I welcome the Minister, Deputy Leyden, to the House. I am glad he survived the storms of recent times and is with us this afternoon.
Liability for Defective Products Bill, 1991: Committee Stage (Resumed).
Question again proposed: "That section 1 stand part of the Bill."
That is not relevant to the Liability for Defective Products Bill.
I was simply getting my breath and being courteous to the Minister who is always courteous.
It is a common practice in Clare.
Yes. On section 1 I raised a difficulty that I could foresee arising in relation to the processing of agricultural produce. The Minister of State, Deputy Kirk, on the last occasion, gave me a substantial reply but it was a reply to questions I never asked and now I want to raise one or two specific points with the Minister.
Section 1 refers to the processing of agricultural produce. The initial processor is the person to whom liability will attach for a defect subsequently arising. I am concerned that the section is silent in relation to defects which would arise from further processing or reprocessing. I made that point in relation to meat and in view of current developments with which we are all familiar. Beef is produced as a primary agricultural product and hopefully the primary producers are conscious — apart from that tiny minority who are prepared to abuse the trust placed in them — of the fact that they should be extremely careful in relation to the administration of chemicals or other matters where livestock are concerned.
They are very fortunate that primary producers are excluded from the ambit of this legislation. As the legislation stands, the primary producer is not responsible for defects arising but the initial processor is responsible. I put this scenario to the Minister: the initial processor does a satisfactory job and the meat is put into cold storage, a freezer or wherever. At that time it is in perfect condition. Sometime later — if we are to believe media reports it could be five years later — that meat is taken from the cold store, thawed and reprocessed, and at that point the defect arises. As this legislation stands, if a defect arises, no liability will attach to the reprocessor. In fact, the liability will revert back to the initial processor who, very likely, did a first-class job. I want the Minister to directly address that specific point.
I would like to take the opportunity to explore further and ask the Minister what is meant by the phrase "initial processing" which is defined in section 1 (1) of the Bill as meaning in relation to primary agricultural products, any processing of an industrial nature of those products which could cause a defect therein. As we said previously, the essence of the directive is contained in Article 1 of the directive and in section 2 (1) of the Bill. Section 1 (1) of this Bill provides that the producer shall be liable in tort for damage caused wholly or partly by a defect in his product. This statement of principle contained in section 2 (1) is subject to the very important qualification that it only applies to a product. A "product" is defined in section 1 (1) as including all moveables with the exception of primary agricultural products which have not undergone initial processing, even where the movables are incorporated into other movables or into immovables whether by virtue of being a component part or raw material or otherwise.
Primary agricultural products are defined in section 1 as meaning the products of the soil, of stock-farming and of fisheries and game, excluding such products and game which have undergone initial processing. The dividing line between products which have undergone initial processing and those which have not may sometimes be difficult to draw.
Therefore, I ask the Minister a number of questions: what about slaughtering and butchering, the use of hormones, antibiotics and other additives in foodstuffs? Do any of these amount to intitial processing of an industrial nature? What about the pasteurisation of milk? What about the use of pesticides and fertilisers on fruit and vegetables? Does the use of pesticides and fertilisers which, we all know, occasionally hit the wrong target or are used in the wrong concentration, constitute initial processing of an industrial nature? Is the freezing of chickens and peas for the supermarket initial processing of an industrial nature? If it is not initial processing, then what is it? If initial processing means the beginning process, what about the subsequent processes? Are they covered by this legislation?
The Bill contains the implication that while initial processing may disqualify goods from this exemption or exception, processing which comes after the initial processing is all right. That would seem to be a ridiculous situation but if we adhere to the exact wording of this Bill that interpretation is possible. Sir Gordon Barry, QC, Director of Fair Trading in the United Kingdom said in an article entitled "Product Liability in the European Economic Communities" and published in the Dublin University Law Journal 1987 that none of these operations removes the exemptions.
There is a difference between the UK legislation and ours because we mentioned initial processing specifically. The United Kingdom's Government view of the intentions of the directive has been enbodied in their domestic legislation so that the exemption for agricultural products is lost only where the essential characteristics of the products have been altered through the use of machinery on a continuous basis. The exemption is lost when, for example, fruit, vegetables or chickens undergo freezing in a factory or when meat is turned into meat pies.
While discussing similar legislation in the United Kingdom Lord Lucas of Kilworth put forward a useful and perhaps a practical twofold test for exemption. First for processing to take place some essential characteristic of the product must have been altered and, secondly, the process must be an industrial one, that is, carried out on a large scale continuously and with the intervention of machinery.
Under the definition of primary agricultural products, the phrase "products of the soil" raises interesting questions about the modern technique of hydroponics whereby crops are grown in vitamin enriched sand and water. Lord Radner pointed out in the House of Lords during a debate on similar legislation that many vegetables, particularly cucumbers, tomatoes and lettuces are grown by a process known as hydroponics where no soil is involved. I would like the Minister to look at that very important modern technique. A ridiculous situation would arise if one of two cucumbers offered for sale fell outside this legislation while the other was covered by it because of the kind of definitions contained in this Bill.
I know the Minister of State is concerned that we accede to exhortations from the European Commission to comply with European legislation but a little while longer would help to tease out this legislation. I suggest that in page 3, line 6 of this Bill, after the word "soil" the phrase, "of hydroponic culture" be inserted otherwise the phrase "products of the soil" may have to be interpreted as referring to products that are capable of being grown in soil in order to extend this definition to cover hydroponic methods of production.
Finally, I would like to ask the Minister about a most topical matter. Will a person injured by contaminated water supplies, for instance where a local authority is responsible, whether the contamination is by sewage or by an excessive concentration of aluminium sulphate, be entitled to claim damages under this legislation?
I presume we are dealing with section 1 of this Bill in a general sense. The agicultural side of production is very important and it has been referred to already in the Dáil and Seanad. The definition of "product" exempts primary agricultural products which have not undergone initial processing. Such products were also exempted by the EC directive but that directive allowed member states, under article 15, the option of bringing such products within the scope of the regime of no-fault liability. The Government have decided not to avail of this option and I concur fully with that decision.
There were calls in the Lower House to include primary agricultural products within the scope of the Bill, contending that their inclusion would enhance the image and reputation overseas of Irish food products. This contention is poorly based on a number of grounds.
Of the nine member states which have to date implemented the directive, only Luxembourg has included primary agricultural products. Agriculture is not a significant percentage of Luxembourg's gross domestic product; it comprises 2.6 per cent compared with 10.2 per cent in Ireland's case. Equally, Luxembourg accounts for only 0.1 per cent of total EC agricultural production whereas for Ireland the figure is 2 per cent. In the other eight markets, that is, the UK, Germany, Italy, Belgium, Denmark, Holland, Greece and Portugal primary agricultural products are excluded from the implementing legislation. If we were to include them consumers in other European markets could, erroneously, get the impression that our primary agricultural products were in some way suspect and I cannot afford the consequences of such a message. I presume the majority of Senators would not like that message to go out either.
The principal reason the Government decided to exclude primary agricultural products is that such products are particularly prone to hidden defects caused by environmental factors beyond the control of the producer, for example acid rain, nuclear fallout, industrial pollution or whatever. Producers of primary agricultural products, however, continue to be liable under tort and contract law. Under the law of tort the consumer has rights against the producer for damage caused if negligence can be proved. Under contract law goods are required to be of merchantable quality and fit for the purpose intended. There is also a variety of enacted legislation to control various quality aspects of agricultural production.
Some examples of this type of legislation are as follows: the European Communities Classification, Packaging and Labelling of Pesticides Regulation, 1985, as amended, prescribes various conditions which must be complied with in relation to the placing on the market of pesticides; the Animal Remedies Act, 1956 regulates the import, manufacture, sale and advertisement of animal remedies; the European Communities Veterinary Medical Products Regulation, 1986 controls the licensing and manufacture of veterinary medical products. In accordance with these regulations all such products may be sold only with an authorisation granted by the Minister for Agriculture and Food. These authorisations are granted on the recommendations of the National Drugs Advisory Board who first test the preparation in question with particular regard to quality, safety and efficiency.
