Driverless cars- the road ahead and the liability implications

April 2016Stephen Hamilton, Partner, Mills & Reeve

Unless otherwise stated, the contents of this document are copyright © Mills & Reeve LLP. All rights reserved. This document contains general advice and comments only and thereforespecific legal advice should be taken before reliance is placed upon it in any particular circumstances. Where hyperlinks are provided to third party websites, Mills & Reeve LLP is notresponsible for the content of such sites.

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Today’s journeyo Background to driverless cars

o Potential insurance implications

o By the end of the session, you will:o have a better understanding of the current development of

driverless carso be able to consider and discuss likely insurance implications

arising from the development of driverless cars

Driverless cars?

“We see the world of mobilitychanging more in the next fiveyears than it has in the last 50”

GM President, Dan Ammann, January 2016

Driverless cars?

"I do think that [the automotive] industry is at an inflection point for massive change. Notjust an evolutionary change." "We'll see what we do in the future.“

Tim Cook, CEO, Apple Inc.19 October 2015

Why does this matter?o Drivers to Passengers

o Why? Cost. Convenience. Uber…o Wasted time to productive time

o Why? Sleep. Work. Play. Shop. Entertainment.o Cars to Transport

o Why? Designed for use. Convenience. Demand driven. Access toall.

o A threat or an opportunity?o Auto manufacturers. Dealers. Mechanics. Suppliers. Oil companies.o Transport providers. Taxi? Train? Bus? Plane? Haulage?o Fuel Duty. Road Tax. Parking revenue. Insurance.o Better congestion? Worse congestion?

“The problem isn't technology, it's legislation, and the wholequestion of responsibility that goes with these cars moving

around ... and especially who is responsible once there is nolonger anyone inside”

Renault-Nissan CEO Carlos Ghosn, June 2014

“One of the big issues is what happens if there is an accident.Who is responsible? There are a whole load of legal issues to

sort out.”Dr. Horst Glaser, Audi Research Team, October 2014

Today’s journeyo Background to driverless cars

o Potential insurance implicationso Driver liability?o Product liability?o Other insurance implications?

Driver liability?o International law

o 1949 Geneva Convention on Road Traffic (95 parties, not China)o 1968 Vienna Convention on Road Traffic (73 parties, not the US,

China and the UK)

– Broadly state:“Every vehicle….shall have a driver”“Drivers shall at all times be able to control their vehicles”

– Hand control to the vehicle, the driver ceases to be in control at alltimes

Driver liability?o International law

o 1949 Geneva Convention on Road Traffic (95 parties, not China)

o 1968 Vienna Convention on Road Traffic (73 parties, not the US,China and the UK)

– Broadly state:“Every vehicle….shall have a driver”“Drivers shall at all times be able to control their vehicles”

– Hand control to the vehicle, the driver ceases to be in control at alltimes

There is a legal impediment to the introduction of:highly autonomous vehicles and fully autonomous vehicles

DRIVER CONTROL DRIVER ASSIST PARTIAL AUTONOMY HIGH AUTONOMY FULL AUTONOMY

Cruise control

ABS

ESC

AEB

Adaptive cruise control

Parking and Lane KeepAssistance

Adaptive Cruise Controlwith lane keeping

Traffic Jam Assistance

Road following

Junction decisioning

Hazard detection andevasive decisioning

Combination of all functionsand multiple redundancies –

No driver monitoring

NHTSA Level 0

No-Automation

NHTSA Level 1

Function-specificAutomation

NHTSA Level 2

Combined FunctionAutomation

NHTSA Level 3

Limited Self-DrivingAutomation

NHTSA Level 4

Full Self-DrivingAutomation

Who or what is in control?

