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The European Commission (EC) has published its long awaited proposals to modernise the Product Liability Directive (PLD) – the legislation governing redress for defective products. The proposals address the risks and challenges posed by the digital age and have raised questions as to whether UK might follow in the EU’s footsteps and seek to reform the Consumer Protection Act 1987 (CPA), the legislation which implemented the PLD into UK law.
As discussed below, in 2021, the Law Commission (the Commission) had identified “product liability and emerging technology” as an area for potential reform as part of its proposed 14th Programme of Law Reform. This would have included a review of the strict liability regime provided for under the CPA and whether it should be extended to cover all software and tech developments. However, the Law Commission announced on 16 February 2023 that the timetable for its proposed 14th Programme of Law Reform had been extended indefinitely, suggesting that any plans to reform the CPA will be put on hold for the next few years, although they are unlikely to be off the agenda permanently.
The CPA is therefore likely to remain in its current form for the time being. This news is likely to be welcomed by producers and suppliers of consumer products, and their insurers.
The 14th Programme of Law Reform (the Programme)
In 2021, the Commission, the statutory independent body responsible for keeping the law of England and Wales under review, had proposed including “emerging technology” as a possible theme for the 14th Programme, noting that they had developed real expertise in designing legal frameworks that anticipate and confront the implications of future technologies, citing automated vehicles as an example. The Commission anticipates that there will be a growing need in the future for law which not only reflects technological developments such as AI, but which also considers the need for proper consumer protection as well as the commercial and economic implications.
In addition to identifying themes for the Programme, the Commission set out specific potential areas of law reform, including “product liability and emerging technology”. In particular, it invited views as to whether the strict liability regime provided for by the CPA should be extended to cover all software and other tech developments. The Commission explained that the although the CPA protects consumers against harm caused by defective products, it was “not designed to accommodate software and related technological developments such as 3D printing or machines that ‘learn’” – a similar rationale to that which underlined the EC’s proposal to reform the PLD.
The outlook for businesses and their insurers
The Commission’s decision to now put the Programme on hold means that product liability litigation brought in the UK should remain relatively contained. This is because in its current form, the CPA:
- Only applies to products, not services. The question of what separates a product from a service in the context of emerging technologies, such as AI enabled products, remains the subject of debate. Claims brought pursuant to the CPA have, traditionally, been in respect of physical tangible products. It remains to be seen whether the UK courts will be tested in respect of ‘intangible’ products such as software or AI-based applications.
- Places the burden of proof on the claimant. The CPA provides that the claimant must prove that a product is defective and that the defect caused the damage alleged. It has been contended by claimants and their legal representatives that this can be onerous burden, particularly if the claimant is unable to establish what it is that makes a product defective, or the causal link.
- Provides that product liability claims can only be brought against a narrow set of parties, namely: the producer (the manufacturer), a person who holds himself out as a producer, or the importer of the product into the UK. A supplier may also be held liable in certain circumstances. However, the CPA does not explicitly include software providers, providers of digital services or online marketplaces which could present difficulties in the context of emerging technologies.
- Includes a 10 year ‘longstop’ period in which a claimant can bring a claim under the CPA. A claimant must bring a claim within 10 years from the date on which the producer put the product into circulation. Such right is extinguished after the expiry of the 10 year period, meaning that there is simply no basis in which to bring a claim under the CPA after that date. Thereafter, claims would have to be pursued in negligence, which is much more onerous on a claimant.
By comparison, the EC’s proposed reform of the PLD is causing concern amongst product manufacturers and their insurers. This is because its draft legislative proposal contains significant changes to the existing regime – including the removal or alleviation of some of the hurdles outlined above - which are likely to make it easier for claimants to pursue product liability claims, particularly in respect of scientifically complex cases such as those involving new technologies.
These proposed changes, coupled with the impending implementation of the Directive on representative actions for the protection of the collective interests of consumers (the Representative Actions Directive) – an EU wide legal mechanism by which EU consumers can bring cross-border collective (class) actions – could give rise to complex, group actions in the product liability sphere, resulting in an increased risk of both volume and value of claims.
One of the core objectives behind the PLD (and the CPA) was to balance the interests of consumers and producers, i.e. to ensure product safety whilst safeguarding innovation. This core objective was recognised in the seminal cases of Wilkes v DePuy International Limited [2016] and Colin Gee v DePuy International Limited [2018], and affirmed by the Lord Ordinary (the trial judge) in the Scottish case of Hastings v Finsbury Orthopaedics Ltd & Stryker UK Limited [2019]. Hastings was subject to appeals before the Scottish Inner House in 2019 and the UK Supreme Court in 2022, neither of which were prepared to interfere with the findings of the Lord Ordinary.
Industry bodies, such as MedTech Europe, are of the view that the PLD in its current form is fit for purpose and plays a key role in ensuring consumer protection whilst promoting innovation. If the PLD is adopted in its current form, there is concern that the balance of interests could be tipped more favourably towards the consumer in any future product liability claims brought in the EU.
For the UK, with the CPA remaining untouched for now, the cases of Wilkes, Gee and Hastings should reassure businesses and their insurers that the courts will continue to recognise, and take into account, the importance of balancing the interests of consumers and producers, when determining whether a product is defective.
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United Kingdom