Regarding primary agricultural products which have been subject to initial processing, even in a case where a defect in this type of product was not caused by the processing operation itself, the onus is on the processor to discover any hidden defects no matter how they were caused. In an attempt to clarify what constitutes initial processing, we have included the definition "any processing of an industrial nature which could cause a defect," drawn from the recitals to the directive. It is accepted of course that it will ultimately be a matter for the court to decide whether liability applies in any particular case.
The Department of Agriculture and Food, the Creamery Milk Suppliers' Association, the Irish Insurance Federation, the Confederation of Irish Industry and the Industrial Cost Monitoring Group concur with our thinking in respect of the exclusion of primary agricultural products. The main opposition to this exclusion is represented by the Consumers' Association of Ireland who feel there is no relevance to the argument that primary agricultural products are subject to environmental factors beyond the conrol of the producer. Because of the extent to which fresh vegetables are sprayed with chemicals and because the land in which they are produced is artificially fertilised, no valid distinction, the association claims, can be made between natural and processed products.
Given that the majority of other member states have excluded such products from their implementing legislation, it would be inadvisable for Ireland to take any measures which might place farmers at a disadvantage with respect to their Community counterparts. To include primary agricultural products within the scope of the Bill would oblige farmers to carry product liability insurance adding substantially to their production costs and having a negative effect on their competitiveness with other EC members.
The definition of product in the Bill will be wide and questions about whether a particular product is covered by the legislation will ultimately be determined by the courts. This situation is very clear-cut as far as I am concerned and I represent a rural constituency where farming is going through a difficult period. I could not stand over a Bill which would make farmers carry product liability insurance for a product which is of the highest possible quality; 99.9 per cent of the farming community produce quality products which meet international standards from the fresh clean environment we are fortunate to enjoy. Wrongdoers exist. The former Minister for Agriculture and Food, Deputy O'Kennedy, made a special issue of so-called angel dust or devil dust as he called it. Those people are engaging in national sabotage and will be dealt with effectively by the courts. Any new legislation required in that regard will be bought in.
Farming organisations such as the IFA and the Irish Creamery Milk Suppliers' Association, are clear in their condemnation of this proposal and of the effect it would have on their membership if any person were caught introducing angel dust into the food cycle in this country. I do not believe that a responsible organisation would allow those people to continue as members.
As Minister for Trade, I feel that this proposal would have a disastrous effect on our exports. I visited the Islamic Republic of Iran on 3 October 1991 where I invited the Minister for Reconstruction and Jihad to visit Ireland. During my attendance at the 17th Teheran Fair I made a strong case to him on behalf of the quality of our agricultural products. He visited Ireland and was so impressed by the quality of our products that he lifted the embargo on the sale of Irish primary products to the Islamic Republic of Iran. Consequently we may be able to sell 250,000 of our cattle to that country and I hope as a result that we will also resume cattle trade with Libya.
What about Iraq?
When the UN decide to lift the trade embargo on Iraq we will be there as well.
Will Larry get his money back?
When those embargos are lifted it is my policy to ensure that we sell to any trading nation acceptable under UN and EC law. I am glad that my colleague, the Minister for Industry and Commerce, is now in South Africa on an important trade mission. I have no apologies to make in that regard and I fully support his decision to go there.
It is vital that we ensure that this Bill exempt primary agricultural products from this legislation. I put it to the Seanad that that is the policy to be pursued by Government and I stand by that recommendation.
I wish to apologise, a Cathaoirligh, but I have to go to the Lower House to debate the Patents Bill. I will be represented here by the Minister of State, Deputy Kirk.
I am surprised that any Minister would gloat over the conclusion of a beef deal with the Islamic Republic of Iran, particularly when the representative involved was described — if I heard the Minister corectly — as the Minister for Development and Jihad, a rather unsavoury title. I opposed all export credit guarantees for Iraq and I was told that what I was suggesting with regard to foreign policy might be the moral approach but could Ireland afford it? I take a sardonic interest in the fact that we are now £187 million down the drain plus, we did not have moral——
Would the Senator keep to section 1.
I am replying to the Minister's remarks. I am in the same field as the Minister.
Acting Chairman
I appreciate that but if the Minister goes off the line, the Senator should not continue in the same direction.
I have two points to make. In some respects this Bill is itself a mildly defective product because some things absent from this Bill ought to be included. It does not address a couple of issues, of which one was the subject of an amendment put down by the Fine Gael Party and the Labour Party — the question of consequential loss. I am surprised that this important matter is not addressed in the Bill. I am sure Senator Cassidy would agree that if one runs an establishment providing music, in the case of a discotheque or a dancehall, a failure of musical or electrical equipment of some kind would result in consequential loss of earnings. Such loss is assessable. I have had personal experience of running a charitable concern involving discotheques and when this unfortunate situation arose we were able to claim consequential loss. In a Bill dealing with liability for defective products, if through bad workmanship, or a defective product a company or employees lose earnings there should be provision for consequential loss claims as part of general liability.
My second point is also brief. I am concerned with the restrictiveness for example, of section 1 (1) (b) where it says:
electricity where damage is caused as a result of a failure in the process of generation of electricity.
Would the Minister agree that this is a variation from the directive itself?
Acting Chairman
That was the subject matter of amendment No. 5 and was disposed of the last day.
I am addressing the principle; I am not supporting the amendment which deleted something. I would like to put a slightly different point, I would not restrict this to electricity. The Minister gives a further definition, where "damage is caused as a result of failure of the process of generation of electricity". That narrows the definition, it should be extended to cover, for example, the distribution of electricity and pylons. A defective pylon may leak microwave radiation and cause damage to livestock and individuals, and as this section is framed, the manufacturers of defective pylons would be excluded.
Section 1 is important because it gives the various definitions under which this legislation operates. Essentially the points that have been made so far on this side of the House have recommended broadening the parameters within which strict liability will apply. That is the difference between what we and the Minister have said.
Where do we draw the line? Do we adopt a minimalist approach or a maximalist approach, if there is such a word? We have, in general, adopted a minimalist approach to all European legislation coming to this House. First, we have been very lethargic about introducing it, only introduced this Bill when proceedings had been initiated so that we had no choice but to do so. It should have been introduced by the middle of 1988 and we are almost into 1992 now and still have not dealt with it. Second, if we are introducing a process of strict liability in relation to defective products, are we going to establish a one or two tier schedule? If we are going to have strict liability for the consumer on one level and not on another, we will end up with a mish-mash and a curate's egg, to say the least. It would be more desirable to establish a broader set of parameters for the application of legislation particularly in section 1 where the narrow definition of damage does not apply to the actual product nor to damage caused by death or personal injury. Criteria for claims are limited to private use with no provision for professional or occupational use which should be covered.
The major area of consequential loss covering damage, economic and financial loss, pain and suffering has been excluded. A discretionary line has been drawn. I know that drafters of the legislation in the context of the directive must draw a line somewhere, but the line is drawn too narrowly. We are not thereby going to effect the purpose of this legislation, namely, to shift the burden away from the tort situation onto strict liability for the producer. We have not achieved that and I would have preferred the Minister to have accepted some of our amendments.
The definition of initial processing is a major concern and the Minister has not given a satisfactory answer. Initial processing means, in relation to primary agricultural products "any processing of an industrial nature of those products which could cause a defect therein". The problem is to determine where processing starts. There is no clear indication of that. "Primary agricultural products" includes products of the soil, stock-farming, fisheries and game excluding such products which have undergone initial processing. This is a very grey area. When we consider what is going on in the present tribunal and what happened in the Goodman factories where initial processing took place, I wonder if countries which have already passed this legislation and who have received beef from this country that may have been tampered with in processing will be looking for compensation?
