Product Liability Reform in the UK: Does Northern Ireland pave the way for an EU style regime?
Background
As part of its 14th programme, the Law Commission recently announced a new project to consider possible reforms to the UK product liability regime,[1] including whether new redress rules are needed to cover significant advances in technology, for example with AI systems.[2] (See also our earlier article: Product liability regime changes on the horizon?) For context, the current core product liability legislation is the Consumer Protection Act 1987 (“CPA”) in England/Wales/Scotland (“GB”) and the Consumer Protection (NI) Order 1987 (“CPO”) in Northern Ireland. The CPA and CPO are each based on the 1985 EU Product Liability Directive that introduced a strict liability regime forty years ago. With no legislative revisions in the intervening period, a need to update the law has been identified not least in view of the extensive changes to the type of products on offer.
Any revision of the wider UK regime will inevitably have regard to recent European developments in this area of the law. While the UK is no longer a member of the EU, Northern Ireland (“NI”) remains subject to certain EU laws and is required to adopt the new EU Product Liability Directive 2024/2853 (“new EU PLD”) (see below). The new EU PLD has made substantial updates to the regime, principally to cover liability that might emerge from technological developments and - loosely - the “internet of things.”
The issue therefore arises of whether in revising its legislation GB will align its product liability laws with the new EU PLD – aiming to avoid internal UK market fragmentation and possible trade barriers – or whether it may take the opportunity to formulate a new bespoke regime.
Northern Ireland moves ahead
The Protocol on Ireland/Northern Ireland (“the Protocol”) provided a framework for NI to remain dynamically aligned with EU law in various areas of law, including product regulation. To avoid a hard border on the island of Ireland and to protect the Belfast (Good Friday) Agreement, the UK and EU agreed that NI would continue to follow certain EU measures, including a defined set of laws governing the single market for goods.[3] This applies to EU provisions such as product safety, consumer protection, conformity assessment, and market surveillance, and explicitly includes the 1985 EU Product Liability Directive[4] upon which the CPA and CPO are based. Where such EU measures are replaced, they are deemed a “replacement act” and the new version automatically applies in Northern Ireland.[5] In short, this structure means that NI will need to implement the new EU PLD.
Initial steps towards adoption of the measures were taken with the publication of an October 2022 Memorandum[6] in which Westminster confirmed that the replacement act arrangements outlined above would apply in relation to the new EU PLD. In the intervening period there has been close scrutiny of the proposed law, both in terms of the NI constitutional rules and trade issues. Aspects considered by the Windsor Framework Democratic Scrutiny Committee (the “Committee”)[7] (tasked with examining such issues) included whether it would be likely that the replacement EU act would differ significantly from the 1985 Directive which it will replace, and whether the new law would have a significant impact on the everyday life of communities in NI in a way that is liable to persist. The conclusion of the Committee was that the law would differ significantly from the measure it is to replace but that it would not have a significant negative impact. This finding meant that the process of adoption of the law could proceed in NI.
During its scrutiny, concerns were raised in the Committee[8] about imbalances that might arise from having different rules applicable in different parts of the nation. Balanced against consumer advantages, business considerations include whether certain enterprises will see increased risk in continuing to supply to NI, and whether prices of goods may need to be raised to set off, e.g., increased insurance costs to cover potentially increased liability. It was recognised that such concerns would apply equally to GB businesses exporting to the EU once the new EU PLD is in place.
Foreshadowing GB law developments
The Committee also considered how GB might respond to avoid the fragmentation outlined above, although legislators resisted wider speculation about Westminster’s intentions for product liability reform.
In this context the Government’s second Explanatory Memorandum of December 2024 on the proposed NI law made plain the view that the existing GB law also needs to be brought into line with technological developments.[9] The Memorandum envisaged a joined-up approach for the four nations, as follows:
“We will in due course set out our intentions for our planned update, which we will consider doing on a UK-wide basis. The UK will continue to make decisions that benefit the UK interest…[T]he Government will look at updates being made internationally, in order to deliver a solution that best meets the needs of the United Kingdom.”
Considerations for the UK Government
On the one hand, adopting a GB regime that closely resembles the new EU PLD will have the benefit of avoiding possible trade friction between the mainland and NI. However, on the other hand, Westminster should also consider any downsides of this alignment and whether the measure is really the best-balanced choice. It is widely expected that the new EU PLD will bring an increase in product liability claims, with the resultant risks for manufacturers and other economic operators, an impact on insurance rates, and ultimately increased costs likely being passed on to consumers.
Areas for discussion will include the new EU PLD’s widened ambit to include AI systems and software, the broader definition of damage (e.g., psychological injury and destruction or corruption of data), the increased categories of entities against whom claims can be made, the potential for early disclosure, and the introduction of rebuttable presumptions on the issue of defect.[10]
Next steps
The enactment of legislation on product liability is an area reserved to Westminster and in due course the new EU PLD will need to be formally transposed into NI law in the form of a statutory instrument.[11]
The new rules will apply to products placed on the market or put into service in NI after 9 December 2026, so any legislative provisions necessary to reflect the terms of the new EU PLD should be brought into force by that date.
Actual examples of how the new EU PLD is impacting both EU and NI markets will start to emerge through 2027 as GB manufacturers and retailers get used to placing on the market/putting into service products in those markets on the new terms. Should the Government choose to wait until then for indications of the impact of the new EU PLD in practice (some may ask why the hurry to reform a 40-year-old law) then lessons may be learned as to how the GB reforms can be optimised to maintain a balance between consumer rights and industry competitiveness.
With thanks to Arthur Cox (Belfast) for their assistance with transposition updates for Northern Ireland.
[1] https://lawcom.gov.uk/project/product-liability/
[2] https://lawcom.gov.uk/news/artificial-intelligence-and-the-law-a-discussion-paper/
[3] See Article 5(4) of the Protocol. For further details see generally https://commonslibrary.parliament.uk/research-briefings/cbp-9548/
[4] See the EU acts listed in Annex 2 of the Protocol.
[5] Article 13(3) of the Protocol, subject to complex mechanisms under the Windsor Framework.
[6] https://www.niassembly.gov.uk/globalassets/committee-blocks/windsor-framework-democratic-scrutiny-committee/com-eu-20242853/annex-b-2853.pdf
[7] See generally, Enquiry into Directive EU 2024/2583 here
[8] E.g., Windsor Framework Democratic Scrutiny Committee proceedings 28 November 2024 p.2 here
[9] Explanatory Memorandum For European Union Legislation Within The Scope Of The UK/EU Withdrawal Agreement And Windsor Framework here
[10] See generally, EU Product Liability Directive 2024/2853.
[11] 1985 EU Product Liability Directive was implemented by the Consumer Protection (Northern Ireland) Order 1987.
