Strengthening consumer rights
The Council has finally adopted the new Product Liability Directive.
UM – 10/2024
Around ten months after the successful
conclusion of the trialogue negotiations on 14 December 2023, the Justice and
Home Affairs Council formally approved the new Directive
on liability for defective products on 10 October. It was adopted without
further discussion. The Council had already informally announced its approval
to the European Parliament months ago.
Revision of the Product Liability Law was
long overdue. The current Product Liability Directive 85/374 EEC dates back to
1985. In particular, there are three developments that have led to the
rewording of the liability for defective products, irrespective of culpability.
AI, online retail and circular economy
First: Smart products and systems with
artificial intelligence (AI) overstretch the currently applicable legal
definitions and requirements, and force adjustments. A new product definition
means that, in addition to AI systems, software and digital construction
documents are now also becoming the focus of Product Liability Law.
Second: Supply chains are structured
differently today than they were in the 1980s, in some cases with new economic
players such as online retail platforms or their fulfilment service providers.
In order to ensure basic consumer rights, the emergence of new economic players
also required revision of the possible liability subjects. Otherwise, legal
liability claims would come to nothing.
Third: With its sustainability strategy,
the European Union (EU) is focussing on a more circular economy. The Green Deal
is intended to promote business models in which products are regularly
repaired, recycled and refurbished. This brings players, who significantly
modify products outside the manufacturer's purview, within the scope of Product
Liability Law.
Consequences for companies
With the revision of European Product Liability
Law, companies are facing new liability and litigation risks. In addition to
the expansion of the product definition and the circle of economic players, the
concept of error has also been expanded. In future, product safety requirements
will also include cyber security, as well as specific requirements for user
groups, such as life-sustaining medical devices. It is also clarified that
personal injury also includes medically recognised damage to mental health. Although
the standard limitation period of three years from the injured party's
knowledge and the ten-year maximum period from placing the product on the
market remain in place, it can - and this is new - be extended to 25 years for
long-term damage to health. Litigation risks arise from the defendant's
obligation to disclose all relevant evidence, insofar as this is necessary and
proportionate.
Omission of liability limits
From a German perspective, it is of
particular interest that the new European Product Liability Law no longer
recognises any upper liability limits. German Product Liability Law currently
recognises a maximum amount of EUR 85 million for personal injury. The
Medicinal Products Act lays down separate regulations for damage caused by
medicinal products. It remains to be seen how the German government will
implement the new European Directive. Following the political will expressed in
the recitals, Member States should not maintain or introduce stricter or less
stringent provisions than those laid down in the Directive. However, this does
not yet guarantee whether the upper liability limits in Germany will cease to
apply in future.
Balancing the burden of proof
The new Product Liability Directive goes
hand in hand with a significant strengthening of consumer interests. Legal
loopholes are closed, new product risks and risks in the supply chains are
averted. However, the legal position of injured parties is not only
strengthened by the right of manufacturers to hand over evidence, but also by a
rebalanced standard of proof. Here, the new directive provides relief for
consumers, including the presumption of defectiveness in the event of a breach
of disclosure obligations, the presumption of causality in the event of typical
damage caused by a defect or, in complex cases, the presumption of
defectiveness and causality if these appear plausible.