AI LIABILITY DIRECTIVE AND MODERNISED PRODUCT LIABILITY DIRECTIVE

CD: Could you provide an overview of why the European Commission (EC) is proposing to modernise its product liability rules? What key factors are driving this process?

Newstead: It is nearly 40 years since the first Product Liability Directive (PLD) was introduced in the European Union (EU). The range and complexity of products that are now on the market are a world away from those in the sights of legislators back in 1985. Consumers now have the choice of a myriad of technically advanced, digital products, which are often connected. Some even have artificial intelligence (AI) capabilities. Those drafting the 1985 Directive could not have foreseen the advancements in technology, nor envisioned how such products may cause new types of loss. Until recently, the PLD had stood the test of time. Courts across the EU have interpreted its provisions creatively as technology has advanced. However, with the significant change in the nature of products, global supply chains and sustainability concerns leading to growing product refurbishment, EU legislators recognise that effective consumer redress now necessitates a Directive refresh.

Fielding: A key factor behind the drive to modernise has been the need to address perceived shortcomings in the existing liability rules, particularly uncertainty about what types of digital products, economic operators and types of harm might fall within the scope of these rules. This includes, for example, how the existing rules might apply to products such as software updates, and who should be liable if a business substantially modifies a product that is already on the market. As regards the Artificial Intelligence Liability Directive (AILD), key factors have been the perceived need to clarify the rules for businesses regarding the extent of their liability for damage caused by AI-enabled products and services, to harmonise the rules across Europe to prevent the emergence of fragmented national civil liability rules, and to reduce the obstacles faced by consumers in gathering evidence to prove liability in claims for damages involving AI systems.

Apr-Jun 2023 issue

Shook, Hardy & Bacon International LLP