Artificial Intelligence (‘AI’) is a rapidly growing field with the potential to significantly revolutionise the way in which we both live and work. AI has already begun reshaping the global economy; influencing everything from financial services to healthcare and the legal profession. Nevertheless, as this new technology evolves and grows, so too does the associated risks and by default, need for regulation. This need has already been recognised by the Chief Minister of the Government in Gibraltar, who, in December 2023, stated that the Government intended to regulate the use of AI in Gibraltar. Indeed, all around the world jurisdictions are racing to set global standards in the regulation of AI, none more so than the EU, with their EU AI Act which entered into force on 1 August 2024. In the United Kingdom, the House of Lords recently rejected some of the proposed amendments to the Data (Use and Access) Bill. The Lords argued for more protection for artists from AI, resulting in a defeat for the British Government. Undoubtedly, therefore, in the global developing response, Gibraltar has an opportunity to position itself as a progressive jurisdiction, by implementing a bespoke, dynamic approach to AI regulation.
It must not be forgotten that AI Regulation is essential for numerous reasons, including but not limited to; the maintenance of fundamental rights, the risk of reputational damage for Gibraltar-based firms that operate globally and timely market opportunities to attract ethical AI developers who seek clear legal certainty. Historically, Gibraltar has successfully leveraged its regulatory agility, becoming a leader in innovative legal frameworks. For example, in January 2018, Gibraltar introduced its Distributed Ledger Technology Regulatory Framework. This was one of the world’s first purpose-built regulatory frameworks for businesses using blockchain or DLT and provided much needed legal certainty for businesses. In a similar vein, Gibraltar has established itself as a leading, and reputable centre for both online gaming and financial services. It has done so using clear, and consistent regulation. It is this innovative, ambitious approach to regulation that makes Gibraltar well-equipped to develop a successful AI regulatory model.
When crafting its regulatory framework, Gibraltar could follow a model similar to that of the EU AI Act. The EU AI Act operates on a risk-based classification system. The classifications include prohibitions on the use of certain AI systems, such as those that make use of social scoring, those that use emotion recognition in the workplace and also forms of AI that exploit vulnerabilities. The EU AI Act then classifies high-risk systems, such as ones of which are not strictly prohibited, but are subject to strict legal obligations; including human oversight and technical documentation to allow for regulatory and audit reviews. Gibraltar may follow in the EU AI Acts footsteps, or alternatively, provide a lighter, more innovation focused approach. Indeed one of the most common debates within AI regulatory circles is the extent of which to regulate. Over regulation arguably stifles development, technological advancement and risks leaving a jurisdiction behind when it comes to global competitiveness and economic growth. Conversely, a lack of regulation could result in significant breaches of privacy, discriminatory profiling and the worrying use of deepfakes for malicious purposes such as election interference.
The exponential growth of AI, and its fast deployment presents both risks and opportunities, particularly for progressive jurisdictions like Gibraltar. Considering our track record in areas such as DLT and online gaming, Gibraltar is well-positioned to find that perfect balance between innovation and safety in order to be the first once more to impact a new emerging sector. Gibraltar need only engage with stakeholders and learn from the ongoing global developments and challenges, so that we may not just regulate AI responsibly, but effectively. Such an opportunity is ripe for the taking, enabling us to once more attract ethical developers whilst equally maintaining public safety.
