Sweden Product Liability

Systems of product liability available in Sweden, as far as personal injury and damage caused to consumer property is concerned, exist in accordance with the 1992 Product Liability Act (PLA), which is based on the EC-directive 85/374/EEC. Liability under the PLA is strict, i.e. no finding of negligence on the part of the producer is required. The consumer need only prove that the injury occurred and that the product was defective. Certain special regulations specifically stipulate for the application of strict products liability, such as the Electricity Act, the Act on Inflammable and Explosive Goods, the Environmental Code and the Atom Liability Act. Furthermore, special regulations with special compensation schemes exist and will be dealt with underanswer 2 below. Swedish general law on torts, which stipulates that anyone, who through negligence causes personal injury or damage to property shall indemnify the person suffering the damage, is applicable in non-contractual relations and is not affected by the PLA. This means that general tort law has a special significance in business relations since the PLA does not apply to such relationships.Contractual liability plays a role when PLA and similar special product liability regulations in certain areas do not apply. For instance, this is the case when (i) property damage is caused to a non-consumer, (ii) damage is caused to the defect product itself, or (iii) damage is caused by the supply of services. Contractual liability can also play a role concerning the producer’s right to recourse towards other liable parties. Contractual liability may be of additional importance in consumer relations. Both the Consumer Sales Act (s31) and the Consumer Services Act (s31 para 4) contain regulations on product liability and although these are limited to damage on property, they may prove more beneficial to the suffering party since the seller/service provider cannot avoid liability by pointing out another party as liable. Within the application of PLA, however, contractual or non-contractual liability does not play a role in the injured person’s right to claim compensation for damage from liable producer(s).

Yes, state schemes of compensation for particular products and services do exist under the Patient’s Compensation Act and the Traffic Compensation Act. Similar but privately operated schemes also exist under the Pharmaceuticals insurance schemes. In general, liability is strict in these special regulations. Compensation is often financed through obligatory insurances by means of one party’s involvement in a ‘‘dangerous sector’’ such as obligatory insurances for car-owners and for those engaged in the pharmaceutical businesses. In addition, the Swedish social security insurance system compensates loss of income and expenses for medical care up to a certain level. It also compensates for damages due to personal injuries related to work (‘‘work accidents’’), thus limiting the scope of actual product liability matters.

All, if they are not able to invoke any of the defences described under answer 7 below.In accordance with PLA, the ‘‘producer’’ is liable for damage caused by a defect in his product making him primarily liable for such damage. The definition of a ‘‘producer’’ is broad and may include the manufacturer of a finished product, the producer of any raw material, the manufacturer of a component part, and any person who, by putting his name, trade mark or other distinguishing feature on the product, presents himself as its producer. Any person who imports a product into the Community will also be deemed a ‘‘producer’’ and therefore subject to liability. This is called the primary liability. In addition to the producer’s primary liability, each supplier of a product will be treated as its producer if the actual producer of the product cannot be identified. This is the case unless the supplier informs the injured person within one month from the date the claims were made of the identity of the producer or of the person who supplied him with the product. This defence is only available to suppliers with ‘‘secondary liability’’. If two or more producers can be held liable for the same fault/defect, they are liable jointly and severally. If one of the liable parties pays the full amount of compensation to the injured party, he has the right of recourse towards the other liable party(ies).

The rules concerning the obligation to recall products are laid down in the 1994 Product Safety Act (PSA). PSA applies to goods and services which are supplied commercially and which customers may use to more than a negligible extent for private consumption. A recall of goods and services may be ordered by the Swedish Market Court in cases where a person or entity has sold goods involving a stipulated special risk of personal injury or damage to property. The rules only apply directly to ordered product recalls; there are no rules concerning voluntary product recalls. Failure to recall results in the authority imposing a penalty. It should be noted that failure to warn the public or to recall the product could also have an effect on a judgement relating to defectiveness. Finally, failure to perform properly and prudently in regard to a recall will of course also increase the risk of multiple losses.

The injured party bears the burden of proving the existence of a defect, the resulting damage, the scope of the loss, and finally, the causal relationship between the defect and the damage. A product will be considered defective if it does not provide the expected safety to which a consumer is entitled, considering all relevant circumstances, including the presentation of the product and the reasonably expected use of the product at the time that the product was put into circulation. In practice, proving causation is often quite difficult. Swedish case law has notably lowered the burden of proof of causation in favour of the injured party in several exceptionally complicated factual scenarios.

