The International Comparative Legal Guide to Product Liability 2011

Contributed by Patrikios Pavlou & Associates LLC [www.pavlaw.com]
Published by Global Legal Group

1 Liability Systems

1.1 What systems of product liability are available (i.e. liability in respect of damage to persons or property resulting from the supply of products found to be defective or faulty)? Is liability fault based, or strict, or both? Does contractual liability play any role? Can liability be imposed for breach of statutory obligations e.g. consumer fraud statutes?

Among the most important aspects of consumer protection is the problem of claiming compensation against a producer when the goods have been defective and have caused injury or even death to a person or damage to property. The system concerned with the operation of the basic rule of liability of producers, manufacturers, importers and installers for defects in the products they supply is called “product liability”. Pursuant to the Defective Products (Civil Liability) Laws of 1995 to 2002, “Law No.105(I) 95”, (hereinafter “the Defective Products Law”) which implements the Product Liability Directive 85/374EEC into the Cyprus internal legal order, a producer is liable for damage caused by a defective product. Damage is defined to be the damage caused due to death or personal harm or any loss or damage of property which at the time was intended for private use or consumption and it is mainly used as such by the sufferer of the loss or damage.
The Defective Products Law imposes the notion of strict liability which entails that the Plaintiff must prove that the product caused damage and that, but for a defect in the product, that damage would not have arisen. Liability under the Faulty Products Law is perceived to be strict but not absolute in the sense that a person will have a prima facie claim under the Law irrespective of the producer’s fault.

Claims for product liability in Cyprus may be brought under the:

a) Defective Products (Civil Liability) Laws of 1995 to 2002: Law No.105(I)/95 (as amended), hereinafter “Defective Products Law”;
b) Sale of Goods Law of 1994: Law No.10(I)/94 (as amended);
c) Contract Law, Cap. 149 (as amended); or
d) General Safety of Products Law of 2004: Law No.41 (I)/2004.

The liability which arises for the producer, by virtue of section 7 of the Law, cannot be excluded by any contractual clause or any agreement, and anything of the kind will result in the contract being deemed void and legally unenforceable. Furthermore, pursuant to the Contract Law Cap. 149, the claimant may also choose to claim damages and terminate and/or rescind the contract.
As provided for by the Sale of Goods Law, products must be of satisfactory quality, be reasonably fit for the stated purpose made known by the buyer to the seller (“of merchantable quality”) and comply with the description applied to them or a sample applied. The claimant is not prohibited from enforcing his rights using different legal bases.

1.2 Does the state operate any schemes of compensation for particular products?

The Republic of Cyprus does not provide any state compensation schemes.

1.3 Who bears responsibility for the fault/defect?

The manufacturer, the importer, the distributor, the “retail” supplier or all of these?

The Defective Products Law, as stated in section 5, provides that the person who should bear the responsibility of the defect is principally the producer. The term ‘producer’ has been defined as the manufacturer of the finished product, the producer of any raw material or the manufacturer of a component part, and any person who, by putting his name, trade mark or other distinguishing feature on the product presents himself as its producer. The liability also extends to the manner by which the product has been packaged, composed and presented to the consumer public.

However, the liability of the producer may be reduced or disallowed if the damaged is caused both by a defect in the product and by the fault of the injured person, or any person for whom the injured person is responsible, as provided for in section 7. If the case arises where either two or more people are responsible for the defective product, then section 8 will apply by enforcing joint and several liability.

The General Safety Law provides, as section 9(1) illustrates, that liability may be extended to both the producer and the distributors of the defective and unsafe product if they knew or ought to have known of the unsafe characteristics of the product, before or after having distributed it to the consumer market, and did not report the defect to the competent authority, namely the Competition and Consumer Protection Department of the Ministry of Commerce, Industry and Tourism.

1.4 In what circumstances is there an obligation to recall products, and in what way may a claim for failure to recall be brought?

By virtue of section 7(5) of the General Safety Products Law, recalling a product from the market occurs only in extreme cases to prevent any foreseeable or existing risks, where either the producers or the competent authority deem it necessary to do so. Recalling a product may even occur when there has been evidence that the product complies with the general safety requirement, but is dangerous to the public. This recall can be enforced in the context of the relevant codes of good practice which are enforceable in Cyprus. A breach of this obligation constitutes a criminal offence, as expressed in section 29(1).

