Automated cars and its Liability

Need for regulation

Prof. Anil B Suraj
Group 9 – Business Law Project
Name Roll Numbers
Rahul Pandey 1816043
Sumit Maurya 1816034
Atul Kumar 1816029
Hagar Sudha 1816062
Vinodkumar Subramanian 1816061
Scope
In this case analysis, we are analyzing legal implications of Automated cars and
emerging technologies from liability angle. We have restrict the study and
recommendations for India.

It does not include

• Different ownership patterns
• Evolution study on the car industry
Introduction of the Case

• Paradigm shift in automobile industry. Moving towards fully automated self driving
cars.
• Advances in IOT industry, H/W evolution, software advances in machine learning
and artificial intelligence are fueling these innovations.
• Big automobiles companies such as Tesla, BMW, Mercedes, Volvo are heavily
investing in the technology to make the Autonomous vehicles to be road ready.
• Even IT titans like Google (Waymo), Facebook, Microsoft are also investing in it.
Many of them are already conducting test trials in countries such as US, Germany,
Singapore, UK, Japan, China, etc. In fact, some of these countries have already
introduced laws to permit testing as well as operation of AVs.
• In India, the government has not yet approved the driving of AVs on the road, yet
this has not deterred various startups and companies like Mahindra and TATA to
invest in its research
Problem statement
• Recent studies show that use of automated cars will drastically reduce the number
of road accidents. But even in the best of circumstances the improbable events
occur.
• The existing laws are not sufficient to address all the scenarios we could
encounter in future related to automated cars.
• We need to assess who will be potentially liable in various scenarios of accidents
involving automated cars. Creating such liability laws aligned to the new
circumstances will provide clear frame work for resolving the claims.
• New liability law should not stifle innovations rather encourage responsible
innovation and technological enhancements.
• In general we have high expectations from advanced technical products.
Automated cars being involved in accidents will have psychological impact which
may deter its acceptability and push for higher compensations and liabilities.
• Relevant parties who could be held liable: Manufactures, Technology providers,
Owner or Insurance companies, Automated Car being an legal entity with its own
persona
Some scenarios of challenge
Some of the potential scenarios which might lead to liability and accountability issues :

• Design Issue: product is not designed to encounter certain situations, In beginning

there will be many such situations but as the technology evolves it would become
rarest of rare cases.
• Manufacturing Defects: product may contain inherent manufacturing defect which
was not identified in quality testing.
• Privacy Issues: such as the Product is loaded with Software which needs
continuous monitoring from Central Servers.
• Software Hacking: could potentially lead to high tech crime, extortion etc.,
• Virus Infection: could lead to unknown behavior or stopping in an hazardous
environment ( e.g. stops in the middle of night at freezing temperatures)
• Software version upgrade issues: Software version of the car is not updated
regularly, which leads to software bug issues.
• Maintenance Issues: if car is not maintained properly, and some of effective parts
go faulty which might lead to accidents.
• AI Issues: If in worst case, the car has to make a decision between saving the
passengers and saving the pedestrian which one it should give priority.
Incidents occurred due to driverless cars
around the world
o In February 2016, Google’s self-driving car was involved in its first crash in
California when it changed lanes and put itself in the path of an on-coming bus. [1]
o First known death caused by a self-driving car in June 2016, when the car sensors
of a Tesla Model S failed to distinguish a large white 18 wheel truck against bright
sky. [2]
o Accident in Indianapolis involving Tesla car where two people lost their lives. The
police were investigating if the Autopilot played a role in the accident. [3]
o Uber Driver in fatal crash may have been watching the voice behind the wheel. [4]
o Facebook's artificial intelligence robots shut down after they start talking to each
other in their own language. [5]
• Some of the accidents have happened due to malfunction of the sensors or
devices put in place for the car to operate.
• In many cases emergency handling mechanism has failed which was required to
prevent the mishap.
• There have been cases where accidents have been caused by driver’s or other
party’s carelessness, which can provide base of the shared legal liability.
Perspective - Automated Car vs Human driven
Car
• Machines are more efficient and can avoid human errors.
• Machines shall possess the ability to assess or discover danger before it comes to
manifest.
• Human beings cannot respond with the mechanical speed and accuracy which can
be found in modern mechanical devices, and the error liability should be more
stringent for the modern devices, moreover for cars where the errors can lead to
life threatening damages.
• Current law considers human as the factor. It needs to include machine factor.
• With advent of deep learning algorithms, If a car is programmed to self learn, at
some point it will develop its own personality which will have unpredicted
behavior.
• Current law might see machines as efficient but it does not see machines as a
Entity for legal action – One of futuristic thought was shown in Enthiran in a 2010
Indian Tamil-language science fiction movie, where the ROBOT is held responsible
and dismantled. [7]
Current Conventional law
• Conventional tort law principles says that if the driver failed to exercise reasonable
care in avoiding the accident, driver is liable.
• If the accident occurred due to product defects (design, manufacturing, software,
marketing defects etc.), liability for a product defect could rest with any party in
the product's chain of distribution.
• But in case of sophisticated self driven cars it could be many times impossible to
identify the cause of the error or liability due to unforeseen issues. Then the
burden falls on manufacturer as they might not have reasonable grounds for
indemnity.
• In case of fully autonomous vehicles it would be unreasonable to attribute all the
liability to the vehicle’s manufacturer or the design.
• The law compels product insurance regime to address the liability.
Motor Vehicle Act in India
• The Indian Motor Vehicles Act, 1988 regulate operation of vehicles in India, do not
currently allow fully automated systems.
• A human driver needs to be in effective control of the vehicle at all times.
• The laws don’t permit even testing of automatic vehicles in India.
• The Motor Vehicles (Amendment) Bill, 2017 has proposed testing AVs – though it is
yet to see light of the day.
• Section 140 of Motor Vehicles Act, 1988 deals with the liability without fault. The
claimant involved in a motor vehicle accident is not required to prove wrongful act,
neglect, or default on the part of the owner of the vehicle or by any other person.
• Individual under the age of 18 are not allowed to drive cars.
• Every state have their own motor vehicle rules.
• The act will need an overhaul to allow licenses for trials, detailed and robust
guidelines for safety assurance systems, and a well thought out regime for
operations of automated vehicles in India.
Different Roles
Manufacturer
• Define limited liability and provide insurance as part of Indemnity for the uncovered
scenarios.
• Formal training to passengers who needs to know hands on to navigate in case of
emergency.
• Indicate car owners to take necessary precautions in case of software hacking.
• Regular maintenance and upgrade. Disable the car after certain cutoff time.
• Measures to ensure privacy and security of passengers.

