Robots in the Boardroom: Artificial Intelligence and Corporate Law

Year 2021, Volume: 79 Issue: 2, 699 - 728, 29.07.2021

Florian Möslein Translator: Sevda Bora Çınar

https://doi.org/10.26650/mecmua.2021.79.2.0004

Abstract

Due to its rapid technological development, artificial intelligence will enter corporate boardrooms in the very near future. This chapter explores the interplay between artificial intelligence and corporate law, and analyzes how the two fit together. Do current corporate law rules match the challenges posed by artificial intelligence, or do they need to be adapted? More specifically, the chapter focuses on the directors of corporations. We consider the extent to which human directors should be allowed—or required—to rely on artificial intelligence. Moreover, technology will probably soon offer the possibility of artificial intelligence not only supporting directors, but even replacing them. Another question is therefore whether or not such a replacement is legally admissible. At any rate, the legal strategies currently adopted by corporate law are tailored to human directors. This chapter tests whether those strategies would still be suitable for boardrooms filled with robo-directors. It concludes that corporate law is highly relevant for the use of artificial intelligence in corporations, but that it will also need to be adapted to the challenges posed by this technology. In that sense, the interplay between artificial intelligence and corporate law promises to be dynamic in both directions.

Keywords

Artificial intelligence, Company law, Business judgment rule, Directors’ duties, Appointment of directors

Yönetim Kurulu Toplantı Odasındaki Robotlar: Yapay Zeka ve Şirketler Hukuku

Abstract

Yapay zeka, hızlı teknolojik gelişimi sayesinde çok yakın bir gelecekte şirket yönetim kurulu odalarına girecektir. Bu çalışma yapay zeka ve şirketler hukuku arasındaki etkileşimi araştırmakta ve birbirlerine nasıl uyum sağlayacaklarını analiz etmektedir. Mevcut şirketler hukuku düzenlemeleri yapay zekanın getirdiği zorlukları karşılamakta mıdır, yoksa düzenlemelerin uyarlanması mı gerekmektedir? Daha belirgin olarak, bu çalışma şirketlerin yöneticilerine odaklanmaktadır. İnsan yöneticilerin yapay zekaya güvenmelerine ne ölçüde izin verilmesi gerektiği ya da buna ne ölçüye kadar zorlanabilecekleri dikkate alınmıştır. Dahası teknoloji, yakında yapay zekanın sadece yöneticileri desteklemekle kalmayıp onların yerini almasını da sağlayacaktır. Bu sebeple bir diğer soru, bu tür bir yerini almanın yasal olarak kabul edilebilir olup olmadığıdır. Her halükarda, halihazırda şirketler hukuku tarafından benimsenen yasal stratejiler insan yöneticilere göre tasarlanmıştır. Bu bölüm, bu stratejilerin robo-yöneticilerle dolu yönetim kurulu odaları için de hala uygun olup olmadığını sınamaktadır. Bu çalışmada, şirketler hukukunun, yapay zekanın şirketlerde kullanımıyla son derece alakalı olduğu, ancak bu teknolojinin getirdiği zorluklara da uyarlanması gerekeceği sonucuna varılmaktadır. Bu anlamda yapay zeka ve şirketler hukuku arasındaki etkileşim her iki yönde de dinamik olmayı vaat etmektedir.

Keywords

Yapay zeka, Şirketler hukuku, İşletmesel karar ilkesi, Yöneticilerin yükümlülükleri, Yönetici atamaları

