An important milestone as Germany permits automated vehicles: Market impact and outlook

By Dr. Markus Burianski and Christian M. Theissen

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On June 21, 2017, Germany enacted a bill legalizing automated vehicles (hereinafter referred to as the AV Bill). The AV Bill modifies the existing German Road Traffic Act (Straßenverkehrsgesetz, StVG), defining the requirements for highly and fully automated vehicles and addressing the associated rights and duties of the driver. It does not change the concept of general liability under German law. Automated vehicles must be equipped with a black box to identify whether the driver or the system had control at the time of an accident. It is expected that the importance of the German Product Liability Act (Produkthaftungsgesetz, ProdHaftG) will increase and the relationship between insurers and car manufacturers will change. However, many legal questions, especially regarding data privacy, remain unclear at this stage.

Background

In 2015, the German government devised the Strategy for Connected and Automated Driving in order for Germany to remain at the forefront of innovation in the automotive sector. The first step towards the introduction of automated driving was the amendment of the Vienna Convention on Road Traffic of 1968. This treaty currently sets out the road-traffic framework for 36 states, including Germany (but not, e.g., the US or the UK). The treaty was amended to allow automated vehicles, and the German Implementing Act came into force on December 7, 2016.

The AV Bill

Following the amendment to the Vienna Convention on Road Traffic, the German government introduced the AV Bill in January 2017. It received heavy criticism, inter alia for being too vague and not establishing direct liability of the car manufacturer. Nevertheless, the slightly amended AV Bill passed through the German Parliament’s lower house (Bundestag) and upper house (Bundesrat) with lightning speed and became law on June 21, 2017.

The main provisions of the AV Bill are the following:

• Highly and fully automated vehicles are defined. The system must comply with traffic regulations, recognize when the driver needs to resume control, and inform him or her with sufficient lead time as well as at any time permit the driver to manually override or deactivate the automated driving mode. The definition does not cover autonomous vehicles, i.e., driverless vehicles.
• The use of automated vehicles is permitted within the limits of the intended use (as will be defined by the individual car manufacturers). The system must inform the driver if a given use is not within the limits of the intended use (e.g., leaving the driver’s seat when in automated mode).
• The driver may avert his or her attention from traffic, but must remain aware in order to resume control of the vehicle without undue delay either when prompted by the system or when the driver recognizes (or must recognize) that the precon­ditions for the automated driving mode are no longer fulfilled.
• A 100% increase in the maximum liability limits under the StVG (currently a maximum of 110 million for death or injury and a maximum of 12 million for damage to property).
• Vehicles with highly or fully automated driving functions must be equipped with a black box. In the event of an accident, the black box identifies whether the driver or the system had control of the vehicle and therefore clarifies whether liability lies with the driver or – potentially – with the manufacturer.

Impact

The AV Bill does not change the concept of general liability under German law. Both the driver and the owner of the vehicle (Halter) remain generally liable even if the vehicle is in automated driving mode. The driver will be able to avoid liability, however, if he or she lawfully used the automated driving mode. Therefore, if an accident is caused by the system and the driver observed his or her duty of care under section 1b StVG, the driver will be able to show that he or she did not act negligently and is thus not liable under the fault-based driver’s liability provisions (section 18 StVG and section 823 of the German Civil Code, BGB).

The AV Bill explicitly states that the driver may avert his or her attention and must be given adequate time before having to resume control. While it is clear that the driver will not be entitled to sleep, it remains unclear what the lawmaker considers “adequate”. During the legal debate, time delays of two to five seconds were referred to but this provision will apply to both city traffic at 30 km/h and driving on a highway at 130 km/h. What constitutes adequate in these two scenarios may be very different, for example due to the necessary muscle reflexes to take over the steering wheel at 130 km/h and the distance driven at different speeds. The courts will have to interpret the requirement with the assistance of scientific experts.

With regard to the owner’s liability, it is expected that vehicle insurance companies will become increasingly involved. Today, vehicle insurance companies rarely try to recover payments from the respective car manufacturer, even if the damage was ultimately caused by a product defect as opposed to human error, because it is usually not possible to prove that the vehicle was defective pursuant to section 1 of the German Product Liability Act (ProdHaftG). This is likely to change once (i) the percentage of car accidents caused by human error decreases, and (ii) the vehicles involved are equipped with a black box. It is expected that, even though the number of accidents will decrease, the amounts will increase due to the complex additional technology installed in automated vehicles that will render the pursuit of claims by vehicle insurance companies more attractive. In light of this, the importance of the ProdHaftG and product monitoring will increase. The further technology progresses, the more difficult it will become for a manufacturer to be exempt under section 1, paragraph 2, No. 5 of ProdHaftG (state-of-the-art defense).

Two major points of criticism were not taken on board. First, it is not the car manufacturer that is directly liable for damage caused by automated vehicles but the non-driving driver. Second, the provision regarding the black box is too vague. With regard to the first point, the German lawmakers underlined that, at this stage of technological development, they do not consider it adequate or necessary to change the current liability rules. This might be different once the final stage of automation is reached, i.e., autonomous self-driving vehicles without a driver able to resume control. Regarding the second point, it does indeed remain unclear who is entitled to request the data to assert, satisfy or defend claims resulting from an accident. But this point is not addressing the real commercial question of who owns the data gathered by the system. Multiple questions regarding data protection and data privacy will need to be answered over the coming years.

Conclusion

The AV Bill is an important milestone for highly and fully automated driving in Germany and for the global automotive industry. It creates a solid legal framework and permits car manufacturers, suppliers and new entrants to pursue business opportunities in a future market many consider colossal. Even though the liability framework has not changed, the cooperation models between the different market players certainly will. Car insurers are seeking to obtain access to the ever-growing quantity of data and to strengthen their cooperation with car manufacturers. This may include post-
accident compensation and the balan­cing of claims in order to avoid public litigation concerning such delicate
questions as bugs in the software of auto­mated vehicles.

mburianski@whitecase.com

ctheissen@whitecase.com