I INTRODUCTION TO THE PRODUCT LIABILITY FRAMEWORK
Product liability in Italy was expressly regulated for the first time by Presidential Decree No. 224/1988, which implemented Council Directive 85/374/EEC on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (the Product Liability Directive). Such Decree was then replaced by Legislative Decree No. 206 of 6 September 2005, (the Consumer Code), a whole comprehensive Act that covers, in addition to product liability, all the different phases in consumer dealings, from advertising to correct information, from consumer contracts in general to product safety, access to justice and consumer organisations.
The Consumer Code applies only to consumers, defined as ‘any natural person who is acting for purposes that are outside his trade, business or profession’2, claiming personal damages (death or physical injuries) or damages caused to goods that are normally destined for private use, both if caused by a defective product.
Article 127 of the Consumer Code provides that it does not affect any rights that an injured party may have under other statutory instruments; claims for damages can also be based on general tort or contract law. Such ‘double protection’ recognised to consumers has also been confirmed by the Court of Cassation, which in 2010 stated that provisions set forth by the Consumer Code accompany the alternative forms of protection already existing in the system, without replacing them.3
With regard to the protection afforded by instruments other than the Consumer Code, tort claims can be brought under Articles 2043 to 2050 of the Italian Civil Code (ICC); contractual claims are based on Articles 1490 et seq. ICC, which impose on the seller of a good the obligation to warrant that the good is free from defects.
Entrepreneurs and other subjects that do not fall within the consumer definition provided by the Consumer Code can only base their claims on general tort and contract law.
II REGULATORY OVERSIGHT
Ministries are responsible for oversight as set out under the Consumer Code. Their main task is to verify that all products placed on the market are safe. In particular, for any product they may carry out inspections at production or packaging plants, warehouses, and sales depots; require all necessary information to be provided by the parties concerned; take samples of products and subject them to safety checks; and draw up reports.4
For any product that might be dangerous, they may ban its sale, marketing or display, for as long as necessary to carry out all safety appraisals, checks and controls and order, for a mandatory period, that the product or batch of products already marketed be adapted to specific safety requirements.
A manufacturer placing a dangerous product on the market is criminally liable and may be punished with imprisonment; in particular, if he or she places it on the market in violation of a restriction order issued by the competent authority he or she may be punished with imprisonment from six months up to one year and a fine from €10,000 to €50,000.
If the dangerous product is already on the market, the competent authority may ban its marketing and introduce measures required to ensure that the ban is enforced. It can also order that products already marketed be adapted to comply with safety requirements within a given deadline. Failure to comply with any of these requirements can bring financial penalties up to €25,000.
Moreover, for products that pose a serious risk to the health and safety of consumers, the Consumer Code implemented the Community Rapid Information System (RAPEX) set forth by Directive 2001/95/EC. In order to improve collaboration on market surveillance and other enforcement activities, any action concerning the recalling or banning of products taken by an EU national authority must be notified at EU level and is recorded in the RAPEX database.5
The Ministry for Productive Activities has also set up the National Council of Consumers and Users. The Council is composed of representatives of consumers’ and users’ associations and it is responsible for, inter alia:
- a expressing opinions, where required, on the features of regulations concerning the rights and interests of consumers and users;
- b formulating proposals in relation to the protection of consumers and users, also with reference to EU programmes and policies;
- c promoting studies, research programmes and conferences on the rights of consumers and users and the control of the quality and safety of products and services;
- d drawing up programmes for the distribution of information to consumers and users;
- e establishing relations with similar public or private bodies from other countries and the European Union; and
- f notifying the Department for Public Administration of any difficulties or obstacles in relation to implementing the provisions regarding simplification of the procedures or documentation in public authorities.6
III CAUSES OF ACTION
i Claims under the Consumer Code
The Consumer Code sets forth a ‘special’ liability regime that is completely independent of any contractual relationship between the injured party and the manufacturer and is, thus, usually regarded as a non-contractual liability.
