By Evangelia Manika Associate, LLB. MSc.
On 28 September 2022, the European Commission published the proposal for a new directive to replace the EU Product Liability Directive (85/374/EEC) (PLD). In particular, it proposes to modernise the existing rules on the strict liability of manufacturers for defective products (from smart technology to pharmaceuticals). The revised product liability rules will apply to all products, from garden chairs to cancer medicines, but also to software updates, AI systems etc.
The new PLD also allows strict product liability claims to be made for defective products that cause “loss or corruption of data” in certain circumstances whilst the scope of the existing PLD was limited only to personal injury and property damage.
The proposed rules will give businesses legal certainty so they can invest in new and innovative products as well as will ensure that consumers can get fair compensation and be effectively protected when defective products, including digital and refurbished products, cause harm. The new proposal allows, among others, compensation for damage when products like robots, drones or smart-home systems are made unsafe by software updates. Consumers will be able to get full compensation, thanks to the removal of arbitrary thresholds that limited what damage could be claimed for under the existing Directive.
Furthermore, it creates a more level playing field between EU and non-EU manufacturers since the new rules protect consumers no matter whether the defective product was made inside or outside the EU and puts consumers on an equal footing with manufacturers by requiring manufacturers to disclose information. In the same context, consumer will be allowed to access relevant information for their claims with safeguards for confidential information.
The revised rules on liability are important for the green and digital transformation, specifically to adapt to new technologies, like AI. The new rules also cover the new technologies, such as cyber vulnerabilities, digital services necessary for products to function and the updates and upgrades of software and AI systems. It is also very important that the revised PLD makes clear that all these mandatory safety requirements, including those set out in the AI Act, should be taken into account when a court assesses if a product is defective.
The new consumer-friendly Directive is expected to be adopted in the near future and thus EU states have to be ready to implement the new PLD introducing significant changes to the existing product liability regime into their national legislation.