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Expanding Supplier Liability Under EU Law: Key Judgment in Ford Italia SpA v ZP and Stracciari SpA

Key Judgment in Ford Italia SpA v ZP and Stracciari SpA

On 19 December 2024, the Court of Justice of the European Union (CJEU) delivered a pivotal ruling in the case of Ford Italia SpA v ZP and Stracciari SpA (Case C-157/23). The judgment clarifies the scope of supplier liability under the Product Liability Directive (PLD) (Directive 85/374/EEC), particularly concerning the interpretation of the term ‘producer’ as defined in Article 3, paragraph 1.

The Italian Supreme Court of Cassation referred the case to the CJEU for guidance on whether a supplier’s liability could be established when their name or branding partially or wholly matches the trade mark of the product’s actual manufacturer. This clarification was sought in a case involving a Ford vehicle whose airbag failed to deploy during an accident in 2004, resulting in a compensation claim against both the dealer and the supplier, Ford Italia SpA.


Expanding Supplier Liability Under EU Law: Key Judgment in Ford Italia SpA v ZP and Stracciari SpA

Decoding the CJEU’s Ruling

The decision by the CJEU reinforces views that protection afforded to consumers through the PLD extends beyond literal interpretation of physically branding a product and that suppliers might also be found liable as 'producers' insofar as their branding activity gives the impression of responsibility for a product's quality.


Highlights of the Ruling: Expanding Supplier Liability Under EU Law: Key Judgment in Ford Italia SpA v ZP and Stracciari SpA

  • Emphasis on Consumer Perception: The court stated that the paramount point is consumer perception. In case the name or brand of the supplier conveys to consumers a participation in the production process, the supplier will be liable.

  • No Need for Direct Branding: The liability of the supplier does not depend on overt branding on the product. In case the supplier's name or trade mark is similar to the manufacturer's branding, then liability arises.

  • Recourse and Contribution Rights: Despite the possible finding of liability for suppliers emanating from Article 5 of the PLD, in reality they do have recourse under national legal frameworks against the actual producer.


Practical implications for suppliers, importers, and brand owners:

It holds great practical consequences for businesses within various industries: automotive, pharmaceuticals, medical devices, and electronics. Some key considerations for suppliers, importers, and brand owners are highlighted below: Expanding Supplier Liability Under EU Law: Key Judgment in Ford Italia SpA v ZP and Stracciari SpA


1. Marketing and Branding Practices

Suppliers and brand owners will increasingly need to consider how they use marketing language and label products. Claims that suggest or imply a product is guaranteed could raise additional liability concerns, particularly where branding creates an impression of production responsibility.


2. Contractual Relationships

  • Supplier Agreements: Manufacturers and importers can renegotiate their contracts with suppliers to clarify their respective liabilities and indemnification obligations.

  • Indemnity Clauses: Suppliers might seek stronger indemnity clauses to pass liability back to manufacturers.


3. Quality Assurance and Due Diligence

  • Supplier Vetting: The importers and brand owners would implement strict due diligence processes that assure the products of a quality and safety standard.

  • Audits: The manufacturers may be allowed to audit the suppliers' processes to avoid risks of the defective products.


4. Product Design and Labelling

  • Clear Distinctions: Businesses can opt for distinguished branding that does not conflict with the manufacturer's trade marks to reduce liability.

  • Disclaimers: Labels and packaging may include disclaimers to indicate who is responsible for what in the supply chain.


5. Supply Chain Transparency

This will call for more openness in the supply chain of businesses, such as documentation of the origin of products, safety certifications, and quality checks.


6. Insurance Considerations

Liability insurance will likely rise, but most especially to distributors and suppliers, whose businesses do trade through branding agreements of this nature, as established by this ruling. The companies should reassess their policies for adequate coverage.


7. Consumer Dispute Resolution

  • Proactive Systems: Organizations should have effective systems that manage consumer complaints so the solutions are provided promptly.

  • Reputational Risks: Dispute resolution will help prevent the occurrence of reputational damage through liability claims.


Looking Ahead

These principles are expected to continue into the new regime ushered in by Directive (EU) 2024/2853-the New PLD. Article 3, paragraph 1 of the PLD, continued by Article 4(10)(b) of the New PLD ensures that this decision will have continued relevance going forward. The businesses have to prepare for this kind of liability interpretations and hence alter their conduct in advance.


Tailored Advice from CCS Law

The decision highlights the determination of the EU to strengthen the protection offered to consumers. Suppliers are made accountable for the products they sell. This ensures effective remedies in product liability cases on account of a defective product sold.


At CCS Law, we provide extensive legal advice focused on specific needs for your business. We can help the supplier, importer, or brand owner navigate through these changes to review their contracts and develop strategies that can reduce liability risks. Contact us today to learn how we can support your business.


Disclaimer: This article is intended for informational purposes only and does not constitute legal advice.



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