Product Liability & Safety 2020

Last Updated June 24, 2020

Austria

Law and Practice

Authors



Preslmayr Rechtsanwälte OG has nine partners and six associates who are experts in business law. Its clients, from Austria and around the world, are primarily large and medium-sized businesses in manufacturing, banking, trade, information technology, advertising, tourism and telecommunications. In the area of (international) product safety, Preslmayr Rechtsanwälte regularly advises globally operating companies on issues of legal compliance with Austrian and European law and also assists with globally co-ordinated product recalls and communication with Austrian authorities in general. Regarding product liability, Preslmayr Rechtsanwälte represents both plaintiffs and defendants in legal proceedings for damages. In connection with these key practice areas, the firm has long-standing and exceptional expertise in compensation, warranty, consumer and distance-selling law as well as in litigation. Clients in these practice areas are multinational consumer electronics companies, software and social media companies, manufacturers of electrical appliances and medical products, SVOD providers and life sciences companies.

General Regulation

The main law regarding the product safety regime in Austria is the Product Safety Act of 2004 (Produktsicherheitsgesetz 2004 or PSG), implementing Directive 2001/95/EC on general product safety (GPSD). The PSG serves as a default where no special provisions exist. It is a federal law that regulates safety requirements for products, obligations for persons placing them on the market and official measures with the aim of protecting human life and health from the hazards posed by dangerous products. The main obligation for producers and distributors resulting from the PSG is to place only safe products on the market. A product is deemed safe when, provided that it is used properly or in a way reasonably foreseeable, it poses no or only very limited dangers to human safety.

Based on the PSG, numerous ordinances were issued regarding detailed safety requirements for special product categories (eg, bicycles, lighters, airsoft guns or hands-free systems). In addition, the Product Safety Advisory Board (Produktsicherheitsbeirat) of the Federal Ministry of Social Affairs, Health, Care and Consumer Protection (Bundesministerium für Soziales, Gesundheit, Pflege und Konsumentenschutz) regularly issues safety recommendations for certain product categories (eg, children’s jewellery, kick scooters for adults or swim toys).

The List of General Safety Standards for Consumer Products (Verzeichnis von Normen für die allgemeine Sicherheit von Verbraucherprodukten) contains the relevant standards pursuant to Article 3 (2) and Article 4 of the GPSD as well as Article 5 of the PSG. When no special regulations exist, a product is deemed to be safe when it complies with these standards.

Sector-Specific Regulation

In addition, various special regulations exist with regard to certain product categories, stipulating distinct safety requirements, including extensive information obligations (eg, the Austrian Radio Equipment Market Surveillance Act (Funkanlagen-Marktüberwachungs-Gesetz or FMaG 2016), implementing the Radio Equipment Directive with regard to radio equipment, which includes a wide range of products of current importance, such as app-connected products).

Besides these Austrian laws and regulations, non-legislative acts at EU level, such as guidelines and recommendations, apply accordingly. This includes in particular the Commission Implementing Decision laying down guidelines for the management of the European Union Rapid Information System (RAPEX) and the Commission Decision laying down guidelines for the notification, by producers and distributors, of dangerous consumer products to the competent authorities of the member states. To interpret Austrian and EU regulations as well as to assess certain cases, Austrian authorities also consider various other European guidelines (eg, the Blue Guide or the RED Guide).

Special product safety regulations exist, inter alia, for:

  • food, cosmetics and utility articles, which are governed by the Federal Food Safety and Consumer Protection Act (Lebensmittelsicherheits- und Verbraucherschutzgesetz or LMSVG);
  • medical devices, which are subject to the Austrian Act on Medical Devices (Medizinproduktegesetz or MPG); and
  • the safety requirements for pharmaceuticals, which are regulated in the Pharmaceutical Products Act (Arzneimittelgesetz or AMG).

The main regulator, especially regarding compliance with the PSG and its ordinances, is the Federal Minister of Social Affairs, Health, Care and Consumer Protection. Notwithstanding this, special regulations may specify another authority as competent for enforcement (eg, the FMaG 2016 designates the Federal Minister for Agriculture, Regions and Tourism (Bundesminister für Landwirtschaft, Regionen und Tourismus) as the competent regulator).

Market surveillance is the responsibility of the governor of each federal state, who assigns these duties to specially trained supervisory bodies (Produktsicherheits-Aufsichtsorgane) in each federal state (eg, the respective local Bureau for Radio and Telecommunications Equipment with regard to radio equipment).

Producer/Trader Investigation Obligations

Market surveillance authorities are authorised to take or to request product samples. Traders are obliged to co-operate with the authorities and in particular have to:

  • inform the authority, upon request, of all places where products governed by the PSG were placed on the market:
  • allow access to these places;
  • authorise supervisory bodies to inspect related documents (including data carriers); and
  • support those authorities in the performance of their duties by:
    1. providing the necessary information about the manufacturer, the supplier and the customers of the products;
    2. presenting the necessary documentation about the nature, mode of operation and characteristics of the products; and
    3. providing assistance in taking samples.

