Recently, the Supreme Court in the Netherlands rendered a judgment on product liability under Dutch law that addressed the question of when a hip prosthesis consisting of different parts was “put into circulation”. This question is important in the context of the possible time lapse of a legal claim for damages in the Netherlands from a manufacturer (by the patient). Our Dutch lawyer for liability law explains the matter.
The expiration of a legal claim for damages under Dutch law
A surgeon used different components for a hip prosthesis, which were put into circulation at different times. The qualification ‘put into circulation’ is important when considering whether a right to compensation of an injured party – here a patient who made a claim for compensation of damage caused by a defect in the hip prosthesis – can still exist in view of the lapse of time. This legal action lapses after ten years from the day following the producer putting the item that caused the damage into circulation. In this case the key question for the assessment of the lapse date of a legal claim, is whether it is assessed based on the various separate components, or whether the assessment should be made based on the date the product is finally completed (or assembled). Our lawyers in liability law / product regulation (CE marking) discuss the most important insights arising from this case.
WHAT DOES PUTTING A PRODUCT INTO CIRCULATION MEAN FOR THE EXPIRATION OF THE PRODUCT LIABILITY PERIOD?
Putting a product into circulation means nothing more than passing the product on to the distribution chain. It means that the product has gone through the production process and has left the manufacturer. This is not always clear, for example in companies with parent-subsidiary relationships. In a case of the European Court of Justice (O’Byrne / Safoni), it was ruled that it must be checked whether in this context the entity is in fact part of the production process of the product concerned.[AB1]
WHAT IS THE DIFFERENCE BETWEEN PRESCRIPTION AND LAPSE OF A LEGAL CLAIM FOR DAMAGES under Dutch law?
The relevant section on product liability and (here) the prescription and extinction of a legal claim for damages (specifically article 6:191 Dutch Civil Code) discusses both the prescription and the extinction of a legal claim for damages. It lists the following:
“The injured party’s legal action for damages against the producer pursuant to section 185(1) shall be barred by the expiration of three years from the beginning of the day following the day on which the injured party became aware or should have become aware of the damage, the defect and the identity of the producer.
The right of the injured party to compensation from the producer under paragraph 1 of Article 185 shall expire ten years from the beginning of the day following the day on which the producer put the good into circulation which caused the damage. The same applies to the right of a third party who is partly liable for the damage to take recourse against the producer.”
When we talk about prescription, the right to claim expires after a certain period of time has passed. In the instance of claim for damages it can no longer be presented to (for example) the court on expiry of the prescription, meaning the right to make your claim has lapsed. The difference is that a limitation period can be ‘interrupted’, which allows rights to be unambiguously reserved (and therefore litigation can continue even after 3 years). This is not possible with an expiry period. The expiration and limitation periods are communicating vessels. Therefore, when you are aware of damage suffered, have a lawyer advise you properly on this matter.
DEFECTIVE PRODUCT AND PRODUCT LIABILITY in the Netherlands
The issue at hand was whether the hip prosthesis was a defective product. The patient was of that opinion because the friction between two parts (the so-called “head” and “bowl”) released metal particles. Until the time of surgery, it had not been decided which specific bowl and head would be used for this operation. In the end, a MoM hip prosthesis was chosen with a head and a socket that were delivered to the importer on different dates: the head on February 11, 2004, the socket on August 7, 2004.
PATIENT’S CLAIM: DECLARATION FOR JUSTICE under Dutch law
The patient’s legal claim was a declaratory judgment, to the effect that both the manufacturer and the importer were liable for the damage suffered (and yet to be determined) as a result of the alleged defect in this hip prosthesis. A declaratory judgment is usually instituted when the actual damage is not yet determinable in extent, or is complex.
ARE THE PRODUCER AND IMPORTER LIABLE in the Netherlands?
The manufacturer and importer defend the declaration of rights and claim that they cannot be held liable for any damage. In doing so, the producer and the importer invoke (and this is the importance of this case) the statutory period of limitation (6:191 (2) of the Dutch Civil Code). If this defence succeeds, then the patient’s rights lapse and neither producer nor importer can be held liable for damages.
The crux of the liable producer’s and importer’s argument is that the head of the hip prosthesis had been put into circulation for more than ten years prior to the date of the summons (with which the legal action was brought on 19 May 2014). It is for this reason that the manufacturer and importer claim not to be liable for any damage from the product, defective or not. On appeal, the Court of Appeal did not accept these arguments – the Court of Appeal believes that the hip prosthesis is a ‘finished product’ and that the delivery of the bowl should be considered. Only then has the ‘end product’ been put into circulation and according to the Court of Appeal the date of the combination between head and bowl is therefore relevant. According to the interpretation of the Court of Appeal, the term had not expired for the prosthesis because the bowl was put into circulation within the term of ten years.
The manufacturer and importer subsequently submitted the case to the Supreme Court.
SUPREME COURT ABOUT THE COMMENCEMENT OF THE EXPIRATION PERIOD OF ARTICLE 6:191 SECTION 2 OF THE Dutch Civil Code
First, it is important to note that the section on product liability implements Directive 85/374/EEC. In that context it is also important that the Court of Justice of the EU has already interpreted the concept of ‘putting into circulation’.
The start of the expiry period must be based on objective criteria. The product has been put into circulation when it has “left the producer’s production process and entered a sales process in a form in which it is offered to the public for use or consumption” (O’Byrne/Sanofi Pasteur).
WHY IS A PRODUCER NO LONGER LIABLE AT SOME POINT?
It is defensible that at some point a producer can no longer be held liable for a delivered product. The aforementioned Directive also zooms in on this. In essence, it can be said that products wear out with the passing of time, that the essential safety requirements change and develop over the years and that scientific and technical knowledge can lead to new insights. The producer’s strict liability must therefore be contained somewhere and risks must remain insurable. It is for this reason that a period of ten years has been stipulated, on the understanding that by bringing an action a defective product can still force the producer (or importer) to be liable after ten years.
NO NEW EXPIRY PERIODS FOR COMPLEX PRODUCTS under Dutch law
Mindful of the background of the product regulations, the Supreme Court held that it is not appropriate that the assembly of a hip prosthesis by the surgeon using various parts leads to a new reference date with regard to ‘putting a product into circulation’. The consequence would be that the assembly of a hip prosthesis by the surgeon would create a new expiration date with respect to product liability vis-à-vis the manufacturer and importer.
Therefore, the Court of Appeal should not have ruled that the assembled prosthesis is a (final) product and that the expiry period of this product only starts when the socket is put into circulation, on the grounds that the alleged defectiveness is caused by a combination of the head and the socket, and that the socket was put into circulation last.
If the socket is still defective, for example due to contact with the head, the liability is not reduced because the expiry period in respect of the head has already expired, according to the Supreme Court. In short, for the patient, there is still a chance to be fully compensated for the damages suffered and to be suffered.
CONTACT A PRODUCT LIABILITY LAWYER in the Netherlands?
Would you, as a manufacturer, importer or distributor, like to know more about the scope of this judgment and its significance for your organization? Then please contact our product liability lawyer in the Netherlands Remko Roosjen.
Our niche law firm in the field of product and safety regulation would be pleased to help you with your legal challenges and implementation in your business processes. The lapse of a legal claim for damages is not always clear, and we will be happy to help you.