Introduction
2023 was a significant year for product liability and safety reform in the UK and the EU.
In the UK, the Retained EU Law (Revocation and Reform) Act 2023, originally dubbed the "Bonfire Brexit Bill" was enacted but in a far more limited form than had been first proposed, and the OPSS published a new consultation as a part of its much anticipated Smarter Regulation review into modernising the UK product safety framework for the digital age.
2024 is set to be another defining year, which may bring greater clarity on what the UK's future product liability and safety framework will look like. It may be the year in which we see concrete proposals for clear divergence from the existing European Union framework. This is especially the case given that the EU is not standing still and continues to legislate in these areas itself. A key example being the implementation of the General Product Safety Regulation in June 2023 and the proposal to reform the strict product liability regime with significant amendments to the Product Liability Directive set to be approved this year.
Our round up below highlights some of the key regulatory and legal developments in product safety and product liability across the EU and UK.
Product safety
UK
CE markings
On 1 August 2023, the Department for Business and Trade (DBT) announced it would extend the use of CE marks, indefinitely, on the 18 classes of goods it oversees, when being sold on the Great Britain (GB) market. As such, businesses placing most goods (eg machinery, electrical equipment, medical devices, and toys) on the GB market can choose whether to use the UKCA and/or CE mark to show that its product conforms with applicable safety legislation. Medical devices and construction products are not covered by this indefinite extension and are subject to sector specific UKCA marking deadlines.
However, it remains unclear precisely how this extension will work in situations in which the UK and EU's product safety requirements start to diverge. In these circumstances, a CE mark will not be equivalent to a UKCA mark, and the logical consequence of this is that the UK could in future be accepting EU based goods onto its market despite the fact that these products do not comply with UK regulations/standards.
The UK Government has not provided much more detail (or any draft legislation) to support this proposal since the press release of 1 August 2023, and we await further clarity to allow us to better understand how it intends to put this into practice.
The Windsor Framework for Northern Ireland
2024 will see the continued roll out of the Windsor Framework, the agreement reached in March 2023 between the UK and the European Union which is intended to remove some of the complexity regarding the transport of goods between Northern Ireland and Great Britain post Brexit.
As part of the Brexit Agreement, the UK and the EU signed the Northern Ireland Protocol which meant that Northern Ireland would continue to follow EU rules in areas such as product safety and liability (this was to avoid the need for a land border between Northern Ireland (a country with the UK) and the Republic of Ireland (an EU Member State).
Under the framework, goods will be put into two separate 'lanes'. Goods entering Northern Ireland from Great Britain that are intended to stay within Northern Ireland will be in the 'Green Lane'. This Green Lane will require minimal paperwork and products will only be subject to physical checks if fraud or non-compliance is suspected. Companies will have to be signed up to a new trusted trader scheme to use the green lane.
The "Green Lane" is set to be fully operational by September 2024, with further elements of the framework being introduced in phases through to 2025.
This year, it should therefore become clearer whether the Framework has been successful in alleviating the difficulties reported by traders importing goods into Northern Ireland post Brexit and whether any further reform will be required.
OPSS consultation
At the same time as the CE marking extension was announced, the Office for Product Safety and Standards (OPSS) launched a consultation (Smarter Regulation: UK Product Safety Review) on its proposals for reforming the UK's product safety rules in light of emerging technologies and new models of supply. The consultation focussed on three core aspects of the proposed new product safety framework: bringing products to the market; online supply chains; and compliance and enforcement.
The proposals suggest we are likely to see some real divergence to certain aspects of the EU's product safety framework in the future, especially given that the EU is also legislating in this area (see below).
For example, the intention is to create a system where differing levels of requirements will apply to demonstrate a product is safe according to the hazard it presents and the potential harm it could inflict. Rules are likely to be less prescriptive and more proportionate with the aim of promoting innovation, whilst still ensuring consumers' safety and confidence in products. But businesses placing products on both the UK and EU markets will have to comply with two sets of rules, which may increase confusion as well as compliance costs.
Although the Government's stated intention is to reduce the burden on businesses where possible, our view is that many of the proposals will likely be more burdensome, particularly for online marketplaces.
The consultation suggests that consumers can be at greater risk when purchasing products online and non-compliance with existing safety requirements can be more prevalent among online sellers. The OPSS also recognises that at present, online marketplaces have little control over the third-party products sold on their platforms and they usually take a reactive approach to safety when instructed to do so by the authorities. The OPSS therefore proposes to require online marketplaces to eg take reasonable steps to verify information about third party sellers for high risk products; monitor their marketplace for the availability of any products flagged on the UK Government Product Recalls and Alerts page; and gather product safety information about third party goods, including analysing customer reviews for safety concerns and carrying out targeted monitoring of any products that they identify could represent a risk.