Pursuant to Article 114 of the Consumer Code, producers are liable for any damage caused by product defects, where ‘product’ is defined as any moveable, even if part of another tangible or intangible item, including electricity.7 Moreover, the manufacturer is held liable only if he or she has distributed the product, that is, if he or she has delivered it to the purchaser, user or a person connected with them.8
A good is considered ‘defective’ when it does not provide the safety one can reasonably expect, taking all circumstances into account, including: (1) the way in which the product was distributed, its packaging, evident features, instructions and warnings supplied; (2) the use to which the product can reasonably be put and the life cycle the product can be reasonably expected to undergo; and (3) the period during which the product was distributed.9 Moreover, a good is considered defective if it does not offer the safety normally offered by other samples of the same series.10
Thus, the notion of ‘defect’ is strictly linked to that of safety, such that under the Consumer Code the defect necessarily implies some kind of danger to the consumer that uses it.11
Claims can be brought by both the consumer and the ‘bystander’ (i.e., any person exposed, even only occasionally, to the risk caused by the defective product).12
Under the liability regime set forth by the Consumer Code, both the manufacturer and the supplier can be held liable for damage caused by a defective product.
In particular, an action may be lodged against one of four different persons:
- a the real producer, namely the subject manufacturing the product in the European Union;
- b the apparent producer, namely any other person or persons presenting themselves as the manufacturer or manufacturers by placing a name, trademark or other distinguishing mark on the product, or the person who refurbishes the product;
- c the importer, namely the manufacturer’s representative, when the manufacturer is not established in the European Union, or the importer of the product, when there is no representative within the European Union; or
- d the distributor, namely any other person in the supply chain insofar as their activities may affect the safety properties of a product.13
With regard to the distributor, Article 116, paragraph 1 provides that ‘where a producer cannot be identified, each supplier of a product shall be treated as its producer should he fail to inform the injured person, within three months of the date of application, of the name and domicile of the producer or person who supplied him with the product’. Thus, his or her liability follows that of the manufacturer in the sense that the supplier can be held liable only on the basis of the failure to identify the manufacturer.
If the supplier complies with such request, the third party named by the supplier (as the producer or previous supplier) may be brought for trial and the supplier ousted, if the person indicated appears and does not raise objections.14
ii Tort claims
An injured party, consumer or entrepreneur can bring claims for defective products on the basis of tort law, in particular pursuant to Articles 2043 to 2050 ICC.
Article 2043 ICC provides that any intentional or negligent act that causes an unjustified injury to another person obliges the person who has committed the act to compensate the damage suffered (neminem laedere principle). Liability under Article 2043 is not ‘faultless’; thus, plaintiffs must prove both the damage allegedly suffered and causation between such damage and the defendants’ negligence or wilful misconduct.
The ICC also sets forth a specific provision concerning liability for dangerous activities. Under Article 2050 ICC, whoever causes injury to another party in the performance of an activity that is per se dangerous is held liable unless he or she proves that he or she had taken all suitable measures to prevent injury. The ICC does not provide for a definition of ‘dangerous activity’, and Italian courts have applied the provision to a wide variety of claims, such as the marketing and distribution of toxic chemical products15, cylinder gases16 and smoking products.17
Article 2050 ICC sets forth a presumption of the defendant’s liability; thus, the injured party only has to prove the dangerousness of the activity and causation between the activity and the damage suffered.
iii Contractual claims
When the injured party is in a direct contractual relationship with the manufacturer, claims can also be based on contractual law. In particular, Article 1494 ICC provides that the seller is responsible toward the buyer for compensation of damages, if he or she does not prove to have not known and that he or she should not have known the defects of the goods. Moreover, he or she must also indemnify the buyer for damages deriving from the defects of the product.
The relevant notion of ‘defect’ under Article 1494 ICC differs from that under the Consumer Code: while the protection afforded by the latter instrument is based on the ‘safety’ of the product, in contractual law goods can be considered ‘defective’ regardless of their safety.
Since the seller’s liability under Article 1494 ICC is based on the contractual relationship between the parties, when goods go from the manufacturer to the final buyer through a series of intermediate sellers, the buyer can bring two different actions: a contractual one under Article 1494 ICC against the seller and a non-contractual one pursuant to Article 2043 ICC or Article 2050 ICC (as long as he or she proves the danger of such an activity), against the manufacturer.
