In pole position

Autonomous vehicles once belonged in the realm of science fiction, however, with the technological advancements of the last 10 to 15 years it is no longer fiction but fact that road traffic will soon include such vehicles. Germany's federal Act on Autonomous Driving ("Autonomous Act") came into force on 28 July 2021, its explicit goal being to "make Germany a global pioneer in autonomous driving". This is why it comes as no surprise that the Federal Government voiced a rather bold goal in its digital strategy dated 31 August 2022 - for 2025, the Federal Government wants to be judged based on whether automated, autonomous and connected driving has made the leap from pilot projects and projects into practice and application in everyday life.

1. Defining autonomous cars

Autonomous vehicles are referred to as Connected and Autonomous Vehicles ("CAVs"), as this term emphasizes the vital role of network connectivity for enabling automated and autonomous features. Based on SAE International's definitions (a global non-profit association of aerospace, automotive and commercial vehicle industries established to advance progress in mobility-promoting technology), CAVs are categorised according to their level of autonomy. There are 6 levels, briefly outlined below:

Level 0 - Performance by driver of all dynamic driving tasks, even if assisted by active safety systems such as automatic braking systems.

Level 1 - Driver Assistance – vehicles capable of "sustained" and specific execution of lateral or longitudinal vehicle control. Driver performs all other dynamic driving tasks.

Level 2 - Partial Driving Automation – vehicles capable of "sustained" and specific execution of lateral and longitudinal vehicle control (i.e. control of speed and direction).

Level 3 - Conditional Driving Automation – vehicles capable of controlling all dynamic driving tasks in certain contexts. The driver is expected to intervene when requested and control the vehicle in unsuitable contexts.

Level 4 - High Driving Automation – vehicles capable of controlling all dynamic driving tasks and do not require human intervention. Confined to certain geographical areas.

Level 5 - Full Driving Automation – vehicle capable of controlling all dynamic driving tasks in all contexts. Driver not required.

In March 2021, the German Federal Highway Research Institute (Bundesamt für Straßenwesen, "BASt") published a simplified model, distinguishing between assisted, automated and autonomous modes only, whereby assisted mode stands for level 2, automated mode for level 3 and autonomous mode for levels 4 and 5.

2. Prior legal framework: Act on Automated Driving (Gesetz zum autonomen Fahren)

The Automated Act entered into force on 21 June 2017, amending the Road Traffic Act (Straßenverkehrsgesetz, "StVG"), introducing three new sections to the StVG (sections 1a et seqq). The Automated Act defines highly or fully automated driving functions for Germany. It states automated vehicles to be those using automation systems capable of: (i) the control of driving tasks (e.g. longitudinal and lateral control); (ii) complying with relevant traffic rules; (iii) alerting a driver to take over control (with a sufficient time buffer); (iv) being deactivated by a driver at any time; and (v) indicating when the automation system is malfunctioning (section 1a (2) (nos 1-5) StVG). This means automated vehicles in Germany are Level 3 CAVs, since automated vehicles as such can take over driving tasks while a human must at all times be able to seize control over the car.

The Automated Act essentially sought to regulate for Level 4 CAVs. However, given the requirement for an "alert" driver (section 1b StVG), the automated vehicle definition in the Automated Act did not correspond to the SAE International categorisations. Level 4 CAVs (and upwards), under the SAE International categorisations, do not require a human driver. On both levels, the car controls its every move itself, making human supervision dispensable. Human beings in the car are reduced to a passenger role. While Level 4 vehicle operation is only possible under specific conditions – such as location within geographically defined areas – Level 5 CAVs literally take autonomous driving to yet another level: Here, the vehicles master even the most complex situations independently, regardless of location and surface. Therefore, as the definition of automated vehicles in the Automated Act requires an "alert" driver, as opposed to a vehicle driving completely independently of the occupants, it actually regulates Level 3 CAVs instead of the autonomous Level 4 or Level 5 CAVs.

The Automated Act governed data processing compliance, as a Level 3 CAV stores position and time data when using its automated faculties. It must also store the same data when the system prompts a driver to retake control. The manufacturer collects this data via a blackbox and may transmit it to authorities (including the Federal Motor Vehicle Transport Authority (Kraftfahrt-Bundesamt, "KBA") and competent state authorities) if requested. The relevant authorities can store this set of data to the extent necessary to determine legal claims in relation to traffic incidents (defined under section 7 (1) StVG). Similarly, third parties ("Dritte", a legal term lacking specificity) may receive data under the same terms, but in a depersonalised form.

