Hello and welcome once again to the Pinsent Masons Podcast, where we try to keep you abreast of the most important developments in global business law every second Tuesday. My name is Matthew Magee and I'm a journalist here at Pinsent Masons. And this week we'll ask an expert whether the UK government’s new plan to reconcile the AI and creative industries will work. And we find out how the growing use of standard contracts could reduce the number and severity of disputes in Australia’s construction industry.
But first, here’s some business law news from around the world.
Victorian government announces August offshore wind auction
UAE influencer licence deadline looms and
Employers prepare for the first phase of new laws industrial relations changes in the UK.

The Victorian state government has announced plans to hold an auction for offshore wind farms in August, ending a year long delay and continued uncertainty for the industry in Australia. The auction, marking Australia’s first open tender for offshore wind projects, is seeking to meet the state’s target for two gigawatts of offshore wind generation by 2032 and nine gigawatts by 2040. The Victorian government will open tenders for the first two gigawatts of capacity after the original auction slated for September was delayed. That previous auction was delayed because of global investment hurdles and the risk of attracting too few bidders. Leanne Olden, an expert in renewable energy, said this announcement is welcome news for the industry because it adds greater certainty to the viability of offshore wind projects.

A new influencer licensing regime marks a watershed moment for digital marketing in the United Arab Emirates and will help protect consumers, experts have said. Social media content creators in the country were required to hold an official advertiser permit to post promotional content in the UAE from the 31st of January or risk campaign disruptions, reputational damage and even significant financial penalties. The changes follow updates to media regulations aimed at professionalising the country’s booming influencer industry. The new rules require any influencer, content creator or digital marketer in the UAE that posts either ads or promotional material, whether paid or unpaid, to be registered and licensed by the 31st of January. It’s believed to be the first permit system of this kind adopted in the Middle East. To obtain a permit, applicants must be at least 18 years old, have a valid UAE trade licence or freelancer licence that permits media or advertising activities, and hold a certificate of good conduct cleared by the police.

The first stage of a major reformation of the relationship between employers and trade unions in the UK, which will begin its phased implementation later this month, will increase exposure for companies, including those which have not previously engaged in industrial relations, according to an expert. Under the new rules, which will come into force on the 18th of February, restrictions about the threshold for industrial action ballots will change, with the Employment Rights Act removing the requirement for a 40 percent support threshold to be met before industrial action can be called in important public services. It also reduces the amount of information unions must include when giving employers notice of ballots and what information is needed on a voting paper for industrial action. Ballot result information notified to employers and employees is also simplified. Employment law expert Anthony Convery said these reforms, particularly those on union recognition and union access, may be most relevant to those employers who don’t currently have established relationships with trade unions and who historically haven’t engaged much with industrial relations. The new measures give unions greater rights to seek involvement in workplaces where no formal relationship exists, so some clients may experience increased union activity for the first time.

We’ve talked here before about the bind that many governments are in when it comes to industrial policy to do with artificial intelligence. It’s to do with the standoff over companies’ use of copyright material to train their AI systems. Governments want AI developers to invest in their countries. So on the one hand want developer friendly, lax intellectual property policies. But they don’t want to lose their creative industries, which rely on strong IP protections. It’s tough to square that circle. The UK is no exception and it’s now embarking on a pilot scheme to try and keep both sides of the dispute happy. It’s a digital marketplace for content, where AI developers can easily license a huge range of high value material for training their systems, and it’s called the Creative Content Exchange. But will it work? London based IP specialist Gill Dennis first reminded me of the core problem to be solved.

Gill Dennis: All AI has to be trained, and to be trained it has to have access to lots of good data, otherwise it simply can’t get up and running. The problem is that AI developers haven’t been able to get access to that data. So what they’ve been doing so far is going onto websites, scraping data, lots of it, and using that to train their tool. All well and good for an AI developer, but not so good for the creative people who own the copyright in that content. It’s used without their permission and why that’s significant is that content owners need revenue from their work. It’s their income stream. So normally they would license it to be used and get royalties back. But if AI developers are simply scraping their content and using it, often without the creative content owner’s permission or even knowledge, then they’re not getting that remuneration.

So the government is in a really tricky position at the moment where it wants to support AI innovation, but equally it recognises the contribution that the creative sector makes to the UK economy as well. And there’s a risk that if AI developers aren’t checked, that this will be really detrimental to the creative sector in the UK because creatives will simply go elsewhere and make money elsewhere in another jurisdiction. So it’s about trying to strike a balance at the moment between the interests of AI development and protecting the creative content sector.

