JUDGMENT
OB (by his mother and litigation friend) (FC)
(Respondent) v Aventis Pasteur SA (Appellants)
before
Lord Hope, Deputy President
Lord Saville
Lord Rodger
Lord Walker
Lady Hale
JUDGMENT GIVEN ON
26 May 2010
Heard on 15 April 2010
Appellant Respondent
George Leggatt QC Simeon Maskrey QC
Prashant Popat QC Hugh Preston
(Instructed by Arnold &
Porter LLP )
(Instructed by Freeth
Cartwright LLP )
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LORD RODGER (delivering the judgment of the court)
1. The claimant, Declan O’Byrne, was vaccinated on 3 November 1992 with
an HIB vaccine (“the Product”). He alleges that the Product was defective and that
it caused him brain damage.
2. The vaccine in question was manufactured in France by a French company,
now known as Aventis Pasteur SA (“APSA”). On 18 September 1992 APSA sent a
consignment of the vaccine, including the Product, to a company, now known as
Aventis Pasteur MSD Ltd (“APMSD”), in England. At all relevant times in 1992
APMSD was a wholly owned subsidiary of APSA and acted as a United Kingdom
distributor for APSA’s products. APMSD received the consignment on 22
September. On an unknown date, probably in late September or early October,
APMSD sold part of the consignment, including the Product, to the Department of
Health, which in turn supplied it to the medical practice which used it to vaccinate
the claimant.
3. On 1 August 2001 the claimant began proceedings for damages against
APMSD, alleging that he had suffered damage caused by a defect in the Product
which APMSD had manufactured and/or produced and so it was liable under
section 2 of the Consumer Protection Act 1987. In its defence, served in November
2001, APMSD pointed out that it was not the manufacturer, but merely the
distributor, of the Product. In response to a further request, in April 2002 APMSD
identified APSA as the manufacturer of the Product.
4. On 16 October 2002 the claimant issued separate proceedings against
APSA, also under section 2 of the Consumer Protection Act, alleging that APSA
was the producer of the Product and claiming damages against it. APSA defended
the action on the basis, inter alia, that it had put the Product into circulation either
on 18 September 1992, when it sent the Product to APMSD, or on 22 September
1992 when APMSD received it. APSA contended that, in these circumstances, the
claimant’s action against it was time-barred since it had been raised more than 10
years after APSA had put the Product into circulation. In advancing this defence,
APSA relied on section 11A(3) of the Limitation Act 1980 and 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 (OJ 1985 L210, p 29) (“the Directive”), which
provides:
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“Member States shall provide in their legislation that the rights
conferred upon the injured person pursuant to this Directive shall be
extinguished upon the expiry of a period of ten years from the date
on which the producer put into circulation the actual product which
caused the damage, unless the injured person has in the meantime
instituted proceedings against the producer.”
5. Faced with this defence in his action against APSA, in his action against
APMSD – with which this appeal is concerned – the claimant applied on 10 March
2003 for an order that APSA be substituted as defendant in place of APMSD. The
application was based on section 35(5)(b) and (6)(a) of the Limitation Act 1980
and rule 19.5(3)(a) of the CPR.
6. It is, of course, common ground that the application was made after the
expiry of the ten- year time-limit under Article 11 for initiating proceedings
against the producer of the Product. In these circumstances APSA contended that,
in so far as English law might permit APSA to be substituted after the expiry of the
time-limit, it was inconsistent with Article 11. By contrast, the claimant contended
that provisions of domestic law permitting this substitution would not be
inconsistent with Article 11.
7. In November 2003, at the request of both parties, the High Court made a
preliminary reference to the European Court of Justice. The European Court
answered three questions: O’Byrne v Sanofi Pasteur MSD Ltd (formerly Aventis
Pasteur MSD Ltd) (Case C-127/04) [2006] 1 WLR 1606. One of the questions
concerned the point in time at which a product was put into circulation for
purposes of Article 11 in a situation where the producer which manufactured it
then transferred it to a distribution subsidiary. I quote and discuss the European
Court’s ruling on this point at paras 20-23 below.
8. So far as the power to substitute one producer for another as defendant was
concerned, the European Court held, [2006] 1 WLR 1606, 1622:
“When an action is brought against a company mistakenly
considered to be the producer of a product whereas, in reality, it was
manufactured by another company, it is as a rule for national law to
determine the conditions in accordance with which one party may be
substituted for another in the context of such an action. A national
court examining the conditions governing such a substitution must,
however, ensure that due regard is had to the personal scope of
Directive 85/374, as established by Articles 1 and 3 thereof.”
