English High Court decision indicates EU-wide product approvals do little to prevent product liability claims for damages

Background

On 14 November 2024, the High Court handed down judgment in the first substantive trial to take place in the industry-wide NOx emissions group litigation. 

This ‘Pan-NOx’ emissions group litigation consists of 13 separate Group Litigation Orders (GLOs) collectively case-managed by the High Court, with four of those GLOs appointed as ‘leads’ (see our earlier blog on certain costs-related aspects of the litigation).

The trial took place over two weeks in October 2024 with the Mercedes-Benz Group as the lead defendant party and a number of other defendant groups (one of which Freshfields represents) participating by way of legal submissions. 

Issues in consideration

The Court was asked to consider whether: (i) findings in certain administrative decisions issued by the Kraftfahrt-Bundesamt (the KBA, the German regulator responsible for type-approving the vehicles according to the applicable EU legislation); and (ii) appeals against those decisions before German administrative courts, legally bind the English High Court as to the regulatory compliance of the vehicles. 

If answered in the affirmative, the implication would be that the English Court could not consider and determine for itself, in a civil claim for damages, allegations which are the subject of a KBA decision. It would simply be required to follow the KBA’s determination (subject to any appeals before the German administrative courts).

Judgment

In brief summary, and based on the position under German law in respect of German civil courts, the High Court found that English Courts: (i) are not bound by the findings of the KBA in decisions establishing the regulatory compliance of vehicles with EU requirements, save in respect of recall decisions; and (ii) are not bound by German court decisions on appeal of those administrative decisions. 

The result is that the English Court will now proceed to investigate for itself factual allegations about the regulatory compliance of the vehicles in the lead GLO proceedings, at a trial due to be heard in October 2025.

Wider consequences: harmonised EU regimes and avoiding ‘havoc’

Beyond this, the decision is of wider significance to the evolving product liability landscape. The Court considered the interplay between (i) the harmonised EU vehicle type approval regime and the KBA’s exclusive competence as the national authority in Germany, and (ii) national courts’ ability to make findings in civil product liability damages claims concerning vehicles. 

The vehicle type approval regime is one of many harmonised EU legislative regimes – ie a framework of legislation harmonising standards for goods and services across the single market, with a single national body appointed to decide whether such standards are met. That scheme aims to provide legal certainty to traders and consumers, and facilitate the free movement of the goods or services in question throughout the single market.

At trial, the defendants contended that the vehicle type approval regime is completely harmonised – unique in the level of competence afforded to national authorities, compared to other harmonised regimes. Peculiar to this regime is the scheme of what the High Court in the earlier English case of Crossley called ‘procedural exclusivity ’ for national authorities. 

The defendants argued that the regime could not tolerate a national court in private civil litigation diverging unilaterally from the decision of a national competent authority. The reason for that, they argued, is that if national courts in each member state in civil proceedings can decide for themselves whether a vehicle is properly approved or not, that would fundamentally undermine the value of a cross-EU approval from a single competent authority. The earlier English case of Crossley had considered this in detail, with the Court observing that such an approach ‘would simply play havoc with the whole harmonised regime’ as different courts across the EU reached different conclusions. 

That ‘havoc ’, the defendants argued, would be detrimental not only to traders, but to consumers, in creating uncertainty around the status of goods circulated in the EU.

Further, the defendants reasoned that the binding effect of KBA decisions should not be considered solely as a matter of German law, but rather by reference to EU law, which has primacy over Member States’ national law. The Court heard that on this issue, the administrative and civil branches of the German court system appeared to have diverged in interpreting national law. The defendants contended that in these circumstances the EU law position – which favours harmonisation and procedural exclusivity – ought to prevail. 

In addressing the balance between those various considerations, the Court touched upon (i) the position in other harmonised EU regimes and (ii) decisions of the Court of Justice of the European Union (CJEU). Ultimately, the Court:

1. concluded that the CJEU decisions did not appear to explicitly indicate that the approval of a product under an EU harmonised regime precluded a private product liability action for damages in respect of that product;
2. sought to distinguish Crossley on the basis that that decision was limited to a specific type of KBA decision, and did not extend generally to the role of national courts in determining for themselves issues of fact or law in respect of claims for civil damages brought against vehicle manufacturers; and
3. concluded that a finding that a product liability damages claim is precluded by the approval of a product under a harmonised regime would be inconsistent with the EU principle of effective judicial protection for consumers.

The implications of the judgment are potentially significant in the EU product liability space. Corporates across industries subject to a harmonised EU regime – of which there are many, ranging from toys to cosmetics to medical devices – should watch these developments closely. If courts in the EU follow this approach and proceed on the basis that they are not bound by product approvals and subsequent regulatory decisions made under a harmonised EU regime, arguably reliance can no longer be safely placed on such decisions as assurance that products comply with EU requirements.

Although harmonisation at the EU level may be less of a key concern for those in the UK post-Brexit, the judgment still has implications within the UK. As in the EU, it generates a potential tension between decisions of regulators as to regulatory compliance of goods, and consumer protection in private claims for damages in respect of those goods – and prioritises the latter at the expense of certainty in regulators’ decisions. 

Looking forward

The implications above may well evolve. Notably, these issues have not been specifically considered by the CJEU, but could be as part of two upcoming CJEU references (albeit that CJEU case law does not bind English Courts post-Brexit). 

Equally, the various approaches adopted by the German administrative and civil court branches noted above have not been examined so far by the German Federal Constitutional Court in the context of a constitutional complaint. It remains to be seen whether the defendants in the English litigation will pursue avenues to appeal in England & Wales, including given the potential tension with the statements made in the earlier Crossley decision. 

Overall, the message is ‘watch this space’, with an eye to whether any of those routes results in courts prioritising EU harmonisation over the facilitation of consumer product liability claims.

Nonetheless, it is clear that the High Court’s decision envisages English judges conducting their own investigation of products’ compliance with EU requirements, without being bound by decisions of national competent authorities as to such compliance. Unavoidably, the immediate consequence is that corporates operating in harmonised regimes, whether in the UK or EU, can take little comfort in national authorities’ approval of, and subsequent regulatory decision making in relation to, products, even in schemes which place the highest degree of harmonisation at their very core.