References

• Agrawal A, Gans J and Goldfarb A, ‘Exploring the Impact of Artificial Intelligence: Prediction versus Judgment’ (Working Paper 2018), < http://www.nber.org/papers/w24626.pdf >
• Agrawal A, Gans J and Goldfarb A, ‘How AI Will Change the Way We Make Decisions’, (Harvard Business Review, 26 July 2017) < https://hbr.org/2017/07/how-ai-will-change-the-way-we-make-decisions >
• Armour J, Enriques L et al, The Anatomy of Corporate Law: A Comparative and Functional Approach (3rd edn, Oxford University Press 2017).
• Bainbridge S, Corporation Law and Economics (Foundation Press 2002).
• Bahar R and Morand A, “Taking conflict of interest in corporate law seriously – direct and indirect rules addressing the agency problem” in Anne Peters and Lukas Handschin (eds), Conflict of Interest in Global, Public and Corporate Governance (Cambridge University Press 2012) 308-333.
• Bayern S, ‘Of Bitcoins, Independently Wealthy Software, and the Zero-Member’ (2014) LLC 108(4) Northwestern University Law Review, 1485-1500.
• Bayern S, ‘The Implications of Modern Business-Entity Law for the Regulation of Autonomous Systems’ (2015) 19 Stanford Technology Law Review, 93-112.
• Bayern S, Burri T, Grant T, Häusermann D, Möslein F and Williams R, ‘Company Law and Autonomous Systems: A Blueprint for Lawyers, Entrepreneurs, and Regulators’ (2017) 9 Hastings Science and Technology Law Journal 135-162.
• Bellia A, ‘Contracting with Electronic Agents’ (2001) 50 Emory Law Journal, 1047-1092.
• Bertschinger U, ‘Aktienrecht im digitalen Zeitalter’, Rechtswissenschaftliche Abteilung der Universität St. Gallen (ed), Recht im digitalen Zeitalter – Festgabe Schweizerischer Juristentag (Dike 2015) 167-202.
• Bertschinger U, Arbeitsteilung und aktienrechtliche Verantwortlichkeit (Schulthess 1999).
• Bostrom N, Superintelligence – Paths, Dangers, Strategies (Oxford University Press 2014).
• Böckli P, Die unentziehbaren Kernkompetenzen des Verwaltungsrates (Schulthess 1994).
• Brynjolfsson E and McAfee A, ‘The Business of Artificial Intelligence’ (Harvard Business Review, 18 July 2017) < https://hbr.org/cover-story/2017/07/the-business-of-artificial-intelligence >
• Burridge N, ‘Artificial intelligence gets a seat in the boardroom’, (Nikkei Asian Review, 10 May 2017) < http://asia.nikkei.com/Business/Companies/Artificial-intelligence-gets-a-seat-in-the-boardroom >
• Cahn A and Donald D, Comparative Corporate Law (Cambridge University Press 2010).
• Chittur K, ‘The Corporate Director’s Standard of Care: Past, Present, Future’ (1985) 10(2) Delaware.Journal of Corporate Law, 505-543.
• Chopra S and White L, ‘Artificial Agents and the Contracting Problem: A Solution Via an Agency Analysis’ (Fall 2009) University of Illinois Journal of Law Technology & Policy, 363-403.
• Cuende L and Izquierdo J, ‘Aragon Network – A Decentralized Infrastructure for Value Exchange’, (White Paper, 20 April 2017) < https://github.com/aragon/whitepaper/blob/master/Aragon%20Whitepaper.pdf >
• Diedrich H, Ethereum (CreateSpace 2016).
• Easterbrook F and Fischel D, The Economic Structure of Corporate Law (Harvard University Press 1996).27
• Eidenmüller H, ‘The Rise of Robots and the Law of Humans’ (2017) 25 Zeitschrift für Europäisches Privatrecht (ZEuP) 765-775.
• Eisenberg M, ‘The Duty of Good Faith in Corporate Law’ (2006) 31(1) Delaware Journal of Corporate Law, 1-75.
• Featherstone T, ‘Governance in the new machine age’, (Australian Institute of Company Directors, 24 March 2017) < https://aicd.companydirectors.com.au/advocacy/governance-leadership-centre/governance-driving-performance/governance-in-the-new-machine-age >
• Fischel D, ‘The Business Judgement Rule and the Trans Union Case’ (1985) 40(4) The Business Lawyer,1437-1455.
• Fleckner AM, ‘Regulating Trading Practices’, in Niamh Moloney, Eilís Ferran and Jennifer Payne (eds), The Oxford Handbook of Financial Regulation (Oxford University Press 2015) 596, 619–23.
• Fleischer H, ‘Die ‘Business Judgment Rule’ im Spiegel von Rechtsvergleichung und Rechtsökonomie’, in Festschrift for Herbert Wiedemann (Beck 2002) 827-849.
• Fleischer H, ‘Zur Leitungsaufgabe des Vorstands im Aktienrecht’ (2003) 1 Zeitschrift für Wirtschaftsrecht (ZIP) 1-10.
• Fleischer H, ‘Vorstandsverantwortlichkeit und Fehlverhalten von Unternehmensangehörigen – Von der Einzelüberwachung zur Errichtung einer Compliance-Organisation’ (2003) Die Aktiengesellschaft (AG) 291-300.
