On 7 May 2018, the European Commission published its fifth report on the performance of the EU Product Liability Directive (Directive/85/374/EEC) in the member states.

The directive introduced the concept of strict liability for producers of defective products regardless of whether the defect is their fault. This evaluation of its performance was the first one carried out by the Commission since the directive came into force in 1985.

The final May 7 report of that evaluation was written by Ernst & Young with the support of Technopolis Group and Valdani Vicari & Associati.

The evaluation analyses two main points: whether the directive still meets its original objectives of ensuring liability of producers, the functioning of the single market, and the protection and compensation of injured people; and whether the directive demonstrates effectiveness, efficiency, coherence, relevance, and EU added value.

Insights

The evaluation was based on desk research at the national level, and field research. The report cautions that not all cases relating to the directive have been published and are available, and that field research was affected by a low number of respondents. Despite these caveats, the report reveals how differently the directive operates within each member state of the EU-28.

For example, the evaluation shows that most cases (46%) are settled out of court, 32% is resolved in court, and a substantial number (15%) is settled through alternative dispute resolution. The report also reveals that consumers have been largely effective in getting compensation through litigation. Around 60% of the claims (476 out of 798) for defective products were successful between 2000 and 2016.

Another finding in the report: the difficulties consumers encounter in getting compensation through litigation differs per country. In the Netherlands, proving a defect is the highest burden. In Spain, it appears to be most difficult to prove a causal link between a defect and damage. Interestingly, the development risks defense is more often a reason for rejection of a claim in Italy and France than in other countries. In Ireland, Netherlands, and Spain, claims are more frequently rejected due to the expiration of the three-year limitation period.

Overall, the most frequent reasons for rejecting a defective product claim is the burden of proof of the defect, and the causal link between defect and damage. Together, they account for 53% of the rejected claims. Burden of proof rejections are particularly high in the medical and pharmaceutical sector.

Emerging technologies

According to the EC, the evaluation showed that even though products are much more complex today than in 1985, the Product Liability Directive continues to be an adequate tool.

The Commission, however, continues to review the directive, and announced in its report that its next report in mid 2019 will contain guidance on the broader implications of Artificial Intelligence, Internet of Things, and robotics vis-à-vis liability and safety frameworks such as the Machinery Directive (on which the Commission also published a report on 7 May 2018).

The Commission announced that, if necessary, it will update certain aspects of the Directive, such as the concepts of ‘defect’, ‘damage’, ‘product’ and ‘producer’. However, the overall principle of strict liability will remain intact.

The report can be downloaded here and the evaluation (233 pages) here.