AI: US and EU policymakers move to regulate after industry rings alarm bells
The artificial intelligence (AI) bot ChatGPT, launched in November, has sparked the world’s collective imagination about what AI can do. Previously the domain of computer scientists and science fiction movies, AI is now the subject of significant attention in the US and beyond.
US policymakers are rushing to put guardrails around AI before it gets away from them. A robust debate is underway in Washington about how to both promote innovation in AI and safeguard the public amid a wider competition with China and Europe. ‘The primary domains for AI having an impact, at least in the near term, are areas like employment, healthcare, finance and consumer marketing’, says Bradley Merrill Thompson, a member at law firm Epstein Becker Green in Washington, DC.
Sam Altman, co-founder and Chief Executive Officer of OpenAI, which produced ChatGPT, has told Congress that government regulation of AI is needed. ‘My worst fears are that we – the field, the technology, the industry – cause significant harm to the world. That could happen in a lot of different ways’, Altman told the Senate Judiciary Committee in May. ‘If this technology goes wrong, it can go quite wrong. And we want to be vocal about that.’ He added that Congress should require licensing for major AI systems and establish a government agency to oversee AI’s regulation and risks.
US President Joe Biden met with AI industry leaders in San Francisco in late June to discuss the potential and threats the technology poses. The White House Office of Management and Budget is expected to issue a sweeping new order in the coming weeks providing guidance for US regulatory agencies.
We’re in a bit of a waiting game, because the industry really wants regulation
Johan Hübner
Chair, IBA Artificial Intelligence and Robotics Subcommittee
Meanwhile, lawmakers in Congress are preparing to draft legislation. Senate Majority Leader Chuck Schumer has announced plans to host a series of forums on AI with industry leaders and interest groups in the coming months, anticipating ‘ambitious’ legislative action.
But the emerging US agenda on AI opens new questions as to whether Washington and Brussels can bridge divides in digital regulation. ‘The earliest you’d see something [in the US] is next year, although you then get into presidential election politics’, says Samir Jain, Vice President of Policy at the Center for Democracy & Technology, a public interest advocacy group based in Washington, DC. ‘Now, there could be bits and pieces around AI that get inserted into other legislation. But I don’t think you’ll see any comprehensive framework this year from Congress.’
In mid-June, the European Parliament approved draft rules setting new global standards for AI. The EU’s AI Act applies a risk-based framework to AI companies, imposing increasing levels of compliance and self-governance requirements as the stakes involved rise. AI applications with minimal risk, such as video games, wouldn’t be restricted. Moderate risk services such as chatbots would have transparency obligations. Higher-risk AI technology used to screen for employment and AI used by major platforms to recommend content would have to conform to standards. AI techniques used for social scoring, public surveillance or subliminal manipulation of human behaviour would be banned.
‘We’re in a bit of a waiting game, because the industry really wants regulation’, says Johan Hübner, Chair of the IBA Artificial Intelligence and Robotics Subcommittee and a partner at law firm Delphi in Stockholm. ‘I will be very surprised if there will be federal [US] legislation. But given that the EU has taken such a proactive stance in this budding technology field’, it’s likely the EU law will become the standard that major tech companies adopt for their global operations, Hübner says, adding that US companies wishing to do business in Europe would need to adhere to the EU’s rules.
However, Thompson doesn’t ‘see a role, contrary to the European model which everyone sort of wants to follow, of a generalised regulatory paradigm for AI for the US. I just don’t think our legal system is built the same way. We have federal agencies that are domain experts at monitoring and tracking and regulating activities’ in key areas, Thompson explains.
In May, the European Data Protection Board (DPC) imposed a €1.2bn fine on Facebook’s owner Meta for violating EU data privacy rules. Meta’s lawyers intend to appeal the ruling, which the company called ‘unjustified’ and ‘dangerous’. At issue is Meta’s transfer of Europeans’ data to servers in the US, where it potentially can be accessed by US intelligence agencies under controversial post-9/11 mass surveillance programmes. The DPC has ordered Meta to stop transferring Europeans’ data and return to Europe or destroy data that was transferred, which can include photos, friends, messages and advertising preferences. Whether Meta will actually have to comply with the DPC order is unclear.
