The Autonomous Vehicle: A Product Liability Perspective

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1 The Autonomous Vehicle: A Product Liability Perspective Alison Newstead Shook, Hardy & Bacon International LLP Tower Old Broad Street London EC2N 1HQ 9 November 2016

2 A RAPIDLY EVOLVING TECHNOLOGICAL LANDSCAPE LUTZ PATHFINDER ULTRA POD UBER S OTTO GOOGLE TESLA S-MODEL 2

3 OPPORTUNITIES AND CHALLENGES NEW TECHNOLOGY LIABILITY 3

4 CURRENT PRODUCT LIABILITY PRINCIPLES Strict Liability Regime: Consumer Protection Act 1987/Product Liability Directive (85/374/EEC). No fault regime Producer liable for damage caused by defect in product Need to prove: Defect Causation - Damage 4

5 WHO COULD BE HELD LIABLE? The Producer Who is this? Manufacturer Own brander First importer into EU Supplier Technology/interconnection of products may force change Joint and several liability 5

6 WHAT IS A DEFECT? Types of Defect: Manufacturing Design Instructions/Warnings Typically defects in components: airbags brakes tyres Car is not as safe as persons are generally entitled to expect (Consumer Expectation test). How is this expectation measured? 6

7 CONSUMER EXPECTATION Court must take all the circumstances into account, including: the manner in which, and purposes for which the product has been marketed, its get up, the use of any mark in relation to the product and any instructions for, or warnings with respect to, doing or refraining from doing anything with or in relation to the product.. Way in which a product is marketed - most immediate impact on consumer expectation. Instructions For Use and warnings are also key. 7

8 DEFENCES? Defences S4(1) CPA: Compliance with legal requirements Product not supplied Product not defective when supplied i.e. met consumer expectation at that time. The Development Risks Defence/ State of the Art defence Could the defect have been discovered? 8

9 HOW WILL LIABILITY CHANGE? 9

10 SEISMIC SHIFT IN LIABILITY MANUAL SEMI- AUTONOMOUS AUTONOMOUS RANGE AND WAY VEHICLES ARE OPERATED WILL DICTATE LIABILITY 10

11 DIFFERENT DEGREES OF AUTOMATION Differing Degrees of automation headache in assessing liability: GOOGLE: AUDI: TESLA: Google cars will not let humans take control. Intend to keep steering wheels in cars - even as automation is increased. When announcing the autopilot features in the Model S stated owners were responsible for keeping cars in control. Technology may LIMIT human mistakes, but not ABSOLVE human responsibility. Humans want to give up control in high risk environments. More mutual agreements on indemnification. 11

12 THE LIABILITY PICTURE WILL SHIFT Majority of car accidents currently caused by driver error 2015: 1,732 Fatalities in UK (Dft) 35,000 Fatalities in USA (NHTSA) Removing human input has dramatic effect Shift in who is driving a car = shift in liability 12

13 THE LIABILITY PICTURE WILL SHIFT The focus of claims will change: Owner/injured party -v- Other drivers Owner/injured party -v- Manufacturer Manufacturer -v- others in supply chain/network providers 13

14 LIABILITY WILL INCREASE Liability of: Auto manufacturers Component manufacturers Software suppliers Human Input 14

15 COST OF PL INSURANCE WILL INCREASE Cost of product liability insurance Cost of personal motor insurance 15

16 NEW LIABILITIES Software errors Mimicking current human driver errors Missing the human touch? Too law abiding and cautious? A transient problem until all vehicles communicate? Hacking Stealing data from vehicle s computers Commandeering vehicles 16

17 HOW WILL THE LAW ADDRESS CHANGES? Autonomous vehicles are not the first advances in safety technology Park assist, cruise control, airbags, seatbelts Autopilot on planes and ships Law is malleable No radical reshaping of liability laws 17

18 HOW WILL THE LAW ADDRESS CHANGES? Consumer expectation test is key More complex the technology larger the gap between peoples expectation and reality Road users accept other road users will make mistakes What is the consumer expectation of autonomous vehicles? Risk may reduce as people more familiar with technology Until then, warnings and Instructions For Use are crucial 18

19 AUTO INDUSTRY ACCEPTING LIABILITY? Volvo We are the suppliers of this technology and we are liable for everything the car is doing in autonomous mode.. Håkan Samuelsson CEO Volvo (Oct 2015) Caveats: Only accept liability if flaw in cars design If a customer used the technology in the wrong way If a third party vehicle causes the crash Erik Coelingh CTO Volvo (Oct 2015) 19

20 WHAT DO OTHERS THINK? Our proposal is to extend compulsory motor insurance to cover product liability to give motorists cover when they have handed full control over to the vehicle (i.e. they are out of the loop). And, that motorists (or their insurers) rely on courts to apply the existing rules of product liability - under the Consumer Protection Act and negligence under the Common Law, to determine who should be responsible.. * * Pathway to Driverless Cars: Proposals to Support Advanced Driver Assistance Systems and Automated Vehicle Technologies, (Centre for Connected and Autonomous Vehicles, July 2016). 20

21 ABI: Insurers are offering to handle the complications of insuring the first automated cars behind the scenes, meaning that consumers should hardly notice any difference in the current system of motor insurance.. ABI reject idea consumers should obtain separate product liability insurance Surge in demand for product liability insurance by manufacturers? 21

22 Evaluation and Fitness Check Directive 85/374/EEC First formal evaluation of PL Directive since 1985 Prompted by liability questions that arise from fast moving technological developments e.g.: Is the unintended behaviour of an advanced robot a defect? How should strict liability for damages be allocated in connected objects relying on each other? Evaluation in

23 WHO (OR WHAT?) IS TO BLAME? Data will be key in deciding liability Event Data Recorder will become very important The new black box What happened in the decisive seconds before a crash? What was the driving mode? Register faults in assistance systems, software bugs, network failures Data Privacy issues Owner of vehicle will be the owner of the data Manufacturers and insurers will want to access data 23

24 THE FUTURE? 24