International Bar AssociationInternational Bar AssociationBuenos Aires 2008Buenos Aires 2008

Global Product Liability TrendsGlobal Product Liability Trends

Bárbara M. ArrietaBárbara M. ArrietaRichards, Cardinal, Tützer, Zabala & ZaeffererRichards, Cardinal, Tützer, Zabala & Zaefferer

AgendaAgenda

Overview of Argentine Legal System

LATAM

Trends

Overview of Argentine Legal Overview of Argentine Legal SystemSystem

Federal ConstitutionFederal Constitution

Civil CodeCivil Code

General laws regulating certain General laws regulating certain aspects of commerce:aspects of commerce:

Consumer Defense Act Consumer Defense Act Antitrust Law 25.156 Antitrust Law 25.156 Fair Trade Act (Law 22.802)Fair Trade Act (Law 22.802)

Federal ConstitutionFederal Constitution Modeled after the U.S. Constitution. Modeled after the U.S. Constitution.

Federal regime. Federal regime.

Bill of rights which includes, as of the 1994 Amendment, a specific section Bill of rights which includes, as of the 1994 Amendment, a specific section related to the consumer’s protectionrelated to the consumer’s protection

Consumer provision in the Federal Constitution:Consumer provision in the Federal Constitution:

““Section 42: Consumers and users of goods and services have, in the consumption relationship, Section 42: Consumers and users of goods and services have, in the consumption relationship, the right to:the right to:

oo the protection of their health, safety, and economic interests; the protection of their health, safety, and economic interests; oo to adequate and truthful information; to adequate and truthful information; oo to freedom of choice and equitable and reliable treatment. to freedom of choice and equitable and reliable treatment.

Civil CodeCivil CodeGeneral liability for damages:General liability for damages:

All damages suffered are recoverable (provided they are proved)All damages suffered are recoverable (provided they are proved)

Judgments are limited to plaintiff's requests and facts of the case Judgments are limited to plaintiff's requests and facts of the case (i.e. no award going beyond plaintiff's claim)(i.e. no award going beyond plaintiff's claim)

Follows traditional requirements and Follows traditional requirements and categoriescategories

TortTort

Contractual liabilityContractual liability

Strict and fault based liabilityStrict and fault based liability

Consumer Defense ActConsumer Defense Act(1993)(1993)

First comprehensive piece of regulation in Argentina for First comprehensive piece of regulation in Argentina for consumer protectionconsumer protection

Ordre publiqueOrdre publique

Joint and several liability for producer, manufacturer, Joint and several liability for producer, manufacturer, importer, distributor, provider, seller and whoever has importer, distributor, provider, seller and whoever has placed its trademark on the good or service placed its trademark on the good or service

2008 Broad Amendment to 2008 Broad Amendment to CDACDA

Main featuresMain features Scope expandedScope expanded

Free and used goods and services includedFree and used goods and services included Increase interference in contractual relationships Increase interference in contractual relationships

Abusive practicesAbusive practices Warranty term.Warranty term.

DamagesDamages Direct damagesDirect damages Punitive (limited)Punitive (limited)

MiscellaneousMiscellaneous Enforcement authorityEnforcement authority Administrative proceedingAdministrative proceeding Statute of limitationStatute of limitation Collective interest actionsCollective interest actions

Forum: Consumer's choicesForum: Consumer's choices

Administrative ProceedingAdministrative Proceeding Secretariat of Trade (national enforcement authority)Secretariat of Trade (national enforcement authority) Local authorities in Buenos Aires and Provinces Local authorities in Buenos Aires and Provinces Claimants: consumers, national enforcement authority and anyone Claimants: consumers, national enforcement authority and anyone

acting on behalf of the consumers general interestacting on behalf of the consumers general interest

Consumers ArbitrationConsumers Arbitration

JudiciaryJudiciary

ArbitrationArbitration 1998 National Consumption Arbitration System 1998 National Consumption Arbitration System

(Decree 276/1998).(Decree 276/1998). Voluntary (general previous acceptance)Voluntary (general previous acceptance) Decisions and adjudications of these arbitrators are conclusive (issue Decisions and adjudications of these arbitrators are conclusive (issue

preclusion). preclusion). In equity, except if parties expressly choose the arbitration is in law.In equity, except if parties expressly choose the arbitration is in law. Gratuitous. Gratuitous.