As stated above, the producers are liable jointly and severally. This means that every person or entity involved in the production and marketing of the product can potentially be held liable for the entire amount of damage.The injured party may choose whether to sue one, all, or some of the potential liable producers. Each of the persons or entities liable are entitled to raise a different defence (see answer 7 below), which may result in some of the defendants being fully or partially exonerated from liability. Also the party(ies) compensating the injured has/have the right of recourse towards the other liable party(ies). The final allocation of the damage between the liable parties is ultimately based on a number of factors, and market-share is unlikely to be of any great significance to this determination.

The producer is not liable if he proves: _ That he did not put the product into circulation. A product is considered to be ‘‘put into circulation’’ when the producer treats it in the way he normally deals with his products for that purpose, i.e. lending, hiring, selling, etc., but not if the product has been stolen. _ That, in regard to the circumstances, it is probable that the defect causing the damage did not exist at the time when the product was put into circulation by the producer, or that the defect happened afterwards. This defence may be available if the producer proves that, for instance, the defect is due to misuse, lack of maintenance or third party interference after the product was supplied._ 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; for example, if the product was sold by a private individual or a non-profit organization for non-commercial purposes._ That the defect is due to compliance with mandatory regulations issued by public authorities._ That the level of scientific and technical knowledge in existence at the time that the product was put into circulation was not such as to enable the discovery of the existence of the defect. _ Contributory negligence on the part of the person who suffers the damage or injury may limit, or even in extreme cases, lead to a total loss of compensation.

Contributory negligence under the PLA is more strict to the suffering party than it is under the general law of torts, since the PLA provides that both property and personal damage may be limited if contributory negligence is found. Under general law of torts, in contrast, contributory negligence will only limit property damage. In accordance with answer 5 above, the producer will not be held liable if the claimant is unable to prove any one of these elements: defect, damage or causal relationship between damage and defect.

Yes, there is a state of the art defence. It should be noted that this defence only provides the basis for the discovery of an existing defect and should thus not be confused with the ‘‘state-of-the-art’’ defence, which is whether or not a defect exists at all. The producer bears the burden of proving that, given the state of the technical and scientific knowledge at the time the product was put into circulation, it was not possible to discover the existence of the defect. To date, there is no Swedish case law that helps in the interpretation of this demand or define how much proof the producer needs to provide in order to effectuate this reference.

Yes, see answer 7 above. This defence is based on the existence of mandatory regulations. It should be stressed that the defect must be a direct consequence of complying with the legal obligations and also that complying with any non-mandatory standard, such as technical standards, is not a defence but may have an effect on the determination of whether a product is considered defective or not.

There is no issue estoppel provided that the issue is brought forward by another claimant. Estoppel will, however, prevent the same claimant from raising the issue against the same counterpart.

In Sweden, all civil matters, with the exception of libel and slander matters, are tried by judges. Accordingly, the trial in the District Court is tried by one to three professional judges and in the Court of Appeal by three to five professional judges. Finally, if applicable, by three to seven professional judges in the Supreme Court.

The Court has the power to appoint specialists to make assessments during the trial. This is, however, unusual in Sweden.