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9. In the light of this answer, Teare J allowed the claimant’s application for
substitution of APSA in place of APSMD, pursuant to section 35(5)(b) and (6)(a)
of the Limitation Act 1980 and rule 19.5(3)(a) of the CPR, on the ground that the
claimant had named APMSD as the defendant in mistake for APSA: O’Byrne v
Aventis Pasteur MSD Ltd [2007] 1 WLR 757. APSA appealed, but the Court of
Appeal (Sir Anthony Clarke MR, Arden and Moore-Bick LJJ) [2008] 1 WLR 1188
dismissed its appeal. The House of Lords granted APSA leave to appeal. At the
hearing of the appeal a majority of the appellate committee considered that it was
clear that the European Court was saying that, in some circumstances, proceedings,
which are obviously intended to be proceedings against the producer but which use
the wrong name, can properly be treated by national procedural law as having been
proceedings against the producer. The majority considered that this would have
been the proper approach in the circumstances in the present case and so they
would have dismissed APSA’s appeal. But, because this was not the unanimous
view of the appellate committee as to the effect of the judgment of the European
Court, the House of Lords referred the case to Luxembourg for a second time:
[2008] 4 All ER 881. The decision on this reference was given by the Grand
Chamber: Aventis Pasteur SA v OB (Case C-358/08) (unreported) given 2
December 2009.
10. The answer returned by the European Court in response to the second
reference is not in line with either of the interpretations of its judgment on the first
reference which had been advanced before the appellate committee. Happily,
however, this time the core answer could not be clearer:
“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
must be interpreted as precluding national legislation, which allows
the substitution of one defendant for another during proceedings,
from being applied in a way which permits a ‘producer’, within the
meaning of Article 3 of that directive, to be sued, after the expiry of
the period prescribed by that article, as defendant in proceedings
brought within that period against another person.”
11. Putting the point shortly – and subject to the important qualification which I
must address in a moment – the Court of Justice holds that, once ten years have
passed since a producer put a product into circulation, that producer cannot be
sued, unless proceedings have been taken against it within the ten-year period. As
the Court explains, at para 38 of its judgment, Article 11:
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“provides for a uniform 10-year period after which those rights are
extinguished. It fixes, in a binding manner, the starting point of that
period as the date on which the producer put into circulation the
product which caused the damage. It specifies the institution of
proceedings against that producer as the only reason for that period
to be interrupted.”
It follows, as the Court says at para 44, that “a rule of national law which allows
the substitution of one defendant for another during proceedings cannot, under
Directive 85/374, be applied in a way which permits such a producer to be sued,
after the expiry of that period, as defendant in proceedings brought within that
period against another person.”
12. As it explained in paras 41-43 of its judgment, the Court adopted this
approach because, in its view, it gave effect to the balance which the Community
legislator had intended to achieve between the interests of consumers and
producers:
“41. Pursuant to the 11th recital in the preamble to Directive 85/374,
the latter seeks, second, to limit, at Community level, the liability of
the producer to a reasonable length of time, having regard to the
gradual ageing of products, the increasing strictness of safety
standards and the constant progressions in the state of science and
technology.
42. As is stated by the Advocate General in points 49 and 50 of her
Opinion, the Community legislature’s intention to limit in time the
no-fault liability established by Directive 85/374 is also intended to
take account of the fact that that liability represents, for the producer,
a greater burden than under a traditional system of liability, so as not
to restrict technical progress and to maintain the possibility of
insuring against risks connected with that specific liability (see, to
that effect, paragraph 3.2.4 of the Report from the Commission of 31
January 2001 on the Application of Directive 85/374 on Liability for
Defective Products, COM (2000) 893 final).
43. It follows that, without prejudice to the possible application of
the rules on contractual or non-contractual liability or a special
liability system existing at the moment when Directive 85/374 was
notified, the application of which is not prejudiced by the latter, as is
apparent from Article 13 thereof and the 13th recital in the preamble
thereto, the ‘producer’, as defined in Article 3 of that directive, is,
under Article 11 of that directive, relieved of his liability under that
article upon the expiry of a period of 10 years from the putting into
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circulation of the product in question, unless, in the meantime,
proceedings have been instituted against him.”