I request that Senator Costello not refer to the tribunal.
I have completed my point.
Acting Chairman
Any tribunal matter is for the tribunal only.
It was not so much the tribunal I was referring to as processing in our beef industry. I was giving an example of processing.
The question I would like to ask is how do we protect the initial product, whatever about the initial processing? It is very easy for us to say that we have a huge agricultural industry but we also have a massive manufacturing export industry. What is paramount for us is high quality goods that can compete with the best in Europe and control standards as high as anywhere else. Because we are the garden of Europe we should be the first to implement defective product legislation in relation to our primary product, agriculture.
I disagree with the Minister of State, Deputy Leyden, when he said we must be very protective of the farmers and not place them at a competitive disadvantage or add to production costs. It is desirable, rather, that farmers produce high quality products. We have had a terrible history of failed bovine tuberculosis eradication; We spent £1 billion on this scheme. There have been abuses in the management of agricultural produce and of the national herd. The same abuse occurred in other areas such as the scandal which was the cause of our losing the Iranian market in the first place.
Acting Chairman
I do not think the Senator should refer to that.
The Minister has already said that the Iranian market has been opened up again and I am delighted to hear that. It is relevant to what I am saying. We are talking about the quality of the product.
Acting Chairman
Is it relevant to section 1 of the Bill?
I refer to the definition at lines 28 to 30 of "initial processing"; at lines 6 to 10 of "primary agricultural product"; and at lines 10 to 13 of product. "Product" means all movables with the exception of primary agricultural products which have not undergone initial processing.
Acting Chairman
I appreciate the Senator's quoting separate lines but he is inclined to stray into a Second Stage speech and that is not appropriate on Committee Stage.
I am addressing the definition and expanding on how we should have leeway in relation to that exemption given for primary agricultural products. I am explaining this because it is important to have high quality control on any exempted area.
Senator Kennedy raised a question about products that are not quite products of the soil under the normal definition and I am not sure if we got an answer to that. The expression Senator Kennedy used was hydroponic culture and it is possible now to grow certain items in sand and in water. Hydroponic culture does not seem to fall within the definition of primary agricultural products.
We seem to be exempting anybody who might have been responsible for a defective product not covered by the definition of initial processing, for example, chemicals, hormones, growth promoters and pesticides which may cause change in the product administered prior to the processing stage. I do not see why there should not be strict liability there as well. If there was it would ensure we had the finest agricultural industry and the finest agricultural produce anywhere and that is the best way to ensure that.
Will the Minister clarify section 1 (2) where it says: "A word or expression that is used in this Act and is also used in the Council Directive has, unless the contrary intention appears, the meaning in this Act that it has in the Council Directive". That seems to be tautology because every word defined in the Council Directive has been defined in the Bill. Why state the same thing? It seems to be unnecessary duplication. Why is it presented in this way?
Since I raised the initial queries in relation to section 1 the debate has expanded considerably. This highlights the concern of Senators that the Bill, as passed, should be adequate to deal with the matter.
There are one or two matters I want to respond to before I come back to my specific question. The Minister of State, Deputy Leyden, referred to his successful marketing trip to Iran. He was justified in feeling pleased with the outcome of his visit and I congratulate him on that. A market for 250,000 cattle from this country is extremely valuable at the present time and, to whatever extent he was responsible for ensuring that, he deserves to be complimented. I sincerely hope that when the Minister of State Deputy Kirk goes marketing, he will be equally successful in his own sector of agriculture.
In case the implication of the point I raised in relation to primary agricultural produce may have been misunderstood, I agree it is important and the correct approach, to exclude primary agricultural products from the effects of this measure. As the Minister pointed out, Luxembourg is the only EC member state that has included agricultural produce. A very high percentage of agricultural producers, in the high nineties, find it in their economic interest to produce the best possible product. They are conscious of that, and are doing so. A tiny percentage has abused the system and put certain aspects of agricultural produce at risk. I accept that the full rigours of the law are being applied to them, but seriousness of what they are doing is such that those convicted of being engaged in that practice should never be allowed to farm again. In the trade I represent in this House, as Senator Honan is well aware, if we transgress on three occasions we can be permanently banned from participating in our profession. If there is as serious an abuse in relation to such a primary product the same penalties should apply.
I am concerned that my question has not been answered. I do not want a lengthy reply. I am asking a very specific question in relation to meat and the reprocessing of meat. When livestock leaves the farm, there is no liability at that stage. Initial processing in the meat factory then takes place and liability can attach to defects at that point. My point is that, where no defects occur at that initial processing but years later the meat is extracted from cold storage and reprocessed and the defect occurs at this point, this Bill brings back liability to the initial processer, not the reprocessor. That is wrong. Is my interpretation of the section correct or not?
My question was not answered the last day and has not been answered today and in so far as I can insist, I want a reply on that specific point. I do not wish to involve other institutions in this, but our heads would be in the sand if we were not aware of certain disreputable practices that have taken place in this industry. We would be failing to fulfil our duty if we did not ensure the presence of safeguards in any legislation before us when we have the opportunity to prevent and to deal with such situations.
Again, I will repeat the query. I refer to a situation where no defect occurs in the initial processing of the meat, but years later it is extracted from cold storage, reprocessed, and a defect occurs then. Under this measure there is no liability at that point for defects arising then. In fact, if a defect arises at that point, it goes back to the initial processor who may not be and very likely was not at all responsible for the defect that has arisen at a reprocessing stage. I want a simple answer. Is my interpretation correct or not?
Like other Senators, I am rather disappointed the Minister of State, Deputy Leyden has not endeavoured to reply to a number of questions that were asked. Senator Howard has repeated the basic question. The Minister should endeavour to answer the questions, and if he cannot answer them he would be as well off to say so.
Towards the conclusion of my remarks I asked, for example, if this legislation covers the modern technology of hydroponics. The Minister did not reply to that or make any reference to it.
Secondly, I asked what would be the position of a person who was injured, for example, by contaminated water supplies, where the water supply had been contaminated by sewage, for example, or by excessive concentration of aluminium sulphate. I mention those matters because they are very much in the news at the moment. Many areas of the country appear to be in breach of EC guidelines and standards in regard to water supplies. If the Minister is not in a position now on Committee Stage to refer to the points we have raised, perhaps he might be in such a position on Report Stage. I would like to know the position of local authorities, and of a person who has suffered injuries, and also the position regarding the new technology.
I am glad to have the opportunity to return to the House to recommence the debate on this matter. Having listened to the contributions of various Senators I noted that many of the points had been raised during the debate the previous day.
On the question of initial processing, I listened to my colleague Minister Leyden and I thought he dealt quite adequately with the query under that heading. I should also say, in the context of this legislation, there is no question of this measure having been suddenly put together over a very short period. This matter has been in gestation for some time. There has been considerable consultation with the various interest groups involved and as a consequence of that consultation, the provisions in the legislation reflect what is best having regard to the need of the consumer at this time and the need of the primary producer.
Senator Howard referred to the defect in, for example, meat which has been processed and subsequently defrosted. In those circumstances the individual who carried out the defrosting would be liable for any defect which might subsequently arise.
Senator Kennedy referred to hydroponic culture. We are in the process of getting the exact, definitive, technical definition of hydroponic culture. We will have an opportunity to come back to that point at a later stage. Senator Costello referred to section 1 (2) which states:
A word or expression that is used in this Act and is also used in the Council Directive has, unless the contrary intention appears, the meaning in this Act that it has in the Council Directive.
That is a standard provision in all legislation giving effect to Community instruments. Together with section 1 (3), it is designed to ensure that in matters of interpretation a precedent is given to the Community instrument over national law.
