Considerations on COM(2022)495 - Liability for defective products - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2022)495 - Liability for defective products. |
|---|---|
| document | COM(2022)495  |
| date | September 28, 2022 |
(2) Liability without fault on the part of the relevant economic operator remains the sole means of adequately solving the problem of a fair apportionment of the risks inherent in modern technological production.
(3) Directive 85/374/EEC needs to be revised in light of developments related to new technologies, including artificial intelligence (AI), new circular economy business models and new global supply chains, which have led to inconsistences and legal uncertainty, in particular as regards the meaning of the term ‘product’. Experience gained from applying Directive 85/374/EEC has also shown that injured persons face difficulties obtaining compensation due to restrictions on making compensation claims and due to challenges in gathering evidence to prove liability, especially in light of increasing technical and scientific complexity. This includes claims for damages related to new technologies, including AI. The revision will therefore encourage the roll-out and uptake of such new technologies, including AI, while ensuring that claimants can enjoy the same level of protection irrespective of the technology involved.
(4) A revision of Directive 85/374/EEC is also needed in order to ensure coherence and consistency with product safety and market surveillance legislation at Union and national level. In addition, there is a need to clarify basic notions and concepts to ensure coherence and legal certainty and to reflect recent case law of the Court of Justice of the European Union.
(5) Considering the extensive nature of the amendments that would be required and in order to ensure clarity and legal certainty, Directive 85/374/EEC should be repealed and replaced with a new Directive.
(6) In order to ensure the Union’s product liability regime is comprehensive, no-fault liability for defective products should apply to all movables, including when they are integrated into other movables or installed in immovables.
(7) Liability for defective products should not apply to damage arising from nuclear accidents, in so far as liability for such damage is covered by international conventions ratified by Member States.
(8) In order to create a genuine internal market with a high and uniform level of consumer protection, and to reflect the case law of the Court of Justice, Member States should not be, in respect of matters within the scope of this Directive, maintain or introduce more, or less, stringent provisions than those laid down in this Directive.
(9) Under the legal systems of Member States an injured person may have a claim for damages on the basis of contractual liability or on grounds of non-contractual liability that do not concern the defectiveness of a product, for example liability based on warranty or on fault. This includes the provisions of the [AI Liability Directive …/… of the European Parliament and of the Council], which lays down common rules on the disclosure of information and the burden of proof in the context of fault-based claims for damages caused by an AI system. Such provisions, which also serve to attain inter alia the objective of effective protection of consumers, should remain unaffected by this Directive.
(10) In certain Member States, injured persons may be entitled to make claims for damages caused by pharmaceutical products under a special national liability system, with the result that effective protection of consumers in the pharmaceutical sector is already attained. The right to make such claims should remain unaffected by this Directive.
(11) Decision No 768/2008/EC 40 of the European Parliament and of the Council lays down common principles and reference provisions intended to apply across sectoral product legislation. In order to ensure consistency with such legislation, it is appropriate to align certain provisions of this Directive, in particular the definitions, to that Decision.
(12) Products in the digital age can be tangible or intangible. Software, such as operating systems, firmware, computer programs, applications or AI systems, is increasingly common on the market and plays an increasingly important role for product safety. Software is capable of being placed on the market as a standalone product and may subsequently be integrated into other products as a component, and is capable of causing damage through its execution. In the interest of legal certainty it should therefore be clarified that software is a product for the purposes of applying no-fault liability, irrespective of the mode of its supply or usage, and therefore irrespective of whether the software is stored on a device or accessed through cloud technologies. The source code of software, however, is not to be considered as a product for the purposes of this Directive as this is pure information. The developer or producer of software, including AI system providers within the meaning of [Regulation (EU) …/… (AI Act)], should be treated as a manufacturer.
(13) In order not to hamper innovation or research, this Directive should not apply to free and open-source software developed or supplied outside the course of a commercial activity. This is in particular the case for software, including its source code and modified versions, that is openly shared and freely accessible, usable, modifiable and redistributable. However where software is supplied in exchange for a price or personal data is used other than exclusively for improving the security, compatibility or interoperability of the software, and is therefore supplied in the course of a commercial activity, the Directive should apply.