1.5 Do criminal sanctions apply to the supply of defective products?

Goods offered to the consumers should, under normal conditions of use, be of such quality and standard so that they do not contain any danger for the health and safety of the consumers. General Safety of Products Law of 2004 (41(I)/2004) provides that breach of the general safety requirement constitutes a criminal offence.

Criminal sanctions do apply in the cases which fall within the scope of the General Safety Products Law. As demonstrated by section 29(1) of the Law in question, a person found to have breached his/her obligations will be subjected to a prison sentence for a period not exceeding two years and/or a fine of no more than €8,543.01.

2 Causation

2.1 Who has the burden of proving fault/defect and damage?

Any person suffering the damage, thus the Claimant, must prove that he suffered damage wholly or partly due to a defective product. If he does prove so, the producer shall be liable, without anyone having the burden to prove fault/defect. The person suffering the damage has the right to claim damages without prejudice to any other rights he may have deriving out of the contract or another legal provision.

2.2 What test is applied for proof of causation? Is it enough for the claimant to show that the defendant wrongly exposed the claimant to an increased risk of a type of injury known to be associated with the product, even if it cannot be proved by the claimant that the injury would not have arisen without such exposure?

The claimant, who has suffered the damage, has the burden to prove, on the balance of probabilities, that the defendant’s product caused the damage suffered. Applying the ‘but for test’, as seen in the Defective Products Law, the claimant would have to prove that, but for the defendant’s defective product, he would not have suffered damages.

If the claimant decides to claim damages from a breach of contract then it is necessary for the claimant to prove, once again on the balance of probabilities, that the defective product was a breach of either the implied or express terms of the contract.

2.3 What is the legal position if it cannot be established which of several possible producers manufactured the defective product? Does any form of market-share liability apply?

In the instance where it cannot be ascertained which of the possible producers manufactured the product, Article 3(3) of the Product Liability Directive would apply as it provides that, where the producer cannot be identified, each supplier of the product shall be treated as its producer, unless he/she informs the injured person, within a reasonable time, of the identity of the producer or of the person who supplied him with the product. This method will also apply in the case of an imported product.

2.4 Does a failure to warn give rise to liability and, if so, in what circumstances? What information, advice and warnings are taken into account: only information provided directly to the injured party, or also information supplied to an intermediary in the chain of supply between the manufacturer and consumer? Does it make any difference to the answer if the product can only be obtained through the intermediary who owes a separate obligation to assess the suitability of the product for the particular consumer, e.g. a surgeon using a temporary or permanent medical device, a doctor prescribing a medicine or a pharmacist recommending a medicine? Is there any principle of "learned intermediary" under your law pursuant to which the supply of information to the learned intermediary discharges the duty owed by the manufacturer to the ultimate consumer to make available appropriate product information?

There is an obligation on the producer to warn the consumer of any foreseeable or inherent risks, either through the use of labels on the exterior packaging or in the instructions of use. If the product has already been marketed, then the producer should take reasonable measures to warn and decide whether it would be in the best interests of the public to withdraw the product. General Safety of Products Law 41(I)/2004 provides that within the limits of their respective activities, producers must provide consumers with all the appropriate information to enable them to assess the risks inherent in a product throughout the normal or reasonably foreseeable period of its use, where such risks are not immediately obvious without adequate warning, and to take precautions against those risks. Breach of this obligation gives rise to criminal liability. No such provision regarding the “learned intermediary” principle appears in the relevant legislation.

