Adopting the European Adopting the European Approach to Product Liability:Approach to Product Liability:

Australia and JapanAustralia and Japan

Dr Luke NottageDr Luke Nottage

Senior LecturerSenior Lecturer

Co-director, Australian Network for Japanese Co-director, Australian Network for Japanese LawLaw

University of Sydney Law FacultyUniversity of Sydney Law Faculty

Visiting Fellow, Max Planck Institute for Foreign Visiting Fellow, Max Planck Institute for Foreign Private and Private International Law, HamburgPrivate and Private International Law, Hamburg

Luke Nottage, BIICL talk, 6/9/04 2

Europeanisation of PL?Europeanisation of PL?

Cf US initially (R2d ‘65), now (R3d, ´98)Cf US initially (R2d ‘65), now (R3d, ´98) ‘‘Americanisation of Japanese law’?Americanisation of Japanese law’?

Eg PL Law `94 (despite EC Directive model!), Eg PL Law `94 (despite EC Directive model!), allegedly too in corp lawallegedly too in corp law

Due to political fragmentation, dereg, Due to political fragmentation, dereg, lawyerslawyers

And of Australian law?And of Australian law? Constitutional evolution, dereg, big law firmsConstitutional evolution, dereg, big law firms Asserted for corp law, less so PL (TPA `92)Asserted for corp law, less so PL (TPA `92)

Luke Nottage, BIICL talk, 6/9/04 3

Plan todayPlan today

Focus mainly on JapanFocus mainly on Japan My book! (Routledge´04)My book! (Routledge´04) Less (balanced) material for English speakersLess (balanced) material for English speakers Ongoing product safety concernsOngoing product safety concerns

(Daimler)Mitsubishi - recalls in 2000 (‘summer of (Daimler)Mitsubishi - recalls in 2000 (‘summer of living dangerously’), another round this summer living dangerously’), another round this summer

2nd largest economy - growing again!2nd largest economy - growing again! Ongoing ‘third wave’ of law reformOngoing ‘third wave’ of law reform

late 19C ‘reception’ (Germany), post-WW2 (US)late 19C ‘reception’ (Germany), post-WW2 (US)

Luke Nottage, BIICL talk, 6/9/04 4

Comparisons with AustraliaComparisons with Australia Different PL trajectory recently (book ch 2)Different PL trajectory recently (book ch 2) Incl. less pro-Pl case law? (ch 3)Incl. less pro-Pl case law? (ch 3) Yet similar reactions to PL enactment (ch 4) Yet similar reactions to PL enactment (ch 4)

and product safety regulation (ch 5)!and product safety regulation (ch 5)!

ConclusionsConclusions Unexpected influence of EU model (+ Asia)Unexpected influence of EU model (+ Asia) Likely further influence, but more broadlyLikely further influence, but more broadly

Luke Nottage, BIICL talk, 6/9/04 5

Comparing PL History:Comparing PL History:US originsUS origins

19C Strict liability “implied warranty” of 19C Strict liability “implied warranty” of “merchantable quality” in “merchantable quality” in SalesSales of of GoodsGoods

Such contract law liability extended, Such contract law liability extended, first to foods, then eg cars (first to foods, then eg cars (HenningtonHennington ’60)’60)

Then in Then in torttort vs makers ( vs makers (GreenmanGreenman ’63) ’63) So s402A of So s402A of Restatement 2Restatement 2dd Torts Torts (’65) (’65)

……

Luke Nottage, BIICL talk, 6/9/04 6

Quite small doctrinal adjustment, yet Quite small doctrinal adjustment, yet this SL remedy in tort caught on from this SL remedy in tort caught on from ‘70s‘70s

Backlash began from 1980s, ‘tort Backlash began from 1980s, ‘tort reform’ (restricting especially at state reform’ (restricting especially at state levels) continued over 1990slevels) continued over 1990s

Restatement 3d of PL (’98) reinstates Restatement 3d of PL (’98) reinstates negligence for design and warning (cf negligence for design and warning (cf manufacturing) defects!manufacturing) defects!

