On 8 December 2024, the EU’s new Product Liability Directive (PLD) came into force, overhauling the prior 1985 regime to reflect sweeping changes in technology, global supply chains, and the rise of software, AI and interconnected products. Businesses placing products on the European market—including in Germany—should now prepare for increased regulatory scrutiny and significant new litigation risks.

The PLD continues the “no fault liability” (strict liability) tradition: Manufacturers and other stakeholders in the supply chain can be held liable for defective products regardless of whether they acted negligently or intentionally. Claimants do not need to prove fault to obtain compensation—making product liability claims easier than bringing claims under many national tort laws, and lending legitimacy to the view that product liability may be a fertile ground for collective actions (read our analysis of the PLD’s implications on product liability in Germany here).

The key question for legal teams is: Will these changes ignite collective product liability actions in Germany? This briefing highlights the critical developments and practical implications.

1. Routes for pursuing mass litigation and collective redress in Germany

Mass litigation and collective redress in Germany are being pursued through three routes: Representative actions (which can only be initiated by consumer protection organizations), claims aggregation models using funding-backed special purpose vehicles (SPVs), and mass litigation, meaning that a large number of claimants (i.e., hundreds to hundreds of thousands) file individual actions in parallel proceedings against the same corporate defendant.

• Representative actions (Model Declaratory Actions and Redress Actions): Only consumer protection organizations who have been granted the status of “Qualified Entities” by the German government have standing in court to bring these actions on behalf of groups of consumers (who are not parties to the proceedings). The Model Declaratory Action resolves key issues (i.e., key legal and factual questions) common to at least 50 consumer claims through a single declaratory judgment. Such declaratory judgment is binding on the courts in individual follow-on litigation between the corporate defendant and the consumers who have opted in. The Model Declaratory Action, however, does not provide for an award for payment or specific performance. The Redress Action enables Qualified Entities to bring a claim for a collective amount in damages that is subsequently being distributed among consumers who have opted in. In terms of funding, representative actions are less attractive than other forms of collective redress due to capped returns and rigorous transparency requirements: The profit share for funders is capped at 10% of the proceeds of an award, and any funding arrangements need to be disclosed to the court and the other litigants at the beginning of the litigation.
• Claims aggregation: Supported by litigation funders and legal tech solutions, for the last ten years claimant law firms have focused their activities in the German legal market on bringing aggregated claims through SPVs. These SPVs bundle large numbers of standardized individual claims, usually by way of claim transfer and assignment. Where the claims can be processed in a highly standardized manner in a single action, such actions are economically viable and allow funders to recover proceeds above the caps imposed on representative actions.
• Mass individual actions can be characterized as claimant law firms initiating numerous parallel individual actions—a practice facilitated by the widespread availability of legal cost insurance for consumers and the potential for higher returns and greater legal fees, as neither profit shares nor amounts in dispute are capped.

For a more in-depth and cross-jurisdictional analysis of the global collective action landscape, request your copy of the 2025 Freshfields’ Class and collective actions guide here.

2. Barriers to large scale collective redress actions

Despite the German legislator’s ambition to create a mechanism for collective redress by introducing the Redress Action in 2023, and due to financial incentives particular to the German legal system, claimant law firms and litigation funders continue to focus their activities on claims aggregation and mass litigation.

In the field of product liability, there is even less variation when it comes to different types of collective actions. So far, we have not seen a single Redress Action in the field of product liability, and neither litigation funders nor claimant law firms seem to have tested claims aggregation in the field of product liability. This restraint can be explained by several practical and legal barriers that make large-scale collective redress unattractive in Germany:

• Uniformity of claims required: All collective mechanisms—especially the Redress Action—require that claims are essentially uniform, both factually and legally, so that claimant law firms as well as courts can handle them with a “template-like” approach rather than requiring individual assessment. Such uniformity is rare in product liability, where the product defect, the harm suffered and the causal link between the defect and the harm must usually be assessed individually.
• Funding and financial incentive constraints: Qualified Entities serve as “gate-keepers” to representative actions, meaning that whether such actions are being initiated eventually depends on the Qualified Entities’ appetite to litigate a case. The restrictions around funding and recovery of legal fees under the statutory regime reduce the appeal for litigation funders and claimant law firms and dampen their enthusiasm for taking on these actions for Qualified Entities: The dispute value that serves as a basis for calculating statutory legal fees is capped at EUR 250,000/EUR 300,000 for Model Declaratory and Redress Actions, respectively, regardless of the actual amount in dispute. Fees calculated based on these amounts rarely cover the costs of complex proceedings. Although fee arrangements that operate on hourly rates are legally permissible and common in commercial litigation, their use is constrained by the limited financial resources of consumer protection associations and by the fact that, even if their action succeeds, such fees are not recoverable from the defendant. Stringent statutory restrictions—including a prohibition on promising funders more than a 10 percent share of any amount awarded and mandatory disclosure of all funding agreements—mean that litigation funders are generally reluctant to support representative actions.
• Late opt-in for claimants: Under German law, the final group of consumers whose claims participate in a representative action is “locked in” only three weeks after the last oral hearing. Thus, claimant law firms face significant uncertainty regarding the scope of their action and potential total recoveries, complicating case strategy (including settlement leverage) and making large-scale engagement less attractive.

