How is a ‘product defect’ defined in your jurisdiction?
Article 137 of Royal Legislative Decree 1/2007 approving the consolidated text of the General Consumer and User Protection Act (hereinafter, the General Consumer and User Protection Act) defines a ‘defective product’ as:
“1. Defective product shall mean any product which does not provide the safety that it could legitimately be expected to provide, taking all circumstances into account, especially the presentation of the product, its reasonable foreseeable use and the time when it was placed on the market.
2. Products are defective in all cases in which they do not provide the safety normally provided by other models in the same series.
3. A product shall not be considered defective solely due to the fact that an improved version of the product is put onto the market.”
Compliance with the regulatory requirements does not imply that a product will not be ‘defective’; it merely authorises the commercialisation of the product.
Further, case law is clear that the risk/benefit analysis or risk/utility ratio alone does not determine whether a product is defective or not. The courts may, however, take these ratios into account or consider them as one relevant factor out of the many that are relevant when determining if a product is defective "taking all circumstances into account".
Causation and burden of proof
How is causation of loss or damage established in relation to product liability claims and where does the burden of proof lie? Can this burden be shifted in any way?
Article 139 of the General Consumer and User Protection Act establishes that the claimant/injured party seeking damages bears the burden of proving that the product was defective, a damage occurred and there is a causal relationship between the defect and the damage.
Article 386 of the Spanish Civil Procedure Act 1/2000 admits certain judicial presumptions. Thus, it is possible for the court to presume certainty of one fact based on another admitted or proven fact, if there is a precise and direct link between what is admitted or demonstrated and the presumption. When this occurs, the court is required to include its reasoning and how the presumption was established in any judgment. This reasoning can be applicable to cases of product liability for the purpose of establishing causation.
In some cases, courts have imposed the burden of proof on a party other than the claimant to establish certain facts where it is within the ability of that party to prove those facts (eg, Supreme Court's decisions of February 13 1992 and July 29 2010). This principle cannot imply a shift in the burden of proof if to do so would be against Article 139 of the General Consumer and User Protection Act, Article 4 of the Product Liability Directive (85/374/EEC) and EU case law. This principle also cannot be used to shift the burden of proof for causation.
Legal bases for claims
On what legal bases can a product liability claim be brought?
In general terms, product defects usually fall into three distinct categories: manufacturing defect, design defect or lack of information defect. Claims can therefore be brought alleging liability for one or more of these categories.
Article 137 of the General Consumer and User Protection Act establishes the general means by which a statutory claim involving an allegedly defective product is made in Spain. Importantly for producers, Article 137 also establishes that a product shall not be considered defective solely due to the fact that an improved version of the product is put on the market.
Claimants are not limited to statutory claims as the statutory product liability system coexists with the contractual and tort liability models in Spain. Such claims are contemplated under the Spanish Civil Code (eg, Article 1902 for tort liability).
Can a defendant be held criminally liable for defective products?
Although the Spanish Criminal Code does not specifically refer to crimes regarding the sale or distribution of defective products, some acts in relation to the sale or distribution of defective products are capable of being considered criminal offences.
For example, Articles 359 and 360 of the Criminal Code concern felonies against public health for the dispatch, supply or trade of substances, chemical products or medicines that are harmful to health or may cause havoc. Likewise, Article 364 states that those who offer to manufacture or sell food products liable to cause damage to the health of persons may be held criminally liable.
Since December 23 2010, the Criminal Code has also been providing that legal entities may be held criminally liable for certain offences. Accordingly, both individuals and corporate entities can be liable for the behaviour and acts of their directors or legal representatives, general managers, proxies, employees and other persons that are within the company's corporate domain. Recent decisions of the Spanish Supreme Court (eg, Supreme Court's decisions of February 29 2016 and March 16 2016) indicate that the prosecution will need to prove that the compliance systems were non-existent or ineffective in order for a corporation to be held criminally liable. As against individual directors or managers, criminal liability will be established if it is shown that the individual intentionally participated and/or wilfully acted in breach.
The applicable criminal penalties include fines, temporary closure of the establishment/company, cessation of activities (eg, Supreme Court's decision of March 16 2016) or imprisonment of individuals.
Which parties can be held liable for defective products?
Under Article 146 the General Consumer and User Protection Act, suppliers may be held liable as if they were producers/manufacturers "where they have supplied a product in the knowledge of the existence of the defect". Where this occurs, the supplier retains a right to bring recovery proceedings against the producer.
The supplier's liability can be excluded if it indicates to the injured party the identity of the producer or such person as supplied or provided it with the product, within three months of the date when the claim is first raised by the consumer. The same rule applies to imported products, where the product does not give the name of the importer, even if the name of the manufacturer is stated.
Limitation of liability
Can liability be excluded or mitigated in any way?
In principle, liability for damages cannot be reduced in any way. This is because under Spanish regulations, which implement the EU Product Liability Directive, product liability is a strict liability regime.
Article 140 of the General Consumer and User Protection Act sets out that producers are liable if they can prove that:
- they did not put the product into circulation;
- given the circumstances of the case, it may be presumed that the defect did not exist when they put the product into circulation;
- the product was not manufactured for sale or any other form of distribution with an economic purpose, nor was it manufactured, imported, supplied or distributed within the context of a professional or entrepreneurial activity;
- the defect is due to the fact that the product was made in accordance with existing mandatory rules; or
- the state of the scientific and technical knowledge at the time the product entered into circulation meant that the existence of the defect could not be perceived.
Article 141 of the General Consumer and User Protection Act also caps the civil liability of the producer as follows: “a) A release of €500 shall be deducted from the amount of compensation for material damages. b) The producer’s overall civil liability for death and personal injuries caused by identical products with the same defect shall be limited to the sum of €63,106,270.96."