Position paper on the evaluation of Directive 85/374/EEC on the liability for defective products (85/374/ECC)
The analysis of questions put forward by the European Commission in a public survey and document accompanying the public consultation on the evaluation of Directive 85/374/EEC on the liability for defective products indicates, that the Commission has a clearly defined objective, that is, to ensure that the directive is fit-for-purpose vis-à-vis new technological developments (software, the Internet of Things based products, advanced robots, autonomous systems and other ‘smart products').
At this stage, the European Commission aims to collect stakeholders' feedback on the application and performance of the Directive on liability for defective products, nevertheless, the documents published in connection with the consultations may prematurely suggest the need to extend the liability mechanism provided for by the directive to cover major technological advances of the XXI century.
Having that in mind, the Polish Confederation Lewiatan assesses, that it seems too early to introduce, at this stage, new principles on liability for damages dedicated to new technologies (e.g. damages caused by malfunctioning apps or autonomous behaviour of advanced robots, IoT based products or other ‘smart products').
Directive 85/374/EEC envisages a risk-based liability of a producer, which is very strict when compared with a fault-based liability (ex delicto, ex contractu). The former does not depend on fault/intent on the side of a producer and any exoneration from this type of liability can be provided in exceptional cases. Although in cases, where the value of damage is lower than the equivalent of 500 ECU (in case the defective product caused damage to, or destruction of any item of property other than the defective product itself) the risk-based liability of the producer is not applicable, nonetheless - in that case - the producer may be held liable in accordance with general rules (i.e. liability based on fault).
Polish Confederation Lewiatan argues that a thoughtful analysis should be done prior to the preparations of a revised version of the Directive 85/374/EWG, in order to establish if there is sufficient evidence and need to justify amendments in the Directive. Products based on IoT, intelligent devices/autonomous robots, such as autonomous cars/planes/boats, distinguish themselves from "traditional" products of this kind by being equipped with advanced software and being capable of making autonomous decisions and communicating with the outside world with the use of sensors and access to the Internet. It is necessary to underline that the discussed new technologies most often take the final form of movable items and can be considered ‘products' from the perspective of consumers and business users. The example of such product is a washing machine (even now often equipped with software) as well as any future intelligent washing machine (equipped with highly advanced software, sensors and communication capabilities facilitating the automation of particular functions). Regardless of the level of complexity of new technologies, identifying which part of the system failed and allocating the responsibility of the producer does not seem a difficult task (pursuant to Art. 2 of the Directive 'product' covers movables (...) even though incorporated into another movable or into an immovable).
Any possible doubts concerning the liability for damages in this context, in particular in case of damages caused by software malfunctioning (software not embedded in a movable item) should be left for the courts to decide. Only after the case-law and legal doctrine indicate that significant doubts still remain, should any legislative steps be taken. The amendments to the Directive should be introduced insofar as systemic, large-scale problems occur.
There is no justification for extending the scope of the Directive to new technologies. Risk-based liability applied to new technologies may have an adverse effect on the technological progress and competitiveness of European businesses competing with the USA and Asian countries (free from such restrictive legislation). Introducing new rigorous regulations may have a chilling effect on companies and hamper scientific research and development of new, innovative technologies, susceptible to errors. When it comes to innovations and new technologies, the risk of an error or a failure is higher - in comparison with products and services from other sectors of business.
Technologies, products and services highlighted in the documents prepared by the European Commission, are at an early stage of development. Premature legislative intervention may act as a deterrent for European companies, working on revolutionary technological ideas, and as an incentive to change the location of their business. European companies would, in that case, be limited to acquiring licences to use software and technologies developed outside Europe.
The introduction of new laws stands in contradiction with the Commission's strategic plans to deregulate markets, boost competitiveness and provide a level playing field for European companies in the globalised market.
To sum up, Polish Confederation Lewiatan believes that the revision and potential amendments of the Directive should be preceded by a critical and honest analysis of the existing legal framework (which, in our view, is fully applicable to new technologies). Such analysis should take into account the existing and deployed technologies as well the adjudication of courts and other relevant public institutions, and avoid predictions and forecasts. In addition to that, in case the Commission decides to proceed with proposal of amendments, any legal changes introduced should not lead to undermining the functioning of the single market and the development of new technologies in the EU.
Polish Confederation Lewiatan, March 29 2017