Measures to Protect Consumer Health and Safety

In the case of an imminent danger, market surveillance authorities are also entitled to impose provisional measures (eg, seize products, prohibit further distribution or have safety warnings affixed).

If the general safety requirements of the PSG or special provisions are not met, the Federal Minister of Social Affairs, Health, Care and Consumer Protection (or the respective competent Minister in the case of special regulations) is entitled to take measures to ensure consumers’ health and safety. Such measures may include:

  • the obligation to add or improve user guides or to affix labelling elements on the package or the product;
  • the obligation to apply appropriate warnings regarding dangers and directions for use to avert these dangers;
  • the obligation to publish warnings or other urgent information;
  • rules and prohibitions with regard to advertising measures;
  • the determination of certain quality requirements (eg, safety precautions);
  • the obligation to verify compliance with certain testing requirements;
  • prohibitions or limitations on marketing;
  • prohibitions or limitations on export;
  • the obligation to immediately withdraw any product or batch of products already placed on the market and, if required, its destruction under appropriate conditions;
  • the obligation to perform an immediate and efficient recall of a product or product batch already marketed, the appropriate publication of the recall (if necessary) and the destruction of recalled products under appropriate conditions (if necessary).

The locally competent District Administrative Authority (Bezirksverwaltungsbehörde) may impose fines amounting up to EUR25,000 when unsafe products are distributed, or market surveillance authorities’ measures are breached.

Apart from the distributor’s primary obligation to notify the authority (see 1.4 Obligations to Notify Regulatory Authorities), there is no general obligation to commence corrective action or any criteria concerning which action to take or when it should be taken. The decision of whether and what measures a distributor takes is generally left to the distributor, which has to perform a risk assessment. But if the competent authority learns of an unsafe product on the market, it may impose obligatory measures to be taken by the distributor (see 1.2 Regulatory Authorities for Product Safety).

Such corrective measures taken (or imposed) must, in any case, be adequate to prevent any risk to consumers. Hence, measures may range from mere information concerning affected users, the circulation of reviewed user guides or the repair or improvement of the product to – as the most drastic measure – the repatriation and/or recall of the product. The form, medium, distribution, publication and extent of the measures taken have to be assessed by the distributor (if not imposed by the authority), considering its possible scope and how to achieve the greatest possible attention and return rate based on the assessed risk.

If a distributor decides to commence corrective actions, it must inform the authority of these measures anyway.

Hence, distributors are well advised to comply with their market surveillance obligations regarding their marketed products, which – pursuant to the PSG – include appropriate marking to allow the identification of a product and to trace it back to its manufacturer, identification of the production batch and the sampling of already marketed products, investigation of complaints and, if necessary, keeping a record of complaints, and informing vendors of the results of such activities. These measures are vital to identify potential risks early and subsequently to be able to swiftly initiate voluntary corrective measures. Such corrective measures, if conducted in good time, will very likely help to prevent or limit possible claims for damages (in particular those based on product liability) by consumers who have suffered any losses due to a defective and/or hazardous product, especially if evidence can be provided that the injured party was effectively warned before the incident happened.

Notification Triggers

When a distributor knows or should know that a product distributed by it poses a risk to consumers that is incompatible with the general safety requirements, it must promptly notify the competent authority. This notification obligation particularly applies to corrective measures taken by distributors to avert any dangers to consumers, and specifically to recalls. It is irrelevant whether the distributor obtains knowledge of a (potential) risk based on reports of incidents where injuries or other losses have already occurred or based on a risk assessment due to the market surveillance obligations discussed in 1.3 Obligations to Commence Corrective Action. Hence, distributors are obliged to notify the authorities in any case of an unsafe product. In addition, they have to notify the authorities of all corrective measures which will be initiated, even if the risk is minimal.

“Distributors” are defined in the PSG as “manufacturers, importers and vendors”. “Manufacturer” means:

  • a party domiciled in the European Community which produces a product within the scope of its business activities and any other party acting as manufacturer by affixing its name, trade mark or other characteristic sign on the product or which reprocesses the product; or
  • a party which represents the manufacturer if such manufacturer is not domiciled in the Community or, if there is no representative domiciled in the Community, which imports the product to the European Community

“Importer” means a party which is domiciled in Austria and which either represents a manufacturer in Austria or imports a product into Austria for the purpose of marketing it domestically. “Vendor” means a party engaged in a trade along the sales chain which supplies or makes available a product within the scope of its business activities and whose activities do not affect the product’s safety properties.

Theoretically, all three parties (manufacturers, importers and vendors) are obliged to give notification of (potential) hazards, but multiple notifications should be avoided, so that an incident needs to be reported only once. Regarding products manufactured outside the EU, it is generally recommended that the entity which imports the product into the EU is responsible for the corrective measure including the notification(s). Direct involvement of a local entity is not strictly required if the necessary information can also be provided to the authority by the responsible entity.

Notification Requirements

The notification, especially in the case of a planned product recall, needs to include the following information:

  • the brand, type, batch number, barcode and in particular photographs of the product, which must be uniquely identifiable;
  • the number of products concerned;
  • the distribution channels (commercial customers nationally and abroad);
  • the risk (including any accidents);
  • the measures taken or intended; and
  • supplementary documents (eg, test reports).

