Hartnell (EU Law, 1995)

QUESTION ONE (ONE HOUR)

The LEGAL FRAMEWORK

In 1985, the Council adopted Directive 85/374/EEC concerning the approximation of the laws of the Member States ("MS") with regard to liability for defective products. Under this Products Liability Directive, the law of each MS must give an injured person the right to sue a producer for damage caused by a defective product. The nature of the cause of action required by the Directive is strict liability rather than negligence.

According to the Directive, the injured person is entitled to recover from the producer if s/he proves "the damage, the defect and the causal relationship between the defect and the damage." A product is defective "when it does not provide the safety which a person is entitled to expect, taking all circumstances into account." This is meant to be an objective criterion, based on the expectations of a reasonable person.

There is controversy over how to treat unsafe chemical substances, such as pharmaceuticals and food additives. Such a product may be unsafe, but this does not necessarily mean it is legally defective. For example, a toxic drug for curing cancer is not "defective" if it is properly prepared and accompanied by instructions for use and by appropriate warnings. (This is sometimes referred to as the "state of the art" defense.)  The Directive also prescribes that certain other defenses be made available to the producer, such as: the defect did not exist when the producer put the goods into circulation, but came into being afterwards; the defect is due to compliance of the product with mandatory regulations issued by public authorities of a MS; and the "development risk" defense.

The "development risk" defense plays an important role in connection with products such as pharmaceuticals and food additives.  It frees the producer of an unsafe product from liability when it was impossible, given the level of scientific and technical knowledge at the time when that product was put into circulation, to identify the defect.  To summarize, the "state of the art" defense means that the product was not defective, whereas the "development risk" defense means that it was defective, but that the defect could not be discovered because of limited scientific or technical knowledge at the time.

In addition to laying down the substantive nature of the injured party's right to recover from the producer of a defective product, the Directive also lays down requirements concerning the remedy.  For example, the Directive requires that injured persons be entitled to recover for damage caused by death and personal injury.  The amount of compensation is not specified in the Directive, but a MS is permitted to limit the producer's total liability for damages caused by identical items with the same defect to ECU $70 million.  The Directive expressly leaves intact the laws of the MS regarding "non-material damages" (e.g. pain and suffering).

The Directive requires that the injured person be entitled to recover from the producer or from the person who imported the defective product into the UK. In case both are held liable, the Directive provides that the liability shall be deemed shared between them.

The United Kingdom ("UK") implemented the Products Liability Directive within the applicable time limit.  With regard to the "development risk" defense, the UK implementing legislation provides that a producer cannot be held liable unless the injured person proves that the producer was negligent in failing to discover the defect.  Another peculiarity of UK law, related to its socialized medical system, is that no compensation may be recovered under UK law for the cost of medical services, since everyone has the right to be treated for free at one of the state-run hospitals.

THE FACTS OF THE CASE

Your client, Paul Popper (PP), suffered severe personal injury and emotional trauma as a result of medication administered to him following an automobile accident in 1993.  PP was transported from the scene of the accident to the Wharf Area Health Order Organization (WAHOO), which was the nearest state-run hospital. While a patient at WAHOO, PP received a dose of XYMOX, a radical new medication used to treat shock. The XYMOX drug caused severe swelling to PP's head; in fact, PP's head swelled to twice its normal size, and stayed that way. PP has suffered extreme physical and emotional pain because of the apparently permanent swelling.. After being released from WAHOO following emergency room treatment, PP sought further treatment for his injuries at a private hospital and in a private psychiatric clinic throughout 1994 and 1995.

XYMOX is manufactured by PHARMACO, a German company, which makes XYMOX in the UK and in Germany.  WAHOO sometimes purchases XYMOX from PHARMACO's UK production facility and sometimes imports it from PHARMACO's German production facility. It is not certain in this case, owing to poor record-keeping by WAHOO, whether the XYMOX taken by PP was imported into the UK or manufactured locally.

In 1994, PP sued WAHOO and PHARMACO in the UK courts, alleging that they were strictly liable for having placed a defective product into circulation.  In particular, PP alleged that XYMOX was defective, and that this defect caused his injuries. PP claimed compensation for his physical and emotional suffering, as well as for the costs of his treatment in 1994 and 1995 at the private hospital and in the private psychiatric clinic.  PHARMACO agreed that XYMOX was "defective" (based on 1995 scientific and technical knowledge).  Under the "development risk" defense, however, PHARMACO argued that it could not be held liable because it was not negligent in 1993 when it failed to discover the defect in XYMOX.  PHARMACO further argued that, even if PHARMACO were liable, PP could not recover the compensation he claims, because such forms of compensation are not available under UK law.

THE QUESTIONS TO BE ANSWERED

As counsel for PP, please analyze all steps that you would take and arguments that you would make under EC law to ensure that your client receives adequate compensation for his injuries suffered and expenses incurred as a consequence of taking XYMOX.  ASSUME for purposes of your answer that XYMOX was the actual cause of PP's injuries and that XYMOX was defective.  FURTHER ASSUME that it was possible in 1993 (i.e. when XYMOX was placed into circulation) to have discovered the defect using rare and highly specialized but nonetheless available scientific and technical knowledge.