Legal, Ethical, and Regulatory Frameworks

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[rahulrazdan][✓ rahulrazdan, 2025-06-16]

Figure 1

In society, products operate within the confines of a legal governance structure. The legal governance structure is one of the great inventions of civilization and its primary role is to funnel disputes from unstructured expression and perhaps even violence to the domain of courts (figure 1). To be effective, legal governance structures must be perceived as fair and predictable. The objective of fairness is obtained by a number of methods such as due process procedures, transparency and public proceedings, and Neutral decision-makers (judges, juries, arbitrators). The objective of predictability is achieved by the use of the concept of precedence. Precedence is the idea that past rulings are given heavier weight relative to decision making, and it is an extraordinary event to diverge from precedence. Precedence gives the legal system stability. The combination of fairness and predictability shifts the dispensation of disputes to a more orderly process which promotes societal stability.

How does this mechanically work and how does this connect to product development ?

Figure 2

As shown in figure 2, there are three major stages. First, legal frameworks are established by law-making bodies (legislators). However, in practice, legislators cannot specify all aspects and empower administrative entities (regulators) to codify the details of law. Finally, regulators often do not have the technical knowledge to codify all aspects of the law and rely on independent industry groups such as Society for Automotive Engineering (SAE) or Institute of Electrical and Electronics Engineers (IEEE) for technical knowledge. Second, in the field, disputes arise and must be adjudicated by the legal system. The typical process is a trial, under the strict processes established for fairness. The result of the trial is to apply the facts to the legal frameworks and apply a judgement. The facts of the case can result in three potential outcomes. In the first situation, the facts are covered by the legal framework, so there is no further action relative to the governance structure. In the second case, the facts expose an “edge” condition in the governance structure. In this situation, the court looks for previous cases which might fit (the concept of precedence) and uses that to make its judgement. If such a case does not exist, the court can establish precedence with its judgement in this case. This has the effect of weighing the future decisions as well. Finally, in rare situations, the facts of the case are in a field which is so new that there is not much in the way of body of law. In these situation, the courts may make a judgement, but often there is a call for law-making bodies to establish deeper legal frameworks.

In fact, autonomous vehicles (AVs) are considered to be one of these situations. Why ? In traditional automobiles, the body of law connected to product liability is connected to the car, and the liability of actions using the car is connected to the driver. Further, Product liability is often managed at the federal level and driver licensing more locally. However, surprisingly, as the figure below shows, there is a body of law dealing with autonomous vehicles from the distant past. In the days of horses, there were accidents, and a sophisticated liability structure emerged. In this structure, there was a concept that if a person directed his horse into an accident, then the driver was at fault. However, if a bystander did something to “spook” the horse, it was the bystander's fault. Finally, there was also the concept of “no-fault” when a horse unexpectedly went rogue. A discerning reader may well understand that this body of law emerges from a deep understanding of the characteristics of a horse. In legal terms, it creates an “expectation.' What are the “expectations” for a modern autonomous vehicle ? This is currently a highly debated point in the industry.

Overall, whatever value products provide to their consumers is weighed against the potential harm caused by the product, and leads to the concept of legal product liability. While laws diverge across various geographies, the fundamental tenets have key elements of expectation and harm. Expectation as judged by “reasonable behavior given a totality of the facts” attaches liability. As an example, the clear expectation is that if you stand in front of a train, it cannot stop instantly while this is not the expectation for most autonomous driving situations. Harm is another key concept where AI recommendation systems for movies are not held to the same standards as autonomous vehicles. The governance framework for liability is mechanically developed through legislative actions and associated regulations. The framework is tested in the court system under the particular circumstances or facts of the case. To provide stability to the system, the database of cases and decisions are viewed as a whole under the concept of precedence. Clarification on legal points is set by the appellate legal system where arguments on the application of the law are decided what sets precedence.

What is an example of this whole situation ? Consider the airborne space with the figure above where the governance framework consists of enacted law (in this case US) with associated cases providing legal precedence, regulations, and industry standards. Any product in the airborne sector, must be compliant to release their solution to the marketplace.

Ref:

  1. Razdan, R., (2019) “Unsettled Technology Areas in Autonomous Vehicle Test and Validation,” Jun. 12, 2019, EPR2019001.
  2. Razdan, R., (2019) “Unsettled Topics Concerning Automated Driving Systems and the Transportation Ecosystem,” Nov 5, 2019, EPR2019005.
  3. Ross, K. Product Liability Law and its effect on product safety. In Compliance Magazine 2023, [Online]. Available: https://incompliancemag.com/product-liability-law-and-its-effect-on-product-safety/