EU Product Liability Directive (EU)2024/****

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Photo © European Union 2017 – European Parliament

Replacing Directive 85/374/EEC

In 1985 the European Union adopted the first Product Liability Directive (85/374/EEC), allowing consumers harmed by dangerous or unsafe products to claim compensation from the producers, if they can show that:-

  • The product was Defective, – failing to provide the level of safety that consumers are entitled to expect, in the circumstances.
  • The consumers has suffered an actual loss – including physical injury or damage to personal property, but excluding pure economic or commercial losses.
  • The Defect or lack of safety caused their loss or injury

Directive 85/374/ EEC also introduced the principles of:-

  • Strict Liability for Product Defects, so that claimants do not need to establish the producer was negligent or caused the lack of safety.
  • Joint Liability – making brand owners, manufacturers and their component suppliers jointly responsible for any harm to consumers caused by defects or the lack of safety, allowing consumers to take action against any or all of them.

To ensure that claims can be pursued and settled in a European Court, Importers and the Authorized Representatives of foreign manufacturers are also held liable, as producers, for any defective products they supply in Europe. However, other distributors and retailers, who have not modified the product or used their branding to sell the product, can normally avoid liability for product defects by identifying their European supplier who is liable.

But, the producer’s liability for defects is not an absolute liability. So the Directive 85/374/EEC established the arguments that may be deployed to avoid the producer’s liability, when it has defective product has caused loss or injury:-

  • We are not a Producer of the defective product or any of it’s component parts, and have not applied our branding to the the product supplied.
  • The defect did not exist when the product was supplied, but has been introduced or created by some unauthorized and unforeseen action after the product left our control.
  • The defect, or lack of safety, could not have been detected, when the product was supplied due to the limits of scientific and technical knowledge at that time. (Known as the development risk defense, this argument may be limited or excluded by the national law of member states, for some or all products)
  • The defect or lack of safety is not in the component we supplied, but due to the design and production of the product in which it was integrated.
  • The defect or lack of safety in the component we supplied, is the result of following the instructions given by our client who is also a producer. This defense protects companies who ‘make to drawing’ from any liabilities that might arise due to poor design, providing they followed their client’s instructions.
  • The defect was the inevitable result of compliance with a legal requirement. Although we may find conflicting legal requirements in different regulations, so far I have been unable to find any case studies to illustrate this argument.

Although primary (unprocessed) agricultural products were excluded from the scope of the original directive, this was changed by Directive 1999/34/EC. So, the Directive 85/374/EEC applies to electricity and all physical products or component parts that are moveable, even when they are incorporated in an immovable object or structure.

Since 1985, our traditional supply chains have been transformed by globalization and the development of on-line sales channels, while public expectations of safety and the risk profile of products have changed as new technology is developed and adopted.

So, after almost 40 years the EU are adopting a new Product Liability Directive (EU) 2024/****, that will be published in the Official Journal of European Union in the next few weeks – when its new number will also be revealed.

When will the New Product Liability Directive be published?

The new Directive is being prepared for publication in the Official Journal of The European Union (OJEU), and we expect it to be published before the end of April 2024, when its official reference number will also be revealed.

However, an copy of the agreed text is available here,

When will the Product Liability Directive come into force?

The new Directive will come into force 20 days after it is published in the Official Journal of European Union.

When will the New Product Liability Directive take effect?

The New Directive will take effect 24 months after it comes into force.

So, we expect the New Directive to apply to all products supplied, or put into service, in the European Single market after April or May 2026

The old Product Liability Directive 85/374/EEC will continue to apply to all claims related to products that are supplied before the New Directive takes effect.

Why have the EU adopted a New Directive?

The Recitals or Preamble at the front of the Directive, paragraphs 1 – 64, explain the purpose of the new legislation and its Legal Intent. So, the Courts will interpret the law to achieve the purpose as explained in those Recitals.

