Product Liability

The COVID-19 pandemic has been not only causing major social upheaval but disrupting business development and the economy as well. Nevertheless, since last March, we have seen many developments and new projects involving self-driving vehicles (SDV). Here is an overview. Distancing made easy thanks to contactless delivery In mid-April 2020, General Motors’ Cruise SDVs were dispatched to assist two food banks in the delivery of nearly 4,000 meals in eight days in the San Francisco Bay Area. Deliveries were made with two volunteer drivers overseeing the operation of the Level 3 SDVs. Rob Grant, Vice President of Global Government Affairs at Cruise, commented on the usefulness of SDVs: “What I do see is this pandemic really showing where self-driving vehicles can be of use in the future.  That includes in contactless delivery like we’re doing here.”1 Also in California in April, SDVs operated by the start-up Nuro Inc. were made available to transport medical equipment in San Mateo County and Sacramento.  Toyota Pony SDVs were, for their part, used to deliver meals to local shelters in the city of Fremont, California.  Innovation: The first Level 4 driverless vehicle service In July 2020, Navya Group successfully implemented a Level 4 self-driving vehicles service on a closed site. Launched in partnership with Groupe Keolis, the service has been transporting visitors and athletes on the site of the National Shooting Sports Centre in Châteauroux, France, from the parking lot to the reception area.  This is a great step forward—it is the first trial of a level 4 vehicle, meaning that it is fully automated and does not require a human driver in the vehicle itself to control it should a critical situation occur. Driverless buses and dedicated lanes in the coming years In August 2020, the state of Michigan announced that it would take active steps to create dedicated road lanes exclusively for SDVs on a 65 km stretch of highway between Detroit and Ann Arbour.  This initiative will begin with a study to be conducted over the next three years. One of the goals of this ambitious project is to have driverless buses operating in the corridor connecting the University of Michigan and the Detroit Metropolitan Airport in downtown Detroit. In September 2020, the first SDV circuit in Japan was inaugurated at Tokyo’s Haneda Airport. The regular route travels 700 metres through the airport.  A tragedy to remind us that exercising caution is key  On March 18, 2018, in Tempe, Arizona, a pedestrian was killed in a collision with a Volvo SUV operated by an Uber Technologies automated driving system that was being tested. The vehicle involved in the accident, which was being fine-tuned, corresponded to a Level 3 SDV under SAE International Standard J3016, requiring a human driver to remain alert at all times in order to take control of the vehicle in a critical situation. The investigation by the National Transportation Safety Board determined that the vehicle’s automated driving system had detected the pedestrian, but was unable to classify her as such and thus predict her path. In addition, video footage of the driver inside the SDV showed that she did not have her eyes on the road at the time of the accident, but rather was looking at her cell phone on the vehicle’s console. In September 2020, the authorities indicted the driver of the vehicle and charged her with negligent homicide. The driver pleaded not guilty and the pre-trial conference will be held in late October 2020.  We will keep you informed of developments in this case.   In all sectors of the economy, including the transportation industry and more specifically the self-driving vehicles industry, projects have been put on hold because of the ongoing COVID-19 pandemic. Nevertheless, many projects that have been introduced, such as contactless delivery projects, are now more important than ever. Apart from the Navya Group project, which involves Level 4 vehicles, all the initiatives mentioned concern Level 3 vehicles. These vehicles, which are allowed on Quebec roads, must always have a human driver present. The recent charges against the inattentive driver in Arizona serve as a reminder to all drivers of Level 3 SDVs that regardless of the context of an accident, they may be held liable. The implementation of SDVs around the world is slow, but steadily gaining ground. A number of projects will soon be rolled out, including in Quebec. As such initiatives grow in number, SDVs will become more socially acceptable, and seeing these vehicles as something normal on our roads is right around the corner.   Financial Post, April 29, 2020, “Self-driving vehicles get in on the delivery scene amid COVID-19,”.

