June 2024 in Brief: International Business Law

Council of the European Union Officially Adopts Artificial Intelligence Act

By Sana Hamidi

On May 21, 2024, the Council of the European Union approved the Artificial Intelligence (AI) Act as the world’s first comprehensive regulatory framework for the development, bringing to market, putting to service, and use of artificial intelligence systems. The new legislation seeks to promote the creation and adoption of secure and trustworthy AI systems throughout the European Union single market, targeting both private and public sectors. Consequently, it aims to protect the fundamental rights of EU citizens while promoting investment and innovation in artificial intelligence within Europe. The AI Act is applicable to domains under the EU jurisdiction and includes exemptions for systems used exclusively for military, defense, and research purposes.

For the enforcement of the AI Act, several agencies will be set up, such as an AI Office within the European Commission to enforce the common rules across the EU, a scientific panel of independent experts to support the enforcement activities, an AI Board with member states’ representatives to advise and assist the Commission and member states on consistent and effective application of the AI Act, and an advisory forum for stakeholders to provide technical expertise to the AI Board and the Commission.

The fines for violations of the AI Act will be calculated as a percentage of the offending company’s global annual turnover from the previous financial year or a fixed amount, whichever is greater. Small and medium-sized enterprises and start-ups will face proportionate administrative fines.