Austria: Product Liability

The In-House Lawyer Logo

This country-specific Q&A provides an overview to product liability laws and regulations that may occur in Austria.

This Q&A is part of the global guide to product liability. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/product-liability/

  1. Please summarise the main legal bases for product liability

    The main legal bases for product liability are the Austrian

    • Product Liability Act
    • Product Safety Act
    • General Civil Code

    In addition, a defective product may also give rise to criminal or administrative criminal liability.

  2. What are the main elements which a claimant must prove to succeed in a strict liability type claim for damage caused by a defective product?

    The claimant has to prove the damage he suffered, the product’s defect, as well as the causality between the damage and the defect.

    A product is deemed to be defective if it does not provide the safety which, taking all circumstances into account, may be reasonably expected, in particular with respect to:

    1. the presentation of the product,
    2. the use to which it can reasonably be expected that the product would be put,
    3. the time when the product was put into circulation.
  3. With whom does liability sit? If there is more than one entity liable, is liability joint and several?

    Liability sits with the entrepreneur by whom a product was produced and put into circulation and with the entrepreneur by whom it was imported into and put into circulation in the European Economic Area (importer).

    Where the producer or – in the event of imported products – the importer cannot be identified, any entrepreneur who has put the product into circulation can be held liable for damage caused by a defective product, unless he supplies the injured party with the name of the producer or – in the case of imported products – of the importer or the party who has supplied the product within a reasonable period of time.

    A product is deemed to be put into circulation as soon as the entrepreneur has transferred it to another person into the latter’s power of disposition or for the latter’s use. Dispatching the product to the customer shall is deemed to be sufficient. If a producer or importer claims not to have put the object into circulation or not to have acted as an entrepreneur, the burden of proof shall rest with him.

  4. Are any defences available? If so, please summarise them.

    There are a number of defences available, namely:

    • the product was not defect at the time of sale but rather the defect occurred after it was brought in circulation (reduced burden of proof for the defendant: he has to show that, having regard to the circumstances, his claim of the defect occurring after the product was brought into circulation is plausible)
    • the defect can be attributed to a legal provision or official instruction with which the product had to comply,
    • the defect was not seen as a defect according to the state of technology at the time when the product was put into circulation by the person against whom an action is brought
    • the defendant has merely produced a raw material or a component part and the defect was caused by the design of the product in which the raw material or component part was fitted, or by the instructions given by the producer of the product.
    • the injured person or a party for whose conduct he is responsible contributed to the fault that led to the damage (partial or full defence, depending on the severity of the conduct)
    • the defendant did not bring the product in circulation or denies his status as an entrepreneur

    Lack of guilt (culpability) is not available as a defence under the Product Liability Act.

  5. What is the limitation period for bringing a claim?

    The limitation period for claims brought under the Product Liability Act is ten years after a product was brought into circulation. Also most claims for damages under Austrian law have to be filed within three years of a person’s knowledge of the damage. The relevant limitation period ends as soon as one of those two limitation periods ends.

    If a claim is brought under the General Civil Code, claims also have to be filed within three years of a person’s knowledge of the damage. The maximum limitation period however is 30 years in most cases (and even 40 in some). Please note, that any claim brought under the General Civil Codes necessitates culpability on the producer’s side.

  6. To what extent can liability be excluded (if at all)?

    Liability for damages under the Product Liability Act can neither be excluded nor limited beforehand. Liability can also not be excluded due to a lack of guilt (culpability). Under the General Civil Code liability for damages can be limited in regard to contractual liability but not for claims under tort law. There are limits to that exclusion (the limits are stricter in B2C situations than they are in B2B situations).

  7. What are the main elements which a claimant must prove to succeed in a non-contractual (eg tort) claim for damage caused by a defective product?

    Under the Product Liability Act the claimant has to prove the damage he suffered, the product’s defect, as well as the causality between the damage and the defect.

    In order to succeed under the General Civil Code the claimant also has to prove the breach of duty and the fault of the perpetrator.

  8. What types of damage/loss can be compensated and what is the measure of damages? Are punitive damages available?

    Typically, the highest claims stem from loss of income, health care related costs and compensation for personal suffering. Punitive damages are not available.

