Press Release: Revised Product Liability Directive risks undermining Single Market coherence, business leaders warn

At a time when the European Union is focused on strengthening the Single Market and boosting competitiveness, participants warned that divergent implementations of the revised PLD could move Europe in the opposite direction by encouraging inconsistent national approaches and forum shopping.

Held at the U.S. Mission to the European Union, the discussion featured warnings from business leaders that implementation of the revised PLD will fuel more mass litigation in the EU, by making it easier to win even meritless product liability claims.

Mass litigation has been growing in Europe, in part due to financialization of civil justice the packaging of portfolios of actions by professional investors, which are also the main beneficiaries of the evolving mass litigation culture. One expert presented economic analysis about the enormous costs of a mass litigation culture to Europe’s economy and competitiveness.

Revised Product Liability Directive Concerns

Speakers expressed deep concern that the PLD mandates judges to reverse the burden of proof in easily met circumstances, requiring defendants to prove their products are not defective and did not cause harm. Even products that meet all safety and quality requirements would be presumed defective and to have caused harm, they said. One speaker pointed out that this takes all the resources and time invested by companies to ensure compliance and throws it away once a complaint is filed against a product.

The vague language in the PLD was flagged as a major problem, causing divergent national implementation and divergent rulings by national judges in the future. The

speakers warned this undermines legal certainty, chills European investments and innovation, and creates pressure on targeted innovators to settle even meritless claims to avoid protracted, costly litigation and reputational damage.

Several participants called for a pause in PLD implementation, to allow time for the Commission to clarify key terms and legal concepts in the Directive by issuing guidance.

The roundtable formed part of a broader series of discussions taking place across Europe on the relationship between the evolving product liability regime in the EU, the single market agenda, and European competitiveness.

Andrew F. Puzder, Ambassador of the United States to the European Union, commented:

“In recent years, mass litigation mechanisms have expanded across EU Member States, supported by new collective action procedures and the growing availability of third-party litigation funding sources. As we have seen elsewhere, the rise of mass claims can have significant economic implications for EU competitiveness as companies divert resources from innovation to litigation, especially in high value-add sectors of the economy.”

Agata Boutanos, Chief Executive Officer of the European Justice Forum, said:

“The real risk is that Europe ends up implementing one Directive in ways that produce 27 different liability environments. At a time when the Commission is rightly focused on strengthening the Single Market and Europe’s competitiveness, PLD implementation must not become another source of fragmentation. The Commission should move quickly to provide guidance so that implementation promotes legal certainty, not forum shopping and profit-driven litigation.”

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