Notifications must be made “promptly” after obtaining knowledge of a potential hazard of a product – ie, immediately after having all relevant information to identify the product, the (potential) risks it poses and who is concerned.

Even when a RAPEX notification is made (Rapid Exchange of Information System: the EU’s rapid alert system for unsafe consumer products and consumer protection which allows a swift exchange of information on measures such as repatriation or recalls, whether imposed by national authorities or carried out voluntarily), it is still necessary to inform the local Austrian authority as well. There are no special formal requirements to be observed with regard to notification of the Austrian authority: notifications may be made by e-mail and are accepted in English.

Notifications regarding non-food products must be filed with the Federal Ministry of Social Affairs, Health, Care and Consumer Protection.

Pursuant to the PSG, in addition to (provisional) measures taken by the competent authorities, the locally competent District Administrative Authority (Bezirksverwaltungsbehörde) may impose fines on distributors. When products are distributed that pose a serious risk to the life or health of consumers, or when (provisional) measures by market surveillance authorities (see 1.2 Regulatory Authorities for Product Safety) are infringed, these fines may be of up to EUR25,000. A violation of the notification obligation or a refusal to co-operate with the authority (eg, providing necessary documentation or product samples) carries fines of up to EUR3,000.

Special regulations, such as the Austrian Radio Equipment Market Surveillance Act, may stipulate different and/or additional penalties.

The main law covering product liability claims is the Austrian Product Liability Act (Produkthaftungsgesetz or PHG), under which consumers must be compensated for any losses caused by a defective product.

Elements

A “producer” (an entity that manufactures the finished product, a raw material or component part, as well as an entity that presents itself as producer by affixing to the product its name, trade mark or other distinguishing feature); an “importer” (which has put the product into circulation within the European Economic Area (EEA)); and, where the manufacturer/importer cannot be identified, a “distributor” (which has put the defective product into circulation (unless it reveals the name of the producer or importer)) is liable for personal injury and loss of property caused by the defective product regardless of fault (strict liability regime).

“Products” are defined in the PHG as movable tangible property (including energy), as well as single parts of other movable property or something that is joined with an immovable property. The legal definition of a “defective product” under the PHG includes faults in production, construction and instruction through which the product fails to provide the safety which may be reasonably expected from it, considering the presentation of the product, the use to which it can be reasonably expected to be put (including such incorrect use as can be reasonably expected (eg, standing on a chair)) and the time the product was put into circulation. Moreover, the ineffectiveness of a product may be considered a defect.

A product is deemed to be “put into circulation” as soon as the entrepreneur – irrespective of the legal reason – has handed it over to another person into the latter’s power of disposition or for the latter’s use. Dispatching the product to the customer is sufficient.

Damages

Personal injury caused by the defective product must be fully compensated. This includes loss of profit, compensation and medical expenses. In the case of death as a result of injury due to a defective product, funeral expenses must also be compensated as well as possible maintenance payments.

Any damage caused to property is compensated only if it was not suffered by an entrepreneur using the faulty object (mainly) in its enterprise, and only to the extent exceeding EUR500. Furthermore, not all property losses are compensated: no compensation is granted for pecuniary loss, loss of profit and "spreading damage", which arises as a result of a defect within the object itself (eg, where a defective water hose destroys the engine into which it was installed at the factory). Such losses may be compensated based on general tort law.

Besides, based on the PHG, compensation for a loss caused by a defective product may also be claimed under fault-based liability and the tort law of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch or ABGB).

The PHG only covers consumers’ compensation for any losses caused by a defective product. For property losses the PHG stipulates a deductible of EUR500. The injured party need not be the contractual partner of the liable party; “innocent bystanders” are also entitled to bring claims if they have suffered a loss due to a defective product.

The PHG does not cover losses suffered by an entrepreneur who used the defective product mainly in the course of their business. Such claims need to be based on the provisions of the ABGB as mentioned in 2.1 Product Liability Causes of Action and Sources of Law.

Claims based on the provisions of the PHG must be brought within three years of the date of the damage and the damaging/liable party becoming known. The same time limit applies for claims based on tort law pursuant to the general provisions of the ABGB.

Liability of the responsible party under the PHG ends ten years after the product was put into circulation, unless the injured party has brought a claim for compensation before. Hence, the limitation period of the different parties (eg, manufacturer or importer) may vary, depending on the time they put the product into circulation. Liability under the general provisions of the ABGB regarding tort law ends 30 years after the damage occurred.

Jurisdiction in Austria

Claims based on the PHG must be brought before a commercial court. Functional jurisdiction depends on the amount in dispute:

  • claims for up to EUR15,000 must be brought before the Commercial District Court of Vienna (Bezirksgericht für Handelssachen Wien) or the competent local District Court acting as Commercial Court (Bezirksgericht in Handelssachen); and
  • claims in excess of EUR15,000 are dealt with by the Commercial Court of Vienna “Handelsgericht Wien) or the competent local Regional Court acting as Commercial Court (Landesgericht als Handelsgericht).