We feel that the Bill fully meets the requirements of the legislation. It is the view of the Government that the Bill strikes the balance between the interests of the consumer and the producer. We sell perhaps 80 per cent of our produce overseas and that is the vital artery for our economy. We must have regard to that fact in any legislation brought before the Houses of the Oireachtas. I believe the Government have succeeded in getting the balance right in the prevailing circumstances.
I must have regard to the very considerable interest a number of Senators on the Opposition benches have in this legislation. We welcome their interest and their endeavours to tease out and get clarification on various points in the sections as we go along. I will do my best to deal with them as they arise. When we get the exact, technical definition on hydroponic culture, I will endeavour to respond to Senator Kennedy.
I would like to thank the Minister of State for endeavouring to respond to the specific questions raised, but he has not responded to the final question I asked: what is the position of a person who is injured by contaminated water supplied by the local authority? Does that person come within the scope of this legislation?
Could that in any sense be regarded as a product under this section?
I do not think so. The position is that the point Senator Kennedy mentions is not covered in this legislation. Naturally, the exact circumstances in which the contamination to which he refers would happen is not intended to be covered in this legislation. I am sure there are various other remedies in legislation under which the matter can be dealt with adequately.
In the definition section, section 1 (1), it states quite clearly that "product' means all movables with the exception of primary agricultural products which have not undergone initial processing". Is it now suggested that local authorities are to be exempt from the definition of product here?
I am intrigued by the Senator's intervention here. In what sense would water be regarded as a product? Is the local authority now, in some sense, producing water?
It would certainly be a movable.
I think we have adequately covered the point in relation to water and the local authority. We have clearly indicated that it is not intended to be covered here and that is, I hope, the explanation.
It is not our intention to prolong the discussion beyond what is a reasonable attempt to obtain clarification on the measure, particularly in relation to section 1. We proposed five amendments to the section, we argued about it the last day and have continued the discussion here again today. It is our belief that section 1 is seriously flawed and for that reason we will oppose it.
Question put.
The Committee divided: Tá, 30; Níl, 17.
Tá
- Bennett, Olga.
- Bohan, Eddie.
- Byrne, Hugh.
- Byrne, Sean.
- Cassidy, Donie.
- Conroy, Richard.
- Dardis, John.
- Fallon, Sean.
- Farrell, Willie.
- Finneran, Michael.
- Fitzgerald, Tom.
- Foley, Denis.
- Haughey, Seán F.
- Honan, Tras.
- Hussey, Thomas.
- Keogh, Helen.
- Kiely, Dan.
- Kiely, Rory.
- Lanigan, Michael.
- Lydon, Don.
- McCarthy, Seán.
- McGowan, Paddy.
- McKenna, Tony.
- Mullooly, Brian.
- O'Brien, Francis.
- Ó Cuív, Éamon.
- O'Keeffe, Batt.
- Ormonde, Donal.
- Ryan, Eoin David.
- Wright, G.V.
Níl
- Cosgrave, Liam.
- Doyle, Avril.
- Hederman, Carmencita.
- Hourigan, Richard V.
- Howard, Michael.
- Jackman, Mary.
- Kennedy, Patrick.
- McMahon, Larry.
- Manning, Maurice.
- Naughten, Liam.
- Neville, Daniel.
- Norris, David.
- Ó Foighil, Pól.
- O'Toole, Joe.
- Ross, Shane P.N.
- Ryan, Brendan.
- Staunton, Myles.
Tellers: Tá, Senators Wright and Fitzgerald; Níl, Senators Cosgrave and Howard.
Question declared carried.
Before we deal with section 2 I would like to inform Senators that we are honoured by the presence of the Nigerian ambassador in the House. I am sure the House would like to join with me in giving her a special welcome.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
Section 2 of the Bill establishes liability for damage caused by defective products. There are a few points in section 2 which I would like the Minister to clarify but, irrespective of what is said on section 2, by the time we come to section 6 there will be adequate defence for everything contained in section 2 in relation to the placing of liability. However, I wish to take up a point made by Senator Kennedy on the last section — I am sure he will develop this point himself — relating to the liability of local authorities in respect of the supply of contaminated water.
Section 2 states that a "producer" means the manufacturer or producer of a finished product, the manufacturer or producer of any raw material or the producer of a component part of a product. In relation to the treatment of water supplies there is no doubt about the situation with regard to the local authorities under those three headings. Section 2 (1) (d): "any person who, by putting his name, trade mark or other distinguishing feature to the product or using his name or any such mark or feature in relation to the product, has held himself out to be the producer of the product". Can any local authority deny they are the producer of the finished product that comes through our taps?
I raise that point because while a response was given to the matter on section 1 that response will be inadequate in relation to the various headings under which liability can occur in section 2. Therefore, I would like the Minister to respond to those points.
As Senator Howard indicated, section 2 is very comprehensive. It defines in a most comprehensive way the definition of "producer" under six headings, and Senator Howard rightly adverted again to the question of the responsibility of local authorities under this legislation. Will the Minister of State consider that matter again before Report Stage?
I would like to ask one or two questions in regard to section 2 (1) (d). It provides that a producer shall be liable for damages in tort for damage caused wholly or partly by a defect in his product and the producer is then defined as any person who, by putting his name, trade mark or other distinguishing feature on the product or using his name or any such mark or feature in relation to the product, has held himself out to be the producer of the product. I would like to ask three questions in regard to that.
What is the position of a pharmacist — generally referred to by many people as a chemist, but we will use the word "pharmacist" in this case — who puts his or her name only on a prescription as is typically done? This can arise, as we all know, in the case of a drug which is in fairly common demand in the form of pills and the pharmacist draws his supplies from time to time from various manufacturers of that drug or pill. If a batch is faulty and a customer suffers injury, what is the position in regard to such a pharmacist? Those questions were not teased out in the other House.
In regard to licensing, what is the position in relation to a company who develop a product and license another company to manufacture it? In general, what is the overall position with regard to licensing? What is the position in regard to the setting up of a subsidiary company where, for example, the assembly, manufacture, patent, trade mark and the licence all are vested by the parent company in a subsidiary company? In such case against whom will an injured person have recourse where, for example, the subsidiary company are capitalised at, say, £100 and the damage is assessed at £1 million? I appreciate there is other legislation in place, such as company law legislation and so on, that covers this matter but it also arises under this legislation. Therefore, I ask the Minister to indicate the position in regard to those matters and if he cannot do so now, perhaps he might do so on Report Stage.
Section 2 deals with liability for damage caused by defective products. Surely my colleagues on the other side are not suggesting that the water for which supply all county councils and local authorities are responsible is anything but top class? If there is damage to water it happens somewhere down the line. We are all delighted money has been allocated to the county councils to deal with water problems if water is contaminated — and I am not saying we do not have polluted water — it is not caused by the local authority; the water could have been contaminated at some point down the line. I am disturbed the Senator would think that water leaving a local authority plant would be polluted. Perhaps I misunderstood the Senator but we must be clear on who we blame, whether it be Clare County Council, Kildare County Council or Limerick County Council. I will stand by the county councils.
There is no great difference between Senator Honan's view and mine. My concern is that where a public water supply becomes contaminated, under this legislation the liability, in the event of inability to identify those responsible would go back to the producer which in this case is the local authority. That is what I want the Minister to clarify.
I am not trying to get at the local authorities. I have no doubt it is the intention and focus of local authorities to produce a quality product but if, for some reason, the tap water in a particular local authority area has been contaminated, in this Bill we are placing liability on the manufacturer or the producer of the finished product. All tap water has undergone treatment. In this Bill "producer" means the manufacturer or producer of any raw material or the manufacturer or producer of any component part of a product, and any person — and I assume any person includes any body — who, by putting his name, trade mark or other distinguishing feature on the product or using his name or any such mark or feature in relation to the product has held himself out to be the producer of that product.
