Produkthaftungsrecht

Contributed by Duncan Grehan & Partners
December 2003 ©

Background

The Personal Injuries Assessment Bill is now being rushed through the Dáil (Parliament). It will establish a Personal Injuries Assessment Board (PIAB) which will commence in early 2004 with Employer Liability claims and will be assessing motor accidents by mid 2004 with Public Liability actions also falling within its remit. Medical negligence is excluded. It is a significant development for Irish litigation in general and for the regulation of product liability claims in particular.

Objective

The PIAB will introduce a documents-only system of assessment of compensation for claimants where liability is admitted. From January a court will only be able to determine such claims if PIAB has issued an authorisation. In its Explanatory and Financial Memorandum to the Bill, the responsible Government Department explains that in the current legal system only 10% of such claims reach a court trial and these carry with them an excessive litigation overhead and cost. It further explains that "it is widely accepted that litigation costs add, on average, in excess of 40% to the cost of compensation. This has contributed to the high cost of insurance in this country and to the cost of claims against the State… By eliminating the need for litigation costs where legal issues are not in dispute, the PIAB will significantly reduce the cost of delivering compensation to the benefit of all consumers". It states the objective of the PIAB is to assess compensation at current levels more expediently while eliminating the excessive litigation overhead. The PIAB will not award litigation costs for or against any party. It will not conduct oral hearings. The new system will be an inducement to the parties to reach a settlement without being compelled to do so because of the risk of cost. Where a manufacturer has a clear liability to the injured claimant because of a product defect, if the claimant cannot agree with it the amount of compensation then he is bound to first have the claim assessed by the PIAB and only if either party then does not accept, or is deemed not to have accepted, an assessment, will the PIAB authorise a determination of the claim by court proceedings.

Main Points

The claim will be assessed on the basis of documents only and there will be no oral hearing. The PIAB will not award costs. It will shortly publish a Book of Quantum as a guideline to general damages so that the parties can satisfy themselves as to the reasonableness of the awards and refer to it in negotiations prior to any application to the PIAB. In contrast to the adversarial system of court, which decides having balanced up the law and facts as submitted by the parties to it, the PIAB assessors will be inquisitorial and may appoint their own experts and advisors, such as doctors, accountants and actuaries. The PIAB costs will be financed by fees to be paid by respondents. Claimants will pay nominal refundable filing fees.

Procedures:

Significant changes in existing legislation and in the Rules of Court will have to be quickly introduced to accommodate the scheme and objectives of the PIAB legislation. The PIAB will publish Rules of Procedure. The procedure envisaged by the Bill provides that "as soon as practicable after receipt of an application" it shall notify the respondent and require it to state whether it consents or objects to a PIAB assessment. If it consents or fails to reply then the Board will arrange for an assessment. If it does not consent the Board shall "as soon as may be after that statement is received by it" issue to the claimant an authorisation to bring proceedings. There is statutory provision for non-participating respondents. The assessment award shall be reached on the same basis as the measure of damages under the law of tort or statutory law which would apply were court proceedings brought. The assessor will serve an assessment in writing on the claimant and the respondent, giving notice that the claimant must within 28 days state whether he accepts it, and notice to the respondent that it must within 21 days from service state whether it accepts it. If the claimant fails to state in writing whether or not he accepts it within that period, he shall be deemed not to have accepted it. If the respondent fails to state within 21 days whether or not he accepts it, he shall be deemed to have accepted it. In those cases, and in the case where either claimant or respondent state in writing that they do not accept the assessment, the Board shall "as soon as may be after the expiry of that period" issue an authorisation that the claimant may bring proceedings. Special provision is made for respondents who do not accept it. Provision is made for court approval of assessments accepted by next friends, committees or other persons on behalf of the claimant. The assessment becomes binding on the claimant and the respondent 28 days of the service of the notice of assessment (or such longer period as may be specified by Rules to be published). Once it becomes binding the Board shall issue to the respondent an Order to Pay. This shall operate as if it were a Judgement of the court. It will operate as an enforceable settlement in relation to claims between one or more respondents, or non-participating or non-accepting respondents, for which there is special provision. The Board may also order the respondent to pay fees and expenses reasonably and necessarily incurred by the claimant.

Comments

This new law envisages that compensation is to be paid in a single once off lump sum, and not by way of instalments or annuity. It provides that where a claimant withdraws his application, no fresh application may be made and no court proceedings may be brought.

The new assessment system is being welcomed by insurers. It will significantly reduce the cost of agreeing compensation claims where liability is not an issue. Insurers will not have to pay the claimant's legal costs and will have greatly reduced own costs. The new system aims also to expedite compensation payment. We must await the PIAB Rules. The Bill already provides, however, that the PIAB must ensure that every assessment is made within nine months from receipt of a respondent's consent to the assessment procedure and this period may be extended only by a further six months. In default the PIAB will issue an authorisation to the claimant to bring proceedings. The assessment procedure will cover not only personal injury but also damage to property. Whether the legislative objectives can be achieved will be dependent to a large degree on the resources made available to the PIAB to deal with the high volume of work which can be expected to flow to it.

The PIAB system of assessment will not do anything to deal with the current court system to which manufacturers are generally joined late in the day by Defendants as Third Parties to claims involving an alleged defective product. The PIAB assessment system will mean that insurers of manufacturers will be more easily able to assess the risk of litigating liability issues as the damages award will often already have been assessed before they become involved.