Product Liability: What Damage Is Recoverable?

Mar 8, 2024 Benn-Ibler Rechtsanwälte

The right to compensation under the Austrian Product Liability Act (Produkthaftungsgesetz, hereinafter PHG) only covers damage to legal interests that are absolutely protected, in so far as this can be attributed to the defective product. Pure financial losses are not eligible for compensation.

The plaintiff is both the building insurer of the owner and the household insurer of the insured. After massive water damage to a residential property, the plaintiff reimbursed the policyholders for the costs of repair and restoration. The tenant was also reimbursed for the temporary rental of a replacement apartment.

The damage had been caused by a faulty connecting piece between the wall outlet and the fitting. The connector had been purchased by the property owner from a DIY store and professionally installed by an installation company. The packaging of the connector bore a designation of origin related to the defendant. However, it also bore the flags of numerous other countries as well as a CE mark.

The plaintiff sought to recover from the defendant for the services provided in insurance coverage. The defendant argued that they had merely sold the goods and could not be accused of failing to act.

The first instance court upheld the claim. The court of appeal, on the other hand, awarded the plaintiff only the costs of the renovation of the tenant’s apartment. The cost of renting a replacement apartment must be classified as pure financial loss and is therefore not covered by the PHG claim. As the owner of the property is a company, compensation for the damage is also excluded in accordance with Section 2 (1) of the PHG.

The court of appeal concluded that purchasers of the connector would consider it to be a mass-produced product coming from a low-cost country and would not consider the defendant to be either the manufacturer or the sole importer. Since the defendant is to be regarded only as a dealer, the defendant is also not liable under the general producer’s liability under civil law. Dealer liability is limited to obvious defects and where there is a specific cause for inspection. Furthermore, the defendant had the right to trust the CE marking.

The Austrian Supreme Court fully confirmed the court of appeal’s decision.

OGH 4 Ob 114/23b (19 December 2023)