Class action procedure was introduced only very recently in Swedish legislation, in 2002 by enactment of the 2002 Group Proceedings Act. Such law suites are not, as of yet, commonly brought and it is uncertain to what extent they can be expected to become common. Since the Group Proceedings Act provides an interesting and somewhat unusual feature in a European jurisdiction it will be described in some detail. Swedish group proceedings are legal proceedings in which a group action is brought. A group action is defined as an action brought by a person or government authority acting as a representative for a considerable group of people. Judgements in group proceedings have legal effect for all members of the group, although they are not parties to the case. A group action may be instituted by private natural person or legal entity (private group action), non-profit organisations (organisation group action) or authorities (public group action). A group action can be brought for claims that are eligible for consideration by a district court under the provisions of the Swedish Code of Judicial Procedure concerning civil cases, e.g. cases concerning the purchase of goods and services or cases relating to rental or leasing agreements. A group action can also be brought to claim damages for some types of environmental damages and to seek injunctions against continued operations or safety precautions or other precautionary measures under the provisions of the Environmental Code. The general rule is that all members of the group needs to be specified by name and address in the application for a summons. In certain cases, however, the group can be specified in some other way, for example, all subscribers to a journal during a certain period. There are special prerequisites before a group action in Sweden may be brought before a court because the group proceedings are only intended to supplement traditional legal proceedings. These prerequisites are _ A group action must be more appropriate than other legal proceedings. _ The group must be clearly defined, for example, regarding its size and delimitation. _ The issues addressed in the case must be of common or similar nature as for all the members of the group. _ The case may not be clearly unmanageable on account of substantial differences in the legal basis of the claims of different members of the group. _ The plaintiff must be an appropriate representative of the group, which includes having the financial resources to bring an action. Moreover, the plaintiff may not have interests of his or her own in the case that differ from the interests of other members of the group. The Swedish group proceedings is an opt-in system. This means that the persons specified in the writ of summons will be notified of the group proceedings. Anyone who receives such notification and wishes to be covered by the proceedings and the judgement subsequently given mus send a written statement to this effect to the court. Thus, only those who have made such a declaration will remain members of the group and only they can be covered by the group proceedings. A private group action and an organisation action must normally be pleaded by an attorney who is a qualified lawyer. There is only a possibility in group proceedings for the plaintiff and his attorney to enter into a risk agreement regarding the attorney’s fees or will be elaborated upon under answer 30 below. The plaintiff may settle out of court on behalf of the group. The settlement will, however, be valid for the whole group only if the court confirms it by judgement. The settlement shall be confirmed, provided it is not discriminatory against particular members of the group or in another way manifestly unfair. Judgments in a group proceeding are subject to appeal to the same extent as decisions in normal legal proceedings. Any member of the group may lodge an appeal. If an appeal is made, also the court of appeal will consider the special prerequisites required for group proceedings. If the prerequisites are not fulfilled, the appeals will be dealt with as individual cases. Only the parties opting to join the case are as a general rule responsible for the costs. The usual rules regarding costs in civil cases – that the loser pays the costs of the opposing party – also apply to group proceedings.

Yes, this is now possible within the framework of a class action suit (see answer 13 above). A private group action, as described in answer 13 above, can be brought by a natural person or legal entity who belongs to the groups he or she wishes to represent. A public group action can be brought by certain specially designated government authorities. The Swedish Government has decided that two such authorities, the Consumer Ombudsman and the Swedish Environmental Protection Agency, may bring public group actions. An organisation action can be brought by non-profit organisations devoted to the safeguarding of consumer or employee interests, if the action concerns some goods, service or other item sold to consumers. In cases concerning environmental issues, an organisation action can be brought by non-profit organisations devoted to the safeguarding of nature conservation or environmental protection interests and by workers’ associations in the fisheries, agriculture, reindeer husbandry and forestry industries.

The trial timetable depends on a number of circumstances, including the nature and extent of the damage, the nature and scope of the evidence, etc. Initial proceedings (writ of summons) can take place immediately after a claim has been rejected, or even before the rejection if, for instance, a statute of limitation period is about to expire. The most common procedure, however, follows the example of an insurance company, which after a claim has been made, investigates the damage and liability. In most cases, the insurance company will be able to complete the investigation without proceedings being brought before a court. It usually takes one to three years after initial proceedings are brought before a court to get to trial and receive a judgment in a District Court. Sometimes, and especially when severe personal injury is to be compensated, it can take longer. This often has to do with the difficulties associated with establishing the actual economic damage an injured person would suffer during his/her lifetime.

The Court can try preliminary issues related to legal relations between the parties in an intermediate judgment. Within the framework of such a trial, facts can also be judged. Sometimes, when both the liability issue and the quantum issue are difficult, the liability issue is tried in an intermediate judgement. The Court cannot, however, base a preliminary issue solely on a single or several facts – the trial has to be based on the establishment of a legal relationship between the parties. As mentioned above, only judges try cases such as this.

Appeal is available to the Court of Appeal and the Supreme Court. However, the Supreme Court only takes an issue to trial after having granted a review permit under certain circumstances, whereas, in general, trying the issue at hand requires that the trial is of essential importance for the application of law.