3. The PLD: a game-changer for liability and collective action risk?

The PLD introduces several enhancements that are likely to improve claimants’ prospects in pursuing product liability claims (read how the new PLD facilitates private enforcement here). In particular, the new PLD features procedural mechanisms that establish a more claimant-friendly environment—in theory paving the way for increased collective redress opportunities in German courts:

• Wider class of “products” and potential defendants: Software—including embedded, standalone, and AI-enabled software—as well as IoT devices and digital services, are now covered by the PLD. Liability under the new regime extends beyond manufacturers to authorized representatives, fulfilment service providers, and providers of online platforms (PLD Articles 4, 8).
• Broader range of compensable damage: Compensation is now also available for loss or corruption of personal data (not just bodily injury or property damage), as well as recognized psychological harm—even if unaccompanied by physical injury (PLD Article 6, Recital 20–21).
• In-trial disclosure of evidence and rebuttable presumptions alleviating the burden of proof: The new rules introduce claimant-friendly disclosure obligations, allowing claimants to request production of documents and other information (such as product samples) supporting their claim in pending litigation on a showing of plausibility. Rebuttable presumptions—like presuming defectiveness if there is an obvious malfunction or failure to produce evidence—substantially reduce evidentiary barriers and significantly increase the challenge for defendants to rebut defectiveness or causality in court (PLD Articles 9 and 10).
• No threshold for claim value: The previous minimum threshold of EUR 500 for loss or destruction of property claims, once implemented to limit the number of small claims, has been abolished, making it economically viable to bring and aggregate even low-value claims collectively.
• Transferability of product liability claims: PLD Article 5(2)(a) clarifies that Member States must ensure claims for compensation may be brought not only by the injured person, but also by “a person that succeeded, or was subrogated, to the right of the injured person by virtue of Union or national law or contract.” This indicates that the European legislator encourages collective redress in the field of product liability.

4. How likely is a surge in product liability mass litigation and collective redress?

In essence, we expect product liability to play a larger role for claim aggregation models and mass individual actions. We do not, however, see a relevant use case for representative actions.

First, even under the new regime, the success of representative actions still depends on the existence and availability of large groups of claimants whose claims are identical or, at the very least, highly similar. This typically only arises when a “series defect”—such as a design flaw or defective batch—causes similar types and degrees of harm to many users. Many types of product harm, in particular personal injury and immaterial damage, still require case-by-case causation and quantum assessment. This limits the practical application of collective redress to seek compensation, especially via redress actions. For personal injury cases including medically recognized damage to mental health, an individual assessment is and will be necessary.

Second, economic calculus still favors mass individual actions and claim aggregation models. The current restrictions on funding and fee recovery for representative actions make traditional, legal insurance- or funder-driven actions the more attractive path for many large-scale claims, particularly as the PLD recognizes the possibility of assigning and transferring claims.

We expect product liability mass claims to become highly relevant for recovering compensation for injuries sustained by medical devices and damage caused by digital products.

a) Spotlight: medical devices 

Medical devices are frequently highlighted as high-risk products for product liability claims, given the potential for widespread harm in the event of a defect. So far, however, claim uniformity is rarely met in this sector. Claims for personal injury from medical devices nearly always entail unique individual circumstances, variations in the degree and type of injury, and complex causation challenges. These factors make such claims generally unsuited for Redress Actions or claims aggregation except in clear-cut cases of series defects—such as defective batches—where the elements of defect, harm and causation can be standardized across claimants. While the Model Declaratory Action can clarify key legal and technical issues with binding effect for a group of affected consumers, it does not remove the need for individual follow-on litigation.

