“Consumer Protection: A Growing International Trend with the Latest Blossom in Thailand”

A. The Theoretical Side: Origin, Influence, and International Trend

The ancient days of caveat emptor, or buyer beware, has long passed for the most part. An area of law called Consumer Protection, a sub-set of Tort Law, is transforming modern day society into a “sellers beware” mindset.

1. The United Nations on Consumer Protection Worldwide

Since late 1983 into mid 1984, the United Nations General Assembly introduced the notion of and further discussed the importance of consumer protection. Taking into account the interests and needs of consumers in all countries, particularly in developing countries, recognizing that consumers often face imbalances in economic terms, educational levels, and bargaining power, the United Nations promulgated Guidelines by which respective governments should follow.

The legitimate needs which the Guidelines are intended to meet are the following:

• The protection of consumers from hazards to their health and safety
• The promotion and protection of economic interest of consumers
• Access of consumers to adequate information to enable them to make informed choices according to individual wishes and needs
• Consumer education
• Availability of effective consumer redress
• Freedom to form consumer and other relevant groups or organizations and the opportunity of such organizations to present their views in the decision-making process affecting them.

In a timely fashion, many countries followed the sentiment embraced by the United Nations and adopted and enforced products liability law.

2. Consumer Protection Law on a Global Scale

Many countries worldwide have adopted and applied Consumer Protection law. Many western countries, such as the United States and many European countries adopted this body of law soon after the United Nations initiative.

In the United States, product liability law frequently serves as the basis of many lawsuits, often compounded into a class action, mass tort lawsuit against manufacturers, sellers, and retailers. Product liability law in the United States comprises of strict liability, negligence, and the Uniform Commercial Code Warranties causes of action, with different state courts employing various tests to determine a defective product.

In Europe, the EC Product Liability Directive dates back to 1985, first establishing strict liability elements, then providing more specific safety directives for consumers to vindicate their rights.

In Asia, there is also a growing trend of product liability law adoption and application. China was the first country in Asia to adopt products liability law, with Taiwan and Japan following closely in 1995, then Indonesia and Malaysia in 1999. South Korea began its adoption of the products liability law in 2002.

This expansive international trend and sentiment on consumer protection is perhaps what inspired and provoked Thailand to adopt and apply the Product Liability Act in early 2009.

B. Thailand’s Product Liability Act

1. History and Introduction

The Act on Liability for Damages Arising from Unsafe Goods or Product Liability Act (“PLA”), dated December 2008, takes effect on February 21, 2009.  Unlike the Consumer Case Procedure Act (“CPA”), which took effect in Thailand on August 24, 2008, and covers goods and services, the PLA covers on goods or products.

“Goods” covered under the PLA, may be produced or imported, and covers a myriad of products from moveable properties to agricultural produce to electric currents.

2. Criterions for responsibility of the “Seller”

A PLA claim can be brought by a consumer who is injured from a defective good that was sold in the stream of commerce. The seller becomes strictly liable for plaintiff’s injury, thus increasing the chances that plaintiff will recover her injuries, since the legislative intent behind this Act was consumer safety and protection.

a. Who Qualifies as a “Seller” or “Operator” under the PLA?

“Sellers” or “Operators” under the Product Liability Act includes manufacturers, wholesalers, distributors, retailers, importers, sellers, and trade name/trademark user. The Act covers a broad and vast spectrum of “sellers” that basically anyone and everyone in the chain of distribution can be liable for a product liability claim. Even trademark licensors might see their responsibility sought.

Under the Product Liability Act “sellers” are most of the time jointly and severally liable.

b. What Qualifies as “Goods” under the Product Liability Act?

“Goods” covered under the Product Liability Act, may be produced or imported, and covers a myriad of products from moveable properties to agricultural produce to electric currents.

Also, the good must be identified, therefore, the Customer must clearly designate which good has caused the harm.

c. Furthermore, good have to be sold in the stream of commerce

This criterion will provide safeguards in case the goods are abducted from their intended use as experimental samples for example. However, goods not sold, but given as a commercial gesture should trigger the protection.

Thai Law here adopts a criterion that resembles criterions used elsewhere, like in the 1985 E.C. Product Liability Directive. However, the E.C directive is less specific, and just mentions the stream of commerce. Actors are looking forward to see how the word “sold” will be interpreted by Thai jurisdictions.

d. How will a “Defect” be Determined?

“Defects” covered under the Product Liability Act includes: 1) Design Defect 2) Manufacturing/Production Defect and 3) Insufficient Warning, Caution or Information Defect.

Since the Act will take affect in Thailand in February of 2009, any claims brought under this Act is rightfully a case of first impression for the Thai courts since there is no precedent.

One can only speculate which sorts of tests the Thai courts will employ to measure whether a product is defectively designed, defectively manufactured, or defective by nature of insufficient warning labels or operation manual. Perhaps the Thai Court will follow and emulate tests from the United States, which measures a defective design by employing the Consumer Expectation Test or the Feasible Alternative Risk Balancing Test, or a hybrid of both tests, such as used by California Courts.

