EU Commission Green Paper on the Product Liability Directive

On 28 July 1999 the European Commission issued its Green Paper on Directive 85/374/EEC on product liability. The Green Paper had not been expected until September, but its text had been agreed some months previously and the new Commission has acted swiftly. Representatives of Member States, industry, insurers and consumers are requested to respond to a sequence of questions before the end of November 1999.

The Commission wishes to obtain the fullest possible information on how the Directive is working in practice in order to prepare its next report on the Directive, due by the end of 2000. The Commission stresses that it has not prejudged any questions of reform: indeed, it has experienced difficulty in obtaining hard data on the impact of the Directive in practice and it wishes to establish the facts before making decisions. The Commission also wishes to encourage public, open debate on the issues which arise. Accordingly, any replies which it receives will not be confidential and may be made public unless the participant explicitly requests otherwise.

Some of the questions asked in the Green Paper are:-

· Does the Directive function properly in practice?
· Have differences in legislation between the EU and other countries (e.g. USA) led to problems in trade, such as discouraging marketing of products or other differences?
· Should there be a single system of liability for defective products, covering strict liability, negligence and any other theory?
· Should each Member State be able to adopt stricter liability rules than those specified in the Directive, or should there be uniformity?
· How many cases have been brought, how many victims have been compensated (on what basis) and what have the costs been?
· Has it been easy for victims to obtain compensation, or have there been problems particularly relating to speed, efficiency or uncertainty?
· Should the Directive be amended to give greater protection to victims' interests?
· What has been the relationship between the Directive and national social security schemes?
· What effect has there been on insurance? Has demand for product liability insurance increased and what have been the effects on costs?
Issues for possible reform

The Commission requests comments on issues which have been put forward as options for reform. It asks for a reasoned stance concerning justification for any revision. The Commission stresses that the Directive constitutes a balanced compromise which reconciles the interests of consumers and industry, which it wishes to see continued.

The Commission requests confirmation that the balance should continue to be based on the principles that the producer's civil liability is (1) objective (no need to prove fault); (2) relative (exempt when he proves the existence of certain facts); (3) limited in time; (4) cannot be waived at the wish of the parties; (5) the burden of proving damage and causation rests on the victim; and (6) joint and several.

The Commission raises for discussion the following possible issues:-

· Whether the burden of proof should be amended.
· Whether "market share liability" would be feasible.
· Whether the "development risks" defence should be retained or whether some alternative approach would be preferable.
· Whether the ECU 500 threshold for property damage and the ECU 70 million ceiling on liability should be deleted or reformed.
· Whether the 10 year cut-off period needs to be amended, either generally or for certain products or sectors, and what the cost of this might be.
· Whether producers should be required to hold insurance.
· Whether there should be obligations to report cases.
· Whether liability of suppliers should be amended.
· Whether the Directive should cover real estate property.
· Whether claims should be allowed for non-material damage, moral damage, mental suffering and/or damaged to property intended for professional use.
· Whether there should be provision for dispute resolution mechanisms, or injunctions by consumers.
· Whether there should be arrangements for common representation of similar interests (similar to class actions)?
The reference to the Green Paper is COM (1999) 369 final of 28.07.1999 and may be accessed at http://europa.eu.int/comm/dg15/en/update/consumer/99-580.htm.

For further information on the above, or other product liability issues, please contact Chris Hodges on:

DDI 0171 367 2738
Fax 0171 367 2000
e-mail [email protected]