I know no local authority will deliberately contaminate a water supply, but if a contamination occurs we are placing liability on the manufacturer or producer of the product, and in this case it is evident who is involved.
Perhaps on Report Stage the Minister of State might be in a position to make a more detailed statement on this matter because it seems that a local authority could, indeed, be covered by this. If the evidence in court suggests that the water supplies were contaminated — this is only hypothetical in the vast majority of cases, Senator Honan, of course, is right — we should not suggest that local authorities will never be responsible. There was a case in Chicago where more than 400 per cent of aluminium sulphate in excess of what should have been in the waters was put in the waters and there were 19 fatalities as a result.
There is always the possibility of a mistake being made, nobody is suggesting that these things are done deliberately. The Minister seemed to suggest that under this legislation the water supply is not the concern of local authorities, but I suggest that it is. This is a genuine question because I am not sure whether it is.
In Britain the legislation applies to the Crown and, therefore, applies to all Departments of State, State agencies, nationalised industries and so on. If, under this legisation water is defined as a product and the local authority are the producer of that product within the broad terms outlined by Senator Howard, it seems extraordinary to exempt local authorities from liability.
Of course, there is the historic case of Byrne v. Ireland where the Supreme Court ruled that local authorities, State industries and that nationalised industries could not be exempt from the normal liabilities of negligence in tort. It may well be that the European Communities have no intention of exempting local authorities from the scope of this legislation. Why should the private sector be subject to strict liability when a local authority or any other such authority that supply a product are exempt? Perhaps the Minister will clarify this on Report Stage.
In relation to the water supply, the Bill does apply to public bodies if they are the producers of a product. The question of whether a local authority is a product for the purposes of the Bill naturally would be a matter for the courts to interpret if there was a difficulty at any given time.
We have to look at the practicalities of water supplies generally. A local authority or a combination of local authorities abstract water from a particular source, whether it is the Dublin Mountains, the Cooley Mountains or elswhere, treat it by way of chlorination or some more advanced treatment and supply it to the homes of the people within the catchment area. The question then arises as to contamination, intentionally or accidentally, and who is liable in those circumstances. The Senator raised a very worthwhile point but I envisage that there will be considerable heart searching in the context of a court case to decide whether a natural resource abstracted from a surplus or underground source could be classified as a product delivered to the homes of people within the catchment area of the system. We would be ill advised to try to interpret that here; it might be better left to the courts to decide.
Where somebody produces a product under licence the licensee would be liable. If a pharmacist makes up a drug using various compounds and the drug subsequently causes injury, then the producer of one or possibly more of those compounds which are shown to have caused the injury would be liable. I hope, to some extent, I have clarified the points the Senator raised.
As a result of a communication, which I am sure we all received, from the Consultative Committee of Accountancy Bodies, Ireland, I wish to raise another matter with the Minister. It is not clear whether products designed to reduce damage, for example, car safety features such as fire alarms, and so on, could give rise to liability if they fail to operate properly due to a defect. The communication states that the Bill should clarify whether a failure to prevent damage or warn of impending damage could be deemed to have caused damage. I am sure this has already been raised with the Minister, but I am not aware of a reply. This is an interesting point, particularly with regard to car safety features and I presume safety belts, fire alarms and so on are included there. The communication asks if those features would give rise to a liability if they fail to operate properly due to a defect. It goes on to state that the Bill should clarify whether a failure to prevent damage or warn of impending damage could be deemed to have caused damage.
In the Bill a "producer" means the manufacturer or producer of any raw material or the manufacturer or producer of a component part of a product. That clearly sets out the point the Senator has in mind. Again, a "producer" means the manufacturer or producer of any raw material or the manufacturer or producer of a component part of a product, or in the case of a product of the soil, of stock farming, and of fisheries and game.
I thank the Minister for replying to two of my questions. However, he did not deal with the question of a parent company setting up a subsidiary for the purposes of manufacturing and supplying a product. Obviously, this is covered under company legislation but will it be covered under this legislation?
For the purpose of the Act, whoever produces the product will be liable if the product is defective. In the incidents which the Senator cited, if the subsidiary company produce the product then, obviously, they will be liable.
I was hoping that that would not be the reply. That seems to blow a hole in this legislation. If it is the opinion of the Minister that the subsidiary company is liable and that that is the end of the matter, then obviously the subsidiary company will only be responsible as I indicated, for £100 and the damages may be assessed at £1 million. Does the Minister not see the implications of suggesting that the liability rests with the subsidiary? I hoped the courts would see through this and hold the parent company liable.
May I intervene to clarify the point I made? Naturally there would be a reference to the relevant company law to establish the structure of the subsidiary company. The liability would be considered in a more global context. If the subsidiary company were the producer of the product, it is fairly obvious that under the law they would be liable but that would be having due regard to the interpretation of company law.
I want to raise another point on section 2 (3) which is quite complicated. It deals with what has been described not alone in Europe but in the United States as the problem of the unknown or the unidentifiable defendant. This section deals with the liability of the supplier of defective products and states any person who supplies a product shall be liable for the damage caused by that product if the supplier fails to identify the person who supplied the product to him, thereby, in my view, going up the chain of supply to the ultimate consumer who, as is intended, should bear liability for the defect under this legislation. Thus, the finished product would usually consist of a large number of separate components and those components may even have components within themselves. Therefore, the intention of section 2 (3) is that the liability of the supplier should only extend to identifying the producer of the finished product and not to the producers of the component of that finished product. Will the Minister clarify that because there is a certain confusion as to what should be identified?
It appears to apply only to the manufacturer of the finished product. For example, in the case of a person who is supplied with a motor car, a part of which is defective, under section 2 (3) the product which was supplied and was defective is quite clearly the motor car and, accordingly, the retailer who, through his showroom or wherever supplied the car, is only bound to identify who actually made the car. He is not expected to identify the manufacturers of the various component parts nor is be bound to identify who made the defective part which has been part of the manufacturing process and ultimately forms part of the finished product which is then sold. It is unclear how that section will operate. In my view it will only apply to the manufacturer of the finished product.
The problem of the unknown defendant has arisen in various shapes and forms in the United States and is also likely to arise here. In the United States the problem arose in that persons who were injured, usually by a prescribed drug, due to the passage of time, were unable to establish which of several possible manufacturers had produced the drug that caused the injury.
One can imagine the problem where hundreds of manufacturers produce the same type of drug. Indeed, a drug which caused widespread product liability problems in the United States was DES, a synthetic product which was widely prescribed for pregnant women to prevent miscarriages during the years 1947 to 1971. That drug was supplied by hundreds of drug manufacturers in the United States. In 1971, following reports linking DES with the subsequent development many years later of cancer in the daughters of those women who had taken the drug, the Federal Drug Administration in the United States effectively banned the drug. The problem which those women were than faced with was that of establishing which of the vast number of manufacturers had produced the DES which was taken by their mothers during pregnancy. Therefore, the practical implementation of section 2 (3) needs to be considered.
The courts in the United States responded very well to the problem because it is a tradition in the United States to impose strict liability on manufacturers. In response of this fairly widespread problem, the courts there evolved a number of new principles on which strict liability may be founded. Without going into the details, these principles include such theories as enterprise liability, alternative liability, the market share theory, the risk contribution theory and so on. Basically we should try to apportion blame where a number of manufacturers produce the same type of drug or product. I ask the Minister to consider this before Report Stage because it is something about which the European Commission and the courts are concerned. In the United States a case has been taken to the Supreme Court in this regard. I do not expect the Minister, unless he wishes to do so, to reply to it in detail now.
Subsection (3) is based on article 33 of the directive and is designed to facilitate an injured person who wishes to take an action against the producer of a defective product but who has difficulty in establishing who is the producer. By virtue of this subsection any person in the supply chain, from the retailer back, will be liable unless he identifies his supplier or the producer within a reasonable time of being requested to do so by the injured person. The phrase "within a reasonable time" is not defined in the Council directive and will ultimately be a matter for the courts to decide. It is clear from subsection (2) and (3) that an injured person should have little difficulty to establishing a liable party in those circumstances.
