Product Liability & Safety 2020

Last Updated June 24, 2020

Iceland

Law and Practice

Authors



Réttur - Aðalsteinsson & Partners is an internationally recognised Icelandic law firm, renowned for its professionalism and high-quality legal services. The firm’s attorneys have extensive experience in litigation in complex high-stakes cases. In addition to product liability and safety cases, Réttur’s main areas of expertise include litigation, constitutional law and human rights, insolvency law, tort law, competition law, company law, contract law, M&A, copyright law and property rights. For decades Réttur has been in close co-operation with international law firms – including in the UK, Scandinavia, Germany and the United States – to ensure that Réttur’s clients receive appropriate legal advice across borders.

The main laws and regulations of the product safety legal regime in Iceland are set out below:

  • Act No 25/1991 on product liability (Lög um skaðsemisábyrgð).
  • Act No 134/1995 on general product safety (Lög um öryggi vöru og opinbera markaðsgæslu).
    1. Regulation No 728/2018 on production of personal protective equipment.
    2. Regulation No 944/2014 on safety of toys and their marketing in the EEA, with later amendments.
    3. Regulation No 74/2014 on procedures relating to the application of certain national technical rules of products lawfully marketed in another EEA-state.
    4. Regulation No 566/2013 on market surveillance, accreditation, etc.
    5. Regulation No 810/2006 on the decisions of the EU Commission on harmonised European standards based on Directive 2001/95 on general product safety, with later amendments.
    6. Regulation No 957/2006 on Council Decisions concerning the modules for the various phases of the conformity assessment procedures and the rules for the affixing and use of the CE conformity marking, which are intended to be used in the technical harmonisation Directives.
    7. Regulation No 942/2002 on the safety of playing fields and playground equipment and the monitoring of such areas.
    8. Regulation No 237/1996 on checks for conformity with the rules on product safety in the case of products imported from third countries.
  • Act No 16/1998 on firearms and weapons (Vopnalög), with later amendments.
    1. Regulation No 414/2017 on pyrotechnic articles.
  • Act No 87/2018 on electronic cigarettes and refills for electronic cigarettes (Lög um rafrettur og áfyllingar fyrir rafrettur).
    1. Regulation No 803/2018 on notifications to the Consumer Agency on the marketing of electronic cigarettes and refills for electronic cigarettes containing nicotine.
    2. Regulation No 255/2019 on labelling of packages for electronic cigarettes.
  • Act No 55/2019 on electronic identification and trust services for electronic transactions.
    1. Regulation No 100/2020 on electronic identification and trust services for electronic transactions.
  • Act No 48/2003 on consumer purchases (Lög um neytendakaup).
  • Act No 50/2000 (Lög um lausafjárkaup).
  • Act No 77/2002 on products made from precious metals (Lög um vörur unnar úr eðalmálmum).
    1. Regulation No 938/2002 on products made from precious metals.
  • Act No 61/2013 on chemicals (Efnalög)
  • Act No 57/2000 on the provision of information in the field of technical standards and regulations for products and remote services.
    1. Regulation No 733/2000 on notifications of technical standards for products and services.

The Consumer Agency, according to Act No 134/1995, is the competent authority for market surveillance in accordance with the general product legislation, cf. the General Product Safety Directive (GPSD) 2001/95/EC. Furthermore, the Consumer Agency is the competent authority for market surveillance according to various sector-specific EU Directives as transposed into national legislation.

The Consumer Agency is also responsible for managing the general organisation of official market control (market surveillance) in co-operation with other sector-specific market surveillance authorities (MSAs) in order to ensure effectiveness and co-ordination to the maximum extent possible, cf. Article 14 of Act No 134/1995. This work and consultations shall be carried out in co-ordination committee(s) according to the provisions of Act No 134/1995, as amended.

The Consumer Agency, in co-operation with other MSAs, has drawn up a National Market Surveillance Programme 2018 (NMSP) according to the provisions of Regulation (EC) 765/2008.

Furthermore, there are sector-specific monitoring authorities, in addition to the Consumer Agency, called Inspection Authorities (Skoðunarstofur). The Inspection Authorities monitor products according to their sector-specific accreditation and systemically collect information on products in the relevant market (eg, by notifications or complaints about hazardous products). The Inspection Authorities can inspect the products of both producers and suppliers. As an example, the company Frumherji ehf. has a licence from the Consumer Agency to inspect annually the quality and safety of cars; it also monitors the safety of car parts and certain measuring appliances for oil/gas etc.