Product liability cases in Italy can be brought in civil courts. The Italian system is articulated in three levels: (1) first instance courts (justices of the peace and tribunals); (2) second instance courts (courts of appeal for tribunals’ decisions and tribunals for justices of the peace’s decisions); and (3) the Court of Cassation.
Courts of appeal, composed of panels of three judges, have second instance jurisdiction over decisions issued by tribunals. Eventually, parties have the right to challenge the decision issued by the court of appeal before the Court of Cassation, which is a court of last resort and whose review is limited to questions regarding the proper interpretation and application of the law.
Small claims (e.g., legal actions whose value is lower than €2,600) are under justices of the peace’s jurisdiction. Decisions issued by such justices can be appealed before tribunals, which also have first instance jurisdiction over all cases not expressly assigned to other courts.
ii Burden of proof
When product liability proceedings are brought by consumers, pursuant to Article 120 of the Consumer Code, plaintiffs have the burden of proving:
- • the defect of the product;
- • the damage allegedly suffered; and
- • the causation between the defect of the product and the damage claimed.
As recently confirmed by the Court of Cassation, the plaintiff is not required to prove negligence or wilful misconduct by the manufacturer (subjective element), but only the defect (objective element).18 In particular, the Court of Cassation constantly affirmed that the consumer has to provide evidence of the causal relationship between the defect and the damage, and not of that between the damage suffered and the product.19 In other words, he or she must prove that the damage was caused by the fact that the product did not provide the safety a person is entitled to expect. Thus, the burden of proof is met only when there is evidence that the damage occurred as a result of the normal use of the product for the purpose for which it was intended.20
As already mentioned above, as opposed to liability under the Consumer Code, liability under Article 2043 ICC requires the injured party to prove both the damage allegedly suffered and the causation between such damage and the defendants’ negligence or wilful misconduct. Instead, with regard to Article 2050 ICC, plaintiffs only have the burden of proving the dangerousness of the activity and the causation between the activity and the damages suffered.
Finally, in contractual claims plaintiffs are required to prove the existence of the contract and to solely allege that the product was defective; the burden to prove the contrary is up to the manufacturer.21 Moreover, with regard to Article 1494 ICC, the Court of Cassation stated that the obligation on the seller also imposes regular checks; thus he or she is liable for damage caused by a defective product, if he or she does not prove that he or she had acted in such a way to check the goods’ quality and the absence of any defect.22
Exclusion of liability
Under Article 118 Consumer Code, liability is excluded in the following cases:
- a the manufacturer did not place the product on the market;
- b the defect that caused the damage did not exist when the manufacturer placed the product on the market;
- c the manufacturer did not manufacture the product for sale or distribution against payment of consideration, or did not manufacture or distribute it in the course of its business;
- d the defect is owing to the product’s compliance with a mandatory legal provision or with binding public measures;
- e the scientific and technical knowledge available when the manufacturer placed the product on the market did not allow the manufacturer to consider the product as defective; or
- f the manufacturer only manufactured one part of the product and the defect is entirely owing to the form of the product in which a component or raw material was incorporated or to the component supplier’s compliance with the producer’s instructions.
The burden to prove one of the above-mentioned exclusions lies with the manufacturer.
In order to further protect the consumer, the list set forth by such provision is exhaustive; thus, the manufacturer is not allowed to escape liability by proving the existence of different circumstances. Moreover, it is prohibited for the producer to contractually create additional grounds of defence; thus, any agreement aimed at excluding the manufacturer’s liability in cases other than those under Article 118 is void or null.23
In claims based on general tort or contractual law, producers can defend themselves by proving that their fault was because of force majeure.
Liability is also excluded when the consumer who has suffered damage owing to a defective product, although having been aware of the defect and the related danger, has voluntarily exposed himself or herself to such risk.24
Moreover, when the consumer has contributed to cause the damage, compensation is reduced proportionally, having regard to the seriousness of the negligence attributable to the same consumer and the extent of the consequences arising therefrom.25
In this respect, the Court of Cassation stated that the manufacturer cannot be held liable if the damage occurred as a result of the non-normal use of the product for the purpose for which it was intended.26
Statutes of limitations
The Consumer Code provides for a three-year statute of limitations from the day the injured person became aware, or should have become aware, of the damage, the defect and the identity of the producer, and in any event upon expiry of a 10-year period since the date the producer put the product into circulation.
