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On 15 April 2010, the Supreme Court (Lord Hope, Lord Saville, Lord Rodger, Lord Walker and Lady Hale) will sit for a one day hearing in the appeal of OB v Aventis Pasteur, which is the first case of the new Easter term.  The dispute relates to whether the Court is authorised by section 35 of the Limitation Act 1980 and CPR 19.5 to allow substitution of a new defendant to a product liability claim after the 10-year period for enforcing rights under Article 11 of Council Directive 85/374/EEC (the “Product Liability Directive“) has expired.

By way of background, Declan O’Byrne (“OB“) commenced proceedings against Aventis Pasteur MSD Ltd (“APMSD“) on 2 November 2000, alleging that a vaccination which APMSD had produced was defective and had caused damage to his brain. However, it transpired that the producer of the vaccine was in fact APMSD’s French parent company, Aventis Pasteur SA (“APSA“).  Accordingly, on 16 October 2002, OB commenced new proceedings against APSA and applied under CPR 19.5(3)(a) for APSA to be substituted as a Defendant in the place of APMSD.  The Defendants argued that, despite OB not having been vaccinated until 3 November 1992, OB’s claim was statute-barred (under s.35 Limitation Act 1980) because the vaccination had been put into circulation within the meaning of Article 11 of the Product Liability Directive by APMSD more than 10 years before 16 October 2002. The Defendants also alleged that the substitution of new Defendants was inconsistent with Article 11 of the Product Liability Directive which provides a similar ten year limitation on claims.

On 18 November 2003, the High Court requested a preliminary ruling from the European Court of Justice, which replied as follows:

‘When an action is brought against a company mistakenly considered to be a producer of the product, whereas, in reality, it was manufactured by another company, it is as a rule for national law to determine the conditions in accordance with which one party may by substituted for another in the context of such an action. A national court examining the conditions governing such a substitution must, however, ensure that due regard is had to the personal scope of the Product Liability Directive, as established by Articles 1 and 3 thereof.’ Case C-127/04 O’Byrne [2006] ECR I-1313

As a result, the High Court granted the application for substitution made by OB, on the ground that APMSD had been wrongly named as defendant instead of APSA. APSA appealed this decision to the Court of Appeal, who dismissed it on 9 October 2007.  APSA then appealed to the House of Lords, which stayed proceedings whilst a further question was referred to the ECJ for a preliminary ruling. This second question was whether the Product Liability Directive must be interpreted as precluding national legislation which, in the context of proceedings instituted on the basis of a system of liability laid down by that directive, allows for the substitution of one defendant for another after the expiry of the 10-year period laid down in Article 11 of the Product Liability Directive, although the person named as a defendant in those proceedings before the expiry of that period did not fall within the scope of the directive, as defined in Article 3 thereof.

The ECJ held, in APSA’s favour, that a rule of national law which allows the substitution of one defendant for another during proceedings cannot, under the Product Liability Directive, be applied in a way which permits such a producer to be sued after the expiry of the 10 year limitation period.  The Court’s reasoning was as follows:

1. an outcome to the contrary would involve a lengthening of the limitation period with regard to a producer in APSA’s position, disrupting its expectations as to the exact date on which it is deemed to be relieved of its liability (and violating the principle of legal certainty which requires that the application of rules of law must be foreseeable); and
2. such an outcome would be inconsistent with the complete harmonisation pursued by that directive on that issue.

However, importantly the ECJ added that Article 11 must not be interpreted as precluding a national court from holding that, in the proceedings instituted within the limitation period against the wholly-owned subsidiary of the producer of the defective product, that producer can be substituted for that subsidiary if that court finds that the putting into circulation of the product in question was in fact determined by the producer.

The ECJ also held that Article 3(3) of the Product Liability Directive must be interpreted as meaning that, where a person injured by an allegedly defective product was not reasonably able to identify the producer of that product before exercising his rights against the supplier of that product, the supplier must be treated as a producer for the purposes of Article 11 if it did not inform the injured person, on its own initiative and promptly, of the real identity of the producer.

The Supreme Court will now be asked to apply the ECJ’s reasoning to the two sets of proceedings.  It seems likely that OB will be time barred in respect of the October 2002 proceedings against APSA, but it will be interesting to see if the argument under Article 3(3) may succeed on the basis that OB could not reasonably identify APSA as the producer at the time, and APMSD did not do enough to aide OB in his attempts to identify APSA.