Case C-45/13, Kainz – where is the harm in putting a defective bicycle into circulation? [judgment 2014, ECLI:EU:C:2014:7]

Where a young person who lives in Austria buys a defective German-made bicycle from a shop in Austria and is subsequently hurt in an accident in Germany, does Article 5(3) of the EU’s ‘jurisdiction’ Regulation 44/2001 mean he must bring his compensation claim in Germany rather than in the Austrian courts?

Facts
Andreas Kainz is a young person. In 2007, he bought a German-made bicycle from an Austrian wholesaler. In 2009, he was using the bicycle in Germany. When the fork ends came loose from the wheel axle, Andreas Kainz fell off his bicycle and was hurt. Seeking compensation, he claimed that the German-made bike was defective.

Although the defendant made the bicycle and was domiciled in Germany, Andreas Kainz decided to sue the defendant in Austria. He submitted that the Austrian court enjoyed competence to hear the dispute by dint of Article 5(3) of the EU’s jurisdiction Regulation 44/2001. The relevant provision, which governs ‘special jurisdiction’, indicates:

in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;

He interpreted this phrase to mean that the place where the harm-causing event occurred was in Austria because that was where the bicycle had been: put onto the market, offered for sale to end-users, and where the consumer transaction had taken place.

However, the correctness of Kainz’s submission was denied by the German company. It contended that the Austrian courts had no jurisdiction because the place where the harm occurred was in Germany – after all, the bicycle had been made in Germany, and it had been put onto the market or put into circulation in Germany (it had been sent from Germany to the Austrian shop).

The German company was successful both at first instance and at second instance. Kainz then appealed to the Austrian Supreme Court.

The judges at the Supreme Court noted that Article 5(3) of the Regulation was applicable because the harm was caused by a defective product (C-189/08, Zuid-Chemie). Accordingly, the claimant had the choice of whether to sue in the place where the fact which caused the harm had occurred (the place of the event giving rise to the damage (Handlungsort)), or in the place where the harmful effect had occurred (Germany).

But Andreas Kainz had elected to sue in Austria so where precisely was the place of the fact that caused the harm? EU law was not clear on how to identify that place. Since the CJEU had not expressly stipulated that this was the place where the manufacturer was domiciled, it was still possible to refer back to old Article 5(1) of the Rome Convention (Regulation 864/2007), and rely on that provision to submit that the place of the event giving rise to the damage was not the place where the product was made but rather the place where the product was intended ‘to be put into circulation’ [‘Inverkehrbringen’].

But the phrase ‘Inverkehrbringen’ itself gave rise to the next bone of contention, namely, what did it mean? Although using the word, the Rome II Regulation actually shed no light as to the correct scope of the concept. However, if reference was made to the Commission’s preparatory ‘proposal’ for the Regulation, then that document would point in the direction of ‘Inverkehrbringen’ being taken to mean the place where there was a structured sale of a product to a consumer in a particular Member State. The Austrian Supreme Court also found clear support for that interpretation in the fact that when the German version of Article 5(1) of the Rome II Regulation talked about ‘Inverkehrbringen’, the English language version of the provision had used the word ‘marketing’.

But the Austrian Supreme Court also noted that the issue of ‘Inverkehrbringen’ also cropped up in another piece of EU legislation. For example, the phrase ‘in den Verkehr gebracht hat’ appeared in Article 11 of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products.

Again, the problem was that the Article 11 of the defective product Directive shed no further light on what was meant. Nevertheless, the Austrian Supreme Court recalled that this phrase in Article 11 had been interpreted by the CJEU in Case C-127/04, Declan O’Byrne to mean:

put into circulation, is to be interpreted as meaning that a product is put into circulation when it is taken out of the manufacturing process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed.

Consequently, for the purposes of product liability law that could possibly be the place where the consumer had actually bought the product. The implication being that Andreas Kainz might be able to sue in Austria.

Therefore, the Austrian Supreme Court sought clarity from the CJEU on whether the Austrian courts enjoyed jurisdiction.

Questions Referred
According to the Curia website, the Austrian Supreme Court has asked:

1. Is the ‘place where the harmful event occurred or may occur’ in Article 5(3) of Regulation (EC) No 44/2001 (‘Regulation No 44/2001′) to be interpreted, in relation to product liability, as meaning:
[1.1] that the place of the event giving rise to the damage (Handlungsort) is the place where the manufacturer is established;
[1.2] that the place of the event giving rise to the damage (Handlungsort) is the place where the product is put into circulation;
[1.3] that the place of the event giving rise to the damage (Handlungsort) is the place where the product is put into circulation;

If Question 1.2 is answered in the affirmative:
2.1 Is the product put into circulation when it has left the manufacturing process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed?
2.2 Is the product put into circulation when it is marketed in a structured way to end-users?