Tort claims are time-barred five years after the event. As for contractual claims, the statute of limitations expires in 10 years. In the case of a contract of sale, claims can be brought only within one year of the sale and only as long as the injured party has reported the defect within eight days of discovery.
iv Personal jurisdiction
As for international jurisdiction (i.e., when proceedings involve an ‘international element’, such as one of the parties’ domicile or the place of delivery), jurisdiction over product liability cases is regulated by EU Regulation 1215/2012 (Brussels I bis Regulation) as well as Law No. 218 of 1995. As a general rule, under Article 4 Brussels I bis Regulation, persons domiciled in a Member State must be sued in the courts of that Member State. However, the Regulation establishes some exceptions to such rule.
Firstly, it grants a specific protection to ‘weaker parties’ (i.e., insureds, consumers and employees). In particular, pursuant to Article 18(1) Brussels I bis Regulation, when the injured party is a consumer, regardless of the other party’s domicile, proceedings can be brought in the courts of the Member State where the consumer is domiciled if the manufacturer pursues commercial or professional activities in that Member State.
Secondly, when the injured party is in a contractual relationship with the manufacturer, pursuant to Article 7(1)(b) Brussels I bis Regulation, proceedings must be brought in the courts of the Member State where, under the contract, the goods were delivered or should have been delivered.
Moreover, under Article 7(2) in matters relating to tort, delict or quasi-delict, persons domiciled in a Member State must be sued in the courts for the place where the harmful event occurred or may occur.27
For claims that fall outside the scope of the mentioned Regulation, international jurisdiction is governed by Law No. 218 of 1995. The general rule on jurisdiction is that Italian courts have jurisdiction if the defendant is domiciled or resides in Italy or has a representative in the country enabled to appear in court. Moreover, under Article 3(2), in matters regulated by the Brussels Convention under Sections 2, 3 and 4, Italian jurisdiction is established, applying the criteria contained therein, also to cases where the defendant is not domiciled in an EU Member State.28
With regard to ‘national’ proceedings, pursuant to Article 66 bis Consumer Code, exclusive jurisdiction to hear claims concerning product liability brought by consumers is attributed to the courts for the venue where the consumer is domiciled, if located within the Italian territory.
As for claims under Articles 2043 and 2050, jurisdiction is attributed to the courts of the place where the harmful event occurred; in contractual claims, proceedings must be brought in the courts of place where the counterparty is domiciled or the contract was signed.
v Expert witnesses
If the proceeding requires a high level of expertise or technical knowledge, courts can, voluntarily or upon a party’s request, appoint one or more independent experts (consulente tecnico di ufficio (CTU)) selected from a lists filed with each court or, alternatively, upon authorisation by the President of the court. Parties are also allowed to appoint their own experts to provide technical evidence in support of their claims (consulente tecnico di parte (CTP)).
CTUs file a written report whereby they answer to all the questions raised by the judge, such as those concerning the defect of the product and causation; they can also take into consideration CTPs’ remarks and comments. The experts’ findings are evaluated by the judge, who can also disagree with them and disregard them as long as he or she gives adequate reasons for the decision.
Italian law does not provide for the possibility of discovery as known in common law jurisdictions. Parties have to produce documents in support of their claims and are under no obligation to produce all the documents concerning the dispute. The court must rely only upon such evidence, refraining from personally investigating facts deemed relevant to the case. However, there are some exceptions to the aforementioned rule, such as that judges are allowed to appoint CTUs or to call witnesses referred to by other witnesses during their testimony.
In civil proceedings, significant importance is given to written documents. During evidence-gathering activities, at the request of one of the parties, the court can order the counterparty or any third party to exhibit documents considered necessary to the decision. In particular, such an order is issued if:
- a it does not cause any damage to the counterparty or any third party;
- b the requesting party indicates the specific documents to be exhibited;
- c the requesting party proves that the other party has the requested documents;
- d the document cannot be obtained in another way; or
- e the evidence provided by the document is necessary to decide the case.
