Product Liability 2010

1 Liability Systems

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

Applicable Ukrainian law establishes a general principle according to which a manufacturer (seller) is obliged to hand the consumer (user) products of appropriate quality and provide true and exhaustive information about the products at issue.

The liability for damage incurred as the result of supply of defective products is established in:

■ the Law of Ukraine “On Protection of the Rights of Consumers” (the “CPL”); and

■ the Civil Code of Ukraine (the “Civil Code”).

The CPL provides for the protection of consumers, namely individuals, who purchase, order or intend to purchase or order goods for personal use, i.e. a use which is not directly related to business activity or employees’ obligations.

The Civil Code extends to civil relations and interactions of individuals and legal entities. It provides for the liability of a manufacturer or seller of goods to the user who suffers injury due to constructional, technological or compositional defects in the goods or the insufficiency of the information relating to them.

The liability of the manufacturer or seller, stipulated in these laws for the injury suffered to the life, health or property of the consumer by defective or faulty products is strict. This liability does not depend on the existence of a contract between the manufacturer/seller and the consumer/user. The damages are compensation in full, if a higher degree of liability is not provided for in law.

Liability under the consumer/user protection schemes does not depend on the existence of contractual relations between the claimant and respondent. However, sale-purchase agreements may establish additional forms of liability for the manufacturer or seller such as penalties, but cannot provide for conditions less favourable to the consumer than those set out in the CPL or in the Code.

The deception of buyers by sellers in respect of the amount of the purchased products, their price or any other deception may result in an administrative or criminal liability. The latter extends to offences which inflict damage on the victim exceeding (approx.) EUR 300. An administrative offence is punishable by a fine, whereas in the case of the invoking of criminal liability the perpetrator may by subject to a fine or a sentence of correctional labour.

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

No, the Ukrainian state does not operate any such schemes.

1.3 Who bears responsibility for the fault/defect? The manufacturer, the importer, the distributor, the “retail” supplier or all of these?

Although both the Civil Code and the CPL provide that the claim may be brought against the manufacturer or the seller at the user’s or consumer’s choice, the provisions of the CPL regulate in greater detail the responsibility of a manufacturer, who, inter alia, incurs liability irrespective of actions or omissions of any other persons related to the infliction of the damage, and is also liable for the equipment and materials used in the course of manufacturing the products.
The “seller” for the purpose of product liability means the last seller, from whom the product was purchased. Therefore, the distributor may incur liability if he/she was the direct seller.

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

The compulsory recall rule is not envisaged by any applicable Ukrainian law. On the other hand, the CPL and the Civil Code provide for the right of the customer/buyer to request the replacement of the purchased product or to avoid the contract with consequent restitution of the product and money paid where the product proved to contain a significant defect.

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

The Criminal Code of Ukraine provides for criminal liability for the manufacture or release into the market, for the purchase by customers, of products of unsatisfactory quality, i.e. of a quality which does not meet the established standards, norms and rules and technical conditions. This criminal liability occurs where the of the product so released is significant. For the time being the “significant amount”, for the purpose of this offence, is equal to an amount over EUR 36,500.

2 Causation

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

As is noted above, product liability is strict and does not depend on a fault by the respondent. However, in respect of the defect and damage the general principles of the Ukrainian procedural law apply, stating that each party to the proceedings must prove the circumstances referred to as the foundation of the claim.

Therefore, the claimants in such cases should prove (a) the existence of the damage; (b) the existence of the defect; and (c) the causal link between them.

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

When litigating under either the CPL or the Civil Code the claimant should prove the existence of a causal link between the damage incurred and the defect. No specific tests for proving this causation are envisaged in any of these acts.

Ukrainian courts normally require the claimants to prove concrete causation between the damages sought and the alleged unlawful behaviour of the respondent. In product liability cases the courts often order relevant expert opinions regarding the existence of the defect and the link between such defect and the damage. Although the courts are not bound by any specific type of evidence and no proof has pre-established evidential value, there should be very serious reasons for a court to differ in opinion from the opinion of an officially certified expert.

