New EU model contractual AI clauses

New EU model contractual AI clauses

Legal Seminar

Standard EU model contractual AI clauses (AI clauses) have been drafted by the EU public buyers community with both the high risk and non-high risk versions of the AI clauses available to download on its website. The AI clauses have been made available for public organisations wishing to procure an AI system developed by an external supplier. Private organisations considering purchasing AI systems and technology providers may find the AI clauses of interest at this pivotal point in time for legal considerations around AI systems.

The AI clauses carry a warning that any public organisations using them do so on a voluntary basis (as the proposed EU regulation - the Artificial Intelligence Act is still under negotiation) and organisations should check them carefully and customise them appropriately. The criteria for whether an AI system is high risk or low risk will be set out in the proposed EU Artificial Intelligence Act. Whilst the European Parliament and Council reached a provisional agreement on the proposed EU Artificial Intelligence Act, the official text of the act is not expected to be released until sometime in 2024.

Technology providers may wish to take note of the model contractual AI clauses even where they do not consider themselves to be providing AI systems. The EU public buyers community notes on the AI clauses state that public organisations may (depending on the impact of the system on individuals and society) extend either set of the AI clauses to other algorithmic systems that may not be necessarily qualified as "AI" to cover in addition simpler software rule-based systems.

Key contractual matters such as intellectual property, acceptance, payment, delivery times, applicable law or liability are intentionally not covered by the AI clauses according to the EU public buyers community. Instead, the drafters of the AI clauses have attempted to put them together in such a way that they can be attached as a schedule to an agreement that deals with those provisions. An initial review of the AI clauses shows ownership of intellectual property rights in data sets is touched on in the clauses and care would need to be taken to ensure the interplay of the AI clauses and other contractual provisions have the effect intended by the parties.

Parties using the clauses may wish to finesse matters from a commercial clarity perspective to clarify various drafting ambiguities as well as to ensure effectiveness under English law (where applicable) of the language used (e.g. use of the undefined term "intellectual property rights" which one would normally define in English law contracts as there is no clear common law definition of this).

Unsurprisingly, the AI clauses are drafted generally in favour of the public organisation/customer. For example, the majority of the obligations are on the supplier with only limited obligations on the public organisation, even in key areas such as in relation to provision of information by the public organisation.

The types of issues covered in the AI clauses may be of interest to private companies contracting to purchase/supply AI systems, even if, in practice, significant amendments to the drafting may be required to make them appropriate to the circumstances. Issues dealt with in the AI clauses include:

  • Putting in place risk management systems
  • Data governance in relation to data sets used in the AI system
  • Requirement to supply and update technical documentation in relation to the AI system
  • Requirements in relation to logging capabilities of the AI system
  • Ensuring sufficient transparency of the AI system
  • Design of the AI system to facilitate effective human oversight
  • Design of the AI system to ensure accuracy, robustness and cybersecurity
  • Putting in place a quality management system to comply with the clauses

For more information please contact Beverley Flynn or Angelica Lovell.

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