With regard to witness examinations, when submitting requests for evidence, parties must provide the court with a list of witnesses and questions in order for the judge to decide on their admissibility (i.e., if it is admissible under the rules governing civil proceedings, such as that testimonies on contracts are not allowed unless: (1) there is some kind of written evidence; (2) it is materially or morally impossible for the contractual party to provide written evidence; or (3) the contractual party has, without any fault, lost the document). During the hearing, the judge then questions the witnesses based on the questions presented by the parties. There is no formal cross-examination: only the judge interacts with the person called to testify, while the parties can solely suggest additional questions. Upon agreement between the parties, the judge can also order the testimony to be given by written statement.
Pursuant to Article 121 Consumer Code, if more than one person can be deemed liable for the same damage, they are all jointly liable toward the damaged party. In such cases, if only one of them indemnifies the injured person, the Consumer Code provides for a right of recourse against them. Liability is shared among all the persons on the basis of: (1) the risk attributable to each of them; (2) the degree of each person’s fault; and (3) the consequences deriving from such fault. As a consequence of such provision, the consumer can sue any of them to obtain full compensation.
However, a distinction must be drawn between the manufacturer of the final product and the manufacturer of a single element of the product. The first is always liable even when the damage is caused by a defect of one of the elements composing the final product, as he or she has an obligation regarding product checks or verification. As for the second, he or she is liable only if the component he or she has provided effectively turned out to be the cause of the damage.29
In the case of tort claims, the same rule on joint liability is set forth under Article 2055 ICC, which provides that when the same damage is caused by several persons, they are all liable toward the injured party. Moreover, as stated above, when the buyer bought the goods from an intermediate seller and, thus, is not in a contractual relationship with the manufacturer, he or she is entitled to file a contractual claim against the seller, as well as a non-contractual one against the manufacturer.
viii Mass tort actions
In 2007, the Consumer Code was amended to introduce class actions as a tool to obtain compensation in certain kinds of multiple claims, including those for defective products.
Pursuant to Article 140 bis Consumer Code, class actions can be brought: (1) by each injured consumer; or (2) upon the consumers’ mandate, by associations acting to protect the rights of a determined class of persons. The mechanism is based on an opt-in system; thus, other claimants can join the proceeding within the deadline set by the court at the first hearing.
Jurisdiction is attributed to the courts of the capital of the region where the defendant has its headquarters, and proceedings begin with a preliminary decision on the admissibility of the class action, which is declared inadmissible if:
- a it is clearly unfounded;
- b there is a conflict of interest;
- c the rights enforced are not homogeneous; or
- d the claimant is judged unsuitable to represent the interests of the entire class.
Such preliminary phase is followed by a merit phase concerning the assessment of liability and damage. The decision is delivered by a panel of judges, and it can provide for a direct conviction or, alternatively, set forth the criteria to calculate the amount due to the members of the group.
As a general rule, all damage, both monetary and non-monetary, suffered by the injured party is recoverable; punitive damages, however, cannot be awarded. More specifically, the Italian legal system recognises different categories of damage:
- a economic damage, consisting of harm to economic assets;
- b biological damage, which relates to physical and mental injury;
- c moral damage, which consists of moral harm, pain and suffering; and
- d existential damage, created by case law and consisting in damage that worsens a person’s living condition.
With regard to non-monetary damages, the Court of Cassation stated that compensation is allowed both in cases of an express provision of law, (i.e. whenever it is acknowledged by a law provision) and in case the damage causes violation of a right that is constitutionally safeguarded30 (e.g., health).
Pursuant to the Consumer Code, product liability claims can be brought to seek compensation for: (1) personal damage (death or physical injuries); or (2) destruction and deterioration of assets other than the defective product, as long as they are mainly and normally intended for private use by the damaged person.31 Thus, with regard to personal injury, the injured party is entitled to compensation of both economic damage (e.g., for medical assistance) and biological damage.
V YEAR IN REVIEW
On 1 January 2017, the European Commission launched a public consultation on the evaluation of Directive 85/374/EEC on the liability for defective products. The aim of such consultation, whose deadline is set for 26 April 2017, is to collect stakeholders’ comments and opinions on the use and performance of the Product Liability Directive, in particular with regard to: (1) whether and to what extent it is in line with its objectives of guaranteeing at European Union-level the liability without fault of the producer; (2) whether it still meets the interested parties’ needs; and (3) if it is fit for purpose with reference to new technological developments such as the internet.
