Analysis of liability for authorised representative under MDR and IVDR: Memorandum

To: European Association of Authorised Representatives
From: Erik Vollebregt
Date: 1 December 2015

1 Introduction and facts

In the Council’s general approach for the Medical Devices Regulation[1] (“MDR”) and In Vitro Diagnostics Regulation[2] (“IVDR”) the following proposed clause has been inserted with respect to the liability of authorized representatives[3]:

“4a. Without prejudice to paragraph 4, where the manufacturer is not established in any Member State, and has not complied with the obligations laid down in Article 8, the authorised representative shall be legally liable for defective devices in accordance with Article 8(13).”

Article 8 (13) provides that:

“13. Natural or legal persons may claim compensation for damage caused by a defective device in accordance with applicable Union and national law. To this end, manufacturers shall consider taking out appropriate insurance or arranging for an equivalent financial guarantee, to cover the costs associated with defective devices.”

The European Association of Authorised Representatives (“EAAR”) has requested Axon Lawyers to analyse this provision and provide a legal discussion on the relation of the provision to existing EU law specifically relating to liability for defective products under the Council Directive of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (“PLD”).

[1] 2012/0266 (COD), 12040/1/15 REV 1
[2] 2012/0267 (COD), 12042/15
[3] Because the clauses are identical in both regulations this analysis only refers to the articles in the proposed Medical Devices Regulation. The corresponding articles in the IVDR general approach are 9 (4a) and 8 (11).

2 Reliance

This analysis was written for the benefit of EAAR and its members and may not be relied upon by any other person for any purpose.
It may be used publicly by EAAR and its members in part or in whole provided no text elements are changed or misrepresented out of context.

3 Executive summary

Making the authorised representative liable for damage caused by defective devices is contrary to the EU New Legislative Framework regulatory logic as well as the EU acquis regarding producer liability for defective products. As proposed currently it would lead to a liability that overlaps with the producer liability under the PLD, without any demarcation, which would be detrimental to the useful effect of the PLD and thereby would make the provision illegal.
It would also constitute a legislative anomaly in EU product regulation, as it would be the only EU product regulation legal instrument with its own liability provision.

4 Analysis

4.1 Role of the authorised representative in EU law

The role of the authorised representative is to act on behalf of the manufacturer in relation to specific tasks with regard to the manufacturer’s responsibility under the Regulation.[4] The Blue Guide 2014 is more specific in this regard:

“The tasks that may be delegated to the authorized representative according to the directives are of an administrative nature. Thus, the manufacturer may neither delegate the measures necessary to ensure that the manufacturing process assures compliance of the products nor the setting up of a technical documentation, unless otherwise provided for. Further, an authorised representative cannot modify the product on his own initiative in order to bring it into line with the applicable directives.”[5]

This is confirmed in Decision No 768/2008/EC of the European Parliament and of the Council of 9 July 2008 on a common framework for the marketing of products, and repealing Council Decision 93/465/EEC,

“which includes reference provisions to be incorporated whenever product legislation is revised. In effect, it is a template for future product harmonisation legislation”[6].

From this it is absolutely clear that EU law as underlying the New Legislative Framework and its predecessor the New Approach sees the tasks of the authorised representative as administrative and draws a sharp divide between the authorised representative and manufacturer as regards ensuring that the products are in conformity with applicable EU legislation. The authorised representative is also not allowed to modify products to ensure compliance and therefore has no possibilities to mitigate a no-fault liability as proposed. Under these circumstances it would not be logical to impose a no-fault liability on the authorised representative.
None of the other directives and regulations that have been aligned under the New Legislative Framework include a liability provision for the authorised representative, although almost all directives in the Alignment Package include a requirements of liability insurance for the conformity assessment body[7] (i.e. the notified body, not the authorised representative). Even directives for high-risk products such as civil explosives[8] and for consumer products such as the Toy Safety Directive[9] do not contain their own liability regime but rather refer to the PLD. Also the product legislation currently in alignment (Gas Appliances, Cableways, and Personal Protective Equipment directives) do not contain such a liability regime.
The MDR and IVDR would be the only legislation in the New Legislative Framework to include such a liability regime, which, as will described below, is moreover contrary to EU law itself.