Specifically in the medical devices sector, the PLD could in principle facilitate collective redress. For “life-sustaining medical devices”, the PLD states that “it should be possible for a court to find that a product is defective without establishing its actual defectiveness, where it belongs to the same production series as a product already proven to be defective” (PLD recital 30)—essentially codifying the ECJ’s Boston Scientific jurisprudence. Also, a product recall could trigger a quasi-presumption of defectiveness for a large group of products (cf. PLD Article 7(2)(g)). Lastly, “innovative medical devices” are given as an example of a type of product that may on its face present technical or scientific complexity and may therefore trigger the rebuttable presumptions of both defect and causation (cf. PLD Article 10(4)(a) and recital 48).

As a result, courts could feel invited to “brush over” the tests for defectiveness and causation by generously applying rebuttable presumptions and thus creating uniformity of at least some elements of a product liability claim. Still, the lack of uniformity when it comes to individual harm, combined with the financial incentives for mass litigation, leaves one skeptical as to whether product liability collective redress in the medical devices sector will become a playground for claimant law firms and litigation funders. As for treatment cost which can form a substantial part of a personal injury claim, these costs are transferred under statutory law to health insurers who, by definition, do not qualify as consumers and thus are barred from participating in a Redress or Model Declaratory Action.

b) Spotlight: Digital products

The digital sector will—most likely—be one of the industries that will see the biggest impact of the new PLD (catch up here on how digital services are covered by the PLD and click here for a summary of the PLD’s key implications for software and AI). A single product flaw, such as a software bug exposing digital or interconnected products to cybersecurity threats, can affect thousands of products, while the lowering of evidentiary thresholds and loss-of-data compensation under the PLD promote the standardization and aggregation of claims. The relaxing of evidentiary standards, coupled with the new disclosure obligation, could materially increase litigation risks for software developers and manufacturers of products who heavily rely on or depend on digital services. There is a risk that courts, when confronted with complex technical evidence, could allow evidentiary presumptions to shade towards “quasi-automatic” findings of defect and causation.

Notably, the PLD’s requirement for manufacturers to meet relevant cybersecurity standards (PLD Article 1(f)) further increases their potential exposure to liability, especially in scenarios where defective software leads to cyberattacks or ransomware incidents affecting many users in similar circumstances. In order to establish a potential line of defense, businesses should maintain robust documentation and compliance protocols, especially for cybersecurity and software updates.

5. Key take-aways for businesses

Product liability will continue to be governed by a strict, no-fault liability regime for the entire product lifecycle, with expanded categories of compensable harm. At the same time, more actors in the supply chain, including software developers and online platforms, are now exposed to direct liability. These reforms, combined with claimant-friendly features such as presumptions as to defect and causation and new disclosure obligations, have the potential to increase the appetite for collective redress in the field of product liability.

Despite these claimant-friendly reforms, however, significant legal and economic hurdles still limit the real-world scope of representative actions, particularly for harm requiring non-standardized, individualized assessment.

Businesses and decision makers should prepare for increased strategic litigation risks. As Member States must implement the PLD by 9 December 2026, manufacturers, software developers and other stakeholders in the product supply chain have less than two years to prepare. Meticulous design and quality management processes, thorough knowledge sharing and document retention policies and an update of supply contracts and insurance coverage to reflect the new risk profile are essential in mitigating pro-duct liability exposure.

6. How can we help?

Our team of highly specialized lawyers has extensive and long-standing experience in advising clients from a wide range of industry sectors. A key focus of our advisory work concerns the handling, processing and defense against masses of individual claims as well as representative actions. Our regulatory and litigation experts work seamlessly together, ensuring a coherent strategy from market access to civil litigation defense. This is particularly important as many litigation scenarios are intertwined with or arise on the back of regulatory scrutiny. Our range of services includes

• Strategic (cross-border) regulatory and litigation risk assessment;
• The development of (preventive) risk minimization concepts and defense strategies;
• Strategic litigation against claims brought by (large numbers of) consumers and businesses, both in the context of mass proceedings and representative actions;
• The development and implementation of tailor-made legal tech solutions developed by the Freshfields Lab, including platforms for the presentation of relevant legal issues and arguments, the analysis and calculation of various risk scenarios and the tracking of progress;
• Providing for a seamless global defense through cooperation with international Freshfields teams in other jurisdictions as well as partner law firms in our StrongerTogether-network; and
• Advise on Litigation PR and crisis communication, collaborating with our clients' communications departments and external PR agencies.