damages award without indicating which part of it corresponded to pecuniary and which to non-pecuniary losses. This is the case, for instance, in SAP Santa Cruz de Tenerife 19.4.2002 [AC 2002\898], where the court is very well aware of the fact that the Product Liability Act does not compensate for non-pecuniary losses, but awards a lump sum of €3,000 for all pecuniary and non-pecuniary losses considering that all the requirements for the application of the domestic legislation, albeit not having been proven, have been met.

The 500 ECU threshold

With regard to the 500 ecu threshold, we may think of the well-known Italian saying ‘traduttore, traditore’ which reminds us how treacherous translations can be. This is the case of the 500 ECU provided by Art. 9(b) of the Directive, i.e., the English ‘lower threshold of 500 ECU’, which turns into a German ‘Selbstbeteiligung von 500 ECU’, a French ‘deduction´ d’une

´

franchise de 500 Ecus’, an Italian ‘detrazione di una franchigia di 500 ECU’ or a Spanish ‘deduccion´ de una franquicia de 500 ECUS’.

In contrast to the Italian transposition norm (which leaves aside the ‘deduction’ of the Directive and stands for the ‘threshold’ effect in the implementing norm), Art. 10.1 LRPD follows the same translation of the Directive and provides that in this case ‘se deducira´ una franquicia de 65,000 PTA’, which seems to lead inevitably to the construction that this amount does not only operate as a threshold for filing a claim but also to the idea that such an amount will have to be deducted, i.e. discounted or subtracted, from the final damages award.

Spanish legal writing contended initially that this amount was meant as a threshold only and that, once the claimant could file a suit because the property damage incurred was above that amount, no deduction whatsoever had to be made and the claimant could recover in full.48 Nowadays, however, the deduction theory prevails and, accordingly, legal writing considers that this amount is always to be deducted from the award for damages.49

What is, however, this amount or, in other words, at which rate are these 65,000 PTA to be converted into euros? In the legal provisions implementing the Directive in other European countries the domestic legislator had also converted the amount of 500 ecus into the national currency. So, for instance, the German legislator fixed the amount of 1,125 DM and the Belgian an amount of 22,500 Belgian francs. However, the legislators of these countries have adapted the amounts expressed in their national currency to the euro and have expressly modified their Acts implementing the Product Liability Directive.50

Since the Spanish legislator has been silent on this point, two possible interpretations arise. According to the general rules that governed the introduction of the euro in Spain, it can be argued that this amount must be converted into the amount of euros resulting from the conversion rate established between the euro and the peseta (1 euro = 166.386 PTA), which gives a result of €398.658.51 A second possible interpretation might contend that the amount of 65,000 PTA is just the conversion of the amount of 500 ecus set out in the Directive, and therefore that rule provided by Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro52 applies. According to Art. 2 of this Regulation ‘[e]very reference in a legal instrument to the ECU, as referred to in Article 109g of the Treaty and as defined in Regulation (EC) No 3320/94, shall be replaced by a reference to the euro

Responsabilidad civil del fabricante’, in Reglero (Coord.), Tratado de responsabilidad civil, p. 1337. See also De la Vega Garc´ıa, Responsabilidad civil derivada del producto defectuoso, pp. 62–3.

50 For Germany see ¨ , vom

Zweites Gesetz zur Anderung schadensersatzrechtlicher Vorschriften

19.Juli.2002 (Bundesgesetzblatt Jahrgang 2002, Teil I Nr. 50. Bonn, 25.Juli.2002), where §9 adapts the amounts expressed in German Marks to the euro in several Acts, including the 1.125 DM of §11 ProdHftG (German Product Liability Act), which are converted into 500 euros. For Belgium see 20 Juillet 2000. – Arrˆete royal portant execution en mati`ere de justice de la loi du 26 juin 2000 relative a` l’introduction de l’euro dans la l´egislation concernant les mati`eres vis´ees a` l’article 78 de la Constitution. – [C – 2000/03478], Moniteur Belge 30.08.2000, p. 29492, providing that ‘L’article 13 modifiant l’article 11, §2, al. 3, de la loi du 25 fevrier´ 1991 relative a` la responsabilite´ du fait des produits defectueux´ adapte au taux d’un euro pour un ecu´ les montants inscrits en francs belges dans cette loi qui applique une directive europeenne´.’

51See Council Regulation (EC) No 2866/98 of 31 December 1998 on the conversion rates between the euro and the currencies of the Member States adopting the euro (OJEC L 359, 31.12.1998). With regard to conversion rates, especially of those amounts which had not been adopted on 1 January 2002, see Art. 26 of the Ley 46/1998, de 17 diciembre, de introducci´on del euro (BOE 18.12.1998, num. 302, p. 42460).

52Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro (OJEC L 162/1, 19.6.97).

at a rate of one euro to one ECU’, a rule which gives rise to the amount of €500, and a result which I consider preferable, since it is more in line with the original uniformity.

Recently arguments in favour of abolishing the threshold have been put forward. It has been argued, along with other reasons, that a dramatic increase in the cases of product liability – a risk that the threshold was intended to prevent – has not occurred. Further, it has been argued that in certain economies, full compensation for property damage caused by a defective product is, from the social point of view, the most desirable option. It has also been said that the revival of consumer arbitration as an adequate device to solve the problems posed by small claims for damage caused by defective products is not coherent with the existence of a threshold which specifically excludes compensation for petty or unimportant damage. The exclusion on the grounds of preventing an increase in court costs from taking place loses its strength if the claims are channelled through the much less expensive and quicker proceeding of consumer arbitration. Finally, because in other areas of liability of professionals with regard to consumers (package travel, consumer credit, etc.) there are no deductions which partially exonerate the professional counterpart that is held liable.53

It is difficult to assess how sound these arguments are but I think that some of them are at least doubtful. I will refer to one of them only: that an increase of claims is not going to take place because of the Product Liability Act.

