Thai Product Liability Law: Preparation for Entreprenuers

Thai Product Liability Law: Preparation for Entreprenuers
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  THAI PRODUCT LIABILITY LAW: PREPARATION FORENTREPRENEURS Praphrut Chatprapachai * บทคัดยอ กฎหมายวาดวยความรับผดในผลตภัณฑไดมผลบังคับใชเมอเรวๆ   น ภายใตช อของพระราชบัญญัต ความรับผดตอความเสยหายท เกดข นจากสนคาท ไมปลอดภัย   พ . ร . บ . ฉบับดังกลาวม งหมายท จะค มครองผ บรโภค ใหมากข นโดยการนหลักความรับผดโดยเครงครัดและคาเสยหายเชงลงโทษมาบังคับใชกับผ ประกอบการท ไม สามารถปฏบัตตามมาตรฐานการผลตสนคา   บทความน มจดประสงคท จะทใหผ ประกอบการไดตระหนักถง ความสคัญของกฎหมายความรับผดในผลตภัณฑโดยการอธบายถงหลักการของกฎหมายโดยยอ   รวมไปถงการยกตัวอยางคดท เกดข นในประเทศสหรัฐอเมรกาและประเทศญ ปนในฐานะประเทศตนแบบ   รวมทั งคแนะนเก ยวกับการเตรยมพรอมและกลยทธท เหมาะสมสหรับผ ประกอบการในการรับมอกับกฎหมายความรับผดใน ผลตภัณฑอกดวย Abstract Product Liability Law has recently been enforced in Thailand in the form of the Liability for Damages Arising from Unsafe Product Act. The act aims to enhancethe protection of consumers’ rights by imposing strict liability and punitive damageson entrepreneurs who do not meet sufficient standards of product manufacturing.This paper aims to increase awareness of entrepreneurs about the importance of thisenhanced protection by describing the Thai product liability law in brief, and includ-ing examples of the laws from the U.S.A and Japan as the models. Proper business preparation and strategies for entrepreneurs in dealing with the product liability laware also suggested in this paper.  ______________________________  *Praphrut Chatprapachai holds an LL.B. from Thammasat University, Bangkok, Thailand;LL.M. from Cornell University, New York, U.S.A. and Lawyer License from Lawyer Councils of Thai-land. He is currently a Lecturer in Graduate School of Law, Assumption University of Thailand. He isalso an Assistant Director of Legal Affairs in Siam Elephant Constructions, Co., Ltd. located in Bangkok,Thailand, and is responsible for various legal consulting, negotiations, dispute resolutions and litiga-tions.30  ABAC Journal Vol.30 No. 3 (September-December, 2010 pp.30-44)  INTRODUCTION On 20 February 2009, Thailand’s longawaited product liability legislation, the so-called “ Liability for Damages Arisingfrom Unsafe Products Act, B.E. 2551 ”came into full force and effect. This legisla-tion has significant influence for business en-trepreneurs in Thailand. It is important tostate that the Act has the potential to be oneof the most influential current laws in Thai-land. Currently, the manufacturing processof many imported and local goods is be-coming far more complicated than ever.Therefore, the consumer faces more diffi-culties in inspecting goods for defects . Con-sequently, it is not fair if the risk of damagefrom using defective products totally falls onconsumers because it is difficult for them tofind out who is responsible for such dam-age, especially in a developing country suchas Thailand, where the bargaining power of consumers is very low.This new law comes into force tostrengthen community confidence in the cur-rent state of consumer protection law inThailand. It enjoys wide spread popular support, both within government circles and in the community at large. It has been supple-mented by complementary legislation intro-ducing new and simplified court proceduresfor consumer claim cases, deliberately de-signed to facilitate the initiation and resolu-tion of consumer claims. In particular, thislaw extends tort law by applying the doc-trine of “ Strict Liability ” which means thatevery entrepreneur is liable if a product isdefective, even if the manufacturer wasnot negligent in making that productdefective .This new law is a major challenge for Thaientrepreneurs. More broadly, most businessessupplying products to or in Thailand will beaffected. The impact is especially significantin some industrial sectors, for example, theautomobile, food and pharmaceutical sectors.Businessmen need to be familiar with the con-tent of the new law. Diligent and responsiblemanagement must improve their practices toensure that their organizations are adequately prepared for this new law because the ad-verse impact of product liability claims uponany organization can be severe for those whoneglect to be well-prepared.Additionally, damage to brand and repu-tation, dislocation and loss of market share,and management down time need to betaken into consideration, in addition toawards for damages and legal expenses thatmust be paid when liability judgments arerendered against a business. Other formsof damage can be even more serious, in particular domestic business