13. The European Court also went out of its way, at para 48, to emphasise that
it made no difference if the failure to sue a particular producer within the relevant
ten-year period had been due to some mistake on the claimant’s part. Even in that
event what mattered was that the ten years had expired without that producer
having been sued. So it could not be substituted as defendant after the ten years
were up:
“48. It should also be added that subjective elements deriving, for
example, from the wrongful attribution, by the injured person, of the
status of manufacturer of the allegedly defective product to a
company which is not the manufacturer, or from the injured person’s
genuine intention to proceed against that manufacturer by way of its
action against such other company, cannot, without infringing the
objective dimension of the harmonisation rules laid down by
Directive 85/374, justify the substitution, after the expiry of the 10-
year period set out in Article 11 thereof, of that manufacturer in
proceedings initiated during that period against another person (see,
to that effect, O’Byrne, paragraph 26 and, by analogy, Case C-51/05
P Commission v Cantina sociale di Dolianova and Others [2008]
ECR I-5341, paragraphs 59 to 63).”
14. In these circumstances the claimant now accepts that he cannot use section
35 of the Limitation Act 1980 as a basis for substituting APSA for APMSD as the
defendant in the present proceedings.
15. The claimant submits, however, that, even though he cannot make the
substitution on the basis of his mistake, the European Court indicated in its
judgment a different basis on which he can actually make the desired substitution.
For this purpose he relies on the second answer which the Court of Justice gave on
the second reference:
“However, first, Article 11 must be interpreted as not precluding a
national court from holding that, in the proceedings instituted within
the period prescribed by that article against the wholly-owned
subsidiary of the ‘producer’, within the meaning of Article 3(1) of
Directive 85/374, that producer can be substituted for that subsidiary
Page 7
if that court finds that the putting into circulation of the product in
question was, in fact, determined by that producer.”
In short, the claimant submits that the position falls within the terms of this
qualification to the European Court’s core answer on the effect of Article 11 and
so there is nothing to prevent him from substituting APSA for APMSD on this
basis. APSA contends, however, that this passage in the Court’s judgment has to
be interpreted in the context of the judgment as a whole and in the light of the
Opinion of Advocate General Trstenjak, 8 September 2009, unreported, which
preceded it. When that is done, APSA says, it can be seen that the qualification
should be given a narrower interpretation, which would not allow substitution in
this case. As will become apparent, in a case like the present, the possibility of
substitution depends, to some extent, on various matters of fact concerning the
relationship between the two entities. At the hearing before this Court, however,
on the basis of what he now knows about the facts, the claimant’s counsel, Mr
Maskrey QC, accepted that, if the Court were to conclude that APSA’s
interpretation of the European Court’s judgment was correct, then its appeal
against its substitution for APMSD should be allowed.
16. The dispute between the parties turns, therefore, on the interpretation of
paras 49-53 of the judgment of the European Court on the second reference:
“49. In light of the foregoing, Article 11 of Directive 85/374 must
be interpreted as precluding national legislation which allows the
substitution of one defendant for another during proceedings from
being applied in a way which permits a ‘producer’, within the
meaning of Article 3 of that directive, to be sued, after the expiry of
the period prescribed by that article, as defendant in proceedings
brought within that period against another person.
50. However, the Court, giving a preliminary ruling on a reference,
has jurisdiction, in the light of the information in the case-file, to
give clarifications to guide the referring court in giving judgment in
the main proceedings (see, to that effect, Case C-366/98 Geffroy
[2000] ECR I-6579, paragraph 20, and Case C-446/07 Severi [2009]
ECR I-0000, paragraph 60).
51. It should be noted in that regard, first, that it is apparent from the
reference for a preliminary ruling that APMSD (formerly Mérieux
UK), which in 1992 supplied the vaccine which was administered to
OB to the United Kingdom Department of Health, was, at that time,
a wholly-owned subsidiary of APSA (formerly Pasteur Mérieux).
52. In such a context, it is for the national court, in accordance with
the applicable rules of national law on matters of proof, to assess
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whether the putting into circulation of the product in question was, in
fact, determined by the parent company which manufactured it.
53. Where the national court notes that fact, Article 11 of Directive
85/374 does not preclude that court from holding that, in the
proceedings instigated within the period prescribed by that article
against the subsidiary under the system of liability laid down by that
directive, the parent company, ‘producer’ within the meaning of
Article 3(1) of that directive, can be substituted for that subsidiary.”
