Artificial intelligence is no longer a side experiment within Saudi companies. As digital transformation accelerates in line with Saudi Vision 2030, AI-powered tools are screening job candidates, drafting marketing campaigns, responding to customers, and reviewing contracts. However, every decision made or influenced by these systems carries potential legal implications, and the resulting liability often falls on the company rather than the technology itself.
The question is no longer, “Should we use AI?” but rather, “How do we manage our legal responsibilities when using it?” This is something every decision-maker needs to understand before expanding AI adoption.
Who Is Legally Responsible for AI Decisions?
In general, a company is not exempt from liability simply because a decision was made by an automated system. If a CV-screening tool rejects a candidate for unjustifiable reasons, or a chatbot provides a customer with incorrect information, the organization that adopted the tool may be held accountable to the affected party.
Companies are therefore advised to clearly define responsibilities both internally and in their contracts with technology providers, including:
- Who has the authority to approve final outputs.
- The provider’s liability limits and agreed performance guarantees.
- The compensation mechanism in the event of damage caused by a system malfunction.
Data Protection and Intellectual Property in AI Systems
AI models rely on data for training and operation, and this data may include personal information belonging to customers or employees. This requires compliance with the Personal Data Protection Law (PDPL), including obtaining appropriate consent where required, defining the purpose of data use, and controlling the transfer of data outside Saudi Arabia.
A practical risk arises when an employee uploads a confidential contract or customer data to a public AI tool without realizing where that information is stored.
Intellectual property raises two key questions: Does the company have the right to use the content and software on which the model was trained? And who owns the rights to the outputs it generates? The answers depend on the applicable licensing terms in each case, making it essential to review these terms before adopting any AI tool for commercial purposes.
Managing Errors, Bias, and Inaccurate Outputs
AI models may generate information that appears convincing but is incorrect, or reflect biases embedded in the data on which they were trained. In recruitment, for example, such bias may unintentionally exclude certain groups of applicants, exposing the company to regulatory and reputational risks.
To mitigate these risks, companies are advised to:
- Test AI tools regularly and verify the fairness of their results.
- Document significant decisions and the reasons behind them to facilitate review.
- Establish a clear process for handling complaints and correcting errors.
Usage Policies and Human Oversight: A Practical Framework for Companies
The most successful companies are those that move from ad hoc AI use to documented governance. A practical framework typically includes an internal policy identifying approved tools and permitted and prohibited uses; a classification of data that must not be entered into external systems; mandatory human oversight of decisions with significant consequences; and employee training, alongside regular policy updates to keep pace with technological developments.
AI presents a genuine opportunity to enhance the efficiency of Saudi companies, but it requires informed legal oversight to protect data, intellectual property, and customer rights. Treating AI in Saudi companies as a responsibility to be managed, rather than merely a tool to be used, helps protect investments and support sustainable growth. The next step begins with reviewing your current AI applications and identifying their legal compliance gaps.
Does your company use AI or develop AI-based solutions? Defence Lawyers & Consultants provides legal advisory services to businesses on contract drafting, governance policies, data protection, and intellectual property. Contact us for specialized legal advice tailored to your business needs.
