EU Trends and Developments Contributed by: Hans-Patrick Schroeder, Kristina Weiler, Laura Knoke, Anita Bell and Rixa Kuhmann, Freshfields
A New Landscape for EU Product Liability and Compliance The EU’s product liability and product safety regimes are undergoing their most significant transformation in decades. The revised Product Liability Directive (PLD) fundamentally redraws the rules governing no- fault liability for defective products. At the same time, the compliance obligations that feed directly into the liability assessment are reshaped by a suite of new and updated product safety regulations, including: • the General Product Safety Regulation (GPSR); • the Machinery Regulation, the Cyber Resilience Act (CRA); and • the Artificial Intelligence Act (AI Act). Together, these reforms create a tightly interlocked regulatory and liability architecture with far-reaching consequences for businesses. The New Product Liability Directive The PLD, which Member States must transpose into national law by 9 December 2026, retains the princi - ple of strict (no-fault) liability but introduces sweeping changes that substantially increase litigation risk for economic operators. As a fully harmonising directive (Article 3 PLD), it sets a uniform standard across the EU: Member States are generally not permitted to fall below or exceed the level of protection prescribed by the PLD, though some limited room for discretion in A defining feature of the revised PLD is the explicit inclusion of software, including AI systems and mod - ules, within the definition of “product” for the purpos - es of strict liability. Under Article 4 (1) PLD, software qualifies as a product irrespective of its mode of sup - ply or usage: • embedded in hardware; • cloud-based; or • delivered as software-as-a-service. Hence, the provider of an AI system, for example, will typically qualify as the manufacturer and is therefore subject to strict product liability. the details of implementation remains. Scope: software, AI and digital services
The PLD also places a stronger focus on components and integrated digital services that are essential to a product’s functions, for example, data processing for navigation, health monitoring or smart home controls (Article 4 (3), (4) PLD). Where such a component or service is integrated within the manufacturer’s or pro - vider’s control, it falls within the scope of strict liability. Critically, the provider of a component and the manu - facturer of the final product into which it is integrated are jointly and severally liable; the claimant can sue either party directly (Article 8 (1) PLD). Contractual exclusions or limitations of liability towards end users are not permitted. Expanded liability cascade The PLD significantly broadens the list of potential defendants (Article 8 PLD), ensuring there is always an EU-based entity that can be held responsible for dam - age caused by a product. Primary liability remains with the manufacturer, followed by the importer, author - ised representative or fulfilment service provider (eg, logistics companies) when the manufacturer is based outside the EU. Distributors and providers of online platforms may be held liable in certain circumstances. Liability further extends to parties that substantially modify a product after it has been placed on the mar - ket. Defectiveness: the hinge between liability and regulatory compliance The PLD revises the test for defectiveness (Article 7 (1) PLD) and establishes a connected presumption of defect in Article 10 (2b). Article 7 (1) PLD states that a product shall be considered defective, where it “does not provide the safety that a person is entitled to expect or that is required under Union or national law.” The second limb of this provision has been introduced to reflect the relevance of product safety and market surveillance legislation when determining whether a product is defective. Whilst compliance with statu - tory product requirements has long been considered part of legitimate safety expectations (under the first alternative), the explicit provision in the second alter - native of Article 7 (1) PLD places greater emphasis on product safety requirements. Article 7 (2) PLD further specifies circumstances that must be considered in this assessment. Relevant
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