With the ongoing COVID-19 pandemic, governments and agencies are implementing an increasing number of measures of all kinds. The state of emergency is giving rise to a multitude of legal concerns, in particular contractual ones. The temporary closure of many businesses, public places and borders and the resulting economic uncertainty is leading businesses to question their contractual obligations, which may have become difficult to meet. In such a context, can debtors fail to meet their obligations without being held liable? The answer to this question can be found either in the text of the contract binding the parties or in the Civil Code of Québec (hereinafter “C.C.Q.”). Many contracts do in fact provide for exemption mechanisms. They set out which of the parties will bear the risks associated with events beyond their control. In the absence of contractual provisions to that effect, the rules set out in the C.C.Q. apply. The Civil Code of Québec and superior force Article 1693 C.C.Q. provides that the debtor of an obligation is released from said obligation when it cannot be performed by reason of superior force. However, the burden of proof of superior force is on the debtor. In Quebec law, superior force is defined as an unforeseeable and irresistible event that is external to the party subject to the obligation. It makes the performance of an obligation impossible1. Thus, in certain circumstances, natural phenomena, such as earthquakes, floods and others, or human acts, such as a state of emergency declared by a government, illness or death, may be considered superior force. Determining whether an event in a particular context constitutes superior force must be done by taking into account all relevant factors. For an event to qualify as superior force, it must meet the following three conditions or criteria. It must be: Unforeseeable Irresistible Exterior An event is unforeseeable when the parties to a contract, acting as reasonably prudent and diligent persons, could not foresee it at the time that the contract was concluded. There is no need for the event to be a new phenomenon. For example, ice storms in Quebec are not unusual. In 1998, however, the ice storm led to an unforeseeable situation. The magnitude of the 1998 ice storm was such that it was sometimes described as superior force.  An event is irresistible when (i) any person placed in the same circumstances cannot reasonably avoid it and (ii) it makes the performance of an obligation impossible. Thus, if the performance of an obligation remains possible, but is simply more difficult, more perilous or more expensive, the event having caused the complication cannot be considered superior force. For an event to be considered exterior, the debtor must have no control over it and must not be responsible for causing it. The debtor must even be able to demonstrate that it has taken all reasonable steps to mitigate its consequences. On the basis of these criteria, the current state of emergency in Quebec may be deemed to be a situation of superior force for some debtors. The analysis must be made on a case-by-case basis and consider the specific obligations of each debtor. For example, the production stoppage ordered by the Government of Quebec, imposing the suspension of workplace activities other than priority activities as of March 25, 2020, makes it absolutely impossible for certain businesses to perform the obligations covered by this decree. For others, the state of emergency may have financial consequences, but these do not make their obligations impossible to perform. While the ongoing crisis can be considered an unforeseeable event for the purposes of a contract concluded years ago, this can hardly be the case for a contract concluded in the last few days, when the disease was already endemic or the pandemic had been announced by the health authorities. In the event of superior force, a debtor is released from the obligation(s) affected by the superior force2. Depending on the importance of these obligations, the release may, in certain cases, lead either to the termination of the contract in its entirety, or to the suspension of the performance of certain obligations. Thus, suspension should only occur when the obligations are to be performed successively and the impossibility of performance is only temporary. A debtor who is released from an obligation by reason of superior force may not demand consideration from the other contracting party3. Superior force cannot be used as a means of exemption for a debtor who is subject, under the terms of the contract, to an obligation qualified as an obligation “of warranty4”. The debtor must then perform the obligation and assume all risks related to the occurrence of an unforeseeable and irresistible event over which it has no control. A debtor faced with the current difficulties arising from the global COVID-19 pandemic must, in all cases, take steps to minimize the damage. For example, it must try to find new suppliers or subcontractors before claiming that it is unable to fulfil its obligations. Contracts may provide for different conditions Parties to a contract may include provisions in the contract governing the consequences of uncontrollable situations, such as superior force, and thus deviate from what is provided for in the C.C.Q. In practice, many contracts contain a broader or more restrictive definition of events that may constitute superior force. For example, strikes and fires will generally not be considered cases of superior force within the meaning of the C.C.Q., but may be under the terms of a contractual provision. Likewise, a party may, at the time that a contract is concluded, undertake to fulfil its obligations even if it is subject to a situation of superior force. In so doing, it waives the right to invoke such grounds for exemption in advance. The parties may also provide for steps to be taken in order to benefit from a contractual provision governing superior force, such as the sending of a notice within a stipulated time limit. The usual provision dealing with superior force requires the party invoking it to send a notice to the other party justifying its use of the provision. Failure to send such notice within the prescribed time limit may result in the affected party being barred from availing itself of the superior force provision. It is therefore particularly important for a party to pay close attention to the formalities and other requirements set out in the contract when invoking such a provision. A contract may additionally contain a provision that determines what effects the occurrence of an event considered as superior force will have. For example, the parties may agree that superior force will result in the termination, suspension or modification of an obligation, such as the proportional adjustment of a minimum volume to be delivered. Finally, the parties to a contract may set out the consequences of unforeseen and external situations that do not, strictly speaking, make the performance of an obligation impossible. For instance, the parties may anticipate the risk of an unexpected increase in the cost of an input by means of a hardship clause. A matter of sound foresight, such a clause may have significant consequences in the current situation, even if it does not specifically address superior force. Conclusion A superior force situation and the exercise of the rights that may result from it must be analyzed with the following in mind: A case-by-case analysis is required for each situation. Other legal concepts may apply depending on the circumstances, such as the duty of good faith of the parties to a contract, the duty to minimize damage, and the duty to demonstrate the absence of an alternative. Business risks or reputation risks may apply to both the party wishing to invoke superior force and the party against whom it is invoked. A review of the terms and conditions of the parties’ insurance policies, which may provide compensation for financial losses, may also be appropriate.   Article 1470 C.C.Q. Article 1693 C.C.Q. Article 1694 C.C.Q. This is opposed to obligations qualified as “of result” or “of means,” for which the debtor may be released by reason of superior force.