Italian case law on product liability is developing in line with previous trends. An interesting decision has been issued by the Court of Cassation with regard to the notion of ‘defective product’. In particular, the court recently held that under the Consumer Code the manufacturer’s product liability is presumed and not objective, because it is independent from proof of the manufacturer’s fault.32 After confirming that, under the Consumer Code, it is up to the injured party to prove causation between defect and damage, since this is a prerequisite of product liability, it added that the product should be considered defective if it does not offer the safety a person can reasonably expect with regard to, inter alia: (1) the way it has been placed on the market; (2) its main features; (3) the instructions or warning provided; (4) the normal use of the product for the purpose for which it was intended; and (5) the period the product has been placed on the market.
In this case, the court rejected a claim for compensation for damages resulting from the explosion of a toxic house detergent, as it held that the product could not be considered defective since it had been manufactured and distributed in compliance with the safety standards required for that type of product.
1 Francesca Petronio is a partner in the litigation practice at Paul Hastings (Europe) LLP, and Francesco Falco is a senior associate in the litigation practice at Paul Hastings (Europe) LLP.
2 Article 3 Consumer Code.
3 Court of Cassation, 1 June 2010, No. 13,432.
4 Article 106 Consumer Code.
5 Annex II to the Consumer Code.
6 Article 136 Consumer Code.
7 Article 115 Consumer Code.
8 Article 119 Consumer Code.
9 Article 117, paragraph 1 Consumer Code.
10 Article 117, paragraph 3 Consumer Code.
11 Under Article 103 Consumer Code, ‘safe product’ is defined as any product ‘which (under normal conditions of use or those which may be reasonably envisaged, including shelf life and, where applicable, usage, installation and maintenance requirements) does not present any hazard or only minimum risks arising out of use of a product and considered acceptable and consistent with a high level of personal health and safety’.
12 Court of Cassation, 29 May 2013, No. 13,458.
13 Article 103, paragraph 1, point d) Consumer Code.
14 Article 116, paragraph 5 Consumer Code.
15 Court of Cassation, 1 February 1995, No. 1,138.
16 Court of Cassation, 20 July 1979, No. 4,352.
17 Court of Cassation, 17 December 2009, No. 26,516.
18 Court of Cassation, 28 July 2015, No. 15,851.
19 Court of Cassation, 26 June 2015, No. 13,225.
20 See, inter alia, Court of Cassation, 13 August 2015, No. 16,808; Court of Cassation, 29 May 2013, No. 13,458.
21 Court of Cassation, 2 December 2016, No. 24,731.
22 Court of Cassation, 10 July 2014, No. 15,824.
23 Article 124 Consumer Code.
24 Article 122, paragraph 2, Consumer Code.
25 Article 122, paragraph 1, Consumer Code.
26 Court of Cassation 13 August 2015, No. 16,808. In that case, the Court ruled that the manufacturer was not liable for the explosion of a tyre since the consumer had inflated it with a compressor that exercised a pressure four times higher than the suggested maximum.
27 In a case concerning product liability, the Court of Justice of the European Union found that, since the place of manufacture is the place where the event that damaged the product itself occurred, Article 5(3) Brussels I Regulation (now Article 7(2) Brussels I bis Regulation) must refer to the place where the manufacturer is established, and not to where the damage was later suffered (Kainz v. Pantherwerke AG, C-43/15).
28 The Italian Court of Cassation repeatedly ruled that, despite the adoption of Regulation 44/2001 then replaced by Regulation 1215/2012, since Law No. 218 of 1995 refers to the Brussels Convention, reference must be made exclusively to the provisions of such instrument.
29 If that is not the case, the liability of the manufacturer of a single component is excluded under Article 118 Consumer Code.
30 Court of Cassation, 31 May 2003, Nos. 8,827 and 8,828; Court of Cassation, 11 November 2008, No. 26,972.
31 Article 123 Consumer Code.
32 Court of Cassation, 19 February 2016, No. 3,258.