EU product liability reform – what are the implications for the UK?

The European Parliament has approved the EU Product Liability Directive and it now awaits formal adoption from the Council of the EU. Once this is done, it will enter into force 20 days after its publication in the Official Journal of the EU and the new rules will apply to products placed on the market 24 months after the Directive comes into force. In short, member states will have a period of 24 months to transpose the content into national law.  

The Directive, which replaces PL Directive 85/374/EEC (issued in 1985), amounts to the most radical reform of the law governing product liability for over 40 years.

We examine both the main changes and, given the UK’s status outside the EU, what this will mean for manufacturers, producers and sellers in the UK.

The main changes 

• The definition of “product” will be widened to include software, digital manufacturing of files (i.e. 3D printing) and raw materials (such as electricity).
• The lack of any software updates and cyber security vulnerabilities will be taken into account when determining the “defectiveness” of a product, meaning that software updates will be caught within the definition of “product” too.
• The Directive will apply to the manufacturers and sellers of white label goods and to both fulfillment service providers and intermediaries.
• The burden of proof will be more focused on manufacturers. Once a claimant has demonstrated the defect and/or the causal link between the defectiveness and the damage, it will be for the manufacturers to disprove the claim.

There is a new disclosure duty placed on defendants to disclose necessary information in court in cases where the injured person has provided sufficient evidence to support a plausible claim for compensation

• The limitation period of 10 years currently applicable to claims where the damage is latent or hidden will be lengthened to 25 years, with this extension of time being applicable to exceptional cases.
• The Directive will also allow the recovery of damages for “medically recognised” psychological injury.
• A product will be considered defective when it does not provide the safety that an “average person” (as opposed to the public at large) is entitled to expect.
• Destruction of data for professional purposes should not be compensated if the economic loss caused is below €100 Euros.
• Legislation will ultimately encompass Artificial Intelligence (AI), though the AI Liability Directive, at present is still in draft form.

The UK position 

Presently, both common law and the Consumer Protection Act [1987] govern the liability of producers and manufacturers towards consumers. In the King’s Speech (17 July 2024), by way of the Product Safety and Metrology Bill, the new Government set out its broad intentions to “maintain high product safety” and to “future proof compliance and regulation in the digital age”.

Whilst the Bill allows the UK to mirror or diverge from updated EU Rules, it appears highly probable that the UK, in time, will introduce new legislation compatible with that set out in the EU Product Liability Directive.

The draft Bill sets out the need to respond to new products and opportunities, citing both the fire risk associated with E-bikes and lithium iron batteries and how the UK must ensure the responsibilities of online marketplaces.   

Commentary 

Although the UK sits outside the European Union and has no obligation to transpose the Directive into national law, the Government’s recognition that updates and reforms are needed gives a clear steer that it intends to mirror and not to diverge from the EU on product safety.

 Once enacted, this will provide consumers with wider grounds to pursue civil actions and make it easier to litigate both individually and collectively. Benefits are likely to include increased product safety and regulation which is compatible with the digital age.

Businesses which export goods to the EU (and vice versa) will need to be aware of how the legislation is changing and what impact it may have on their liability for defective goods. Businesses need to monitor, in particular, legislative updates and ensure that they have robust and comprehensive compliance systems to ensure that their products meet EU and UK safety standards. This will put them in the strongest position to defend claims which may be presented.

Producers, manufacturers, retailers, intermediaries and insurers would be wise to start planning now for the changes which appear inevitable.