Focus: Thailand - Product Liability New product liability legislation in Thailand
17 June 2008
In brief: The Thai Government recently enacted the country's first product liability legislation. The Unsafe Goods Liability Act B.E. 2551 (2008) is groundbreaking legislation as it empowers the court, for the first time, to grant punitive damages to injured parties. International Partner Marcus Clark (view CV), Senior Associate Rawat Chomsri and Associate Jeffrey Sok report on the new product liability legislation in Thailand that will hold manufacturers, importers and sellers jointly liable for injuries sustained from use of a good deemed unsafe.
- Product liability arrives in Thailand
- What are unsafe goods and who is responsible?
- Burden of proof
- Mental injury now actionable
- Risk minimisation strategies
How does it affect you?
- Manufacturers, sellers and importers of unsafe goods will be jointly liable for the injuries sustained through normal usage or storage of such goods.
- Limitation of liability clauses will not be enforceable against consumers of unsafe goods.
- Thai courts will be empowered to grant damages for mental anguish, as well as punitive damages in some circumstances.
Thailand's new legal framework for product liability focuses on the manufacture, import and sale of goods that cause or may cause injury. All manufacturers, importers and sellers will be jointly liable to the injured party, irrespective of whether or not the injury occurs from deliberate action or actions amounting to negligence. The injured party need not prove negligence but only that any injury occurred through normal usage or storage of the goods.
Until this legislation comes into force on 20 February 2009, the only avenue for recourse available to consumers injured by unsafe goods is under section 420 of the Civil and Commercial Code of Thailand or under the Consumer Protection Act B.E. 2522 (1979). Section 420 requires a person to compensate an injured party when they unlawfully injure the life, body, health or property of another person through a wilful or negligent act. In practice, damages for a claim under this section are limited to actual damages eg medical bills and are not transferable to the heirs of the injured party unless the claim has been acknowledged by contract. Damages under the Consumer Protection Act are also quite limited in scope.
The Unsafe Goods Liability Act defines an unsafe good as one that causes or may cause injury as a result of defective manufacturing or because directions of use have not been properly labelled or they are incorrect or unclear. If, during normal usage, a person sustains injury because a good was unsafe, he or she will have standing to bring suit under the Act against the manufacturer or importer of a good or the seller if they cannot identify the manufacturer or importer (all are referred to as business operators). In addition to those listed above, a person who uses a name, trade name, trade mark, statement or who holds themselves out as a manufacturer or importer will also be a business operator under the Act.
Business operators will be jointly liable to the injured party however they may arguably have rights of subrogation against each other. Business operators may raise three defences to a claim under this Act:
- the goods are not unsafe;
- the injured party knew the goods were unsafe; or
- the injury occurred because of incorrect usage or storage of the goods where a warning on the goods was correctly labelled.
In a claim under the Act, the burden of proof rests with the injured party. The injured party must prove they sustained an injury through the normal usage or storage of goods that were manufactured, sold or imported by a business operator.
An agreement between a consumer and a business operator that purports to disclaim liability for any injuries that might occur will not be recognised by the court and will not operate as an effective disclaimer against liability under the Act.
Claims are subject to a statute of limitations of three years from the date the injured consumer knew of the injury and could identify the relevant business operator, or ten years from the sale of the good. Similar to toxic tort class actions, the legislation also includes a provision for cases in which symptoms do not occur for an extended period of time or injuries are caused by an accumulation of harmful substances in the body eg asbestos.
Also for the first time, the Thai courts are to be given explicit power to grant damages for mental injury. Furthermore, if the injured party dies, the husband, wife or heirs of the deceased are entitled to damages for mental injury.
If, during the course of the proceedings, it is discovered the business operator knew or should have known the goods were unsafe, the court is empowered to order punitive damages at a maximum of twice the amount of actual compensation.
It will be interesting to see how the Thai courts, not renowned for their largesse when it comes to consumer claims, make use of these new powers.
For retailers, risk minimisation is relatively easy. They must make sure that they can identify the manufacturers or importers of all the goods they sell. If they can identify the manufacturer or importer they will be able to avoid liability, unless some conduct on their part has caused the injury (in which case the manufacturer and importer may have rights of subrogation against the retailer).
For manufacturers and importers, one important point of focus should be warning labels. Thai courts are unlikely to think much of English language warning labels that most Thai consumers may struggle to understand so manufacturers and importers should get them translated.
Another point of focus will be on manufacturers and importers agreeing among themselves about how any liability should be shared. While consumer disclaimers won't work, appropriately worded provisions can bind a manufacturer or importer, subject to the caveat that Thai law does not enforce disclaimers from liability for fraud or gross negligence.
- Marcus ClarkPartner,
Ph: +61 2 9230 4260
- Peter O'DonahooPartner,
Ph: +61 3 9613 8742