• Forstmoser P, Meyer-Hayoz A and Nobel P, Schweizerisches Aktienrecht (Stämpfli 1996).
• Freitag R and Korch S, ‘Die Angemessenheit der Information im Rahmen der Business Judgment Rule (§ 93 Abs. 1 S. 2 AktG)’ (2012) Zeitschrift für Wirtschaftsrecht (ZIP) 2281-2285.
• Gehrlein M, ‘Leitung einer juristischen Person durch juristische Personen?’ (2016) Neue Zeitschrift für Gesellschaftsrecht (NZG) 566-568.
• Gevurtz F, Corporation Law (2nd edn, West Publishing 2010).
• Granelli C, ‘La responsabilità civile degli organi di gestione alla luce della riforma delle società di capitali’ (2003) Le Società 1565-1571.
• Grass A, Business Judgment Rule (Schulthess 1998).
• Gruber MC, ‘Was spricht gegen Maschinenrechte?’, Jochen Bung and Sascha Ziemann (eds), Autonome Automaten (Beck 2015) 11-14.
• Grundmann S, European Company Law (2nd edn, Intersentia 2012). Informal Company Law Expert Group (ICLEG), ‘Report on digitalisation in company law’ (March 2016) < http://ec.europa.eu/justice/civil/files/company-law/icleg-report-ondigitalisation-24- march-2016_en.pdf >
• Hadji-Artinian S, La faute de gestion (Litec 2001).
• Hallevy G, Liability for Crimes Involving Artificial Intelligence Systems (Springer 2014).
• Halpern P, Trebilcock M ve Turnbull S, ‘An Economic Analysis of Limited Liability in Corporation Law’ (1980) 30(2) University of Toronto Law Journal 117-150.
• Hansmann H and Kraakman R, ‘The Essential Role of Organizational Law’ (2000) 110(3) Yale Law Journal, 387-440.
• Hansmann H, Kraakman R and Squire R, ‘Law and the Rise of the Firm’ (2006) 119(5) Harvard Law Review, 1333-1403.
• Harari Y, Homo Deus: A Brief History of Tomorrow (Random House 2016).28
• Hassanien AE et al (eds), Big Data in Complex Systems: Challenges and Opportunities (Springer 2015).
• Herzel L and Katz L, ‘Smith v. Van Gorkom: The Business of Judging Business Judgment’ (1986) 41(4) The Business Lawyer, 1187-1193.
• Hilb M, ‘Toward an Integrated Framework for Governance of Digitalization’, in id (Ed), Governance of Digitalization (2017) 11-20.
• Jain L and Martin N, (eds), Fusion of Neural Networks, Fuzzy Sets and Genetic Algorithms (CRC Press 1999).
• Jain L and Wilde PD (eds), Practical Applications of Computational Intelligence Techniques (Springer 2001).
• Jensen M and Meckling W, ‘Theory of the Firm: Managerial behavior, agency costs and ownership structure’ (1976) 3(4) Journal of Financial Economics, 305-360.
• Kammerer A, Die unübertragbaren und unentziehbaren Kernkompetenzen des Verwaltungsrates (Schulthess 1997).
• Kaplan J, Artificial Intelligence (Oxford University Press 2016).
• Kenshaw D, Company Law in Context (Oxford University Press 2012).
• Knapp V, ‘What are the issues relating to digitalisation in company law?’ (June 2016) <http://www. europarl.europa.eu/RegData/etudes/IDAN/2016/556961/IPOL_IDA(2016)556961_EN.pdf >
• Knepper W and Bailey D, Liability of Corporate Officers and Directors (7th edn, Lexis 2002).
• Kudyba S, Big Data, Mining, and Analytics – Components of Strategic Decision Making (CRC Press 2014).
• Kühn R and Grünig R, Successful Decision-making: A Systematic Approach to Complex Problems (2nd edn, Springer 2009).
• Lessig L, ‘The Law of the Horse: What Cyberlaw What Might Teach’ (1999)113 Harvard Law Review, 501-546.
• LoPucki L, ‘Algorithmic Entities’ (2018) 95 Washington University Law Review, 887-953.
• Macey J, ‘Smith v. Van Gorkom: Insights About C.E.O.s, Corporate Law Rules, and the Jurisdictional Competition for Corporate Charter’ (2002) 96(2) Northwestern University Law Review, 607-630.
• Manne H, ‘Our Two Corporation Systems: Law and Economics’ (1967) 53(2) Virginia Law Review, 259-284.
• Manning B, ‘Reflections and Practical Tips on Life in the Boardroom after Van Gorkom’ (1985) 41(1) The Business Lawyer, 1-14.
• Mäntysaari P, Comparative Corporate Governance (Springer 2005).
• McCarthy J, Minsky M, Rochester N and Shannon C, ‘A Proposal for the Dartmouth Summer Research Project on Artificial Intelligence’ ( 1955) < http://www-formal.stanford.edu/jmc/ history/dartmouth/dartmouth.html >
• Möslein F, Grenzen unternehmerischer Leitungsmacht im marktoffenen Verband (De Gruyter 2007).
• Möslein F and Lordt A, ‘Rechtsfragen des Robo Advice’ (2017) Zeitschrift für Wirtschaftsrecht (ZIP) 793-803.
