Taking some of the shine off commercial product liability?

When a ship, a rig, a factory or an office-block is damaged owing to some malfunctioning device or other, a claim in tort against the manufacturer of the device has distinct attractions for the owner and/or its subrogated insurer. Contractual restrictions on liability can be bypassed. So (in the case of ships) can limitation of liability, since component or machinery makers are outside the charmed circle of those who can limit under the 1976 Convention.

A case today in the English Court of Appeal may, however, cause some such claimants to have second thoughts. In Howmet Ltd v Economy Devices Ltd & Ors [2016] EWCA Civ 847 an English factory owned by Howmet, an ALCOA subsidiary and manufacturer of turbine blades, burnt down after a badly-designed thermosensor on sensitive equipment failed. The factory owner (H) sued the manufacturer (EDL). The awkwardness was that there had been problems with the thermosensor before, as H’s employees well knew, but H had continued to use the device. Did this matter? Most lawyers until today would have said that for an owner suing in tort, the worst that could happen was that he might have damages docked for contributory negligence. But a majority in the Court of Appeal (Jackson LJ and Sir Richard Akenhead) held that in a case such as this the claimant failed entirely on causation grounds, as he would in contract under Lexmead v Lewis [1982] AC 225. Arden LJ dissented, essentially arguing that if this was right, it deprived the Law Reform (Contributory Negligence) Act 1945 of a great deal of its point.

This is highly significant in practice. It’s very often possible for a well-advised defendant to a commercial product liability  suit to provide evidence that someone knew of problems earlier: in so far as this is now capable of leading to a dismissal of the whole action rather than a docking of damages, the effect of this on settlement prospects will be clear.

What can claimants do? Grin and bear it, perhaps. Or possibly, look for somewhere else to sue. Most European jurisdictions, one imagine, would not only welcome the legal business but say that this was a simple case of apportionment for faute de la victime, Mitschulden, or whatever. Time will tell.

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