Insurance Company
• Insurance agent should consider to cover most of Scenarios (Hacking, faulty sensors,
Virus etc).
• Putting product insurance to cover liabilities will have to be crucial to define the
levels to the coverage of the compensations depending on the safety levels of these
vehicles as claimed by the manufactures.
• The cost of insurance may be higher but as the industry matures it would lead to
economies of scales.
Different Roles continue..
Car Owner
• Ensure the car is being used as provided in the manufacturer’s guideline
• If self-drive cars are driven in semi-auto mode with intermittent feedback from
the driver, he should operate the car accordingly. Ignorance or lack of
awareness of this cannot be an excuse.
• Should be regularly maintained and updated.

Government
• Define the laws considering all aspects of the society.
• Strict and clear liability rules so that all the parties understand their
responsibilities.
• Certification for fitness of care should include software certification, sensor
certification etc. (Note: too much control might stifle innovation and may
introduce red tape)
• Define rules for manufacturers, insurance, user liabilities so that its become
mandatory
• Define safe drive zones.
 Recommendations
• The liabilities shall be reasonably apportioned between all the responsible parties.
• Insurance of the vehicle : vehicles shall be stringently made to be insured by the
manufacturers and owners to ensure that in case of liability the compensation could
be provided for the loss.
• Mandatory Shared Liability: user always leases the Car from the company, so that it
becomes shared liability, and manufactures keep the systems of the vehicle always in
check.
• Continuous Certification: fully automated self-driving vehicles needs to be registered
and certified by the government for its fitness. (analogous to driving license).
• For test and development zones or areas needs to be identified. It can be further be
enhanced to the regulation of fully automated self-driving vehicles.
• “No Fault liability” is too harsh on the owner or insurance company in case of fully
automated self-driving vehicles. This needs to be modified and liabilities needs to be
fixed with manufacturers or technology providers.
• Consideration for minors: As self-driven cars need not have driver, it could be thought
for minors travelling in self-driver cars alone. Same could be true for physically
disabled persons currently unfit for driving.
Summary

• The current law of product liabilities lies with the Manufacturer as long as these
machines can be considered as the ‘agents’ of individual or companies.
• Current law does not consider yet the potential future scenarios with automated care,
Evolution of Machine to be considered and rules needs to be defined for the same in
the law.
• Even with rules, accident cannot be ruled out 100%, but it would be much better than
human drivers.
• The law shall evolve in future to handle the liabilities in case of introductions of truly
autonomous machines going rouge or acting on its own.
• Law should not stifle innovation which is leading to betterment of the society.
• Law should evolve to allow safe usage of technology.
References
[1] Dave Lee, Google self-driving car hits a bus, 29 February 2016, available at
http://www.bbc.com/news/technology-35692845
[2] Danny Yadron and Dan Tynan
https://www.theguardian.com/technology/2016/jun/30/tesla-autopilot-death-self-
driving-car-elon-musk
[3] http://guardianlv.com/2016/07/tesla-accident-highlights-issues-with-self-driving-cars-
and-insurance/
[4] Kate Conger and Bryan Menegus https://gizmodo.com/uber-driver-in-fatal-tempe-
crash-may-have-been-watching-1827039127
[5] https://www.independent.co.uk/life-style/gadgets-and-tech/news/facebook-artificial-
intelligence-ai-chatbot-new-language-research-openai-google-a7869706.html
[6] https://auto.economictimes.indiatimes.com/tag/motor+vehicles+act,+1988
[7] Enthiran ( lit. Robot) is a 2010 Indian Tamil-language science fiction action film written
and directed by S. Shankar. https://en.wikipedia.org/wiki/Enthiran
[8] https://en.wikipedia.org/wiki/Motor_Vehicles_Act,_1988
 Thank You

Indian Institute of Management Bangalore

Bannerghatta Road, Bangalore – 560 076, INDIA

www.iimb.ernet.in