I believe the opposite to be true where there are a number of manufacturers of a drug which some years later is seen to have caused problems. The drug I mentioned obviously caused problems and the whole case law in the United State clearly pinpoints the fact that it is very difficult to identify what has been referred to as the problem of this defendant. I hope we would look at that because it is going to arise here. This is becoming a modern country, there is modern technology developed here. We should be aware of that. To suggest that the plaintiff would have little difficulty in identifying the defendant would not be true so far as drugs of this nature are concerned.
Before we conclude I want the Minister to confirm that I understood his reply to my query on safety features. I am talking about manufacturers and suppliers of fire alarms. The Minister referred me to section 2 (2) (a) and (b) "manufacture or producer of a finished product "and" manufacturer or producer of a component part...." My understanding is that the Minister's reply confirms that a company manufacturing and supplying a fire alarm is liable under the provisions of this legislation should the fire alarm due to a defect, fail to warn and, therefore, cause the householder to suffer damages. Is it correct that the manufacturer or supplier, or both, of that fire alarm are responsible and that liability rests on them should the fire alarm fail to function due to a defect?
My advice is that if the fire alarm fails to be activated because of a fault and there is subsequent loss or damage as a result, there would be liability in those circumstances. The Senator did not differentiate between that case and where the fire alarm did not go off and there was no resultant damage. It would appear that, where it failed to be activated and there was damage and loss, there would be a liability.
Question put and agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."
This section sets a threshold of £350 for damages, which is reasonable. We have to protect against frivolous claims. In the Dáil the Minister referred to the fact that a small claims court was close to coming into existence and that that court would take care of that.
First, I welcome this section. The threshold of £350 is reasonable. I do not think any one of us would like to see a situation where there were thousands of claims coming into the courts every day. Like Senator Howard, I will be glad to see the operation of the small claims procedure in the District Court. In the debate on the Courts (No. 2) Bill and the Minister indicated that a pilot project was being set up in the Dublin area for the operation of the small claims procedure. That has been very effective in the United Kingdom and the idea of a pilot scheme is almost a necessity. I think the rest of the country would benefit greatly from a small claims procedure. Therefore, I welcome the provision in section 3 and hope it can be linked and perhaps we could have some indication from the Minister as to the wider availability of the small claims procedure for the rest of the country.
It is not my Department, but, with regard to pilot schemes, it is a question of learning from the experience of their operation. If the results of the experience of their operation is satisfactory, the question of their further extension would be considered and dealt with expeditiously.
Question put and agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
I welcome this provision. It brings clarity into the legislation, which is important. In order to prove a case in court the plaintiff knows exactly what he or she has to prove. There are three things that have to be proved: (1) the damage, (2) the defect and (3) the casual relationship between the defect and the damage. That is the type of clarity I was pleading for in section 1; and I welcome it in section 4.
Question put and agreed to.
Section 5 agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."
As we went through the Bill I felt that the substance is in sections 2, 4 and 6. Section 5 deals with defences. We spent a lot of time dealing with the interpretations in section 1 and liability in respect of defective products in section 2; the responsibility of the manufacturer and producer of a finished product, raw material or a component part, somebody putting their name or trade mark to a product and we felt liability should attach there. Now we come to section 6. I believe section 6 provides an adequate defence to practically every liability we discussed earlier. Whether in relation to a finished product, raw material or a component part, all a producer has to do to prove he is not liable is (a) show that he did not put the product into circulation and (b) having regard to the circumstances, it is probably the defect which caused the damage did not exist at the time the product was put into circulation by him. That defence is as wide as the proverbial barn door and my colleague, Senator Kennedy and his colleagues in another establishment here in town will find scope for their talents in the series of defences provided for under section 6.
I suggest to the Minister that it is going to be virtually impossible, because of the range of defences provided here, to establish liability.
Section 6 (b) says:
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 the defect came into being afterwards...
I think that is a very safe defence for any defect that may be found in a product, that it probably did not exist at the time the product was put into circulation. Who is to say it did or did not or that the defect came into being afterwards?
Section 6 (c) says:
that the product was neither manufactured by him for sale or any form of distribution for an economic purpose nor manufactured or distributed by him in the course of his business...
The manufacturer, for example, could claim that the product was produced as a result of a hobby.
Section 6 (d) says:
that the defect concerned is due to compliance by the product with any requirement imposed by or under any enactment or any requirement of the law of the European Communities...
If that is an example of a clear explanation, I am toally baffled by it. Section 6 (b) and (c) provide an adequate defence to any of the liabilities we dealt with earlier.
Very briefly, I refer to section 6 (e): "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". This has been referred to elsewhere as the state of the art defence and it is there for manufacturers. It is clearly giving them an out and it looks comparativley reasonable at its face value. The true effect will be to render it impossible for a wronged person to succeed against a chemical company. That can scarcely be desirable when we think of thalidomide children and so on. I am sure I will be replying as a result of the Minister's response but at this stage I wish to say that section 6 provides a battery of defences.
As Senator Howard has indicated, this Bill provides quite a number of defences, indeed what might be called primary defences, in the sense that what you have to do in court is obviously to disprove a number of assumptions in regard to primary facts. The Bill itself, as he has indicated, provides six statutory defences to the principle of strict liability. The one I want to deal with is the defence provided in section 6 (e) — that the state of scientific and technical knowledge at the time he put the product into circulation was not such as to enable the existence of the defeat to be discovered; in other words, a producer shall not be liable under this legislation if he proves that particular point.
As Senator Howard has indicated, section 6 (e) provides for the development risks or the state of the art defence. Thus, a product will not be liable if, but only if, he proves that the state of scientific and technical knowledge at the time of the supply was such that he could not have discovered the defect. The inclusion of this defence has aroused much controversy. It has aroused controversy in the European Community. It has been regarded as a defeat for the European Commission. It is here in any case and it is open to us to have it included in this legislation or to seek a derogation from it. On the one hand it has been said that without the development risks defence innovation would be stifled. That would not be in the interest either of industry or consumers. On the other hand the state of the art defence undoubtedly leaves a gap in the compensation cover through which the victims of another thalidomide disaster or another Chinook helicopter disaster might slip.
This defence has been included to meet the needs of high risk industries in which innovation is often crucial. It excludes not only development risks as regards dangers unknown at the time of distribution but also liabilty for injury caused by, and I quote, "established products with previously unsuspected propensities". It is of enormous importance to the pharmaceutical sector in respect of undiscovered side-effects in new drugs and to the aerospace sector in respect of design defects in aircraft.
This exemption for the pharmaceutical sector is particularly ironic because the Pearson Commission, which boosted the move towards strict liability for defective products, has been established in the wake of and because of the thalidomide disaster. However, under this legislation, and because of the inclusion of this defence in this legislation, it appears unlikely that the victims of such a drug today would be able to recover under this legislation, or indeed under the British legislation. The defence reintroduces the concept of fault, albeit in a limited way, and thereby blurs the distinction between the two systems of liability.
The most compelling argument against the defence is that a consumer should not have to bear the risk of the unknown and that liability should be strictly imposed on the person who created the risk, albeit innocently, for commercial gain. In Germany — and it is interesting to see developments there — liability in respect of defective drugs is strict and has been for many years. Personal injury claims relating to such products are settled under the German Pharmapool, a compulsory system of insurance which encourages a high degree of co-operation between the German pharmaceutical and insurance industries.
There is a suggestion abroad now that this is the appropriate way to go. I know the Confederation of Irish Industry and the British Confederation of Industry have taken a different view. It may well be indeed that the inclusion of this defence in this Bill may prove a significant flaw in the legislation and that we should have opted for the derogation which indeed is open to us in respect of this defence. We have been rather cautious in our approach to this matter. The defence, it can be soundly argued, gravely undermines the ability of the injured person to claim compensation in matters of very serious injury in respect of the industries I have mentioned.
