Russia introduces liability for failure to adopt product recall measures

The amendments* to the Code on Administrative Offences of the Russian Federation came into force on 30 July 2017. The amendments have established liability for failure to take product recall measures. Previously, there was no such liability in the Russian legislation.

It needs to be noted here that Chapter 7 of the Federal Law “On Technical Regulation”* envisages a number of actions which must be undertaken by any manufacturer, provider, seller or person who is performing the functions of a foreign manufacturer (the “Manufacturer”) in Russia, in case the information on its products that are on sale in Russia do not conform to the requirements of the technical regulations.

Such actions include:

• informing the competent authorities about the detected deviation from the requirements;
• checking that the information about the non-conformity of a product to the required standards is accurate and making the results available to the competent state agencies on demand;
• taking measures to prevent harm in accordance with a programme that should be developed according to Rosstandart’s guidelines (as indicated below);
• suspending the production and sales of the defective product, as well as recalling it from the market, if the threat of harm cannot be eliminated by other means.

Harm prevention programme

Despite the fact that the Federal Law “On Technical Regulation” contains an obligation to take harm prevention measures, up until July 2017, there was no liability for failing to take such measures. That said, even before the new rules on liability came into force, Rosstandart had prepared the guidelines* for developing and implementing programmes that will help prevent harm. Such programmes should be developed when it has been reliably confirmed that the products in question are defective and should include:

• sending end-user notifications about the possible defects;
• developing detailed instructions on how to repair the product and sending instructions to Rosstandart and end-users;
• ensuring that spare parts for repair are sufficiently available;
• sending an information letter to Rosstandart, notifying the consumers about the defects in the products, the possible precautionary measures that need to be taken, the efforts to rectify the defects, etc.;
• repairing the defective products;
• publishing a programme of measures on the official websites of both the Manufacturer and Rosstandart;
• sending interim and final reports on the implementation of the programme to Rosstandart.

Liability for violation of specific obligations

The applicable administrative liability will depend on the obligations established by the Federal Law “On Technical Regulation” that have been violated.

Accordingly, a failure to inform the competent authorities about a detected defect in a product (its non-conformity to the required technical requirements) is punishable by a fine from RUB 10,000 to 30,000 (EUR 143 – 429) for legal entities.

A Manufacturer that does not check whether the information received about the non-conformity of its products is accurate, or does not make the results of such check available upon request to the competent authorities, could be fined from RUB 20,000 to 40,000 (EUR 286 – 572).

A failure to comply with the measures to prevent harm may attract a fine from RUB 30,000 to 100,000 (EUR 429 – 1,430).

The most severe sanction has been set for cases, where Manufacturers fail to comply with their obligations to suspend the production and sales of their defective products and recall them from sale: the fine in such cases ranges from RUB 100,000 to 500,000 for legal entities (EUR 1,430 – 7,143). In addition, the amendments have provided a more stringent alternative sanction in case of a repeated violation of this obligation. The fine in such cases will range from RUB 700,000 to 1m (EUR 1,000 – 14,300) with confiscation of the defective products or an administrative suspension of the Manufacturer’s activities for a period of up to 90 days along with confiscation of the defective products.

The sanctions for individual entrepreneurs are considerably lower than those set for legal entities (as indicated above).

Comments

We recommend that manufacturers and sellers of products that need to meet the quality requirements laid down by the Russian law, take into consideration the sanctions that may be imposed for non-compliance with the rules on the provision of information to consumers about the defects in their products and their recall from market. Further, they need to undertake all the measures prescribed by the legislation on technical regulation that are necessary to prevent harm from the defective products within the timeframes established by the legislation.

We suppose that in cases where the manufacturer of the product is a foreign company, the measures described above should be taken by the authorised representatives of the manufacturer or the seller of such products in Russia. We therefore recommend that provisions spelling out such responsibilities are included in the contracts between the foreign manufacturers and their authorised local representatives or the sellers of their products in Russia.

If you have any questions on the matters referred to in this Alert, please do not hesitate to contact CMS Russia experts Leonid ZubarevMaxim Gubanov and or your regular contact at CMS Russia.

* In Russian