However, the new Directive addresses the following concerns:-

  • The introduction of new technology, in particular Software and machine leaning, into products that may be interconnected has changed the risk profile of typical products. So, the new Directive defines software as a product, and component part of any product in which it is integrated.
  • Many products interact with and may be controlled by Software Applications and Services that may modify the products behavior or risk profile. So, these are now defined as Related Service and fall within the scope of the new Directive.
  • Software vendors and providers of Related Services may introduce product defects. So, they are now considered to be ‘manufacturers’ or ‘component suppliers’, jointly liable for any lack of safety they introduce into products their products are integrated into or used to with.
  • The characteristics and risk profile of products may be changed after they have been put into service, by software updates or physical modifications. So, the new Directive makes a manufacturer who approves or authorizes changes to products already in service, liable for any defects or lack of safety that may be introduced by the change.
  • Independent operators may make unauthorized changes or updates to products already in service, changing their risk profile or introducing new risks to users. So, such modifications are regarded as ‘new products’ manufactured by the economic operator who made the change.
  • As the ‘circular economy develops’ an increasing number of products and components may be repurposed at the ‘end of life’, and incorporated in new products. So, the Directive says that products that have undergone ‘substantial modification’ or been adapted for different use that is outside the scope of original manufacturer risk assessment, will be regarded as new products made by the company that modified them.
  • The scope of the Directive now includes all products that have been supplied, or put into service, within the Single Market, including those are put into service by the manufacturer for their own use.
  • The definition of defect, – a failure to achieve the level of safety people are entitled to expect, – has not changed, but their is a new presumption that products that don’t comply with Union Law (CE marking / type approval etc) or the National Law of a Member State are in fact Defective.
  • The potential harms that create a ‘recoverable loss’, have been extended to include psychological trauma, and the loss or corruption of data that is not held for ‘commercial purposes’, in addition to death, physical injury and material damage to private property.
  • People making claims for compensation must still prove that the product was defective, they have suffered an actual loss, and that the defect caused their loss.
  • But, consumers may be unable to prove a product is defective, without access to information and technical expertise to understand the potential risk. So, the the Directive introduces the ‘Rights of Discovery’ and an obligation to disclose relevant information, for both claimants and defendants. (This is already recognized in UK law, but will become mandatory throughout the EU Single market)
  • Technical complexity, resource constraints, or a lack of data may create excessive difficulties for claimants trying to establish the existence of a defect. So the new Directive allows the the Courts to reverse the burden of proof in complex cases, presuming that the defect exists until disproved by the manufacturer.

Other changes in the new Directive may enable and encourage groups of consumers with similar complaints to bring claims using Group Litigation or Representative Actions, while the EU will establish a public database of Product Liability Judgements.

Your next steps….

The new Product Liability Directive and recently adopted General Product Safety Regulation EU 2023/988 are major reforms of consumer right and product regulation.

Designed to improve consumer protection. they create new obligations and legal risks for economic operators in the extended supply chain. So, you and your management team, need to understand the law and how it will change your supply chain relationships .

Although some of the most obvious impacts involve software vendors and companies providing Related Services, these changes will affect everybody supplying products in the European Single Market.

So, if you need help, our Product Liability Training – designed for engineering managers – has been updated to reflect the recent changes in European law. Why not give us a call?

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Smarter Regulation? Delivering BREXIT…..

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Britain has chosen to reassert it’s sovereignty by leaving the European Union, – rejecting the rules and regulations created by unelected bureaucrats in Brussels, – to resume our rightful place as global leaders. But, BREXIT like a messy divorce – is a painful process – with an uncertain outcome.

While the Leave Campaign successfully portrayed the European Union as the problem, they avoided proposing a consistent vision of the desired end state. Instead, they offered voters many alternative – carefully targeted and personalized – visions of Britain’s future.

So, the spectrum of BREXITs proposed included;-

  • A deregulated Singapore on Thames, in which Corporation’s are unrestrained by the burden of regulation. A vision that today underpins proposals for Freeports and Charter Cities – free to set their own rules without Parliamentary interference or democratic scrutiny.
  • Through to….
  • A member of European Free Trade Association (EFTA), with full access to the Single Market, based on mutual recognition of Technical Standards and Product Approvals – like Norway or Switzerland. A form of BREXIT-Lite for those opposed to more radical change.

The deliberate ambiguity of the leave campaign secured 17.4 million votes (51.8% of votes cast) – without a mandate for any particular version of BREXIT – or understanding of it’s practical consequences, even among it’s supporters.

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Reforming EU Product Liability Law

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Picture by Thijs ter Haar – Creative Commons

The European Union is reforming Product Liability Law to ensure it remains ‘fit for purpose’ – rebalancing the rights and obligations of Economic Operators – with our rights as Consumers.

