GERMANY Law and Practice Contributed by: Eva Nase and Kay-Uwe Neumann, POELLATH
to allow companies sufficient time to take into account the practical guidance and best practices included in the Commission’s due diligence guidelines, which are to be adopted by 26 July 2027. The implementation of the CSDDD into German law will take place, in line with the coalition agreement ( Koalitionsvertrag ) published on 9 April 2025, by replacing the existing Supply Chain Due Diligence Act with a new law on international corporate responsibil - ity, which is intended to implement the CSDDD in a low-bureaucracy and enforcement-friendly manner. It is further intended to abolish the reporting obligation under the Supply Chain Act. Furthermore, violations of the existing statutory due diligence obligations – with the exception of massive human rights violations – are not to be sanctioned until the new law comes into force. There is no standalone corporate law regime spe - cifically governing board oversight of AI. There is no requirement to appoint AI specialists or establish dedicated AI committees. Instead, oversight follows general corporate governance rules: the management board is responsible for running the company on an informed basis and for setting up monitoring systems, while the supervisory board oversees these activities. Boards may use AI as a support tool – for example in research, drafting or analysis – but not as a substitute for human judgement. Core management and over - sight functions remain non-delegable. There is neither a general obligation nor a prohibition to use AI; deciding whether and how to use it is itself a business judgement requiring due care and consid - eration of the company’s best interests. 8.2 AI Use-Related Risks Germany manages AI risks through a layered frame - work rather than a single law, combining the EU AI Act, corporate law duties, data protection, employ - ment rules and sector-specific regulation. Data pro - tection authorities have issued guidance on AI, and 8. Artificial Intelligence 8.1 Board Oversight of AI
works councils’ rights may be triggered where AI affects employees. In 2025, developments were mainly driven by the EU AI Act, which introduces a risk-based system covering prohibited, high-risk, transparency and minimal-risk AI. Since February 2025, organisations must ensure staff have sufficient AI literacy (Article 4 of the AI Act) and avoid certain prohibited practices (Article 5 of the AI Act). Financial entities are also subject to the Digi - tal Operational Resilience Act (DORA), requiring man - agement to oversee Information and Communication Technology risk. In practice, AI strategy is led by management, sup - ported by legal and technical functions, with super - visory boards providing oversight. Using AI is a busi - ness decision under the ordinary duty of care and business judgement rule. Once adopted, companies must implement controls such as monitoring, valida - tion, safeguards and documentation. 8.3 Liability Exposures Arising From AI Use In Germany, liability exposure for boards and officers using AI is not governed by a separate regime but by general corporate law duties. For stock corporations, Sections 93, para 1, and 116 of the AktG apply, mean - ing that responsibility remains with human decision- makers. Risks typically arise where AI is introduced or relied on without proper assessment, safeguards or oversight. In practice, this may lead to liability for discriminatory outcomes, data protection breaches, confidentiality violations, misleading AI-assisted communications, product-related harm or failures in disclosure. At EU level, the AI Act introduces additional regulatory exposure, while the revised Product Liability Directive extends product liability rules for new technologies, including AI systems. 8.4 Key Disclosure Requirements for AI Use There is no general legal principle or specific single obligation to disclose AI use or strategy. Instead, dis - closure requirements arise from specific AI rules, data protection law, general reporting duties and capital markets regulation. AI-related matters must be dis -
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