Externally funded project

Certification bodies - trust, accountability, liability (certification bodies)

Project Details
Project duration: 06/201606/2016


Certification bodies – trust, accountability, liability?

Certification bodies are involved in a number of business operations, and for a variety of reasons. Certification plays an increasing role not only in textile, sportswear and food industries, but also in automotive, electronics and the insurance industries. Areas of law concerned range from product safety, safety at work and electronic signatures to organic production, animal protection and corporate social responsibility and finally the quality of study programs and the rating of investments.

Certification bodies are third parties whose involvement in production or services is required by law or by private organisations, for example in the ambit of labelling schemes, or who are commissioned voluntarily by the producers or service providers. In each case, their role is to exercise control or to evaluate safety or quality and, usually, to invoke trust of authorities, organisations or consumers in the product or service at stake. Often, their involvement is used as an argument to relax public control, as in the case of the safety of medical products.

At first glance, certification seems to create a win-win-situation for both companies and consumers. Companies signaling a responsible approach to safety or to social, ecological and ethical issues build confidence in their clients, investors, authorities and consumers. Certification schemes are used to back up marketing claims for unobservable quality attributes. Certification is seen as a potential solution to the well-known asymmetric information problem. Third-party certifiers are supposed to solve the problem that a producer's unilateral declarations lack credibility, given the producer's conflict of interest and the information asymmetries between producer and consumer. Much of the literature on global private regulation through standards for environmental sustainability, corporate social responsibility, among others, assumes that certification works.

Closer inspection shows, however, that sometimes certification bodies themselves lack credibility. In the recent past, the role of certification bodies has come to the focus of public attention as well as of the attention of academic scholars due to a number of scandals in which they were involved.

The most prominent example at this time is probably the so-called “PIP scandal” around cheap and defective breast implants that were produced and distributed by Poly Implant Prothèse (PIP). The product design of those implants had been certified by TÜV Rheinland as being safe. Critiques argue that TÜV Rheinland has not exercised due care in monitoring the activities of PIP and have therefore initiated litigation in German courts. The case is also pending in the Court of Justice of the European Union. Legal arguments centre around the question as to who is meant to be protected by the certification process: is it the patients, or is it the producer who needs the certification so as to be allowed to affix the CE mark on his products, confirming that those products comply with EU product safety standards?

A more recent scandal in which a certification body is involved is the scandal on manipulated software of Volkswagen engines. Here, the TÜV Nord has been accused of not having exercised due care in measuring the exhausts of Volkswagen cars. In the area of credit rating, legal disputes have arisen, amongst others, around the potential liability of Standard & Poor’s for positive ratings of Lehman Brothers just before the latter broke down.

Whatever the correct solution of the above-mentioned cases may be, it has become clear that certification bodies play a crucial role in many areas of the economy, and also for the protection of the life, health and the economic interests of consumers, and that role is ever growing with the globalisation of the economy and the increasing difficulty of assessing the quality and the trustworthiness of producers and service providers. Therefore, it will be essential to ensure the quality of the work of certification bodies.

At the workshop, instruments to that end were discussed. These instruments range from public law measures, such as accreditation, to private law incentives, or deterrents, such as liability towards victims. Moreover, the role of competition between certification bodies was analysed. Hereby, the workshop explored commonalities as well as necessary distinctions between certification bodies in various fields that may stem from different functions that those bodies have in a particular scenario but also from different types of damage that the certified producer or service provider may cause to consumers.

These questions were discussed from a legal point of view as well as from the point of view of economics.

certification bodies, Zertifizierungsorganisationen

Last updated on 2017-28-11 at 10:27