International Bar Association Buenos Aires 2008 Global Product Liability Trends

1. International Bar Association Buenos Aires 2008 Global Product Liability Trends Bárbara M. Arrieta Richards, Cardinal, Tützer, Zabala & Zaefferer

2. Agenda • Overview of Argentine Legal System • LATAM • Trends

3. Overview of Argentine Legal System • Federal Constitution • Civil Code • General laws regulating certain aspects of commerce: • Consumer Defense Act • Antitrust Law 25.156 • Fair Trade Act (Law 22.802)

4. Federal Constitution • Modeled after the U.S. Constitution. • Federal regime. • Bill of rights which includes, as of the 1994 Amendment, a specific section related to the consumer’s protection Consumer provision in the Federal Constitution: “Section 42: Consumers and users of goods and services have, in the consumption relationship, the right to: o the protection of their health, safety, and economic interests; o to adequate and truthful information; o to freedom of choice and equitable and reliable treatment.

5. Civil Code General liability for damages: • All damages suffered are recoverable (provided they are proved) • Judgments are limited to plaintiff's requests and facts of the case (i.e. no award going beyond plaintiff's claim) Follows traditional requirements and categories • Tort • Contractual liability • Strict and fault based liability

6. Consumer Defense Act(1993) • First comprehensive piece of regulation in Argentina for consumer protection • Ordre publique • Joint and several liability for producer, manufacturer, importer, distributor, provider, seller and whoever has placed its trademark on the good or service

7. Main features Scope expanded Free and used goods and services included Increase interference in contractual relationships Abusive practices Warranty term. Damages Direct damages Punitive (limited) Miscellaneous Enforcement authority Administrative proceeding Statute of limitation Collective interest actions 2008 Broad Amendment to CDA

8. Forum: Consumer's choices • Administrative Proceeding • Secretariat of Trade (national enforcement authority) • Local authorities in Buenos Aires and Provinces • Claimants: consumers, national enforcement authority and anyone acting on behalf of the consumers general interest • Consumers Arbitration • Judiciary

9. Arbitration • 1998 National Consumption Arbitration System (Decree 276/1998). • Voluntary (general previous acceptance) • Decisions and adjudications of these arbitrators are conclusive (issue preclusion). • In equity, except if parties expressly choose the arbitration is in law. • Gratuitous. • The Arbitration Court is integrated by three arbitrators, one designated by consumers, one by enterprises associations, and one institutional arbitrator representing the Government. • Cases of personal injury (physical or mental) or death of consumers are not allowed to be instituted into the Arbitration System.

10. Mercosur • Brazil, Argentina, Uruguay and Paraguay signed the Treaty of Asunción on March 26th, 1991 • Constitutional framework: Ouro Preto Protocol, signed by the four countries in December, 1994. The Protocol recognizes the legal existence of the community under international law, ascribing it with the authority to negotiate, on its own behalf, agreements with third party countries, groups of countries and international organizations. • Common external tariffs and common trade policy. • A general regulation for consumer defense was prepared by a Technical Committee N° 7 but it was not approved by Brazil • Protocol for International Jurisdiction for Consumer Relationships 1996. • International jurisdiction • Consumer relations which result from transport contracts are not included. • Awards can be executed if compliant with their internal regulation and with the Mercosur Protocol for Judicial Cooperation and Assistance in Civil, Commercial, Labor and Administrative Matters of 1992. • Res. 104/2005 Warning duties for e-commerce

11. BRAZIL • Comprehensive regulation • Consumer Defense Code enacted in 1990 • Inspired in the European Directive of 1985 • Brazilian 1988 Constitution • Consumers have two main causes of action: • A judge of civil lawsuits of smaller complexity introduced at national level by law 9099 of the 26 of September of 1995 (does not require judicial expenses). • By means of an arbitration (law 9307); the arbitration is voluntary.

12. PERU Peruvian legislation, without prejudice to the administrative liability process, also provides liability under contract and tort theories. URUGUAY Parties liability Only providers are to be held responsible except for cases in which the distributor can be held liable if importer and manufacturer can not be identified. MEXICO Special protection for consumer as regards to transactions operated by electronic or optic means or by using any other technology. Other Countries in the Region

13. Trends

14. Trend # 1: To further regulate • Enactment of laws, codes and other regulations to protect consumer • General regulations • Specific regulations for certain industries, i.e. tobacco, alcohol, pharma, etc • New causes of action for Product liability claims

15. Trend # 2:Increasing interference in contractual relationships • Mandatory regulations • Increasing interference in contractual relationships: • CDA provides that clauses waiving o restricting consumer’s rights: disclaimer of legal warranties, • limitation of liability and/or consumers’ remedies, • clauses that amount to a waiver o restriction of consumer’s rights or enlarging the rights of the other party; • clauses shifting the burden of proof with grief to consumers • Etc. • Are to be considered NOT enforceable • Furthermore said clauses may also trigger the application of fines as penalties

16. Trend # 3:Broadening of consumer rights to recover damages • Last CDA amendment introduces the concept of: • “Punitive damages” (previously unknown under Argentine law) • “Civil fine” in favor of consumers up to Ar$ 5,000,000 (aprox. US$ 1.5 MM) in judicial awards for product liability.

17. Trend # 4 Increasing requirements in informational duties • In Argentina, information is an underlying element in Law No. 24.240 and its latest amendment. • Section 4: “providers are compelled to furnish consumers with clear, truthful and detailed information regarding the essential characteristics of the goods or services provided and the commercialization conditions. Information has to be provided at no cost and has to be sufficiently clear to enable its comprehension.” • Section 10, when dealing with the document that should be provided in the sale of personal property, describes in detail additional information that should be given to consumers; • Section 14 mentions the information that should be included in the “warranty certificate;” • Section 21 deals with the information that should be given by the service provider in an “estimate” required by the consumer; etc.

18. More on Trend # 4: • Decree 1798/94 states that “providers of goods or services who, subsequent to their introduction into the market, have knowledge of their dangerous character shall communicate such circumstance immediately to the competent authorities and to the consumers through sufficient public advertising.” • Breach of duty to inform or warn triggers strict liability • Lack of information is a business risk that could lead to consumer negligence or mishandling. Those who do not inform should be responsible if the harm and causal relation with the use of the product or service are proven. • This duty does also fulfill a ‘preventive’ function and ensures an informed consent, and, therefore, a truly free consent.

19. QUESTIONS ???