(14) Digital manufacturing files, which contain the functional information necessary to produce a tangible item by enabling the automated control of machinery or tools, such as drills, lathes, mills and 3D printers, should be considered as products, in order to ensure consumer protection in cases where such files are defective. For the avoidance of doubt, it should also be clarified that electricity is a product.
(15) It is becoming increasingly common for digital services to be integrated in or inter-connected with a product in such a way that the absence of the service would prevent the product from performing one of its functions, for example the continuous supply of traffic data in a navigation system. While this Directive should not apply to services as such, it is necessary to extend no-fault liability to such digital services as they determine the safety of the product just as much as physical or digital components. Such related services should be considered as components of the product to which they are inter-connected, when they are within the control of the manufacturer of that product, in the sense that they are supplied by the manufacturer itself or that the manufacturer recommends them or otherwise influences their supply by a third party.
(16) In recognition of the growing relevance and value of intangible assets, the loss or corruption of data, such as content deleted from a hard drive, should also be compensated, including the cost of recovering or restoring the data. As a result, the protection of consumers requires compensation for material losses resulting not only from death or personal injury, such as funeral or medical expenses or lost income, and from damage to property, but also for loss or corruption of data. Nevertheless, compensation for infringements of Regulation (EU) 2016/679 of the European Parliament and of the Council 41 , Directive 2002/58/EC of the European Parliament and of the Council 42 , Directive (EU) 2016/680 of the European Parliament and of the Council 43 and Regulation (EU) 2018/1725 of the European Parliament and of the Council 44 is not affected by this Directive.
(17) In the interests of legal certainty, it should be clarified that personal injury includes medically recognised damage to psychological health.
(18) While Member States should provide full and proper compensation for all material losses resulting from death, or personal injury, or damage to or destruction of property and data loss or corruption, rules on calculating compensation should be laid down by Member States. Furthermore, this Directive should not affect national rules relating to non-material damage.
(19) In order to protect consumers, damage to any property owned by a natural person should be compensated. Since property is increasingly used for both private and professional purposes, it is appropriate to provide for the compensation of damage to such mixed-use property. In light of this Directive’s aim to protect consumers, property used exclusively for professional purposes should be excluded from its scope.
(20) This Directive should apply to products placed on the market or, where relevant, put into service in the course of a commercial activity, whether in return for payment or free of charge, for example products supplied in the context of a sponsoring campaign or products manufactured for the provision of a service financed by public funds, since this mode of supply still has an economic or business character.
(21) This Directive should not affect the various means of seeking redress at national level, whether through court proceedings, non-court solutions, alternative dispute resolution or representative actions under Directive (EU) 2020/1828 45 of the European Parliament and of the Council or under national collective redress schemes.
(22) In order to protect the health and property of consumers, the defectiveness of a product should be determined by reference not to its fitness for use but to the lack of the safety that the public at large is entitled to expect. The assessment of defectiveness should involve an objective analysis and not refer to the safety that any particular person is entitled to expect. The safety that the public at large is entitled to expect should be assessed by taking into account, inter alia, the intended purpose, the objective characteristics and the properties of the product in question as well as the specific requirements of the group of users for whom the product is intended. Some products, such as life-sustaining medical devices, entail an especially high risk of damage to people and therefore give rise to particularly high safety expectations. In order to take such expectations into account, it should be possible for a court to find a product defective without establishing its actual defectiveness, where it belongs to the same production series as a product already proven to be defective.
(23) In order to reflect the increasing prevalence of inter-connected products, the assessment of a product’s safety should also take into account the effects of other products on the product in question. The effect on a product’s safety of its ability to learn after deployment should also be taken into account, to reflect the legitimate expectation that a product’s software and underlying algorithms are designed in such a way as to prevent hazardous product behaviour. In order to reflect that in the digital age many products remain within the manufacturer’s control beyond the moment at which they are placed on the market, the moment in time at which a product leaves the manufacturer’s control should also be taken into account in the assessment of a product’s safety. A product can also be found to be defective on account of its cybersecurity vulnerability.
(24) In order to reflect the relevance of product safety and market surveillance legislation for determining the level of safety that the public at large is entitled to expect, it should be clarified that safety requirements, including safety-relevant cybersecurity requirements, and interventions by regulatory authorities, such as issuing product recalls, or by economic operators themselves, should also be taken into account in that assessment. Such interventions should, however, not of themselves create a presumption of defectiveness.