The Automated Act does not modify the StVG's liability regime. Thus, it maintains that both a driver, in the case of fault (section 18 StVG), and a Halter (registered vehicle keeper), irrespective of fault due to their absolute liability (section 7 (1) StVG), of an automated vehicle will have liability when an automated vehicle using the automated systems causes damage.

3. National regulatory framework (as specified by Autonomous Act and Autonomous Ordinance)

3.1 Interim Solution and Scope

The Autonomous Act is part of the Federal Government's aim to create "clear legal requirements" for the use of CAVs. In the absence of EU and international legislation (see below, ‎3.9), the Autonomous Act aims to create legal certainty for the operation of Level 4 ("autonomous") CAVs under operation within defined operating areas ("DOAs"). The Autonomous Act shall serve as an interim solution, limited as to time, territory and factual scope. As soon as the EU introduces legal specifications regarding type approval and the operation of automated and autonomous vehicles, the Autonomous Act will be amended accordingly.

Contrary to the first impression and some public statements, the Autonomous Act does not provide for an unlimited scope of operating Level 4 CAVs, as even within the DOAs their unlimited use is not permitted. In particular, the Autonomous Act does not allow for the use of an autonomous driving mode by a customer outside of business purposes. For example, activating an auto-pilot function to read a book or watch a movie without being able to/having to regain control over the car if needed is not facilitated by the Autonomous Act. Situation similar to the foregoing example are not yet regulated for.

Subject to the traffic authority's approval (which can provide for ancillary provisions (§ 4 (2) Autonomous Ordinance)), the CAV can be operated on public roads within an area specifically defined by the CAV's Halter. While the Autonomous Ordinance does not provide for a maximum size of such area, the Halter has to define the area of use geographically (festgelegter Betriebsbereich). The authority can grant approval for an operating licence for the CAV according to § 4 (1) Autonomous Ordinance, subject to (a) there being a suitable defined operating area according to § 9 (2) Autonomous Ordinance, and (b) the personnel and material requirements according to §§ 13, 14 Autonomous Ordinance (requirements for keeper and technical supervision) being met. The suitability of the operating area poses the central requirement for approval. Such requirement is met, if the traffic authority determines that

• the CAV [...] can independently manage the driving task in this defined operating area;
• the road infrastructure [...] meets the technical requirements [...] according to the specific CAV's (type) permit;
• the Technical Supervisor can intervene in order to disable or enable driving manoeuvres of the CAV at all times;
• the operation of the CAV [...] in this operating area does not impair the safety or the ease of road traffic and does not endanger the life and limb of persons; and
• other public interests, such as those of the Immission Control Act (Immissionschutzgesetz), do not go against the approval [...].

As of now, the particular standards for such non-impairment of safety or ease of road traffic appear unclear.

According to its explanatory memorandum, instead of providing a comprehensive regulatory framework, the Autonomous Act rather aims at creating the regulatory environment for testing of autonomous systems. In this light, it appears reasonable that the law focuses on fields of practical use such as autonomous buses for public transport (People Movers) as well as on autonomous vehicles to transport goods (Goods Movers). Other possible fields of use include hub-2-hub-traffic (between distribution centres), demand-dependent offers at off-peak times as well as dual-mode vehicles (e.g. in the context of Automated Valet Parking). Additionally, the Autonomous Act provides for regulation for autonomous systems in vehicles of the German army, the federal and the state police forces, the civil defence and disaster control, the fire brigades and the rescue services.

Being the first of its kind, the Autonomous Act provides – as an interim solution – initial regulations on: (i) the operation of CAVs; (ii) requirements of CAVs; and (iii) requirements of technical operators, manufacturers producing CAVs and the registered vehicle keepers (Halter) of CAVs.

In particular, the Autonomous Ordinance specifies the approval process of CAVs initiated by the respective manufacturer's application. In this context, the manufacturer must provide evidence of complying with standards of care and the CAV's functionality by filing specific statements and submitting a number of documents. Also, the Autonomous Ordinance, including its annexes, specifies the technical requirements to be met. In particular, autonomous CAVs must be technically capable of recognising other road users, uninvolved third parties, animals and objects in the vicinity of the CAV, interpreting such sensor data and, based on this, be able to predict how the traffic situation will develop in order to decide how to (re)act. In addition, the autonomous CAV must have a system that appropriately balances both factual risks and legal interests.

