Apart from the European Court of Justice, the treatment of legal questions related to the scandal centred on the defective breast implants produced by the French manufacturer Poly Implant Prothèse (PIP) has also been subject to rulings of numerous domestic Courts of different Member States. In two rulings, the European Court of Justice showed a reserved approach concerning the liability issue, by rejecting a duty of domestic legislations derived from the Council Directive 93/42 EEC to offer the victims a right of to be compensated in any event for infringements of the duty to check the conformity of the implants (Judgement of the Court of 16 February 2017 – C-219/15 (Schmitt/TÜV Rheinland)), and by considering that prescribing a geographical limitation on insurance coverage offered in the insurance contract between the manufacturer and its French insurance company to victims residing in France did not constitute a discrimination based on grounds of nationality in the meaning of art. 18 TFEU. (Judgement of the Court of 11 June 2020 – C-581/18 (TÜV Rheinland LGA Products GmbH, Allianz IARD SA)). Consequently, victims living outside the French borders were not granted acces to the insurance company Alianz, with the effect that due to the insolvency of the manufacturer that had already ocurred in 2010, asserting compensation claims vis-à-vis TÜV Rheinland based on the alleged infringement of a duty granting rights to third parties to assess the products´conformity remained the only possibility for the plaintiffs. For lawsuits goverend by German law and asserted against the company TÜV Rheinland LGA Products GmbH, latter in its function as so-called “notified body” being a potential debtor of such duty, in a ruling pronounced in 2017 the German BGH rejected claims based on both the legal concept of a contract with protective effect for the benefit of third parties (Vertrag mit Schutzwirkung zu Gunsten Dritter) as well as the violation of a breach of statutes intending to protect another person (Verletzung von Schutzpflichtgesetzen) (see BGH NJW 2017, 2617). To the contrary, in a ruling of 10.10.2018 (N° de pourvoi: 15-28.531), the French Cour de Cassation answered to the affirmative with regard to a duty based on tort law whose breach it considered proven due to circumstantial evidence for non-compliant behaviour on the part of PIP, and subsequently in 2021 the Paris Cour d‘ Apell upheld the ruling granting compensation based on tort law after the case had been referred back to it.

Also the action brought before the Spanish Courts was based on the legal grounds of tort law. However strangely enough not the company TÜV Rheinland LGA Products GmbH in its function as so-called “notified body” and thus being a potential debtor of such liability was sued by the plaintiff, but expressly the entire „TÜV-Group, regardless of the fact under which company names latter may act in the market“. Prior dismissal of such an action based on the premise of an overall responsability of the whole corporate group by the First Instance Court of Valencia, and a further ruling of the Spanish Supreme Court anuling the notification of the lawsuit exclusively to TÜV Rheinland LGA Products GmbH´s Spanish sister company due to a lack of any power to represent other entities belonging to the same group, nevertheless the Court of Appeal of Valencia estimated the claim well founded. It held that the duties granting protection to third parties established by the Council Directive 93/42 EEC were owed by the whole corporate group, rejecting that latter could invoke the legal independance of the different group companies.

Certainly from a socio-psychologic point of view such an overall liability of the entire corporate group may be the result of the restrictive interpration given by the ECJ not being shared by some domestic Courts, recent case-law on Corporate Social Responsability (CSR, see the cases Lungowe v Vedanta Resources; Okpabi v Shell and Milieudefensie et al. v. Royal Dutch Shell plc.) or the increasing politicisation of Spanish Courts. In the judgement nº35/2019 of 24/01/2022 being the matter subject of this commentary, fortunately the Spanish Supreme Court accurately anuled the ruling of the Cour of Appeal, because even though in principle under Spanish law there exist remedies to pierce the corporate veil (levantamiento del velo) under certain circumstances, the respect of the legal independence of the different entities belonging to a corporate group and the separation of their assets constitute well-settled case-law, so that the mere fact that two corporations belong to the same group is never considered sufficient in order to justfy an overall piercing of the corporate veil. The Court adds that neither the fact that all are using the same core part „TÜV Rheinland“ in their respective company names solely constitutes a legal ground for expanding responsibility for tort. Nevertheless, the Court sticks to the vague legal instrument of the piercing of the corporate veil and particularly the non-exhaustive caracter of the different categories into which legal scholars use to classify this legal doctrine (numerus apertus), which in practice leads to a high degree of legal uncertainty.

In addition, once more, we are concerned that during all Court instances, all legal arguments raised in connection with the doctrine of the lifting of the corporate veil exclusively treated substantive law, ignoring completely complex questions concering Private International law and Union law. For instance, the present lawsuit could have been simply dismissed by the mere reason that pursuant to the large majority of legal scholars also under Spanish law, besides some debated groups of case of liability based on the appearenca or trust but not at issue in the present case, the instrument of the peircing of the corporate veil is goverend by the lex societatis and thus consequently must be resolved under German, but not Spanish law. Indeed a distinct legal question (especially due to the recent CSR- debate) would have been if the mother company can be subject to potential duties to supervise and monitor subsidiaries, to organise ist corporate group in a way that the subsidiaries´ infringements at stake can be avoided (compliance), or if it may even be held liable for acts comitted by subsidiaries as vicarious agents, and if the answer is affirmative, if the aformentionded claims are goverend by the Rome-II-Regulation, and in the affirmative if the law applicable is determined by the State where the damage ocurrs (the lex loci damni), consequently Spanish law, or to the contrary if due to its inextricable link with a corporation´s company-law regime concerning rights and duties to manage a group pursuant to Art. 4 para. 3 Rome-II-Regulation a closer connection can be established with the corporate relationship between both companies, with the consequence that again German but not Spanish law would have been applicable.

Due to the fact that also German law denies an overall liability of the whole corporate group, in the present case the result would have been identical. However, in the event the plaintiff, eventually encouraged by the recent case-law of the French Courts, would have sued the „correct“ company TÜV Rheinland LGA Products GmbH, without prejudice of an eventual risk to have become already time-barred prior to its filing, such a lawsuit directly filed against the subsidiary and based on tort law certainly would have had better prospects of success than the perspective to fail with a lawsuit against the mother company TÜV Rheinland AG due to the strict requirements of the company-law instrument of the lifting of the corporate veil, such a lawsuit in addition making no sense from an economic point of view given the obvious subsidiary´s solvability. This demonstrates that in such cross-border liability lawsuits involving corporate groups, any unreflected action envolved by the attorneys-at-law can even jeopardise the realisation of existing claims, leading to a subsequent advisor´s liability, unless the choice of the group company(ies) to be sued is prepared with the same efforts than the review and the submission of the substantive requirements of the respective claim. Specialised advise in International Company and Corporate Group-law as well as in PIL is thus of essence and pays off well, not to mention the difficult questions of jurisdiction and recognition of judgements that must be equally be taken into account!

Florian Deck, 18. February 2022