Research Seminar by Professor Jenifer VARZALY

Department : Law & Tax

Speaker : Jenifer VARZALY from Durham University

Room : S 210 and by Zoom link: https://hec-fr.zoom.us/j/96996682329 

“Artificial Intelligence and Directors’ Duties: The Central Role of Care, 

Skill and Diligence”

Abstract

Artificial intelligence (AI) is increasingly shaping corporate activity, with its development and deployment progressing more rapidly than the evolution of regulatory frameworks. Since companies are central to the design, deployment, and use of AI, company law is expected to play a substantial role in its regulation. Directors’ duties under UK company law are the principal mechanism through which directors’ behaviour is governed. Yet it remains uncertain whether, and to what extent, this framework can respond effectively to the distinctive risks and governance challenges associated with AI.

This article analyses how these duties apply to the use of AI within companies, before evaluating how well they can ensure that AI is used appropriately by companies. It concludes that only the duty of care and skill will have any meaningful impact in this regard, albeit constrained by the absence of sufficiently precise regulatory and judicial guidance.

It argues that more structured guidance should be developed within the existing framework of directors’ duties, including a clearer articulation of expectations relevant to AI-related decision-making and oversight, in order to support more effective governance and to enable company law to better anticipate and address the risks associated with AI.