Artificial Intelligence (AI) and Directorial Decision Making

This is the authors' abstract. We don't add key points for this paper.

Artificial intelligence capabilities are increasing by the day as machines, applications and tools are embedded with human like cognition for processing data and generating results specific to a particular input or query.Directors have to tread the path carefully when it comes to adoption of AI systems.Though there are seeming advantages of scaling up, Directors are duty bound to act in the best interest of the organisation, exercise reasonable skill and diligence and most importantly exercise independent judgement.The rapid advancements in Artificial Intelligence (AI) present a unique dilemma for corporate directors: to rely or not to rely on AI in decision -making.This paper explores the role directors can play in guiding AI transformation strategies within organiz ations, while adhering to their legal duties under the UK Companies Act, 2006 and the Indian Companies Act, 2013.Key duties discussed include promoting the success of the company, exercising reasonable skill, care, and diligence, and exercising independent judgment.The analysis delves into the challenges of balancing AI's potential benefits with the risks of agency conflicts, insufficient oversight, and the need for directors to have a basic understanding of AI capabilities and limitations.Through a comparative legal lens, the paper examines how courts might attribute liability in cases where AI decisions adversely impact the organization, emphasizing the importance of directors' informed and independent judgment.