CJEU paves the way for an extension of manufacturer liability in regulated industries

In a decision announced today, the CJEU paved the road for a potential widening of manufacturer liability in regulated industries.

In the specific case at hand, the CJEU was asked to clarify whether the relevant provisions of Directive 2007/46/EC establishing a framework for the approval of motor vehicles (the “Framework Directive”), read in conjunction with Regulation (EC) No 715/2007 that prohibits certain software solutions for reducing exhaust gas recirculation rates, must be interpreted as protecting the specific interests of an individual purchaser of such a vehicle. The CJEU found that “the Framework Directive establishes a direct link between the car manufacturer and the individual purchaser of a motor vehicle intended to guarantee to the latter that that vehicle complies with the relevant EU legislation. Consequently, the Court considers that the provisions of the Framework Directive, read in conjunction with those of Regulation No 715/2007, protect, in addition to public interests, the specific interests of the individual purchaser of a motor vehicle vis-à-vis the manufacturer […]where that vehicle is equipped with a prohibited defeat device. The Member States are therefore required to provide that the purchaser of such a vehicle has a right to compensation from the manufacturer […]” (cf. press release; the full decision is available here).

Under German tort law, the assumption of the protective character of the relevant Framework Directive opens up the possibility of liability for negligence in case of a violation of “relevant EU legislation”, whereas claimants have to demonstrate deliberate violations under Sect. 826 of the German Civil Code if the protective character is denied.

The decision of the CJEU, although not in itself rendering a final verdict for the individual case, has the potential for far-reaching consequences. It of course remains to be seen which conclusions national courts draw from the decision, but the general guidance from the CJEU might lead to comprehensive tort law liability in cases where only minor regulatory provisions have been breached. Specifically, the reasoning with regard to the Framework Directive in question (concerning motor vehicles) can easily be transferred to any other product subject to EU regulation (including, inter alia, consumer products and medical devices), in particular any product bearing a CE mark (which indicates compliance with the relevant EU provisions). In the past, the German Federal Supreme Court was reluctant to substantially increase the scope of application of German tort law compared to contractual warranty law. It will likely have to address the CJEU’s guidance in upcoming cases scheduled for decision in early May 2023.