Question: If a company relies on AI-generated advice or decisions and these result in financial loss, legal violations or harm to an individual, who is legally responsible — the company, the employee who acted on the advice, or the AI developer? How does UAE law address accountability in such cases?
Answer: Under UAE law, such liability may be considered under the general principles of civil liability, contractual obligations and any applicable sector-specific legislation. Although the UAE Civil Transactions Law does not establish a separate liability regime specifically for AI-generated outputs or advice or work rendered on the basis of AI generated advice, its provisions concerning liability for harmful acts may be relevant.
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General:
In this regard, Article 245(1) of Federal Decree-Law No. 25 of 2025 promulgating the Civil Transactions Law (the “Civil Transactions Law”) provides:
“Subject to the provisions on liability contained in special legislations, the provisions of this Chapter shall apply to the liability arising from a harmful act committed by a natural or legal person.”
Further, Article 246 of the Civil Transactions Law provides:
“Every act causing harm to another shall obligate its perpetrator to compensate for the damage, even if the perpetrator lacks discernment.”
Article 247 of the Civil Transactions Law further distinguishes between harm caused directly and harm caused by way of causation. It provides:
“1. Harm may be caused directly or by causation.
If the harm occurs directly, a guarantee is due without any condition. If it occurs by causation, no guarantee is due unless the perpetrator was a transgressor or acted intentionally, or the act led to the harm.”
Accordingly, the determination of liability may depend on the role played by each person in the development, deployment or use of the AI system, the nature of the act or omission involved and whether a sufficient connection can be established between that conduct and the damage suffered. The use of AI as a tool would not, by itself, necessarily exclude the possibility of liability on the part of the person or entity responsible for its use.
In relation to a company, liability may arise where an AI system is used in its business operations and the resulting harm can be attributed to the company’s acts or omissions. This may include circumstances involving inadequate assessment of the system, insufficient safeguards or a failure to appropriately monitor its use. The company’s contractual obligations, applicable regulatory requirements and the extent of its involvement in the relevant decision may also be relevant.
For professional companies
In case of ‘Professional Companies’, the terms regarding liability and accountability are clearer.
By Article 645 of the Civil Transactions Law, “A professional company is a company established by one or more persons licensed to practice a liberal profession, or thereby with others, and its purpose is to practice that profession, unless the law or the agreement provides otherwise.”.
Subsequently, by Article (651) of the Civil Transactions Law, (i) partners of the professional company are personally liable to the professional company for their acts, and towards other partners and third parties; (ii) the company itself remains liable for acts of its manager or authorised employees and a third party has relied on such authority in dealing with the company. The detailed provisions of the said Article (651) are as follows:
“Second: Liability of the Professional Company and the Partner
Article (651)
1. Each partner shall be personally liable for their professional faults towards the professional company and the rest of the partners, and the professional company shall be liable for the faults of the partners vis-à-vis third parties.
2. The professional company shall be liable for any act or conduct carried out by the manager or managers in the ordinary course of management, and shall also be liable for any act carried out by one of its employees or agents whenever such person has the authority to act on its behalf, and the third party has relied on such authorization in dealing with it.
3. Any provision contained in the articles of association of a professional company that permits the approval of the exemption of any person from any personal liability borne thereby in their capacity as a current or former manager in the professional company shall be void.”
In light of the foregoing, professional companies themselves remain liable under the applicable laws of the UAE for professional services provided by them regardless of whether it was rendered by a manager acting in the ordinary course of business or an authorised employee, and regardless of whether the service deliverables relied on advice generated by artificial intelligence. Such liability may not be expelled by the professional company constitutional documents or other agreements.
The AI-developer
As to liability/ accountability of the AI Developer, one may refer to the provisions of AI Ethics: Principles and Guidelines (December 2022) (the “AI Ethics Guidelines”) which was issued by the UAE Ministry of State for Artificial Intelligence, Digital Economy and Remote Work Applications.
Article 3.2.1 of the AI Ethics Guidelines provides:
“Accountability for the outcomes of an AI system lies not with the system itself but is apportioned between those who design, develop and deploy it.”
The Article 3.2.2.1 of the AI Ethics Guidelines further state as follows:
“AI operators and AI developers should consider designating individuals to be responsible for investigating and rectifying the cause of loss or damage arising from the deployment of AI systems.”
Further, by Article 3.5.1 (Principles) “AI Developers should ensure AI systems will not cause any unintentional harm and adverse impacts”.
The AI Ethics Guidelines also provides procedures through which individuals affected by significant AI-assisted decisions may challenge those decisions and seek human review. However, the Guidelines expressly describe themselves as non-binding and should therefore be read as policy guidance rather than as a standalone basis for imposing legal liability.
Conclusion
Accordingly, where AI-generated advice or decisions (by a company) result in financial loss, legal violations or harm to an individual, the individual shall have a right of recourse against the company itself. If the service was rendered by a partner, the partner remains personally liable to the company for any loss suffered by the company as a result of such third-party claim or action. As to a manager who was not acting in the ordinary course of business or an unauthorised employee acting in bad faith, the company may subsequently take action against such partner/manager/employee including termination of employment of the employee in accordance with the following provisions:
1) Article (614) clause 3 of the Civil Transactions Law which reads as follows:
“3. If the manager of the company exceeds the powers specified in the contract, he shall be liable for any damage that befalls the company as a result of such act.”
2) Clauses 2, 3, 4 and 9 of Article 44 of the Decree Law No (33) of 2021 on the Regulations of Employment Relations:
“Article (44)
Dismissal of Employee without prior notice
An Employer may dismiss the Employee without prior notice, after a written investigation with him, and dismissal decision shall be in writing and reasoned, and given by the Employer, or his representative, to the Worker, in any of the following events:
….
2. If the Employee commits an error resulting in gross material losses to the Employer, or deliberately cause harm to the property of the Employer, and admits the same, provided that the Employer notifies the Ministry (of Human Resources and Emiratisation) of the incident within 7 (seven) working days of being aware of the occurrence thereof.
3. If the Employee violates the bylaws of the Establishment in relation to Work and Workers Safety or the Workplace, provided that such instructions are in writing and posted in a visible place, and the Employee has been advised thereof.
4. If the Employee fails to perform his main duties in accordance with the Employment Contract, and fails to remedy such failure despite a written investigation with him on the matter and two warnings that he will be dismissed in case of recidivism.
….
9. If the Employee abuses his position with the aim to obtain personal gains and profits.”
Any claims by a company against an AI developer shall be subject to the contractual terms governing their relations.
Applicable provisions:
· Federal Decree-Law No. 25 of 2025 promulgating the Civil Transactions Law
· AI Ethics: Principles and Guidelines (December 2022)
Source: Khaleej Times