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Revision of Directive 85/374/EEC on liability for defective products

The new EU Product Liability Directive 2024/2853




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On 18 November 2024, the new EU Product Liability Directive 2024/2853 was published in the EU Official Journal and will come into force on 9 December 2024. EU member states now have until 9 December 2026 to transpose the new product liability rules into national law. The previous directive 85/374/EEC is repealed with effect from 9 December 2026.

European product liability law will continue to be based on the strict principle of liability without fault (so-called strict liability), which in the Federal Republic of Germany is flanked by liability with fault pursuant to Section 823 para. 1 of the German Civil Code (so-called producer liability). The producer liability is particularly relevant for the aftermarket, since European product liability law will not and does not deal with the period after the product has been placed on the market from the point of view of averting danger in the field.

The following section provides an outlook on the new European product liability law, although some of the provisions referred to are likely to change.

 

A. Effective date and national transposition deadline

The dates for the entry into force and implementation of the EU Product Liability Directive are particularly important in practice. In this respect, Art. 22 et seq. of the Product Liability Directive are decisive. While the directive is to enter into force 20 days after its publication in the Official Journal of the EU (Art. 23), the national implementing measures are to be adopted and in force 24 months after the entry into force of the directive. The implementation period has therefore been significantly extended by a further year compared to the originally planned 12 months. In the context of the national transformation, the EU Member States must explicitly refer to the Product Liability Directive (Art. 22 para. 1).

At the same time, the old EC Product Liability Directive (Directive 85/374/EEC) will be repealed. However, it will continue to apply to all products that were placed on the market or put into service before the relevant date, Art. 21 para. 1 of the Product Liability Directive.
 

B. Purposes of the EU Product Liability Directive

The new EU Product Liability Directive is intended to fulfil several purposes. Specifically, the proposal aims to

  • ensure that a company based in the EU is always available, precisely because European consumers are increasingly buying directly from EU third countries (online) without the involvement of manufacturers or importers,
  • ensure that European product liability law is aligned even more closely with European product safety and market surveillance law, with particular reference to Decision No 768/2008/EC and product safety legislation, and
  • strengthen harmonisation through common rules on liability, thereby improving the proper functioning of the internal market.

In the final version of the EU Product Liability Directive, greater emphasis is placed on the creation of a level playing field. The first point, in turn, is becoming more important in view of the current renewed discussions about online platforms such as Temu, Shein, Wish or Alibaba, if and because numerous dangerous products are the subject of purchase processes carried out via such platforms and subsequently enter the European single market.
 

C. Extension of the product concept

The result is that the EU Product Liability Directive has remained with a broad product concept. The legislator aims at comprehensive product liability regulations in the EU. The product definition is enshrined in Art. 4 No. 1 of the Product Liability Directive. According to this, a product continues to mean all movable items, even if they are integrated into or connected to another movable or immovable object,  Art. 4 No. 1 cl. 1 of the Product Liability Directive. What is new, however, is that it is no longer intended to include only electricity, but also digital manufacturing files, raw materials and software, Art. 4 No. 1 cl. 2 of the Product Liability Directive. A digital manufacturing file is named in accordance with Art. 4 No. 2 of the Product Liability Directive a digital version of a movable item or a digital version of it, which contains the functional information necessary for the manufacture of an item. A digital construction document is therefore the basis for the manufacture of a tangible object in that it enables the automatic control of machines or tools (e.g. milling machines). 3D printers are also relevant in this context.

The clarification regarding software, which has been intended from the beginning of the legislative process, certainly is particularly important. This will put an end to the long-standing discussions regarding the relevance of software under product liability law. Covered software can be operating systems, firmware, computer programs, applications or AI systems. Neither the way in which it is provided nor the way in which it is used plays a role, i.e. it does not matter whether software is placed on the market as a stand-alone product, accessed via cloud technologies or provided as part of software-as-a-service models.

However, the source code is not software in this sense, as it is considered to be pure information. The preamble makes it clear, as it did at the beginning of the legislative process, that information should not be the subject of European product liability law.
 

D. Relevant date

Even if the placing on the market (with a view to Art. 11 para. 1 (a) of the Product Liability Directive) still marks the decisive point in time from which product liability can in principle be considered, the new criterion in Art. 7 para. 2 (e) of the Product Liability Directive must not be overlooked in this context. This is where the criteria for determining the defectiveness of a product are now specified. These are currently still listed in Art. 6 para. 1 of Directive 85/374/EEC and in § 3 para. 1 of the German Product Liability Act (ProdHaftG). As regards the criterion in question in point e), the focus is now on "the moment in timewhen the product was placed on the market or put into service or, where the manufacturer retains control over the product after that moment, the moment in time when the product left the control of the manufacturer."

This means that a product defect can be established even if the product itself was still free of defects when it was placed on the market. The prerequisite for extended liability is the continued control over the product. In this scenario, the relevant point in time is the moment from which this control ends. Continued liability is thus the flip side of product control. In this context, it should be noted that in the future there will be many more circumstances to be considered when examining the defectiveness of a product. In the corresponding catalogue of Art. 7 para. 2 of the Product Liability Directive, aspects such as artificial intelligence (AI; point c)), combined risks (point d)) or recalls ordered by the competent authorities (point g)) are also considered relevant.