Another example of a monitoring authority other than the Consumer Agency is the Licensing Authority (Löggildingarstofa), which is responsible for the enforcement and notification of technical standards for products and services.

Furthermore, under Act No 16/1998 on firearms and weapons, the police issues licences for the production and import of firearms and weapons, but notification of a flawed or dangerous product should be made to both the police and the Consumer Agency.

Article 9(1) of Act No 134/1995 on general product safety states that both the production and the supply of a product shall always be in accordance with laws and regulations applicable at the time of that production and supply. Article 9.a.(4) of Act No 134/1995 states that if the producers or suppliers of a dangerous or hazardous product know or should know that it could pose a danger to consumers, they must inform the relevant monitoring authority of the danger and the corrective actions that have been taken to prevent further danger.

Under Article 12 of the same Act, the producers and suppliers of a product are obliged to assist the relevant monitoring authority, following such a demand, in actions that promote the safety of consumers.

In Chapters IV-VI of Act No 43/2000 on consumer purchases, there are several provisions regarding corrective action in cases of defective products – albeit, not specifically directed at instances involving hazardous or dangerous products – that are not, or do not perform, in accordance with their marketing and their stated purpose. Article 26 of the Act specifically states that if a product is defective, the consumer can withhold payment, choose to receive a new product of the same kind, demand a discount, terminate the relevant agreement or claim damages.

As noted in 1.3 Obligations to Commence Corrective Action, Article 9.a.(4) of Act No 134/1995 on general product safety, states that if a producer or supplier of a product know, or should know, that the product they have supplied could endanger consumers, or that continuous use of the product could be severely hazardous if corrective actions are not taken, they shall notify the monitoring authorities thereof. Pursuant to the article this must be done “without delay”.

The article further stipulates that if the risk is serious, the notification must include certain information as stipulated in the article, including all available information in order to trace the origin of the product.

According to Article 24(2) of Act No 134/1995 on general product safety, the producers or their agents bear all costs of removal of a product, as well as the cost of inspection, testing, etc. They also bear the costs of notifying the public (eg, via the media) of the dangerous or hazardous product.

According to Article 25 of the same Act, the relevant monitoring authority can impose fines if its instructions or decisions are not complied with. The daily penalty can be up to ISK50,000 per day, depending to the relevant minister's decision. If the instructions of the monitoring authority are disregarded, and there is considerable danger of the product causing harm, the police can assist the monitoring authority in preventing such harm.

According to Article 28, violations of the Act can be punishable with fines or a prison sentence of up to two years, if the punishment is not heavier according to other applicable laws.

The main causes of action by an injured person against producers and supplier for alleged product liability are stipulated in Act No 25/1991 on product liability (Lög um skaðsemisábyrgð) as well as in unwritten rules formed in national jurisprudence prior to this legislation.

Moreover, according to Article 13 of Act No 25/1991, an injured person is not limited to this Act and can also seek damages according to the rules of the law of contractual or non-contractual liability, or through other relevant laws.

Act No 25/1991 is applicable in cases where the producer and supplier have put a defective product on the market, and it causes bodily injury, or the death of a provider (Article 2(1) of the Act) or other damages. Furthermore, if the product results in damage to another product intended for personal use, then this is also grounds for a claim (Article 2(2) of the Act).

The person with standing to bring a claim is the person on whom the bodily harm due to the defective product is inflicted. Furthermore, a person who has lost a provider as a result of the defective product has standing to claim damages on these grounds (Article 2(1) of the Act). Finally, the owner of an object that was damaged or destroyed by a defective product – so long as (i) that product is not the defective product itself, (ii) the product is intended for personal use and (iii) the minimum threshold of damages is EUR500 or a corresponding amount in Icelandic kronas – has standing (Article 2(2) of the Act).

The general time limit to put forth a product liability claim is three years from the date that the injured party knew or should have known of the injury or harm, cf. Article 14(1) of Act No 25/1991 on product liability. Article 14(2) then states that even if a claim has not become time-barred pursuant to Article 14(1) it cannot be upheld after ten years from the day that the producer supplied the product that caused the injury or harm.

The travaux preparatoires with Act 25/1991 on product liability state that there are no specific provisions on jurisdiction in cases of claims of product liability. General rules on jurisdiction should thus be applied. According to the Icelandic Civil Procedure Act No 91/1991, a case is generally filed against an individual or an entity in the jurisdiction or forum where it or they are residing or registered, where the consumer product was bought or in the forum where the damage occurred.