with foriegnunits and foreign business entrepreneurs op-erating in Thailand should realize that localclaims made under the new law may haveinternational implications as well as ramifi-cations for related companies outside of Thailand. They need to understand that,whilst in broad terms the new law is based on comparable laws in other jurisdictions,the Act also contains features that are uniqueand distinctive to Thailand.In particular, some defenses which can be normally found in the laws of other juris-dictions have been excluded from the Act.For example, there is no defense based onthe absence of defect at the time of supply.Moreover, any supplier can be jointly liablewith other suppliers in the supply chain, eventhough a product may have been free of defect at the time it left the possession of  Thai Product Liability Law: Preparation for Entrepreneurs 31  that particular supplier. The absence of thisdefense has the potential to encourage “de-fendant shopping.” Plaintiffs will be inclined to pursue claims against high profile, bigname, defendants, including Thai subsidiar-ies of international corporations. RECENT PRODUCT LIABILITYLAW IN THAILAND This law contains 16 sections which areeffective beginning February 20, 2009. Any“product,” including agricultural productsand electricity sold after the enforcing dateis affected by this law, but not including “ service ”. (Office of the Council of State,2008)A. Unsafe Products Similar to product liability doctrine in theU.S.A., the Product Liability Act makes adistinction between three different catego-ries of unsafe or defective products:1. Unsafe products from a defect in pro-duction This first category typically arises whenthere is an unintended irregularity in an oth-erwise safe manufacturing process. Becausethis sort of claim turns on a single or limited number of allegedly flawed products, rather than an entire line of products, this type of claims is usually more straightforward.2. Unsafe products resulting from a de- fect in design This is often much more contentious and controversial because it can affect an entireline of products and because of the type of decisions it requires courts to make. De-sign defect claims require a court to deter-mine if there were hazards lurking in a product’s engineering or scientific concep-tion and, if so, whether such hazards rise tothe level of a “defect.” Defect claims typi-cally require highly technical evidence. Fur-ther, because there are hazards in any hu-man activity, they also involve difficult judg-ment calls about what can reasonably beexpected from a design.3. Products which are unsafe becauseof insufficient warnings of danger or lack of instructions for safe use. The third category turns on information provided about the product. This categoryhas two separate obligations: first, a duty towarn; and second, a duty to provide proper instructions. It is also an area where busi-ness operators can reduce their exposure.Although these three categories often over-lap with each other, they differ in terms of the decisions they require courts to makeand the risks they create.B. Entrepreneur The Product Liability Act provides for  joint and several liabilities for the categoryof “entrepreneur,” which covers:1.Producer (Manufacturer) or a partyauthorizing the production (outsourcer).2.Importer 3.Seller of a product who cannotidentify his producer, party authorizing the production, or importer 4.Party using a name, trade name,trade mark, mark, message or other meanswhich may be understood as being the pro-ducer, party authorizing the production, or  Praphrut Chatprapachai 32  importer.C. Burden of Proof  For the entrepreneurs to be liable, thedamaged party (plaintiff) shall prove that:(1)the damaged party sustained dam-ages from the product of the entrepreneur(s)and (2)the use or storage of the productwas done in a normal manner.**However, evidence shall not be re-quired showing that the damages occurred from the action of a particular entrepreneur.D. Defenses The entrepreneurs shall not be liable if they can prove that:1.The product was not unsafe. (The product was safe.)2.The damaged party had knowledgethat the product was unsafe, or 3.The damage occurred because of inappropriate use or storage of the productas determined by the instructions for appro- priate use and storage or warning included with the product.