For claims based on the ABGB, the general civil courts or – in the case of a claim for contractual penalty against a defendant who is an entrepreneur – the commercial courts are competent.

Local jurisdiction is generally based on the defendant’s domicile or establishment – ie, the commercial court that has competence for the place of establishment or registered office of the defending manufacturer, importer or distributor.

Claims due to death of or injury to a person or damage to a physical object may also be brought before the district or regional court competent for the place of damage (the same value threshold of EUR15,000 applies).

International Jurisdiction

With regard to international jurisdiction, Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters applies to cross-border cases within the EU; the Lugano Convention applies to cases between Austria and Switzerland, Norway or Iceland. International jurisdiction widely corresponds with the above-stated national regulations: primarily competent is the member state in which the defendant has its domicile. In addition, certain special jurisdictions apply. Thus, a defendant domiciled in one member state may also be sued in another member state in matters relating to tort and negligence, in the courts competent for the place where the harmful event occurred or may occur.

Product liability cases are generally governed by the rules of the Austrian Code of Civil Procedure (Zivilprozessordnung or ZPO). Hence, no mandatory steps are required to be taken before proceedings can be commenced.

However, it is recommended to begin by requesting payment out of court to give the defendant an opportunity to acknowledge the claim. Otherwise the plaintiff may have to bear the defendant’s litigation costs if the latter admits its liability at the first opportunity.

The plaintiff, as the damaged party, bears the primary burden of asserting and proving any damage caused by the defective product. It has to prove that the damage occurred, and that the product is defective (but not at a level of detail such as which component was defective, why a defect occurred or what type of product defect is involved). Hence, the plaintiff is well advised to gather, keep and finally submit all the relevant evidence to the court. This includes (the remains of) the defective product, (the remains of) damaged objects, photos, medical reports (where applicable in case of personal injuries), and invoices with regard to the injury or loss suffered. 

In two cases the plaintiff may request “preservation of evidence” (Article 384 f ZPO) to have the current status recorded by a court-appointed expert in independent proceedings, separately from later compensation proceedings: first, where there is a risk that evidence may be destroyed or will be lost due to other reasons, and second, where the current condition of an object needs to be determined and the applicant has a legal interest in preservation. Preservation of evidence is generally only possible with regard to personal inspection, witness and expert evidence, but can also be permitted when a party cannot be heard, or where a document might become unusable in the future.

If a claim has already been brought, the trial court is also competent for the proceedings of preservation of evidence. If a claim has not yet been brought, the District Court where the object of evidence is located is competent. The applicant has to state in its application the subject of evidence, the object of evidence, the reason for preservation and – if possible – the opponent. The court will decide without any oral hearings but will inform the opponent – if specified – of the preservation proceedings so they may participate, if reasonable.

The costs of these proceedings must be initially borne by the applicant and are later subject to the general rules of payment of costs in the main compensation proceedings: the winning party recovers the costs reimbursed by the opponent in proportion to the winning party's share. If both parties win and lose in equal parts (50:50), the law stipulates a cost waiver.

Product liability cases are generally governed by the rules of the ZPO: the claimant has to assert all relevant circumstances of the case and, if it wants to substantiate its statements or legal arguments with particular items of evidence (eg, documents or parts of the allegedly defective product), bears the burden of proof and is therefore obliged to forward these documents or evidence.

In a product liability case, the plaintiff will primarily have to prove that the product was defective, as well as proving the loss the plaintiff suffered due to the accident caused by the defective product. In return, the defendant will have to prove any circumstances exempting it from any liability. Hence, evidence supporting the plaintiff’s position, such as photos, medical reports and invoices must be forwarded by the plaintiff. Possible documents supporting the defendant’s position, such as technical documentation or test reports, must be forwarded by the defendant.

It is only in absolutely exceptional cases that the court will order the opponent to disclose evidence – eg, if it is impossible for the plaintiff to provide documents which are in the defendant’s sole power of disposition or if a fact is impossible to obtain for the plaintiff but can be easily supplied by the defendant.

The rules for expert evidence are the same as in any other civil proceedings under the ZPO: where the court’s expertise is not sufficient to assess – typically technical – questions, either party can request that a court expert be appointed. So-called “private expert opinions” which are obtained by the parties themselves have less evidential value in practice but can serve as an indication and can be used to raise doubts regarding the court-appointed expert’s opinion. The court expert is restricted to determining the facts (eg, which injuries were suffered) and his or her subsequent opinion (eg, episodes of pain suffered). He or she is not allowed to draw any legal conclusions (eg, the amount of compensation that would be adequate) or to evaluate evidence, as these tasks fall to the courts.

In product liability cases medical doctors (to determine injuries) or technical experts (to determine the defectiveness of a product or the course of events) will mostly be the only experts necessary. Generally only experts who are listed as “court-certified” experts in Austria may be appointed. In exceptional cases (eg, where no “court-certified” expert in the area concerned is available or at least not in Austria) other persons who have the required expertise and/or foreign experts may be appointed. The court selects the expert to be used. Court-appointed experts may be refused or rejected for the same reasons that judges may be (eg, due to bias). 

