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Product Liability Directive: reviewing the political agreement
On Thursday 14 December, the EU reached a political agreement on the Product Liability Directive. This is an important step towards finalising a vital piece of legislation which should set in place a product liability framework that supports businesses bringing innovative products to market, protects consumers, and at the same time, maintains an appropriate balance between the interests of claimants and defendants in Member State courts.
The final text of this provisional agreement has not yet been published. However, the American Chamber of Commerce to the EU (AmCham EU) is encouraged by the Council’s press release with respect to one highly contentious issue – namely, who must bear the burden of proof in litigation. The Commission’s explanatory memorandum in the original proposal stated: ‘there will be no reversal of the burden of proof, as this would expose manufacturers to significantly higher liability risks and could hamper innovation, leading also to potentially higher product prices and reduced access to innovative products.’
We understand that in an attempt to dramatically overturn the current law, the European Parliament had proposed that the mere ‘possibility’ of a product being defective would be sufficient to reverse the burden of proof, and instead a company would then be required to prove its innocence. The Commission and the Council have maintained that there must be at least the ‘likelihood’ of a defect before a defendant company would need to bring evidence to the contrary. Moreover, we also understand that several Member States have legitimately questioned the impact of mandatory new evidentiary rules and mandatory presumptions (based on mere assertions by a claimant) on their own civil justice systems.
The Council’s press release provides that a court ‘may’ decide that a claimant is required to prove the ‘likelihood’ that a product was defective. If this signals that the Commission and Council have defended their position on this critical issue and that the co-legislators will also permit Member States certain discretion in how they implement the new rules, we are confident that the legislation will have found a more balanced approach. This could alleviate some of the negative consequences that would result from a ‘hard’ reversal of the burden of proof.
The details on these provisions require clarification and there are still key issues to be resolved in the text.
If Europe is to continue to be a preferred destination for investment and for the launch of innovative new products, where consumers’ interests are also well protected, policymakers must ensure that Europe does not develop into a place where unmeritorious and abusive litigation is allowed to prosper and where the legitimate interests of consumers are conflated with the profit-seeking interests of lawyers and third-party litigation funders. As American companies committed to and invested in Europe, we stand ready to engage with and support policymakers in the upcoming negotiations.