Luke Nottage, BIICL talk, 6/9/04 7

History – EU: more consistentHistory – EU: more consistent Thalidomide disaster in 60s (no contracts)Thalidomide disaster in 60s (no contracts) 1978 Pearson Report: SL for defective 1978 Pearson Report: SL for defective

products (but not no-fault compo scheme products (but not no-fault compo scheme like NZ)like NZ)

Derailed in UK eg by poor economy, neo-Derailed in UK eg by poor economy, neo-liberal Thatcher from ’79, joining EU ‘73liberal Thatcher from ’79, joining EU ‘73

1975 draft EU Directive, vs strong 1975 draft EU Directive, vs strong oppositionopposition

Luke Nottage, BIICL talk, 6/9/04 8

1985 Directive compromise, 1985 Directive compromise, eg exclusion for agriculture, eg exclusion for agriculture, dev’t risks (“no one could know” dev’t risks (“no one could know”

defence)defence) Ltd but significant effects (little case Ltd but significant effects (little case

law, but safety improvements)law, but safety improvements) Broader EU program since late 90s: Broader EU program since late 90s:

PS Directive(s), consumer protectionPS Directive(s), consumer protection

Luke Nottage, BIICL talk, 6/9/04 9

Lovells for Commission (2003)Lovells for Commission (2003) Some disharmony, but not huge problemSome disharmony, but not huge problem ““General happiness with current balance” [?]General happiness with current balance” [?]

Luke Nottage, BIICL talk, 6/9/04 10

History – Australia: hybrid dev’tHistory – Australia: hybrid dev’t

No thalidomide; but some problems in case No thalidomide; but some problems in case law, surveys in 80s … and especiallylaw, surveys in 80s … and especially

EU Directive ‘85 as (legal EU Directive ‘85 as (legal andand political) model political) model Cf ‘89 ALRC: “harm arising from how gds Cf ‘89 ALRC: “harm arising from how gds

acted”acted” Opposition from business (& conservative Opposition from business (& conservative

govt)govt) Compromise: Part VA added to TPA in ’92Compromise: Part VA added to TPA in ’92

based on (more pro-Consumer) variant of EU based on (more pro-Consumer) variant of EU DirectiveDirective

Luke Nottage, BIICL talk, 6/9/04 11

More pro-Cer proposals lost from viewMore pro-Cer proposals lost from view eg 20-year “period of repose” for toxic tort eg 20-year “period of repose” for toxic tort

situationssituations ““Tort reforms” from 2002 (beginning with Tort reforms” from 2002 (beginning with

NSW)NSW) Clarifying negligence standard (eg medical Clarifying negligence standard (eg medical

opinion)opinion) Caps on damagesCaps on damages Lawyers must have prospect of success (PS Lawyers must have prospect of success (PS

ADR)ADR) Limitation periodsLimitation periods

Luke Nottage, BIICL talk, 6/9/04 12

History – Japan: another hybridHistory – Japan: another hybrid

Tort, untrammelled by “privity of Tort, untrammelled by “privity of contract”contract”

But mostly negligence (1898 Civil But mostly negligence (1898 Civil Code art 709)Code art 709)

““Big Four” PL cases over 60sBig Four” PL cases over 60s Morinaga milkMorinaga milk Thalidomide, SMONThalidomide, SMON Kanemi rice oilKanemi rice oil Cf auto defectsCf auto defects

Luke Nottage, BIICL talk, 6/9/04 13

Various responses led to “still-birth” of PL in Various responses led to “still-birth” of PL in 70s:70s: Collective action & legal problems (eg autos - Collective action & legal problems (eg autos -

design)design) Government formalism (better safety laws)Government formalism (better safety laws) Bureaucratic informalism (broader Cer Protn)Bureaucratic informalism (broader Cer Protn) Industry informalism (1Industry informalism (1stst party insurance scheme party insurance scheme

etc)etc) ““Re-birth” from late 80s -> 1994 PL Law:Re-birth” from late 80s -> 1994 PL Law:

(Revived?) accidents, EU as model(Revived?) accidents, EU as model int’l trade pressure (US, WTO), LDP lost power ’93int’l trade pressure (US, WTO), LDP lost power ’93

Luke Nottage, BIICL talk, 6/9/04 14

Summary Comparison:Summary Comparison:Pro-consumer PL?Pro-consumer PL?

1960s 1970s 1980s 1990s 2000s 2000+

US

EU

Oz

Japan

Luke Nottage, BIICL talk, 6/9/04 15

Comparing Japan’s PL LawComparing Japan’s PL Law

Purpose (art 1): ltd use (except EU?)Purpose (art 1): ltd use (except EU?) Defns (art 2):Defns (art 2):

Product: manuf’d/processed movable [broad]Product: manuf’d/processed movable [broad] Defects: ‘safety it ought to have’, eg nature, Defects: ‘safety it ought to have’, eg nature,

normally foreseeable manner of use, time normally foreseeable manner of use, time deliv’ddeliv’d

Manufacturer: incl importer, own-brander, [!] etcManufacturer: incl importer, own-brander, [!] etc [Strict] Liability (art 3):[Strict] Liability (art 3):

on ‘manufacturer’ for D caused by ‘defect’ in on ‘manufacturer’ for D caused by ‘defect’ in ‘product’, interfering with another’s life/health ‘product’, interfering with another’s life/health or [!] property; except if D only to product itselfor [!] property; except if D only to product itself

Luke Nottage, BIICL talk, 6/9/04 16

Exemptions (Art 4):Exemptions (Art 4): Development risks: state of tech/sci Development risks: state of tech/sci

knowledge such that impossible to knowledge such that impossible to detect defect when delivered detect defect when delivered

strictly construed so far (snapper case), strictly construed so far (snapper case), cf Australia (oysters)?cf Australia (oysters)?

