A landmark survey of the Asian-Pacific region to discover whether individual countries in that region could emulate the burgeoning product liability litigation being experienced in the United States and Australia has been initiated by a leading Australian lawyer.
Jocelyn Kellam from Australian law firm Clayton Utz, an acknowledged commentator and author on product liability issues , says that a decade of Product Liability reform throughout the Asia-Pacific region could have created the conditions for such actions to take off.
“This is of concern to manufacturers, whether local or multi-national, who are operating in the region,” Dr Kellam said, “because the emergence of a more highly litigious environment will impact on their liability exposure, risk management and insurance requirements.
“At the moment the trend is unknown. This is a problem for international insurance companies writing business overseas as they need to understand the local litigation liability environment in order to assess the risks and the premiums before they write cover. What is needed is hard data.
“During the past five years in Australia, public liability litigation increased rapidly but because a lot of insurers didn’t recognise the trend they didn’t rate premiums accordingly. This has seen Australia struggle with a public liability insurance crisis resulting. Subsequently it has become difficult to obtain cover for some classes of insurance. Some insurance companies have also incurred losses in the public liability area, as well as in other classes of general insurance and in medical negligence.
“Undoubtedly, both manufacturers and insurers would want to avoid a similar scenario arising in countries such as the Asia Pacific region. Such an event would also make it very difficult for manufacturers to afford cover. If countries which have implemented product liability reforms follow the US litigation experience, manufacturers might end up having to set up their own captive insurance or make alternative arrangements for risk transfer. Should there be a blow-out in PL insurance the best possible case then for manufacturers could even involve them facing very large increases, perhaps of up to one thousand percent, in premiums and restrictions in cover.”
Dr Kellam says the Asia-Pacific Product Liability Survey will be a highly objective and academically rigorous study that could take as long as two years to be fully completed.
“The survey will involve approximately 200 blue chip manufacturers which do business in the different jurisdictions across the region,” Ms Kellam explained. “”Emeritus Professor David Harland, formerly Challis Professor of Law at the University of Sydney and currently a consultant with Clayton Utz has agreed to be involved in the collation and analysis of the results. The results will allow manufacturers worldwide and insurers to better judge product liability risks in the region and give guidance as to whether there is further need for product liability reform or whether the clock should be wound back – as is now being suggested in the tort law reform process in Australia.
Dr Kellam who is visiting Singapore over the next few days will have discussions with a number of local manufacturers about the survey which will mirror the one completed for the European Commission last year by London legal firm Lovells.
“Previously there has been a reluctance in some in Asia countries to litigate. However ten years ago product liability law reform was unheard of, and that has now become widespread in the region.
“We think the question now for the ‘economic tiger’ economies in particular, especially in a tougher economic climate, is has there been a cultural shift that may make the climate of these countries more conducive to the growth of this sort of litigation. Already there are anecdotal reports that multinational corporations for example are facing increased litigation in China.
“Manufacturers will not want to go into a country if the courts are seeing investing multinationals as being deep pocketed, so we believe they will welcome this unique opportunity to understand what is occurring.”
Local lawyers and insurers are also invited to participate in the survey and encouraged to involve their clients with the results being made available on a confidential basis when it is completed.
Interested manufacturers, insurers and lawyers are invited to contact Dr Kellam via email: [email protected]tonutz.com