The newly enacted legislation guarantees that there is consistently a business based in the EU held responsible for any incurred damages / Credit: Kit8.net via Shutterstock

Negotiators from the European Parliament and Council have reached a provisional agreement to simplify access to compensation for individuals facing damages caused by defective products.

The agreement focuses on adapting liability rules to the changing landscape of online shopping, the rise of new technologies such as artificial intelligence (AI), and the transition to a circular economic model.

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To address the challenges posed by increased online shopping, including transactions outside the EU, and the emergence of AI and other new technologies, the negotiators aimed to ensure that there is always an EU-based business accountable for damage caused by a product.

This coverage extends to products not purchased within the EU. However, to avoid stifling innovation, the rules exclude open-source software developed or supplied outside of commercial activities.

Streamlining compensation process for victims

One key aspect of the agreement is the simplification of the burden of proof for individuals seeking compensation.

The negotiators agreed to ease the process for claimants, acknowledging that proving a product’s defectiveness and its role in causing damage can be challenging.

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In cases of technical or scientific complexity, where difficulty arises, the court may presume the product’s defectiveness, facilitating the compensation process.

In addition, victims will now have the right to request the court to compel businesses to disclose “necessary and proportionate” evidence, making it easier for them to pursue compensation claims.

 Competent consumer protection authorities are also encouraged to provide additional assistance to consumers navigating the compensation process.

Extended liability and inclusive compensation

During negotiations, Members of the European Parliament (MEPs) ensured that compensation could be sought not only for material damage but also for non-material losses, including psychological harm.

The agreement also allows claims for damages resulting from the destruction or corruption of data not used for professional purposes. Notably, an extended liability period of 25 years has been agreed upon for exceptional cases where symptoms of damage emerge slowly.

In response to the agreement, co-rapporteurs from the Legal Affairs Committee (JURI) and the Internal Market and Consumer Protection Committee (IMCO) highlighted the importance of balancing the rights of victims and the legal certainty economic operators deserve in today’s rapidly changing market.

The legislation is set to come into force upon formal approval by the plenary and member states, applying to products placed on the market 24 months after the directive’s entry into force.

The agreed-upon rules represent an update to the existing Directive on the liability of defective products, enhancing consumer protection within the EU.