The Arbitration Court is integrated by three The Arbitration Court is integrated by three arbitrators, one designated by consumers, one by arbitrators, one designated by consumers, one by enterprises associations, and one institutional enterprises associations, and one institutional arbitrator representing the Government. arbitrator representing the Government.

Cases of personal injury (physical or mental) or Cases of personal injury (physical or mental) or death of consumers are not allowed to be death of consumers are not allowed to be instituted into the Arbitration System.instituted into the Arbitration System.

MercosurMercosur Brazil, Argentina, Uruguay and Paraguay signed the Treaty Brazil, Argentina, Uruguay and Paraguay signed the Treaty

of Asunción on March 26th, 1991of Asunción on March 26th, 1991 Constitutional framework: Ouro Preto Protocol, signed by Constitutional framework: Ouro Preto Protocol, signed by

the four countries in December, 1994. The Protocol the four countries in December, 1994. The Protocol recognizes the legal existence of the community under recognizes the legal existence of the community under international law, ascribing it with the authority to international law, ascribing it with the authority to negotiate, on its own behalf, agreements with third party negotiate, on its own behalf, agreements with third party countries, groups of countries and international countries, groups of countries and international organizations. organizations.

Common external tariffs and common trade policy.Common external tariffs and common trade policy. A general regulation for consumer defense was prepared A general regulation for consumer defense was prepared

by a Technical Committee N° 7 but it was not approved by by a Technical Committee N° 7 but it was not approved by BrazilBrazil

Protocol for International Jurisdiction for Consumer Protocol for International Jurisdiction for Consumer Relationships 1996. Relationships 1996. International jurisdiction International jurisdiction Consumer relations which result from transport contracts are not included. Consumer relations which result from transport contracts are not included. Awards can be executed if compliant with their internal regulation and with the Awards can be executed if compliant with their internal regulation and with the

Mercosur Protocol for Judicial Cooperation and Assistance in Civil, Commercial, Mercosur Protocol for Judicial Cooperation and Assistance in Civil, Commercial, Labor and Administrative Matters of 1992.Labor and Administrative Matters of 1992.

Res. 104/2005 Warning duties for e-commerceRes. 104/2005 Warning duties for e-commerce

BRAZILBRAZIL Comprehensive regulation Comprehensive regulation Consumer Defense Code enacted in 1990Consumer Defense Code enacted in 1990

Inspired in the European Directive of 1985Inspired in the European Directive of 1985 Brazilian 1988 Constitution Brazilian 1988 Constitution

Consumers have two main causes of action: Consumers have two main causes of action: A judge of civil lawsuits of smaller complexity introduced at national A judge of civil lawsuits of smaller complexity introduced at national

level by law 9099 of the 26 of September of 1995 (does not require level by law 9099 of the 26 of September of 1995 (does not require judicial expenses).judicial expenses).

By means of an arbitration (law 9307); the arbitration is voluntary.By means of an arbitration (law 9307); the arbitration is voluntary.

Other Countries in the Other Countries in the RegionRegion

PERUPERU Peruvian legislation, without prejudice to the administrative liability Peruvian legislation, without prejudice to the administrative liability

process, also provides liability under contract and tort theories.process, also provides liability under contract and tort theories.

URUGUAYURUGUAY Parties liabilityParties liability

Only providers are to be held responsible except for cases in which the Only providers are to be held responsible except for cases in which the distributor can be held liable if importer and manufacturer can not be distributor can be held liable if importer and manufacturer can not be identified.identified.

MEXICOMEXICOSpecial protection for consumer as regards to transactions operated by Special protection for consumer as regards to transactions operated by

electronic or optic means or by using any other technology.electronic or optic means or by using any other technology.