The US and EU are negotiating a new data privacy framework that would allow Meta to continue to transfer the personal data of users across borders as it does now. ‘The DPC order puts the pressure on that political situation to get that agreement authorised’, says Lokke Moerel, a senior of counsel at law firm Morrison Foerster in Brussels. She explains that the European Commission has issued a draft adequacy decision authorising the new framework, which itself is due this summer. ‘Now, if that decision is adopted, that would mean that Meta is off the hook as [far as] the transfers are concerned’, Moerel says. The record fine for past infringements remains in place unless Meta wins on appeal.
European concerns about personal data ending up in the US where spy agencies can access it parallel US fears that Americans’ data held by ByteDance’s TikTok app is available to Communist Party authorities in China. ‘Everybody thinks it’s ridiculous that we worry that EU data ends up in the US but in the end, it’s a similar issue’, Moerel says.
Meanwhile, the emergence of AI systems adds a whole new layer of complexity to data privacy issues. As AI advances, it’s being used to predict consumer behaviour based on personal data. And at the recent Senate hearing, senators worried about the impact of AI fakes on public opinion heading into the 2024 US presidential election and whether creative artists and musicians can assert intellectual property rights over AI products that mimic their work. ‘We all have to be humble about our forecasts and forecasting is such a hard thing’, says Thompson. ‘But the fact of the matter is, there’s an awful lot of applications for AI at this juncture.’
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IBA Annual Conference to take place in Paris
This year’s IBA Annual Conference is set to take place at the Palais des Congrès in Paris from 29 October – 3 November. Paris is the capital city of France and one of the world’s leading centres for finance, diplomacy, commerce, fashion, gastronomy, science and the arts. Known as ‘the City of Lights’, Paris is a major European business hub, and the location of the European head office for 75 per cent of large, 500+ employee, multinational companies in Europe. Paris is home to more Fortune 500 companies with European operations than any other city in Europe.
The Annual Conference serves to advance the development of international law and its role in business and society, to provide members with world-class professional development opportunities to enable them to deliver outstanding legal services.
The IBA Annual Conference is the leading conference for legal professionals around the world to meet, share knowledge and network. It is open to both members and non-members of the IBA alike, with lawyers from over 130 jurisdictions and all sectors of the legal profession including in-house counsel, judges, human rights advocates and many more. This unique mix of perspectives provides a rich environment for discussion, debate and learning as well as the opportunity to develop lasting business relationships and lifelong friendships.
It frequently boasts over 5,000 attendees, with typically more than 2,700 law firms, companies and regulators being represented, and hundreds of working sessions and social programmes.
There will be sessions from a host of IBA committees from across the IBA’s Legal Practice and Public and Professional Interest divisions. There will also be sessions involving the IBA’s Human Rights Institute, and the IBA Legal Policy & Research Unit. In addition, the event will feature a number of keynote speakers and the annual ‘A conversation with…’ interview sessions.
Register for the 2023 Annual Conference here.
Updated IBA Guide to International Trade Agreements reflects significant shift in the landscape
The IBA has published an updated edition of its Guide to International Trade Agreements for IBA Member Bars (the ‘GATS Handbook’). The update reflects the significant shift in the international trade landscape during the intervening decade since the 2013 edition was released. This updated guide aims to further legal professionals’ understanding of the General Agreement on Trade in Services (GATS) – a 1995 World Trade Organization treaty (WTO) – and of the consequences of other free trade agreements signed on a bilateral or regional basis.
The GATS Handbook aims to provide practical assistance to Bars wishing to understand, and respond to, the international trade agreements signed by their respective governments of which there have been several developments, both within and outside the WTO, which affect trade in legal services both nationally and internationally.
The Handbook is based on research carried out by the IBA Bar Issues Commission’s International Trade in Legal Services Committee between November 2022 and January 2023. The co-authors are Alison Hook, Co-Founder of Hook Tangaza and Member of the IBA Section on Professional and Public Interest Advisory Board; Laurel Terry, Professor of Law Emerita, Penn State Dickinson Law, and Communications Officer of the IBA Anti-Money Laundering and Sanctions Expert Subcommittee; and Jonathan Goldsmith, international legal services consultant and a member of the IBA BIC Policy Committee.
Read the report here.
In memoriam: Adrian Tan
The IBA extends deepest condolences to the family, friends, colleagues and Singapore’s legal community at the death of Adrian Tan, President of The Law Society of Singapore. Adrian died at the young age of 57 after a year-long battle with cancer.
