Lovells against pro-consumer product liability directive

Lovells has completed a ground-breaking study of product liability law for the European Commission. The City firm has recommended that the commission drops plans laid out in its 1999 green paper for radical reform of the product liability directive.

Under pressure from the pro-consumer European Parliament, the commission released a green paper that suggested the burden of proof be reversed to make it easier to establish liability, that defences available under the directive should be seriously curtailed, and that class action procedures be introduced across the EU.

However, Lovells’ study concludes: “The commission should not initiate substantial reform of the directive at this time. The prevailing view is that the directive itself strikes an appropriate balance between the needs of producers and the needs of consumers.”

In late 2001, the body decided it needed an in-depth study before it could draft further proposals for reform. Several law firms and academic institutions competed for the work, but a Lovells team led by John Meltzer was awarded the instruction.

According to Rod Freeman, the Lovells associate most actively involved with the review, the City firm’s contacts and experience in the insurance industry were key factors in the victory. Freeman said that previous studies by the commission had failed to penetrate the insurers, who were concerned about sharing confidential information.

The commission will now decide whether to initiate reform. It is not compelled to change the directive until 2005, when it must produce a review, according to rules set out in the directive itself.