Driver Driver Driver Driver or System System

RO

AD TR

AFFIC LAW

S RO

AD TR

AFFIC LAW

S

“NHTSA will interpret driver in the context of Google’s described motor vehicle designas referring to the SDS [Self-Driving System], and not to any of the vehicle occupants.We agree with Google that its SDV [Self-Driving Vehicle] will not have a driver in thetraditional sense that vehicles have had drivers during the last more than one hundredyears. … If no human occupant of the vehicle can actually drive the vehicle, it is morereasonable to identify the driver as whatever (as opposed to whoever) is doing thedriving. In this instance, an item of motor vehicle equipment, the SDS, is actuallydriving the vehicle.”

National Highway Traffic Safety Administration, 4 February 2016

NHTSA letter to Google

“While some of Google’s requested interpretations may be permissible given the factspresented here, we wish to make clear that many of the other requests present policyissues beyond the scope and limitations of interpretations and thus will need to beaddressed using other regulatory tools or approaches.”

A possible change to the law?

Proposed amendment to the Vienna Convention:Proposed by Sweden and Belgium to the Economic Commission for Europe, Inland TransportCommittee, Working Party on Road Traffic Safety in March 2015

“driver” means any person who drives or a vehicle system which hasthe full control over the vehicle from departure until arrival and is inconformity with the conditions of construction, fitting and utilizationaccording to international legal instruments concerning wheeledvehicles, equipment and parts which can be fitted and/or be used onwheeled vehicles, driving a motor vehicle or other vehicle (including acycle), or who guides cattle, singly or in herds, or flocks, or draught,pack or saddle animals on a road.

A possible change to the law?

Proposed amendment to the Vienna Convention:Proposed by Sweden and Belgium to the Economic Commission for Europe, InlandTransport Committee, Working Party on Road Traffic Safety

"driver" means(i) any person or a vehicle system(ii) which has the full control over the vehicle and(iii) is in conformity with international legal instruments

Ethical questions?o The (unhelpful) trolley problem

o In any case, it is not a self-driving car issue:– Did we consider ethical dilemmas with the introduction of AEB?– Is it ethical to leave the driver to decide - now that we don’t have

to?

– How did the vehicle get there?– It’s a choice between two bad

outcomes: humans cannot choose– The outcomes are uncertain– The scenarios are theoretical– The law does not require ethical

perfection

A possible change to the law?

Proposed amendment to the Vienna Convention:Proposed by Sweden and Belgium to the Economic Commission for Europe,Inland Transport Committee, Working Party on Road Traffic Safety

"driver" means(i) any person or a vehicle system(ii) which has the full control over the vehicle and(iii) is in conformity with international legal instruments

Analyse control

o Navigational Control– Ability to drive from A to B

o Critical Event Control– Arises on immediate threat to person, animal or property– Consists of emergency evasive action– Overrides navigational control

o Autonomous Navigational Controlo Being widely tested

o Autonomous Critical Event Controlo Does not form part of the on-road tests

“the [test] driver should constantly monitor road, traffic and weatherconditions, remain ready to resume manual control and be responsible

for the overall safe operation of the vehicle”UK Department for Transport February 2015

o Why does this matter?o We tolerate and forgive human drivers; “accidents happen”o Will we tolerate the same of autonomous vehicles?

Autonomous control

The legal challenge

o International standards for Autonomous NavigationalControl– Relatively simple from a legal liability perspective– Compliance with road traffic laws– Transport occupants from A to B without colliding with person or

propertyo International standards for Autonomous Critical Event

Control?– What action does the vehicle (the system) take in a critical event

scenario?

Autonomous Critical Event Controlo AEB is the first stepo Steering / collision avoidance the nexto Autonomous emergency steering and braking combined =

“Autonomous critical event control”– a necessary requirement for an autonomous vehicle– liability rests with the manufacturer– an enhancement to every vehicle at all times?

o a passive safety featureo enhanced safety benefits exist at all timeso the option to enjoy driving is maintained

General principle:The system should take ACTION to steer around an obstruction inthe IMPACT ZONE if:a)the vehicle can rejoin its primary path or continue its journey inaccordance with road traffic laws and regulations without impactinganother obstruction orb)the vehicle can come to a stop off the carriageway withoutimpacting another obstructionIf the vehicle cannot achieve (a) or (b), the vehicle should activateemergency braking to minimise the impact on the obstruction

Autonomous Critical Event Control

The legal challengeo International standards for Autonomous Navigational

Control– Relatively simple from a legal liability perspective– Compliance with road traffic laws– Transport occupants from A to B without colliding with person or

propertyo International standards for Autonomous Critical Event

Control?– What action does the vehicle (the system) take in a critical event

scenario?– What performance level does it need to achieve?

