Artificial Fiduciaries

Abstract

The rapid development of technology in the last decade has affected all levels of society. Corporate governance has not been immune to these changes. In the future, Artificial Intelligence (AI) fiduciaries may be technologically capable of serving as independent corporate directors. This could be an effective way to address the challenge of the absence of truly independent directors in the traditional governance framework. Artificial fiduciaries could also offer a way to mitigate agency costs and improve overall corporate governance. However, traditional corporate law lacks solutions for coping with the integration of AI into corporate governance.

Currently, there is little scholarship discussing the intersection of AI and corporate governance. Because the impact of technology on corporate governance is inevitable, jurisdictions with a robust corporate focus (such as Delaware) will likely have to amend their corporate laws. This article introduces the theory of artificial fiduciaries and offers a novel interpretation of traditional fiduciary duties. It aims to harmonize the long-established duties of loyalty and care with the fast-paced technological advancements of the modern era. The discussion extends beyond the question of whether AI is more than a mere tool, and scrutinizes the anticipated critiques of AI’s alleged faults--including issues of bias, the “blackbox” problem, and concerns related to the “superdirector.” It also explores the “human in the loop” option in the context of artificial fiduciaries. This comprehensive analysis not only highlights AI’s pivotal role in driving the evolution of traditional corporate governance toward an innovative technological framework, but also delineates clear trajectories and presents a strategic blueprint for technology governance’s forthcoming evolution.

Keywords: Corporate Governance; Fiduciary Duty; AI Directors; Law and Tech