EU Asks Compensation for Defective Products Purchased Online
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Revolution in Online Commerce: EU’s new liability laws make online sellers and importers accountable for their products. EU Council and European Parliament reached an agreement on a Commission’s proposal ffor a Directive on liability for defective products. The EU’s product liability regime is established to compensate individuals for physical injuries or property damages resulting from defective products. The regime traditionally required proof that a product was defective and that this defect caused the injury or damage. This new agreement represents a significant evolution of these rules, reflecting contemporary challenges in product liability.
Negotiators from the Spanish presidency and the European Parliament have reached a political agreement on a new law focusing on liability for defective products. This law aims to modernize the decades-old liability framework, addressing the unique challenges posed by the digital economy and the shift towards a circular economy.
The new Product Liability Directive (PLD) objective is to provide an EU-level system for compensating people who suffer physical injury or damage to property due to defective products. Since the adoption of the PLD in 1985, there have been significant changes in the way products are produced, distributed and operated, including the modernisation of product safety and market surveillance rules. The green and digital transitions are underway and bring with them enormous benefits for Europe’s society and economy, be it by extending the life of materials and products, e.g. through remanufacturing, or by increasing productivity and convenience thanks to smart products and artificial intelligence.
Product innovation and new forms of sales require greater attention to consumer safety, and the proposed Directive aims to protect consumers from purchases that may prove to be dangerous to health.
Digital Economy Considerations
Under the new directive, the definition of ‘product’ will now include digital manufacturing files and software, reflecting the increasing prevalence of digital features in modern products. Notably, the directive excludes free and open-source software developed or supplied outside commercial activities.
Another key aspect of the digital economy addressed in the directive relates to online sales. Online platforms can now be held liable for defective products if their presentation or transaction facilitation leads consumers to believe that the product is provided by the platform or a trader under its authority.
Circular Economy Focus
In line with circular economy principles, where products are designed to be durable, reusable, reparable, and upgradable, the directive introduces new liability rules. When a product undergoes substantial modification outside the original manufacturer’s control and is reintroduced to the market or service, the entity responsible for the modification will be held liable as the manufacturer of the modified product.
Right to Compensation
A cornerstone of the agreement is the right to compensation for any natural person suffering damage from a defective product. This includes compensation for personal injury, property damage, destruction, or irreversible corruption of data. The right to compensation encompasses both material and non-material losses, as long as they are compensable under national law.
Access to Evidence
To address the complexity of proving claims in court, the agreement stipulates that injured parties can request access to relevant evidence held by the manufacturer. This provision is crucial in technically complex cases where proving product defectiveness or causal links is challenging.
Protections for Non-EU Products
Considering the global nature of commerce, the agreement ensures equal protection levels for consumers buying products from non-EU manufacturers. Importers, authorized representatives, or fulfilment service providers can be held liable for damages caused by defective products or components from manufacturers based outside the EU.
Burden of Proof in Complex Cases
The directive aims to ensure fair compensation chances in complex cases. Courts may allow claimants to only demonstrate the likelihood of product defectiveness or its probable causation of damage, easing the burden of proof in technically or scientifically complex situations.
Next Steps
The agreement requires endorsement by member states within the Council (Coreper) and formal adoption in both the Council and the European Parliament.
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