CMS Guide to changes to EU Product Liability Directive in Slovakia

Product liability provisions are included in the Slovenian Obligations Code (B2B, C2C) and Consumer Protection Act (B2C), which transposes the current Directive 85/374/EEC.

In Slovakia, liability for damage caused by defective products is governed by Act No. 294/1999 on Liability for Damage Caused by Defective Products, which transposes Council Directive 85/374/EEC into national law. Additional aspects are regulated by Act No. 40/1964, the Civil Code.

 Under this framework, producers are strictly liable for damage to health, including loss of life, caused by a defective product. Liability also extends to damage to or destruction of property (other than the defective product itself) belonging to the injured party, provided certain legal conditions are met.

 To successfully claim damages, the injured party must prove three key elements: the defectiveness of the product, the occurrence of damage, and a causal link between the defect and the damage. Strict liability under Act No. 294/1999 applies if the damage exceeds a specific monetary threshold outlined in the Act. 

For businesses operating in Slovakia, the strict liability regime under the Product Liability Act underscores the importance of rigorous product safety measures and compliance programs. Producers, importers, and distributors should implement robust quality control processes and maintain comprehensive product documentation to mitigate liability risks. In addition, companies introducing innovative or digital products, such as software or AI-driven tools, should monitor legal developments closely, as the current framework is less clear regarding immaterial products. Businesses in these sectors may face legal uncertainties about whether their products fall under the scope of "defective products" as defined by the Act.

As of now, no legislative changes have been made. The most recent amendment to Act No. 294/1999 came into effect on September 1, 2004.

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Historically, the publication noted that consumers rarely exercise their rights to compensation under producer liability for defective products. Instead, they tend to pursue alternative remedies, such as withdrawing from the contract, requesting a price reduction, or seeking repair of the defect.

Additionally, the burden of proof for certain types of products has posed significant challenges, making it difficult for consumers to enforce their rights effectively. 

Given that no substantial amendments have been made in recent years, the Act transposing the Directive does not adequately address evolving market trends and advancements in technology. This includes potential issues with categorizing products that fall within the scope of the Act. Furthermore, the translation of the term "defective product" has also faced criticism for its lack of precision.

• The Product Liability Act currently lacks clarity regarding the definition of "product" in the context of digital products. The definition is based on the concept of a "movable thing," which, according to legal doctrine, is intended to apply equally to material and non-material items. However, in practical application, this may lead to uncertainties about the correct interpretation of "product" under the Act and whether digital products can be included within its scope.
•  Since the Directive explicitly defines the term product to include DMF and software files, we believe that a proper implementation of the Directive should eliminate this deficiency.

• As mentioned above, the term "product" under the current Slovak Product Liability Act is defined in a manner that application to immaterial products, such as software, AI, and IoT devices, relies heavily on legal doctrine. This creates significant ambiguity, as the existing definition is based on the concept of a "movable thing," which traditionally applies to tangible items.
• It remains unclear how the new definition of "product," introduced by recent EU regulatory updates, will be incorporated into Slovak law. However, these changes aim to address gaps in the liability framework for digital and interconnected technologies. This includes ensuring that non-physical products, such as AI-powered solutions or IoT devices, are explicitly covered under product liability laws, providing greater clarity and legal certainty for both producers and consumers.
• For businesses dealing with emerging technologies, this transition represents both challenges and opportunities.
• Companies should:
  • Monitor upcoming legislative updates closely to ensure compliance with new definitions and liability standards.
  • Evaluate how their products, especially software and AI-driven tools, might be classified under the updated framework.
  • Consider updating contracts and product documentation to account for potential liabilities linked to immaterial products.
  • Enhance risk management strategies, including product testing, monitoring, and safety protocols, to address evolving legal requirements.

We anticipate that the proper implementation of the new Directive could enhance consumer protection and, more importantly, improve legal certainty in Slovakia. This would ensure that courts uniformly and predictably assess liability for damage caused by "digital products," such as various software, AI tools, and similar technologies. In the Slovak context, aligning the definition of "product" with the evolving market and technological landscape would address current ambiguities under Act No. 294/1999 on Liability for Damage Caused by Defective Products, thereby strengthening the legal framework and consumer confidence.

• We anticipate that developers and sellers of software and other digital products will need to implement new measures and processes to ensure the security and reliability of their digital offerings. While these requirements may increase production costs for end consumers or business clients, they also promote a more responsible approach to digital product development.
• These measures are expected to enhance the safety and security of digital products, reducing the risk of harm and associated liability. This preventive effect can not only minimize damage caused by defective digital products but also build consumer trust and strengthen the reputation of businesses that prioritize compliance and safety.
• Key considerations for businesses:
  • Compliance Costs: Meeting new standards may require investments in technology, quality assurance, and legal oversight, impacting profit margins in the short term.
  • Innovation opportunities: The push for higher standards may also spur innovation, as companies develop safer, more secure, and compliant products to meet evolving legal and consumer expectations.
• Ultimately, while compliance with updated regulations may initially seem burdensome, the long-term benefits include enhanced consumer trust, reduced liability risks, and a stronger market position.

• Challenges:
  • Proving damages: Injured parties may face significant hurdles in proving their claims for compensation. While the Directive requires the injured party to present sufficient facts and evidence to support the credibility of their claim, they are often at a disadvantage compared to producers. This is particularly true in cases involving complex digital products, where understanding how the product is built and operates requires access to technical information that is typically unavailable to the consumer.
  • Demonstrating liability preconditions: Establishing the defectiveness of the product, the occurrence of damage, and the causal link between the defect and the damage (the preconditions for liability) can be particularly challenging for injured parties. This is especially true for digital products, such as software or AI systems, where defects may not be as easily identifiable or observable as in physical products.
  • Judicial complexity: Courts may also encounter difficulties in interpreting and understanding the intricate technical parameters of digital products. Assessing whether liability preconditions are met for cutting-edge technologies requires specialized expertise, which could slow down legal proceedings and lead to inconsistent decisions.
• Opportunities:
  • Enhanced transparency: These challenges may encourage producers to adopt greater transparency in how their digital products are designed and operated. This could result in clearer documentation, standardized practices, and a stronger emphasis on product safety.
  • Innovation in compliance: The need to ensure compliance with evolving liability standards presents an opportunity for businesses to innovate. Developing robust testing and monitoring processes, as well as integrating safety and reliability into product design, can not only meet regulatory requirements but also build trust with consumers and clients.

Based on the above response to the current changes, there is no draft legislation available. The Ministry of Economy is expected to be responsible for transposition. Based on the current position, Act No. 294/1999 will either be amended or replaced in order to transpose the new Directive.

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