Open Access Research Article
ARTIFICIAL CLAIMS, REAL LIABILITY: REGULATING AI WASHING THROUGH INDIA’S CORPORATE DISCLOSURE FRAMEWORK
Abstract
The present-day capital
market is awash with assertions relating to artificial intelligence. Issuers,
listed firms, investment advisers and firms catering to consumers regularly
assert themselves to be “AI-powered,” “AI-driven” or “AI-first,” usually in
filings and offering documents that raise capital and manage investor
expectations. When such assertions exceed the actual technological state of
things, the phenomenon has a name“AI washing”and, with the first enforcement action
by the US Securities and Exchange Commission in March 2024, a legal
consequence. The Indian legislative corpus does not contain any specific law
governing AI washing, and the prevailing academic view is that the absence of
law provides a shield for the boasting firm. This article challenges the above
academic view. It makes the argument that the extant law of corporate
disclosures in India the misrepresentation, fraud and duties of directors’
provisions in the Companies Act, 2013, the anti-fraud and disclosure laws in
the SEBI Act, 1992 and the rules made under it, and the misleading
advertisements law in the Consumer Protection Act, 2019. Thus there already
exists an implicit yet effective regime against AI washing. Leveraging the
enforcement strategy of the SEC, the transparency framework of the Artificial
Intelligence Act of the European Union, and the 2024 anti-greenwashing
guideline of the Central Consumer Protection Authority as a domestic legal
precedent, this article outlines how fictitious representations can be
transformed into liability based on existing Indian law. Subsequently, it
examines the structural limitations of the implicit regime in determinacy of
materiality in technological representations, the lack of legal definition of
“AI”, the puffery doctrine, and a disclosure framework that favors listed
companiesand presents a targeted, hierarchical approach to address thema
disclosure circular issued by SEBI with regard to AI-related representations,
an anti-AI claim guideline issued by CCPA, and the on-demand substantiation
requirement. The premise is that India does not need an AI legislation to
regulate AI washing; all it needs is the calibration of its existing disclosure
instruments.
Published Paper
Author Details
Authors: SUJOY GOSWAMI Registration ID: 1013581 | Published Paper ID: IJLRA13581Approved ISSN: 2582-6433 | Country: Delhi, India
Article Information
ARTIFICIAL CLAIMS, REAL LIABILITY: REGULATING AI WASHING THROUGH INDIA’S CORPORATE DISCLOSURE FRAMEWORK
Authors: SUJOY GOSWAMI
- Journal IJLRA
- ISSN 2582-6433
- Volume 3
- Issue 8
About Journal
International Journal for Legal Research and Analysis
- AbbreviationIJLRA
- ISSN2582-6433
- AccessOpen Access
- LicenseCC 4.0
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