By Zayed Al Jamil, Counsel, and Holly Tunnah, Knowledge Paralegal and AI Specialist for LIBOR.
The New Technologies Formation (NTF) of the Expert Group on Liability and New Technologies, set up by the European Commission, was convened in June 2018. After analysing the relevant national laws and looking at specific use cases, its 2019 report compared various aspects of existing liability regimes and discussed how emerging digital technologies could fit into the pre-existing framework. The NTF decided that certain adjustments need to be made to EU and national liability regimes to allow for just and equitable results for affected parties.
The NTF considered both artificial intelligence (AI), and more broadly, “emerging digital technologies”, including the internet of things (IoT), distributed ledger technology (DLT), advanced robotics and autonomous systems. This means that the conclusions reached in the report could have implications for a broad range of technologies, sectors and individual businesses, even where, on the face of it, a particular technology (to pick an example from the report, an IoT-enabled kettle) does not immediately appear to be on the technological cutting edge.
In this series of three Blog Posts, we discuss the key points addressed in the report, and in particular, the potential implications for businesses that are procuring, developing and/or deploying emerging digital technologies.
Policy drivers and focus of the report
The report states that the drivers for adequate liability regulation are steered by a need to ensure that victims are given appropriate and effective redress against harm caused by emerging digital technologies, and include:
- Corrective justice: since loss resulting from emerging digital technologies may not be allocated to the party who is the most appropriate to bear that loss.
- Functional equivalence: as compensation may be denied in a situation involving emerging digital technologies when there would be compensation in a functionally equivalent situation involving human conduct and conventional technology.
- Effective access to justice: as the victim might theoretically receive compensation, but litigation may be unduly burdensome and expensive, leaving the victim without effective access to justice.
These drivers are reflected throughout the opinions expressed in the report on the current and suggested framework for liability for emerging digital technologies, and raise complex questions for businesses. Specifically:
- the policy drivers in the report are largely focused on protection of the public and consumers, so it remains to be seen, if these recommendations are adopted, whether businesses receive similar protection.
- in any event, businesses which deploy emerging digital technologies will be affected by these recommendations (if adopted) in their relationship with the public and consumers. This means that they will have to be taken into account when contracting for emerging digital technologies, with potentially significant impact on the allocation of liability within a supply chain. Suppliers and customers may both seek contractually to reallocate the liability positions recommended in the report.
- regulated businesses will have to consider carefully the interaction between the recommendations made in this report and their existing regulatory frameworks.
Challenges of emerging digital technologies for liability laws
The NTF highlighted that emerging digital technologies pose the following risks and challenges to the policy drivers outlined above:
- Complexity: modern hardware now differs from equipment on which the rules of liability are based. The increase in complexity and number of parts, combined with a high degree of technical sophistication, makes it hard to apply existing rules.
- Opacity: as emerging digital technologies become more complex, or even so complex that they become so-called opaque “black boxes”, it becomes increasingly difficult for victims to identify what may have caused the harm.
- Openness: a shift from the classic notion of a product completed at a certain point in time to the emerging digital technologies that we have today, which depend on subsequent input in the form of updates or upgrades and/or interaction with other systems or data sources to function properly, has considerable impact on product liability.
- Autonomy: emerging new technologies are becoming more and more autonomous, with self-learning capabilities enabling the alteration of the initial algorithms that process external data collected in the course of the operation.
- Predictability: as emerging digital technologies (and in particular, increasingly sophisticated AI) become capable of processing more external data feeding into their decision-making, the more difficult it will be to foresee the precise impact once in operation.
- Data-“drivenness”: as emerging digital technologies become more and more dependent on external information (generated by internal sensors or communicated from the outside), the more risk there is of data necessary for proper functioning becoming flawed or missing altogether.
- Vulnerability: the increasing necessity for emerging digital technologies to be subject to updates and to be in constant interaction with outside information makes them particularly vulnerable to cybersecurity breaches (which may make the system more likely to cause harm).
In Blog Post 2 of this series, we examine the NTF’s views on the current legal framework for liability in relation to emerging digital technologies.
For more information
For more information on emerging digital technologies, see the following Norton Rose Fulbright resources: