Adopting the European Approach to Product Liability Australia

Adopting the European Approach to Product Liability: Australia and Japan Dr Luke Nottage Senior Lecturer Co-director, Australian Network for Japanese Law University of Sydney Law Faculty Visiting Fellow, Max Planck Institute for Foreign Private and Private International Law, Hamburg Luke Nottage, BIICL talk, 6/9/04

Europeanisation of PL? n n Cf US initially (R 2 d ‘ 65), now (R 3 d, ´ 98) ‘Americanisation of Japanese law’? Eg PL Law `94 (despite EC Directive model!), allegedly too in corp law n Due to political fragmentation, dereg, lawyers n n And of Australian law? Constitutional evolution, dereg, big law firms n Asserted for corp law, less so PL (TPA `92) n Luke Nottage, BIICL talk, 6/9/04 2

Plan today n Focus mainly on Japan My book! (Routledge´ 04) n Less (balanced) material for English speakers n Ongoing product safety concerns n n (Daimler)Mitsubishi - recalls in 2000 (‘summer of living dangerously’), another round this summer 2 nd largest economy - growing again! n Ongoing ‘third wave’ of law reform n n late 19 C ‘reception’ (Germany), post-WW 2 (US) Luke Nottage, BIICL talk, 6/9/04 3

n Comparisons with Australia Different PL trajectory recently (book ch 2) n Incl. less pro-Pl case law? (ch 3) n Yet similar reactions to PL enactment (ch 4) and product safety regulation (ch 5)! n n Conclusions Unexpected influence of EU model (+ Asia) n Likely further influence, but more broadly n Luke Nottage, BIICL talk, 6/9/04 4

Comparing PL History: US origins 19 C Strict liability “implied warranty” of “merchantable quality” in Sales of Goods n Such contract law liability extended, first to foods, then eg cars (Hennington ’ 60) n Then in tort vs makers (Greenman ’ 63) n So s 402 A of Restatement 2 d Torts (’ 65) … n Luke Nottage, BIICL talk, 6/9/04 5

Quite small doctrinal adjustment, yet this SL remedy in tort caught on from ‘ 70 s n Backlash began from 1980 s, ‘tort reform’ (restricting especially at state levels) continued over 1990 s n Restatement 3 d of PL (’ 98) reinstates negligence for design and warning (cf manufacturing) defects! n Luke Nottage, BIICL talk, 6/9/04 6

History – EU: more consistent Thalidomide disaster in 60 s (no contracts) n 1978 Pearson Report: SL for defective products (but no-fault compo scheme like NZ) n Derailed in UK eg by poor economy, neoliberal Thatcher from ’ 79, joining EU ‘ 73 n 1975 draft EU Directive, vs strong opposition n Luke Nottage, BIICL talk, 6/9/04 7

n 1985 Directive compromise, n eg exclusion for agriculture, n dev’t risks (“no one could know” defence) n Ltd but significant effects (little case law, but safety improvements) n Broader EU program since late 90 s: PS Directive(s), consumer protection Luke Nottage, BIICL talk, 6/9/04 8

Lovells for Commission (2003) n n Some disharmony, but not huge problem “General happiness with current balance” [? ] Luke Nottage, BIICL talk, 6/9/04 9

History – Australia: hybrid dev’t n n n No thalidomide; but some problems in case law, surveys in 80 s … and especially EU Directive ‘ 85 as (legal and political) model Cf ‘ 89 ALRC: “harm arising from how gds acted” Opposition from business (& conservative govt) Compromise: Part VA added to TPA in ’ 92 n based on (more pro-Consumer) variant of EU Directive Luke Nottage, BIICL talk, 6/9/04 10

n More pro-Cer proposals lost from view n n eg 20 -year “period of repose” for toxic tort situations “Tort reforms” from 2002 (beginning with NSW) n n Clarifying negligence standard (eg medical opinion) Caps on damages Lawyers must have prospect of success (PS ADR) Limitation periods Luke Nottage, BIICL talk, 6/9/04 11

