Radical Changes to Europe's Product Liability Rules Adopted
Dramatic changes to EU product liability rules are expected to drive an increase in litigation.
On November 18, 2024, the European Union published its new Product Liability Directive (the "PLD"), which applies to products placed on the market or put into service after December 9, 2026. Transposition of the PLD into the domestic laws of the EU Member States must be completed by the same date.
From a litigation perspective, plaintiffs in the future could have European courts order disclosure of evidence based on a claim being "plausible." Moreover, in certain circumstances, plaintiffs will not need to prove a defect but instead be able to rely on a presumption, where a plaintiff will only need to show that a defect was "likely." See our Commentary, "Reversal of Burden of Proof Under Proposal for a New EU Product Liability Directive" (November 7, 2023) for further details.
Other changes include a broadening of the definition of "product" (expanded to digital manufacturing files and software), the extension of liability to, for example, importers, and the addition of a 25-year statute of limitations in the case of personal injury symptoms that are slow to emerge.
The new PLD is a landmark revision of existing EU product liability rules. The European Union believes these will enhance the safety and accountability of products on the market, and that it addresses the growing complexities posed by emerging technologies, such as artificial intelligence and digital products. A separate proposal for an Artificial Intelligence Liability Directive is yet to be adopted.
Most EU Member States by now have also implemented the Representative Actions Directive, which foresees the adoption of collective redress tools across the European Union. Third-party litigation funding ("TPLF"), which provides financial resources to litigants in exchange for a share of the proceeds of litigation, is also gaining momentum in the European Union. Concerns about TPLF, particularly in the context of collective actions, include conflicts of interest, increased litigation costs, and questionable motives on the part of plaintiff organizations. These concerns have led to calls for stronger EU-wide rules to ensure transparency, fairness, and genuine consumer protection in funded litigation.
Businesses need to be conscious of the risks caused by increased EU regulation, particularly when married with new collective redress mechanisms and unregulated TPLF.