    Compared to the US health related costs and compensation for personal suffering are not very high. Regarding loss of income, courts typically ask for a high probability that the claimant would have had the income if not for the suffered injuries caused by the defective product (which can be hard to prove especially for the self-employed).

    Under the Product Liability Act, damage to the product itself is not eligible for compensation. Thus this will only be compensated based on general tort law (with some kind of negligence as a precondition). Under the product liability act, material damage is only covered by the amount that is exceeding EUR 500,-.

    Other damages than already mentioned play a limited role within the realm of product liability proceedings. Some cannot be compensated at all (i.e. emotional distress not rising to the level of a medically accepted disease).

  9. How are multiple tortfeasors dealt with? Is liability joint and several? Can contribution proceedings be brought?

    If the damage is caused by several persons, they are jointly and severally liable for the entire damage. They have the option to (partly or fully) regress vis-à-vis other tortfeasors (depending on the severity of their guilt).

  10. Are any defences available? If so, please summarise them.

    The defendant may defend himself by

    • invoking the limitation period for the claim,

    proving that there is no causal link between the damage and the conduct in question
    proving that the damage was caused solely by the plaintiff's conduct
    proving that there is no fault on the part of the defendant

  11. What is the limitation period for bringing a claim?

    As already mentioned in Q5 the subjective statute of limitations shall be three years from the date on which the injured party becomes aware of the damage and injuring party. The objective limitation period is 30, in some cases even 40 years. The limitation period can, however, be interrupted or suspended, for example by settlement discussions or the assertion of a claim in court.

  12. To what extent can liability be excluded (if at all)?

    Liability cannot be excluded if there is no contractual relationship between the parties. However the liability of the defendant may be reduced if the damage was at least partially caused by the claimant himself or any other person he is responsible for.

  13. Does the law imply any terms into B2B or B2C contracts which could impose liability in a situation where a product has caused damage? If so, please summarise.

    The Austrian General Civil Code provides for a fault-based liability system. All relevant aspects are covered by statutory law. This statutory law can – to some extent – be modified by contracts. Those possible changes are however not unlimited (the law is more favorable to consumers in a B2C setting than to businesses in a B2B setting).

    Traders selling consumer goods in the European Union (EU) are obliged to remedy defects which existed at the time of delivery and which become apparent within 2 years. EU rules guarantee consumers a minimum level of protection, especially if the goods do not meet the standards promised.

    The product has to confirm to the sales contract. That is the case if it complies with the sales description, is fit for the purpose for which the good was intended and demonstrates the quality and performance that can reasonably be expected.

    Sellers are responsible for any incorrect installation if that forms part of the contract, be it that the seller himself undertook to install the product or that the instructions were faulty. Consumers have a right to ask for a repair of faulty goods free of charge within a reasonable time and minimum inconvenience. They may ask for an appropriate price reduction if the repair or replacement is not done on time or without significant inconvenience to the consumer.

    Sellers, who are liable to consumers for the goods they sell, then have a claim against producers if the fault is found to lie with them.

  14. What types of damage/loss can be compensated and what is the measure of damages?

    The same applies as in Q8 here.

    Regarding contractual liabilities the injuring party is liable not only for his own conduct but also for those who act for him as vicarious agents. Also some contracts are seen as to protect third parties.

  15. To what extent can liability be excluded (if at all)?

    Depending on whether it is a consumer contract or not, the law allows contractual deviations. In the case of consumer contracts, the law regularly prohibits the limitation of liability exclusions and warranty exclusions. If the contract is not subject to a particular legal regime, such as consumer protection, restrictions are permitted to the extent that they are not deemed to infringe upon unwritten mandatory law.

  16. Are there any recent key court judgements which have had a significant impact on the approach to product liability?

    In Austria, the approach to product liability has been pretty stable for a number of years.

    One recent major case concerned the risk of thrombosis when taking a certain contraceptive.

    The Supreme Court ruled that the warning labels inside the package were sufficient as to not constitute an “instruction error” (Austrian Supreme Court, 10 Ob 8/18a).

  17. What are the initial litigation related steps you should take if you are facing a product liability claim or threatened claim?