For many years now, we have been discussing the arrival of autonomous vehicles on Quebec roads. Thus, in April 2018, the government amended the Highway Safety Code1 to adapt it to the particularities of these new vehicles However, the automotive sector is not the only one being transformed by automation: the aeronautics industry is also undergoing profound changes, particularly with the introduction of autonomous air transport technologies in urban travel. Terminology There are many terms used in the autonomous air transport industry, including “autonomous flying car”, “unmanned air vehicle” and even “autonomous air taxi”. For its part, the International Civil Aviation Organization (ICAO) has proposed some terms that have been included in various official documents, including certain legislation2. These terms are as follows: Unmanned air vehicle: A power driven aircraft, other than a model aircraft that is designed to fly without a human operator on board; Unmanned air system: An unmanned aircraft and all of the associated support equipment, control station, data links, telemetry, communications and navigation equipment; Remote piloted aircraft system: A partially autonomous remotely piloted aircraft; Model aircraft (also called “drone”): A small aircraft, the total weight of which does not exceed 35 kg that is not designed to carry persons. As for Canadian legislation, it uses specific vocabulary and defines a remotely piloted aircraft system as a “a set of configurable elements consisting of a remotely piloted aircraft, its control station, the command and control links and any other system elements required during flight operation”, whereas a remotely piloted aircraft is defined as “a navigable aircraft, other than a balloon, rocket or kite, that is operated by a pilot who is not on board3”. Legislative Framework In accordance with Article 8 of the Convention on International Civil Aviation4, it is prohibited for unmanned aircraft to fly over the territory of a State without first obtaining the authorization of the State in question. In Canada, the standards governing civil aviation are found in the Aeronautics Act5 and its regulations. According to subsection 901.32 of the Canadian Aviation Regulations ((the “CARs”), “[n]o pilot shall operate an autonomous remotely piloted aircraft system or any other remotely piloted aircraft system for which they are unable to take immediate control of the aircraft6.” In Canada, the standards governing civil aviation are found in the Aeronautics Act5 and its regulations. According to subsection 901.32 of the Canadian Aviation Regulations ((the “CARs”), “[n]o pilot shall operate an autonomous remotely piloted aircraft system or any other remotely piloted aircraft system for which they are unable to take immediate control of the aircraft6.” Since the 2017 amendment of the CARs, it is now permitted to fly four (4) categories of aircraft ranging from “very small unmanned aircraft” to “larger unmanned aircraft7”, subject to certain legislative requirements: The use of unmanned aircraft weighing between 250 g and 25 kg is permitted upon passing a knowledge test or obtaining a pilot permit, if applicable8; To fly unmanned aircraft over 25 kg to transport passengers, it is mandatory to obtain an air operator certificate9. Ongoing projects Many projects developing unmanned aircraft are underway. The most high-profile and advanced projects are those of automotive, aeronautics and technology giants, including Airbus’s Vahana, Boeing’s NeXt program, Toyota’s SkyDrive and the Google-backed Kitty Hawk Cora10. The most advanced project appears to be UberAIR. In addition to actively working on developing such a vehicle with many partners like Bell and Thales Group, Uber’s project stands out by also focusing on all the marketing aspects thereof. The program is slated for launch in three cities as early as 202311. These cities are expected to host a test fleet of approximately fifty aircraft connecting five “skyports” in each city12. Challenges Despite the fact that technology seems to be advancing rapidly, many obstacles still remain to truly implement this means of transport in our cities, in particular the issue of the noise that these aircraft generate and the issues relative to their certification, costs and profitability, safety linked to their urban use, social acceptability and the establishment of the infrastructure necessary to operate them. In the event of an accident of an autonomous aerial vehicle, we can foresee that the manufacturers of such vehicles could be held liable, as could the subcontractors that are involved in manufacturing them, such as piloting software and flight computer manufacturers. We could therefore potentially be faced with complex litigation cases. Conclusion A study predicts that there will be about 15,000 air taxis by 2035 and that this industry will be worth more than $32 billion at that time13. In the context of climate change, sustainable transportation and in order to bear urban sprawl, these vehicles offer an interesting transit alternative that may very well change our daily habits. The flying car is finally at our doorsteps!   