It seems to me that perhaps in the long term Lord Hanworth has got it right when, speaking on similar legislation in the House of Lords, he stated that on balance — and I appreciate there are good arguments on both sides — the loophole should be closed and that perhaps this defence should not be in the Bill. If injury does occur it seems the manufacturer, and especially multinational manufacturers, are in a much better position than the victim to meet costs arising from such injury. Therefore, in respect of those two industries — the pharmaceutical industry and the aerospace industry — and other very big companies it seems to me they should be able to get their house in order to cover the necessary type of insurance.
I posed the problem. I do not think this side of the House will be voting against the legislation unless Senator Howard, who is our spokesperson on the matter, decides otherwise. The parties in the other House seem to have been fairly united. However, it may happen that in a few years from now future Senators will say we got it wrong and that this defence should have been left out of this legislation.
The grounds on which the producer may be exonerated from liability are listed in this section. However, it is the responsibility of the producer to prove that these circumstances obtain in any particular case. These defences are as follows: Paragraph (a): "That he did not put the product into circulation". A product has been put into circulation when it has been delivered to another person in the course of business. He would not, for instance, be liable in a situation where the product had either been stolen and/or resold. Paragraph (b) states: "That having regard to the circumstances, it is probable that the defect which causes the damage did not exist at the time the product was put into circulation by him or that that defect came into being afterwards." The producer cannot, for instance, be held responsible for defects caused by improper handling of goods in the course of distribution or by the injured person himself. This provision would apply also to products with warnings or instructions for use which might be detached for the final supplier, thereby causing the consumer to injure himself or damage his property.
This aspect is an integral part of the presentation of the product which is one of the criteria set out in section 5 (1) for determining a defective product. Paragraph (c) states: "That the product was neither manufactured by him for sale or any form of distribution for an economic purpose, nor manufactured or distributed by him in the course of his business." This derogation would apply in the case of private transactions — for example, the private sale of motor vehicles or other items of property. Paragraph (d) states: "That the defect concerned is due to compliance by the product with mandatory regulations issued by public authorities within the European Communities." The producer would have to show, however, that the defect was the direct result of compliance with such regulations, that is, that it was impossible for the product to have been produced in accordance with the regulations without causing the product to be defective. It is important to note that this defence could only be used in a country where such national regulations exist or in a member state with similar national provisions.
Paragraph (e) states: "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." Member states were allowed by Article 15 of the directive to exclude this defence, known as the "development risks" or "state of the art" defence. It has been decided to include the defence in the provisions of the Bill.
During the discussions on the directive at Community level some member states argued that the inclusion of this defence was contrary to the principle of strict liability and in certain cases would leave the consumer with no avenue for compensation. This defence would, it was claimed, also bring about problems relating to proof and the courts would have to give lengthy consideration to cases where the defence was used. Other member states, however, argued that the absence of such a defence would cause enormous problems for manufacturers, such as the high cost of insurance and the stifling effect on innovation, especially in high risk industries like pharmaceutical production where considerable research is involved in the development of what are in many cases life-saving drugs.
Regarding insurance costs, the Irish Insurance Federation feels that the exclusion of the development risk defence would have a serious inflationary effect on liability insurance costs. In any event the burden of proof will be on the producer to show that because of the state of scientific and technical knowledge at the time the product was put into circulation he could not have been expected to discover the existence of the defect and providing such proof is likely to be difficult.
In its report on implementation of the directive on product liability, the fifth report of the Joint Committee on Secondary Legislation of the European Communities favoured the inclusion of the development risk defence as it felt the higher insurance premiums which would probably result from its exclusion would damage producers' competitive positions both on the home and foreign markets. Of the nine member states who have so far implemented the directive, eight have included the development risk defence in their national provisions. Of these eight, Germany has extended the defence to all products except pharmaceuticals, for which strict liability provisions had already been in force nationally for a number of years.
Article 15 of the Council directive also states that the option relating to development risks will be reviewed by the EC Commission ten years after the date of notification of the Council directive, that is, after 25 July 1995. The Commission may, in the light of the experience of member states in relation to this option, make proposals to the Council for change.
In the case of the manufacturer of a component or the producer of a raw material, no liability will be incurred if either can prove that the defect in the component or raw material is attributable to the design of the product of which the component or raw material is a part or to the instructions given by the manufacturer of the product. The expression "instructions given by the manufacturer" is taken to mean that in cases where the defect in the component is the result of compliance with the specification or design of the finished product, then the manufacturer of the finished product will be liable.
I want to briefly recall that the Minister of State in introducing the measure in this House stated that the directive that gave rise to this legislation was the most significant piece of EC legislation in the area of consumer protection. The Minister is perfectly right to praise his Bill, and he did that. Today and last week we spent quite a time clearing our minds on what section 1 dealt with and, in section 2, defining more liability would attach and so on. We then come along in section 6 and put adequate defence to the measures of protection we introduced earlier. Therefore, I feel we would be misleading the consumer to a degree to suggest that this is an answer to the problems caused by defective products. It is not, because although we have defined liability we have included adequate defences against that.
I share the Minister's concern that legislation should not inhibit or act as a disincentive to the provision of new drugs and experimentation. At the same time, I have to bear in mind that the effect of section 6 is to render it virtually impossible for a wronged person to succeed against a chemical company. I know Senator Kennedy referred to a convergence of views in the other House in relation to the approach to this section of the Bill, but I do not think that we in this House are obliged to follow suit at any time. Therefore, I feel, as I do, that we are nullifying a lot of our earlier good work by the all-embracing effect of section 6, it would be wrong for me to agree to section 6. Despite a very eloquent defence of its provisions by the Minister, I have expressed my reservations and his lengthy and comprehensive defence has not been adequate to convince me I should give my consent in its entirety to what is contained in the section. I will be opposing section 6.
Question put.
The Committee divided: Tá, 26; Níl, 19.
Tá
- Bohan, Eddie.
- Byrne, Hugh.
- Byrne, Sean.
- Conroy, Richard.
- Dardis, John.
- Fallon, Sean.
- Farrell, Willie.
- Finneran, Michael.
- Fitzgerald, Tom.
- Foley, Denis.
- Honan, Tras.
- Hussey, Thomas.
- Keogh, Helen.
- Kiely, Dan.
- Kiely, Rory.
- Lanigan, Michael.
- McCarthy, Seán.
- McGowan, Paddy.
- McKenna, Tony.
- Mullooly, Brian.
- O'Brien, Francis.
- Ó Cuív, Éamon.
- O'Keeffe, Batt.
- Ormonde, Donal.
- Ryan, Eoin David.
- Wright, G.V.
Níl
- Cosgrave, Liam.
- Doyle, Avril.
- Hederman, Carmencita.
- Hourigan, Richard V.
- Howard, Michael.
- Jackman, Mary.
- Kennedy, Patrick.
- McMahon, Larry.
- Manning, Maurice.
- Naughten, Liam.
- Neville, Daniel.
- Norris, David.
- Ó Foighil, Pól.
- O'Toole, Joe.
- Ross, Shane P.N.
- Ryan, Brendan.
- Ryan, John.
- Staunton, Myles.
- Upton, Pat.
Tellers: Tá, Senators Wright and Fitzgerald; Níl, Senators Cosgrave and Neville.
Question declared carried.
SECTION 7.
Question proposed: "That section 7 stand part of the Bill."
I wish to ask the Minister of State if he would set the provision in regard to the limitation period of three years and the extinguishing period in the context of the Civil Liability Act, 1961 and the Statutes of Limitation, 1957 and 1991 and set this legislation in the context of existing legislation.