The changes are a response to the increasing; –

  • Use of embedded software in physical products to control their performance.
  • Use of inter-connected products from different suppliers.
  • Importance of digital products and services with their related cyber-security threats
  • Application of Artificial Intelligence and Machine Leaning that may modify the products functional behavior and risk profile, after is has been ‘supplied’.
  • On-line sales and the growth of on-line market places.
  • Desire to promote a ‘circular economy’ in which products can be ‘repurposed’

So, if you supply, maintain or modify products used in Europe, you need to review your policies and procedures, – so that you can comply with your Legal Obligations when the new Regulations take effect, as shown below;-

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After BREXIT: What Next?

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BREXIT - the end of an era

Leaving the Single Market

The EU’s ‘Single Market’ allows the free movement of goods within the member States, providing they comply with the relevant EU Standards and Regulations. But, this system of ‘Free Trade’ within Europe is underpinned by the harmonization of standards and the mutual recognition of Approval Bodies.

The familiar CE mark is used to identify products that comply with European Standards, and although producers may be able to ‘self certify’ some of their products, ‘regulated products’ must be certified by an independent Approval Authority or Notified Body.

Although it can be time consuming and expensive to obtain product approval, once a product has been approved it can be sold anywhere in the ‘Single Market’ because all member states have adopted the same technical standards. Access to an ‘enlarged domestic market’ across Europe can also bring significant economies of scale allowing companies to grow – and confidently invest in new products.

But BREXIT undermines this system of Free Trade with Europe, and will inevitably create problems because the political choices made by the UK Government will have consequences in the real world.

But what are the consequences of leaving?

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Are you ready for BREXIT?

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You may love or despise the the European Union, but we are leaving.

For the last 47 years we have taken our place among the nations of Europe – helping to shape and form its European Institutions – working together to create the Single Market and Customs Union.

Trading relationships have blossomed as:-

  • Rules and regulations have been harmonised
  • Internal tariffs and Customs Declarations have been abolished
  • Hard borders have been removed
  • Supply chains have been integrated

Businesses of all shapes and sizes have learnt to trade with Europe, supplying our goods and services – building relationships with our customers and suppliers across Europe.

But we have taken our freedom to trade with Europe for granted – forgetting or perhaps resenting the harmonised rules and regulations that make that a viable choice.

They saw a mirage that was so clear,
words of caution were project fear,
so they voted to get out of here,
now as Brexit draws near,
reality will start to interfere,
with the vison they held so dear

Phil Stunell 2020

As we come to the end of the ‘transition period’, negotiations with the EU about our future trading relationship are stalled – with ‘No Deal’ now the most likely outcome – UK firms trading with Europe face inevitable disruption.

One problem for UK producers is the way that the EU balances the rights of consumers and producers in the Product Liability Directive, and the General Product Safety Directive. These make producers responsible for the safety of their products, allowing consumers to claim compensation when things go wrong, and requiring producers to work with the regulators to remove unsafe products from circulation.

The practical problem with this approach is that it is impractical for ordinary consumers to sue a producer of imported goods, in for example Taiwan, outside the jurisdiction of the European Legal System.

So the EU directives define the producer as anybody who:-

  • Produces the product or any of it’s component parts, or
  • Incorporates the product in their own product, or
  • Attaches their brand name to the product, or
  • Imports the product into the European Union

Making all producers involved in the supply of defective products jointly liable for any harm caused by them, ensures that consumers can always seek compensation in Europe, where the the EU Directives apply.

By choosing to leave the EU – opting out of the Single Market and Customs Union – we are also rejecting the authority of the European Courts and leaving the EU’s jurisdiction.

But this creates is a problem for UK producers exporting to Europe. After 31 December this year, – their European clients will no longer just be ‘customers’ or ‘distributors’ – they will become importers into the European Union, and therefore a producer of the product.

This means that their European distributors will:-

From a European perspective this ensures that:-

  • Somebody who is subject the Jurisdiction of the European Courts is held accountable for the safety and compliance of the products supplied in Europe
  • So, consumers can bring claims for compensation ‘within Europe’.

This is a non-negotiable principle that underpins the free movement of goods within the EU.

So, if you are exporting goods to Europe and have not already agreed who in Europe will be responsible the safety and compliance of your products in January, you are still not ready for BREXIT!

While the UK Government are encouraging us to ‘Check – Change- Go’ – to some unknown destination – the EU have published a series of detailed and practical guides to Brexit explaining what will change and why.

If you are designing, manufacturing or supplying physical products and want to understand more about Product Liability – why join one of our Product Liability Training courses – now available on-line or in-house.

