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 Freeman Partner, 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 3 rd Report – the Lovells Study

The Lovells Report Participants in the four categories Legal Producers Insurers Consumer Representatives

The Lovells Report Responses from Member States GER UK ESP SWE DK AT BE FI FR GR IRL ITA LUX NE PRT Austria 15Belgium 11Denmark 15Finland 22France 22 Germany 65Greece 12Ireland 10Italy 20Luxembourg 8 Netherlands 26Portugal 19Spain 14Sweden 11UK 74

The Lovells Report – key findings 1.Product liability claims are on the increase 55% 1% 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 findings Factors 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 findings 2.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 all Legal 8% 29% 63% a great deal a little not at all

The Lovells Report – key findings 3.Overall, there is a high level of acceptance of the Directive, which is generally regarded as striking an appropriate balance

The Lovells Report – key findings 4. 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