Last week, the European Union made a significant breakthrough towards its goal of overhauling the 40-year-old Product Liability Directive for the demands of the “digital” age and modern economy. To amend the directive, the elected European Parliament and the European Council (comprised of government representatives of the 28 member states) must agree on final language and separately pass the draft legislation through their respective bodies. After extensive legislative efforts and negotiations, the European Council (currently led by the Government of Spain) and the European Parliament issued press releases announcing that they have reached a political agreement regarding the proposed updates to the directive.
Americans love a good scare on Halloween. But, of course – with ancient castles, centuries of folklore, and actual Transylvania, our friends in the European Union know how to celebrate the spooky season just as well as we do. Unfortunately, there’s more than ghost stories to send a shiver down your spine in the EU these days. This month, a joint committee of the European Parliament voted on new amendments to the proposed “digital age” update of the Product Liability Directive, which was initially enacted in the 1980s. On the one hand, the proposal seems like a treat with its efforts to modernize the product liability framework to account for the changing product landscape and to address access issues for consumers. But many European business leaders caution that this is more trick than treat. Among other things, there are concerns that the traditional burden of proof requirements and safeguards on evidentiary disclosures will vanish into thin air. Concerns abound that the proposals won’t benefit consumers or industry, but rather lawyers and litigation funders. Scary stuff, indeed.
It’s finally here. Enforcement of the Collective Redress / Representative Actions Directive (RAD) in the EU has now begun. At this time, six member states have adopted a national translation of this law and nineteen states are engaged in ongoing discussion and drafting. The landscape is changing rapidly and our team is tracking these developments.
Are you ready for this shift in litigation culture? Backed and supported by the growing EU third party litigation funding industry, the RAD will provide an unprecedented procedural mechanism to bring class and consumer actions on a mass scale against EU traders. These actions can be premised upon one or more of 66+ substantive regulations that cover everything from the finance industry to environmental regulations to product and artificial intelligence liability. If you have not prepared, now is the time.
On May 23, 2023, the European Commission formally published the new General Product Safety Regulation, which reforms a variety of product safety regulations for manufacturers doing business in the European Union (EU) and its 27 member states. The European Parliament adopted the text of the regulation on March 30, 2023, and the European Council adopted it on April 25, 2023, but its official publication yesterday triggers the implementation and enforcement deadlines. Specifically, the regulation takes effect on June 12, 2023 (20 days from yesterday) and will include an 18-month transitionary period for EU member states, companies subject to the regulation and other actors to implement the new and revised regulations. Full enforcement begins December 13, 2024, after the conclusion of the transition period.
The regulations have been under consideration for many years and represent a major overhaul of product safety regulation in Europe. Product manufacturers should review the full set of regulations carefully and make any necessary adjustments to their procedures and processes to be in compliance with the new regulations before full enforcement takes effect on December 13, 2024. Among other things, the new General Product Safety Regulations include new requirements related to adverse event reporting, pre-market risk assessments, safety recalls, and product labeling and documentation. For example, manufacturers will be required to report “accidents caused by a product” “without delay” if the product is involved in an incident resulting in death or “serious adverse effects on health and safety.” Meanwhile, operators of online marketplaces are subject to an even more broadly worded requirement to report “accidents caused by a product … resulting in serious risk or actual damage of the health or safety of a consumer,” which extends the reporting requirement beyond incidents of actual injury.
Under the timeline imposed by the EU’s Directive of the European Parliament and of the Council on Representative Actions for the Protection of the Collective Interests of Consumers, the EU’s 27 member states were required to provide a collective litigation option to consumers by December 25, 2022, including by adopting or amending national law in jurisdictions where mechanisms for such litigation were not previously established. By June 25, 2023, member states are required to implement and begin applying these new mechanisms. But while that process is still ongoing, multiple EU member states have already taken legislative action to permit greater collective litigation mechanisms than previously available in their respective jurisdictions. Additionally, legal industry observers have already noted the increased presence of plaintiffs’ firms and litigation funders in the EU in response to the greater and increasing availability of representative and collective redress actions. See K. Henderson, Z. Okanyi, et al., European Class Action Report 2022, at 2, CMS (2022), available at https://cms.law/en/int/publication/cms-european-class-actions-report-2022.
In particular, one study noted that class action filings in Europe had increased more than 120% over the last five years (from 49 in 2018 to 110 in 2021), propelled by greater attention to potential mass actions by plaintiffs’ firms and increased availability of litigation funding. The data confirms what practitioners in this space already know: the plaintiffs’ bar in the EU is not waiting for the full implementation of the Representative Actions Directive. Of particular note, this rise is fueled, in significant part, by product liability, personal injury, and consumer mass actions.
The European Commission adopted two proposals that adapt liability rules to the digital age, circular economy and the impact of global value chains. These proposals are related to the Revised Product Liability Directive, fit for the green and digital transition and global value chains, and the AI Liability Directive to provide easier access to redress.