American Law Institute (ALI) Civil Liability Principles Project: Shaping the Future of Common Law AI Torts

As courts face a surge in AI-related litigation—ranging from product liability, wrongful death, and algorithmic discrimination to commercial unfair competition—the lack of established common law precedents creates immense judicial uncertainty. To address this gap, the American Law Institute (ALI) has launched a major project focusing on the Principles of Civil Liability for Artificial Intelligence.

Structuring a Common Law Framework for AI Liability

The project, discussed in detail in May 2026 by its reporter Mark Geistfeld (Professor of Civil Liability at NYU School of Law), aims to provide courts, litigants, and policymakers with a systematic framework for applying traditional tort principles to autonomous and semi-autonomous systems.

Key themes and directions emerging from the ALI Civil Liability Principles Project include:

• Adapting Negligence and Strict Liability: The project explores the boundary between traditional negligence (which requires showing a breach of a duty of care by a human actor) and strict liability (which applies to defective products). Because AI systems possess degrees of autonomy, the project seeks to define when an AI malfunction should be treated as a product defect versus a failure of human supervision (negligent deployment).
• Assigning Liability Between Developers and Deployers: A central challenge is the "allocation of responsibility" along the AI value chain. The ALI principles aim to clarify how liability should be apportioned when a downstream deployer modifies, fine-tunes, or improperly prompts an upstream developer's foundation model.
• The "Reasonable AI" Standard: The project is examining whether courts can or should construct a "reasonable AI" standard analogous to the common law's "reasonable person" standard, or whether AI systems must be governed by strict risk-utility product liability tests.

Relevance for Enterprise Risk Management

For corporate legal departments, the ALI's work is highly influential:

• Judicial Reference: While the ALI Principles are not statutory law, US state and federal courts heavily rely on ALI Restatements and Principles to resolve novel legal questions where statutes are silent. The project's draft principles will serve as a primary guide for judges ruling on early AI tort cases.
• Informing Contractual Allocations: Enterprises can use the emerging ALI framework to structure their software-as-a-service (SaaS) and AI procurement agreements, aligning their contractual indemnity clauses with the liability divisions proposed by the ALI.