One of the main issues addressed in the Proposal for a Directive of the Parliament and of the Council on liability of defective products <\/a>(\u201cPLD Proposal<\/strong><\/a>\u201d) is proportionality, described as a careful balance between the interests of industry and consumers. In the press release<\/a> the European Commission notes that by requiring manufacturers to disclose evidence and sanctioning failure to do so with a rebuttable presumption of product defect the PLD Proposal aims at putting consumers on an equal footing with manufacturers.<\/p>\n According to the European Commission, the evaluation of the existing PLD identified the burden of proof resting on the injured persons and their consequent difficulty to successfully enforce their compensation claims as one of the main shortcomings. Injured persons may be, as stated in the Questions & Answers document for the PLD Proposal<\/a>, at a significant disadvantage compared to manufacturers in terms of access to, and understanding of, information on how a product was produced and how it operates. Such asymmetry of information may undermine the fair distribution of risk, in particular in cases involving technical or scientific complexity. If the national courts would continue to handle such complex questions by divergent approaches to disclosure obligations the European Commission fears an unequal level of consumer protection and unpredictable court decisions within the Union market (see Impact Assessment Report<\/a>, p. 33).<\/p>\n So, the PLD Proposal establishes rules that will have to be incorporated into the Member States\u2019 national no-fault liability systems implementing the currently applicable Product liability directive<\/a> with an aim to alleviate the burden of proof resting on the injured person, by balancing it more fairly between the injured person and the manufacturer under certain conditions.<\/p>\n The European Commission aims to achieve this by introducing a two-staged mechanism:<\/p>\n First, national courts may \u2013 under certain conditions and to a certain extent \u2013 order the defendant to disclose relevant evidence at its disposal.<\/p>\n Second, rebuttable presumptions of fact may apply, for (1) either the alleged defectiveness of the product, (2) or the alleged causal link between the alleged defectiveness and the alleged damage, (3) or both, the alleged defectiveness and the alleged causal link. Next to other alternatives, under which national courts may base the existence of (inter alia) a product defect on the presence of another fact that has been proven, national courts shall also presume the alleged product defect<\/u>, where a defendant fails to comply with a national court\u2019s order to disclose evidence.<\/p>\n In more detail:<\/p>\n The PLD Proposal aims to provide persons seeking compensation for damage allegedly caused by a product defect with effective means to access relevant evidence to enforce their claims, thereby alleviating their burden of proof.<\/p>\n The PLD Proposal provides that national courts must be able to order the defendant to disclose relevant evidence that is at its disposal. Since failure to comply with such orders shall result in a presumption of defectiveness, \u201crelevant evidence\u201d may be construed as evidence relating to the defect of the product alleged by the claimant with its claim, as e.g. technical information on the product.<\/p>\n However, national courts shall limit the disclosure of evidence ordered to what is necessary and proportionate to support the injured person\u2019s claim (i.e. to limit the disclosure to the necessary minimum and prevent blanket requests and\/or fishing expeditions).<\/p>\n To determine the necessary scope of the relevant evidence to be disclosed, national courts may refer to the facts and evidence presented by the claimant, to support the plausibility of its claim for damages. The defendant\u2019s disclosure of evidence should \u201cmirror\u201d \u2013 and be limited to \u2013 the facts and evidence on the product defect, as alleged by the claimant. Referring to Article 6 of the PLD Proposal, the defendant may be ordered to disclose evidence (only) on all circumstances, based on which \u2013 pursuant to the injured person\u2019s presentation of facts and evidence in its claim \u2013 the product shall allegedly be considered defective. Conversely, any evidence relating to circumstances other than those for which the claimant presented facts and evidence, shall not the disclosed by the defendant.\u00a0\u00a0\u00a0<\/p>\n In determining whether an order for the disclosure of evidence is proportionate, national courts shall also consider the legitimate interests of all parties, including third parties concerned, in particular in relation to the protection of trade secrets and of confidential information.<\/p>\n According to the PLD Proposal, where a defendant fails to comply with an order by a national court to disclose relevant evidence, national courts shall presume the alleged defect of the product. This shall, as stated in recital 33 of the PLD Proposal, provide an incentive for the defendant to comply with the obligation to disclose information, to escape the burden of rebutting the otherwise looming presumption of defectiveness (cf. Article 9 Para 2 (a), Para 5 PLD Proposal).<\/p>\n To rebut the alleged product defect presumed by the national court, the defendant shall demonstrate that the facts and evidence presented by the injured person with its claim \u2013 as a prerequisite for the national court\u2019s order to disclose the relevant evidence and the subsequent sanction of presumption of defect \u2013 do not warrant the product to be considered defective according to Article 6 PLD Proposal. This means that the defendant must show that the product does provide the safety the public at large is entitled to expect in this regard.<\/p>\n According to the PLD Proposal, in respect of trade secrets, national courts should be empowered to take specific measures necessary to preserve the confidentiality of information that is a (alleged) trade secret during and after the proceedings. This should include, as stated in recital 32 of the PLD Proposal, at least measures to restrict access to documents containing trade secrets or alleged trade secrets and access to hearings to a limited number of people, or allowing access to redacted documents or transcripts of hearings.<\/p>\n When deciding on such measures, national courts should take into account:<\/p>\n The PLD Proposal is far from being final and is at an early stage of legislative work.<\/p>\n Both the European Parliament and the Council will review the PLD Proposal and suggest amendments. Without a crystal ball it is not possible to predict when the trilogue process will conclude, even if on average such process takes around two years. It is thus possible that the new PLD will be enacted before the end of the term of the current European Parliament in 2024.<\/p>\n Moreover, once the PLD is finalized at Union level, transposition of the novel mechanisms included in the current version of the PLD Proposal \u2013 which would at the time being also comprise the new evidence disclosure obligation and rebuttable presumptions of fact \u2013 into the respective national no-fault liability systems of the Member States will raise additional and important legal issues \u2013 both of substantive and of procedural law.<\/p>\n It is fair to say that in many Members States the implementation into national law of the above-described mechanisms would represent a significant procedural change. It remains to be seen whether the other EU institutions will adopt the same approach to achieve fairness between injured parties and manufacturers defending in product litigation as the current PLD Proposal of the Commission, bearing also in mind the principles of fair trial instituted inter alia under the European Convention on Human Rights.<\/p>\n Further, the above-described mechanisms may raise EU constitutional law questions, as evidentiary rules and\/or provisions on proof are traditionally seen as a matter of national law rather than EU law. So this topic could be a focal point of debate in the months to come between the various stakeholders.<\/p>\n Hogan Lovells is actively monitoring developments in this space \u2013 keep an eye out for our future updates. For former articles of Hogan Lovells\u2019 European Product liability team please head to: European Commission proposes new ground-breaking rules on product liability and AI civil liability to protect consumers – Hogan Lovells Engage<\/a>.<\/p>\n<\/div>\n1st stage: Ordering disclosure of evidence on product defect<\/h4>\n
2nd stage: Failure to disclose evidence leads to rebuttable presumption of alleged defect<\/h4>\n
Confidentiality of trade secrets<\/h4>\n
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Outlook and next steps<\/h4>\n
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