The Product Liability Directive, first enacted in 1985, was a landmark piece of European legislation that transformed how product liability claims were handled across the European Union (EU).
Before the Directive, laws varied significantly across EU member states, creating uncertainty for both consumers and businesses. Consumers faced challenges in seeking redress when harmed by products, as national laws differed in how they allocated responsibility. Businesses, especially those operating in multiple European markets, had to navigate a complex patchwork of legal standards.
The new regime was intended to bridge these gaps, providing uniform rules across all member states, to ensure a high level of protection for consumers and create legal certainty for businesses engaged in cross-border trade.
The Directive introduced several key principles, which became the foundation of product liability law in the EU, including:
Strict liability: Manufacturers can be held liable for damage caused by a defective product, including personal injury, death or damage to property, regardless of whether they were negligent. This was a significant departure from traditional fault-based liability systems. It shifted the burden of risk onto the producer, recognizing that they are best positioned to control and mitigate risks associated with their products.
Definition of a defective product: A product is defective if it does not provide the safety that a consumer is entitled to expect, considering its presentation, including any warnings or instructions provided, its expected use, and when it was put into circulation. Importantly, the Directive does not require a product to be completely free from risk, but as safe as consumers might reasonably expect, given the circumstances.
Who can be held liable: Primary responsibility for defects lies with the producer, including the manufacturer and makers of raw materials and component parts. Importers of products into the EU from third countries can also be held liable.
Taken together, these provisions made it easier for consumers to claim compensation for injuries or damage caused by defective products, including complex products, where proving negligence would have been difficult or impossible. It also contributed to raising safety standards within the EU. Knowing that they could be held strictly liable for any defects, manufacturers became more vigilant in their quality control and risk management processes.
The revised EU Product Liability Directive (PLD) was adopted in October 2024 and must be enacted by member states by the end of 2026. It’s aimed at modernizing liability rules in response to advances in technology and shifts in the marketplace.
Liability for software-related defects: Software, including artificial intelligence (AI) systems, are now included under the definition of a product. This means that manufacturers of software, whether standalone or embedded in physical products, can be held liable for defects, including those caused by cybersecurity failures and software updates. This has major implications for manufacturers of medical equipment and devices, many of which are driven by software and AI.
Expansion of recoverable damages: Consumers can claim for the psychological harm caused by a defect, as well as any destruction or corruption of personal data. This could have significant implications for life science companies, which depend heavily on data collection and sensitive patient relationships, where physical treatment can affect mental wellbeing.
Changes in the burden of proof: The Directive makes it easier for claimants by introducing presumptions of defect and causation in cases where technical complexity makes it difficult to prove, such as with AI-driven products or medical devices.
Who can be held liable: The Directive broadens the range of operators who can be held liable, including authorized representatives and online platforms, ensuring that consumers can get recourse from whoever is responsible.
Time limit for claims: The ‘long stop’ limitation period for latent harm is increased from 10 years to 25 years and the minimum and maximum limits for claims are removed.
These updates signal a major shift in how product liability is handled in the EU, increasing the potential for claims against manufacturers, especially in technology-driven industries such as life science. The rise of litigation funding is likely to intensify this trend.
Affected businesses will need to reassess their product liability risks and review their contracts and insurance policies.
By introducing a strict liability regime and harmonizing product liability rules across the EU, the Product Liability Directive provided greater protection for consumers and certainty for businesses. The newly-revised version, which must be enacted by 2026, further strengthens consumer rights and protections. This could lead to significant exposures for life science. Review your supplier contracts and insurance policies to make sure you are protected. Your broker will be able to help you understand your exposures and adjust your cover to align with the new rules.