TrendsTrends

Trend Trend ## 1: To further 1: To further regulateregulate

Enactment of laws, codes and other Enactment of laws, codes and other regulations to protect consumerregulations to protect consumer

General regulationsGeneral regulations Specific regulations for certain industries, i.e. tobacco, alcohol, Specific regulations for certain industries, i.e. tobacco, alcohol,

pharma, etcpharma, etc

New causes of action for Product New causes of action for Product liability claimsliability claims

Trend # 2:Trend # 2: Increasing interference in Increasing interference in contractual relationships contractual relationships

Mandatory regulationsMandatory regulations Increasing interference in contractual Increasing interference in contractual

relationships:relationships: CDA provides that clauses waiving o restricting CDA provides that clauses waiving o restricting

consumer’s rights: disclaimer of legal warranties,consumer’s rights: disclaimer of legal warranties,o limitation of liability and/or consumers’ remedies, limitation of liability and/or consumers’ remedies, o clauses that amount to a waiver o restriction of consumer’s rights or enlarging clauses that amount to a waiver o restriction of consumer’s rights or enlarging

the rights of the other party; the rights of the other party; o clauses shifting the burden of proof with grief to consumersclauses shifting the burden of proof with grief to consumerso Etc.Etc.

Are to be considered NOT enforceableAre to be considered NOT enforceable Furthermore said clauses may also trigger the Furthermore said clauses may also trigger the

application of fines as penaltiesapplication of fines as penalties

Trend # 3:Trend # 3: Broadening of Broadening of consumer rights to recover consumer rights to recover

damagesdamages

Last CDA amendment introduces the Last CDA amendment introduces the concept of:concept of:

““Punitive damages” (previously unknown under Argentine Punitive damages” (previously unknown under Argentine law)law)

““Civil fine” in favor of consumers up to Ar$ 5,000,000 (aprox. Civil fine” in favor of consumers up to Ar$ 5,000,000 (aprox. US$ 1.5 MM) in judicial awards for product liability.US$ 1.5 MM) in judicial awards for product liability.

Trend # 4 Increasing requirements in Trend # 4 Increasing requirements in informational dutiesinformational duties

In Argentina, information is an underlying element in Law In Argentina, information is an underlying element in Law No. 24.240 and its latest amendment. No. 24.240 and its latest amendment. Section 4: “providers are compelled to furnish consumers with clear, truthful and Section 4: “providers are compelled to furnish consumers with clear, truthful and

detailed information regarding the essential characteristics of the goods or detailed information regarding the essential characteristics of the goods or services provided and the commercialization conditions. Information has to be services provided and the commercialization conditions. Information has to be provided at no cost and has to be sufficiently clear to enable its comprehension.”provided at no cost and has to be sufficiently clear to enable its comprehension.”

Section 10, when dealing with the document that should be provided in the sale Section 10, when dealing with the document that should be provided in the sale of personal property, describes in detail additional information that should be of personal property, describes in detail additional information that should be given to consumers; given to consumers;

Section 14 mentions the information that should be included in the “warranty Section 14 mentions the information that should be included in the “warranty certificate;” certificate;”

Section 21 deals with the information that should be given by the service provider Section 21 deals with the information that should be given by the service provider in an “estimate” required by the consumer; etc.in an “estimate” required by the consumer; etc.

More on Trend # 4:More on Trend # 4:

Decree 1798/94 states that “providers of goods or Decree 1798/94 states that “providers of goods or services who, subsequent to their introduction into services who, subsequent to their introduction into the market, have knowledge of their dangerous the market, have knowledge of their dangerous character shall communicate such circumstance character shall communicate such circumstance immediately to the competent authorities and to the immediately to the competent authorities and to the consumers through sufficient public advertising.” consumers through sufficient public advertising.”

Breach of duty to inform or warn triggers strict Breach of duty to inform or warn triggers strict liability liability

Lack of information is a business risk that could Lack of information is a business risk that could lead to consumer negligence or mishandling. Those lead to consumer negligence or mishandling. Those who do not inform should be responsible if the harm who do not inform should be responsible if the harm and causal relation with the use of the product or and causal relation with the use of the product or service are proven.service are proven.

This duty does also fulfill a ‘preventive’ function and This duty does also fulfill a ‘preventive’ function and ensures an informed consent, and, therefore, a truly ensures an informed consent, and, therefore, a truly free consent.free consent.

QUESTIONS ???QUESTIONS ???