    There are a number of issues to be tackled at the same time. This is best to be undertaken by a team of experts:

    Thus typically the first step is to immediately commission an internal investigation as to the validity of the claims made or threatened against your company both from a technical and a legal perspective. Austrian law does not provide for a discovery proceeding, thus the result of said investigation will stay confidential (as long as they are not seized as part of a criminal investigation or leaked in any way).

    If the product or certain batches of the product really are defective, a product recall (under the relevant Austrian and EU regulations) is to be issued immediately. The financial risk (and possibly even risks under criminal law) is substantive if this is not tackled immediately.

    At the same time, in case a company has insurance against product liability claims, a notification of claim is to be filed within the relevant contractual deadline (those can be quite short, e.g. 7 days).

    If there is any risk that one of the company’s officers and directors might have some personal liability risk on their hands, a precautionary notification of claims is to be filed in regard to a possible Directors and Officers Liability insurance the Director or Officer or the company itself might hold.

    If any damage is covered by a product liability insurance policy, your insurance company typically has the right to decide on which way to go forward (i.e. from a quiet settlement to fighting the claim until all legal remedies are exhausted).

    From a bird’s eye perspective if you face a small number of claims but internally see a rather large risk for additional claims, a quiet settlement including an NDA might make sense. If there already is a big public awareness for your product’s (supposed) faults and you are possibly facing a large number of claims it is often a sound strategy to fight each claim and wait until the damage of limitation has run out before settling with all those that sued you. The correct strategy however is very dependent on the situation at hand and at the end of the day a typical business decision.

  18. Are the courts adept at handling complex product liability claims? Are cases heard by a judge or jury?

    In general Austrian courts are adept at handling complex liability claims.

    All civil liability claims are heard by judges. At the court of first instance nearly all civil liability claim cases a heard by one judge. If the dispute matter is valued at more than EUR 100k, each party can request a three-judge panel; however in practice this is exceedingly rare. In case a three-judge panel hears the case, one of the judges is a lay judge (i.e. an experienced businessman).

  19. Is it possible to bring a product liability related group action? If so, please summarise the types of procedure(s) available

    The Austrian Law on Civil Procedure does not provide for a true Class-Action style lawsuit (i.e. opt-out-System).

    It is however possible to bring a joint lawsuit (i.e. an opt-in system) where either a number of plaintiffs join and file a joint lawsuit or (more relevant in practice) a large number of consumers assign their claims against one or a few defendants to one of Austria’s consumer advocacy groups and this group then files a lawsuit on their behalf (Class Action – Austrian Style).

  20. How are cases typically funded? Can lawyers charge success fees? Is third party funding permissible?

    Small cases are often funded by the claimant himself or by his insurance company (e.g. legal protection insurance).

    Third party funding is permissible and common: Many Class Action’s Austrian Style are organized by Austrian’s biggest consumer advocacy group and funded by a third party.

    Lawyers are not allowed to work exclusively on a contingency fee basis. It is however permissible to include performance-based elements into the payment structure as long as this in not a de-facto contingency fee. Third party funders are allowed to charge a success fee.

  21. How common are product liability claims and what factors influence their frequency?

    Product liability claims are relatively common. Most cases however are not fought until all legal remedies are exhausted but rather settled quietly at some point either before or during a trial. This is especially true for product liability claims brought between companies under the Austrian General Civil Code.

    The ubiquity of your product and any perceived fault is the main factor regarding the frequency of product liability claims.

    Any way possible product defects garner widespread publicity (i.e. traditional or social media; PR work done by an association for the protection of consumer rights etc) typically multiply the risk that your company will be confronted with a product liability claim.

    In Austria, only the Supreme Court decisions (and a small number of appellate court decisions) are published in Austria’s legal information system. Thus it is quite frequently possible to reach a settlement without alerting the wider public.

    Also, the willingness of legal aid insurance companies or third party funders to fund legal action being brought is a major factor in the frequency of product liability claims being brought to trial.

  22. What are the likely future developments in product liability law and practice? To what extent is the suitability of the law being challenged by advances in technology?

    As of today we do not expect major changes regarding the handling of product liability cases in the near future. In the medium and long term future the technical advances will make it easier for large numbers of claimants to file their claims. The use of certain technical applications will be necessary for handling those large numbers of claims. As of today Austria’s court system could become clogged, if it were flooded by huge numbers of similar claims.