Performance level?o The required performance standard for the ACEC system?

– Presumably better than the performance we expect from drivers

National Motor Vehicle Crash Causation Survey (NMVCCS) conducted from 2005 to 2007 by NHTSA

Performance level?The required performance standard for the ACEC system?

o Better than we expect from drivers

o But, require perfection and we lose the benefits

o We will need to accept that:– Self-driving vehicles will still be involved in accidents– They will not be perfect– They will still need insurance…..

There is a legal roadblock to the introduction of: highly autonomous vehicles,fully autonomous vehicles and potentially partially autonomous vehicles

DRIVER CONTROL DRIVER ASSIST PARTIAL AUTONOMY HIGH AUTONOMY FULL AUTONOMY

Cruise control

ABS

ESC

AEB

Adaptive cruise control

Parking and Lane KeepAssistance

Adaptive Cruise Controlwith lane keeping

Traffic Jam Assistance

Road following

Junction decisioning

Hazard detection andevasive decisioning

Combination of all functions+ Artificial intelligence and

multiple redundancies – Nodriver monitoring

NHTSA Level 0

No-Automation

NHTSA Level 1

Function-specificAutomation

NHTSA Level 2

Combined FunctionAutomation

NHTSA Level 3

Limited Self-DrivingAutomation

NHTSA Level 4

Full Self-DrivingAutomation

Who or what is in control?

Driver Driver Driver or System? Driver or System SystemR

OAD

TRAFFIC

LAWS R

OAD

TRAFFIC

LAWS

Changes to the way we live?o Real estate / planning implications?

– If people own less carsoParking at home?oParking in towns / cities?oUrban design?oTown planning?

o Employment implications?– If people can do other things in cars

oWork? Commute?– If we don’t need drivers

oTaxi firms? Haulage? Transport?

Changes to the way we live?o Construction

– Less drivers?– Safer construction sites?– Changes to road building / infrastructure?– Implications for other forms of transport?

o Automotive– New maintenance and support frameworks?

o New business opportunities?– Uber? Car sharing?– How time is spent in the vehicle?

o Business failures?– Repairers? Dealerships? Car parks? Transport providers?

Insurance change?o Insurance for the vehicle

– Product liability?oSoftware updates?oMaintenance and support?oSafe modes?

– Cyber security?– Importance of telematics?– Self-insurance by manufacturers?

o Insurance for automated transport generally?o Health and medical insurance claims?o Travel insurance? Hire car insurance? Excess insurance?o Other insurance……?

Stephen Hamilton is a partner with UK law firm Mills & Reeve. Mills &Reeve acts for a range of clients who have an interest in the developmentof autonomous vehicles including automotive manufacturers, suppliers toautomotive manufacturers and insurers.

Stephen has consulted widely in relation to the legal challenges related toconnected and autonomous vehicles including with regulators, legalcounsel from global automotive manufacturers and other legal andregulatory stakeholders and interested parties.

Stephen HamiltonPartner+44 1223 222349+44 7825 603111stephen.hamilton@mills-reeve.com@selfdrivinglaw

The contents of this document are copyright © Mills & Reeve LLP. All rights reserved. This document contains general advice and comments only and therefore specific legal advice shouldbe taken before reliance is placed upon it in any particular circumstances. Where hyperlinks are provided to third party websites, Mills & Reeve LLP is not responsible for the content of suchsites.