Consequentially, the control of the manufacturer also plays a role in the liability exclusions in Art. 11 of the Product Liability Directive. This applies, for example, to the still-recognised development error, which is now also based on the time of putting into service and the period of product control by the manufacturer (para. 1 (e)). And it also applies to the exclusion of liability with regard to those defects that probably did not yet exist when the product was placed on the market or that only arose at a later date; because if the manufacturer continues to have control over the product, he cannot invoke this exclusion if, for example, software updates or upgrades that are necessary to maintain security are missing (para. 2 (c)). The importance of security updates will increase significantly in this context.

Finally, in the future, putting into service in accordance with Art. 4 para. 9 of the Product Liability Directive and thus the in-house manufacture of products will clearly also play a relevant role under product liability law.
 

E. Extension of the liability addressees

The updated provision in Art. 8 of the Product Liability Directive is of particular importance. It now summarises "Economic operators liable for defective products". Currently, according to Art. 1, 3 Directive 85/374/EEC, only the manufacturer is primarily liable, whereby the so-called quasi-manufacturer is also included. The importer in turn is liable as a manufacturer in accordance with Art. 3 para. 2 Directive 85/374/EEC. The supplier, on the other hand, is only liable on a subsidiary basis in accordance with Art. 3 para. 3 Directive 85/374/EEC. He is only liable if the manufacturer cannot be identified and he is unable to name the manufacturer or his supplier to the injured party within a reasonable period of time, Art. 3 para. 3 cl.1 Directive 85/374/EEC. In the Federal Republic of Germany, the supplier has at least four weeks to provide the relevant information after receiving the request from the injured party, § 4 para. 3 cl.1 ProdHaftG.

What is new is that the following players will also be liable in future:

  • the authorised representative if the manufacturer of the defective product is established outside the EU (Art. 8 para. 1 (c)(ii) of the Product Liability Directive)
  • the fulfilment service provider if the manufacturer of the defective product is established outside the EU and there is neither an importer nor an authorised representative (Art. 8 para. 1 (c) (iii) of the Product Liability Directive)

The four actors named in Art. 8 para. 1 of the Product Liability Directive - manufacturer, importer, authorised representative and fulfilment service provider - are clearly distinguished from subordinately liable suppliers and providers of online platforms, which are only brought into focus after para. 1. On the other hand, there is also a distinction from the person who significantly modifies a product.

The distributor, who is called supplier, remains liable on a subsidiary basis. He is now only liable if neither the manufacturer and importer nor the authorised representative and fulfilment service provider can be identified in accordance with Art. 8 para. 1 of the Product Liability Directive, Art. 8 para. 3 of the Product Liability Directive. Even if all of the aforementioned actors are not present, the distributor can "discharge himself" if he names the economic operator in accordance with Art. 8 para. 1 of the Product Liability Directive or his own supplier within one month of receiving the application. It is noteworthy that the supplier is subordinately liable after the fulfilment service provider.

The providers of online platforms that enable consumers to conclude distance contracts with traders are in turn treated in the same way as distributors, Art. 8 para. 4 of the Product Liability Directive. According to this, they may also be considered as potential liability addressees; de facto, however, they (like suppliers) will be able to "exonerate" themselves without any problems.

On the other hand, Art. 8 para. 4 of the Product Liability Directive does not introduce any changes, as anyone who significantly modifies a product is rightly already a manufacturer at present. In this respect, product liability law refers to the influencing of safety characteristics, which should result in such a legal consequence. A substantial modification within the meaning of product safety law is unquestionably such an influence on safety characteristics, Art. 4 No. 18 (a) of the Product Liability Directive.

It was only during the legislative process that a new Art. 8 para. 5 of the Product Liability Directive was finally adopted. The provision deals with the case that an injured party cannot obtain compensation because, in particular, none of the players named in Art. 8 para. 1-4 of the Product Liability Directive can be held liable or because they are insolvent. In this scenario, the EU Member States can utilise existing national compensation schemes or set up new compensation schemes to ensure adequate compensation. However, public funds should not be prioritised for this purpose.
 

F. Compensation

The changes in relation to compensable damage are also relevant. Firstly, there is currently not only the possibility in the EU Member States to limit "a producer's total liability for damage resulting from death or personal injury and caused by identical items with the same defect [...] to an amount which may not be less than 70 million ECU", Art. 16 para. 1 Directive 85/374/EEC. In addition, the lower threshold in the event of damage to property is 500 ECU , Art. 9 (b) Directive 85/374/EEC. In Germany, a maximum liability amount of EUR 85 million applies in accordance with § 10 para. 1 ProdHaftG and a deductible of EUR 500 in the event of property damage in accordance with § 11 ProdHaftG. The two restrictions, which do not exist in German producer liability law in accordance with Section 823 para. 1 BGB, will no longer apply in future.

Secondly, from the EU-wide date of application, there will no longer be the restriction on property damage according to which items used for professional purposes are generally not eligible for compensation. Instead, only property "used exclusively for professional purposes" is to be excluded, Art. 6 para. 1 (b) (iii) of the Product Liability Directive.

