Legal Implications of AI in Israel

The state of AI laws and regulations in Israel is currently a patchwork of sector-specific laws and regulations rather than a comprehensive legal framework. In Israel, the term “artificial intelligence” (AI) is commonly understood to refer to software capable of tasks that typically require human intelligence, such as reasoning, learning, decision-making, and problem-solving. However, there is no legal definition for AI yet. This article aims to outline the current implications of AI on the legal field in Israel, focusing on both the legal and regulatory environments, as well as the practical aspects for legal professionals.

In Israel, the regulatory approach to AI addresses concerns on a sector-by-sector basis. The Ministry of Justice and the Israel Innovation Authority have indicated that Israel does not plan to adopt general AI legislation. Instead, the application of existing laws to AI is determined through judicial interpretation. These laws include those relating to data protection, intellectual property, consumer protection, competition, cybersecurity, and human rights. Additionally, there may be future sector-specific regulations and guidelines that apply to AI.

When considering the broader regulatory landscape, there are several laws in Israel that may have an impact on AI applications. The Protection of Privacy Law, 1981, governs the processing of personal data and applies to AI systems that use personal data during training or implementation. The Copyright Law, 2007, safeguards original works of authorship and may be relevant to AI systems that generate or use copyrighted works alongside human authors. The Consumer Protection Law, 1981, may apply to AI systems involved in consumer transactions and prohibits unfair or deceptive practices. Additionally, anti-discrimination laws may come into play if AI systems produce discriminatory outputs in protected areas such as employment and public services.

The issue of free data access is significant for AI development, as AI systems heavily rely on large volumes of data. Although Israel’s current legal framework does not specifically address free data access in relation to AI, the Ministry of Justice has issued an opinion on the potential application of fair use defences for training AI models using copyrighted materials.

In the courts, AI is not yet regulated, but there are initiatives to explore its potential. For example, the Ministry of Justice has launched a pilot project to use AI for standardising criminal sentencing based on previous court decisions.

From the legal profession perspective, the Bar Association Law, 1961, regulates legal services in Israel, implying that lawyers are responsible for the quality and ethics of their work, regardless of the tools used. This means that lawyers using AI tools must ensure compliance with professional conduct rules. In addition, the Israel Bar Association Law arguably prohibits non-lawyers from providing legal services, effectively limiting legal AI start-ups from offering their tools directly to consumers without a lawyer’s involvement.

In addition, practical legal work pertaining to AI has increasingly adopted a risk-based approach. This involves conducting AI risk analyses for clients to identify potential legal and ethical issues that may arise from the use of AI technologies. Lawyers also draft internal AI use policies to ensure that their clients’ AI practices comply with current and future laws and regulations, and trust and safety standards. Additionally, AI due diligence is becoming a crucial part of financing and M&A transactions, as it helps assess the AI-related risks in the target companies. Finally, drafting AI provisions in commercial transactions is essential to clarify the rights, responsibilities, and liabilities associated with AI products and services, including the entire AI supply chain. This comprehensive approach ensures that clients are well prepared to navigate the complex legal landscape of AI.

As for future trends, Israel is likely to continue its sector-specific approach to AI regulation, with potential updates to existing laws to better address the unique challenges posed by AI. Professional organisations are expected to play a crucial role in setting ethical guidelines for AI use in various sectors. For instance, the Israel Bar Association has published preliminary guidance on the use of AI systems by law firms in the provision of legal services.

In conclusion, Israel’s AI laws and regulations are evolving, with a focus on sector-specific solutions and future trends that are likely to mirror developments in the United States and the EU. Regardless of regulatory developments, practitioners are increasingly focusing on AI risks and developing new practical tools to include AI risk analysis in various commercial legal tasks.