It should be noted that the Lugano Convention (the EEA equivalent to the Brussels Convention) has been ratified in Iceland, cf. Act No 7/2011, after the former Act entered into force. That Convention Act is relevant to issues related to jurisdictions issues in the EEA. With respect to other territories, general rules on private international law would apply.

There are no mandatory steps that must be taken before proceedings can be commenced formally in product liability cases. In practice, tort cases are largely settled out of court directly with insurers. 

According to Article 6(2) of Act No 25/1991, the injured person or the person who has suffered damages due to a product intended for personal use must prove the damage, the defect of the product in question and the causal link between the defect and the damage caused. 

There are no specific requirements regarding the method(s) used to prove a case in Act No 21/1995 and so the general rules of submission of evidence under Section 2 of the Civil Procedure Act No 91/1991 would apply. Pursuant to Act No 91/1991 the presiding judge assesses the evidence and one general guideline from case law is to assess for which party it was easier to preserve evidence/provide proof.

As discussed in 2.6 Rules for Preservation of Evidence in Product Liability Claims, the rules on proof are governed by the Civil Procedure Act No 91/1991.

According to Article 67(2) of Act No 91/1991 a party can formally challenge an opposing party to disclose a document that it has in its possession, if it has previously refused to hand the document over. Article 68(1) of the same Act stipulates the consequences of non-compliance by the opposing party. According to the provision, non-compliance with such a request by the opposing party can result in the acceptance by a judge of the requesting party's narrative/account on the content of requested document. 

It is also possible, according to Article 67(3) and 68(2&3) of the same Act, that a party to a case can get a document by enforcement from a third party that is not a party to the case.

As discussed in 2.6 Rules for Preservation of Evidence in Product Liability Claims, the rules on proof are governed by the Civil Procedure Act No 91/1991.

According to Article 51(1) of Act No 91/1991, a witness can only be called to the stand to answer oral questions about facts which he or she has witnessed in person. This Article means that expert witnesses are not allowed by Icelandic law in product liability cases.

Instead of expert witnesses, Chapter IX of the same Act allows a party to request a court-appointed specialist assessor to deliver an assessment. The assessor has a duty to the court alone and, as a result, these reports have strong evidentiary value in court cases.

It is also possible in some circumstances to put forth other specialist reports that were not attained by the rules in Chapter IX, but the evidentiary value of such reports is more limited.

The claimant generally bears the burden of proof in product liability cases.

According to Article 6(2) of Act No 25/1991, the injured person, or the person that has suffered damage by a product intended for personal use, must prove the damage, the defect of the said product and the causal link between the defect of the product and damage caused by it. 

However, Act No 25/1991 states that a producer shall not be liable if they prove that certain instances were at hand. According to Article 7(1) of Act No 25/1991, producers are not liable if they prove that:

  • they did not put the product into circulation;
  • the product was neither manufactured by them for sale or any form of supply for economic purpose, nor manufactured or supplied by them in the course of their business;
  • the defect is due to compliance of the product with mandatory regulations issued by the public authorities; or
  • the state of scientific and technical knowledge at the time when they put the product into circulation was not such as to enable the existence of the defect to be discovered.

Furthermore, according to Article 10(1) of Act No 25/1991, the supplier of a defective product is liable for damages caused by that product unless they can prove that they were not at fault. Pursuant to Article 10(2), a supplier is liable for damage that is caused by the fault of the producer or earlier suppliers. 

Product Liability Cases can be brought before the regular courts in Iceland unless the parties have expressly and exclusively agreed to arbitration. There is no jury system in Iceland.

There is an upper threshold regarding the award of damages by the Icelandic courts. According to Article 8 of Act No 25/1991, the producer’s total, collected liability for damages resulting from death or personal injury, and caused by identical items with the same defect, shall be limited to an amount that corresponds to EUR70 million.

There are no specific procedural requirements for product liability cases. The general requirements of Act No 91/1991 apply.

The first instance courts in the judicial system in Iceland consists of eight district courts scattered around the country. Each district court has a specific jurisdiction.

The judgments of the district courts can be appealed to the appellate court within four weeks from the delivery of a judgment according to Article 153(1) of Act No 91/1991. The rulings of the appellate court can be appealed to the Supreme Court but only after permission is granted by that court and where there are strong requirements for such.