(25) In the interests of consumer choice and in order to encourage innovation, the existence, or subsequent placing, on the market of a better product should not in itself lead to the conclusion that a product is defective. Equally, the supply of updates or upgrades to a product should not in itself lead to the conclusion that a previous version of the product is defective.
(26) The protection of the consumer requires that any manufacturer involved in the production process can be made liable, in so far as their product or a component supplied by them is defective. Where a manufacturer integrates a defective component from another manufacturer into a product, an injured person should be able to seek compensation for the same damage from either the manufacturer of the product or from the manufacturer of the component.
(27) In order to ensure that injured persons have an enforceable claim for compensation where a manufacturer is established outside the Union, it should be possible to hold the importer of the product and the authorised representative of the manufacturer liable. Practical experience of market surveillance has shown that supply chains sometimes involve economic operators whose novel form means that they do not fit easily into the traditional supply chains under the existing legal framework. Such is the case, in particular, with fulfilment service providers, which perform many of the same functions as importers but which might not always correspond to the traditional definition of importer in Union law. In light of the role of fulfilment service providers as economic operators in the product safety and market surveillance framework, in particular in Regulation (EU) 2019/1020 of the European Parliament and of the Council 46 , it should be possible to hold them liable, but given the subsidiary nature of that role, they should be liable only where no importer or authorised representative is based in the Union. In the interests of channelling liability in an effective manner towards manufacturers, importers, authorised representatives and fulfilment service providers, it should be possible to hold distributors liable only where they fail to promptly identify a relevant economic operator based in the Union.
(28) Online selling has grown consistently and steadily, creating new business models and new actors in the market such as online platforms. [Regulation […/…] on a Single Market for Digital Services (Digital Services Act)] and [Regulation […/…] on General Product Safety] regulate, inter alia, the responsibility and accountability of online platforms with regard to illegal content, including products. When online platforms perform the role of manufacturer, importer or distributor in respect of a defective product, they should be liable on the same terms as such economic operators. When online platforms play a mere intermediary role in the sale of products between traders and consumers, they are covered by a conditional liability exemption under the Digital Services Act. However, the Digital Services Act establishes that online platforms that allow consumers to conclude distance contracts with traders are not exempt from liability under consumer protection law where they present the product or otherwise enable the specific transaction in question in a way that would lead an average consumer to believe that the product is provided either by the online platform itself or by a trader acting under its authority or control. In keeping with this principle, when online platforms do so present the product or otherwise enable the specific transaction, it should be possible to hold them liable, in the same way as distributors under this Directive. That means that they would be liable only when they do so present the product or otherwise enable the specific transaction, and only where the online platform fails to promptly identify a relevant economic operator based in the Union.
(29) In the transition from a linear to a circular economy, products are designed to be more durable, reusable, reparable and upgradable. The Union is also promoting innovative and sustainable ways of production and consumption that prolong the functionality of products and components, such as remanufacturing, refurbishment and repair. 47 . In addition, products allow for modifications through changes to software, including upgrades. When a product is modified substantially outside the control of the original manufacturer, it is considered to be a new product and it should be possible to hold the person that made the substantial modification liable as a manufacturer of the modified product, since under relevant Union legislation they are responsible for the product’s compliance with safety requirements. Whether a modification is substantial is determined according to criteria set out in relevant Union and national safety legislation, such as modifications that change the original intended functions or affect the product’s compliance with applicable safety requirements. In the interests of a fair apportionment of risks in the circular economy, an economic operator that makes a substantial modification should be exempted from liability if it can prove that the damage is related to a part of the product not affected by the modification. Economic operators that carry out repairs or other operations that do not involve substantial modifications should not be subject to liability under this Directive.
(30) In light of the imposition on economic operators of liability irrespective of fault, and with a view to achieving a fair apportionment of risk, the injured person claiming compensation for damage caused by a defective product should bear the burden of proving the damage, the defectiveness of a product and the causal link between the two. Injured persons, are, however, often at a significant disadvantage compared to manufacturers in terms of access to, and understanding of, information on how a product was produced and how it operates. This asymmetry of information can undermine the fair apportionment of risk, in particular in cases involving technical or scientific complexity.
(31) It is therefore necessary to facilitate claimants’ access to evidence to be used in legal proceedings, while ensuring that such access is limited to that which is necessary and proportionate, and that confidential information and trade secrets are protected. Such evidence should also include documents that have to be created ex novo by the defendant by compiling or classifying the available evidence.