Matthew Magee: So what is the Creative Content Exchange and how will it work?

Gill: The Creative Content Exchange is intended to be a single platform on which anyone can get a licence to use creative content. And that might be music, images moving or still, or written content. And the reason why this exchange is needed is because most creative content is protected by copyright. So if it is used without the permission of the copyright owner, without a licence from them, then that is copyright infringement and it’s unlawful. But what it aims to be is a one stop shop where I, as an AI developer, can come to that platform, search for work that I might want to use for training my system, and seek a licence to do that. The licence will happen or it won’t happen, most likely it would happen, on that exchange, payment takes place, and the AI developer can go away and get on with their development work. So very much a one stop shop for licensing of copyright protected content.

Matthew: Gill said that the exchange could grow to be large and wide ranging, but that the UK government was starting with a pilot scheme with a small number of cultural big hitters.

Gill: What the government is doing, what it’s begun doing since the beginning of this year, is testing the concept via a pilot scheme. And what that will involve is various cultural institutions in the UK, for example the National Archives, the Imperial War Museum, the National Portrait Gallery, the Natural History Museum and many more. What those cultural institutions will be required to do is identify their key cultural assets, get those digitised, get those put on the platform and then see what demand there is from AI developers to use those creative assets.

Matthew: So will it work? Well, we might get some lessons from history here. Fifteen years ago the UK government created the Copyright Hub, a content licensing exchange very like this one, that didn’t really take off. But Gill thinks that the rise of AI raises the stakes and means the UK government will be more determined to make a success of this new mechanism. But the government is only one part of the picture. It may be that developers just bypass the exchange because of the kind of content they now see as valuable and cut deals directly with the biggest content creators.

Gill: We know AI developers have a desperate need for data. They used to have an appetite for lots of data. Now the stress is much more on high quality data. So with regard to this pilot, what we hope and believe is that what the cultural institutions will be putting on there probably is pretty high quality data and so AI developers may be interested in that. Well I think there is absolutely an argument that developers may go to those institutions direct. The government has made clear that this exchange is not intended to replace free licensing in the market.
We’ve seen a lot of that over recent months where big AI developers have approached big content creators, publishers, music producers and entered into a licence with them for the use of their data for AI development. So what I would anticipate is that that practice would continue, with AI developers almost seeing the exchange as a bit of a nuisance to have to engage with. And they’ll go out there potentially with their large negotiating power to access the big datasets they need. So query whether they will even engage with this platform at all.

Matthew: And there is another, more fundamental challenge to the model that developers might just not see the need to pay at all because it’s not clear that UK law forces them to said Gill.

Gill: Certainly in the UK, the position in the UK is ambiguous. AI developers have yet to be convinced to start paying where they potentially don’t need to. Most AI developers at the moment are not paying for the content they use. Why would they start doing that just because the exchange is launched in a situation where the law about the legality of using copyright content for AI training is still unclear? And that’s particularly so where AI developers potentially have an easier ride in other jurisdictions. They could go to the US, for example, where it’s arguably easier to use work for AI development than it is in the UK. In the US there’s a fair use defence where you can access works without paying for them where what you’re using it for in AI terms is going to be transformative. It’s not going to complete with the original works. Now I am certainly not an expert in US law, but that is an exception we don’t have in the UK. So it could push developers, if they’re required to pay via the exchange, to go elsewhere, exactly what the government doesn’t want to happen because they’re looking for inward investment into AI in the UK. So a big problem for them potentially.

Construction projects are well known for often being contentious affairs, as long chains of owners, funders, contractors and subcontractors disagree and often arbitrate or even litigate about whose fault a costly delay was. But some operators of projects in Australia are trying to change that by using different construction contracts. Plenty of work has been done for years in some countries to take a more collaborative approach, being more honest about problems and more prepared to share the risk. And one part of that process is making the contracts less adversarial and more cooperative. One way of doing that that’s now common for major publicly funded infrastructure projects is the use of a particular set of standard form contracts where large complex contracts are pre drafted and the details of a particular project filled in. The new engineering contracts, or NEC, developed by the UK’s Institute of Civil Engineers, is used commonly in the UK. Sydney based construction expert Lucy O’Dwyer told me about the changing situation in Australia, beginning with an outline of what NEC is and how it works.

