European Commission Evaluation Report: EU Product Liability Directive remains an adequate tool

Products and technologies have evolved significantly since 1985, when the EU Product Liability Directive (85/372/EEC) (the Directive) was issued. Many products that we use today will have characteristics that could not have been imagined in the 1980s and the challenges posed by these products are very different.

In light of these technological advances, the European Commission has recently carried out an evaluation of the Directive to consider its ongoing relevance and assess whether it still serves its intended purpose.

Background

The Directive’s main purpose is to strike a balance between protecting consumer safety and fostering an environment where producers are able to develop new and innovative technologies and products.

It has been incorporated into English law by the Consumer Protection Act 1987 (the CPA).

Under the Directive and CPA, a producer is strictly liable for injury or damage caused by a defective product. A product is defective if it does not meet the level of safety that the public generally are entitled to expect, taking into account all relevant circumstances. The test of ‘defect’ is necessarily broad, given that the Directive is intended to cover a very wide range of products, from toys to cars to pharmaceutical products.

Critically, a consumer does not have to prove negligence or ‘fault’ on the part of the producer.

The report

Historically, the Commission has published performance reports on the Directive every five years. This is the first of those reports to be accompanied by an evaluation of the continued relevance of the Directive.

The evaluation was carried out in response to widespread concerns that the Directive may no longer be fit for purpose and no longer an adequate tool to deal with the complexities of modern products. In particular, it addressed the question of whether the Directive, in its current form, is sufficiently flexible to deal with issues arising from modern technologies such as digitisation, the Internet of Things, artificial intelligence and cybersecurity.

The Commission concluded that despite advancements in technologies and the increased complexities of modern products, the Directive continues to serve its purpose - for the time being. It found that the Directive largely strikes a good balance between consumer protection and product innovation in the EU.

As part of its evaluation, the Commission looked at how product liability cases were resolved between 2000 and 2016. Its findings suggested that between 2000 and 2016 most European product liability claims settled out of court. In particular, settlement was negotiated in 46% of cases and 15% settled through alternative dispute resolution. Only 32% of cases were resolved through litigation.

The Commission made the following observations:

  1. Four individual cases concerning medical devices and pharmaceutical products were brought before the Court of Justice of the European Union during the reporting period, potentially highlighting specific problems in the application of the Directive to healthcare products.
  2. While there was widespread understanding that producers are liable for defects in their products, consumers felt the burden of having to prove the link between defect and damage was onerous. Nonetheless, it is a requirement that could not be set aside. Overall, the Directive achieved a balance between consumer protection and the free market.
  3. It terms of efficiency, the report was critical of the costs and length of court proceedings in some Member States, particularly in cases involving pharmaceuticals. However, the efficiency of national proceedings were not due to burdens imposed by the Directive.
  4. Whilst the Directive was found to be in line with wider EU product safety rules and legislation, to ensure such consistency is maintained, the evaluation comments that the Directive will need to keep up to date with emerging technologies, which will inevitably bring about corresponding changes in other EU legislation.

The future

In order to ensure that the Directive will remain relevant in the future:

  • The Commission intends to produce guidance in mid-2019 to address the way in which the Directive applies to artificial intelligence, robotics and the Internet of Things.
  • If necessary, it may clarify the definitions of key concepts such as ‘product’, ‘producer’, ‘defect’ and ‘damage’. However, the concept of strict liability will remain.
  • It is necessary to look closely at products like pharmaceuticals and digital technology, which may pose a challenge to the efficacy of the Directive. The report is not clear as to whether the Commission’s proposed 2019 review will include guidance on such products, although further commentary is expected given the observations raised by the Commission in relation to healthcare products.

Comment

It is noteworthy that in its robust and detailed judgment in the DePuy Ultamet metal on metal hip litigation in England and Wales, the High Court considered the meaning of ‘defect’ under the CPA, specifically in the context of a new product that is designed to improve on a previous generation of products. The decision is particularly timely, given the concerns raised by the Commission in respect of product liability claims brought in respect of healthcare products. The principles laid down in the Pinnacle Ultamet judgment will apply to any products falling within the CPA and will therefore be of significance to all manufacturers and distributors. It will provide useful guidance when considering whether a product is defective.

It remains to be seen how UK product liability laws will be shaped post Brexit, but given the EU is the UK’s main trading partner, it is likely that they will remain closely aligned with EU law.

Related item: The DePuy Pinnacle metal on metal hip litigation