Reform Issues: Product Liability and General Product Safety Directives

Product Liability Directive

A conclusion has now been reached on the attempts to reform Directive 85/374/EEC on product liability. The only amendment which has been passed is the original proposal made by the Commission that all primary agricultural products (including animals and fish) will be considered as products even where they have not undergone initial processing (Article 2). The optional provision for member states to include (or exclude) unprocessed primary agricultural products contained in Article 15.1 has now been removed.

Various other amendments were proposed by the European Parliament and its Environment Committee during the legislative process, but all of these amendments had been rejected after they failed to achieve a sufficient number of votes in the European Parliament second reading on 23 March 1999. However, the position has not been resolved, since the Commission will issue a Green Paper on possible reform of the Directive later this year. We have been closely involved in liaising the Commission and with many trade associations on this issue. The Green Paper is expected to invite comments and hard facts to be submitted on the state of product liability claims throughout Europe. This information would form the basis of consideration of whether any amendments need to be made to the Directive in due course. The Commission has to issue a report on the Directive by December 2000 and that report will contain any further amendments which the Commission may propose.

It therefore remains important for manufacturers and insurers to continue to lobby on the question of reform and to respond to the Green Paper. It is expected that consumers will continue to press for major amendments to the Directive, such as reversal of the burden of proof, removal of the development risks defence, removal of the 10 year cut-off on claims and of the 70 million ECU cap on liability. These issues may not be resolved for 2 or 3 years, so an extended period of lobbying will be required. Any change to the European Directive will lead to pressure for change to similar legislation in Japan, Australia, Brazil and other countries who have based their strict product liability laws on the Directive.

General Product Safety Directive

Directive 92/59/EEC on general product safety is likely to be amended in due course. The Commission has started to draw up possible amendments in advance of receiving the results of two studies on the working of the Directive in practice. The relevant part of the Commission which has responsibility for this Directive is Directorate-General XXIV, which deals with consumer affairs. It is likely that the amendments proposed by DGXXIV will favour consumers and impose greater cost on manufacturers, distributors and insurers.

The GPS Directive imposes regulatory obligations on producers and distributors of consumer products. It is enforced by criminal provisions arising under national laws. It has the following four main obligations on producers:

1.Products must be safe.
2.Adequate safety information must be supplied with products, both before and after marketing.
3.Producers must have adequate post-marketing information and communication systems to enable them to be aware of safety hazards which arise in use and then to be able to communicate appropriately with consumers.
4.Producers must take appropriate action in response to post-marketing safety information including, where appropriate, recalling a product.

The scope of the proposed amendments has not yet been made public but is likely to include some of the following issues:

-Clarifying the relationship between the GPS Directive and other Directives that deal with specific product-sectors (such as pharmaceuticals, medical devices, machinery, cosmetics, motor vehicles etc).

-Imposing greater obligations on producers in relation to post-marketing information systems and obligations to recall products.

It is again an issue on which industry will wish to lobby to make its views heard, particularly in relation to amendments for which there is no justification but which would considerably increase costs.

Christopher Hodges