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Product liability – past, present and future

Looking at the current legislative framework for product liability claims and the issues following COVID and Brexit.

Past

The litigation against GSK by users of Seroxat (an anti-depressant medication) was successfully concluded in favour of GSK. It was alleged that the drug was defective due to the nature of its side effects. The court applied principles laid down in earlier cases (of Wilkes v DePuy and Gee v DePuy) for a holistic and flexible approach being applied to determine if products were defective. A risk/benefit analysis argument will be used to defend appropriate actions going forward.

The Office for Product and Safety Standards (OPSS) provided guidance (not legally binding) for use of confidentiality clauses in consumer settlement agreements. Guidance is intended to ensure that information relating to the safety of a product can be shared as appropriate so that both consumer safety and confidence can be maintained.

Present

The current legislative framework for product liability claims (which emanates from EU law) remains in operation as retained EU law pursuant to the European Union Withdrawal Act 2018.

But on 1 January 2021 UK-based suppliers of products were re-classified as 'importers' as opposed to 'distributors' when bringing goods from the European common market into the UK (provided the goods were not previously placed on the market prior to 31 December 2020). Importers' obligations differ from those of distributors, in that they are required to include their name and business address on product packaging and to ensure that the product complies with relevant product compliance regimes. In order to provide some scope for a transition into the post-Brexit era, the Government will allow for such information to be provided on accompanying documentation until 31 December 2022.

Liability under the Consumer Protection Act 1987 is greater as an importer as opposed to a supplier/distributor. This increased risk profile may not have been reflected at present in premiums set by insurers previously.

The Trade & Co-Operation Agreement (TCA) 2020 between the UK and the EU contains provisions to ensure co-operation between the parties in respect of regulation of products placed on both markets.  Many businesses will need to address EU and UK product compliance separately (save for specific products such as motor vehicles, medicinal products, organic food and wine which remain linked by mutual recognition of regulation.)

There are new obligations, such as how goods must be placed on the market with the new UKCA mark.

Future

Will the Government stick to current EU law however? There is perhaps a balance to be found between smoothing the path for the UK’s trading relationship with the EU by retaining existing legislation and moving away from it to speed up innovation, make manufacturing cheaper and aid the UK’s battered economy. If the latter, will this cause concern for insurers with the risk of potentially defective products being placed on the market that are not subject to the stringent regulatory rules in place at present?

TCA does include provisions to attempt to ensure a common approach to technical requirements for products. Further it also highlights the need for co-operation on enforcement with the sharing of information between the EU’s Safety Gate Rapid Alert System for Dangerous Non Food Products (RAPEX) and the UK.

Some food for thought…

During all lockdowns, many people ‘stuck’ at home will have bought more products. Have manufacturers (whether of the ultimate end product or component parts) been under pressure to produce goods quickly, possibly with reduced workforces due to COVID?  Would this have led to errors in production or corners being cut, leading to defective products?

The pandemic has led to challenges with the supply of raw products in some areas. Usual supply chains have been disrupted as a result of illness and self-isolation of workers. Have manufacturers sourced alternative products from new suppliers where they may not have conducted full due diligence on those suppliers? Will this expose them to greater potential liability for defective products?

Financial hardship amongst the population may lead to consumers pursuing claims which are at best, unmeritorious and at worse, fraudulent. 

There may be challenges in investigating product liability claims which straddle different compliance regimes; will clients have the correct documentation to assist in defending claims?

The complexity of products due to the rapid progress of technology, including the Internet of Things, will inevitably make claims for defective products complex with the potential to involve many parties.

Will there be an increase in premiums for policyholders who will now be importers? Will newly-defined importers have insurance (or sufficient insurance) to cover any claims made?

There will be some uncertainty around jurisdiction following Brexit. 

Natasha’s Law bites from 1 October 2021. Suppliers must label products which are prepared and packaged on site with a full ingredient list (and not just the existing 14 prescribed allergens). Suppliers that fail to do so and, where injury follows, will find no defence in consumer law.

Safe construction products - the Government very recently announced its intention to establish a new regulator for construction products in order to ensure that safer materials are used to build homes. What will be the impact on product liability law for this?

The Office for Product and Safety Standards (OPSS) provided guidance for use of confidentiality clauses in consumer settlement agreements.

Underlying all of the above is the perennial issue with product liability claims; securing the balance between damage to reputation and brand and the desire to prove that a product is not defective.

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