Highway Safety Code, CQLR, c C-24.2. Government of Canada, Office of the Privacy Commissioner of Canada, Drones in Canada, March 2013, at pp. 4-5 Canadian Aviation Regulations, SOR/96-433, s. 101.01. International Civil Aviation Organization (ICAO), Convention on International Civil Aviation (“Chicago Convention”), 7 December 1944, (1994) 15 U.N.T.S. 295. Aeronautics Act, RSC 1985, c. A-2. Canadian Aviation Regulations, SOR/96-433, s. 901.32. Government of Canada, Canada Gazette, Regulations Amending the Canadian Aviation Regulations (Unmanned Aircraft Systems) - Regulatory Impact Analysis Statement, July 15, 2017. Canadian Aviation Regulations, SOR/96-433, s. 901.64 et seq. Canadian Aviation Regulations, SOR/96-433, s. 700.01.1 et seq. Engineers Journal, The 13 engineers leading the way to flying car, May 29, 2018 Dallas, Los Angeles, and another city yet to be announced. Uber Elevate, Fast-Forwarding to a Future of On-Demand Urban Air Transportation, October 27, 2016, Porsche Consulting, “The Future of Vertical Mobility – Sizing the market for passenger, inspection, and goods services until 2035.” 2018

The Autonomous Bus and Minibus Pilot Project 1 (the “Pilot Project”) came into effect in Quebec on August 16, 2018. The project provides guidelines for the regulated driving of the first autonomous vehicles on Quebec’s roads. Driving autonomous vehicles in quebec An autonomous vehicle is defined by the new Highway Safety Code as “a road vehicle equipped with an automated driving system that can operate a vehicle at driving automation level 3, 4 or 5 of the SAE International’s Standard J3016”.2 Driving autonomous vehicles is currently prohibited in Quebec other than in accordance with a pilot project.3 Eligibility requirements To be authorized by the Minister under the Pilot Project, a manufacturer, distributor or operator of autonomous vehicles (referred to by the Pilot Project as the “promoter”) must submit certain information to the Minister of Transport and to the Société de l’assurance automobile du Québec (“SAAQ”) concerning their experimental project, including, in particular: -      an application specifying their project and the objectives pursued; -      a description of the vehicles that will be used; -      the area in which the project will be implemented; and -      the safety measures proposed.4 Insurance and security Under the new Highway Safety Code, the Pilot Project provides that the promoter of a project must carry a minimum of $1,000,000 in liability insurance to guarantee compensation for material harm.5 In the event of an accident involving an autonomous vehicle operated under an experimental project, the SAAQ may recover the compensation it will be required to pay under the Automobile Insurance Act6 from the manufacturer or distributor of the autonomous vehicle involved in the accident. In that case, the operator of a project will have the obligation to reimburse the SAAQ for the compensation paid.7 Security must also be provided to the SAAQ to guarantee reimbursement, in an amount that will be determined by the Minister on a case by case basis, depending on the project. A manufacturer or distributor from which the SAAQ has made a claim for compensation paid may refuse to make reimbursement or request a reduction of the amount claimed in two situations: (1)  by proving the fault of the victim or of a third person; or (2)  in the case of superior force.8 Experimental project The entry into effect of the Pilot Project has authorized a first experimental project in Quebec, sponsored by Keolis Canada Innovation, s.e.c.9 The purpose of the project is to put Navya autonomous minibuses into service that are capable of transporting up to 15 passengers, travelling on a closed circuit in Candiac. The vehicles will travel at a maximum speed of 25 km/h and a driver will be on board to take control of the vehicle, if necessary.10 We can count on seeing a number of other projects in the future, now that there is a legislative framework allowing them.   Autonomous Bus and Minibus Pilot Project, (Highway Safety Code, CQLR chapter C-24.2, s. 633.1).[ Pilot Project] Highway Safety Code, CQLR chapter C-24.2, s. 4. Highway Safety Code, CQLR chapter C-24.2, s. 492.8; except for vehicles at level 3, which may be driven if their sale is authorized in Canada. Pilot Project, s. 4. Pilot Project, s. 20. Automobile Insurance Act, CQLR c. A-25. Pilot Project, s. 21. Pilot Project, s. 22. Pilot Project, s. 26. “Une navette à L’essaie pour un an à Candiac”, La Presse, August 11, 2018, Montréal.