CMS Guide to changes to EU Product Liability Directive in Slovenia

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.

Slovenia will need to implement the new directive carefully, as it does not allow Member States to derogate from its provisions in order to achieve a different (i.e. more or less stringent) level of protection (except in limited respects, including the “state of the art” defence).

The key changes will therefore be that:

• the definition of a “product” will be broadened and will also include software, AI systems and digital services;
• the scope of circumstances to determine if a product is defective will be widened and will also include product recalls and compliance with safety regulations;
• the right to compensation will now also cover medically recognised psychological damage;
• the limitation period will income cases be increased from 10 to 25 years after a product is placed on the market;
• consumers will be allowed to seek compensation for damage in the form of destroyed or corrupted data;
• claimants will have enhanced rights to seek disclosure of documents;
• the burden of proof for proving that a product is defective is shifted to defendants to rebut any presumptions that a product is defective or that a causal link exists between a defect and damage.

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At this time, there are no aspects of the directive that could be subject to varied interpretation or could pose particular legal challenges in Slovenia. However, this may change during the transposition process.

It remains to be seen whether Slovenia will choose to omit the “state of the art” defence when transposing the directive and thus hold manufacturers liable even if they can prove that the state of scientific and technical knowledge at the time was such that the defect could not have been detected.

The Consumer Protection Act will have to be amended so that the provisions on product liability for defective products will also apply to digital products and services.

The provisions on product liability will also apply to emerging technologies. The new directive provides for liability of manufacturers for products as long as they have control over the product, which applies to software and AI systems, which remain in control of the manufacturer after the product is placed on the market. However, the new directive exempts the free and open-source software from the product liability regime, which will allow the developers of free and open-source software to contribute without worrying about liability and for the free and open-source software to flourish.  

Consumers will have easier access to claim compensation for defective products, both individually and collectively, on the account of presumptions, shifted burden of proof to the defendant and right to disclosure of documents. It will also be ensured that there is always an entity in the EU which can be held liable for a product.

The new directive will likely increase product liability litigation across the EU, especially collective actions.

In particular businesses offering stand-alone software products, digital content and services or AI systems, will need to assess whether they fall within the scope of the updated directive. Businesses will also need to assess their manufacturing and marketing processes to ensure that products placed on the market or put into service after the two-year deadline for Member States to transpose the new directive into national law are compliant.

Businesses will have to develop strategies for managing disclosure requirements, including how to protect confidential and privileged documents. It can be expected that businesses will be affected by an increase in the number of claims brought against them and, in turn, an increase in their overall legal costs. This will most likely lead to an increase in product prices and a shift of these costs to consumers. It can also be expected that liability risks will have effects on innovation and investments in innovation as these risks are often uncertain and difficult to manage and insure against.

The updated EU directive has not yet been transposed into national legislation. It will most likely be implemented by amending the Consumer Protection Act and Obligations Code.

To ensure compliance with the new directive, business should:

• assess if their if their software, AI system or digital service falls inside the scope of the updated directive;
• assess their manufacturing and marketing processes;
• review supply chain contracts that allocate liability risks and the coverage and duration of product liability insurance;
• develop strategies for managing disclosure requirements across Member States, e.g. ensure materials fit for disclosure, such as design files, evidence of safety testing etc.;
• consider potential litigation defence strategies, given significantly easier access of consumers to civil remedies for defective products.