with other marketers, consumers and authorities. There are special rules for high-risk goods.

Notification criteria and time limits

What criteria apply for determining when a matter requires notification and what are the time limits for notification?

Any situation where a product does not meet the safety requirements under the Product Safety Act (see question 1) has to be reported to the competent authority. Notification about such hazardous products has to be made promptly (section 7, paragraph 4 of the Product Safety Act). In cases of serious danger (ie, any severe danger that requires rapid action on the part of the authorities even when it has no direct effect), there are special rules on inter-agency cooperation, temporary action to avert danger by the supervisory bodies (eg, seizure, ban on marketing, application of warning signs, etc) and (higher) fines.

Competent authority

To which authority should notification be sent? Does this vary according to the product in question?

The notification has to be sent to the ‘responsible authorities’. The responsible authorities are the state governors and the Federal Minister for Work, Social Affairs, Health and Consumer Protection. There are special rules for high-risk goods (eg, medical products).

Notification information

What product information and other data should be provided in the notification to the competent authority?

All necessary information to judge the character and severity of the threat caused by the defective product should be provided. For high-risk products, there are special rules and regulations.

Obligations to provide updates

What obligations are there to provide authorities with updated information about risks, or respond to their enquiries?

Authorities have to be provided with updated information about risks and a response to their enquiries in a timely manner.

Penalties

What are the penalties for failure to comply with reporting obligations?

Under Austrian tort law, anyone can lodge a claim for damages, if the non-compliance led to damages. However, claims for property damage cannot be based on violations of the reporting obligations, since the Product Safety Act’s scope of protection does not include property but only bodily harm.

Failure to comply with reporting obligations may also result in administrative penalties up to €3,000. For the first violation, the fines are significantly lower than that (eg, €300) thus they do not provide an adequate deterrence.

Under Austrian law, corporations can be held criminally liable (ie, be fined severely) if a ‘decision-maker’ (eg, board member) committed a criminal offence him or herself or under certain preconditions, if an employee committed a criminal offence (eg, if a decision-maker facilitated the criminal offence by not acting with the necessary due diligence).

Public disclosure

Is commercially sensitive information that has been notified to the authorities protected from public disclosure?

Under the Austrian rules on public confidentiality, commercially sensitive information that has been notified to the authorities is protected from public disclosure.

Use of information in prosecution

May information notified to the authorities be used in a criminal prosecution?

Yes, any information disclosed to the authorities may be used in a criminal prosecution. The Austrian constitution also provides for a duty of inter-agency cooperation. This duty to cooperate applies to cooperation between authorities and the public prosecutor’s office.

Product recall requirements

Recall criteria

What criteria apply for determining when a matter requires a product recall or other corrective actions?

In case of a defective product, the necessary response depends on the nature of the defect. A recall is not always necessary.

The Austrian product liability and product safety law distinguishes four types of product defects:

  • Construction defects are defects inherent to the design of the product. In the whole line of the product, every piece is flawed. Construction defects can lead to a recall obligation if the safety of the consumer would be insufficiently provided for by only informing the public.
  • Production defects affect only a certain piece of a line of products owing to an error in the production process. Product recalls will usually not be necessary in such a case, since the number of flawed products will be small if the design of the product as such is up to code.
  • Instructional defects are errors in a product’s manual. The product as such is not faulty, only the manufacturer’s instructions for using it. In such a case, it will usually be enough to inform the consumers on how to use the product correctly in order to avoid danger.
  • Development defects are defects that could not be discovered prior to the circulation of the product because of insufficient scientific knowledge leading to the inability of the manufacturer to realise that the design of the product could lead to safety hazards. Therefore, a development defect is usually simply a construction defect that the manufacturer cannot be held liable for because it was impossible to avoid at the time the product was put into circulation. However, the same rules apply, which means a product recall is necessary if the consumer’s safety would be put at risk without it or if a warning is not sufficient to control the risk.

Up to this point, there is no detailed statute or case law providing for a clear differentiation between cases where a corrective action is sufficient and cases where a product recall is necessary. In our experience, it is advisable to err on the side of caution.

Consumer warnings

What are the legal requirements to publish warnings or other information to product users or to suppliers regarding product defects and associated hazards, or to recall defective products from the market?

As stated above, there is no general regulation that states what corrective and protective actions have to be taken by the manufacturer in the event the product is found to be dangerous. However, the competent authority (see question 6) can undertake certain measures to ensure that the public is shielded from unnecessary danger, if the consumer’s safety requires it. In some cases, an obligation to enclose improved instruction manuals may suffice; in other cases, other steps (including a product recall) may be necessary.

Recall notices

Are there requirements or guidelines for the content of recall notices?

In the event a defective product is under the scope of the EU Rapid Alert System for dangerous non-food products, the EU provides for an application generating the necessary report.

In non-EU cases, the information that has to be provided generally is:

  • the name of the recalled good;
  • the names of the manufacturer, importer and vendor;
  • the reason for product recall;
  • the intended plan (eg, the customer is asked to return the product in exchange for a full refund); and
  • preferably a picture of the recalled product (see guideline regarding food product recall provided by the Austrian Agency for Health and Food Safety).

Media

What media must be used to publish or otherwise communicate warnings or recalls to users or suppliers?

The Product Safety Act speaks of ‘suitable media’ as a place to publish warnings and notices about recall actions but there is no legal definition. Product recalls are published on the website of the Austrian Agency for Health and Food Safety, a private company owned by the state. Information about product recall will also usually be found at supermarkets or other stores that sold the defective products.

Time frame

Do laws, regulation or guidelines specify targets or a period after which a recall is deemed to be satisfactory?

