After 40 years, the European Union has finally replaced the “old” law on liability for defective products, Council Directive 85/374/EEC, by a “new” Product Liability Directive 2024/2853 (PLD). The PLD harmonizes and increases the level of protection of natural persons within the internal market and provides for a much-needed adaptation of the law to the technological advancements and new business models.
The new law will apply to products placed on the market or put into service after December 9, 2026.[1] By the same date, the Member States are required to transpose the directive into their national laws.[2] In departure from the minimum harmonization principle applicable under the old law, the Member States are not allowed to introduce provisions that are more or less stringent than those laid down in the PLD when doing so.[3]
Against this background, companies operating within the European Union are strongly recommended to proactively prepare before the PLD becomes effective. The following contribution summarizes the most significant changes to the existing legal framework and maps out practical steps to prepare the liable parties for the potentially increased liability risk under the new law.
Expanded “product” definition
In addition to all movables, also those integrated into or inter-connected with another movable or an immovable, the term “product” under the PLD encompasses:
- Software, irrespective of the mode of its supply or usage—i.e. irrespective of whether the software is stored on a device, accessed through a communication network or cloud technologies, or supplied through a software-as-a-service model—including artificial intelligence (AI) systems and machine learning components;[4]
- Exception: Free and open-source software developed or supplied outside the course of a commercial activity;[5]
- Digital manufacturing files containing the functional information necessary to produce a tangible item;[6]
- Exception: Digital files, such as media files or e-books or the source code of software;[7]
- Product related services—including digital services—that are integrated into or inter-connected with the product in such a way that the absence of the service would prevent the product from performing one of its functions (examples: supply of traffic data in navigation systems or a voice-assistant service through which the product is controlled).[8]
Expanded “defect” definition
The PLD also broadens the concept of defectiveness. The following additional circumstances must be taken into consideration when assessing if a product is defective under the new law:
- Noncompliance with relevant product safety requirements—including safety-relevant cybersecurity standards—which can be indicated by a product recall or other intervention relating to product safety;[9]
- Unexpected effect of an inter-connected service or another product on the product—including its ability to continue learning or acquiring new features—provided that they are expected to be used together.[10]
Additional liable parties
Moreover, the list of liable economic operators has been amended and extended to include:
- Importers and authorized representatives of a non-EU manufacturer, if the manufacturer of the product or the component is established outside the European Union;[11]
- Fulfillment service providers, where no importer or authorized representative is established in the European Union;[12]
- Distributors, including online platforms, if they fail to identify a relevant economic operator established in the European Union (manufacturers, importers, authorized representatives or fulfilment service providers);[13]
- Any person that substantially modifies the product—including through software updates—outside the manufacturer’s control and puts it on the market or into service.[14]
Expanded scope of recoverable damages
The PLD has also broadened the scope of the recoverable damages. In addition to the compensation for all losses resulting from death, personal injury, and destruction of property other than the defective product itself, the PLD also stipulates the compensation for:
- Psychological harm, provided that it is medically recognized and certified;[15]
- Pain and suffering, so far as such losses can be compensated for under the applicable national law;[16] and
- Losses resulting from the destruction or corruption of data, excluding data used for professional purposes.[17]
Reversal of burden of proof
Furthermore, the PLD has introduced significant changes to the burden of proof in product liability cases, granting the injured party a possibility to establish a rebuttable presumption of defectiveness of the product and the causality between the defect and the damage.[18]
Evidence disclosure
Finally, the PLD has introduced a document production request mechanism. Under the new law, both defendants and claimants can be required to disclose relevant and material evidence in their possession.[19] This mechanism will constitute a novum to the procedural laws of many Member States.
Conclusion
In the light of the above changes, companies operating within the European Union are strongly recommended to review their liability exposure and establish suitable processes to minimize it. The following considerations are of importance.
• Review and Update Contracts: Ensure that the agreements with suppliers, distributors, and online platforms align with the expanded liability framework.
• Enhance Product Safety Protocols: Implement robust safety measures to mitigate potential liabilities, especially in connection with digital and interconnected products.
• Establish Modification Guidelines: Define, track, and document any substantial product modifications, including software updates to determine potential liability.
• Prepare for Evidence Disclosure: Develop document retention systems to preserve, manage, and timely disclose relevant evidence, if necessary.
We are happy to assist, if you would like to speak to us regarding your liability exposure or establishing suitable compliance guidelines.
[1] Rec. 63, Art. 2(1) of the PLD.
[2] Art. 22(1) of the PLD.
[3] Rec. 8, Art. 3 of the PLD.
[4] Rec. 13, Art. 4(1) of the PLD.
[5] Rec. 14, 15, Art. 2(2) of the PLD.
[6] Rec. 16, Art. 4(2) of the PLD.
[7] Rec. 13, 16 of the PLD.
[8] Rec. 17, Art. 4(3) of the PLD.
[9] Rec. 34, Art. 7(2)(f) and (g) of the PLD.
[10] Rec. 32, Art. 7(2)(c) and (d) of the PLD.
[11] Art. 8(1)(c) Nos. i, ii of the PLD.
[12] Rec. 37; Art. 8(1)(c) No. iii of the PLD.
[13] Rec. 37, 38, Art. 8(3) and (4) of the PLD.
[14] Rec. 39, 40, Art. 8(2) of the PLD.
[15] Rec. 21, Art. 6(1)(a) of the PLD.
[16] Rec. 23, Art. 6(2) of the PLD.
[17] Rec, 20, Rec. 22, Art. 6(1)(c) of the PLD.
[18] Rec. 47, 48, Art. 10 of the PLD.
[19] Rec. 42, 44, Art. 9 of the PLD.