The producer’s liability is without fault, thus their liability is not reduced or disallowed if the damage is caused by no fault of their own. On the other hand, there are some factors that can lead to the producer’s liability being rejected or reduced.

First of all, Act No 25/1991 states that a producer shall not be liable if they prove that certain instances were at hand. According to Article 7(1) of Act No 25/1991 the producer is not liable if they prove that:

  • they did not put the product into circulation;
  • the product was neither manufactured by them for sale or any form of supply for economic purpose, nor manufactured or supplied by them in the course of their business;
  • the defect is due to compliance of the product with mandatory regulations issued by the public authorities; or
  • that the state of scientific and technical knowledge at the time when they put the product into circulation was not such as to enable the existence of the defect to be discovered.

Secondly, Article 8 of Act No 25/1991 states that it is possible that a producer’s liability can be reduced or disallowed if the damage is also caused by the injured person, either by intent or negligence.

Furthermore, as previously noted in 2.9 Burden of Proof in Product Liability Cases, according to Article 10(1) of Act No 25/1991 the supplier of a defective product is liable for damages caused by that product unless they can prove that they were not at fault. However, pursuant to Article 10(2), the supplier is liable for damage that is caused by the fault of the producer or earlier suppliers.

Adherence to regulatory requirements is a relevant consideration in product liability cases, and breaching regulatory requirements will increase the likelihood that fault is considered established pursuant to case law.

Furthermore, according to Article 7(1)(3) of Act No 25/1991, producers shall not be liable if they prove that the defect of the product is due to compliance of the product with mandatory regulations issued by the public authorities.

The general rules regarding payment of legal cost can be found in Chapter XXI of Act No 91/1991. The legal costs consist, inter alia, of court fees; litigation fees (including travel costs); remuneration to an assessor, witness, translator or interpreter; and other cost directly connected to the case (see Article 129(1) of the aforementioned Act).

The successful party can generally recover its costs associated with the litigation from the losing party. The legal cost is decided by the presiding judge and there are no specific rules on such a determination. The judge may also decide to drop legal costs, so each party bears their own costs if this is found to be justifiable. These decisions can come upon review on appeal.

Individuals who intend to participate in proceedings in a product liability case before an Icelandic court may apply for legal aid to the Ministry of Justice in Iceland. The Ministry then submits the application to the Committee on Legal Aid which gives its opinion on whether to grant legal aid or deny the application (Article 125(2) of Act No 19/1991).

Article 126 of Act No 91/1991 states that any person involved in judicial proceedings in Iceland may be entitled to legal aid. Legal aid is provided for all individuals involved in judicial proceedings in Iceland, that includes foreign nationals who are involved in judicial proceedings in Iceland.

The conditions for legal aid are stated in Article 126(1) of Act No 91/1991. Legal aid is only granted if the applicant has sufficient reason to initiate proceedings or defend themselves in civil proceedings in court in Iceland, and if one of the following conditions are fulfilled:

  • The applicant's financial situation is such that they could not afford to defend their interests and the case is of such a nature that it would be considered appropriate that legal aid in the case would be financed by public funds (this criteria is strict and the limits generally considered low).
  • The outcome of the case would have great general significance or matter greatly to the employment, social status or other personal status of the applicant.

If an individual has been granted legal aid, they are exempt from all legal fees payable to the state treasury. Other legal costs, including the lawyer's remuneration according to the judge's decision and any costs due to the evaluation of a court appointed specialist, are included in legal aid. However, legal aid can be restricted to a certain amount (Article 127 of Act No 19/1991).

Contingency fees or "no win, no fee" arrangements are permissible in Icelandic law but are seldom used. If such an arrangement is used, it is a contractual arrangement with the lawyer.

Class actions are permitted and available in product liability cases in accordance with Article 19.a. of Act No 91/1991. Instead of each damaged person bringing their own lawsuit, the class action allows claims of all its members to be resolved in a single proceeding through the efforts of a specific "litigation group" (málsóknarfélag). Thus, the only purpose of the group will be to litigate a particular case in court. All claims of the class members must be aimed at the same party and must have the same origin – ie, the claims must be due to the same incident, facility or legal act. The litigation group represents the interest of all its class members and the group acts unanimously. The members of the group must be at least three. The claims of each member of the group are summed up to make one large claim.

The jurisprudence on Act No 25/1991 has mainly concerned defective products within the meaning of Article 5 of Act No 25/1991, which is in accordance with Article 6 of the General Product Safety Directive. A few notable cases from the past few years are discussed below.