There are no laws or regulations specifying after what time period a recall is deemed to be satisfactory. If the product recall is published in compliance with the guidelines and measures taken by the competent authority, the manufacturer will have fulfilled its recall obligations.

Repair and replacement

Must a producer or other supplier repair or replace recalled products, or offer other compensation?

Yes, generally speaking, a producer or other supplier has to repair or replace defective products, subject to the applicable statute of limitations. The consumer’s claim is to be lodged against its contractual party (eg, the vendor). The vendor then has a recourse claim against its contractual partner (eg, importer).

Penalties

What are the penalties for failure to undertake a recall or other corrective actions?

There are civil, criminal and administrative repercussions if a manufacturer, importer or vendor fails to comply with product safety legislation.

Under Austrian tort law, anyone can lodge a claim for damages, if the non-compliance led to damages. The Austrian Product Liability Act even provides for a non-fault-based liability of the producer or importer of a defective product. Claims based on the Product Liability Act can be lodged if a person is killed, suffers an injury to his or her body or health, or if any tangible property other than the product itself is damaged because of the defect of a product (deductible by €500).

Claims based on violations of recall obligations can be lodged under normal tort law if the manufacturer is not liable according to the Product Liability Act, specifically in the case of damages owing to development defects (see question 12).

Austrian tort law does not provide for punitive damages.

There is a possible administrative fine of up to €25,000. For the first violation, the fines are significantly lower than that (eg, €2,500) thus they do not provide an adequate deterrence.

Under Austrian law, corporations can be held criminally liable (ie, be fined severely) if a ‘decision-maker’ (eg, board member) committed a criminal offence him or herself or under certain preconditions, or if an employee committed a criminal offence (eg, if a decision-maker facilitated the criminal offence by not acting with the necessary due diligence).

Authorities' powers

Corrective actions

What powers do the authorities have to compel manufacturers or others in the supply chain to undertake a recall or to take other corrective actions?

To the extent that the safety requirements are not complied with by marketers, the authorities can take government action directed at marketers or, if necessary to avert any danger, at any other person. Such measures can include, without limitation:

  • requirement to add or improve instructions for use or to attach identification elements on the package or product;
  • requirement to attach to the product a warning against dangers and directions for behaviour to avert them as are appropriate to reflect the urgency of averting such dangers;
  • requirement to publish warnings or other urgent information in a manner and by media suitable for the market categories concerned;
  • orders and prohibitions with regard to promotional measures for products;
  • specification of certain quality requirements (eg, safety precautions), in particular by declaring national or international standards to be fully or partially binding;
  • requirement to furnish proof of compliance with specified testing requirements;
  • prohibitions or limitations on the marketing (eg, with regard to specified categories of persons or the type of distribution);
  • prohibitions or limitations on export (eg, with regard to a destination);
  • requirement to promptly withdraw from the distribution chain any product or batch of products already placed on the market and, if necessary, its destruction under suitable conditions; and
  • obligation to carry out a prompt and efficient recall of a product or product batch already marketed from consumers, if necessary, publication of such recall scheme in media suitable for the market categories concerned and, if necessary, the destruction of such product or product batch under suitable conditions.

The measures referred to above are to be taken by way of an ordinance and can thus be enforced. Nevertheless, to the extent that reasonable measures for danger aversion can be obtained on a voluntary basis, such procedure is to be given preference.

In cases of grave danger, temporary action to avert danger can be taken by the authorities, if:

  • the product has been found to pose a danger to human life or health either by an expert opinion prepared by a domestic or foreign accredited testing body or an authorised civil engineer;
  • there is reasonable suspicion that the use of a product constitutes an imminent danger to human life or health;
  • marketing of a product is manifestly inconsistent with any measure decreed under section 11 of the Product Safety Act; or
  • the product has already been subject to a measure in a state party to the EEA Treaty and such measure was notified within the scope of a RAPEX procedure based on Directive 2001/95/EC on general product safety.

Any temporary action within the meaning of the above list has to be directed to averting imminent danger, with due regard to be given to a high level of protection for consumer safety. For such purpose, the most restrained means still effective to meet the purpose should be used at all times.

Any products subject to temporary action are to be left in the business or storage rooms and, if possible, should be sealed or labelled so as to ensure that they cannot be changed without breaking the seal or label. The person previously authorised to handle the products should be notified in writing by the supervisory body of the consequences under criminal law that may result from moving or changing the products or from breaking the official seal.

Government warnings

Can the government authorities publish warnings or other information to users or suppliers?

Yes (see question 19).

Government recalls

Can the government authorities organise a product recall where a producer or other responsible party has not already done so?

Yes (see question 19).

Costs

Are any costs incurred by the government authorities in relation to product safety issues or product recalls recoverable from the producer or other responsible party?

Yes.

Challenging decisions

How may decisions of the authorities be challenged?

The decisions taken by the authorities are taken by way of an ordinance and can thus be challenged in Austria’s administrative courts.

Implications for product liability claims

Implications for product liability claims

Is the publication of a safety warning or a product recall likely to be viewed by the civil courts as an admission of liability for defective products?

Under Austrian tort law, the damaged party has to prove that the damage incurred was caused by a defective product and that the defendant is liable for the damages incurred. While the publication of a safety warning or a product recall will be seen as an admission that a product was defective, it does neither prove that damages were caused because of that defect nor does it prove any wrongdoing on the part of the defendant.

Can communications, internal reports, investigations into defects or planned corrective actions be disclosed through court discovery processes to claimants in product liability actions?

Austrian law on civil procedure does not provide for a discovery phase. However, if criminal proceedings are pending, victims have a right to inspect the criminal proceedings’ files and thus can gain access to vital information.

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