3 Defences and Estoppel

3.1 What defences, if any, are available?

Section 12 of the Defective Products Law, applying the provisions afforded by the Products Liability Directive, provides the following defences for the defendant producer:
(i) That the product was neither manufactured by him for sale or any form of distribution for economic purpose nor manufactured or distributed by him in the course of his business;
(ii) That he did not put the product into circulation;
(iii) In the case of a manufacturer of a component, that the defect is attributable to the design of the product in which the component has been fitted or to the instructions given by the manufacturer of the product;
(iv) That the defect is due to the compliance of the product with any provisions of legislative acts and/or mandatory regulations issued by the public authorities;
(v) that, having regard to the circumstances, it is probable that the defect which caused the damage did not exist at the time when the product was put into circulation by him or that this defect came into being afterwards;
(vi) that, without him being the producer or the importer of the product, he revealed the identity of the producer or the person that supplied him the product; or
(vii) that the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered.
In all these circumstances, the burden of proof is for the defendant to demonstrate their applicability in his case.
In addition, pursuant to the General Safety Law, section 35, the person who, by virtue of section 29(2), is facing criminal charges, will be able to rely on the defence that he/she took every reasonable measure and exercised all reasonable care.
If the claimant’s case is based on the tort of negligence, as regulated by the Civil Wrongs Law, Cap. 148, the common law defences will apply.

3.2 Is there a state of the art/development risk defence? Is there a defence if the fault/defect in the product was not discoverable given the state of scientific and technical knowledge at the time of supply? If there is such a defence, is it for the claimant to prove that the fault/defect was discoverable or is it for the manufacturer to prove that it was not?

The Defective Products Law offers the defence for the defendant to demonstrate that the level of scientific and technical knowledge at the time when he placed his product on the market did not facilitate or enable the discovery of the defect.

3.3 Is it a defence for the manufacturer to show that he complied with regulatory and/or statutory requirements relating to the development, manufacture, licensing, marketing and supply of the product?

According to the Defective Products Law, it is a specific defence for a defendant to prove that he complied, either wholly or in part, with provisions laid down by either regulatory or statutory instruments.

3.4 Can claimants re-litigate issues of fault, defect or the capability of a product to cause a certain type of damage, provided they arise in separate proceedings brought by a different claimant, or does some form of issue estoppel prevent this?

The final judgment of the court is conclusive. The doctrine of estoppel will only arise to prevent those same parties from re-litigating the same issues. If the proceedings are brought by different claimants, then the doctrine of estoppel will not apply.

3.5 Can defendants claim that the fault/defect was due to the actions of a third party and seek a contribution or indemnity towards any damages payable to the claimant, either in the same proceedings or in subsequent proceedings? If it is possible to bring subsequent proceedings is there a time limit on commencing such proceedings?

In the instances where it has been proven that the defective product has either wholly or partly caused the damage in question, the producer will be held accountable. This also extends to circumstances whereby the damage has been caused by both the producer and by the action or omission of a third party. This does not prevent the claimant also bringing a claim against the third party.

Proceedings against the third party can either be brought at the same time as the claim against the producer, or after the original proceedings have been brought. This can be done by applying to the court by way of an ex parte third party notice or contribution notice, within a month of the filing of the defence, as provided for by the Civil Procedure Rules.

3.6 Can defendants allege that the claimant’s actions caused or contributed towards the damage?

Contributory negligence may be claimed, and this is regulated by section 7(c) of the Defective Products Law. It provides that the liability of a producer may be reduced or nullified if the damage has been caused by both the defect in the product and on account of the claimant or any other person for whom the injured claimant is responsible for.

4 Procedure

4.1 In the case of court proceedings is the trial by a judge or a jury?

In Cyprus, all criminal and civil procedures are conducted by judges, not a jury system.

4.2 Does the court have power to appoint technical specialists to sit with the judge and assess the evidence presented by the parties (i.e. expert assessors)?

The Court itself does not have the power to appoint technical and expert specialists to assess the evidence for the Court. The parties themselves are responsible for calling expert witnesses to prove the intricacies of their case which would consequently be subjected to cross-examination.

4.3 Is there a specific group or class action procedure for multiple claims? If so, please outline this. Is the procedure ‘opt-in’ or ‘opt-out’? Who can bring such claims e.g. individuals and/or groups? Are such claims commonly brought?

Class actions can be brought under the Civil Procedure Rules, which provides that people, who have the same interest or legal cause, can be authorised by the Court to enjoin and sue or defend, on behalf of or for the benefit of all interested and affected parties.

Where a judgment is issued in a class action suit, all parties involved in the action are bound by the Court’s judgment which can thereby be enforced against each and every individual.

4.4 Can claims be brought by a representative body on behalf of a number of claimants e.g. by a consumer association?

This is possible, provided that the representative body obtains a power of attorney from each individual who wishes to be represented by the body and the pre-requisite authorisation from the Court.

