CJEU Receives Queries on the AI Act Regarding Automated Decision Making
The Court of Justice of the European Union (CJEU) has been approached with significant questions concerning the AI Act and its implications for automated decision-making (ADM). This inquiry stems from a request made by Bulgaria’s Sofia District Court on November 25, 2024, related to the provisions governing ADM under the AI Act.
Background of the Case
The case, designated as C-806/24, emerged from a dispute involving a telecom company and a consumer who failed to pay their bills. The consumer contends that the telecom’s method of automatically calculating fees constitutes an ADM system, which is therefore subject to Article 86(1) of the AI Act. This article emphasizes the need for transparency, human review, and fairness within ADM systems.
The Bulgarian court has requested the CJEU to clarify 17 legal questions, referencing not only the AI Act but also the Unfair Terms Directive and the Consumer Rights Directive.
Key Questions Raised
The Bulgarian court has articulated three primary areas of inquiry for the CJEU:
- Consumer Rights: The court seeks to understand the consumer’s right to be informed and to request reviews of decisions made by ADM systems.
- Fairness in Compensation: Questions have been raised about the fairness of imposing a compensation fee when a contract has concluded, under the scope of consumer protection law.
- Cost Responsibility: The court queries whether a consumer can be held liable for court costs due to non-payment if the trader failed to clearly explain the ADM prior to legal proceedings.
Interpretation of Article 86(1)
The first set of questions focuses on interpreting Article 86(1) of the AI Act, which stipulates that individuals subjected to decisions based on high-risk AI systems are entitled to receive “clear and meaningful explanations” regarding the role of the AI in the decision-making process.
Specific inquiries regarding this article include:
- Must the trader inform the consumer about the decision-making process of the ADM system, including details on the algorithm used to calculate invoices?
- Does the court possess the authority to compel the trader to disclose black box data, source code, and algorithms relevant to ADM decision-making?
- Does the consumer have the right under Article 86(1) to request explanations or algorithms related to the ADM process?
- Can the consumer demand a human review of ADM decisions, and must this review be conducted by a judge in formal judicial proceedings?
Implementation Timeline
Although the AI Act officially came into force in August 2024, it’s noteworthy that Article 86(1) will not be applicable until August 2, 2026. A judgment from the CJEU is anticipated by mid-2026, which could have profound implications for the application of ADM in the EU.
Conclusion
This inquiry highlights the ongoing evolution of regulatory frameworks surrounding artificial intelligence and automated decision-making. As technology continues to advance, the legal landscape must adapt to ensure consumer rights are protected while fostering innovation. Stakeholders, including technology companies and legal experts, will be closely monitoring these developments to navigate the complexities of AI regulation effectively.
