Tim Richards
Posted on 28 Feb 2014

ECJ judgment confirms where the 'place of the harmful event' occurs in product liability claims.

A recent European Court of Justice (ECJ) decision has clearly set out the matter of jurisdiction in product liability claims. The general rule is that the courts with jurisdiction will be those in the place of manufacture of the goods in dispute. This highlights the importance for manufacturers, retailers and suppliers to fully understand the supply chain their businesses operate within to ensure they know in which jurisdiction a claim could be made.

On 16 January 2014, the ECJ considered jurisdiction in relation to product liability claims where a defective product is manufactured in one European Member State and sold in another Member State. The ECJ was asked by the Austrian Court to clarify the meaning of the wording 'the place where the harmful event occurred' in relation to a defective product. The ECJ confirmed that the courts where the product was manufactured will have jurisdiction.

In the case of Kainz (Judgment of the Court)(Case C-45/13) [2014] EUECJ an Austrian citizen (Kainz) purchased a defective bicycle from an Austrian supplier. Kainz commenced proceedings against the manufacturer, based in Germany, when he fell from the bicycle and sustained injuries. Kainz argued that the Austrian courts had jurisdiction as this was 'the place where the harmful event occurred', since the bicycle had been sold and the accident had occurred in Austria. The manufacturer disputed this jurisdiction on the basis that the bicycle had been manufactured in Germany and had been placed on the market when dispatched from the German place of business.

The Austrian Supreme Court referred its questions to the ECJ. It asked where a manufacturer faces a claim of liability for a defective product, how was Article 5(3) of the Brussels Regulation to be interpreted for the purpose of identifying the place of the event giving rise to the damage?  

The ECJ restated that the general rule in Article 2(1) of the Brussels Regulations was that persons domiciled in a Member State are to be sued in the courts of that State, irrespective of the nationality of the parties. However, this could be derogated from if special jurisdictional rules applied, such as Article 5(3). In the cases of product liability the ECJ affirmed the following:

"It must therefore be held that, in the 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 ECJ considered that attribution of jurisdiction to the place where the product was manufactured creates a predictable rule and allows both the manufacturer (as the defendant) and the victim (as the applicant) to reasonably foresee which courts will be best placed to determine the case. The ECJ rejected Kainz's argument that the issue of special jurisdiction should take account of the interests of the person who has sustained the harm and therefore allow him to claim in his own Member State.

This case demonstrates the potential difficulties for cross-border manufacturing supply chains. It would be common for a consumer to expect to make a claim in their own jurisdiction if a product was defective, however this case clarifies that the general rule for product liability cases is that courts in the place of manufacture have jurisdiction. It is therefore important for manufacturers, retailers and suppliers to fully understand the product supply chain in which they operate, particularly the place of manufacture. This knowledge will give manufacturers, retailers and suppliers a strong indication of the jurisdiction likely to be attributed to a case should they wish to make a claim, or are faced with a claim from a consumer and allow them to be proactive in their approach.

For more information, contact Tim Richards on tim.richards@michelmores.com