The legal framework applicable to consumer protection in Spain has undergone some significant changes in the past two decades with regard to (i) the substantive law on product liability, (ii) legal aid, and (iii) class actions. As a result of those changes, consumers associations in Spain are now in a better position to claim corporate liability. Before analyzing the most relevant of those changes, it is important to briefly discuss the social and political circumstances which have led to the current legal framework.
A. Social-political circumstances that explain the changes in the consumer protection legal framework in Spain.
There are three main circumstances that explain the changes in the consumer protection legal framework in Spain, which in turn have significantly affected the legal position of industry in product liability cases:
- Regulatory efforts made by the Spanish government in the early 80s to convince the members of the European Union (EEC at that time) of the ability of the Spanish Public Authorities to adapt to the highly developed consumer protection framework of the EU. In this regard, the Spanish Parliament enacted the General Consumer Protection Act1. As will be discussed below, the General Consumer Protection Act is highly protective of consumers' interests.
- Technically poor drafting and parliamentary debates on regulations. Traditionally, highly politically oriented regulation is technically poor in Spain. This sort of regulation is typically drafted by one or few technicians within the Government, not necessarily familiar with the legal issues or involved in the subject being regulated, and enacted by the Parliament without a real debate on the legal accuracy of the drafting of the regulation.
- Lack of lobbying by the industry. While both the Spanish Government and Parliament have enacted regulations which tend to benefit consumers, industry has failed to effectively lobby the Government and Parliament in order to avoid some of the consumer protection regulation or at least to minimize its impact. The lobbying that has been carried out in Spain in the past decades has been limited to specific industrial/economic sectors, and has normally concerned vertical regulation2.
Horizontal regulation is rarely lobbied in Spain. A recent example of this is the drafting and enactment of the 1/2000 Civil Procedure Act, which sets forth a completely new regulation of Spanish Civil procedure. Neither the preparation of the Bill (which was carried out by a small group of legal experts directly appointed by the Ministry of Justice), nor its enactment in Parliament, raised the slightest hint of lobbying activity on the part of industry. Therefore, it is not surprising that the new class action regime set forth in the new Civil Procedure Act received no attention whatsoever from industry, nor was it the subject of any technical discussion during the Parliamentary debates.
B. Consumer protection/product liability legal framework.
As a result of the three factors explained above, the legal framework in Spain is already highly protective of consumers and has clearly weakened the legal position of industry with regard to torts (and, in particular, in product liability cases).
B.1. Substantive law on product liability.
a) 1984 General Consumer Protection Act.
The 1984 General Consumer Protection Act sets forth a omnia comprehensive legal framework for the protection of consumers. As regards service/product liability, the Act is applicable to the damages derived from services provided or products put into circulation after 1984. Among other issues, the 1984 General Consumer Protection Act sets forth a double liability regime that is indistinctively applicable to services and products:
- For regular products, Article 25 of the Act sets forth the principle that manufacturers and distributors are jointly liable for any negligence committed in the putting into circulation of the product or in the provision of the service, which has resulted in damages being caused to consumers. Furthermore, it sets forth the burden of proof on the manufacturers and/or distributors to prove that they were diligent enough, and therefore, that no liability exists.
- For "regulated products" (i.e. products whose efficiency and/or safety are subject to certain specific requirements set forth by the regulation), Article 28 of the Act sets forth a strict liability regime, according to which the consumer must always be compensated for any damage suffered as a result of the consumption of the product, regardless of whether or not the manufacturer and/or distributor has infringed a duty of care. Both food and medicines are qualified as "regulated products" by Article 28.
Unfortunately, some scholars and some case law disregard the fact that the liability set forth in Articles 25 and 28 of the Act are only applicable to those cases where there is a defect in the product and/or the consumer did not or could not assume the risks involved in the consumption of the product or the use of the service3. This obliges defendants in product/service liability lawsuits to devote extra efforts to educating the Courts in order to ensure the liability regime is understood and applied adequately.
On the other hand, the General Consumer Protection Act does not provide for a state of the art defense, nor does it set forth any of the other traditional product liability specific defenses.
b) 1994 Product Liability Act
The 1994 Product Liability Act is the result of the transposition of the 374/1985 European Directive on Product Liability. It applies to the damages derived from the consumption of products put into circulation after 1994.
The Spanish Government requested the Instituto Nacional del Consumo (National Institute of Consumption), a governmental body in charge of protecting and developing the rights and interests of Spanish consumers, to produce a Bill to be submitted to the Parliament. Not surprisingly, the Bill which was finally passed in Parliament excluded the state of the art defense both for food and medicines (Article 6.3). No lobbying by the affected industrial/economic sectors either during the drafting of the Act or during the Parliament debates was ever reported.
B.2. Legal Aid
The legal aid regime currently in force in Spain was passed in 1996 (Act 1/1996, January 10). According to it, those individuals or entities that are granted the legal aid status:
- May (but are not obliged to) solicit to the Bar Association to provide them with legal counsel free of charge. The Bar Association is then obliged by law to appoint a lawyer to the applicant.
- May ask the Court to appoint as many expert-witnesses as required by the subject of the litigation, which will be financed by the Government.
- Will not have to pay legal fees and costs in the event that they finally loose the case.
All those entities that are granted the status of "public utility" can solicit (and will mandatorily be granted) the legal aid status. In turn, Consumers Associations are "public utility" entities according to the law, and therefore can always solicit the legal aid status. The law does not make any exception. In particular, it does not exclude the legal aid status of the Consumers Associations in the event that they claim on behalf of individual consumers, rather than in their own interest.
B.3. Class actions.
The 1/2000 Civil Procedure Act sets forth a class action regime, by virtue of which Consumers Associations are entitled to file a lawsuit on behalf of an undetermined number of consumers for those damages allegedly caused to them. Any favorable decision issued by the court will benefit all the undetermined consumers that are represented by the Consumers Association -regardless of whether or not those consumers are affiliated to the plaintiff Association-. The undetermined consumers will afterwards be entitled to execute the decision on their own behalf.
Among other omissions, the Civil Procedure Act does not specifically set forth any preliminary proceedings to certificate the action -contrarily to what is provided for by Procedure Federal Rule no. 23-, in order to duly assess the existence or otherwise of the traditional requirements for this type of action (commonality, typicality, numerosity and adequacy of representation) and which might have allowed the industry to more effectively avoid the certification and filing of them.
In future articles, we will analyze the implications of the new regulations on collective actions in detail.
1 The rape-seed oil (colza oil) case, which caused hundreds of deaths and more than 20,000 cases of serious disability in 1981, increased the potential need for legislation and resulted in the enactment of the said law- among others.
2 For example, in the early 90s, insurance companies effectively lobbied Parliament on the need to pass legislation on the compensation paid out for car accidents. As a result, in 1992 a Royal Decree was passed setting forth the amounts to be paid by insurers to victims of car accidents for each type of injury suffered.
3 The assumption of risks doctrine/principle is implicitly set forth in Article 3 of the Act, according to which "products and services will not give rise to risks for the health or safety of consumers, except for those usually or legally accepted" (emphasis added). However, and due to the aforementioned poor technical drafting and enactment of the regulation in Spain, the legislator failed to clearly link the assumption of risk principle set forth in the said Article 3 to the product and service liability regimes set forth in Articles 25 and 28 of the Act.
Alejandro Ferreres-Comella practices as an external legal counsel for Philip Morris in Spain
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