As to the costs of expert evidence, the party requesting it is generally obliged to pay an advance on the expert’s costs. These costs are subsequently also subject to the general rules of payment of costs: depending on the final outcome of the proceedings, the winning party receives the costs paid from the opponent pro rata to the winning party’s share.

The plaintiff, as the damaged party, bears the burden of proof regarding the loss/damage caused by the defective product. It has to prove that the damage occurred, and that the product is defective (but not at a level of detail such as which component was defective, why a defect occurred or what type of product defect is involved).

Pursuant to the PHG a reversal in the burden of proof, in which the defendant must prove that its assertions are plausible in light of the particular circumstances, applies in two cases:

  • if the defendant claims that the product has not been put into circulation by it; and
  • if the defendant claims that the product, when it was put on the market, did not have the defect which caused the damage.

Additionally, the producer bears the burden of proof for all circumstances which it claims exclude its liability – eg, that the defect could not have been detected according to the state of the art applicable at the time the product was put into circulation.

In court proceedings regarding a contractual penalty according to the ABGB, the defendant bears the burden of proving that it is not at fault.

Claims based on the PHG must be brought before the commercial courts. Claims for up to EUR15,000 must be brought before the Commercial District Court of Vienna or the competent local District Court acting as a Commercial Court; claims in excess of EUR15,000 are dealt with by the Commercial Court of Vienna or the competent local Regional Court acting as a Commercial Court. For claims based on the ABGB, the general civil courts or – in the case of a claim for a contractual penalty against a defendant who is an entrepreneur – the commercial courts are competent. Local jurisdiction is generally based on the defendant’s domicile or establishment (ie, the commercial court that has competence for the place of establishment or registered office of the defending manufacturer, importer or distributor), local jurisdiction may be also based on the place of damage.

Decisions at first instance are usually made by a single judge. Only at the Commercial Court of Vienna and the Regional Courts (acting as Commercial Courts if applicable) will a senate of three judges decide, provided that the amount in dispute exceeds EUR100,000 and that a party files a timely request for a decision by a senate. Generally, such a senate consists of three professional judges; senates at the Commercial Courts are made up of two professional judges and one lay judge.

Courts of Second Instance

Decisions of the courts of first instance may be appealed against. The appeal must be filed by an attorney-at-law and within a timeframe of four weeks.

Appeals against the decisions of the Commercial District Court of Vienna as the court of first instance may be brought at the Commercial Court of Vienna. The Regional Courts (acting as Commercial Courts) are responsible for appeals against decisions of the District Courts (acting as Commercial Courts). Appeals against the decisions of the Commercial Court of Vienna / the Regional Court (acting as Commercial Court) as courts of first instance may be brought at the Higher Regional Court (Oberlandesgericht).

In an appeal no new claims, objections, facts or evidence may be brought that were not subject to the first instance proceedings (Neuerungsverbot).

An appeal must be based on at least one of the four legally stated reasons of appeal:

  • nullity (Nichtigkeit) – violations of basic rules of procedure (eg, lack of competence);
  • substantial procedural violation (Wesentliche Verfahrensmängel) – errors preventing complete consideration and thorough determination of the case (eg, errors in the evidence procedure);
  • incorrect fact-finding (Unrichtige Tatsachenfeststellung) – wrong conclusions based on the evidence of the case; and/or
  • wrong legal assessment (Unrichtige rechtliche Beurteilung) – the false application and assessment of regulations and laws. 

When the amount in dispute is less than EUR2,700, the reasons of appeal are limited to nullity and wrong legal assessment.

Supreme Court

Ultimately, an appeal against the ruling of the court of second instance may be filed at the Supreme Court (Oberster Gerichtshof), again within a timeframe of four weeks. Such an appeal is generally only admissible when the appealed decision is subject to a point of law of considerable importance. A point of law of considerable importance is a question which is significant with regard to legal unity, legal certainty or legal development – eg, when the court of appeal deviates from previously settled case law of the Supreme Court, such case law is missing or is inconsistent. In a nutshell, the legal question at hand must be of importance for future cases as well as the case in dispute.

An appeal to the Supreme Court is furthermore only admissible if the amount in dispute exceeds EUR30,000, or, if the amount in dispute is between EUR5,000 and 30,000, when the court of appeal declares the appeal as admissible because it involves a point of law of considerable importance. When the amount in dispute is less than EUR5,000 an appeal is not possible for product liability or tort claims.

As with an appeal against a ruling of the court of first instance, the appeal to the Supreme Court must be based on at least one legally stated reason of appeal:

  • nullity of the second-instance decision;
  • deficiencies in the second-instance proceedings;
  • wrong assessment of the case files (Aktenwidrigkeit); or
  • wrong legal assessment by the court of second instance.

The Supreme Court’s ruling is final.

Generally, liability for loss or damage under the PHG may be neither excluded nor limited in advance.

Moreover, liability cannot be excluded through lack of fault, but only by proving that:

  • the defect can be attributed to a legal provision or official instruction with which the product had to comply;
  • the product could not be detected as being defective according to the level of technical innovation applicable at the time when it was put into circulation; or
  • the defendant produced only the raw material or a component part and the defect was caused by the design of the product into which such raw material or component part was incorporated, or was caused due to the instructions given by the producer of the end product.

