The U.S. House Energy and Commerce Committee’s Subcommittee on Commerce, Trade and Consumer Protection recently marked up a bill that, if enacted, would have a significant impact on Canadian exporters and U.S. importers.

The Foreign Manufacturers Legal Accountability Act of 2010 (H.R. 4678) would require foreign manufacturers of certain products that are imported into the United States (or component parts used in the U.S. to manufacture such products) to establish registered U.S. agents who are authorized to accept service of process on behalf of the manufacturer in all civil and regulatory actions in state and federal courts.
 




Sponsors of the proposed legislation claim that the current rules put American manufacturers at a significant competitive disadvantage because they supposedly allow foreign companies to offer cheaper products that do not necessarily comply with U.S. safety requirements.  The objective of the bill therefore was to find a way to hold foreign companies accountable when they ship products into the United States, even when they have no actual physical presence in the country, and to make it easier for victims of defective foreign-made products to file suit against foreign manufacturers. To do this, the legislation specifically addresses the legal issues of service of process and jurisdiction.

Service abroad involves the Hague Convention on the Service Abroad of Judicial and Extra Judicial Documents in Civil and Commercial Matters, to which the U.S. is a signatory. Under the terms of that agreement, a complaint must be translated into the foreign language, transmitted to the central authority in the foreign country, and then delivered according to the rules of service in the home country of the defendant.  To avoid this lengthy and expensive process, H.R. 4678 is designed to ensure that foreign manufacturers and producers of consumer goods can be sued in U.S. courts for product safety and other violations by requiring them to register an agent in the U.S.





The products covered by this legislation are (1) drugs, medical devices and cosmetics; (2) biological products; (3) consumer products; (4) chemical substances; (5) pesticides; and (6) motor vehicles or motor vehicle equipment. The registered agent would have to be an individual or domestic firm or corporation that is a permanent U.S. resident and is located in a U.S. state that has a substantial connection to the importation, distribution or sale of the covered product(s).

The agent registration requirement would apply only to companies that manufacture or produce covered products in excess of a minimum value or quantity established by the Consumer Product Safety Commission, the Food and Drug Administration, the Environmental Protection Agency or the National Highway Traffic Safety Administration, as appropriate. In determining the minimum requirements, the applicable agency would be required to consider the value and quantity of all covered products imported from the manufacturer or producer in a calendar year and the frequency of importation.

The registration requirement would enter into force a year after the date of enactment of the legislation. Products from non-compliant manufacturers would be barred from entry into the U.S. effective 180 days from the date of issuance of the applicable regulations to implement the registration requirement.

Manufacturers would also be required to notify the applicable U.S. agency of any safety recalls or other safety campaigns conducted in a foreign country of a covered product that is identical or substantially similar to a covered product offered for sale in the U.S.