4.5 How long does it normally take to get to trial?

This depends on the circumstances, the complexity of each case and the litigation tactic employed by the parties. The instructions of the Supreme Court of Cyprus call for the speedup of the process, the rapid access to justice and for an average 3-year maximum period to get to trial. However in practice it takes much more time from the issuance of proceedings until trial of the substance of a case.

4.6 Can the court try preliminary issues, the result of which determines whether the remainder of the trial should proceed? If it can, do such issues relate only to matters of law or can they relate to issues of fact as well, and if there is trial by jury, by whom are preliminary issues decided?

As a general principle, it is in the interests of the parties in dispute and the administration of justice that all the issues are tried at the same time. However potentially decisive issues can be tried before or separately from the main trial. The Court may issue a pre-trial order for: (a) trial of a preliminary issue on a point of law; and (b) separate trial of preliminary issues or questions of fact.

4.7 What appeal options are available?

Strict time limits exist for filing an appeal. A notice of appeal against a judgment on the merits must be filed within 42 days from the date of the judgment. An appeal against interlocutory judgment must be filed within 14 days from the date of that judgment. According to the Supreme Court of Cyprus precedent law, only judgments which have an imminent effect on the rights of the parties may be appealed in the case of interlocutory judgments.

4.8 Does the court appoint experts to assist it in considering technical issues and, if not, may the parties present expert evidence? Are there any restrictions on the nature or extent of that evidence?

As aforementioned in the answer to question

4.2, only the parties involved in the case are allowed to present evidence to support their arguments. Evidence is deemed admissible in accordance with the relevant provisions in Cyprus Evidence Law and common law principles. Common Law rules of evidence modified by statutes apply.

4.9 Are factual or expert witnesses required to present themselves for pre-trial deposition and are witness statements/expert reports exchanged prior to trial?

There are no requirements by Cyprus law which would need factual or expert witnesses to present themselves for pre-trial deposition or for the exchange of witness statements prior to trial.
By virtue of the Civil Procedure Rules, the parties may apply to the Court to order a disclosure of any relevant documents or expert reports that either side has in their possession.

4.10 What obligations to disclose documentary evidence arise either before court proceedings are commenced or as part of the pre-trial procedures?

There are no disclosure obligations before the court proceedings commence.
However, as mentioned in question 4.9 above, during the pre-trial stage, either party can apply to the Court for an order directing the other party to discover the documents which are or have been in his possession or power which relate to the matter in question. This disclosure needs to be accompanied by a sworn affidavit. The application to disclose the documents by either or both parties will only be granted if the Court is satisfied that such discovery is necessary and will consequently provide a time limit by which the party must file its affidavit. The party can also apply for an inspection of the other party’s documents and he/she will be permitted to make copies of them. The Court may reject an application for discovery if it is of the opinion that it is not necessary at that stage of the proceedings, or because such a matter will merely impose a financial and unnecessary burden for the parties.

It is important to note that during the trial, the parties who have successfully applied to disclose documents in their possession will not be able to rely on any evidence which it has failed to disclose.

4.11 Are alternative methods of dispute resolution available e.g. mediation, arbitration?

Generally speaking, most legal disputes or claims are capable of being settled by arbitration. Domestic arbitration proceedings are predominantly regulated by the Arbitration Law Cap. 4. The United Nations Commission of International Trade Law (UNCITRAL) has adopted a model law on International Commercial Arbitration which has been adopted by Cyprus, with only a few minor amendments, by the Cyprus Arbitration Law No. 101/1987.
Parties are encouraged to resolve their disputes, insofar as they are able to do so, out of Court, so as to avoid the costs of going to trial.

5 Time Limits

5.1 Are there any time limits on bringing or issuing proceedings?

Yes there are time limits. See the answer to question 5.2.

5.2 If so, please explain what these are. Do they vary depending on whether the liability is fault based or strict? Does the age or condition of the claimant affect the calculation of any time limits and does the Court have a discretion to disapply time limits?

