EU and the UK have been looking to 'future proof' their product liability legislation against technological and environmental advances.
The UK's current consumer protection legislation was implemented initially back in 1987 by virtue of the Consumer Protection Act 1987 (the CPA). This was introduced to comply with the EU Product Liability Directive (85/374/EEC) (the PLD). In short, the CPA established a no-fault/strict liability regime to enable claimants to claim compensation from the producer of a defective product. Both the PLD and CPA now over 30 years old. The environment in which goods are bought and sold has changed with more and more sales being conducted online. Technology has developed at speed with the increased use of software, including AI, incorporated into products. Both of these developments have made it more challenging for consumers to seek redress if something goes wrong with products they have purchased. The Green Agenda, and the need to repair and re-use rather than dump and buy new, has also been brought into sharp focus.
This has meant that both the EU and the UK have been looking again at product liability legislation with an eye to making sure it is fit for purpose in these times (and to future proof it for further technology and environmental advances).
Focussing on the EU firstly, the European Commission published a draft updated Product Liability Directive in September 2022. This draft seeks to do the following:
- expand the scope of the Product Liability Directive to cover intangible products like software, digital content, data, AI systems and AI enabled goods
- the scope of potential defendants to be increased to include software developers, providers of digital services and AI system providers
- the definition of damages has been extended to include specific reference to any loss or corruption of data that is not used exclusively for professional purposes
- alleviate or reverse the burden of proof (from claimant to defendant) in cases where the court considers the claimant faces excessive difficulty in proving the defectiveness of a product due to complex technical or scientific issues
- impose a new disclosure obligation on manufacturers, software developers and importers, which could see complex technical information being passed to consumers to assist with bringing claims.
The wheels of EU legislation grind slowly however, and the draft must go through the EU's administrative process. We are, therefore, unlikely to see the proposed Product Liability Directive become law in member states for some time, and not until at least 2024/2025.
The proposals will, however, if introduced, be likely to have a significant impact on product manufacturers. There is the potential for an increase in product liability litigation due to the wider definition of "product".
Alongside review of the PLD, the EU has also reviewed the General Product Safety Directive (2001/95/EC) (the GPSD) which governs the safety regime for consumer products. It covers, amongst other things, steps to be taken for recalls and withdrawal of products from the market. The new General Product Safety Regulation (the GPSR) is designed to replace the GPSD. On 30 March 2023, the EU Parliament endorsed the content of the GPSR and it is now to be endorsed at European Council level before it comes into force. It is likely to be early 2025 before the GPSR will apply.
As it is Regulation (as opposed to a Directive) it will be directly applicable to member states. However, it will also be relevant to any economic operator who is involved in any way in the sale of products into the EU market. Even companies who are not established within the EU will, therefore, need to comply with the new rules when they are brought into effect. These include:
- an economic operator must be established in the EU before products can be placed on the EU market and the economic operator will need to appoint a "responsible person"
- details of the economic operator must be included on the product or its packaging
- providers of online marketplaces must:
- identify and register a single contact point for market surveillance authorities;
- publish safety warnings when publishing online adverts, and
- directly notify consumers who bought a product that was subject to a recall.
- new rules for reporting an "accident" with different reporting obligations for online marketplaces
- detailed provisions for the conduct of recalls
- new definition of "product" to include reference to interconnected products.
But how does all of the above affect UK producers/manufacturers?
In short, it does not at present. However, if the new GPSR is not replicated in the UK, companies selling products on both the UK and EU markets could find themselves in the unfortunate position of having to comply with two different sets of regulatory requirements.
In the UK, the Office for Product Safety and Standards (the OPSS) is conducting its own review of the UK's product safety and liability regimes with a view to ensuring that they are fit for purpose in this modern age. It remains to be seen if the UK will bring in changes which closely reflect what the EU is doing. Manufacturers will no doubt hope that standards are very similar, if not identical, to avoid the burden of potentially complying with two separate product safety and product liability regimes.
Watch this space.....
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