Section 7 (2) provides that the right of action conferred upon the injured person under the Bill shall expire by the end of a ten year period from the date on which the actual product was put into circulation by the producer, not the date on which that type, model or product was first marketed. If judicial proceedings are pending at the end of the ten year period, liability does not expire but runs until a final decision is made. Injuries arising from any defect in the product after the expiry of the ten year period would not be covered by the Bill.
The ten year period referred to is not intended to be interpreted as a standard safe working life for all products. Reasonable life expectancy of a product which will vary from case to case is one of the factors that may be taken into account in assessing whether a product is defective. Section 5 (1) of the Bill states that: "For the purposes of this Bill a product is defective if it fails to provide the safety which a person is entitled to expect taking all circumstances into account." The ten year limitation is intended to protect the producer against claims after an unreasonable length of time when evidence for his defence might just be difficult to obtain.
Section 7 (2) (b) states that the ten year period laid down in paragraph (a) "shall have effect whether or not the right of action accrued or time began to run" during that period. In other words, the ten year limit shall apply once proceedings have not been instituted against the producer. They will also override the three year period allowed in subsection (1) of this section. Even where damage to property or personal injury are caused and discovered during the year period but proceedings have not been instituted then the injured person's right of action is still extinguished.
Question put and agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."
Section 8 provides for joint and several liability and it does so within the meaning of Part III of the Civil Liability Act, 1961. Perhaps the Minister would again indicate the operation of this Bill in the context of the Civil Liability Act.
This section provides that the principle of joint and several liability as concurrent wrongdoers as defined in Part III of the Civil Liability Act, 1961 should apply to two or more persons liable under this Bill for the same damage. Part III of that Act defines concurrent wrongdoers as two or more persons who are responsible to an injured person for the same damage whether or not judgment has been recovered against some or all of them. The expression "whether or not judgment has been recovered against some or all of them" means that in cases where two or more persons are responsible for damge or injury caused even though damages may have been recovered in respect of one of the responsible parties, right of action will still accrue to the injured person aginst the other liable persons. Another advantage to the consumer in respect of joint and several liability is the protection of the rights of the injured person in the event of one or more of the responsible parties being unable to pay their shares of the damages.
Question put and agreed to.
SECTION 9.
Question proposed: "That section 9 stand part of the Bill."
On section 9, without prejudice to Part III of the Civil Liability Act, 1961 concerning the right of contribution, the liability of the producer shall not be reduced when damage is caused both by a defect in a product and by the act or omission of a third party. I am not clear what we are providing for here. If damage has been caused by a defect in a product by an act of a third party, are we lifting responsibility from that third party because the act of the third party in some way, perhaps even in a major way, contributed to the damage suffered by the consumer? I imagine what we are dealing with is the balance of liability. I assume that it would be for a court to ascertain the balance of liability between the producer and the third party whose act or omission caused the damage. Are we making the producer totally liable despite the fact that an act or omission of a third party contributed to the damage caused, perhaps in a major way?
Section 9 (1) provides that a producer cannot avoid or reduce his liability under the Bill when damage is caused both by a defect in the product and by the act or omission of a third party. In other words, if a product was defective when put into circulation and if this defect was subsequently compounded by, for instance, a distributor of the product before the defect was caused by a distributor or any third person, then because the product was defective to begin with the liablity of the original producer cannot be reduced or avoided. However, the provisions of Part III of the Civil Liability Act, 1961, relating to rights of contribution shall apply in all cases covered by this Bill. Under the provisions of Part III of the Civil Liability Act, 1961, where responsibility for damage is shared by two or more persons, for instance, concurent wrongdoers damages are apportioned according to the degree of fault of the concurrent wrongdoers and one concurrent wrongdoer has a right to recover a contribution towards damages from any other concurrent wrongdoer.
Question put and agreed to.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill."
I welcome the prohibition on exclusion from liability. All too often we see various contracts and so on which exclude liability. I welcome this provision whereby the liability of a producer to an injured person cannot be excluded by any exclusion clause in a contract or by any notice or, indeed, by any other provision. That is very important to the consumer. I welcome section 10.
Question put and agreed to.
SECTION 11.
Question proposed: "That section 11 stand part of the Bill."
Section 11 states: "This Act shall not effect any rights which an injured person may have under any enactment or under any rule of law." I would like to link section 11 with section 1 (1), the definition section. It comes back to what we said originally. I would like the Minister of State to give us examples of the operation of this section. That is the major concern I have with this legislation. While parts of the Bill are very clear I am disturbed and concerned about the lack of clarity regarding the definition of damage and the type of injury for which injured people will be entitled to claim under this legislation. As I said, I would like the Minister to give us examples.
The section states that an injured person is basically not to be deprived of any of the benefits that they would have under any legislation or under any rule of law, but the definition section, section 1 (1), puts in doubt the whole question of recovery for consequential economic loss, loss of wages and so on, that are the normal elements of damage. I would like the Minister to comment on that.
This subsection provides that a claimant's rights under existing contract and tort laws shall not be affected by this Bill. Accordingly, under contract law the consumer will retain his rights against the supplier and under the law of tort any victim of a defective product may bring an action against any person in the chain of supply who has been negligent.
Question put and agreed to.
Sections 12 to 14, inclusive, agreed to.
SCHEDULE.
Question proposed: "That the Schedule be the Schedule to the Bill."
I understand the concern of the Minister of State that for convenience of reference, the directive should be set out in the Schedule. I acknowledged this earlier. However, in relation to international agreements, we have been accustomed to adopting two approaches. The first approach is by means of a Schedule setting out the international agreement, to incorporate it in our general law; the second approach, which in a sense has been heralded by Articles 19 and 20 of the directive, is that member states synthesise by setting out in terms that may be familiar to national courts, to parties who may be litigants and to others, the force of what is within the directive.
The law on product liability is set out within the confines of this Bill itself. Accordingly, the provisions in this Bill are to be construed according to the directive and the legislation is essentially derived from the directive. However — and it is important to stress this for the convenience of everybody and in the interests of clarity — it seems to me, and I would like the Minister to confirm, that this Bill stands on its own and that there should be no need to refer directly to the directive because what is being done is to synthesise this for the purpose of national law. Obviously this is what is intended in Article 19. Statutory precedents might require and indicate that the directive itself should not be a Schedule to the Bill and the courts and the judges may refer to the directive for elucidation of any points.
The annexing and scheduling of this directive to the Bill could give the impression that the directive is governing the Bill. The Bill stands on its own. It incorporates the key provisions in the directive, but there are provisions in the directive that are not included in the Bill. I suggest that if we adopt the second approach, to synthesise the two situations rather than to incorporate the international agreement directly into the Bill, it should not be annexed no matter how convenient because it could cause an element of confusion. I ask the Minister to consider that matter as well.
The intention behind the Bill was to give effect to the substance of the EC Directive. Certain flexibility was given in relation to different areas but nonetheless, the Bill was produced first in the Dáil and second in the Seanad directly as a result of the Community putting the directive into effect. The Bill is intended to give effect to it in Ireland. The interpretation reads:
1. —(1) In this Act, except where the context otherwise requires —"the Council Directive" means Council Directive No. 85/374/EEC of 25 July 1985 the text of which in the English language is set out for convenience of reference in the Schedule to this Act;
Is the Minister relying totally on the English version of the directive because it is quite clear that when this directive was discussed in other Legislatures, the English language was certainly not the predominant medium so far as the interpretation of this directive was concerned. Is he suggesting that we are relying 100 per cent on the English version of this directive?
I cannot give a direct answer to that but no matter from what language we draw it, the translation within the Community would be sufficiently accurate to ensure there was no substantial variation from one State to another.
Question put and agreed to.
Title agreed to.
Bill reported without amendment.
Report Stage ordered for Thursday, 28 November 1991.
Sitting suspended at 6 p.m. and resumed at 6.30 p. m.