Supreme Court Case No 384/2001

In Supreme Court Case No 384/2001, from 21 March 2002, the Court set out important criteria on the assessment of whether a product is defective by noting that it was necessary to examine the relevant information and knowledge that was available at the time that the damaged occurred. The case concerned whether unfrozen chicken was defective within the meaning of Article 5 of Act No 25/1991. The Court found that the plaintiffs had not proved that the producer could have had knowledge of the fact that a large portion of its production was indeed infected when the damage occurred and that it was therefore obliged to warn its customers specifically to follow the instructions on how the chicken should be cooked to avoid infection. Hence, the product was not considered defective.

Supreme Court Case No 380/2004

In Supreme Court Case No 380/2004, from 10 March 2005, the Court found that a drug was defective within the meaning of Article 5 of Act No 25/1991 because the patient information label was not in Icelandic and it did not include sufficiently detailed information on the possible side effects of the medicine in accordance with Icelandic regulations. 

Supreme Court Case No 79/2010

In Supreme Court Case No 79/2010, from 9 December 2010, the Court set out the importance of warnings. The Court found that a candy spray was defective within the meaning of Article 5 of Act No 25/1991, because the product did not contain any warnings that is should not be dismantled while it still contained liquid nor was there a warning that it could be dangerous to drink the liquid. This, and the fact that the product was intended for children, led to the candy spray being found defective.

Supreme Court Case No 386/2015

In Supreme Court Case No 386/2015, from 22 March 2016, the Court found that fireworks were defective within the meaning of Article 5 of Act No 25/1991 because the safety instructions had not been as detailed as was demanded by regulation No 952/2013 on fireworks. Therefore, the product was defective as it did not provide the level of safety that people were entitled to expect, taking all circumstances into account, particularly because of the way in which the fireworks were presented. However, the liability of the producer was reduced because the damage was caused by both the defect and by the fault of the injured person.

A significant change occurred in 2014 when Act No 25/1991 was amended with Act No 3/2014, which brought the legislation in line with Directive 85/374/EEC, regarding suppliers' liability under Article 3(3) of the Directive.

The Supreme Court of Iceland had previously found in 2010 that an injured party could make a direct claim against a supplier and that the supplier's liability was strict (without fault), even if the producers of a product could be identified (see case No 79/2010). This was in accordance with Danish law on product liability at the time. However, the European Court of Justice had found, in case C-402/03, Skov Æg, that the Danish law was not in accordance with the Directive. The Court found that the supplier could not be liable without fault to a further extent than what leads from Article 3(3) of the Directive. Following the Supreme Court's judgment, the EFTA Surveillance Authority sent the Icelandic government a reasoned opinion where it found that the Directive had been wrongly implemented into Icelandic law and alterations were therefore necessary regarding the suppliers' liability under Icelandic law.

Following the change in 2014, the liability is as outlined in Article 10, which has been discussed in 2.9 Burden of Proof in Product Liability Cases and 2.12 Defences to Product Liability Claims, ie, that there is liability unless the supplier can prove they were not at fault and that the supplier is liable for damage that is caused by the fault of the producer or earlier suppliers. 

At present, there are no published pending bills at the Icelandic parliament concerning product liability or product safety law.

The Icelandic Parliament has passed a bill amending a number of laws to meet the economic challenges of the COVID-19 pandemic. However, these are not aimed at amending Act No 25/1991 on product liability or Act No 134/1995 on general product safety. We are not aware of other publicly available information about possible affects or changes in this area, but we do not exclude the possibility that they might appear in the future or even in the near future.

Réttur – Aðalsteinsson & Partners

Klapparstigur 25-27
101 Reykjavík
Iceland

547-2000

rettur@rettur.is www.rettur.is
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Law and Practice

Authors



Réttur - Aðalsteinsson & Partners is an internationally recognised Icelandic law firm, renowned for its professionalism and high-quality legal services. The firm’s attorneys have extensive experience in litigation in complex high-stakes cases. In addition to product liability and safety cases, Réttur’s main areas of expertise include litigation, constitutional law and human rights, insolvency law, tort law, competition law, company law, contract law, M&A, copyright law and property rights. For decades Réttur has been in close co-operation with international law firms – including in the UK, Scandinavia, Germany and the United States – to ensure that Réttur’s clients receive appropriate legal advice across borders.

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