Product Liability of Car Manufacturers

Despite existing protections for consumers in case of product defaults as per Consumers’ Protection Law, which are categorically general and ineffective, today, marking the date August 18th 2019, members of the Islamic Parliament introduced new-found protections for automobile consumers in case they suffer damages arising from car defects and flaws. Article 7 of the Amendment to The Car Industry Organization Plan, which was enacted in the Parliament and is pending confirmation in the Guardian Council provides that “in case of accidents occurring up to five years after numbering a car, if the buyer does not have knowledge of the car defects and flaws, the local manufacturer or the official representative of the foreign manufacturer or the exporter, incur civil liability proportionate to the involvement and effectiveness of such defects and flaws in the occurrence of the accident.”

Once approved by the Guardian Council, the new law will become effective within ten days after its publication in the official Gazette.

This new liability has been introduced in light of high casualty numbers in car accidents in Iran and aims to ensure higher standards of safety. Nevertheless, it creates new risks for car exporters as well as manufacturers in Iran. The same law provides that the Ministry of Industry, Mine and Trade shall work in cooperation with the ministries of Communication, Energy and Roads & Urban Development alongside the Scientific Vice-Presidency to draft a document on strategic technologies in the car manufacturing industry including full-hybrid, automatic, mixed cars, and the possibility of using other non-fossil fuels in the period of one year from the enforceability of this legislation.