The European Commission has announced that it will shelve the much-beleaguered AI Liability Directive.

The Directive was first proposed in September 2022, and it sought to adapt non-contractual civil liability rules to address artificial intelligence. As it was put at the time, “current national liability rules, in particular based on fault, are not suited to handling liability claims for damage caused by AI-enabled products and services. Under such rules, victims need to prove a wrongful action or omission by a person who caused the damage. The specific characteristics of AI, including complexity, autonomy and opacity (the so-called “black box” effect), may make it difficult or prohibitively expensive for victims to identify the liable person and prove the requirements for a successful liability claim”.

In response, the Commission proposed not only an expansion of existing product liability rules, but also a specific ‘AI Liability Directive’. The Directive sought to lay down common rules to address two areas in particular: (1) the disclosure of evidence of high-risk AI systems to enable a claimant to substantiate a non-contractual fault-based civil law claim for damages; and (2) creating a rebuttable presumption of a causal link between the fault of the defendant and the output produced by the AI system where certain conditions were met.

Despite being adopted by the European Parliament in March 2024, the Directive’s progress soon stalled. In particular, once the EU AI Act and the Product Liability Directive were adopted, questions were raised as to whether the AI Liability Directive was necessary any longer.

Those questions seem to have been answered, as the Directive has now been withdrawn “for the foreseeable future” because “no foreseeable agreement” is expected to be reached on the proposal.

Some have immediately criticised the decision, including the rapporteur on the Directive, MEP Axel Voss, claiming that the Commission had chosen “legal uncertainty, corporate power imbalances and a Wild West approach that only benefits Big Tech”. Others claim that it is a pragmatic strategic manoeuvre by the EU to show its commitment to removing regulatory burdens and boosting investment.

Meanwhile, lawmakers on the European Parliament’s Internal Market and Consumer Protection Committee have voted to continue work on liability rules for AI, so the door might not be entirely closed on this subject.