The AI Effect: Rethinking Governance And Risk In Corporate Law
- IJLLR Journal
- Feb 15
- 1 min read
Madhu Srikar Chintalapudi, BA LLB, BMS College of Law, Bengaluru
ABSTRACT
Artificial Intelligence (AI) has steadily advanced from experimental novelty to mainstream utility across industries as diverse as aviation, healthcare, finance, and cybersecurity. Corporate law has not remained untouched by this trend. Law firms and corporate legal departments increasingly employ AI-driven tools to streamline repetitive tasks, draft and review contracts, assist in compliance, and conduct due diligence. This integration promises significant efficiency gains, yet it also presents complex legal, ethical, and governance challenges.
This paper examines the intersection of corporate law and AI through two interrelated perspectives. First, it considers the practical adoption of AI by corporates in India, focusing on benefits and potential risks ranging from data privacy concerns to the fiduciary obligations of directors and managers. Second, it situates these issues within a comparative legal framework by analysing recent doctrinal developments in the United States particularly the Anthropic and Meta litigation which tested whether training language models on copyrighted material qualifies as “transformative use” under the doctrine of fair use. Although these U.S. judgments provide a permissive view of AI training, they underscore unresolved risks of copyright infringement, market substitution, and liability.
Drawing lessons from these cases, the paper argues that Indian corporate entities must approach AI adoption with caution. Unlike the United States, India’s copyright law recognises the narrower doctrine of “fair dealing.” Without explicit legislative exceptions for text and data mining, corporations face heightened risk when deploying AI models that rely on copyrighted inputs. The paper concludes with recommendations for corporate governance frameworks, contractual safeguards with AI vendors, and hybrid compliance strategies that balance innovation with accountability.
