Supplier’s liability: recent clarifications from the Italian Supreme Court

In product liability cases it often happens that the claim is brought, either in court or out of it, against the supplier rather than the manufacturer (according to article 116 of the Italian Consumer Code, the supplier is the company or person that “distributes the product in the exercise of a commercial activity”).

This choice – which may constitute a mistake leading to the dismissal of the claim – is based on reasons of opportunity: the supplier is normally based in Italy while the manufacturer may a foreign entity, and the supplier, having sold the products to the consumer, is easily identifiable, while the identity of the manufacturer is often unknown to the consumer. Also, if the manufacturer and the supplier have similar company or trading names and belong to the same group, this mistake tends to occur quite easily.

The Supreme Court’s rulings

This happens also with litigation in the automotive sector and in 2023 the Supreme Court ruled twice on the supplier’s liability in this industry, providing some clarifications applicable to any industry sector.

First of all, it is worth noting that the supplier’s liability is governed by article 116 of the Consumer Code, providing that the supplier is liable to the injured party when the manufacturer is not identified, and the supplier fails to disclose the identity and domicile of the latter within a period of three months from the injured party's written request.

In decision no. 26135 of 7 September 2023, the Supreme Court exactly applied the above provision and pointed out that:

• the supplier is liable under the same conditions as the manufacturer, but they are not joint and severally liable,
• the supplier’s liability is an indirect liability since, in certain circumstances, an individual other than the manufacturer is held liable,
• since this is an indirect liability, the supplier is liable for the damage to the same extent as the manufacturer,
• the supplier’s liability is not established on the basis of its contribution in the production process or to strengthen the injured party’s chances of obtaining compensation, but to put pressure on the supplier to reveal the manufacturer’s identity,
• in this way, the injured party can easily get compensation without taking investigations, which may result difficult, to identify the producer,
• once the supplier has disclosed the manufacturer’s identity during the proceedings, it is not necessary for the supplier to join the latter to the action: the involvement of the manufacturer in the action is an option, not an obligation, and the exercise of this option can lead only to the strike out of the supplier, not to establishing its liability,
• to sum up, the party injured by a defective product, has the following options vis-à-vis the supplier: a) ask for the manufacturer’s identity; b) make a claim in contract under the purchase agreement; c) make a claim in tort based on the Consumer Code provisions.

Awaiting the opinion of the Court of Justice

In the decision under examination, the Supreme Court also pointed out that, with the interlocutory order no. 6568 of 6 March 2023, it asked to the Court of Justice of the European Union to clarify what is the correct interpretation of article 3, paragraph 1, of the 85/374/CEE Directive concerning damage caused by defective products (this directive was implemented in Italy by Presidential Decree No. 224 of 24 May 1988 and then transposed into the Consumer Code)

In particular, the Court of Justice was asked whether an interpretation of article 3, paragraph 1, that extends the manufacturer’s liability to the supplier is permissible, even if the latter has not materially put its name, trademark or other distinctive sign to the products and merely because the supplier has a name, trade mark or other distinctive sign that is wholly or partly identical to those of the producer.

Should the answer – which has not been given yet – be affirmative, then the impact on the European supply chains of multinationals and large industrial groups would certainly be considerable.

In this connection it is to be noted that the above issue is not dealt with in the proposal for a revised directive on liability of defective products presented by the European Commission on 28 September 2022, which is likely to be approved by the end of the year.