Safety in Critical Domains How to Allocate Liabilities for Failures

Marta Simoncini | European University Institute

Safety in the risk society

Risk and uncertainty are relevant issues in the management of scant resources

Technological risks are the «secondary consequences» of industrial development

Risk management aims at preserving and possibly enhancing the expected living standards

Trade off between risk and safety

Legal instruments for risk management

Forward-looking

Precautionary management of risk

Safety Standards aimed at mitigating risks to the extent to which these can become acceptable

in the risk society

Backward-looking

Risk is trasferred to the party who is in the best position to bear it

Liability reparation and incentive to the correct functioning of the precautionary system

Insurance transfer of the risk in exchange of payment

Safety standards Thresholds beyond which the relevant community does not

want to take a specific risk

Rational management of risks aimed at making the trade off between risk and safety tenable

… but the possibility of failure cannot be excluded completely…

Liability and software

In case of failure of safety standards,

who can be charged with liability?

•the producer?

•the user?

•the standard setters?

Is the «regulatory compliance defence»

comparable to

the «state of the art defence»?

Negligence and risk Negligence refers to failure to respect a due care standard

Due care is related to the foreseeability of the risk with regard to a specific role and its tasks

EFFECT OF COMPLIANCE WITH STANDARDS

Who sets the standard?

Private regulation proof of prudent behaviour (for the defendant), but the insufficiency of the

standard can be challenged (by the plaintiff): the standard-setter can be found negligent. E.g., USA case-law on swimming pools and screening practices in blood transfusions

Public regulation if «regulatory compliance defence» is comparable to the «state of the art

defence», the liability of the producer can be ruled out

USA: FDA preemption the public regulator (the State) can be liable for 'faulty' supervision or

regulation with reference to the state of the art

Italy: Cass. Civ., III, 11609/2005

Strict liability and risk

Related to the effects of a risk, not to misbehaviour

EFFECT OF COMPLIANCE WITH STANDARDS

Who is liable?

The market (market share liability) in mass production pro rata liability of producers limited to the extent of the

respective share of the market

USA: DES cases (Sindell v. Abbott Laboratories, 26 Cal. 3d 588 1980)

The State state compensation of damages stemming from the

unforeseeable materialisation of risk with the aim to restore an equal distribution of public burdens

e.g., France, Germany, Italy

Insurance and software

Further means to transfer risks

Why is it difficult to insure software?

Insurance and risk

The possibility of insuring against risks depends on the nature of the risk at stake foreseeable measurable: the amount paid by insured party must cover both

risk and expected costs of providing coverage

Difficulties in assessing risks related to software

Uncertainty of risk makes difficult to identify the advantage of risk bearing

Potential catastrophic impact

(e.g. automated ATM)

Discussion is very open…..

Thank you very much!