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

There exists no market-share liability in the Ukrainian law. As was noted above, the causal link between the suffered injury and the alleged defects of a product should be established.

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

Applicable Ukrainian law envisages the right of the consumer to necessary, accessible, true and timely information about the product. The information should be provided before the purchase of the goods in issue.

As a minimum the following information should be provided: (a) the name of the product and trademark under which it is being sold; (b) the indication of regulations; the requirements of which the product must meet if produced in Ukraine; (c) the information on the main features of the product, in respect of food products – the incidents, nominal weight etc; (d) data on dangerous materials contained in the product and restrictions on the use by certain categories of consumers; (e) an indication of whether the product contains GMO; (f) information on the price (tariff), the conditions and rules of purchase; (g) the date of production; (h) information on the conditions of storage; (i) guarantees of the manufacturer; (j) rules and conditions of safe use of the product; (k) the period of life, information on actions that should be taken after the expiry of this period and the possible consequences if the recommended actions have not been taken; and (l) the name and location of the manufacturer, the company authorised to deal with consumers’ complaints, repair and technical services.

The information should be provided in Ukrainian by the manufacturer in accompanying documentation which is added to the product on the label or in some other accessible and visible form. The information may be placed in the premises where the products are sold or provided to the consumer through means of communication with the consumer’s consent.

Where the failure to provide accessible, true, complete or timely information has caused damage to the life, health or property of the consumer, he/she is entitled to seek compensation under the same provisions as those described in section 1 above.

When considering such cases, the courts should presume that the consumer does not have specialist knowledge of the features and characteristics of the purchased products.

The information should be provided directly to the consumer. No “learned intermediary” concept exists in Ukrainian law, irrespective of the source through which the product was obtained.

3 Defences and Estoppel

3.1 What defences, if any, are available?

The seller or manufacturer of the defective product is relieved of the liability for the damage if it proves under the Consumer Law that:

1) the damage was incurred due to the fault of the consumer through violation of the rules of the use, storage or transportation of the product or due to force majeure circumstances;

2) the respondent did not introduce the product into commercial operation; and

3) the defect was caused due to the need to comply with imperative provisions of the law or the obligatory orders of state authorities.

The Civil Code provides for the following defences:

1) the damage was incurred due to the violation of the rules of the use, storage or transportation of the product by the user; or

2) the damage is due to the force majeure circumstances.

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

No there is no such defence. On the contrary, under law themanufacturer of the product is liable to the consumer for the materials, equipment of other devices used in the course of the production of the relevant goods, irrespective of the level of its scientific or technical knowledge.

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

Applicable Ukrainian law provides that a seller or manufacturer of the product is not liable for the defect which was caused due to the need to comply with imperative provisions of the law or the obligatory orders of the state authorities.

On the other hand, the very fact that the product was manufactured/sold in compliance with the law or other regulations does not in itself relieve the respondent from the liability.

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

According to applicable Ukrainian law, a claimant may re-litigate (ask for revision) of a case if he/she becomes aware of certain material circumstances of which such claimant was not aware or could not have been aware at the time of the initial consideration of the case.

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

Yes, the defendants may claim that the defect was due to the actions of a third party and may request the court to order such other party to be co-defendant. In such cases, the court will decide who is liable for the defect.

With regard to compensation, the manufacturer is obliged to compensate the seller’s costs for meeting these claims, via the exchange of defective products or restitution of the price.

If the defendant believes that, in fact, another person is responsible for the defect, for example, the supplier of the materials for the product, he/she is free to file a claim in a separate set of proceedings. Such claim would be barred by a general three-year statutory time limit, starting to run on the date when the victim learned or ought to have learned of the violation of its rights.