The defendant may furthermore generally claim (and, depending on the above-stated burden of proof, must prove) that:

  • the damage was not caused by the defective product;
  • the product is not defective;
  • the product has not been put into circulation by the defendant; or
  • the product did not have the defect which caused the damage when the defendant placed it on the market.

The defendant  can also raise the objection of contributory negligence of the injuring party  under the provisions of the ABGB: if the plaintiff is "jointly responsible" for a damage (careless usage of its goods is sufficient), its own fault will be considered. The damage is then split proportionally according to the severity of the plaintiff’s fault. If the ratio cannot be determined, the damage is split 50:50. In product liability cases such contributory negligence – regarding the use of the product – must of course be of greater severity than in general civil proceedings, because due to the definition of “defective product” pursuant to the PHG, incorrect use of the product must to a certain extent be considered by the manufacturer within the scope of construction and design (eg, standing on a chair). The provision on contributory negligence also involves a duty of the injured party to mitigate the damage.

The primary objective of the PSG (and of related special laws like the Austrian Radio Equipment Market Surveillance Act) is to ensure the safety of products. This is regulated as an administrative matter, whereas the PHG's focus is on compensation for any losses caused by a defective product in civil proceedings.

Civil courts are in principle bound by decisions of the administrative authorities. Hence, compliance with regulatory requirements of the PSG or related laws may be particularly relevant in product liability cases. If an authority or administrative court ascertains the defectiveness of a particular product – eg, in the form of being hazardous, or as being “unlawful”, (eg, due to missing instructions or the violation of information obligations) – this will be a very strong indication for the defendant’s liability. The same applies if the authority or administrative court ascertains that market surveillance obligations were violated, or corrective measures were not performed in time in spite of knowing of the hazardousness of the product.

Hence, regulatory compliance with product safety laws is vital to identify potential risks early and to be able to subsequently initiate voluntary corrective measures swiftly. Such corrective measures, if conducted in good time, will very likely help to prevent possible claims for damages (in particular based on product liability) by consumers who suffered a loss due to a defective and/or hazardous product, especially if evidence can be provided that the injured party was effectively warned before the incident happened.

Product liability claims are conducted in general civil proceedings, therefore the general regulations under the ZPO are applicable: the winning party recovers the costs reimbursed by the opponent in proportion to the winning party's share. If both parties win and lose in equal parts (50:50), the law stipulates a cost waiver.

These costs include the costs of representation as well as the court fees and costs, if any, of court experts, translators and witnesses. The costs of representation and the court fees are calculated on the basis of statutory rates, depending on the amount in dispute. Court fees are a lump sum and have to be paid at the moment the claim is brought. Representation costs are charged for each action performed (eg, each brief or each hour of oral hearings).

The costs of prior proceedings for preservation of evidence must be borne initially by the litigating party and are later also subject to the rules of payment of costs in the main proceedings for compensation. Regarding the court expert’s costs, the party requesting a hearing of experts is generally obliged to pay an advance on the expert’s costs. Subsequently these costs are also subject to the above-stated general strict liability rules of payment of costs.

If the defendant did not cause the claim to be brought and admits its liability at the first opportunity, the plaintiff has to bear the defendant’s entire litigation costs, regardless of the winning ratio.

Often, claimants have taken out legal expenses insurance in case they need legal advice or representation. However, it should be borne in mind that legal expenses insurance frequently provides for coverage restrictions and exclusions.

If legal expenses insurance is not available (or does not provide coverage), it is possible to approach a provider of third-party funding for litigation proceedings. Litigation funds enable claimants to file their claims by fully assuming the claimant’s risk of litigation costs against a share of the damages (amount paid by the opponent). Several litigation funds (mainly from Austria, Germany, Switzerland and the UK) offer their services on the Austrian market. Depending on the litigation fund, the claim must involve a certain value; several litigation funds accept only claims of at least EUR100,000 but are often willing to support lower-value proceedings in the case of “mass damage” that affects a large number of people.

Whereas Austrian lawyers are not allowed to be promised a certain percentage of the amount in dispute as a fee, this is permissible for litigation funds under Austrian case law. Standard litigation funding contracts stipulate that a specified share of the amount paid by the opponent must be awarded to the litigation fund. The size of the share depends on the individual case and the legal and economic risks (around 35% after deduction of the costs invested by the fund). If the litigation is unsuccessful, the litigation fund must bear all the procedural costs.

Previous efforts to implement the instrument of “class action” into the ZPO have not so far been successful in Austria. If similar claims of numerous claimants are to be filed in a single action, this must be done by means of an auxiliary construction, which is referred to as "Austrian-style class action". Its admissibility has, meanwhile, been recognised by the case law of the Austrian Supreme Court. Austrian-style class actions are also common in product liability matters. Most recently, the Austrian style class action has been used for lawsuits in Austria against Volkswagen in the so-called dieselgate scandal.

