AUSTRIA Law and Practice Contributed by: Andreas Eustacchio, EUSTACCHIO
ness is due to related services, software, including software updates, or a lack of safety-relevant updates under the manufacturer’s control. For software-inten - sive and connected products, this will make it con - siderably more difficult for manufacturers to rely on development risk and “no defect at the time of placing on the market” arguments. The main exemptions from liability (defences) can be listed briefly as follows. • The economic operator did not place the product on the market or put it into service (or, for a distrib - utor, did not make it available on the market). • It is probable that the defect did not exist when the product was placed on the market, put into service or made available, but arose only afterwards. • The defect is due to compliance with mandatory legal requirements. • According to the objective state of scientific and technical knowledge at the time of placing on the market or putting into service, or while the product was within the manufacturer’s control, the defect could not have been discovered (development risk defence). • For a component manufacturer: the defect of the finished product is attributable to its design or to the instructions given by the manufacturer of the finished product. • For a person substantially modifying a product: the defect is related to a part of the product that was not affected by the modification. 2.13 The Impact of Regulatory Compliance on Product Liability Claims Under both the new EU Product Liability Directive and the Austrian PHG, mandatory regulatory require - ments and technical standards play different roles in the defect analysis. • Mandatory regulatory requirements: If the alleged defect directly results from compliance with binding legal rules, this can constitute a specific defence. Regulatory compliance with such manda - tory requirements is therefore highly relevant and, where the defence applies, liability excluding. • By contrast, technical standards and industry prac - tice: EN/ISO norms and similar standards are usu -
ally non-binding. Compliance is only evidence of an appropriate minimum safety level, not an inde - pendent defence. Courts may still find a defect if, in the circumstances (state-of-the-art, user group, foreseeable misuse, product presentation), a higher level of safety was objectively to be expected. 2.14 Rules for Payment of Costs in Product Liability Claims In Austrian product liability litigation, the general “loser pays” principle applies: the unsuccessful party must reimburse the successful party’s necessary court fees and tariff-based legal costs, including court-appoint - ed expert, interpreter and witness costs at statutory/ tariff levels. In addition, the losing party must still pay its own lawyer’s fees. Contingency fees (pure quota litis) are prohibited under Austrian professional rules, but fee agreements with success-related components (for example a bonus on top of a base or time based fee) are permissible within certain limits. Moreover, Austrian law does not recognise punitive damages or exemplary damages; only compensatory damages are recoverable. 2.15 Available Funding in Product Liability Claims In Austria, product liability claims can be financed both through commercial third-party litigation fund - ing and through legal expenses insurance. • Third-party funding is generally admissible – the Austrian Supreme Court has confirmed its permis - sibility (notably OGH 6 Ob 224/12b), and funders typically cover court and legal costs, including adverse cost risk, in higher value or mass cases in return for a share of the proceeds. • By contrast, legal expenses insurance, usually taken out long before any dispute arises, functions as the most common de facto funding mechanism for consumers, as it covers their own litigation costs and, depending on the policy, the risk of hav - ing to pay the opponent’s costs. • In both models, the mechanism typically covers both the party’s own litigation costs and, in the event of losing, the obligation to pay the oppo - nent’s costs subject, in the case of insurance, to
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