IBA President, Almudena Arpón de Mendívil Aldama, IBA Bar Issues Commission Chair Ken Murphy and IBA President Mark Ellis expressed their condolences to Singapore’s legal community in a joint statement: ‘Throughout his professional career, Adrian’s unwavering dedication to advancing the legal profession and upholding justice was remarkable. The standard that he set will, undoubtedly, continue to guide and inspire Singapore’s legal community for years to come. His commitment to the rule of law and justice is his legacy and it will remain ingrained in the ethos and work of those who had the privilege of working alongside him. It is clear that Adrian was much respected by many’.
IBA Task Force and LPRU publish report on best governance practices for cybersecurity
In late July, the IBA’s Presidential Task Force on Cybersecurity and the Legal Policy & Research Unit (LPRU) published a new report: ‘Global perspectives on protecting against cyber risks: best governance practices for senior executives and boards of directors’. This report’s purpose is to provide first-of-its-kind global perspectives and guidance on best governance practices for senior executives and boards of directors in protecting their organisations from global cyber risks, with a view to harmonising efforts globally for effective protection against cyber attacks.
There is a great global need for standards and best practice guidelines for corporate and organisational cybersecurity risk governance that is applicable to boards and management. Cyber attacks are cross-border in nature, and the challenges related to protecting people, businesses and institutions against cyber attacks are similar for organisations around the world. The speed and scale of these evolving risks have resoundingly outpaced the ability of organisations to manage them effectively.
Given this background, the report includes specific recommendations to protect against cyber risks in small, large and global organisations. While the scope of the report is global, it notably draws on reporting sourced from Task Force members spread across ten jurisdictions – Australia, Brazil, Denmark, Germany, India, Israel, Singapore, Uganda, the United Kingdom and the United States – each of whom has compiled research and analysis on comparative practice across this diverse set of countries.
The ultimate target audience of the report is, directly, boards of directors and senior management, as well as, indirectly, society at large, including industry bodies, legislators and enforcement agencies. The report’s secondary goal is to inform and empower lawyers to take up the cause of ensuring strong cybersecurity risk governance by becoming catalysts for change at their firms and organisations, as well as with their clients.
Read the report here.
Arbitration compendium celebrates meaningful stories of practitioners
The IBA Arb40 Subcommittee – set up for younger arbitrators aged 40 or below – has published a compendium that presents ten meaningful stories about experiences of practitioners in international arbitration, following a competition that attracted entries from 16 countries across six continents.
The overall winners are Rizki Karim (Indonesia) and Claus von Wobeser (Mexico), who will each receive a complimentary pass to the 2023 IBA Conference in Paris and a 12-month subscription to the Asia International Arbitration Journal (published by Singapore International Arbitration Centre and Wolters Kluwer), the Hong Kong International Arbitration Centre Case Digest and the Investor State Law Guide.
Jus Mundi has also generously provided a one-year subscription to Jus Mundi Legal Research for the winners of each category (if a student) or a student nominee of their choice. Category winners are Lucy Greenwood (UK), Janice Cheng (Hong Kong), John Gaffney (Ireland), Lizzie Chan (Hong Kong), Numatra Shah (India), Mireze Philippe (France), Lisa Resier and Ulrike Gantenberg (Germany) and Jan Paulsson (Bahrain). The winning stories cover areas including greener arbitrations, technology, diversity and mentorship.
Read further information and the compendium here.
IBA focus on ESG
Taking ESG (environmental, social and governance) concerns into consideration has become an increasingly important part of the day-to-day professional activity for many lawyers over the past few years. ESG matters are also at the top of the global agenda, with a focus not only on the climate crisis and broader environmental issues, but also social and governance issues, including diversity and inclusion, and accountability.
The IBA has set up a new hub page designed to be a resource for IBA members and the broader legal community on ESG. The page gathers relevant output from across the IBA in this area, including reports, guides, articles, podcasts, webinars and videos, and covers many aspects of ESG and its intersection with areas such as client relationships, law firm management, regulatory risk and a host of other IBA committee-specific areas.
The IBA held a specialist conference on the role of lawyers in ESG in March 2023 and is planning another for 2024. Additionally, ESG will be discussed at a number of sessions at the IBA’s Annual Conference in Paris in November.
ESG is one of IBA Almudena Arpón de Mendívil's presidential priorities and you can read her message on the IBA’s engagement with it here.
Visit the ESG hub here.