History – Japan: another hybrid Tort, untrammelled by “privity of contract” n But mostly negligence (1898 Civil Code art 709) n “Big Four” PL cases over 60 s n Morinaga milk n Thalidomide, SMON n Kanemi rice oil n Cf auto defects n Luke Nottage, BIICL talk, 6/9/04 12

n Various responses led to “still-birth” of PL in 70 s: n n n Collective action & legal problems (eg autos - design) Government formalism (better safety laws) Bureaucratic informalism (broader Cer Protn) Industry informalism (1 st party insurance scheme etc) “Re-birth” from late 80 s -> 1994 PL Law: n n (Revived? ) accidents, EU as model int’l trade pressure (US, WTO), LDP lost power ’ 93 Luke Nottage, BIICL talk, 6/9/04 13

Summary Comparison: Pro-consumer PL? Luke Nottage, BIICL talk, 6/9/04 14

Comparing Japan’s PL Law n n Purpose (art 1): ltd use (except EU? ) Defns (art 2): n n Product: manuf’d/processed movable [broad] Defects: ‘safety it ought to have’, eg nature, normally foreseeable manner of use, time deliv’d Manufacturer: incl importer, own-brander, [!] etc [Strict] Liability (art 3): n on ‘manufacturer’ for D caused by ‘defect’ in ‘product’, interfering with another’s life/health or [!] property; except if D only to product itself Luke Nottage, BIICL talk, 6/9/04 15

n Exemptions (Art 4): n Development risks: state of tech/sci knowledge such that impossible to detect defect when delivered n n strictly construed so far (snapper case), cf Australia (oysters)? Component manufacturing: solely followed another’s design instructions, & not neg. [also ltd] Luke Nottage, BIICL talk, 6/9/04 16

n Time limits (Art 5) n n Claim within 3 years of knowing of defect, and 10 years from delivery (unless like [cf Oz!] ‘toxic tort’) Civil Code (Art 6): otherwise applicable n n n Fill gaps: eg ‘causation’, calculate Ds, comparative negligence Always in parallel: eg hi standard for food ‘defect’ Essential for gds delivered before Law in force (7/95) Luke Nottage, BIICL talk, 6/9/04 17

Substantive law < context! n Civil procedure & civil justice system Scope of damages (eg punitive? Juries? Claim lawyers fees if win? ) n Evidence and proof (standard, re liability [eg specific defect? ] or damages [eg unclear? ]? Pre-trial discovery? Other info disclosure, eg from govt agencies? ) n Access to courts etc (eg group actions) n n Nature of entire legal system! Luke Nottage, BIICL talk, 6/9/04 18

Multiple Effects in Japan [=EU (Lovells), Australia (replica now)] n Litigation n ADR n n n Nos of suits: slow but steady increase in Japan (faster, more than Australia, most EU? !) Pro-plaintiff settlements: more, esp. mid-90 s Industry associate based PL Centres Local govt “Consumer Living Centres” Product safety activities by manufacturers n n Complaints handling, compliance Design/warning improvements, insurance Luke Nottage, BIICL talk, 6/9/04 19

Japan & Australia similar to EU? Luke Nottage, BIICL talk, 6/9/04 20

Conclusions n Influence of EU model in Japan, even Australia (and beyond) n (Deceptively) succinct structure, concepts n n n Also now in Japan: consumer contracts, suits In Australia (less so): “unfair terms” (Vic) Political compromise, but then n n Hard to get attention for further PL Law reforms (Japan)? Or indeed easily undone (Australia’s ‘tort reforms’) Luke Nottage, BIICL talk, 6/9/04 21

n Future of EU model n `Reformulation‘: Ongoing (world-wide) case law developments n n But no ALI, or even European Law Institute `Reform‘ of PL laws per se less likely Not even in EU (cf Lovells) n Some expansions (agriculture), limits (time: Oz) n Most attention on PS ‘re-regulation‘ (EU) n Parallel procedural reforms also a la EU n Luke Nottage, BIICL talk, 6/9/04 22