Although it is still very early to reach a firm conclusion, the decisions issued over recent years show a tendency for an increase in a certain type of claim which in one way or another disregards the existence of a threshold and which could be described in this way: a consumer, normally covered by a first-party multi-risk home insurance, sustains property damage (frequently, in an electrical appliance) and collects payment from the insurer. Then the insurer subrogates and files a claim against the producer. Since the current trend of the Courts of Appeal seems to be either to disregard the existence of the threshold or to consider that the conditions required by the general civil legislation (especially negligence or fault of the producer) have also been met, suing for petty sums can be worth the trouble for the insurer: if he wins the case he will not only collect the small amount but also the costs and lawyer’s fees. However, the incentive

53In this sense, Juan Jose´ Mar´ın Lopez,´ Da˜nos por productos: estado de la cuesti´on (Madrid: Tecnos, 2001), pp. 121–2.

is not very great, since lawyer’s fees for the winning party can never exceed a third of the total amount of the claim in the proceedings (Art. 394.3 LEC). This is, for instance, the case in the judgment of the Court of Appeal of Cordoba (SAP Cordoba´ 19.6.2002 [JUR 2002\212207]), where a power surge caused property damage of €105. The insurance company filed a claim pursuant to the Product Liability Act against the electricity company. The decision, which not even once refers to the Product Liability Act threshold or deduction, compensates the insurance company in full.

The possibility of deduction is not even mentioned in a judgment of the Court of Appeal of Valencia (SAP Valencia de 17.9.2002 [AC 2002\1658]), referring to the property damage caused by a leak in a boiler due to a manufacturing defect. The decision awards €11,800.65 as compensation for the property damage suffered by the claimant without even referring to the deduction established by the Act (Art. 10.1 LPRD).

When the court is aware of the existence of this provision and mentions it, it simply declares that the proven facts show that both the conditions required by the Product Liability Act and the general provisions governing fault liability in tort (Art. 1902 CC) have been satisfied. Fault of the producer is not only rebuttably presumed but simply derived from the mere fact of the existence of a defect in the product. In this sense, see the Court of Appeal of Ciudad Real (SAP Ciudad Real 26.11.2002 [JUR 2002\326332]), in a case in which a defective drive belt of a car harmed the vehicle in which it was incorporated and where the defendant wanted the threshold amount to be deducted, arguing that fault of the defendant had not been shown; the court stated that ‘taking into account the defect that has been detected, it can be inferred that the control and check procedures used by the manufacturer either have not been sufficient or have not functioned properly, thereby giving rise to the placement of a product with a serious defect on the market, according to which all conditions of liability required by Art. 1902 CC are met’.

Conclusion

A non-Spanish reader could have the impression that the intention of this paper is to point out the mistakes made by the Spanish Courts of Appeal and to hint that they have not been able to cope with the Product Liability Act implementing the Directive. This, however, has not been the author’s aim, but rather it has been to show the state of the actual application of the Act at the end of 2003. Some of the misinterpretations of the Act can be attributed to the ‘novelty’ of an Act which, although almost ten

years old, has only recently begun to be applied. These problems can be and, hopefully, will be easily corrected when these cases start reaching the Supreme Court. A few papers in those journals read by judges with alluring titles such as ‘All the Possible Mistakes in the Application of the Product Liability Act and How to Avoid Making Them’ could also contribute to overcoming this problem. Nevertheless, the first decision of the Supreme Court has not been very promising. Besides other minor mistakes, and in spite of the fact that it was issued almost one year after Medicina Asturiana and the other decisions of the European Court of Justice, it once more referred to the possible application of the old General Act for the Protection of Consumers and Users (LGDCU), pointing out that Art. 27.1 (c) LGDCU becomes ‘decisive’ when, both according to the First Final Provision of the Spanish Product Liability Act and to Medicina Asturiana, the old Act is no longer applicable to defective products put into circulation after the Product Liability Act came into force.54

Other difficulties that Spanish courts will have to overcome are even more worrying. They are related not to a simple misinterpretation of the Act but to the existence of domestic legal principles and traditions which are different from those that underpin the implementing Act and the Directive. So, for instance, compensation for non-pecuniary loss is far more widely accepted in Spain than in some other European countries and, in contrast to, for instance, Germany before the 2002 reform,55 it has never been excluded from statutes providing for strict liability regimes. Therefore, it is not self-evident why the judge must resort to the general tort liability rules to compensate for these losses or to decide on aspects excluded from the Directive such as, for instance, the recoverability of the amount of damages under the threshold. Although a much more detailed examination would be required, these aspects show that harmonisation through Directives is a difficult road to travel along and that the further development of common European Principles is necessary if the process of rapprochement of the European legal systems is to be pursued.

54For more details about these decisions of the Spanish Supreme Court see Mart´ın Casals and Sole´ Feliu, Aplicaci´on de la Ley de responsabilidad por productos defectuosos, pp. 1–2.

55See Jorg¨ Fedtke and Ulrich Magnus, ‘Germany’, in Bernard A. Koch and Helmut Koziol (eds.), Unification of Tort Law: Strict Liability (The Hague; London; Boston: Kluwer Law International, 2002), p. 166.