As indicated above, the court can appoint experts to assist in legal disputes. Usually, the parties will present and invoke such expert evidence themselves. In general, there are no restrictions on the nature or extent of the evidence. Only if the evidence is deemed as clearly unnecessary can the invoked evidence be neglected in the District Court. Parties are, in general, restricted from invoking new evidence in the Court of Appeal

There is no ‘‘pre-trial deposition’’ of witnesses under Swedish procedural law. However, as a general rule, expert witnesses are required to present a written statement before the Court prior to a trial. Such expert witness statements should contain the reasons and circumstances upon which the statement is based.

Duty to disclose information or documentary evidence only exists by Court order in accordance with a request from any of the parties. Such demand must be precise in terms of what evidence or information is required from the other party.

Yes.

PLA stipulates a limitation period of three years from the day on which the plaintiff became aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer. PLA also stipulates a ‘‘final’’ limitation period of ten years from the day on which the producer put into circulation the product that caused the damage. Within these time limits, the plaintiff must have instituted proceedings against the producer if the issue is disputed. The same limitation periods are stipulated in the Traffic Compensation Act and the Patient’s Compensation Act. Swedish general law on torts stipulates ten years. The claimant’s age or physical or emotional condition do not affect the calculation of time limits. The Court does not have the discretion to suspend time limits which have been invoked by any of the parties – the Court only interprets the time limits based on the individual circumstances in each case. Under Swedish legal practice, i.e. the three-year limitation period regarding awareness of personal injury does not commence until a specialist has given the diagnosis and explained the reasons for the injury.

Damage to the product itself is not covered by PLA but could be indemnified through general contract law or sales of goods law. Damage to property is covered under the PLA up to the market value of the particular property or in proportion to the costs to repair the product. Repair costs cannot exceed the market value of the property with the exception of damage to pets, under certain circumstances. From damages awarded as compensation for damage to property, an amount of SEK 3,500 is deducted (like an excess stipulated by law). Bodily injury is covered as compensation for direct medical costs, a fair amount for other costs due to the injury, a certain amount for cosmetic defects (scars), a certain amount for pain and suffering, and full compensation for loss of income. The basis of estimating the scale of compensation for bodily injury is the notion that the injured person should be put in the same situation as if the injury had never occurred, e.g. compensating damages.

No. According to the Product Safety Act, an order to recall goods requires efforts to correct the faulty product or an actual recalling of the product. This could imply compensation for mentioned costs.

No, Swedish law does not allow punitive damages.

There is no monetary ceiling on serial damage. However, it is safe to assume that under certain circumstances, a producer would be able to claim that damages should be limited in order not to be unreasonably burdensome for the producer. This could be the case in a serial damage situation if the producer had a proper insurance protection, acted prudently, and the damage would be signifi- cantly higher than what would be a normal risk in the producer’s business.

Court fees and the parties’ own legal costs of bringing the proceedings (including costs for evidence) are recovered from the losing party.

For consumers, generally, insurance coverage is up to only SEK 75,000 for legal fees. Public funding exists but does not cover these issues in general. The latter is at most 100 hrs.

Yes, see answer 28 above.

Generally no. Under Swedish Bar Association rules, contingency fees are not allowed. The fee must be reasonable taking into account, inter alia, the importance of the matter, the difficulty of the matter, the disputed amount, and the amount of time required. Accordingly, to some extent it is possible to have fee arrangements, allowing for higher fees if the assignment is successful and lower fees if the matter is not successful. However, as indicated in answer 13 above, so-called ‘‘risk agreements’’ are allowed in Swedish class action suits. The person representing the group and the attorney may enter into such a risk agreement stipulating that the fee will depend on the outcome of the case. The attorney will then receive a particularly high payment if the group wins the case and little or no payment if the group loses. The financial responsibility for losing in court is thus shared between the plaintiff and the attorney, which is intended to make it possible to engage the services of particularly skilful (plaintiff’s) lawyer. If the court has approved a risk agreement, the payment specified by the agreement can be paid out of the means won by the group in the proceedings.

The author acknowledges the assistance given by Rickard Samuelsson.

The information contained in this chapter is not intended as legal advice or as an opinion on specific facts. For more information about these issues, please contact the author, Jo¨rgen Eklund. The invitation to contact the author is not to be construed as a solicitation for legal work in any jurisdiction in which the author is not admitted to practice. There will be no charge for the initial contact. Any attorney/client relationship will be confirmed in writing. You can also contact us through our web site at www.kilpatrickstockton.com.