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Pinnacle MoM Hips (Part 6)

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Hip Replacement - used with the permission from www.mayoclinic.org
Hip Replacement Surgery (Used with permission of www.mayoclinic.org)

Estimating the risk of failure

In 2018 Ian Haley was among a group of 312 patients, who sued Depuy in the English High Court because they had an adverse reaction to metallic debris (ARMD) from the hip’s metallic bearing surfaces. So, they claimed that the Pinnacle Hips with a metal on metal (MoM) bearing were legally defective.

Their claim was based on Part 1 of the Consumer Protect Act implementing the European Product Liability Directive in British Law.

In Article 6 the Directive says:-

A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, 

Article 6 (1) of the European Product Liability Directive

The patients’ first claim against Depuy, alleging that the defect was the ‘production of metal wear particles from the bearing surfaces’, is discussed in my previous post.

So now we will turn our attention to the patients’ secondary claim that:-

…”the Pinnacle Ultamet prosthesis had “an abnormal potential for damage, compared with existing established non-MoM total hip replacement prostheses and/or that a large head MoM articulation had an abnormal potential for damage compared to alternative bearing surfaces within the Pinnacle modular system”

Pinnacle Judgement Paragraph 136

The Statistical Evidence

The Judge – Mrs Justice Andrews – established a two stage test for the claimants to satisfy in order to obtain compensation:-

  • Firstly, they must show that the risk of revision surgery – to repair or replace their hip – within 10 years was significantly increased by the use of a Pinnacle MoM hip, compared with alternative products already accepted in the market place in 2002.
  • Secondly, individual patients must show that, on the balance of probabilities their revision surgery was the result of the increased risk, associated with the development of ARMD

Discussing how the first test could be satisfied, Mrs Justice Andrews observed that:-

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Pinnacle MoM Hips (Part 5)

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Hip Replacement - used with the permission from www.mayoclinic.org
(Hip Replacement Surgery Used with permission of www.mayoclinic.org)

How to Prove Products are Defective

The 312 patients, including Ian Haley, seeking compensation from Depuy claimed that their Pinnacle Metal on Metal (MoM) hips were defective, because:-

  • Metallic wear particles were shed from bearing surfaces
  • Their immune systems reacted to the metallic debris, causing pseudo tumours to develop, damaging their muscle and bone structure – a process described as ARMD (Adverse Reaction to Metallic Debris)
  • As a result of ARMD, they required revision surgery to remove and replace their Pinnacle MoM hips, in some cases leaving them with a permanent disability

They did not claim that Depuy had been negligent or failed in their Duty of Care. Instead their claim was made under Part 1 of the Consumer Protect Act (CPA), which implements the European Product Liability Directive in British law.

The Directive says that a producer is strictly – without fault – liable for any harm caused by defects in the products they supply to consumers, and defines a defect by saying:-

1) A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, including:-

a) the presentation of the product

b) the use to which it could reasonably be expected that the product would be put

c) the time when the product was put into circulation

2) A product shall not be considered defective for the sole reason that a better product is subsequently put into circulation

Article 6 of 85/374/EEC as amended by Directive 1999/34/EC

If the patients succeeded in proving that:-

  • The product was defective
  • They suffered the harm
  • The defect cause the harm

Then Depuy would be liable for any damage caused by the defect, unless they could use one of the defence arguments permitted by Article 7 of the Directive.

So, the claimants presented two alternative explanations of the defect.

As discussed in my previous post in their primary claim, which was unsuccessful they argued that:-

  • The defect was the production of metallic wear particles from the bearing surfaces of the hip joint,
  • The harm caused was the need for revision surgery and any resultant disability, pain and discomfort

However, knowing that Depuy might object to that definition of the defect they also presented a second alternative claim, that:-

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ROUNDUP $13 Bn Settlement

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Roundup - glyphosphate base herbicide
ROUNDUP a glyphosphate-based Herbicide – supplied By Monsanto

In 2016 the German chemical company Bayer acquired Monsanto – one of the largest global producers of agricultural chemicals – in a $60 Billion take over. The deal gave Bayer access to the US market with an expanded product range, including ROUNDUP – a glyphosate-based herbicide, – developed by Monsanto.