17. Under reference to its reasoning in paras 34-48, in para 49 the European
Court gave its core ruling on the construction of Article 11, which I have already
discussed. The Court then went on, in the subsequent paragraphs, to give some
additional guidance which it considered might be helpful to any domestic judges
who were going to be dealing with this particular case. There is nothing, however,
to suggest that, in these paragraphs, the Court was intending to depart from the
principled approach which it had just been at such pains to develop and finally to
formulate in para 49. What the Court says in paras 50-54 must therefore be read in
the light of that core decision. In other words, the Court is explaining how that
decision may fall to be applied, depending on the domestic court’s assessment of
the practical relationship between the manufacturer, APSA, and the distributor,
APMSD.
18. In venturing to give this additional assistance the European Court was
following the lead of the Advocate General. Although the structure of her Opinion
makes for repetition, it is clear that she, too, had concluded that only the bringing
of proceedings against the particular producer could stop the Article 11 time-bar
from taking effect ten years after the producer had put the relevant product into
circulation. See, in particular, paras 61 and 69-78 of her Opinion. So, in reaching
its conclusion in para 49 of its judgment, the Court was following this aspect of the
Advocate General’s reasoning. The Advocate General went on to hold, at para 68,
that a substitution of the producer as a defendant when he has been released by the
expiry of the ten-year limitation period is equally incompatible with the Directive.
She gave her reasoning for this conclusion at para 79, where she said that to allow
the substitution of a producer against which proceedings had not been taken within
the ten-year period in place of a producer against which they had been taken would
“de facto be capable of also interrupting the limitation period in
relation to producers. The upper temporal limit of liability for
producers in Article 11 would thereby be broken through, and that is
excluded in the light of the complete harmonisation of the field
which is the aim of Directive 85/374.”
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So, when reaching the comparable conclusion at paras 44-47 of its judgment, the
European Court was, again, following the Advocate General’s approach.
19. The Advocate General also gave some thought to how Article 11, thus
interpreted, should be applied in a case, like the present, where the parent
manufacturing producer (APSA) transferred the Product to a distributor (APMSD)
which was its wholly owned subsidiary.
20. In this connexion the Advocate General referred back to the judgment of the
European Court on the first reference: O’Byrne v Sanofi Pasteur MSD Ltd
(formerly Aventis Pasteur MSD Ltd) [2006] 1 WLR 1606. The first ruling in that
judgment, at p 1622, had been in these terms:
“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 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.”
This conclusion reflects what the Court says in para 27 of its judgment, which is,
in turn, based on its reasoning in the preceding paras 20-26. Paragraphs 27-32,
[2006] 1 WLR 1606, 1620-1621, are of importance in the present context:
“27. In light of those considerations, a product must be considered
as having been put into circulation, within the meaning of Article 11
of the Directive, when it leaves the production 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.
28. Generally, it is not important in that regard that the product is
sold directly by the producer to the user or to the consumer or that
that sale is carried out as part of a distribution process involving one
or more operators, such as that envisaged in Article 3(3) of the
Directive.
29. When one of the links in the distribution chain is closely
connected to the producer, for example, in the case of a wholly
owned subsidiary of the latter, it is necessary to establish whether it
is a consequence of that link that that entity is in reality involved in
the manufacturing process of the product concerned.
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30. The examination of such a close relationship must not be
influenced by the question whether or not distinct legal persons are
involved. On the other hand it is of relevance whether those are
companies carrying out different production activities or are, on the
contrary, companies one of which, ie the subsidiary company, acts
simply as a distributor or depository for the product manufactured by
the parent company. It is for the national courts to establish, having
regard to the circumstances of each case and the factual situation of
the matter before them, whether the links between the producer and
another entity are so close that the concept of producer within the
meaning of Articles 7 and 11 of the Directive also includes that latter
entity and that the transfer of the product from one to the other of
those entities does not amount to putting it into circulation within the
meaning of those provisions.
31. In any case, contrary to what is maintained by the defendants,
the fact that the products are invoiced to a subsidiary company and
that the latter, like any purchaser, pays the price, is not conclusive.
The same applies to the question of knowing which entity is to be
considered as owner of the products.
32. Therefore the reply to the first question must be that Article 11
of the Directive 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.”
