Dissecting the New EU Product Liability Directive: Codification of Novel Categories of Recoverable Damages

At a Glance

• The EU is “updating” product liability laws across its member states through the new PLD, which member states are required to implement into national legislation by December 9, 2026. Compared to existing laws, the PLD recognizes two new categories of damages.
• First, the new PLD recognizes medically certified damage to psychological health as compensable if it "affects the victim's general state of health and could require therapy or medical treatment." In a significant departure from traditional tort law principles, no accompanying physical injury is required to pursue a psychological harms claim.
• Second, the PLD recognizes a novel damages claim permitting plaintiffs to seek compensation for the loss or corruption of personal data. These damages supplement any regulation-based compensation for data leaks or breaches of data protection that may separately exist in national law.
• Companies operating in the EU should anticipate that the new PLD may bring more frequent claims, greater exposure, and higher legal spend due to these forthcoming changes, including recognition of new categories of liability and more expansive damages claims.

Table of Contents

1. Psychological Harms

2. Personal Data

The European Union's December 9, 2026, deadline for member states to transpose the new Product Liability Directive (EU) 2024/2853 (the PLD) into national law is on the horizon. We broke down the practical nuts and bolts of the PLD earlier this year in "Ten Things to Know about the European Union's New Product Liability Directive," explaining how the PLD makes sweeping changes to product liability laws in the EU.¹

After our in-depth look at the new PLD's provisions on discovery and disclosure obligations earlier this month in "Dissecting the EU's New Product Liability Directive: The Dawn of US-Style Discovery?," we take a closer look here at the new types of damages available under the PLD to plaintiffs in tort and property actions. In addition to compensatory damages for personal injury claims and property damage that are available under current product liability laws, the new PLD recognizes two new categories of recoverable damages: (1) psychological harms and (2) loss or corruption of personal data.

Because the PLD is a directive rather than a regulation, it does not automatically become law in each EU member state. Instead, it sets forth threshold requirements that each member state must transpose into its own national law by December 9, 2026. As a result, while the PLD applies across the EU, the damages available in any given case will be shaped by the implementing legislation of the member state where the claim is brought and subject to differences in scope and procedure at the national level. Moreover, because most EU member states are still debating implementing legislation, national laws and the degree of variation among member states remain subject to change. We most recently wrote about the current state of implementation in a September 2026 update.

Psychological Harms

The PLD recognizes medically certified damage to psychological health as compensable if it "affects the victim's general state of health and could require therapy or medical treatment." The psychological harm must be medically recognized and medically certified to justify damages. To succeed on a psychological harms claim, no accompanying physical injury is required.

For companies used to litigating claims in the United States, the PLD marks a significant departure from typical tort liability rules because most US jurisdictions still require direct physical injury by the product or physical manifestation of injury for indirect harm to state a legal claim. See, e.g., Willis v. Gami Golden Glades, LLC, 967 So. 2d 846, 850 (Fla. 2007) (affirming the physical impact rule, which requires that the defendant's negligent conduct cause some physical contact or impact upon the plaintiff's person before the plaintiff can recover emotional distress damages); see also Payton v. Abbott Labs., 437 N.E.2d 171, 178 (Mass. 1982) (requiring physical manifestation of emotional distress, because mental anguish without physical symptoms is likely to be "relatively harmless").

The PLD cites the World Health Organization's (WHO) disease classifications as the authoritative standard for determining which harms are medically recognized and certified.² The WHO recognizes mental and behavioral disorders such as depression and anxiety. However, the PLD does not specify the psychological conditions that qualify for compensation, nor whether courts will require a specialist's diagnosis or a standard medical certificate to evidence psychological harm.

Ambiguous guidelines could lead to divergent outcomes across member states. Under the existing regulations that date back to the original PLD adopted in the 1980s, for example, the French courts interpreted the scope of recoverable damages under existing regulations to include nonmaterial losses. Similarly, German product liability law acknowledges "tangible" psychological or mental harm as recoverable damage if the harm is appreciable and of a certain duration, providing both economic damages and monetary compensation for pain and suffering. In Italy, however, psychological harm is compensable only if it arises out of an injury to a person's constitutionally protected values or interests.

As EU member states transpose the PLD, additional variations may emerge. Hungary has fully transposed the PLD into national law, writing medically recognized psychological harms directly into the statutory definition of recoverable product damage. In a notable contrast, the Netherlands' and Lithuania's draft legislation omits the "medically recognised" qualifier for psychological harm altogether, potentially broadening the scope of psychological-harm claims beyond the restrictions of the PLD’s limitation to scientifically cognizable conditions.

Personal Data

The new PLD introduces a novel category of damages: compensation for the loss or corruption of personal data. This category does not cover data used purely for business or professional purposes. The PLD provision specifically provides for material losses, such as direct costs of data recovery, expenses for retrieving lost data, and consequential material losses resulting from the data loss or corruption. These damages supplement any regulation-based compensation for data leaks or breaches of data protection.

Notably, this provision should be understood in the context of other changes brought by the PLD, including the broader definition of "defect" to encompass digital products and presumptions of defect and causation under certain circumstances (see topics 2 and 3 in Ten Things to Know about the European Union's New Product Liability Directive).

Although the PLD explicitly provides recovery only for material damages, it also allows for compensation for nonmaterial losses (such as distress from losing irreplaceable photos), provided that such losses are otherwise compensable under national law. Accordingly, whether nonmaterial losses are compensable depends on each member state's preexisting civil liability framework, namely, its civil code or common law in the case of Ireland. For instance, the German Civil Code now explicitly extends to the destruction or damage of data, which previously only applied in principle to personal injury and property damage. Applying local law can yield varying award amounts as courts in EU member states develop methodologies for valuing these losses.

Additionally, the PLD eliminates the preexisting €500 minimum threshold for destruction or loss of property claims. Without this threshold, claimants could litigate small or trivial losses. While the likelihood of claimants doing so on an individual basis may be remote due to the low monetary value of claims below the abrogated threshold, businesses operating in the EU should keep in mind that these substantive changes to product liability laws are occurring fast on the heels of a more expansive litigation landscape.

As we have written before, the EU enacted the Representative Actions Directive (the RAD, sometimes called the Collective Redress Directive) in 2020, and its implementation phase ended in December 2022. The RAD allows "qualified entities," such as consumer organizations and public bodies, to bring representative actions on behalf of consumers. Additionally, the RAD permits EU member states to allow third-party litigation funding. In practice, the post-RAD litigation landscape makes it easier for plaintiffs' firms to aggregate claims and litigate them via class or mass actions to a greater degree than previously available in many EU member states.³ The removal of the damages minimum could allow plaintiffs to pool product liability claims en masse and form class actions more readily than previously possible in the EU in the product liability context.

In Conclusion

Overall, the new PLD expands the scope of damages by allowing medically recognized psychological harm as a standalone cause of action, and economic claims stemming from data loss or corruption. Companies operating in the EU should anticipate that the new PLD may bring more frequent claims, greater exposure, and higher legal spend due to the forthcoming changes, including recognition in product liability laws of new and more expensive categories.