Product liability is being modernised

The European Commission has proposed to amend the Product Liability Law. Directive 85/374/EEC dates back to 1985 and does not adequately reflect product developments over the last 40 years. The resulting gaps in liability law are now to be closed. To this end, the European Commission proposes to completely recast the Directive (COM(2022) 495 final).

Closing liability gaps

In future, Product Liability Law will also cover products based on new digital technologies. Clear responsibilities should also be created for damages claimed due to faulty software updates or as a result of the use of AI algorithms. This is not a question of culpability; the subject of the Product Liability Directive is exclusively damages without culpability.

The draft of the new Product Liability Directive addresses the economic players liable for defective products and puts the onus on Member States to ensure that they can be held liable for damage caused by products under their responsibility – physical injury, damage to property and loss of data. This also applies if they are established outside the European Union – be it a manufacturer, trader, importer or even an online platform.

Disclosure of evidence

The new Product Liability Directive aims to strengthen the rights of consumers. In order to reduce the "information asymmetry" between producers and consumers, the European Commission's draft provides for the Member States to grant national courts the option of forcing liable parties to hand over relevant information and evidence on the one hand. Provided that the injured person can present facts and evidence that make the claim for damages plausible. However, in order to also meet the legitimate interests of manufacturers or traders, proportionality must be maintained in the disclosure.

Easing the burden of proof

On the other hand, the burden of proof is to be eased in complex cases. This can be the case, for example, with medicines, complicated medical devices or in connection with the use of artificial intelligence (AI). Here, it may be excessively difficult for the affected parties to prove the defectiveness of the product and the causal link to the damage suffered. In such cases, it shall be sufficient to prove that the product contributed to the damage, that the product was probably defective and/or that its defectiveness probably caused the damage. Whether it is a case in which the instrument of the "presumption of causality" applies is also determined by the competent national court.

AI liability

The presumption of causality and the facilitation of access to information in liability disputes are also reflected in a second draft of the European Commission, which was presented at the same time as the proposal for the new Product Liability Directive. The AI Liability Directive (COM(2022) 496 final) aims to modernise the legal framework in the EU for malpractice liability and extend it to claimed defects caused by AI systems. Unlike strict product liability, the focus here is on the culpable responsibility of the manufacturer. The draft directive is intended to help harmonise the different national liability rules based on culpability and facilitate the assertion of claims relating to damage caused by AI systems.

Tailwind from the EU

The European Commission is sending a positive signal with its proposals for directives. Tailwind for more consumer protection should also be welcome in Germany.