3. The Process of Implementation of the Product Liability Directive in English Law

The UK was one of the first Member States to implement the Product Liability Directive, doing so by the Consumer Protection Act in 1987. Apart from being much quicker, overall the process was less controversial than in France, though there were significant disagreements, notably as to the development risks defence and the position of primary agricultural products. Here, I wish to look briefly at the legal and political debate surrounding the legislation, the latter’s form and relationship to English law more generally and how these compare with the loi of 1998. I shall then look at a particular problem raised by the 1987 Act’s provisions tying consumer safety to civil liability.

(A) The legal and political debate

The idea of reforming the law of product liability so as to impose liability without fault was neither alien nor new to English lawyers in the mid-1980s, having been recommended by the Law Commissions and the Pearson Commission in 1976 and 1977 respectively.²⁹⁰ At the time, product liability was seen as naturally focused on the manufacturer, whose ground of liability in respect of personal injuries and damage to property beyond privity of contract was almost exclusively in the tort of negligence.²⁹¹ This background meant that most English lawyers saw change in the law of product liability as required by the 1985 Directive as an example of law reform (changing the law to make it better or fairer) rather than merely as an instrument of EEC economic (p.466) policy. It is for this reason that earlier commentaries on the Directive from the point of view of English law were principally concerned with whether the change which it required was effective as a matter of law reform, assuming this to mean improving the chances of compensation of a person injured by a product as compared with the existing law.²⁹² This was also the focus of concern in the parliamentary debates on the Bill, centring on the development risks defence.

In the UK, the political context of implementation was a double one. While lawyers, politicians and the press had in mind the difficulties which the victims of Thalidomide encountered in their claims for compensation, this famous example of the potential liability for products did not involve any allegations against public officials or against government of the sort which made the affaire du sang contaminé so prominent in French political life in the mid- and later 1990s.²⁹³ The British government in 1986 and 1987 was Conservative, the Consumer Protection Bill being introduced a few months before Margaret Thatcher was elected as Prime Minister for a third time in June 1987. The general policy of this government was expressly stated by the responsible minister, Lord Lucas, as being to implement the Directive, but not to go beyond it,²⁹⁴ although in doing so the governments Bill sailed as close to the wind as it could, at times apparently trying to restrict the Directives liability as much as could arguably be compatible with EC law.²⁹⁵ This can be seen in two minor and rather obscure aspects of the implementation,²⁹⁶ but is clearer in the wording of the development risks defence later brought before the European Court.²⁹⁷ This suggests that the Conservative government of the day was as much concerned with the need not to impose any greater burden of liability than necessary on British industry and with a desire to keep to the limits of liability in the Directive in the interests of har-monisation of liability laws in the EEC.²⁹⁸

However, another aspect of the implementation of the Product Liability Directive in the UK reveals an apparently contrasting attitude, as it formed the first part of an Act whose second part provided important new provisions relating to the safety of products, in particular creating a general requirement of safety for all consumer products backed by criminal sanctions, and new powers in public bodies to act in the interest of product safety, whether by regulation or by intervention in the market.²⁹⁹ For the government, these new provisions were justified by the need for fair competition since ‘[s]upplying unsafe goods is a form of unfair competition as it gives the supplier of unsafe goods an unfair advantage over a competitor who is prepared to incur the (p.467) costs associated with ensuring that his goods are safe’.³⁰⁰ These two aspects of the Consumer Protection Act 1987 were considered complementary: Part Part I concerned with compensation, Part II with deterrence and punishment.³⁰¹ However, this coupling of the implementation of the 1985 Directive and reform of the law of product safety drew attention to the question of the appropriate link between the two.

Despite general parliamentary support for the Consumer Protection Bill,³⁰² there remained two main points of disagreement, both regarding the choices to be made by the UK under the 1985 Directives derogations: the inclusion of primary agricultural products and the development risks defence.³⁰³ As to the first, the government wished to exclude them from the scheme of liability on the ground that it was difficult to trace suppliers of primary goods and that they are particularly prone to hidden defects caused by environmental factors.³⁰⁴ This view, reflected in the Act as enacted, has now had to be reversed as a result of amendment of the 1985 Directive in 1999.³⁰⁵

The central point of contention—and the only one to make any significant presence felt in the non-legal media—was the development risks defence. Those who opposed its inclusion considered that it would bring back negligence as the basis of liability by the back door,³⁰⁶ whereas manufacturers are better able to bear this risk than are consumers: only in this way would victims of a Thalidomide-type disaster be compensated.³⁰⁷ However, the government (strongly supported by the Confederation of British Industry) wished to retain the defence³⁰⁸ and countered that to impose liability for development risks on producers would be a great disincentive to innovation and ‘innovation benefits consumers as well as producers’.³⁰⁹ It was this last argument which made Lord Denning change his mind on the issue, being impressed by the need for British companies to find new drugs without being hampered, giving the example of a new treatment for AIDS.³¹⁰

One aspect of the parliamentary debate is particularly interesting, though, as it attempted to relate the UK’s decision on the development risks defence to the burden of liability insurance. In general it was thought that the impact of the 1985 Directive would have a minimal impact on the cost of liability insurance (following the view of the Association of British Insurers) but there was more concern as to the insurability of liability for development risks³¹¹ and the government saw the risk of producers not (p.468) being able to obtain insurance as a further reason for retaining the defence.³¹² Even those who wished the defence to be excluded acknowledged that the future insurance position was uncertain and proposed by way of response that the government should be made ‘insurer of last resort’, for cases where the commercial market could not provide one.³¹³ However, the government opposed this on the ground that it constituted an ‘unacceptable state intervention in the insurance market’³¹⁴ and that the defence formed part of the balance of interests between consumers and industry which had been struck in Brussels.³¹⁵ Similar reasons were adduced by the government for rejecting a later proposal that all producers should have an obligation to insure against their liability, but with a special back-up fund where this obligation was not performed similar to existing arrangements regarding road accidents.³¹⁶ In the end, the government won the day, retaining the development risks for all categories of product.

The British and French parliamentary discussions had in common, therefore, that attention was focused on the Directive’s possible options (and especially on the development risks defence) rather than on the significance of the concept of ‘defect’, but the political and legal contexts of the French and UK implementation were radically different. In the UK in 1987, liability for unsafe products was not a highly politicised issue and the need to develop pharmaceutical products to deal with the risks of diseases such as HIV could argue for retention of the defence; in France just over a decade later, ‘responsibility’ for products had become very prominent in political life, ever associated with the affaire du sang contaminé.³¹⁷ The legal background also differed significantly: in the UK the new law looked as though it improved the position of injured parties by comparison with liability in negligence; in France, the new law risked making their position worse.³¹⁸ While in implementing the Product Liability Directive, the significance of insurance played a much larger role in the debates in the UK than in France, insurance was to become all too prominent a part of the reform of French medical liability which itself has implications for products.³¹⁹