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

The law provides that a manufacturer (seller) cannot be held answerable for the damage resulting from a default in the product that took place on account of the consumer’s or user’s failure to comply with of the rules of the use, storage or transportation of the product.

4 Procedure

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

The full-scale jury system is envisaged by the Constitution of Ukraine, but it has not been implemented and currently is not used. Thus, in the case of court proceedings, the trial is by a judge. The cases raised from defects in goods are usually judged either in civil or in commercial courts. If one of the parties of the case is an individual, the case is judged in a civil court according to civil procedure rules (the “Civil Procedure Rules”), otherwise it is judged in a commercial court according to commercial procedure rules (the “Commercial Procedure Rules”).

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

Yes. The court may, upon a party’s motion, appoint an expert, if there are particular circumstances that are relevant to the case and require specialist knowledge in the areas of science, art, technology, crafts, etc.

Technical specialists (experts) become participants in the court proceedings, when the expert is appointed. They have the right to inspect evidences and give competent conclusions concerning the questions, which the court raises with them, regarding special knowledge in their sphere.

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

There is no specific group or class action procedure for multiple claims in Ukraine.

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

Under the CPL, the consumers’ association may file a lawsuit on behalf of the public at large, seeking recognition of a seller or manufacturer’s illegal actions, (or companies, performing their functions on their behalf), and stop such actions. In the meantime, an injury claim can be brought exclusively by or on behalf of the person that has suffered the injury.

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

This depends on the type of proceeding. According to the Civil Procedure Rules the judge shall open proceedings within a 10-day period from the date of filing of the claim. According to the Commercial Procedure Rules, the judge shall open proceedings in within a five-day period from the date of filing of the claim.

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

A pre-trial (preliminary) hearing is envisaged by the Civil Procedure Rules only, and is held by the judge to let parties give their evidence (or call for evidence), to clarify the possibility of settlement without consideration of the merits and to make the trial as quick and effective as possible. Ukrainian law does not allow the making of a final court decision during a preliminary hearing.

4.7 What appeal options are available?

These options depend on the type of proceedings. In general, the court’s decision may be appealed in a court of higher instance. The Civil Procedure Rules provide for two levels of appeal, which may be lodged by the parties and other persons and are affected by the outcome of the proceeding. The Commercial Procedure Rules provide for three levels of appeal, which may be taken either by the claimant or by the defendant. Nevertheless, the discrepancy is between civil and commercial proceedings, both of which limit the appeal court by the reviewing of the lower court decision within the scope of the claims declared in the court of the first instance.

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

Please, see question 4.2 above.

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

According to the Commercial Procedure Rules, witness statements and expert reports may be exchanged prior to, or filed during, the trial. According to the Civil Procedure Rules the parties shall submit all evidence relating to the case and call for witnesses, experts, interpreters at the initial preliminary session. As a matter of practice, however, the submission of evidence during the trial is not infrequent. In the course of the hearings parties may request the judge to investigate, examine or question any proof or witness, if any of those are in question.

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

The court can, on the claimant’s motion, oblige the defendant to disclose documentary evidence required, either before court proceedings are commenced, or in the course of a preliminary hearing.

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

Under Ukrainian law, the only body to consider product liability disputes is the respective state court.

5 Time Limits

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

Yes. Such time limits depend on the lifetime of the goods and on the scope of information provided to the consumer (please see our answer to question 5.2 below).

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

Applicable Ukrainian law takes the “defect in the product” as a condition for liability instead of the “intention or fault” of the manufacturer or the seller. Time limits relating to product liability depend on the following circumstances:

1. if damage resulting from defects in goods has occurred within the lifetime of relevant goods, full compensation should be paid by the manufacturer or the seller;

2. if damage results from defects in goods, the lifetime of which has not been established, full compensation should be paid by the manufacturer or the seller, provided that such damage has incurred within 10 years from the date of production of goods; and

3. if damage results from defects in goods, the lifetime of which has not been determined but is required to be determined, or in case the consumer was not provided with truthful and sufficient information relating to the product’s lifetime or any actions to be taken upon expiration of such period and the potential consequences of failing to take such actions, full compensation should be paid by the manufacturer or the seller regardless of the time of infliction of damage.

