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Prevention of liability risks in companies: § 130 OWiG (Act on Regulatory Offences) and delegation

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published on 11 November 2020 | Reading time approx. 4 minutes


An economic activity is not possible without taking entrepreneurial risks. Especially in Life Sciences, which is an area where different specialised fields meet, it is important to have in mind the legal requirements and prohibitions. Violations are subject to severe penalties.

 


Life Sciences is a cross-sectional discipline and includes various areas of the so-called bio or life sciences.

Since, in practice, these areas affect highly specialised spheres of life, the laws regulating Life Sciences have various specialist legal bases, such as food and feed law, medicinal product and medical devices law, chemicals law, product safety and consumer goods law, as well as waste and packaging law.

This vast number and complexity of the legal bases require that we pay special attention to liability risks, in particular as regards the prevention of infringements of legal requirements and prohibitions.


Overall competence and delegation

Business or company owners have a special role to play here as those responsible. They initially take on all tasks and competences and are primarily responsible for all matters. In particular, they have a duty to take measures that are necessary to avoid criminal acts. In this context, ownership is not determined by the material circumstances, but by the fact who is actually responsible for the fulfilment of duties.

For example, owners of food companies have a duty to ensure that no food is placed on the market that is unsuitable for human consumption (cf. for example the prohibition of certain acts for health protection in Article 5 in conjunction with Article 58 of the German Food and Feed Code).

As a further example, the various players along the trade chain in the field of medical devices (manufacturer or its EU representative, importer, distributor) can be mentioned, a naturally sensitive area in which companies are exposed to a wide range of liability risks with regard to their products. Starting from the question of which obligations the respective actor has under medical device law, questions of contractual liability as well as product liability arise both domestically and abroad.


Liability issues currently still find their normative point of reference in the German Medical Devices Act (in future in the Medical Devices Regulations (EU) 2017/745 and 2017/746), whose task is to regulate the marketing of medical devices and thus ensure the safety, suitability and performance of medical devices as well as the health and the necessary protection of patients, users and third parties. With regard to liability issues in particular, it should be noted that the requirements for the safety of these products must be set particularly high and that medical devices which have been found to have a potential defect can already be classified as defective.

If we analyse the situation from a true-to-life perspective, it is clear that above a certain size of company, persons responsible are compelled to delegate certain tasks to employees. The transfer of tasks and competences to lower-level management is possible and also reasonable. Because of the importance of the division of tasks, especially in large companies, delegation can be seen as the core responsibility of managers .

A legally certain transfer of tasks involves elements such as proper delegation, selection, instruction and surveillance. In practice, delegation goes far beyond the mere selection of a suitable employee. While liability based on fault in selecting is conceivable in this respect, managers are at the same time required to sufficiently instruct and supervise employees. In this case, the manager may be additionally liable on the basis of fault for supervision. Organisational duties must therefore be taken seriously.


Regulatory liability according to Article 130 OWiG

Article 130 OWiG is the normative starting point for the regulatory sanctioning of violations of organisational and supervisory duties. In practice, this is the most relevant, the broadest in scope, yet often unknown legal basis in the context of directors' and officers' liability.

In principle, Article 130 OWiG is intended, as a catch-all element, to close a liability gap resulting from the separation of ownership of an enterprise and the associated special positions on the one hand and the actual performance of activities on the other. Against this background, the legislator has created an independent factual element which in the first place addresses the decision-maker and defines his duty of supervision, selection and surveillance within the framework of the division of labour.

Violations of these duties give rise to liability subject to regulatory fines, linked to an intentional or negligent failure to create appropriate organisational framework. In the case of violations of supervisory duties carrying a criminal penalty, the maximum regulatory fine may amount to up to one million euros (Article 130 (3) sentence 1 OWiG).


Article 130 OWiG as a gateway to special statutory liability

At the same time, Article 130 OWiG serves as a gateway to special statutory liability of those responsible. The special criminal law is separated from the general criminal and regulatory offence law and was created by the legislator in order to penalize typical offences in those areas.

Special statutory liability regulations can be found in many areas, for example in the Food and Feed Code in Articles 58 et seq., in the Medicinal Product Act in Articles 95 et seq. or in the Medical Devices Act in Articles 40 et seq.


Importance of testing and security measures

In practice, the liability can be unlimited. Within the framework of delegation, company organisation must therefore ensure the highest possible level of security against breaches of duty by exercising the required level of due care, for example through personnel, organisational and financial measures.

The implementation of liability-reducing measures can be linked both to concrete personnel measures, such as the selection of employees on the basis of their professional and technical qualifications, and to concepts for compliance with statutory regulations.

For example, comprehensive training and monitoring concepts for food companies are required to ensure compliance with the legal provisions. This includes but is not limited to such measures as hygiene training, the control of statutory quality standards and occupational health and safety.


Conclusion

The delegation of corporate duties is of extreme importance in practice. Company owners as those primarily responsible must exercise great care, especially in view of complex legal regulations, in order to avoid personal liability.

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