(32) In respect of trade secrets within the meaning of Directive (EU) 2016/943 of the European Parliament and of the Council 48 , national courts should be empowered to take specific measures to ensure the confidentiality of trade secrets during and after the proceedings, while achieving a fair and proportionate balance between the interest of the trade-secret holder to secrecy and the interest of the injured person. This should include at least measures to restrict access to documents containing trade secrets or alleged trade secrets and access to hearings to a limited number of people, or allowing access to redacted documents or transcripts of hearings. When deciding on such measures, national courts should take into account: (i) the need to ensure the right to an effective remedy and to a fair trial; (ii) the legitimate interests of the parties and, where appropriate, of third parties; and (iii) any potential harm for either of the parties, and, where appropriate, for third parties, resulting from the granting or rejection of such measures.
(33) It is also necessary to alleviate the claimant’s burden of proof provided that certain conditions are fulfilled. Rebuttable presumptions of fact are a common mechanism for alleviating a claimant’s evidential difficulties, and allow a court to base the existence of defectiveness or causal link on the presence of another fact that has been proven, while preserving the rights of the defendant. In order to provide an incentive to comply with the obligation to disclose information, national courts should presume the defectiveness of a product where a defendant fails to comply with such an obligation. Many legislative and mandatory safety requirements have been adopted in order to protect consumers and the public from the risk of harm. In order to reinforce the close relationship between product safety rules and liability rules, non-compliance with such requirements should also result in a presumption of defectiveness. This includes cases in which a product is not equipped with the means to log information about the operation of the product as required under Union or national law. The same should apply in the case of obvious malfunction, such as a glass bottle that explodes in the course of normal use, since it is unnecessarily burdensome to require a claimant to prove defectiveness when the circumstances are such that its existence is undisputed.
(34) National courts should also presume the defectiveness of a product or the causal link between the damage and the defectiveness, or both, where, notwithstanding the defendant’s disclosure of information, it would be excessively difficult for the claimant, in light of the technical or scientific complexity of the case, to prove its defectiveness or the causal link, or both. In such cases, requiring proof would undermine the effectiveness of the right to compensation. Therefore, given that manufacturers have expert knowledge and are better informed than the injured person, it should be for them to rebut the presumption. Technical or scientific complexity should be determined by national courts on a case-by-case basis, taking into account various factors. Those factors should include the complex nature of the product, such as an innovative medical device; the complex nature of the technology used, such as machine learning; the complex nature of the information and data to be analysed by the claimant; and the complex nature of the causal link, such as a link between a pharmaceutical or food product and the onset of a health condition, or a link that, in order to be proven, would require the claimant to explain the inner workings of an AI system. The assessment of excessive difficulties should also be made by national courts on a case-by-case basis. While a claimant should provide arguments to demonstrate excessive difficulties, proof of such difficulties should not be required. For example, in a claim concerning an AI system, the claimant should, for the court to decide that excessive difficulties exist, neither be required to explain the AI system’s specific characteristics nor how these characteristics make it harder to establish the causal link. The defendant should have the possibility to contest the existence of excessive difficulties.
(35) In order to maintain a fair apportionment of risk, and to avoid a reversal of the burden of proof, a claimant should nevertheless, in order to benefit from the presumption, be required to demonstrate, on the basis of sufficiently relevant evidence, that it is likely that, where the claimant’s difficulties relate to proving defectiveness, the product was defective, or that, where the claimant’s difficulties relate to proving the causal link, its defectiveness is a likely cause of the damage.
(36) In the interest of a fair apportionment of risk, economic operators should be exempted from liability if they can prove the existence of specific exonerating circumstances. They should not be liable where they can prove that a person other than themselves has caused the product to leave the manufacturing process against their will or that compliance with mandatory regulations was the very reason for the product’s defectiveness.
(37) The moment of placing on the market or putting into service is normally the moment at which a product leaves the control of the manufacturer, while for distributors it is the moment when they make the product available on the market. Therefore manufacturers should be exempted from liability where they prove that it is probable that the defectiveness that caused the damage did not exist when they placed the product on the market or put it into service or that it came into being after that moment. However, since digital technologies allow manufacturers to exercise control beyond the moment of placing the product on the market or putting into service, manufacturers should remain liable for defectiveness that comes into being after that moment as a result of software or related services within their control, be it in the form of upgrades or updates or machine-learning algorithms. Such software or related services should be considered within the manufacturer’s control where they are supplied by that manufacturer or where that manufacturer authorises them or otherwise influences their supply by a third party.