The age or condition of the claimant does not affect the calculation of time limits. The court does not have the right to change time limits.

5.3 To what extent, if at all, do issues of concealment or fraud affect the running of any time limit?

Concealment or frauds do not affect the running of time limits. The running begins from the moment the injured party knew or should have known of the violation of its consumer protection rights.

6 Remedies

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

Compensation for moral harm, injunctive relief as well as recovery of damages (including replacement of goods, compensation in kind or monetary compensation), are available remedies in product liability cases.

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

According to applicable Ukrainian law, damage caused to the life, health (personal injury) or assets of an individual or damage done to the property of a legal entity as a consequence of constructive, technological, recipe or other defects of goods, and also in consequence of untrustworthy or insufficient information about goods shall be subject to redress by the seller or the manufacturer of goods.

law. However, there is no real mechanism for its application. The individuals/claimants in product liability cases are exempt from paying court fees.

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

Applicable Ukrainian law does not apply to possible future malfunctions and potential injury.

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

Applicable Ukrainian law does not recognise punitive damages.

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

No, there is no maximum limit.

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

There are no special rules for the settlement of claims. The amicable settlement agreement should be registered by the court.

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

The Social Insurance Fund for Temporary Disability and the Social Insurance Fund for Accidents and Professional Diseases are the government authorities concerned with health and social security matters. These authorities do not have powers to claim reimbursement of benefits paid by the state to the claimant from compensation payments made by the defendant.

7 Costs / Funding

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

The claimant normally may recover court fees and expenses as well as its legal costs from the unsuccessful defendant, and the defendant may recover his/her legal costs and expenses from an unsuccessful claimant. However, the amount of reasonable fees which may be recovered very much depends on the discretion of the judge.

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

Yes, public funding is generally envisaged by applicable Ukrainian

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

Not applicable.

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

Lawyers are not prohibited from acting on a contingency fee basis. However, according to general court practice, only actual legal costs incurred prior to delivery of judgment, but not contingency fees can be awarded to the successful party within the court proceedings. Contingency fees can be awarded to the successful party in a separate litigation. However, the recovery of such fees very much depends on the discretion of the judge.

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

Litigation is usually funded by the parties. In any case, the court fees shall be formally paid by the claimant. There are no restrictions on third parties funding legal costs, unless there is a conflict of interests. However, only legal costs of a party to the case may be compensated in the event of a court decision in favour of such party. If a third party that is funding legal costs under a product liability claim is not a party to the case, its expenses would not be compensated.

8 Updates

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

On 1 July 2009 a regulation which was adopted by the Government of Ukraine on 13 May 2009, requiring the labelling of food products containing genetically modified organisms (GMOs), entered into force. The “Regulation on the labelling of food products containing GMO or produced from materials containing GMO” requires that all food products containing GMO should be labelled or, in case they are not, be removed from the market.

On 17 December 2009 the Verkhovna Rada (Parliament) of Ukraine introduced changes to the Law “On the Quality and Safety of Food Products”, which regulates relationship among governmental authorities, food producers, traders and consumers in the course of manufacturing, processing, supply (including import and export), transportation, storage, sale, consumption and disposal of food products and raw materials.

The amendments introduce new labelling requirements for food products. Specifically, the label of any food product must refer to the presence or absence of genetically modified organisms (GMO) in the product by inscribing “With GMOs” or “Without GMOs” respectively on the label.

This requirement does not apply to tobacco and tobacco products, and food produced for personal use.

Ukraine currently operates 28 GMOs laboratories with nine of them run by the State Committee on Technical Regulation and Consumer Policy (DerzhSpozhyvStandard), and 17 run by the Ministry of Health.