EC Proposes New Liability Rules on Products and AI

The European Commission adopted two proposals to adapt liability rules to the digital age, circular economy, and the impact of global value chains. They will give businesses legal certainty so they can invest in new and innovative products and will ensure that victims can get fair compensation when defective products, including digital and refurbished products, cause harm.

Firstly, it proposes to modernize the existing rules on the strict liability of manufacturers for defective products (from smart technology to pharmaceuticals). Secondly, the Commission proposes for the first time a targeted harmonization of national liability rules for AI, making it easier for victims of AI-related damage to get compensation.

The revised Directive modernizes and reinforces the current well-established rules, based on the strict liability of manufacturers, for the compensation of personal injury, damage to property, or data loss caused by unsafe products, from garden chairs to advanced machinery. It ensures fair and predictable rules for businesses and consumers alike by modernizing liability rules for circular economy business models, and rules for products in the digital age. It should also level the playing field between EU and non-EU manufacturers, and put consumers on an equal footing with manufacturers.

The purpose of the AI Liability Directive is to lay down uniform rules for access to information and alleviation of the burden of proof concerning damages caused by AI systems, establishing broader protection for victims, and fostering the AI sector by increasing guarantees. It will harmonize certain rules for claims outside of the scope of the Product Liability Directive, in cases in which damage is caused due to wrongful behavior.

The Commission's proposal will now need to be adopted by the European Parliament and the Council. It is proposed that five years after the entry into force of the AI Liability Directive, the Commission will assess the need for no-fault liability rules for AI-related claims if necessary.