(38) The possibility for economic operators to avoid liability by proving that a defect came into being after they placed the product on the market or put it into service should also be restricted when a product’s defectiveness consists in the lack of software updates or upgrades necessary to address cybersecurity vulnerabilities and maintain the product’s safety. Such vulnerabilities can affect the product in such a way that it causes damage within the meaning of this Directive. In recognition of manufacturers’ responsibilities under Union law for the safety of products throughout their lifecycle, such as under Regulation (EU) 2017/745 of the European Parliament and of the Council 49 , manufacturers should also be liable for damage caused by their failure to supply software security updates or upgrades that are necessary to address the product’s vulnerabilities in response to evolving cybersecurity risks. Such liability should not apply where the supply or installation of such software is beyond the manufacturer’s control, for example where the owner of the product does not install an update or upgrade supplied for the purpose of ensuring or maintaining the level of safety of the product.
(39) In the interests of a fair apportionment of risks, manufacturers should also be exempted from liability if they prove that the state of scientific and technical knowledge, determined with reference to the most advanced level of objective knowledge accessible and not to the actual knowledge of the manufacturer in question, while the product was within their control was such that the existence of defectiveness could not be discovered.
(40) Situations may arise in which two or more parties are liable for the same damage, in particular where a defective component is integrated into a product that causes damage. In such a case, the injured person should be able to seek compensation both from the manufacturer that integrated the defective component into its product and from the manufacturer of the defective component itself. In order to ensure consumer protection, all parties should be held liable jointly and severally in such situations.
(41) Situations may arise in which the acts and omissions of persons other than a potentially liable economic operator contribute, in addition to the defectiveness of the product, to the cause of the damage suffered, such as a third party exploiting a cybersecurity vulnerability of a product. In the interests of consumer protection, where a product is defective, for example due to a vulnerability that makes the product less safe than the public at large is entitled to expect, the liability of the economic operator should not be reduced as a result of such acts or omissions. However, it should be possible to reduce or disallow the economic operator’s liability where injured persons themselves have negligently contributed to the cause of the damage.
(42) The objective of consumer protection would be undermined if it were possible to limit or exclude an economic operator’s liability through contractual provisions. Therefore no contractual derogations should be permitted. For the same reason, it should not be possible for provisions of national law to limit or exclude liability, such as by setting financial ceilings on an economic operator’s liability.
(43) Given that products age over time, and that higher safety standards are developed as the state of science and technology progresses, it would not be reasonable to make manufacturers liable for an unlimited period of time for the defectiveness of their products. Therefore, the liability should be subject to a reasonable length of time, that is 10 years following placing on the market, without prejudice to claims pending in legal proceedings. In order to avoid unreasonably denying the possibility of compensation, the limitation period should be 15 years in cases where the symptoms of a personal injury are, according to medical evidence, slow to emerge.
(44) Since substantially modified products are essentially new products, the limitation period should restart after a product has been substantially modified, for example as a result of remanufacturing, that modify a product in such a way that its compliance with the applicable safety requirements may be affected.
(45) In order to facilitate harmonised interpretation of this Directive by national courts, Member States should be required to publish relevant court judgments on product liability.
(46) The Commission should carry out an evaluation of this Directive. Pursuant to paragraph 22 of the Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on Better Law-Making 50 , that evaluation should be based on the five criteria of efficiency, effectiveness, relevance, coherence and EU value added and should provide the basis for impact assessments of possible further measures. For reasons of legal certainty, this Directive should not apply to products placed or put into service on the Union market before the date of its transposition. It is necessary to provide for transitional arrangements in order to ensure continued liability under Directive 85/374/EEC for damage that caused by defective products which have been placed on the market or put into service before that date.
(47) Since the objectives of this Directive, namely to ensure the functioning of the internal market, undistorted competition and a high level of consumer protection, cannot be sufficiently achieved by the Member States due to the Union-wide nature of the market in goods but can rather, by reason of the harmonising effect of common rules on liability, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.