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On Tuesday, 20 May, AmCham EU met with Michael McGrath, European Commissioner for Democracy, Justice, the Rule of Law and Consumer Protection. The meeting served as an introduction to AmCham EU’s work and an opportunity to hear more about the Commissioner’s current priorities. AmCham EU underlined the importance of legal certainty, proportionality and alignment across upcoming legislation. We also shared updates on our engagement with the Commission on key sustainability, digital and consumer protection files, including outreach to international partners.  

The discussion also touched on broader EU-US economic relations. A stable, open transatlantic environment that avoids barriers is essential for smooth business on both sides of the Atlantic. Representing AmCham EU were Malte Lohan, CEO and Kim Watts, Senior Policy Manager.

Businesses face a rapidly growing risk of litigation in areas such as sustainability compliance, product liability and digital compliance. This litigation is often financed by third-party litigation funding (TPLF), which offers financial resources to litigants in exchange for a portion of the litigation proceeds. But without sufficient regulatory oversight, TPLF poses risks to the integrity of civil and commercial justice systems. These concerns have prompted calls for stronger EU-wide regulations to ensure transparency, fairness and genuine consumer advocacy in funded legal actions. Find out how TPLF is already increasing exposure to litigation risks across Europe.

On Thursday 14 December, the EU reached a political agreement on the Product Liability Directive. This is an important step towards finalising a vital piece of legislation which should set in place a product liability framework that supports businesses bringing innovative products to market, protects consumers, and at the same time, maintains an appropriate balance between the interests of claimants and defendants in Member State courts.

The final text of this provisional agreement has not yet been published. However, the American Chamber of Commerce to the EU (AmCham EU) is encouraged by the Council’s press release with respect to one highly contentious issue – namely, who must bear the burden of proof in litigation. The Commission’s explanatory memorandum in the original proposal stated: ‘there will be no reversal of the burden of proof, as this would expose manufacturers to significantly higher liability risks and could hamper innovation, leading also to potentially higher product prices and reduced access to innovative products.’

We understand that in an attempt to dramatically overturn the current law, the European Parliament had proposed that the mere ‘possibility’ of a product being defective would be sufficient to reverse the burden of proof, and instead a company would then be required to prove its innocence. The Commission and the Council have maintained that there must be at least the ‘likelihood’ of a defect before a defendant company would need to bring evidence to the contrary. Moreover, we also understand that several Member States have legitimately questioned the impact of mandatory new evidentiary rules and mandatory presumptions (based on mere assertions by a claimant) on their own civil justice systems.

The Council’s press release provides that a court ‘may’ decide that a claimant is required to prove the ‘likelihood’ that a product was defective. If this signals that the Commission and Council have defended their position on this critical issue and that the co-legislators will also permit Member States certain discretion in how they implement the new rules, we are confident that the legislation will have found a more balanced approach. This could alleviate some of the negative consequences that would result from a ‘hard’ reversal of the burden of proof.   

The details on these provisions require clarification and there are still key issues to be resolved in the text.

If Europe is to continue to be a preferred destination for investment and for the launch of innovative new products,  where consumers’ interests are also well protected, policymakers must ensure that Europe does not develop into a place where unmeritorious and abusive litigation is allowed to prosper and where the legitimate interests of consumers are conflated with the profit-seeking interests of  lawyers and third-party litigation funders. As American companies committed to and invested in Europe, we stand ready to engage with and support policymakers in the upcoming negotiations.