Stay updated on the Law Commission's review of product liability laws, addressing the challenges posed by digital innovations and ensuring consumer protection in a changing market.
As we indicated in our article Is the law on Product Liability in the UK about to change? | Weightmans, the UK Law Commission has launched its first review of product liability law in almost 50 years, with a particular focus on digital products and emerging technologies such as AI.
Following an initial scoping exercise towards the end of last year, the Law Commission has now published the terms of reference of the review of the law relating to liability for defence products.
With all sectors increasingly employing new technologies to improve efficiencies in processes and better products, the Law Commission’s ultimate recommendations on changes to the law, once published, will potentially significantly impact product liability claims brought by consumers. This means that insurers, manufacturers and suppliers of products will need to keep an eye on developments.
The Law Commission last reported in this area of law nearly 50 years ago, following which the Consumer Protection Act 1987 (‘CPA 1987’) was introduced in the UK and which implemented the EU product liability directive (85/374/EEC).
The CPA 1987 introduced no-fault liability for defective products i.e., a consumer does not have to prove that a producer acted unreasonably as would be required in negligence. Although a consumer need not prove fault on the part of a producer, they must prove that the product is defective within the meaning of the CPA 1987.
Since the implementation of the CPA 1987, the range of available products, particularly digital products and emerging technologies, has developed significantly and the Law Commission says, “there are concerns that the product liability regime has not kept pace with such developments.”
Domestic legislation has been slow to catch up with such changes. The EU is ahead of the UK with its new Product Liability Directive 2024/2853 (the ‘new EU PLD’) having come into force on 9 December 2024. Member states will have to implement changes set out in the new EU PLD by December 2026, although it will only apply to products placed on the market after that date.
The new EU PLD extends the definition of ‘product’ to encompass software, including updates, AI, digital manufacturing and digital services. Under the new EU PLD, a product will be deemed presumptively defective if the manufacturer fails to comply with the obligation to disclose information relevant to a claim, the product does not comply with mandatory safety requirements or damage is caused by an obvious product malfunction. The new EU PLD also extends the limitation period (currently 10 years) up to 25 years for personal injury claims where there is latent development of symptoms.
The Law Commission says the current review will “consider the operation of the existing product liability regime, particularly in relation to digital products and emerging technologies such as AI to determine what law reform might be required to ensure that the product liability regime is fit for purpose.”
The review will help determine whether the law on product liability is successfully balancing the interests of consumers in respect of compensation claims and producers and suppliers, who need to be able to innovate. Insurers and indemnifiers will need to keep a close eye on developments.
The terms of reference state the issues to be considered by the review will include the following:
I. Does the CPA’s definition of “product” need to be reformed to include digital technologies, such as software and digital downloads, and are reforms required to reflect when a product has been modified by either its producer or a third-party?
II. Whether the CPA’s definition of “defect” needs to be reformed to take into account the nature of emerging technologies, including AI.
III. Is reform required of the CPA’s definition of “producer” and the range of economic operators who may be held liable?
IV. Should the 10-year limitation period under the CPA be extended for latent harms and products that are periodically updated (such as software)?
V. Is it appropriate to amend the “state of the art” defence in the CPA 1987 to account for the fact that some products can be updated over time?
VI. Under the existing laws, is it too difficult for claimants and their experts to show that some products are defective, for example, software and generative AI, which are often opaque?
VII. Whether the definition of “damage” in the CPA needs to be extended to account for arm that can be caused by emerging technologies, including data destruction or date corruption.
The implication of some of the areas to be reviewed, and comments made by the Law Commission, suggest that the reforms under consideration could potentially make it easier for claimants to pursue product liability claims in the future
It is essential that manufacturers are able to continue to use new technologies to innovate and improve products. It is therefore hoped that any changes to the current law on product liability will accommodate the need for manufacturers to continue to innovate as safely as possible, whilst ensuring that consumers are protected.
Insurers, manufacturers and suppliers of products will want to keep a close eye of developments. Depending on what the review says, and how the UK government ultimately implements any recommendations, may alter the risk profile for a wide variety of manufacturers and suppliers within all sectors of industry and business.
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For further information on this subject, please speak with our product liability lawyers.
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