21. As can be seen from para 31 of the European Court’s judgment, in the first
reference APSA – which naturally wanted to push the starting-date for the ten-year
period back as far as possible – was arguing that it had put the Product into
circulation when it transferred the consignment containing the Product to APMSD
in the period of 18 to 22 September 1992. In support of that argument APSA was
pointing to the fact that APMSD had been invoiced for the consignment and had
paid for it. The claimant’s counsel, who was, of course, contending for as late a
date as possible for the Product being put into circulation, was contending that this
had not happened until APMSD supplied it to the Department of Health.
22. The European Court rejected any approach that was based on the formal
legal relationship between the parent manufacturing producer and the subsidiary
distributor. In particular, the Court emphasised, at para 30, that the fact that the
manufacturer and the distributor were distinct legal entities was irrelevant. The
national court had to look at all the links between the two entities and decide on
that basis whether they were so close that, for the purposes of Article 11, the
concept of the manufacturing producer (which would apply to APSA) really
included the distributor (in this case, APMSD). In that event, even if the Product
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were transferred from one to the other, this would not mean that it had been taken
out of the manufacturing process operated by the producer. So, applying the test in
para 27 of that judgment, for the purposes of Article 11 the Product would not
have been put into circulation by the manufacturing producer when it transferred it
to the distributor. Obviously, the Court’s concern was that, unless this were indeed
the position, at least in the case of products with a long shelf-life, by the time they
were eventually put on the market by the distributor, a significant part of the tenyear period for proceedings against the manufacturing producer might have
elapsed. This would upset the balance which the Directive sought to maintain
between the interests of the consumer and the producer.
23. In paras 83-90 of her Opinion on the second reference, the Advocate
General did indeed make use of this part of the Court’s analysis in the first
reference when considering how the domestic court might determine the date at
which the Product was put into circulation. But she also used it for the rather
different purpose of showing when a distribution subsidiary could be so closely
involved with the parent producer that they could, in effect, be regarded as one for
the purposes of Article 11. In that event, suing the subsidiary would be tantamount
to suing the parent. In concrete terms, if that were the position in this case, by
suing APMSD within the ten-year period, the claimant would also have sued
APSA within that period. So the Article 11 time-bar would not bite and the
claimant could, if he wished, substitute APSA for APMSD as defendant in the
present action – or, indeed, simply proceed with his (second) action against APSA.
24. The Advocate General’s reasoning and conclusions on these matters are to
be found in paras 109-113 of her Opinion:
“109. If, by contrast, the national courts were to reach the
conclusion in the main proceedings that a supplier such as APMSD
was, because of its involvement in the manufacturing process
operated by APSA, to be regarded together with APSA as a producer
within the meaning of the first half of Article 3(1) of Directive
85/374, the bringing of proceedings in due time against APMSD
would indeed have the effect of interrupting the limitation period in
relation to APSA.
110. The decisive point here is the fact that a supplier who is
sufficiently closely involved in the manufacturing process operated
by the producer is to be classified together with the producer as a
producer within the meaning of the first half of Article 3(1) of the
directive. Because those two entities are to be regarded, in the light
of the functional interpretation of the concept of producer, as one
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producer within the meaning of the first half of Article 3(1), the
limitation period must also run in the same way for both entities.
111. In this connection the Court in O’Byrne, after carefully
weighing up the interests of consumers and producers, synchronised
the starting point of the 10-year limitation period under Article 11 of
Directive 85/374 for the producer stricto sensu and the supplier who
forms part of the manufacturing process by reference to the date on
which the supplier puts the product into circulation. In the context of
the same balancing of interests, the running of the limitation period
must also be uniform.
112. Since the running of the limitation period under Article 11 of
the directive is interrupted only by the bringing of proceedings, a
uniform limitation period for the producer and supplier who are to be
regarded together as a producer within the meaning of the first half
of Article 3(1) presupposes that the bringing of proceedings against
the supplier interrupts the running of the 10-year limitation period
not only in relation to that supplier but also in relation to the
producer in whose manufacturing process the supplier is involved.