• Müller R, ‘Digitalization Decisions at Board Level’, Michael Hilb (ed), Governance of Digitization (Haupt 2017) 43-50.
• Noyes J, Cook M and Masakowski Y (eds), Decision Making in Complex Environments (CRC Press 2007).29
• Paolini A (ed), Research Handbook on Directors’ Duties (Edward Elgar Publishing 2014).
• Peters K, ‘Angemessene Informationsbasis als Voraussetzung pflichtgemäßen Vorstandshandelns’ (2010) Die Aktiengesellschaft (AG) 811-817.
• Philipps-Wren G and Jain L, ‘Artificial Intelligence for Decision Making’ in Bogdan Gabrys, Howlett RJ and Jain L (eds), Knowledge-Based Intelligent Information and Engineering Systems (Springer 2006) 531-536.
• Philipps L, ‘Gibt es ein Recht auch für ein Volk von künstlichen Wesen, wenn sie nur Verstand haben?’, in Festschrift for Arthur Kaufmann (CF Müller 1989) 119-126.
• Rodewalt J, ‘Informationsmanagement im Unternehmen als Instrument zur Vermeidung von Organhaftung’ (2014) GmbH-Rundschau (GmbHR) 639-644.
• Popper N, ‘A Venture Fund With Plenty of Virtual Capital, but No Capitalist’ (New York Times, 21 May 2016) < https://www.nytimes.com/2016/05/22/business/dealbook/cryptoether-bitcoin-currency.html >
• Popper N, ‘A Hacking of More Than $50 Million Dashes Hopes in the World of Virtual Currency’ (New York Times, 17 June 2016) < https://www.nytimes.com/2016/06/18/business/dealbook/hacker-may-have-removedmore-than-50-million-from-experimental-cybercurrency-project.html >
• Rao A, ‘AI everywhere / nowhere part 3 – AI is AAAI (Assisted-Augmented-Autonomous Intelligence)’ (20 May 2016) < http://usblogs.pwc.com/emerging-technology/ai-everywhere-nowhere-part-3-ai-is-aaaiassisted-augmented-autonomous-intelligence/ >
• Roth M, Unternehmerisches Ermessen und Haftung des Vorstands (Beck 2001).
• Schneider SH, Informationspflichten und Informationssystemeinrichtigungspflichten im Aktienkonzern (Duncker and Humblot 2006).
• Schneider SH, ‘“Unternehmerische Entscheidungen” als Anwendungsvoraussetzung für die Business Judgment Rule’ (2005) Der Betrieb (DB) 707-712.
• Scholastique E, Devoir de Diligence des administrateurs de sociétés – Droits français et anglais (LGDJ 1998).
• Scholz L, ‘Algorithmic Contracts’ (2017) 20 (2) Stanford Technology Law Review, 128-169.
• Securities and Exchange Commission, ‘Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO’, Release No. 81207, 25 July 2017, < https://www. sec.gov/litigation/investreport/34-81207.pdf >
• Semler J, ‘Entscheidungen und Ermessen im Aktienrecht’ in Festschrift for Peter Ulmer (De Gruyter 2003) 627-642.
• Senior J, ‘Review: ‘Homo Deus’ Foresees a Godlike Future. (Ignore the Techno-Overlords)’ (New York Times, 15 February 2017) < https://www.nytimes.com/2017/02/15/books/review-homo-deus-yuval-noah-harari.html >
• Smith A, An Inquiry into the Nature and Causes of the Wealth of Nations (Clarendon Press 1976).
• Solum L, ‘Legal Personhood for Artificial Intelligence’ (1992) 70 North Carolina Law Review, 1231-1287.
• Stout L, ‘In Praise of Procedure: An Economic and Behavioral Defense of Smith v. Van Gorkom and the Business Judgment Rule’ (2002) 96 Northwestern University Law Review 673-761.
• Strine L, Hamermesh L, Balotti RF and Gorris J, ‘Loyalty’s Core Demand: The Defining Role Of Good Faith in Corporation Law’ (2010) 93 Georgetown Law Journal, 629-696.
• Swan M, Blockchain: Blueprint for a New Economy (O’Reilly Media 2015).30
• Teubner G, ‘Elektronische Agenten und große Menschenaffen: Zur Ausweitung des Akteurstatus in Recht und Politik’ (2006) 27 Zeitschrift für Rechtssoziologie, 5-30. Qudrat-Ullah H, Spector JM, Davidsen P (eds), Complex Decision Making: Theory and Practice (Springer 2010).
• Wile R, ‘A Venture Capital Firm Just Named an Algorithm to its Board of Directors’ (Business Insider, 13 May 2014) < http://www.businessinsider.com/vital-named-to-board-2014-5?IR=T >
• Wright A and Filippi PD, Decentralized Blockchain Technology and the Rise of Lex Cryptographia, (Working Paper 2015) < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2580664 >
• Zolfagharifard E, ‘Would you take orders from a Robot? An artificial intelligence becomes the world’s first company director’ (Daily Mail, 19 May 2014) < http://www.dailymail.co.uk/ sciencetech/article2632920/Would-orders-ROBOT-Artificial-intelligence-world-s-company-director-Japan.html >