The key message in relation to all future product safety reform is that the UK Government wants to give businesses maximum scope to innovate when producing safe products and not place unnecessary burdens on them to drive innovation and growth for the UK economy. It will only intervene when needed to protect consumers. Further, there needs to be flexibility so that frameworks can evolve with advances in technology and respond accordingly.
The Consultation closed on 24 October 2023 and the outcome of the consultation is still awaited. It has not been confirmed when the OPSS will publish its response but we expect to hear more this year.
EU
General Product Safety Regulation (GPSR)
While the UK's proposals to reform its product safety regime are still at an early stage, the EU has already enacted legislation in this area.
The EU legislator is replacing the outdated General Product Safety Directive (Directive 2001/95/EC) with a directly applicable regulation. With the comprehensive modernisation in the EU Product Safety Regulation (Regulation (EU) 2023/988, the General Product Safety Regulation - "GPSR"), the European legislator is attempting to do justice to the digitalisation of products and the challenges of new business models. The new Product Safety Regulation came into force on 12 June 2023 and will apply from 13 December 2024, directly affecting all economic operators operating in the EU, ie manufacturers, authorised representatives, importers, distributors or any other person who is subject to obligations in connection with the manufacture of products, their making available on the market or their putting into service in accordance with the relevant legislation.
The main changes include in particular:
- extension of the personal scope of application to fulfilment service providers and providers of online marketplaces, each with far-reaching information and product safety obligations
- earlier date of application: The date from which the obligations under the GPSR apply will be brought forward considerably, particularly in distance selling.
- extension of the assessment criteria for the safety of products: it must be explicitly assessed how other products affect the product to be assessed and whether safety-relevant properties are affected
- codification of the assumption of manufacturer status when a significant product change is made
- stricter product recall requirements
- obligation of the economic operator to offer remedies following a product recall.
Affected parties are advised to prepare for the new product safety regulations now and to evaluate their business model with regard to the new requirements of the GPSR. Internal processes (cf. only the mandatory "Product Compliance Process" in Art. 14 GSPR) require - possibly time-consuming implementation.
It should be noted that the GPSR and the OPSS Smarter Regulation review are seeking to address many of the same issues, at their crux they both seek to ensure that regulations governing products are fit for purpose and safeguard consumers in the age of ever advancing technology.
Once the UK has published draft legislation in this area, it will be easier to assess the extent to which the UK and EU regimes will diverge in the future.
Product Liability
EU PLD
The current EU Product Liability Directive (PLD) is almost 40 years old and stipulates a strict no-fault liability for a defective product. The European Commission published the initial draft of a revised PLD in September 2022. Just recently, on 14 December 2023, the EU Parliament and the Council reached a political agreement to amend the initial draft.
The revised PLD aims to respond to the increase in online shopping and the emergence of new technologies (such as AI), as well as ensuring the transition to a circular economy model. Without a doubt, the revised PLD has the potential to change the current liability landscape significantly.
What will be the key changes?
- Extended liability
Under the revised PLD, software and digital production files shall be considered a ”product“. Claimants shall be compensated for material and non-material damage (including damage to psychological health) as well as the destruction or corruption of data that is not used for professional purposes.
- More potential defendants
In addition to the (quasi-) manufacturer and the EEA importer of a product, the revised PLD imposes for strict no-fault liability on the manufacturer’s EU authorised representatives, fulfilment service providers (i.e. storage, packaging and shipping service providers) and, in certain cases, even retailers and online marketplace operators. Companies that "substantially modify" a product outside the control of the manufacturer shall be considered manufacturer of the modified product.
- Burden of proof
The revised PLD aims to simplify the burden of proof for claimants who would normally have to prove that the product was defective and that this caused the damage suffered. In addition to several other presumptions, the draft provides that both the defectiveness and the causal link between the product defect and the damage can be presumed if the claimant faces excessive difficulties in particular due to technical or scientific complexity and the product is likely to be defective.
- Disclosure of evidence
The revised PLD provides for a disclosure of “necessary and proportionate” evidence, which is not common outside of Common Law jurisdictions.
The revised PLD will enter into force once formally approved by the plenary and the EU member states and will have to be implemented into national law within a 24-month period. The new rules will apply to products placed on the market 24 months after entry into force of the revised PLD.
UK Implementation of the EU PLD to change the CPA?
It is still unclear the extent to which the UK will implement the EU PLD and if so, how this will change the current, and seemingly now outdated, Consumer Protection Act 1987 ("CPA"). As noted above, we are still waiting for the outcome of the OPSS' product safety consultation (which includes compliance and enforcement as a key limb) and we understand its response will provide further light on any CPA updates.