113. Accordingly, my conclusion is that classification – to be
assessed by the national courts – of the supplier of a product as its
producer has the consequence that that supplier is liable under
Article 1 of the directive for the damage caused by a defect in the
product, regardless of whether he is classified as a producer within
the meaning of Article 3(1) or a producer within the meaning of
Article 3(3) of the directive. Classification of a supplier as a
producer within the meaning of the first half of Article 3(1) of the
directive has the further consequence that the 10-year limitation
period for the producer in whose manufacturing process the supplier
is involved does not start to run until the time when the supplier puts
the product into circulation. At the same time, proceedings brought
against that supplier will in that case interrupt the running of the
limitation period under Article 11 of the directive in relation also to
the producer in whose manufacturing process the supplier is
involved.
In the summary which she gives in para 115, the Advocate General repeats the
conclusion which she reaches in para 113.
25. Two points stand out. First, the Advocate General’s conclusion in
paras 113 and 115 involves no departure from the principle that the Article
11 time-bar can only be interrupted by bringing proceedings against the
producer concerned. Secondly, when she contemplates the domestic court
classifying a supplier as a producer within the meaning of Article 3(1), she
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contemplates the domestic court applying the approach of the European
Court in its judgment on the first reference: O’Byrne v Sanofi Pasteur MSD
Ltd (formerly Aventis Pasteur MSD Ltd) [2006] 1 WLR 1606. And – as the
Advocate General recalls at paras 111 and 113 – according to that
judgment, where the supplier forms part of the manufacturing process, the
starting point of the ten-year limitation period under Article 11 is fixed by
reference to the date on which the supplier puts the product into circulation.
Indeed, in the proceedings on the first reference, the claimant fought
successfully to establish exactly that point.
26. With this background in mind, it is appropriate to return to paras 51 and 52
of the European Court’s judgment on the second reference:
“51. It should be noted in that regard, first, that it is apparent from
the reference for a preliminary ruling that APMSD (formerly
Mérieux UK), which in 1992 supplied the vaccine which was
administered to OB to the United Kingdom Department of Health,
was, at that time, a wholly-owned subsidiary of APSA (formerly
Pasteur Mérieux).
52. In such a context, it is for the national court, in accordance with
the applicable rules of national law on matters of proof, to assess
whether the putting into circulation of the product in question was, in
fact, determined by the parent company which manufactured it.”
27. It is correct to say that, unlike the Advocate General, the European Court
does not actually refer to its answer to the first question on the first reference. But
there is nothing whatever to suggest that it intended to depart in any way from that
analysis. The assumption must therefore be that it falls to be applied where
appropriate. Certainly, the Court supplies no alternative or additional theoretical
analysis which could displace or supplement it.
28. The European Court is concerned to show how the principle which it has
just laid down would apply in relation to the substitution of APSA for APMSD.
Certainly, to judge by the Advocate General’s analysis – and there is no rival – the
only way in which that principle could be maintained and yet APSA could be
substituted for APMSD, would be if, by suing APMSD, the claimant had, in effect,
sued APSA. So the Court must be pointing the domestic court to the way in which
it should approach that issue.
Page 14
29. Mr Maskrey argued, however, that the position was really much simpler. As
the European Court noted, at para 51, APMSD was a wholly owned subsidiary of
APSA. Secondly, APSA had determined that the Product should be put into
circulation by transferring it to its wholly owned subsidiary, APMSD, and it had
then in fact transferred the product to the subsidiary. So the requirements of paras
51 and 52 were fulfilled and the substitution could be made.
30. I would reject that argument. As counsel freely admitted, this argument runs
completely counter to the one which the claimant advanced on the first reference.
That is, of course, merely a forensic point. More significantly, the argument is
internally incoherent as well as being inconsistent with the reasoning of the Court
of Justice. If, as counsel now contends, APSA put the Product into circulation
when it supplied it to APMSD, then, consistently with the Court’s ruling on the
first reference, this can only be because the two companies are to be regarded as
having operated quite distinctly – so that the Product was taken out of the
manufacturing process operated by APSA when it was transferred to APMSD. But
the fact that APMSD was a wholly owned subsidiary of APSA, which the Court
began by noting in para 51, could not be a pointer towards that conclusion. If
anything, it would point against it. So, on this interpretation, the European Court
could have had no reason to draw attention to the status of APMSD. Yet it did.
31. Mr Maskrey criticised APSA’s interpretation of para 52 on the specific
ground that it involved reading in three words: “whether the putting into
circulation of the product in question by the supplier, was, in fact, determined by
the parent company which manufactured it.” Mr Leggatt QC accepted that this
was, in effect, how he contended that the sentence should be interpreted. In my
view, that is indeed the correct interpretation.