Lucy O’Dwyer: It’s a suite of standard form contracts that can be used for construction and engineering projects. So it’s effectively a relatively off the shelf type solution whereby the users can select a different form of the contract and they can pick a pricing model and pick from certain pre drafted clauses depending on what is relevant to their project. It was first introduced in the UK in 1993 and we’re now on the fourth edition of it and it is widely used in the UK and some other places like Hong Kong and Singapore. It is less widely used in Australia at the moment but we are seeing growing use of it at the moment. So for example there is an engineering and construction main contract which can be adopted for a whole range of construction and engineering projects, and then you can pick certain commercial pricing options. So there’s a lump sum version of the contract, or you can pick a target cost mechanism where the parties share the risk of the price. So there are different pieces of the jigsaw and they can be placed together in different ways depending on the risk profile of the project and the type of project.

Matthew: The Australian construction business is very active, but its contracts are not like NEC ones, says Lucy, and lack NEC’s flexibility.

Lucy: Some of the main features that make NEC contracts different in particular to the traditional Australian contracts are first of all that it is written in plain English and there is no legal jargon so the people using the contracts can understand them easily. That is very different from traditional Australian contracts, which lawyers have been all over. Another point is that the contracts are suitable for a wide range of projects due to the flexibility that comes with having different contract forms, pricing options and pre written clauses. For example, there’s the main engineering construction contract, there’s subcontracts which can also be adopted to work together, and different types of contracts such as the alliancing contract which can be adopted if the parties want to adopt that sort of arrangement.

Matthew: Lucy does see change coming in Australia though, where the use of NEC is becoming more widespread. But she says a change needs to come from those paying for the work. And when the buyers of the services make this change, construction companies and lawyers need to be ready to change with them.

Lucy: Large construction projects need to be driven ultimately by the parties procuring those projects. So really a large part of this is about the approach of the parties procuring public projects.
We're seeing it certainly gaining traction in New South Wales. So for example, we know that Sydney Water has adopted NEC for their Partnering for Success programme and it is also being used for a couple of other sort of large infrastructure programs. So I think, I think it's a case of watch this space really in terms of where it's going to go in Australia.

Matthew: And the reason those procuring the work want things to change is quite simple. The way it works now isn't really producing great results for anyone.

Lucy: So I think it is recognised that the procurement of infrastructure projects needs to change. So the market has become associated with negative contracting practices in many ways, adversarial approaches to running contracts, not just the contract form but the way parties manage contracts as well. Things like cultures of blaming the other party, making claims, not being fully transparent as to the costs of projects. So there are some negative behaviours that are sort of inherent in the market in Australia and certainly in New South Wales. You know, there's a desire for change and there's a desire to adopt. There must be a better way to get to better project outcomes.

Matthew: But Lucy says if NEC adoption is going to be successful, then Australian construction companies and their lawyers need to embrace them fully and not fight the process.

Lucy: The parties need to buy into the sort of spirit and ethos of the NEC. In terms of the contract form itself, so I mentioned that it's a contract form based on straightforward language and no legalese. Now that is terrifying for lawyers and there is a sort of pre disposition to- heavily amend these contracts and certainly some of the NEC contracts we've seen in Australia so far have been quite heavily amended. I think we need to stay true to the spirit of NEC and so whilst it's a commercial reality that these contracts will need to be amended to an extent to tailor them to the projects and to the specific risk profile that the parties have agreed on here and NEC standard form isn't always totally suitable to Australia so we do need local adaptations to those terms and that risk profile, parties need really to stray away from doing significant wholesale amendments to the contract and keep the amendments to what is actually essential to make the contract work and to fit the project and the risk profile that's been agreed. That way it stays as true as possible to the ethos of NEC.

Thanks again for your time, for listening, for paying attention. Please do share it with anyone you think it might be relevant to. It's always good to reach new people. Review it if you feel like it on your podcast platform of choice. And do come back again two weeks today for more. But remember, you don't have to wait that long. You can keep up with daily news from our dedicated team of expert reporters at pinsentmasons.com or you can ask us for a personalised weekly digest at pinsentmasons.com/newsletter. Until next time, thanks and goodbye.

The Pinsent Masons Podcast was produced and presented by Matthew Magee for international law firm Pinsent Masons.