(if the product informationis accurately and clearly provided by theentrepreneurs).4.The party producing products byorder of the party authorizing the produc-tion shall not be liable if evidence can be provided that the danger was caused by thedesign of the party authorizing the produc-tion or compliance with the instructions pro-vided by the party authorizing the produc-tion, whereas the producing party had notexpected such danger.5.The producer of the product com- ponents shall not be liable if it can be proved that the danger of the products was caused  by the design, assembly, instruction for us-age and storage, or the warning or productinformation provided by the party produc-ing the product.However, any agreements entered into between the consumer and the entrepre-neurs before the damages and the statementof the entrepreneur to disclaim or place lim-its on his liability for damages caused by theunsafe product cannot  be asserted as a dis-claimer or limit the entrepreneur’s liability.E. Awardable Damages 1.Compensation for violations of theCivil and Commercial Code.2.Compensation for damages to men-tal health, emotional distress damages and,if a damaged party dies, certain relatives and heirs of the damaged party can also recover emotional distress damages.3.Punitive damages can also beawarded if the entrepreneurs knew the products were unsafe, failed to discover the products were unsafe because of gross neg-ligence, or failed to take proper action to prevent damage after learning that the prod-ucts where unsafe. Punitive damages are lim-ited to twice the actual amount of damagesunder this Act.F. Prescription Period The right to demand compensation aris-ing from unsafe products will expire after:1.3 years counting from the date thedamaged party became aware of the dam-ages and became aware of the entrepre-neurs responsible or 10 years counting fromthe date the product was sold. Thai Product Liability Law: Preparation for Entrepreneurs 33  2.In the event the damages were tolife, body, health, or hygiene by the accu-mulation of chemicals in the body or in theevent a period of time must pass before anysymptoms appear, 3 years counting from thedate that the damaged party became awareof the damages and the entrepreneurs re-sponsible, but not exceed by 10 years count-ing from the date he became aware of thedamages. LANDMARK PRODUCT LIABILITYCASES Because the Liability for Damages Aris-ing from Unsafe Products Act, B.E. 2551was enforced on February 20, 2009, thereare no major court decisions based on theact in Thailand to-date. However, sinceThailand’s Unsafe Product Act adopts simi-lar legal concepts to the U.S.A.  and Japan’s Product Liability Law (Suppanit, 2006)which have enforced their PL laws since1944 and 1994, respectively, precedentcourt decisions in PL law from these two jurisdictions are good models for analogi-cal comparison to the Thai PL act. (Tanitkul,2010) The following case illustrate:A. Manufacturing defect  Escola v.Coca Cola Bottling Co. , (1944)  While Ms. Escola was picking up acoca cola bottle to keep in the fridge, it ex- ploded. Ms. Escola’s hand was seriouslyinjured and she lost the ability to use thathand forever. In this case, the facts showthat the coca cola bottle was over-carbon-ated, the coca cola company was liable for the body injury of Ms. Escola under doc-trine of strict liability. The case of National televisionburned down office (Trial Court of Osaka, 1990)  The plaintiff plugged in a Na-tional TV (manufactured by the defendant’scompany, Matsushita) on the ground floor which was plaintiff’s construction office. Themaid testified that she saw smoke driftingfrom the back of the TV. The judge theninferred that the fire must have srcinated from the TV which was negligently manu-factured. The judge reasoned that the TVshall be deemed defective because the wit-ness could see smoke and flames erruptingfrom the TV, although the plaintiff normallyused the TV by leaving it plugged in and turning on standby mode. Moreover, thefacts showed that, since the plaintiff had  bought the TV 8 months prior to the fireincident, the plaintiff had never touched anyinner parts of the TV nor let anyone fix it,therefore, it could be inferred that there wasa close relationship between the productdefect and the damage incurred at the timethe defendant sold the product on the mar-ket.B. Defective (insufficient) warning  Nowak v. Faberge USA, Inc., (1994) The plaintiff was using a hair spray which isoperated by a flammable alcoholic pressure process. The spray bottle was labeled witha warning that stated “No Piercing” and “Nouse near fire or flame.” The plaintiff tried touse the spray, but the valve did not work.Then, she used a can opener to pierce thespray can. Immediately, white smokespouted and flowed to a flaming gas stove.It caught on fire and burned the body of the plaintiff. In this case, the producers were Praphrut Chatprapachai 34
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