On 22 October the European Parliament sent a draft regulation to the Commission for a new strict liability regime for operators of AI systems. Its salient features are.
This Regulation applies on the territory of the Union where a physical or virtual activity, device or process driven by an AI-system has caused harm or damage to the life, health, physical integrity of a natural person, to the property of a natural or legal person or has caused significant immaterial harm resulting in a verifiable economic loss.
(c) ‘high risk’ means a significant potential in an autonomously operating AI-system to cause harm or damage to one or more persons in a manner that is random and goes beyond what can reasonably be expected; the significance of the potential depends on the interplay between the severity of possible harm or damage, the degree of autonomy of decision-making, the likelihood that the risk materializes and the manner and the context in which the AI-system is being used;
(d) ‘operator’ means both the frontend and the backend operator as long as the latter’s liability is not already covered by Directive 85/374/EEC;
(e) ‘frontend operator’ means any natural or legal person who exercises a degree of control over a risk connected with the operation and functioning of the AI-system and benefits from its operation;
(f) ‘backend operator’ means any natural or legal person who, on a continuous basis, defines the features of the technology and provides data and an essential backend support service and therefore also exercises a degree of control over the risk connected with the operation and functioning of the AI-system;
(g) ‘control’ means any action of an operator that influences the operation of an AI-system and thus the extent to which the operator exposes third parties to the potential risks associated with the operation and functioning of the AI-system; such actions can impact the operation at any stage by determining the input, output or results, or can change specific functions or processes within the AI-system; the degree to which those aspects of the operation of the AI-system are determined by the action depends on the level of influence the operator has over the risk connected with the operation and functioning of the AI-system;
(h) ‘affected person’ means any person who suffers harm or damage caused by a physical or virtual activity, device or process driven by an AI-system, and who is not its operator;
(i) ‘harm or damage’ means an adverse impact affecting the life, health, physical integrity of a natural person, the property of a natural or legal person or causing significant immaterial harm that results in a verifiable economic loss;
(j) ‘producer’ means the producer as defined in Article 3 of Directive 85/374/EEC. (the Product Liability Directive)
Strict liability for high-risk AI-systems
1. The operator of a high-risk AI-system shall be strictly liable for any harm or damage that was caused by a physical or virtual activity, device or process driven by that AI-system.
2. All high-risk AI-systems and all critical sectors where they are used shall be listed in the Annex to this Regulation…
3. Operators of high-risk AI-systems shall not be able to exonerate themselves from liability by arguing that they acted with due diligence or that the harm or damage was caused by an autonomous activity, device or process driven by their AI-system. Operators shall not be held liable if the harm or damage was caused by force majeure.
4. The frontend operator of a high-risk AI-system shall ensure that operations of that AI-system are covered by liability insurance that is adequate in relation to the amounts and extent of compensation provided for in Articles 5 and 6 of this Regulation. The backend operator shall ensure that its services are covered by business liability or product liability insurance that is adequate in relation to the amounts and extent of compensation provided for in Article 5 and 6 of this Regulation. If compulsory insurance regimes of the frontend or backend operator already in force pursuant to other Union or national law or existing voluntary corporate insurance funds are considered to cover the operation of the AI-system or the provided service, the obligation to take out insurance for the AI-system or the provided service pursuant to this Regulation shall be deemed fulfilled, as long as the relevant existing compulsory insurance or the voluntary corporate insurance funds cover the amounts and the extent of compensation provided for in Articles 5 and 6 of this Regulation.
5. This Regulation shall prevail over national liability regimes in the event of conflicting strict liability classification of AI-systems.
Amount of compensation
1. An operator of a high-risk AI-system that has been held liable for harm or damage under this Regulation shall compensate:
(a) up to a maximum amount of EUR two million in the event of the death of, or in the event of harm caused to the health or physical integrity of, an affected person, resulting from an operation of a high-risk AI-system;
(b) up to a maximum amount of EUR one million in the event of significant immaterial harm that results in a verifiable economic loss or of damage caused to property, including when several items of property of an affected person were damaged as a result of a single operation of a single high-risk AI-system; where the affected person also holds a contractual liability claim against the operator, no compensation shall be paid under this Regulation, if the total amount of the damage to property or the significant immaterial harm is of a value that falls below [EUR 500](9).
1. Civil liability claims, brought in accordance with Article 4(1), concerning harm to life, health or physical integrity, shall be subject to a special limitation period of 30 years from the date on which the harm occurred.
2. Civil liability claims, brought in accordance with Article 4(1), concerning damage to property or significant immaterial harm that results in a verifiable economic loss shall be subject to special limitation period of:
(a) 10 years from the date when the property damage occurred or the verifiable economic loss resulting from the significant immaterial harm, respectively, occurred, or
(b) 30 years from the date on which the operation of the high-risk AI-system that subsequently caused the property damage or the immaterial harm took place.
Of the periods referred to in the first subparagraph, the period that ends first shall be applicable.
Fault-based liability for other AI-systems
1. The operator of an AI-system that does not constitute a high-risk AI-system as laid down in Articles 3(c) and 4(2) and, as a result is not listed in the Annex to this Regulation, shall be subject to fault-based liability for any harm or damage that was caused by a physical or virtual activity, device or process driven by the AI-system.
2. The operator shall not be liable if he or she can prove that the harm or damage was caused without his or her fault, relying on either of the following grounds:
(a) the AI-system was activated without his or her knowledge while all reasonable and necessary measures to avoid such activation outside of the operator’s control were taken, or
(b) due diligence was observed by performing all the following actions: selecting a suitable AI-system for the right task and skills, putting the AI-system duly into operation, monitoring the activities and maintaining the operational reliability by regularly installing all available updates.
The operator shall not be able to escape liability by arguing that the harm or damage was caused by an autonomous activity, device or process driven by his or her AI-system. The operator shall not be liable if the harm or damage was caused by force majeure.
3. Where the harm or damage was caused by a third party that interfered with the AI-system by modifying its functioning or its effects, the operator shall nonetheless be liable for the payment of compensation if such third party is untraceable or impecunious.
4. At the request of the operator or the affected person, the producer of an AI-system shall have the duty of cooperating with, and providing information to, them to the extent warranted by the significance of the claim, in order to allow for the identification of the liabilities.
National provisions on compensation and limitation period
Civil liability claims brought in accordance with Article 8(1) shall be subject, in relation to limitation periods as well as the amounts and the extent of compensation, to the laws of the Member State in which the harm or damage occurred.
There are also provisions regarding contributory negligence, Article 10, joint and several liability, Article 11, recourse for compensation, Article 12.
There are no carve-outs as regards existing civil liability conventions for maritime claims such as the CLC, Bunker Oil Pollution Convention, HNS Convention, which are strict liability based, and the 1910 Brussels Collision Convention which is fault liability based. This is in contrast to the exclusions contained in the 2004 Environmental Liability Directive whose territorial scope was widened with the 2013 Offshore Safety Directive. The current proposal applies to the “territory of the Union” which would encompass the territorial sea of Member States and, in the light of the ECJ’s decision in Commun v Mesquer, loss or damage manifesting on land from an oil spill in the exclusive economic zone of a Member State would come within the scope of the Regulation. As such, it has the capacity to conflict with existing strict liability conventions as enacted in national laws (see the priority of the regulation stipulated in art 4(5)) where autonomous vessels come into operation at MASS Levels 3 and 4, if these are regarded as ‘high risk’. If that were the case, collision liabilities involving such vessels would be dealt with by a strict liability regime, as opposed to the current fault based regime under the Brussels Collision Convention 1910.