Component manufacturing: solely Component manufacturing: solely followed another’s design followed another’s design instructions, & not neg. [also ltd]instructions, & not neg. [also ltd]

Luke Nottage, BIICL talk, 6/9/04 17

Time limits (Art 5)Time limits (Art 5) Claim within 3 years of knowing of defect, and Claim within 3 years of knowing of defect, and

10 years from delivery (unless like [cf Oz!] 10 years from delivery (unless like [cf Oz!] ‘toxic tort’) ‘toxic tort’)

Civil Code (Art 6): otherwise applicable Civil Code (Art 6): otherwise applicable Fill gaps: eg ‘causation’, calculate Ds, Fill gaps: eg ‘causation’, calculate Ds,

comparative negligencecomparative negligence Always in parallel: eg hi standard for food Always in parallel: eg hi standard for food

‘defect’‘defect’ Essential for gds delivered before Law in force Essential for gds delivered before Law in force

(7/95)(7/95)

Luke Nottage, BIICL talk, 6/9/04 18

Substantive law < context!Substantive law < context!

Civil procedure & civil justice systemCivil procedure & civil justice system Scope of damages (eg punitive? Juries? Scope of damages (eg punitive? Juries?

Claim lawyers fees if win?)Claim lawyers fees if win?) Evidence and proof (standard, re Evidence and proof (standard, re

liability [eg liability [eg specificspecific defect?] or defect?] or damages [eg unclear?]? Pre-trial damages [eg unclear?]? Pre-trial discovery? Other info disclosure, eg discovery? Other info disclosure, eg from govt agencies?)from govt agencies?)

Access to courts etc (eg group actions)Access to courts etc (eg group actions) Nature of entire legal system!Nature of entire legal system!

Luke Nottage, BIICL talk, 6/9/04 19

Multiple Effects in Japan Multiple Effects in Japan [=EU (Lovells), Australia (replica now)][=EU (Lovells), Australia (replica now)] LitigationLitigation

Nos of suits: slow but steady increase in Japan Nos of suits: slow but steady increase in Japan ((faster, morefaster, more than Australia, most EU?!) than Australia, most EU?!)

Pro-plaintiff settlements: more, esp. mid-90sPro-plaintiff settlements: more, esp. mid-90s ADRADR

Industry associate based PL CentresIndustry associate based PL Centres Local govt “Consumer Living Centres”Local govt “Consumer Living Centres”

Product safety activities by manufacturersProduct safety activities by manufacturers Complaints handling, complianceComplaints handling, compliance Design/warning improvements, insuranceDesign/warning improvements, insurance

Luke Nottage, BIICL talk, 6/9/04 20

Japan & Australia similar to EU?Japan & Australia similar to EU?

Luke Nottage, BIICL talk, 6/9/04 21

ConclusionsConclusions Influence of EU model in Japan, Influence of EU model in Japan,

even Australia (and beyond)even Australia (and beyond) (Deceptively) succinct structure, (Deceptively) succinct structure,

conceptsconcepts Also now in Japan: consumer contracts, Also now in Japan: consumer contracts,

suitssuits In Australia (less so): “unfair terms” (Vic)In Australia (less so): “unfair terms” (Vic)

Political compromise, but thenPolitical compromise, but then Hard to get attention for further PL Law Hard to get attention for further PL Law

reforms (Japan)?reforms (Japan)? Or indeed easily undone (Australia’s ‘tort Or indeed easily undone (Australia’s ‘tort

reforms’)reforms’)

Luke Nottage, BIICL talk, 6/9/04 22

Future of EU modelFuture of EU model `Reformulation‘: Ongoing (world-wide) `Reformulation‘: Ongoing (world-wide)

case law developmentscase law developments But no ALI, or even European Law InstituteBut no ALI, or even European Law Institute

`Reform‘ of PL laws per se less likely`Reform‘ of PL laws per se less likely Not even in EU (cf Lovells)Not even in EU (cf Lovells) Some expansions (agriculture), limits (time: Some expansions (agriculture), limits (time:

Oz)Oz) Most attention on PS ‘re-regulation‘ (EU)Most attention on PS ‘re-regulation‘ (EU) Parallel procedural reforms also Parallel procedural reforms also a la EUa la EU