[4] Recital 20
[5] Blue Guide, p. 22/23 paragraph 3.2
[6] See Commission website on the New Legislative Framework, http://ec.europa.eu/growth/single-market/goods/new-legislative-framework/index_en.htm
[7] See e.g. Directive 2014/30/EU of the European Parliament and of the Council of 26 February 2014 on the harmonisation of the laws of the Member States relating to electromagnetic compatibility, Directive 2014/34/EU of the European Parliament and of the Council of 26 February 2014 on the harmonisation of the laws of the Member States relating to equipment and protective systems intended for use in potentially explosive atmospheres, Directive 2014/33/EU of the European Parliament and of the Council of 26 February 2014 on the harmonisation of the laws of the Member States relating to lifts and safety components for lifts, Directive 2014/29/EU of the European Parliament and of the Council of 26 February 2014 on the harmonisation of the laws of the Member States relating to the making available on the market of simple pressure vessels
[8] Directive 2013/29/EU of the European Parliament and of the Council of 12 June 2013 on the harmonisation of the laws of the Member States relating to the making available on the market of pyrotechnic articles, recital 49
[9] Directive 2009/48/EC of the European Parliament and of the Council of 18 June 2009 on the safety of toys, recital 45

4.2 Analysis of article 9 (4a) and article 8 (13)

4.2.1 Without prejudice to paragraph 4 […] has not complied with the obligations laid down in Article 8

Article 9 (4) makes a number of exceptions to manufacturer responsibilities set out in article 8 to the scope of the mandate of the authorised representative.[10] These exceptions to delegation of manufacturer obligations in 9 (4) also should lead to exclusion of liability. As is explained in more detail below, the obligation set out in article 8 (1) (ensuring that the devices ‘are designed and manufactured in accordance with the requirements of this Regulation’) is excluded from the scope of the mandate of the authorised representative. Consequently, responsibility for defects as a result of design and manufacturing should also be excluded from the scope of liability of the authorised representative. This is underlined in recital 23 of the IVDR general approach:

“Moreover, in view of the difficulty of enforcement of awards of compensation for damage as against manufacturers established outside the Union, it is appropriate to provide that authorised representatives be legally liable for defective devices in case of non-compliance with the obligations of the manufacturer.” (underlining added).

This recital is inconsistently not mirrored in the MDR. It is also unclear what the remaining scope of liability for defective products would be after deduction of all the manufacturer responsibilities under article 8 MDR/IVDR.

[10] Article 9 (4) “The mandate referred to in paragraph 3 shall not include the delegation of the manufacturer’s obligations laid down in Article 8(1), (1a), (1b), (2), (3), (3b), (5), (6), (7) and (8).”

4.2.2 Imprecise wording of liability scope in violation of EU acquis in defective products liability

Article 9 (4a) uses the wording “legally liable”, which is an imprecise term from a legal perspective because the type and scope of liability is not defined. Since article 8 (13) only refers to a “damage caused by a defective device” this seems to exclude liability of the authorised representative for anything else than damage caused by defective devices, such as non-compliance with regulatory requirements by the manufacturer. However, since the MDR does not define these concepts nor refers to EU legislation that does, the scope of these concepts is unclear and it is not clear how they relate to, overlap with or are identical to similar concepts used in the PLD, which are clearly defined in that directive.

4.2.3 Authorised representative has no responsibilities as regards preventing defects

It is inconsistent and unproductive to make the authorised representative liable for defects in devices that the authorised representative has no influence over. Article 9 (4) explicitly excludes article 8 (1)[11] from the scope of the delegation (ensuring that the devices ‘are designed and manufactured in accordance with the requirements of this Regulation’). As a result the authorised representative does not even have the means to control the manufacturer because the authorised representative is not even allowed to have a responsibility with respect to design and manufacturing. Design and manufacturing in conformity with the MDR are however the factors that lead to defects or not. The result is a liability for the authorised representative that he has no means of mitigating, which is a pointless exercise. The PLD incorporates the logical and ethical principle that a company should not be liable for defects in products that it had no influence over or did not place on the market. The PLD therefore excludes liability in article 7 (a) and (c) for a producer if he proves that[12]:
a) he did not put the product into circulation; or
b) the product was neither manufactured by him for sale or any form of distribution for economic purpose nor manufactured or distributed by him in the course of his business
It follows that the authorised representative liability proposed in article 9 (4a) flies in the face of these important principles of no-fault liability set out in the PLD, because the authorised representative does not in any way form part of the supply chain of the product nor did he have any influence over its design and production. Including liability as set out in article 9 (4a) MDR would go against EU acquis in the field of liability for defective products.
Even if it could be assumed that article 9 (4a) would bring the authorised representative within the scope of the PLD somehow as a lex specialis (which is not possible because the MDR and IVDR do not specify that they amend or clarify the PLD in this respect), the authorised representative would always benefit from the exceptions for non-supply chain parties set out in the PLD, rendering the clause meaningless as regards authorised representative liability.
While the EU Court has not excluded that the EU or member states impose no-fault liability for defective devices used by service providers13, this only happened in a case where the service provider (hospital) provided a medical service to the patient using a defective product (medical device). In the case of the authorised representative however there is absolutely no link between the authorised representative and the patient, nor does the authorised representative have any right to decide what devices it allows to be placed on the EU market or not.
The only result of creating this liability will be that the overlap between the importer liability for defective products and the authorised representative liability for defective products overlaps and will lead to more difficulties for injured patients to recover damage. The insurers of the authorised representative and importer/supplier will both deny responsibility pointing to the other’s liability, making it even more difficult for patients to recover damage.
The EU Court has held in the case of Centre hospitalier universitaire de Besançon v Thomas Dutrueux and Caisse primaire d’assurance maladie du Jura14 that national legislation and EU legislation in the field of liability for defective products may be established but only on condition that it does not adversely affect the producer’s liability as it is established by the PLD.[15] This is precisely what happens by creating the ill-defined overlapping no-fault liability contemplated in article 9 (4a). This will make it more difficult for patients to claim damages as described above, and thus adversely affect the system established by the PLD, rendering article 9 (4a) illegal. The EU Court held that imposition of liability or other consumer rights relating to product liability are allowed that is additional to the PLD and contributes to enhancing consumer protection[16], but not if it overlaps with the PLD and thus detracts from consumer protection.