For the Austrian-style class action, claimants assign their claims against the same defendant to an entity (eg, a specially founded association, a limited liability company or – in consumer matters – to a consumer protection organisation) which collects these claims and asserts them jointly in the same action. In this case, the suit involves only two parties, although a multitude of claims of different parties are concerned. A prerequisite, however, is that the court seized must be competent for each and every claim (although claims that fall within the jurisdiction of the District Courts may be filed with the Regional Courts if the action also contains claims for which Regional Courts are competent). In addition, the same issues of facts or law must concern all claims, and there must be an essentially similar ground for the claim. Under the same conditions, it would also be permissible for claimants, rather than assigning their claims to another entity pursuing the claims on their behalf, to pursue their claims as plaintiffs themselves together with others in one and the same action, which entails an “accumulation of claims” in multi-party proceedings.

In practice, Austrian-style class actions relating to the same subject-matter are often conducted at the same time in different Austrian courts (for the purpose of risk spreading and/or in order to benefit from favourable decisions by other courts seized in this matter). In this context, it should be noted that there is no binding effect of the decision in one action on another. Nevertheless, the courts involved adhere de facto to decisions issued by other courts, especially to decisions of a higher instance.

In consumer matters, the Consumer Information Association (Verein für Konsumentenschutz) often conducts “model actions” for a particular consumer in order to clarify legal questions concerning consumer rights and to create a sort of “model decision” by the courts. Although this “model decision” is not binding for other consumers, it does facilitate the enforcement of their rights.

Only one significant product liability case, regarding the question of whether the PHG is applicable to newspapers, has recently been published or announced. In most cases, proceedings are either not even initiated due to out-of-court settlements, or they are not brought to the Supreme Court, the decisions of which are generally the only ones published. There have, however, been cases in the past which have attracted public attention or were important with regard to legal questions.

Product Liability of Newspapers

In its decision 1 Ob 163/19f, of 21 January 2020, the Supreme Court has submitted, to the European Court of Justice (ECJ), the question of whether or not the physical edition of a daily newspaper containing a technically incorrect health tip that, if carried out, results in damage to a person's health is subject to the product liability regime.

The case was that a health tip was published in the print edition of an Austrian daily newspaper. However, the duration of treatment stated there was incorrect. A subscriber who trusted this tip suffered serious injuries to her body due to the incorrect application. While the first and second instances rejected a product liability claim, the Supreme Court decided to submit the question to the ECJ for a preliminary ruling on whether physical copies of a daily newspaper qualify as products within the meaning of the Product Liability Directive.

Birth Control Pill

In its decision 10 Ob 8/18a, of 2 February 2018, the Supreme Court ruled that the content of warnings must be clear and generally understandable. If there is a special risk, this should be described in detail. The description (instruction) must be suitable to eliminate the risk of infringing legal rights. The greater the extent of the potential consequences of the damage and the more hidden the danger, the clearer the warnings must be. Hence, warning notices must not be "hidden" within other text. These instructions must clearly describe the nature of the potential hazard and make functional relationships clear so that it is possible to identify the reasons why the product is unsafe.

The background of this ruling was a plaintiff who sustained a deep-seated sinus thrombosis and a stroke after taking the contraceptive pill manufactured by the defendant and argued that the defendant had not sufficiently pointed out, in the package insert, the risk of thrombosis associated with ingestion. The Supreme Court rejected the appeal because it did not involve a substantial legal question. The information on risk-increasing factors and on risk incidence (in terms of 10,000 women per year with and without taking the preparation or similar preparations with other active substances) enables a medical layperson to realistically estimate the risk and therefore constitutes sufficient warning.

Frozen Mineral Water Bottle

In its decision 9 Ob 60/09b, of 30 June 2010, the Supreme Court ruled that, in general, if a product is used in an unpredictable or even absurd manner, its manufacturer is not liable for any damage. Nevertheless, the manufacturer should foresee that a partially emptied mineral water bottle may be first frozen in a freezer compartment and then stored in the refrigerator.

The case involved a plaintiff who lost an eye and had it replaced with a glass eye after a mineral water bottle exploded when the refrigerator door was opened. Before the explosion, the mineral water bottle had been placed in the refrigerator's freezer compartment partially emptied, and then removed from the freezer compartment and placed in the refrigerator's normal refrigeration area. The Supreme Court assumed a technical defect but referred the case back to the court of first instance to clarify whether the defect was discernible at the time the bottle was placed on the market.

Apparent Producer

In its decision 7 Ob 82/15g, of 10 June 2015, the Supreme Court ruled that liability of the “apparent producer” is based on the objective appearance on the date the defective product has been put into circulation. In the circumstances assessed by the Supreme Court, the plaintiff`s personal injury was caused by a defective hip implant.

The implant was produced by the defendant’s French sister company and sold by the defendant in Austria. Before implantation, it was stored in a special depot equipped by the defendant. The wrapping, adhesive labels and instructions for use each showed only the sister company’s name. After surgery the plaintiff got an “implant pass” that included these adhesive labels. After some years the implant broke and had to be replaced by a new one. The plaintiff claimed damages due to product liability. The Supreme Court found that the defendant is no apparent producer under the PHG, due to the lack of objective appearance on the date the defective product was put into circulation.

