What happens to product liability in the age of digitalisation?

Legal rules are constantly evolving

Have liability regimes ever remained stable? Absolutely not. The legal rules about the responsibility to pay damages to a person who has suffered an injury or property damage are constantly evolving in one way or another.

Product Liability Directive 85/374/EEC, the cornerstone defining liability for damage and injuries caused by defective products in Europe, is over 30 years old. It created a common basis for all member states and adopted the concept of strict liability and the claimant’s direct right to claim damages from the producer.

Products are tangible objects but not, for example, data or software. The directive has been a success story, making the Single Market operate in quite a uniform manner and simultaneously promoting fair competition.

During the decades since the directive, the EU Commission has published several reports on the functioning of the directive and legislation based on it in the member states. These reports have not brought up problems calling for amendments. The set-up has endured enormous changes in production and new products. However, things may change soon.

A public consultation on the directive

Two years ago, the EC launched a public consultation on the directive, particularly on the following themes:

• whether and to what extent the directive meets its objectives of guaranteeing, at EU level, the liability, without fault, of the producer for damage caused by a defective product
• whether it still corresponds to stakeholders’ needs
• whether the directive is fit for purpose where new technological developments, such as the Internet of Things and autonomous systems, are concerned

The replies have been published. The opinions varied, for example, between consumers and industries, but the survey revealed plenty of interesting areas needing further analysis.

An Expert Group on Liability and New Technologies

Last year, the EC continued by setting up an Expert Group on Liability and New Technologies. The group consists of members from academia, law firms, stakeholders such as industry and consumers, and authorities and public entities.

The work has progressed with drafts of the documents, and some results should be ready next summer. The aim is to study even the most fundamental concepts like “product” and “producer” or “defect” and “damage”. One deliverable will be a non-binding guidance for courts and practitioners on product liability, which is intended to lead to more uniform outcomes in liability.

The work will also study the role of new technologies such as software, IoT, AI, 3D printing, and service platforms. Who should, in the end, be liable for injuries and damage? It must be relatively simple to find out who is liable. Otherwise, handling and legal costs may blow up.

We in the liability insurance business, as well as our clients in the manufacturing or service industries, are keenly following the work. Can product liability be developed in an orderly fashion to represent better the influence of different factors and operators that lead to damage or injury?