By 2019 Bayer were facing a growing number of product liability claims, from people arguing that their cancers, in particular Non-Hodgkin Lymphoma (NHL), had been caused by their exposure to ROUNDUP – as discussed in my previous article,

The claims being made were particularly serious, because:-

  • It was alleged that Monsanto’s negligence was wilful and deliberate – allowing claimants to seek punitive damages – designed to punish and deter such reckless behaviour.
  • The first successful claims, in 2019, made Bayer an attractive target for other lawyers working on a no-win-no-fee basis, with many potential claimants who had been exposed to ROUNDUP

It has now been reported that Bayer have reached a negotiated settlement with lawyers representing 125,000 claims about ROUNDUP and and it’s link to cancer.

According to Werner Bauman, Bayer’s Chief Executive:-

“First and foremost, the Roundup™ settlement is the right action at the right time for Bayer to bring a long period of uncertainty to an end, It resolves most current claims and puts in place a clear mechanism to manage risks of potential future litigation. It is financially reasonable when viewed against the significant financial risks of continued, multi-year litigation and the related impacts to our reputation and to our business. The decision to resolve the Roundup™ litigation enables us to focus fully on the critical supply of healthcare and food. It will also return the conversation about the safety and utility of glyphosate-based herbicides to the scientific and regulatory arena and to the full body of science.”

From albawaba

The settlement may mitigate the damage to Bayer reputation caused by prolonged legal arguments – and hopefully get compensation to those who have suffered before they die.

So Bayer have agreed that:-

  • The three cases that have already been decided against Bayer, and are subject to appeal will be ‘decided by the Courts’ in order to establish a precedent and provide legal guidance for the future
  • Bayer will pay $8.8 billion – $9.6 Billion to settle approximately 125,000 current claims, without admission of liability or wrong doing.
  • A further $1.25 billion will be made available to resolve future litigation
  • In addition, Bayer will provide funding of $1.25 billion for a independent Science Panel tasked with determining if exposure to ROUNDUP does in fact increase the risk of Non-Hodgkin Lymphoma.
  • All parties will be bound to accept the Science Panel’s findings which will be published by Bayer on their website when available.

It is difficult to estimate the total cost of the settlement, but based on the published information the costs will exceed $13 billion – but Bayer’s share price, that had slumped by 50% as investor confidence evaporated, may now start to recover.

The Bayer – Monsanto merger shows how important is to consider Product Liability Risks when valuing an acquisition – and that must include an assessment of the management culture and their risk management systems. For Bayer’s senior management team, underestimating those risks has proved to be a ‘near death experience’ and a disaster for Bayer – and their reputation.

To learn more…

To learn more about Product Liability and risk management please contact Phil Stunell or subscribe to our newsletter to receive updates.

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Pinnacle MoM Hips (Part 4)

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Hip Replacement - used with the permission from www.mayoclinic.org
Hip Replacement Surgery (Used with permission of www.mayoclinic.org)

Legal Argument – What is a Defect?

In 2018 a group of 312 patients including Ian Haley, who had received artificial hips manufactured by Depuy, sued Depuy in the English High Court claiming that:-

  • The Pinnacle Hips with a Metal on Metal (MoM) bearings were legally defective, because the patient’s immune system reacted to microscopic wear particles from the bearing surfaces of the joint.
  • Typically, their Adverse Reaction to Metallic Debris (ARMD) caused the growth of pseudo tumors in the soft tissue around the joint, and damaged their muscles and bone structure – among other symptoms.
  • Patients with severe ARMD required revision surgery to remove and replace their Pinnacle MoM hips. In some cases leaving them with reduced mobility or a permanent disability.

But, the patients did not attempt to prove that Depuy had been negligent, or failed to exercise their Duty of Care

Instead they based their claim against Depuy on the European Product Liability Directive, which has been implemented in British Law by Part 1 of the Consumer Protection Act (CPA).

So in her written judgement the Judge, the Honourable Mrs Justice Andrews analysed the law, explaining how it should be applied – creating a precedent or example that may be used in future.

The Product Liability Directive

The Product Liability Directive was introduced in 1985, because the European Council recognised that the patch work quilt of legislation across Europe needed to be harmonised to:-

  • Balance the economic interests of consumers and producers
  • Enhance consumer protection

Reading the EU Directive, you will find:-

  • The preamble or Recitals, which explain the European Council’s policy objectives and the purpose of the Directive.
  • Articles, which define the rules to be implemented in the domestic law of the member states.

Although we may be tempted to fast forward through the Recitals – that is a mistake. The Articles are intended achieve the policy objectives explained in the Recitals – so the Articles must be interpreted in a way that achieves, as far as possible, those policy objectives.

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