Definition of Product

Regarding the legal definition of “product” under the PHG, the Supreme Court ruled, on 10 November 2016, that the PHG distinguishes between a partial and an “end product” and that therefore the manufacturer’s liability is linked to its product (see OGH, 7 Ob 175/16k). According to the definition of the Supreme Court, the “end product” is often a very complex "finished product” composed of many individual parts. In the case at hand, the plaintiff, a trucker, transported some pallets with goods (in this case: insulating rolls). For transportation, the goods were wrapped in plastic foil by the defendant. During transport, the goods shifted position on the pallets because they were inadequately secured. When the plaintiff unloaded the truck, one of the stacks tipped over and injured the plaintiff.

The Supreme Court ruled that, according to the prevailing opinion, an “end product” is defined by how it will be distributed properly and how the customer can actually use it. In the case at hand, the Supreme Court stated that wrapping the end product (ie, the insulating rolls) does not turn it into a new product. Wrapping served only to improve transport safety and does not constitute a “new product”. Hence, the wrapped pallets/goods are not defined as “products” under the PHG, and the Supreme Court decided in favour of the defendant and granted his appeal to deny the defendant’s liability.

The most recent case regarding the question of whether the PHG is applicable to newspapers is discussed in 2.17 Summary of Significant Recent Product Liability Claims.

With the progress of technology, aspects such as artificial intelligence and the Internet of Things (IoT) are now more relevant than when the Product Liability Directive 85/374/EEC and the PHG (as its implementing Austrian law) entered into force in the late 1980s. Hence, the European Commission is currently evaluating the Directive in the light of the latest upcoming trends and plans to issue guidance on the Directive and a report on the broader implications of potential gaps in, and the direction of, the liability and safety frameworks for artificial intelligence, the IoT and robotics. Possible upcoming changes in European legislation will subsequently have impacts on the Austrian implementing legislation.

Regarding market surveillance, the (directly applicable) Regulation of the European Parliament and of the Council on market surveillance and compliance of products will enter into force in 2021.

Regulation 2019/1020/EU on market surveillance and compliance of products will be applicable from 16 July 2021 and will harmonise standards of market surveillance, including the powers of market surveillance authorities.

As both the Product Safety Directive and the Product Liability Directive are fairly outdated by now, it is expected that amendments and revisions of these Directives will be initiated on a European level in the near future. Very likely in late 2020 or early 2021 the first draft of a new Product Safety Directive will be available, dealing with actual topics like distance sale, enhanced labelling requirements and – it is rumoured – even artificial intelligence.

The COVID-19 pandemic has led to an increased demand for protective equipment, especially protective masks. To meet this demand some provisional regulations were implemented.

In the period from 5 April to 4 July 2020 (possibly to be extended), the import of (simple) medical protective masks (but not filtering facepiece (FFP) masks) is allowed even if the masks do not comply with the regulations for medical devices (eg, lack of CE marking) as long as the masks are not intended for use in the medical sector. For customs clearance, such masks must be accompanied by a declaration signed by the importer stating that the masks will not be used in the medical sector but exclusively as simple masks for mouth and nose.

FFP masks are personal protective equipment and must comply with the applicable provisions of Regulation (EU) 2016/425. To avoid shortages of masks which provide the safety of an FFP mask, the Federal Minister for Digitalisation and Business Location (based on the European Commission recommendation (EU) 2020/403 of 13 March 2020) issued a decree that certain "Cov-2 Virus Pandemic Respiratory Masks (CPA)", which are not equal to masks which comply with Regulation (EU) 2016/425, can be made available to health care professionals for the duration of the current health threat even without an attached CE mark after successfully completing a shortened assessment procedure.

(Self) sewn masks, very popular during the pandemic, do not qualify as personal protective equipment unless they suggest medical efficiency. Hence these do not fall under the Medical Devices Act and also do not require CE marking.

Preslmayr Rechtsanwälte OG

Preslmayr Rechtsanwälte OG
1010 Wien
Austria
Universitätsring 12

+43 (1) 533 16 95

+43 (1) 535 56 86

office@preslmayr.at www.preslmayr.at/en
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Law and Practice

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Preslmayr Rechtsanwälte OG has nine partners and six associates who are experts in business law. Its clients, from Austria and around the world, are primarily large and medium-sized businesses in manufacturing, banking, trade, information technology, advertising, tourism and telecommunications. In the area of (international) product safety, Preslmayr Rechtsanwälte regularly advises globally operating companies on issues of legal compliance with Austrian and European law and also assists with globally co-ordinated product recalls and communication with Austrian authorities in general. Regarding product liability, Preslmayr Rechtsanwälte represents both plaintiffs and defendants in legal proceedings for damages. In connection with these key practice areas, the firm has long-standing and exceptional expertise in compensation, warranty, consumer and distance-selling law as well as in litigation. Clients in these practice areas are multinational consumer electronics companies, software and social media companies, manufacturers of electrical appliances and medical products, SVOD providers and life sciences companies.

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