Political agreement reached on the revised Product Liability Directive

On 14 December 2023, the EU Parliament and the Council reached a political agreement to revise the almost four-decade old Product Liability Directive (“PLD”). From the point of view of potential defendants, the amendments – including an extension of the scope of covered economic actors and products, new rules on a reduced standard for the burden of proof as well as on disclosure and longer expiry periods – have the potential to change the current liability landscape significantly. They should thus prepare carefully for the new, claimant-friendly product liability regime.

The new provisions

The compromise text agreed upon has not yet been made public and it may still take a couple of weeks until it is released. However, based on the Parliament’s press release and the Council’s press release, some of the key amendments to the EU product liability rules are the following (see our previous blog post on the institutions’ initial positions):

Expanded scope of application

• Products. The definition of in-scope “products” will cover digital manufacturing files and software (including AI). However, free and open-source software that is developed or supplied outside the course of a commercial activity will be excluded from the scope of the revised PLD.

• Economic operators liable for defective products:

• The revised PLD seeks to ensure that there will always be an EU-based business which can be held liable for damages caused by a defective product, even if the product was not bought in the EU. The scope has therefore been broadened to not only include importers in cases where the manufacturer of the defective product is established outside the EU, but also authorised representatives and, as a last resort, fulfilment service providers as addressees of product liability claims. Distributors and online platforms may also be held liable under certain circumstances.

• In addition, to accommodate the realities of the circular economy, the person or company that substantially modifies a product outside the manufacturer’s control and thereafter makes it available on the market or puts it into service, will be held liable as the manufacturer of such modified product.

Easier proof of defectiveness and causation and access to evidence

One aim of the revised PLD is to simplify the burden of proof for claimants seeking compensation. To that effect, a series of new presumptions of defectiveness and/or of causation will be introduced. For example, one such presumption will be triggered when the claimant (i) is faced with excessive difficulties to prove the defectiveness of the product or the causal link between this defectiveness and the damage; and (ii) establishes that the product is likely to be defective or that its defectiveness is a likely cause of the damage. It remains to be seen whether this will lead to an actual simplification in practice or whether it will create new uncertainty regarding the requirements of likelihood. In addition, the revised PLD will establish a mechanism for the disclosure of evidence that is deemed “necessary and proportionate”.

Broader recoverable damages

The definition of “damage” under the revised PLD will be extended to include medically recognised damage to psychological health, as well as the destruction or corruption of data.

Longer expiry period

Finally, the institutions also agreed on an extended expiry period of 25 years if the claimant was not able to initiate proceedings due to the latency of a personal injury. The negotiators agreed from the outset that such a provision should be created for special cases in addition to the general expiry period of 10 years. However, the exact length of the period was initially controversial and the compromise that has now been reached is at the upper end of the proposals put forward. For defendants, the new, very long expiry period could entail incalculable liability risks depending on how it will be applied in practice.

Next steps

Formal adoption by the Council and the Parliament, publication in the Official Journal of the European Union and the related entry into force of the revised PLD are expected to occur in early 2024. The revised PLD will then have to be transposed into national legislation within a 24-month period. The new rules will apply to products placed on the market 24 months after entry into force of the new PLD.

Stay tuned on ProductLiabilityLinks for a more in-depth analysis of the revised PLD once the final compromise text will be made public.