MENA LEGAL ADVISERS:Product Liability in the UAE - 2015

Facing a never-ending variety of goods and services, end-users are overwhelmed with choices for products and services that may be defective or unreasonably dangerous without being duly informed.

When a damage results out of a product or a service, justice commands that such a damage “shall render the doer thereof (…) liable to make good the harm” (Article 282 of the UAE Federal Law no. 8 of 1985 on Civil Transactions (the “Civil Law”)). This principle, also stated for contractually grounded damages (Article 555 and Consumer Protection Law no. 24 of 2006 (the “CPL”)), lays but the execution stands by. “Who is responsible?” and to “Which extent?”

In the UAE, one should not be surprised that the legal terms supplier/seller/trader are often used to refer to the agent, the raw material suppliers, the manufacturer or the assembler so to define the role, in the chain of liability over the product sold/leased to the end user, of each of them. The Civil Law (Articles 282 and follows (harm), Articles 237 and follows (option to reject for a defect); Articles 543 and follows (liability for defect)) is the main law that defines the “supplier” and governs its liabilities.

“Defects” is quite well defined in the Civil Law. Article 544(4) stipulates that “For a defect to be regarded as old (prior to the sale) it must have been latent, and a latent defect is one which cannot be observed by a superficial inspection of the thing sold, or which would not be apparent to the ordinary man, or which could not be discovered by any person other than an expert, or which would become apparent only upon testing.” The Consumer Protection Law also defines the “defect” in a way which could be used, in our opinion, for cases non-related to the Consumer Protection Law: “Any flaw in the design, processing or manufacturing of the commodity or any inappropriateness, distortion or damage that may happen or arise before or during usage or as a result of the noncompliance or lack of adherence sufficiently with the adopted standards, guarantee or the specifications that are advertised or shall be advertised by the supplier or with any confirmation or advertisement that is related to or fixed on the commodity (means product)”.

The concept of “damage” is defined mainly in Articles 283 to 302 of the Civil Law. It must be direct or by causation, certain and sustained; it concerns personal injury, including moral harm, and property deterioration.

Precedents and practices have given the above mentioned legal concepts an extended meaning that can be summarized as follows in the context of tort or of contract.

When there is no contract, a damage caused by a product must be compensated by its owner or by its seller whichever had control over the actual cause of the damage (the thing itself or the defect/negligence that caused the damage).

When there is a contract, the contracting parties have an obligation towards each other to meet their contractual commitments, including an express or legal warranty against defect. The liability for breach of such warranty is generated in case such a defect is discovered, the defect being considered as a breach. In the UAE, in case of defect the obligor will not be discharged of his obligation even if it should be proven that he was not negligent. The seller may nevertheless rely on exclusion or limitation of liabilities that are possible in the UAE except in the following cases:

  • Personal harm or injury. Any provision purporting to provide exemption from liability for a harmful act to a person shall be void (article 296 of the Civil Law);
  • Criminal liability;
  • Contrary to Public Order;
  • Designer of the structure of a product (assembler of the armouring and standard spare parts, the Contractor or architect in respect of building design and construction of fixed installations (articles 878, 880 and 882 of Civil Law), the pharmaceutical laboratory in respect of the molecular compositions). Any agreement that attempts to exempt a party from such liability (or providing warranty for such works/services), or to limit such liability, shall be void; and
  • Where there is evidence of wilful (deliberate) breach and/or gross negligence (article 545 (4) of the Civil Law);
  • When the essence of the contract is for the supplier to be liable in case of defect of the good;
  •  When the CPL imposes a legal warranty and obligation of recovery/repair/replacement (article 32 to 34) or when the standards set by (Federal Consumer Protection Department (“FCPD”) and Emirates Standards and Metrology Authority (“ESMA”)) are not respected, which is immediately considered as a defect as per CPL.

One must note that once the defect is proven, there is no need that the obligee proves anything else than the damage that results out of the defect or the negligence.

Finally, regarding the damage itself, in the UAE, the Courts are bound to follow the legal reasoning of both the Civil Law and the Shari’ah Law concerning evaluation of damage. Precedents are extremely vague concerning compensation for personal injury and very often  the value of compensation is not reasonable at all as per modern standards.

Property damages is handled very differently as the value of the property can be assessed easily and reimbursement of full value can be claimed.

Finally, it is worth mentioning that in the UAE courts rarely consider claims for damages that are uncertain (loss of chance of gain, loss of businesses opportunities).

By Mr. Romain Astruc
Legal Consultant
MENA Legal Advisers

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