[11] Article 8 (1): “When placing their devices on the market or putting them into service, manufacturers shall ensure that they have been designed and manufactured in accordance with the requirements of this Regulation.”
[12] Article 7 PLD: “The producer shall not be liable as a result of this Directive if he proves:
(a) that he did not put the product into circulation; or
[…] (c) that the product was neither manufactured by him for sale or any form of distribution for economic purpose nor manufactured or distributed by him in the course of his business; or”
[13] See Case C-495/10 Centre hospitalier universitaire de Besançon v Thomas Dutrueux and Caisse primaire d’assurance maladie du Jura
[14] Case C-495/10
[15] Case C-495/10, points 30 and 34
[16] Case C-495/10, point 35 and C-310/13 Novo Nordisk

4.2.4 Authorised representative liability not needed for effective patient recourse

Finally, it is not even necessary to make the authorised representative liable for defective devices in order to provide a patient that suffered damage as a result of a defective device with effective recourse. This seems to be the main motivation behind clause 9 (4a) as set out in recital 23 of the IVDR general approach, which states:

Insofar as liability is concerned, the importer of the defective device into the EU[17] or supplier of the device will be seen as producer for the purpose of the PLD.[18] Consequently, patients that suffered damage as a result of a defect can always address the importer or a supplier of the device for that damage. There is no need to create a separate and overlapping liability for the authorised representative and there is no objective published data, e.g. in the Commission’s impact assessment for the MDR and IVDR that we are aware of that confirms the assumption in recital 23 of the IVDR.

[17] Article 3 (2) PLD: “Without prejudice to the liability of the producer, any person who imports into the Community a product for sale, hire, leasing or any form of distribution in the course of his business shall be deemed to be a producer within the meaning of this Directive and shall be responsible as a producer.”
[18] Article 3 (3) PLD: “Where the producer of the product cannot be identified, each supplier of the product shall be treated as its producer unless he informs the injured person, within a reasonable time, of the identity of the producer or of the person who supplied him with the product.”

4.2.5 “in accordance with Article 8(13)”

The liability in article 9 (4a) is “in accordance with article 8(13)”, which sets out a proposal for the liability of the manufacturer for defective devices. Article 8 (13) confusingly refers to

compensation for damage caused by a defective device (in relation to liability); and
costs associated with defective devices (in relation to scope of insurance cover)

These are different scopes of liability mentioned in the same article. Both the concept of “damage” and “costs” are not defined and therefore completely unclear. The PLD, for example, defines clearly what kind of damage can be claimed based on no-fault liability[19] whereas article 4 (9a) is completely unclear about this and moreover confuses matters by referring to costs and liability seemingly interchangeably.
Article 8 (13) also refers to EU and national law regarding liability for defective products. As has been explained above the overlap of scope renders article 9 (4a) and article 8 (13) illegal because the overlap is detrimental to the useful effect of the PLD.

[19] See Article 9 PLD: only (a) damage caused by death or by personal injuries; and (b) damage to, or destruction of, any item of property other than the defective product itself

4.3 The imposition of liability assumes a role of the authorised representative that is not foreseen in CE legislation

In the light of the role of the authorised representative as foreseen in the New Legislative Framework as discussed above in paragraph 4.1 it is inconsistent with general EU goods law to make the authorised representative liable for damage caused by defects in products that the authorised representative has no influence over. It is explicitly not the intention of EU goods law to identify the authorised representative with the manufacturer. This is however precisely what the proposed article 9 (4a) does by imposing the same liability on the authorised representative.