Covid-19: UK pandemic Inquiry set to be most expensive in history
In March 2020, then UK Prime Minister Boris Johnson announced the country’s first lockdown, limiting social contact to stop the spread of Covid-19. This came a few weeks after the World Health Organisation declared the outbreak of a global pandemic. In the UK, more than 228,000 people have since died with Covid-19 listed on their death certificate. In June 2023, the Inquiry into the government’s handling of the pandemic began, with bereaved families hoping to get answers.
Months before the hearings began, it was reported that the Inquiry could become the most expensive in UK history, with spending now already topping £100m. These numbers are based on data by Tussell, a company that monitors government contracts, and indicate that a number of law firms have been contracted to various government departments for large sums of money in connection to the Inquiry.
Gustaf Duhs is a partner at Stevens & Bolton in the UK. ‘It is not surprising that this has led to criticism from some, particularly as inquiries have been seen by some as a way for government to outsource problems, or “kick them into the long grass”’, he says. ‘On the other hand, the eventual cost of the Inquiry is likely to be a fraction of the estimated cost of [the UK government’s] Covid measures.’ Those latter costs are estimated to range between £310bn and £410bn.
Among the law firms instructed by the government are Burges Salmon, contracted to the Cabinet Office to provide support for the Inquiry on a contract worth close to £10m, and Pinsent Masons, provider of legal support to both the Cabinet Office and the Department of Health and Social Care. Other government departments have also engaged law firms on multi-million-pound contracts, including Education and International Trade, who have hired DWF and Gowling WLG respectively.
A spokesperson for the Government Legal Department has stated that ‘all appointments represent value for money and ensure that the Inquiry can fulfil its remit.’ Burges Salmon and Pinsent Masons advised they could not comment, when contacted by Global Insight, while DWF and Gowlings did not respond to requests for comment.
‘The UK government’s handling of Covid-19 has already seen some high-profile controversies, including our current and former Prime Minister [Boris Johnson] being found liable and fined for breaching the lockdown laws and a ruling that the government’s policy on discharge to care homes was unlawful on the grounds of “irrationality”’, says Duhs. ‘So there are likely to be plenty of questions, lessons to be learnt and the Inquiry could lead to repercussions. It is also an opportunity for the bereaved to be heard. It is likely to be clearer when it is over whether it was worth it.’
There is the possibility of separate legal action, whether civil or criminal, in relation to the subject matter of the Inquiry. So, there is certainly the potential for consequences
Gustaf Duhs
Partner, Stevens & Bolton
A spokesperson for the Inquiry told Global Insight that ‘The Inquiry Chair, Baroness Hallett, set out in her opening statement the substantial task faced by the Inquiry to consider and report on the preparations and the response to the pandemic in England, Scotland, Wales and Northern Ireland. She made clear that, to do this properly, it will take time and have a significant cost’. The spokesperson added that ‘We will regularly publish our financial information and have rigorous governance processes in place to make sure we are delivering value for money when fulfilling the Inquiry’s Terms of Reference’.
A major influence on the costs will be the duration of the Inquiry, for which no end date has been given. Despite the extensive remit that the Inquiry is expected to cover, Baroness Hallett has said that she would like the Inquiry to go as ‘speedily as possible so lessons are learned before another pandemic strikes’.
An inquiry is not a court of law and while its recommendations will be non-binding and the process is due only to finish after the next general election – when a new government may be in power – it could nonetheless lead to repercussions, says Duhs. ‘Adverse developments or findings can have a significant impact to reputations and there is the possibility of separate legal action, whether civil or criminal, in relation to the subject matter of the Inquiry’, adds Duhs.
Rosanna Ellul is Senior Policy and Parliamentary Officer at INQUEST, a charity working with bereaved families that is advocating for more accountability following inquiries into state-related deaths. ‘Investigation, public inquiries, inquests and official reviews following state-related deaths, such as the Covid-19 inquiry, have an important function to prevent future deaths’, she says. ‘However, the possibility for prevention is undermined by the lack of a framework to monitor compliance with, and/or actions taken in response to, the findings and recommendations that emerge from post-death investigations.’
INQUEST believes a ‘national oversight mechanism’ would provide better learning, prevention and accountability for bereaved families following a state-related death ‘by increasing transparency of the action, or inaction, of state and corporate bodies in response to life-saving recommendations’, explains Ellul.
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