Product Liability In Taiwan

By Jackson Shuai-Sheng Huang

Posted: 27th November 2014 09:10

In Taiwan, there are no specific sets of statutes dealing with product liability cases.  However, their relevant regulations concerning product liability are included in the Civil Code.  If a consumer is injured due to defects in a product or service, there are two different claims that he can assert in an attempt to remedy his injuries in accordance with the Civil Code.  The first is to demand compensation based on a contractual relationship between the consumer and the other party.  The second is to demand compensation based on a cause of action in torts.  However, the traditional contract and torts liabilities are insufficient to protect consumers.  As the result, the Consumer Protection Act was enacted to provide adequate protections and remedies to consumers. 
 
Consumer Protection Act and Consumer Protection Committee
 
The Consumer Protection Act was enacted in 1994, which imposes duties on business operators.  The duty includes but not limited to pay attention to the health and safety of consumers, explain to consumers the proper methods of using goods and services, ensure the fairness of transactions, provide consumers adequate and accurate information, and implement other measures necessary to protect consumers with regard to goods or services provided.  Moreover, the Consumer Protection Act also requires business operators to ensure that goods and services they provide meet and comply with the contemporary technical and professional standards of the reasonably expected safety prior to these goods or services being launched in the market.  Where goods or services may endanger the lives, bodies, health, or properties of consumers, they must be clearly labelled with warnings and methods dealing with emergency situations.  Business operators that violated the above obligations and cause injury to consumers or third parties shall be jointly and severally liable.
 
Consumer Protection Committee was established under Article 40 of the Consumer Protection Act.  The purpose of the committee is to act as the agency overseeing the consumer protection and rights in Taiwan.  It has the ability to investigate in to consumer disputes, impose fines, mediate disputes, and initiate class actions.  Consumer Protection Committee is in the forefront of any consumer dispute, which includes products liability. 
 
Class Actions
 
The class action system in Taiwan has been developing since 1994.  It was first introduced in the Consumer Protection Act in 1994 and expanded by the Code of Civil Procedure in 2003.  Article 50 of the Consumer Protection Act provides that “where numerous consumers are injured as the result of the same incident, a consumer protection group may take assignment of the rights of claims from 20 or more consumers and bring litigation in its own name.  Consumers may revoke such assignment of the rights of claims before the close of oral arguments, in which case they must notify the court.” Similarly, Article 44-1 of the Code of Civil Procedure also articulates that “multiple parties with common interests who are members of the same incorporated charitable association may, to the extent permitted by said association's purpose as prescribed in its bylaws, appoint such association as an appointed party to sue on behalf of them.”
 
Therefore, product liability claimants can invoke these statutory provisions to initiate class actions if they meet the requirements of “numerous consumers” or “multiple parties with common interests who are members of the same incorporated charitable association”.  In addition, such actions can be brought by a representative body such as a consumer protection group or a charitable association.
 
Defences
 
The Consumer Protection Act remains silent as to the statute of limitation.  Therefore, the relevant articles of the Civil Code are applicable.  Article 197 of the Civil Code provides that the statute of limitation is two years from the date when the injury and the person liable to make compensation became known to the injured person.  Furthermore, the statute limitation will have lapsed ten years after the date when the wrongful act was committed.
 
Article 7 of the Consumer Protection Act provides for the state of the art defence, which stipulates that business operators are only required to ensure that goods and services provided by them meet and comply with the contemporary technical and professional standards of the reasonably expected safety prior to the goods being sold in the market, or at the time when the services were provided.  Therefore, business operators can argue that the product defect was not discoverable within the limitations of science and technology at the time of distribution as a defence.  However, business operators bear the burden of proof for this defence.
 
Damages
 
There is no specific limitation regarding the types of compensatory damages that are available under the Civil Code or the Consumer Protection Act.  Therefore, any damage suffered by the victim, including direct, indirect, psychological, and economical damages can be included if there is legally sufficient causation.
 
Punitive damages are available to product liability claimants if their interests are injured by a defective product.  In a litigation brought under the Consumer Protection Act, the claimants may request for punitive damages up to three times the amount of actual damages as a result of injuries caused by the wilful misconduct of business operators; however, if such injuries are caused by negligence, the consumer can only claim for punitive damages of up to the same amount of the actual damages.
 
Criminal Sanctions
 
The Consumer Protection Act does not impose criminal sanctions on the sale or distribution of defective products.  However, if the government believes that the goods or services provided by business operators may endanger the lives, bodies, health, or properties of consumers, they will immediately undertake an investigation.  If the belief is confirmed, the related agency shall order such business operators to immediately cease the design, production, manufacturing, processing, importation, and distribution of such goods or the rendering of such services, or take other necessary measures. 
 
A business operator violating such order may be punished by an administrative fine of not less than NT$60,000 and not more than NT$1,500,000 and these fines may be imposed consecutively if the violations are not ceased.  In the case of a serious violation, an order for the suspension of operations or discontinuance of business may be issued with the approval of the relevant authorities at the central government level or of the Consumer Protection Committee of the Executive Yuan.
 
Recent Climate and Trends
 
Recently, there are a large number of high profile food related consumer disputes in Taiwan.  Namely the plasticizer case in 2011, Top Pot Bakery case in 2013, and the cooking oil case in 2013 and 2014.  All four cases involve fraudulent business practices and food products all affect consumers’ health and wellbeing.  Consumer Protection Committee is actively involved in all three cases in investigating, imposing fines, perform mediations, and initiating class actions.  These cases have raised consumer awareness on food products and place additional emphasis on honest business practices. 
 
Jackson Shuai-Sheng Huang
Partner, Formosa Transnational Attorneys at Law

Email: shuai-sheng.huang@taiwanlaw.com
Tel: 8862 27557366 Ext:260

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