It is worth reminding that the Law Commission highlighted "product liability and emerging technology" as an area for potential update as part of its proposed 14th Programme of Law Reform back in 2021 so decision makers are alive to the need to update the CPA. However it was announced in February 2023 that the timetable for this had been extended indefinitely so it is unlikely that we will see changes to the CPA happening in the next year or so.
That being said, the English court continues to influence the product liability landscape:
- The new QOCS rules (through the amendment to CPR44.14) came into force on 5 April 2023 and apply to all claims issued on or after 6 April 2023. The amendments allow a defendant to set off its cost liabilities against the claimant's costs and damages and therefore enforce costs orders in its favour against the Claimant. The defendant's recoverable costs are still capped at the aggregate amount of damages, interest and costs recovered by the Claimant but this is a far better position for defendants than had been the case previously.
- Tyers v Aegis Defence Services (BVI) Ltd & Ors [2023] EWHC 896 (KB) and Shaw v Maguire (Re Preliminary Issues) [2023] EWHC 2155 {KB): These are both further examples of the court exercising its discretion regarding limitation deadlines to the benefit of the claimant. Defendants facing claims for defective products should be alive to the fact that, other than the 10-year limitation long stop from date of circulation, limitation deadlines are far from complete defences to claims and the court is likely to allow the claim to proceed if it considers it fair, just and proportionate to do so.
- CCC v Sheffield Teaching Hospitals NHS Foundation Trust [2023] EWHC 1905 (KB): This considers a child's right to bring a "lost years" damages claim for loss of earnings. Adults are entitled to make such claims (ie for money they would have earned but for their injury/death) but it is currently considered too speculative for such claims to be made by children. However, permission has now been granted for this appeal to be heard by the Supreme Court in 2024 so we look forward to seeing the decision.
Environmental and sustainability
EU
Product businesses should also be aware of regulatory developments relating to packaging. The EU Packaging Regulation draft proposal significantly enhances the existing EU Packaging Waste Directive. The proposal addresses several issues raised in the European Green Deal, including reducing excess packaging, improving package recyclability, and lessening the number of virgin materials utilized in new packaging. Ultimately, it supports the European Green Deal’s goal of creating a cleaner, more sustainable circular economy to achieve the ambition of zero pollution by 2050.
Expected to take effect in late 2024, it’s essential for businesses to start preparing for the new regulation.
The Draft of the European Commission for the Regulation on Packaging and Packaging Waste pursues ambitious goals to minimise the environmental impact of packaging and to promote the circular economy. The Commission President has announced that she wants to adopt the draft regulation before the new European Parliament elections in summer 2024. The goals of the European Regulation on Packaging and Packaging Waste include:
Improving recyclability
- increasing the use of recycled plastics
- promotion of compostable packaging
- prohibiting certain types of packaging
- quotas for reusable packaging.
UK
The UK has not published similar proposals, and the General Elections scheduled for autumn this year could have an impact on future proposed legislation. The UK Government has introduced some recent reforms such as a ban on the use of single use plastics in items such as plates, trays and bowls from October 2023. Exemptions apply in some circumstances but not for products such as cutlery and balloons.
Future steps are expected to include banning additional plastic items and mandatory labelling on packaging to help consumers correctly dispose of items.
One issue which is likely to continue to be relevant in 2024 is the significant rise in fashion brands making "green claims" about their products (such as “eco-friendly” and “sustainable”) and enforcement action taken by the UK regulators to safeguard consumers from misleading statements.
In 2023, the Competition and Markets Authority (CMA) launched an investigation into the environmental claims being made by three major fashion brands on their products/marketing materials. This investigation focused on whether these brands were misleading customers by giving the impression that their garments were “more environmentally sustainable than they actually are.
In the UK, both broadcast and non-broadcast advertising, including marketing materials or claims made on websites, is regulated by the Advertising Standards Authority (ASA). The ASA has no legal powers, but it can refer matters to Trading Standards, which has enforcement powers. Green claims made on packaging and the products themselves are regulated by the CMA.
The CMA does have enforcement authority and at its most severe, it can pursue criminal prosecution for misleading actions and omissions committed by traders via the Consumer Protection from Unfair Trading Regulations 2008 (CPUT). These regulations prohibit misleading actions or omissions, as well as unfair commercial practices.
The CMA’s powers are set to be enhanced with the introduction of the Digital Markets, Competition and Consumer Bill, which will enable it to issue fines of up to 10% of turnover or up to £300,000 for misleading actions and omissions. If enacted, the CMA will also have greater powers to make rulings itself, as opposed to having to obtain enforcement orders from a Court as it does now.
We are monitoring the passage of the Bill and it remains to be seen what impact this will have on the CMA's enforcement of this issue.
Find out more
Please contact our international products team if you require any further information on the topics discussed above.
Part 2 of this article will be released next Monday.
