Out-Law Analysis | 02 Jun 2020 | 7:00 pm | 4 min. read
Changes to UK product liability and product safety laws after the UK’s withdrawal from the EU will lead to changes for companies bearing liability and regulatory responsibilities for unsafe products.
The amendments have the potential to reduce information flow about dangerous products sold on the UK and EU markets and impact consumer safety in the UK. It is inevitable that the changes will cause confusion in the marketplace – particularly for businesses operating in both the UK and the EU. Businesses need to spend time to ensure that they understand and observe in good time the changed obligations that they are likely to have to comply with in 2021.
From an insurance perspective, companies holding product liability insurance should revisit their policy terms and examine the policy coverage implications that may be affected as a result of the changes to the Consumer Protection Act 1987 (CPA) and the General Product Safety Regulations 2005 (GPSR) at the end of December 2020.
The Product Safety and Metrology etc. (Amendment etc) (EU exit) Regulations 2019 will come into force at the end of December 2020, provided that the implementation period has not been extended.
The Product Safety Regulations will amend an array of sectoral product safety laws which deal with products such as toys, electrical products, radio equipment, lifts and machinery.
They will also amend the CPA, which provides a right of recourse to consumers who have suffered losses as a result of defective products, and the GPSR, which deal with the safety of products that are brought to the market.
Schedule 3 of the Product Safety Regulations will amend the CPA at the end of December 2020.
Section 4(1)(a) of CPA currently provides a defence to product producers, who can claim that a defect is attributable to compliance with any EU law or obligation. The Product Safety Regulations mean that this defence will no longer apply if that law or obligation is not retained by domestic law at the end of December 2020.
UK distributors who import products from the EU will become 'importers' of products into the UK, and will be required to display their name, address and a product reference on products supplied to the UK. The requirement for importers to label or re-label products could prove arduous and the costs of this exercise are unlikely to be recoverable.
Furthermore, as a result of the amendments to the CPA, importers will be held liable as producers for personal injury or property damage arising from any unsafe products that they supplied in the UK. In the circumstances, from 2021, it is likely that, subject to assets and insurance, consumers will pursue claims against the importers of defective products into the UK who have a closer domestic tie to the UK and will be simpler to sue in UK courts.
UK importers should therefore review their product liability insurance to ensure they are covered for the increased liabilities and additional defence costs that may arise in relation to defective products that they supply to the UK.
Product liability insurers covering legal expenses should also be equipped to deal with the possibility that an increased number of legal claims may be brought against insureds who are importers of defective products into the UK after 31 December 2020.
Product liability insurers must also account for the additional expenses attached to claims which implicate manufacturers of defective products in EU jurisdictions and the impact of contribution proceedings involving EU entities. Importers into the UK should check their contracts with producers for terms which determine which law is to govern these, or which provide for a particular jurisdiction where claims are to be heard.
Schedule 9 of the Product Safety Regulations will amend the GPSR at the end of December 2020. The definition of 'producers' will be amended so that whereas formerly this covered manufacturers established in any part of the EU, it will instead cover UK manufacturers of products or “a person established in the UK that places a product from outside the UK on the market”.
This new category of 'producer' will have to carry out the exercise of labelling or re-labelling products to ensure that their name and address and product reference appear on products where necessary.
They will also be responsible for ensuring that only safe products are placed on the market and that the other "producer" obligations are complied with. These include:
Importers into the UK who used to be treated merely as EU distributors will also become liable to comply with the importer duties under other product specific regulations. One important example is the obligation in many cases to have available in the UK required product technical files which demonstrate the design, testing and compliance of the product.
Under the current GPSR, if a product poses a safety risk to consumers, there is an obligation for producers to tell all relevant UK enforcement authorities where the product has been marketed or supplied elsewhere in the EU. After 31 December 2020, this obligation will no longer apply to producers for UK purposes.
In addition, at the end of December 2020, there will be no requirement for UK authorities to notify EU authorities, or vice versa, about product safety issues via the Rapid Alert System (Rapex) which allows EU countries to quickly share information about defective products and recall unsafe products from any affected member states. The UK government will establish a UK-wide replacement database in substitution for Rapex.
The changes to the GPSR will mean that the UK will no longer automatically benefit from alerts regarding serious safety risks posed by products sold on the UK market which were made by external EU entities. The lack of available information communicated through Rapex has the potential to impact consumer safety in the UK and the speed of recall of dangerous products sold on the UK and EU markets.
Although UK producers may no longer need to recall unsafe products supplied on the EU market via Rapex after 31 December 2020, UK manufacturers may elect to do so – for example, for reputational reasons – meaning that they will have to recall the products via the first importer of the product into the EU who will have to do a separate notification. This may add complexity and delays to the procedure for notification.
Co-written by Sophia Hytiris, a product liability specialist at Pinsent Masons, the law firm behind Out-Law.
28 Feb 2019