Thirdly, the loss or falsification of data "used exclusively for professional purposes" should also be relevant as damage, Art. 6 para. 1 (c) of the Product Liability Directive.
 

G. Extension of the burden of proof

The new regulations on the burden of proof in Art. 10 of the Product Liability Directive should also be emphasised, as up to now there has simply been no facilitation of the burden of proof for the injured party or plaintiff. Currently, according to Art. 4 of Directive 85/374/EEC, the injured party must prove "the damage, the defect and the causal relationship between defect and damage". In the near future, there will not only be new presumptions of defectiveness in para. 2, e.g. in the event that the claimant demonstrates "that the product does not comply with mandatory product safety requirements laid down in Union or national law " (point (b)). This therefore refers to the underlying product safety law. In addition, there is a specific presumption of causality between the defect and the damage in para. 3. A national court should then assume the defectiveness or the causality between the defect and the damage or both if it is excessively difficult for the plaintiff to provide the corresponding proof due to the technical or scientific complexity in particular (para. 4). However, the defendant may rebut any presumption (para. 5).
 

H. Duty to disclose evidence

Despite all the criticism levelled at the introduction of the disclosure of evidence/documents planned from the outset, this provision remained in Art. 9 of the Product Liability Directive until the legislative process was completed. Specifically, the EU Member States are to ensure that the defendant, at the request of an injured party who claims compensation for the damage caused by a defective product in proceedings before a state court and has submitted facts and evidence that sufficiently support the plausibility of their claim for compensation, must disclose relevant evidence under its control under the conditions specified in Art. 9 of the Product Liability Directive, Art. 9 para. 1 of the Product Liability Directive. The subject of this "investigation" can be, for example, technical documentation including a risk assessment. The (civil) courts called upon to decide will have to comment on the plausibility threshold.

With this genuinely procedural regulation, the EU is breaking new ground outside the common law regime with its disclosure and discovery procedures, especially as it has so far limited itself to substantive law in terms of product liability. In German civil procedure law, this brings back memories of §142 of the German Code of Civil Procedure (ZPO), which, however, is limited solely to documents and can also oblige the plaintiff to surrender them. The protection of confidential information and trade secrets is to be expressly taken into account in the context of the examination of necessity and proportionality, Art. 9 (3) and (4) of the Product Liability Directive.

The reason for including the disclosure of evidence is said to lie in the asymmetry of information, which lies in the fact that the injured party often does not know how a product was manufactured and how it works. This asymmetry can have a negative effect to the detriment of the injured party, especially in technically or scientifically complex cases. The disclosure in question is therefore intended to balance out precisely this imbalance.

It is important that the defendant is aware of the provision in Article 10 para. 2 (a) of the Product Liability Directive, as this states that the product is presumed to be defective if he "fails to disclose relevant evidence ". In this respect, the new disclosure obligations are thus combined with the new facilitation of evidence.

After all, there is also a corresponding duty to disclose evidence on the part of the plaintiff if this is necessary for the defendant for the purpose of defence against an action for damages. In this respect, the defendant must, of course, sufficiently prove that he needs the evidence.
 

I. Conclusion

The new EU Product Liability Directive brings with it considerable innovations that will have a particular impact on civil proceedings. In this respect, the introduction of evidence facilitation and the provicion on the disclosure of evidence should be mentioned. In conjunction with the Directive on Representative Actions (Directive (EU) 2020/1828), there will undoubtedly be an upturn in product liability law once the new European product liability law comes into force. Nevertheless, the basic framework of the regulatory concept will remain untouched. This applies in particular to the reference to strict strict liability on the one hand and to the relevant categories of defects and the dogmatics developed in this respect, e.g. on the relevance of the state of the art in science and technology in the area of design on the other. It then applies to the important exclusion period of ten years, which is retained according to Art. 17 para. 1 of the Produc Liability Directive. Art. 17 para. 2 of the Product Liability Directive only provides for a limitation period of 25 years if an injured person was unable to initiate proceedings within ten years due to the latency period of a personal injury. And it also applies to the limitation period of three years from knowledge or negligent ignorance (Art. 16 of the Product Liability Directive). However, this should not obscure the fact that the extension of liability addressees heralds a paradigm shift in product liability law. The long-standing aim of the final EU Product Liability Directive is reflected more clearly than before in the fact that any injured party should be able to claim damages from a responsible EU actor on the basis of product liability.
 

Product liability directive – download

On 18 November 2024, the new product liability directive (EU) 2024/2853 was published in the Official Journal of the EU. You can use the following link to open and download the full text of the legislation:


Directive (EU) 2024/2853 of the European Parliament and of the Council of 23 October 2024
on liability for defective products and repealing Council Directive 85/374/EEC


Posted on: 2024-11-18 (last amendment)

Author

Dr. Carsten Schucht
Dr Carsten Schucht is a lawyer and a partner at the Berlin office of the product law firm. He specialises in advising on product safety, product liability and occupational safety law.

Email: schucht@produktkanzlei.com | www.produktkanzlei.com

 

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