The key facts about product liability in South African Pharma. Prepared in association with Fasken, a leading global law firm, this is an extract from The Pharma Legal Handbook: South Africa, available to purchase here for USD 99.

1. What types of liability are recognized in your jurisdiction?

In terms of South African common law legal liability may arise from a breach of contract or from delict.

Liability in delict may arise irrespective of the existence of a contract between the producer and the injured party.

Claims from breach of contract usually take the form of an action for breach of a warranty concerning the fitness of the product. Under common law contractual liability for a defective product rests on an express or implied warranty that the product is free from defects, or on a misrepresentation by the supplier regarding the qualities of the product (which are claimed or stated to be defect free).

The rights of the purchaser are determined by the contract with the supplier of the contract and only parties to such contract derive rights and obligations from it – this is known as privity of contract, a doctrine which prevents out- siders to a contract from suing or being sued in terms of the contract.

2. How do these types of liabilities apply to the manufacturers of medicines and devices?

Currently in South Africa there is no specific liability regarding pharmaceutical products. Rights of Consumers are however governed by the Consumer Protection Act No 68 of 2008 (the CPA) and in this regard in terms of Section 55 there is an implied warranty on any products, good or services rendered to a consumer.

It should however be noted that in addition to an implied warranty of quality which applies ex lege to any transaction governed by the CPA, other provisions are also made in the Act pertaining to unsafe goods or a defect, hazard or failure in goods.

The Consumer Protection Act does not provide for special rules in respect of pharmaceutical products. In this respect South Africa will follow most European jurisdictions, where arguments for special treatment of pharmaceutical products have generally not prevailed. There are however strict quality controls in place which apply to the manufacture, importation and distributions of prescription medicines.

Most of these quality controls are involved in the monitoring of all stages of the different manufacturing and distribution processes (as would be required in terms of the Regulatory and Compliance requirements from the SAHPRA as well) and as such, contain risks effectively in most cases.

It has been suggested that the application of various safety standards in terms of Section 61(1) of the CPA, read with Section 53(1), requires particular consideration of different factors such as:

• Whether the medicine or medical device has harmful effects which exceed the limits considered tolerable in light of the current medical knowledge and technological advancement; and
• The balance between the risks of harm and the therapeutic benefits of the medicine and/or medical device

3. Does potential liability extend to the manufacturer only or could claims extend to corporate executives, employees, and representatives?

In terms of the South African Companies Act, Directors and prescribed officers can be held liable in specific circumstances as set out in Section 77 of the Act.

The purpose of the Act includes the registration of offices of foreign companies carrying on business within the Republic and to define the relationship between companies and their respective shareholders or members and directors.

Potential liability in terms of the CPA extends to any supplier, whether or not they reside in South Africa.

Directors (which in terms of this Section, includes an alternate director, and a prescribed officer or a person who is a member of a committee or board of a company, or of the audit committee of a company, irrespective of whether or not the person is also a member of the company’s board) may be held liable in accordance with the principles of common law relating to breach of a fiduciary duty, for any loss, damages or costs sustained by the company as a consequence of any breach by the director of a duty as contemplated in the Act.

A Director may also be held liable in accordance with principles of the common law relating to delict for any loss, damages or costs sustained by the company as a consequence of any breach by the director of a duty contemplated in the Act or breach of any provision of this Act not otherwise mentioned in Section 77 or any provision of the company’s Memorandum of Incorporation.

4. How can a liability claim be brought?

Claiming for liability from a manufacturer or supplier will depend on the basis on which the claim is brought. If the claim is a result of a breach in the contractual relationship between parties, the law of contract provides several remedies for circumstances where harm was caused by defective products.

In South Africa the delictual remedy provided by the common law is the Aquillian action, which is based on fault in cases where harm was caused.

Section 61 of the Consumer Protection Act does however now provide a similar remedy – it discards fault and gives its own content to the concept of a defect, but it still incorporates elements of an action in delict, which include damages, causing harm. The defences such as prescription and consent can however also be used in opposing a claim in this regard.

Common law liability exists as an alternative basis for recovery of damages for harm done by defective products and may remain relevant in the situation where the injured consumer is unable to meet the requirements as set out in the definitions contained in the Act.

The CPA provide each consumer with means to enforce their rights by means of Section 69 which provides for the consumer to refer the matter  directly to the Consumer Tribunal, if such a direct referral is permitted by the Act in the case of the particular dispute – there are prerequisites for such referral which is set out in the CPA under a different section.

The consumer also has the right, in terms of Section 69 of the CPA, to: –

• refer the matter to the applicable ombud with jurisdiction, if the supplier is subject to the jurisdiction of any such ombud;
• if the matter does not concern a supplier who is subject to the jurisdiction of an ombud, the consumer has the right to refer the matter to the applicable industry ombud, accredited in terms of Section 82(6) of the CPA, if the supplier is subject to any such ombud;
• apply to the consumer court of the province with jurisdiction over the matter, if there is such a consumer court, subject to the law establishing or governing that consumer court;
• refer the matter to another alternative dispute resolution agent contemplated in section 70 of the same Act; or
• file a complaint with the Commission (in accordance with Section 71); or
• approach a court with jurisdiction over the matter, if all other remedies available to that person in terms of national legislation have been

Once all other remedies available to a consumer have been exhausted, they may institute legal action in a court with the relevant jurisdiction.

This process is regulated through the South African Civil Procedure Law and will be Action proceedings – this is where a person brings an action (Plaintiff) against another person or entity (Defendant) in for example a claim for damages due to defective medical device or harm that was caused by a medicine.

5. What defenses are available?

The claimant is only allowed to approach a court if all other remedies available to them in terms of national legislation have been exhausted. If the manufacturer is able to prove that this is not the case, the claimant will not be able to institute action in court.

There are also limitations placed on the consumer’s right to bringing an application, one being that an application may not be referred or made to the Tribunal or to a consumer court more than three years after the act or omission that is the cause of the complaint or in the case of a course of conduct or continuing practice, the date that the conduct or practice ceased.

A complaint in terms of this Act may not be referred to the Tribunal or to a consumer court in terms of this Act, against any person that is, or has been, a respondent in proceedings under another section of the CPA relating substantially to the same conduct.

A manufacturer can make use of Section 115(2) of the CPA as a defence when a claimant has instituted civil action in contravention of this section which indicate that a person who has suffered loss or damage as a result of prohibited conduct, or dereliction of required conduct may not institute a claim in a civil court for the assessment of the amount or awarding of damages if that person has consented to an award of damages in a consent order.