From product liability to production liability: Modelling a response to the liability deficit of global value chains on historical transformations of production

Abstract

A legal response to the liability deficits inherent in global value chains, the new standard of economic production, could be modelled on legal responses to the liability deficits of earlier transformations of production. One example is provided by the rise of product liability law in the 20th century. In the wake of centralized mass production and fragmented distribution chains, manufacturers and users of goods were increasingly separated from one another not only physically but also from a legal perspective. Law responded by developing causes of action that overcame contractual and corporate boundaries and allowed users of defective goods effective recourse towards manufacturers with whom they otherwise might not have had a legally relevant relationship otherwise. Similarly, in today’s global value chains a central problem is the lack of a legally relevant relationship between lead firms responsible for organizing and governing production and those harmed by their various tiers of subsidiaries, suppliers and subcontractors. Current approaches to developing such a legally relevant relationship, such as debates over a duty of care based on the common law tort of negligence, are comparable to early developmental phases of product liability law. Under product liability, these early developments were found insufficient for guaranteeing the rights of injured parties, as also seems to be the case in relation to global value chains today. I compare law’s responses to these two transformations of production and propose modelling lead firm liability for inadequate value chain governance (‘production liability’) on the current, more advanced phases of development of product liability law.