The European Parliament is working on proposals to amend the Product Liability Directive (PLD) that would affect businesses’ abilities to innovate. Adopted nearly 40 years ago, the PLD has provided a largely effective compensation mechanism for those who suffer damage caused by defective products in the EU. The proposed revisions to the PLD would update the Directive’s definitions and provisions for emerging technologies. Unfortunately, the amendments being considered go too far and could hamper the innovation and development of new products and services.
A key issue with the revised PLD is the ‘alleviation’ of the burden of proof. The draft revised PLD would shift the burden of proof from the claimant to the defendant in cases that involve so-called complex or technical products. The claimant would only need to show that the product contributed to the damage and that the product was likely defective or that its defectiveness is a likely cause of the damage. Companies can be held liable based on ‘likelihood’ rather than proof of harm.
The European Parliament is also considering another amendment that would turn the concept of burden of proof further on its head. The latest proposals under consideration suggest that a claimant would not even need to show that it is likely that a defect is causing harm. Instead, once they have shown that it was ‘possible,’ the defendant would be liable unless the defendant could prove it is not possible.
Even if a defendant could successfully prove the impossibility of their responsibility, it would not be without costs. The EU’s Representative Actions Directive allows claims under the PLD to be pursued on a group basis so defendants could face presumed liability in broad representative actions over quite hypothetical and unlikely claims. These types of claims often require significant financial resources to defend. The potential for broad speculative claims is likely to attract litigation funders, who profit from more and higher-cost litigation. Defendants will also face higher product liability insurance premiums because of increased liability exposure. The Commission even anticipated these higher costs in their impact assessment of the proposal.
Ultimately, by shifting the burden to defendants to rebut presumptions of liability, the revised PLD risks undermining legal certainty, significantly reducing incentives for producers to innovate, and hampering economic growth. The proposal would be particularly burdensome for small and medium enterprises and start-ups that may lack the capacity to prove that they had no responsibility for an alleged harm. The proposed provision on the burden of proof in the PLD should stick to the key principle that the burden should be with the person making an allegation, as only this can maintain a fair balance between defendants and claimants.
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