From product liability towards decision liability

| Insight

A pedestrian is run down by an automotive vehicle. Who is responsible for the damages?

The Product Liability Act implements an EU directive. This means that Norway and other EU countries have more or less similar rules in this area.

According to the Product Liability Act a manufacturer may become liable for damage that the product causes a third party. With regard to software, including decision support systems or other types of artificial intelligence, this give rise to interpretation issues. What is a product according to the law and who is the manufacturer?

The Product Liability Act is from 1988 and the EU Directive form 1985. This was before internet became common property. In spite of this, the legislator actually mentions software. In the preparatory works to the Act, it is stated that in some situations software could be regarded as a product component, e.g. software installed in a vehicle. Despite this was written more than 30 years ago, the legislator’s example fits on the present issue. Nevertheless, the Product Liability Act gives no obvious answer to the many questions arising in the wake of the technology development.

A pedestrian is run down by an automotive vehicle, a patient is given an erroneous diagnosis in a hospital using a decision support system or an important document is ignored in connection with a semi-automatic due diligence. In all cases a third party suffers a loss. Who shall cover the loss?

In the first example the car manufacturer, the car software supplier as well as the insurance company of the person driving the car are potential liable parties. The car manufacturer has the superior liability for the product put on the market. The software supplier is liable for the software as such, whereas the driver could have acted contrary to instructions from the manufacturer.

When the software is a central component in a product, as it is in a robot vacuum cleaner, an automotive car or a production machine, the injury potential is not only connected with the material features of the product. On the contrary, the software could represent the largest injury potential. If the product causes a damage, this could be owing to errors or defects in the software operating the product. One could say that product liability is about to assume a new aspect; that is decision liability. Decisions are traditionally made by people and liability is connected with subjective criteria. Software made decisions, however, could result in strict liability for the manufacturer.

In a press release from the European Commission last spring, it is stated that next spring EU will give a statement on the interpretation of the product liability rules with regard to artificial intelligence. These guidelines will hopefully contribute to giving the market players more predictability with regard to liability for «intelligent products» that are put to the market, but that remains to be seen.

The article was first published in Finansavisen 17 December 2018