32. The European Court’s reference to APMSD being a wholly owned
subsidiary of APSA is only consistent with it directing attention to factors which
may point to a close connexion between the two companies. Given the context of
the discussion (seeing whether proceedings against APMSD count as proceedings
against APSA), that is precisely what we would expect. For the reasons already
given, we should also expect the focus to be on the time when the Product was
supplied by APMSD to the Department of Health, since, if APMSD was, in effect,
tied into the manufacturing process of APSA, the Product would only be put into
circulation when it was supplied by APMSD. And that is what we find in para 51
where the European Court refers to APMSD’s status as a wholly owned subsidiary
at the time when it supplied the Product to the Department of Health. Therefore, in
para 52 the Court must indeed be referring to the Product being put into circulation
by the supplier at the behest of its parent. That interpretation is also consistent, of
course, with what the Advocate General says in paras 111 and 113 of her Opinion
on the second reference (quoted at para 24 above).
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33. This interpretation of para 52 is also consistent with its language, both in
the English version and in the original French (“si la mise en circulation du produit
concerné a été déterminée en fait par la société mère qui l’a fabriqué”). The
European Court is plainly contemplating a situation where, to all outward
appearances, a supplier has decided to put a product into circulation. The domestic
court must look at the circumstances to see whether, despite appearances, in fact, it
was the manufacturing parent company which had determined that the product
should be put into circulation. If, by contrast, the European Court had meant what
Mr Maskrey suggested, it would have had no reason to use this language: all it
would have required to say was that the national court was to assess whether the
parent company, which manufactured the product, transferred it to its wholly
owned subsidiary, the distributor. The further difficulty with that interpretation is,
of course, that everyone agrees that APSA sent the consignment containing the
Product to APMSD on 18 September and that APMSD received it on 22
September. There would therefore be nothing for the domestic court to assess.
34. The European Court was therefore indicating, in para 52, that the domestic
court was to consider, in accordance with domestic rules of proof, whether the
manufacturer, APSA, was in fact controlling APMSD and determining when it put
the Product into circulation. There is nothing in the judgment of the European
Court on either reference to suggest that the fact that APMSD was a wholly owned
subsidiary of APSA could somehow, of itself, be a reason for allowing APSA to be
substituted after the expiry of the ten-year period. Indeed, that would be
inconsistent with the two companies being distinct entities. Rather, the fact that
APMSD was a wholly owned subsidiary was simply one – by no means decisive –
factor to be taken into account by the domestic court when assessing how closely
the subsidiary was involved with its parent’s business as an Article 3(1) producer.
All the circumstances would have to be taken into account. If APSA was indeed in
a position to decide when the Product was to be distributed, then APMSD would
be integrated into the manufacturing process and so tightly controlled by APSA
that proceedings against APMSD could properly be regarded as proceedings
against the parent company, APSA. Hence, as the European Court goes on to hold
in para 53, the manufacturing parent company could be substituted for the
subsidiary – APSA for APMSD.
35. Mr Maskrey submitted that, if the European Court’s judgment were
interpreted in this way, then it would allow substitution of the parent producer only
where the supplier could, in any event, itself be sued as a producer falling within
the definition in Article 3(1). But that is, of course, precisely what the Advocate
General does say in paras 113 and 115 of her Opinion. Moreover, the criticism
seems a little ungenerous. It is, after all, the claimant who, for what must
presumably appear to him to be good reasons, wishes to substitute APSA for
APMSD as the defendant. The Advocate General and the Court are merely
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responding to that situation by pointing to circumstances where it might indeed be
possible for the claimant to do so. It is, of course, the case that, in any such
circumstances, the claimant will also be able to sue the supplier as a producer
within the terms of Article 3(1). But that is not a criticism of the approach taken by
the Advocate General or the Court. If a claimant will gain nothing by suing the
manufacturer in substitution for the supplier, he will presumably not try to do so.
But such a course might have advantages if, say, the supplier were insolvent. The
Advocate General and the European Court were entitled to assume that, in this
case, the claimant had what he regarded as good reasons for wishing to make the
substitution.
36. For these reasons, I would allow the appeal and set aside paragraph 1 of the
order of Teare J dated 20 October 2006 substituting Aventis Pasteur SA for
Aventis Pasteur MSD in the present action, HQ02X00848.
