Written by Tatjana Evas,
Two key trends are shaping the future of personal mobility: first, a shift from human (driver-driven) to machine (driverless-supercomputer driven) control of vehicles and second, a shift from individual to shared ownership of vehicles. This European added value assessment (EAVA) focuses on the first trend, the shift from driver-driven to autonomous personal mobility, and more specifically on the regulation of civil liability for autonomous vehicles (AVs) at EU level. The main objective of this EAVA is to assess whether regulatory action on civil liability for AVs is justified at EU level and, if so, what would be the expected benefits and costs of such intervention. The analysis of European added value is informed by two expert studies specifically commissioned by the EPRS: ‘Socio-economic analysis of the EU common approach on liability rules and insurance related to connected and autonomous vehicles’ and ‘Legal analysis of the EU common approach on the liability rules and insurance related to connected and autonomous vehicles’; it also draws on the results of the European Parliament’s public consultation on robotics and artificial intelligence and on publicly available statistical data and publications.
Accelerating the adoption curve for driverless or autonomous vehicles (AVs) by five years has the economic potential to generate European added value worth approximately €148 billion. It is therefore in the interest of the public regulator to ensure that the regulatory framework facilitates the adoption of AVs, thus helping to generate economic value. The expert national committees of Member States, high level expert groups set up by the European Commission, and recently adopted European Parliament resolutions have all underlined that the liability issues related to the adoption and use of AVs need to be clarified.
The appropriation of risks in relation to the use of motor vehicles is currently regulated by two main EU legislative acts governing liability rules: the Motor Insurance Directive (2009/103/EC) and the Product Liability Directive (85/374/EEC). The current EU system of appropriation of risks related to motor vehicles generally works well and, as a comparative legal analysis suggests, would in principle be able to deal with the introduction of AVs to the market. However, the application of the existing rules to AVs will likely shift the existing balance in liability distribution between consumers and producers, further accentuate existing gaps, and could potentially contribute to legal and administrative costs in connection with uncertainties.
If the current EU framework is not adjusted, in addition to existing gaps in the current EU legal framework, the introduction of AVs will contribute to the emergence of new gaps and legal grey areas. This is because the current legal framework was not developed to deal with the liability issues of AVs, which are technologically complex and stand distinctly apart from the motor vehicles currently on the roads. Four main categories of risk relating to the liability issues raised by AVs are likely to emerge or become significantly more prominent with the mass roll-out and use of AVs. The new risks include: risks relating to the failure of operating software enabling an AV to function, risks relating to network failures, risks related to hacking and cybercrime, and risks/external factors relating to programming choices. These four issues are not at all or not sufficiently addressed under the current Product Liability Directive – Motor Insurance Directive framework.
If the above issues are not specifically addressed by the legislator, the current regulatory framework will result in many uncertainties, in particular relation to the new groups of risk identified above. In this context, it is likely that the cost of scientifically unknown risks will be borne by the injured parties and consumers will find it increasingly difficult to claim damages. This could ultimately lead to reduced consumer confidence in AVs and, consequently, to slower uptake of AVs in the market.
An analysis of the gaps and limitations of the existing EU regulatory framework suggests that EU policy needs to respond by regulating liability issues relating to the roll-out and introduction of AVs. EU action should address three main sets of issues: first, the limitations and gaps relating to the current framework, specifically the shift in liability between parties; second, the need to adjust the current framework or introduce new rules to cover new risks; and third, the need to adjust or introduce new procedural rules allowing liability to be established for damages involving or caused by AVs.
Four policy options to address the current shortcoming of the EU liability framework are compared and analysed: the status quo (Option 1); reform of the Product Liability Directive (Option 2); or Motor Insurance Directive (Option 3); and the introduction of new EU legislation and setting up of a no-fault insurance framework for damages resulting from AVs (Option 4). A comparative assessment is made of these policy options applying seven qualitative criteria: legal certainty, potential litigation burden, impact on innovation, impact on level of consumer protection, political acceptance, degree of regulatory intervention needed, and degree of dependence on soft law. On this basis it is argued that Option 4 (new EU legislation and insurance framework) is preferable as it has the greatest potential of the four policy options to address three sets of outstanding issues and gaps identified through comparative legal analysis.
Revision of the existing regulation and/or the introduction of additional regulation on the allocation of risks related to AVs has the economic potential to generate European added value that could be lost if the no-action option is chosen. The European added value generated from the roll-out of AVs would be generated mainly by legislative measures facilitating their earlier adoption. Further added value from EU action could be generated at the mass AV adoption stage by measures aimed at reducing transaction and litigation costs arising from regulatory divergences between differing jurisdictions and measures to boost consumer trust in the new technologies.
Coordinated action at EU level has the potential to contribute further to European added value by reducing the transaction costs resulting from the fragmentation of national legal systems and minimising litigation costs. Insufficient coordination among several jurisdictions on the adoption of regulatory rules enabling the testing, licensing and operation of autonomous technologies and vehicles could ultimately lead to unnecessary barriers to the development and deployment of new technological solutions. Clear rules at EU level would meanwhile contribute to legal certainty and would help to avoid transaction costs arising from divergent national legal rules.
Read the complete study on ‘A common EU approach to liability rules and insurance for connected and autonomous vehicles‘ on the Think Tank pages of the European Parliament.
This analysis has been drawn up by the European Added Value Unit within the European Parliamentary Research Service (EPRS). It builds on two expert research studies carried out by the Utrecht Centre for Accountability and Liability Law and RAND Europe for the European Added Value Unit of the European Parliament’s DG EPRS. The two expert research papers are presented in full in Annex I and Annex II. This assessment of European added value finds that revision of the EU’s current legislative framework is necessary, notably as regards the regulation of civil liability and insurance. Quantitative assessment of added value, at the current stage of technological development, proved difficult and inconclusive. A qualitative analysis, however, provided evidence that action at EU level would (i) promote legal certainty; (ii) reduce the transaction costs for car manufacturers and public administrations arising from differences in national liability rules and systems for the determination and calculation of damages; and (iii) secure effective consumer protection. Not only would revision ensure legal coherence and better safeguarding of consumers rights but it would also be likely to generate economic added value. It is argued that accelerating the adoption curve of driverless or autonomous vehicles (AVs) by five years has the economic potential to generate European added value worth approximately 148 billion Euros.