Legally - the dogs owner is at fault and if the childs parents do make a complaint I'd expect a visit from the police, possibly dog warden as well/instead of police.
The onus is on the dog owner to prevent such things happening - which in situations like this I think is grossly unfair, but legally, even if you block your dog from the person, TELL the person not to touch your dog, and the person touches your dog anyway and gets bitten you are STILL liable.
Now the police and a court is likely to be pretty reasonable about it, particularly if you can evidence the steps you took to prevent the incident... but thats still a pain in the backside and if you do NOT have evidence and it is a he said/she said situation... not so good, you could end up with a control order.
Morally, of course the childs parents are at fault.
Practically - dog owners should ensure their dog is walking to heel to pass people, with the dog on the far side of them away from whoever they are passing. I would add a muzzle if walking somewhere there are narrow paths and blind corners too, and in fact I would get a muzzle (basket style) and start training that NOW..
I would also get a behaviourist/trainer out to consult and come up with a plan to teach a decent heel and desensitize to passing people/children.
That way IF they get a visit from the police or dog warden, they can clearly demonstrate that they have taken the incident seriously and are taking pro-active steps to prevent it occurring again in the future.
This goes down VERY very well with dog wardens, police and courts, should it come to that, so its worth doing even if you do not think you need to or don't believe you were at fault.