3. Which Type of Damages can Plaintiff Recover?

Under the Product Liability Act, plaintiff may recover actual damages, compensatory damages, including costs for medical treatment and for pain and suffering, as well punitive damages of up to two times the amount for actual damages incurred.

4. Defenses

a. Viable Defenses

To defend against a claim of product liability, a “seller” defendant may dispute the elements of the product liability claim, such as showing that he or she was not in fact a “seller” or that the goods were not “Sold” in the stream of commerce.

In addition to disproving an element of product liability, the “seller” defendant can raise the following Defenses:
1) Assumption of Risk by the consumers; or 2) Improper and unforeseeable misuse, as well as contributory negligence in certain circumstances; 3) The product is Custom made in total compliance with the instructions of the client; and 4) Suppliers of components for a composed end product can defend themselves by showing that the component was not the cause of the defect in the end product.

b. When a Defense is Not a Defense

Under the Product Liability Act, there are a handful of inadmissible defenses as well, which “seller” defendants should be aware of since these will be dismissed by the Thai Civil Court.

Examples of inadmissible defenses are as follows: 1) waiver of Liability for Defective Goods 2) compliance with mandatory regulations; and 3) State-of-the-Art Defense —that sellers should not be liable because they did not know that the product was dangerous and/or defective at the time the goods were sold.

C. Thailand Consumer Case Procedure Act

The Thai “Consumer Case Procedure Act” (“CPA”) entered into force on August 24, 2008, and covers both claims arising about goods and services. This law has therefore a wide scope (1), that it addresses with procedural (2) as well as substantial provisions (3).

• Scope of the act

The scope of the CPA is very large as it refers to the definitions of the Consume protection act of 1979 for the definition of its scope.

Consumers are therefore defined broadly, with little to no reference to the criterion of an existing contract. A consumer can therefore benefit from the act even in situations where he has no contractual relationship with the operator.

The operator, called “businessman” in the 1979 Act, is accordingly defined widely, classically encompassing manufacturing, sales, import.

Unlike he Product Liability Act, the CPA also covers services provider as well as grantor of trademark license and the advertising business. This matter has its importance as 20% of the cases filled since the entry into force of the CPA 6 months ago have involved an advertiser.

• The Consumer Procedure Act binds procedure to the needs of the Consumer

The CPA is offering a wide variety of mechanism intended to empower the judge and ease the procedure for the applicant.

The judge is indeed provided with injunctions and inquisitorial prerogatives, and the authority to involve other operators originally alongside the sued defending party.

The acts also provides filling fees and costs exemptions, oral case filling (even by telephone!), grants jurisdiction to the resort of the consumer, places largely the onus of proof on the operator (except as regards the damage and the causality), grants standing to the Consumer Protection Board, allows for the use of former judgments involving the same defendant to be used as evidence in a later cases, and finally drastically limits appeal on factual grounds, so as to keep the fees low for the applicant as well as bar dilatory proceedings.

Furthermore, prescription is extended to 3 years (instead of one in general tort law) after the damage is suffered or known, and the judge can reserve the right to amend his judgment within 10 years if he foresees an evolution of the damage.

• Substantive aspects

Despite its name, the CPA also covers substantive issues.

The CPA provides for punitive damages (from two to five times the actual damage) in cases where the operator is clearly at fault, such as concealment, or when it commits gross negligence.

Also, the CPA provides autonomous causes of action. For instance, if an operator promises something, but fails to deliver it, the notice, advertisement and warranty it has given are deemed part of the contract concluded.

Finally, the CPA organizes contagion of liability when there is an attempt by the operator, its managers and owners, to avoid responsibility. In case of a transfer of assets intended to avoid responsibility, partners, shareholders, directors and transferee are presumed liable, unless they can demonstrate their good faith.

D. The Practical Side: “Seller’s” Precautions in the context of Thai Consumer Protection 

In the context of such a statutory Consume Protection, operators should try to adapt and anticipate litigations. 

First of all, an assessment and a good communication with business partners are important. The buyer must exercise some degree of control on its suppliers, whether importer or manufacturers, and should try to stipulate it in a framework agreement. Furthermore, this control should not be limited to findings defects in the products, but should also cover matters of labeling and notices of the products.

On the curative side, recall mechanisms and policies can be prepared, so as to react promptly and effectively in case of discovery of a defect in a product. Insurance contracts are also an option to consider.

Furthermore, Operators along the same business chain can agree to share the expenses of a successful claim. Each and every operator in the chain can be held liable for the whole actual damage, due to the joint responsibility that the Consumer Protection Laws foresee. However, they are then free to sue each others on the basis of their respective negligence and contractual breaches.

E. A Final Remark: Sellers Should Think About Ways to Protect and Prepare

Since there is a rapidly booming international trade where exports and imports into and out of Thailand run rampant, local and international sellers of goods alike should be mindful of how to protect and prepare themselves for product liability claims from consumers. This process of preparation and protection can be from re-evaluating the quality control process of goods to considering product liability insurance.

Whatever the best method for each seller may be, the Product Liability Act proves that sellers, rather than buyers, should beware and arm themselves against potential product liability claims.