The European Union has overhauled its liability regulations, aligning them with the challenges of the digital age and the emerging circular economy.
The agreement, struck between the Council and the European Parliament, heralds a major shift in how the EU will handle liability for defective products, considering the growing influence of digital features in products and the shift towards a sustainable, circular economy.
The new liability directive significantly expands the definition of ‘product’ to include digital manufacturing files and software. However, free and open-source software developed or supplied outside commercial activities is excluded from this directive.
This change addresses the reality of the digital economy, where online sales and digital features in products are becoming increasingly prevalent.
Importantly, the directive also holds online platforms accountable for defective products sold through their channels, if their presentation leads consumers to believe the platform or a trader under its control is the provider.
The circular economy model, which emphasises durability, reusability, repairability, and upgradability of products, is another focus of the new law.
The directive also holds online platforms accountable for defective products sold through their channels, if their presentation leads consumers to believe the platform or a trader under its control is the provider.
Significantly, the directive assigns liability to the entity or individual responsible for substantial modifications of a product outside the manufacturer’s control, once the product re-enters the market or service.
The agreement aims to ensure that any individual suffering damage from a defective product, including psychological harm, property damage, data destruction, or corruption, is entitled to compensation. This right extends to material and non-material losses, subject to national law.
Given the increasing complexity of products, EU member states must ensure that injured parties have access to necessary evidence held by manufacturers to support their compensation claims.
Recognising the global nature of commerce, the EU’s updated liability rules set out to provide equal protection to consumers purchasing from non-EU manufacturers. In cases of defective products from outside the EU, the importer, the manufacturer’s authorised representative, or, as a last resort, the fulfilment service provider can be held liable.
The directive aims to give consumers a fair chance at compensation in complex cases. Courts may now allow claimants to only prove the likelihood of product defectiveness or its probable causation of damage, especially in technically or scientifically complex cases.
The agreement awaits endorsement by member states’ representatives within the Council. If approved, it will undergo formal adoption in both the Council and the European Parliament.