KANBrief 3/23
In the autumn of 2022, the European Commission began modernizing EU product liability legislation by publishing drafts for an amended Product Liability Directive and a new AI Liability Directive. The European Council of Ministers and Parliament are now addressing this legislation in greater detail.
The transition to the digital age necessitates changes to the legislation governing liability, as well as that governing placing on the market. The existing Product Liability Directive, which dates back to 1985 and was transposed in Germany in 1989 with passing of the German Product Liability Act (ProdHaftG), no longer covers all damage potentially caused by products. This has given rise to legal uncertainty for companies and to a growing number of products in respect of which the consumer has no legal claim to compensation for damages caused by them (Evaluation study and proposals for the directives). In addition, the directive is to be brought into line with the recently updated General Product Safety Regulation and the Market Surveillance Regulation.
The new Product Liability Directive can be expected to apply to products of all types, including those not covered in the past. It therefore extends for example to smart products, software updates, AI systems and digital services, and also to products that have been refurbished or significantly modified. Manufacturers in the circular economy will, however, not be liable for harm caused by unmodified parts of the product.
Liability is extended to cover products from third countries that are imported into the EU by consumers themselves, for example through the online trade. In addition to importers who already face liability, it will apply in future to manufacturers' representatives and other economic operators such as online platforms that are based in the EU. Procedural changes are also planned: in order to reduce the information asymmetry favouring manufacturers to the detriment of consumers, economic operators can be obliged to disclose evidence. Altogether, the burden of proof will be eased significantly to the benefit of the injured party, but not reversed. The existing limits on liability and excess have been omitted from the draft.
Claims for compensation arising from the new Product Liability Directive in its current draft form apply only in cases of personal injury (including harm to mental health), damage to property and loss of data. This is a strict product liability that applies against the manufacturer and other economic actors regardless of fault. Claims can be made only by natural persons and only where the product is not used exclusively for professional purposes.
The new Product Liability Directive is to be accompanied by an AI Liability Directive. Where harm is caused by AI systems, the AI Liability Directive is intended to make it substantially easier for injured parties to assert their claims on a legal basis other than product liability law, for example in the event of violations of fundamental rights, or cases falling under civil liability.
To prevent legal fragmentation of the EU Member States, a harmonized legal framework for the liability of manufacturers, operators and users of artificial intelligence is to be set out. It is envisaged that in the event of a claim, the AI will be assumed to have caused the damage. Injured parties need then demonstrate only that the provider, operator or user of the AI culpably failed to comply with a relevant obligation and that a causal link is probable. In addition, manufacturers or suppliers of high-risk AI are to be required to make all relevant product information available in the event of a lawsuit.
The AI Liability Directive does not make provision on its own for legal claims for damages, but complements existing national fault-based liability regimes in the event of legal infringements caused by AI. The new, fault-based liability regimes simplify the assertion of claims for damages for all natural and legal persons.
The EU Council of Ministers has already considered the Commission's draft of the Product Liability Directive and has largely accepted it. Discussion in the European Parliament has also begun, but will last for several months. The AI Liability Directive is not to be negotiated until the second phase.
Freeric Meier
meier@kan.de