Pursuant to the Defective Products Law, section 11, a claim must be brought:

a) within three years from when the claimant knew or ought to reasonably have known of the damage, defectiveness and identity of the producer of the defective product.
b) within ten years from when the defective product which caused the damage was put into circulation, otherwise the right to claim will become extinguished, unless the producer stated in a written guarantee that the product may be used for a longer period, or if the damage occurred within the period of ten years but could not be reasonably discovered in time.

5.3 To what extent, if at all, do issues of concealment or fraud affect the running of any time limit?
The Limitation of Actions Law, in accordance with section 7, provides that the period of limitation shall not begin until the claimant discovers the fraud or mistake, or could, with reasonable diligence, have discovered it. The provisions of this Law however, have been suspended until the 31st March 2011 (Law No.111(I)/2010).

6 Remedies

6.1 What remedies are available e.g.monetary compensation, injunctive/declaratory relief?

The remedies available are numerous and can involve, inter alia, monetary compensation for pecuniary damages and injunctive or declaratory relief. Each claim would have to illustrate to the Court the extent of the damage suffered by stating the monetary compensation they seek from the defendant, and any other compensation that the Court would be willing to grant the injured party.

In negligence claims, damages are awarded in accordance with the principle of restitution, which essentially aims to place the injured party in the position he/she would have been but for the negligent act. Damages awarded can be nominal, special or general.

6.2 What types of damage are recoverable e.g. damage to the product itself, bodily injury, mental damage, damage to property?

Damages, in negligence claims, can be recovered in respect of death or personal injury and damage to property. However, it is not possible to claim compensation for pure economic loss.

The Defective Products Law does not allow the recovery of damages in relation to any damage which had been caused by the product itself on account of its own defect or a defect by another product of which it was a part of during the time it was distributed, and to any damage caused to property unless the amount which would be claimed exceeds the amount of €427.15.

With reference to the above Law, matters relating to compensation and damages, which are not covered by this Law, would be regulated in accordance with the principles laid down by the Civil Wrongs Law, Cap. 148.

6.3 Can damages be recovered in respect of the cost of medical monitoring (e.g. covering the cost of investigations or tests) in circumstances where the product has not yet malfunctioned and caused injury, but it may do so in future?

Unless harm or damage has been suffered, it is not possible to recover compensation for possible, future injuries.

6.4 Are punitive damages recoverable? If so, are there any restrictions?

Awarding punitive damages is extremely rare in Cyprus and the Court has discretion to determine whether it would be appropriate to award such damages.

6.5 Is there a maximum limit on the damages recoverable from one manufacturer e.g. for a series of claims arising from one incident or accident?

There is no maximum limit.

6.6 Do special rules apply to the settlement of claims/proceedings e.g. is court approval required for the settlement of group/class actions, or claims by infants, or otherwise?

There are no special rules which apply to the settlement of claims. If the parties reach an out-of-Court settlement, then they must declare this to the Court which will then issue an order by consent, incorporating the terms the parties have decided on.

6.7 Can Government authorities concerned with health and social security matters claim from any damages awarded or settlements paid to the Claimant without admission of liability reimbursement of treatment costs, unemployment benefits or other costs paid by the authorities to the Claimant in respect of the injury allegedly caused by the product. If so, who has responsibility for the repayment of such sums?

This is not possible. If the Government, or any public body, wishes to sue, they must join as a party to the proceedings or sue independently.

7 Costs / Funding

7.1 Can the successful party recover: (a) court fees or other incidental expenses; (b) their own legal costs of bringing the proceedings, from the losing party?

As a general principle, the costs follow the result of the claim, meaning that the unsuccessful party would pay the costs of the successful party. These costs could include both Court fees, legal costs and any other disbursements.

However, the Court also has discretion to allocate costs between the parties or for the costs to be assessed by the Court Registrar.

7.2 Is public funding e.g. legal aid, available?

Legal aid is not available for product liability claims.

7.3 If so, are there any restrictions on the availability of public funding?

Not applicable.

7.4 Is funding allowed through conditional or contingency fees and, if so, on what conditions?

Contingency and conditional claims are prohibited in Cyprus.

7.5 Is third party funding of claims permitted and, if so, on what basis may funding be provided?

Third party claims are rare in Cyprus, however they are permitted.

8 Updates

8.1 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in Product Liability Law in Cyprus.

There have been no recent legal updates regarding product liability during this past year in Cyprus.

CONTACTS

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