British Institute of International and Comparative Law

“'Reviewing the Review: the European Commission's Third

Review of the Product Liability Directive.' ”

Outstanding issues, and a look to the future

Rod FreemanPartner, Product Liability

5 December 2006

• Survey of the practical operation of product liability systems in the EU

• Covered all (15) Member States

• Input from all operators, including government representatives, producers, distributors, consumer groups, academics and lawyers

Background to the 3rd Report – the Lovells Study

The Lovells Report

Participants in the four categories

8528

168 68

Legal

Producers Insurers

Consumer Representatives

The Lovells ReportResponses from Member States

GER

UK

ESP SWE

DK

ATBE

FIFR

GR

IRL

ITA

LUXNE

PRT

Austria 15 Belgium 11 Denmark 15 Finland 22 France 22

Germany 65 Greece 12 Ireland 10 Italy 20 Luxembourg 8

Netherlands 26 Portugal 19 Spain 14 Sweden 11 UK 74

The Lovells Report – key findings

1. Product liability claims are on the increase

55%

1%

22%22%

greatly increased

increased a little

no change

decreased

Extent to which product liability claims have increased in past 10 years

The Lovells Report – key findingsFactors leading to increase

76%

64%

53%

37%

27%

26%

25%

18%

14%

10 %3 %

43%

Consumer awareness of rights

Media activity

Greater access to information

Greater access to legal assistance

Awareness of claims abroad (eg US)Judicial attitudes to claims

Advertising by lawyers

Implementation of the Directive

Changes in other substantive laws

Changes to regulatory environment

Changes in court procedures

Deterioration in safety products

The Lovells Report – key findings2. Product liability risks differ between Member States

Consumers

38%62%

a great deal

a little

Producers

53%27%

20%

a great deal

a little not at all

Insurers

74%

16%10% a great deal

a little

not at allLegal

8%

29%63%

a great deal

a little not at all

The Lovells Report – key findings3. Overall, there is a

high level of acceptance of the Directive, which is generally regarded as striking an appropriate balance

Overall

14%

16%

66%

4%

strikes an appropriatebalance

does not adequatelyprotect consumers

does not adequatelyprotect producers

does not protect eitheradequately

Consumers

80%

20%strikes an appropriate

balancedoes not adequatelyprotect consumers

does not adequatelyprotect producers

does not protect eitheradequately

Producers

26%

3%66%

5%

strikes an appropriatebalance

does not adequatelyprotect consumers

does not adequatelyprotect producers

does not protect eitheradequately

Insurers

5%

7%86%

2%

strikes an appropriatebalance

does not adequatelyprotect consumers

does not adequatelyprotect producers

does not protect eitheradequately

Legal

6%

27%63%

4%

strikes an appropriatebalance

does not adequatelyprotect consumers

does not adequatelyprotect producers

does not protect eitheradequately

The Lovells Report – key findings4. No obvious case for fundamental

reform

– The Commission should monitor developments

– The Directive as part of a wider, dynamic scheme

The Fondazione Roselli Report

1. The development risks defence performs an important economic function, and it should not be removed

2. A compensation scheme for those injured by “development risks” should be considered

Product liability in the EU – where are we now, where are we going?

Reform off the agenda?

not quite….

Product liability in the EU – where are we now, where are we going?

The concept of “defect”

• Foster v Biosil/Richardson v LRC Products

• A v National Blood Authority/Bogle v McDonalds

Product liability in the EU – where are we now, where are we going?

The development risks defence

• Advocate-General in European Commission v UK

• A v National Blood Authority

A worthless defence? Perhaps not:• French “Pentasar” case (September 2004)• Italian blood products case (April 2006)

Product liability in the EU – where are we now, where are we going?

Defence of regulatory compliance?

Kitchen Stove, Case (1998)Swiss Elevator case (2004)Pollard v Tesco Stores (2006)

The future?

• Ongoing monitoring by the Commission

• Changes in the broader liability environment– Procedural reforms?– Regulatory reforms

• Development of experience with GPSD

• REACH