3.2 Key Terms

"Motor vehicles with autonomous driving functions" ("MVADF"), within the meaning of sections 1d (1), 1e (2) StVG, are CAVs that can/have:

• autonomously carry out driving tasks within a DOA without a human driver operating the vehicle;
• without a traditional driver intervening or a Technical Supervisor constantly monitoring the vehicle;
• comply with traffic regulations;
• an accident avoidance system compliant with the ethical specifications set out in the Autonomous Act (see below);
• enter into a Minimum Risk Maneuvre if continuation of driving would violate traffic regulations;
• communicate with a Technical Supervisor if necessary;
• a reliable network connectivity, in particular to communicate with the Technical Supervisor; and
• have technical properties able to autonomously put the vehicle in a minimum risk state in case network connectivity is lost or in case an unauthorised party gains access over the vehicle.

"DOAs", within the meaning of section 1d (2) StVG, are public road sections where MVADFs may operate. The locations and extent of DOAs are to be designated by statutory ordinance(s), and the operation of MVADFs on DOAs has to comply with all other relevant sections of the StVG. According to the Autonomous Act's explanatory memorandum, it is possible to operate an MVADF in multiple DOAs.

"Technical Supervisor", being defined as the natural person who can deactivate/partially control the operation of the automatous functions of the MVADF (see section 1d (3) StVG), replaces the concept of the de-facto driver (Fahrzeugführer). The Technical Supervisor may either be present in the MVADF or supervise the MVADF remotely. Level 5 CAVs do not require a supervising human being as such, meaning that the Autonomous Act is to be applied to Level 4 CAVs only.

"Minimum Risk Condition" is when an MVADF puts itself in a condition or state that achieves the greatest possible road safety for other road users (see section 1 d (4) StVG). This can be autonomous or at the instruction of the Technical Supervisor.

3.3 Ethics

The prospect of autonomous decisions by CAVs raises a number of ethical dilemmas, notably in the context of road safety. The Autonomous Act, building on the "material findings" of the Ethics Commissions report on Automated and Connected Driving (Ethik-Kommission), specifies some ethical requirements for MVADFs. In accordance with section 1e (2), (2a-e) StVG, the MVADF has to have an accident prevention system, that:

(i) prioritises loss prevention and damage reduction;

(ii) takes into account the hierarchy of the legally protected rights/assets in events of unavoidable damage to different legal interests (i.e. humans and property), and prioritises the protection of human life; and

(iii) does not distinguish between persons based on personal characteristics (such as age, gender, and physical or mental state) in events of unavoidable damage to multiple persons.

The issue of whether an algorithm should provide for quantity-based reasoning remained unsolved. In particular, this relates to a situation in which the algorithm would have to decide to harm (or even kill) one person instead of a group of persons in case of an imminent accident.

Overall, the Autonomous Act provides for sophisticated legal requirements in cases of ethical dilemmas that could occur anywhere in the world. It remains to be seen how both the envisaged EU directive and other legislators address this situation.

3.4 Obligations of the Halter, Technical Supervisor and OEM

According to section 1f (1) StVG, the registered vehicle keeper (Halter) is required to ensure the MVADF's compliance with road safety standards and environmental standards. Alongside complying with general road traffic regulations, the Halter must, in particular, ensure: (i) regular maintenance of the autonomous capabilities; and (ii) that the MVADF is supervised by a Technical Supervisor. Further, the Halter must carry out an extended check ("erweiterte Abfahrkontrolle") before each departure (§ 13 (1) no. 2 AF-VO). It is unclear what the term "departure" means exactly. To operate the MVADF, the Halter must apply for and receive approval of the vehicle from the KBA.

As noted above, the Halter has to appoint a natural person to carry out the so-called Technical Supervisor's tasks in connection with the MVADF's operation. In critical traffic situations, the autonomous vehicle communicates options for driving manoeuvres to the Technical Supervisor, who then decides how to (re)act instead of the software. The Technical Supervisor is also obliged to document situations in which the vehicle (e.g. due to a technical defect) puts itself in a so-called minimum-risk state (i.e. activating warning light and coming to a halt at the side of the road). The Autonomous Ordinance also specifies which personal requirements apply to the person performing technical supervision tasks. The Technical Supervisor must (a) have a degree as a state-certified technician or a certain science university degree (e.g. mechanical engineering, electrical engineering or aerospace engineering); (b) be specially trained with regard to the MVADF in question; (c) be reliable (in the sense of German traffic regulations); and (d) have a driver's licence (§ 14 (1) s. 2 nos. 1-4 Autonomous Ordinance). Within the scope of its duties, the Technical Supervisor may employ persons who are slightly less but overall similarly qualified, as specified in more detail within the Autonomous Ordinance (§§ 14 (2), 13 (2) Autonomous Ordinance).

Every ninety days, the Halter must carry out an overall inspection in line with the MVADF's manual's specifications (§ 13 (1) no. 3 Autonomous Ordinance). If the Autonomous Ordinance requires the forwarding of information qualifies as necessary (erforderlich) (§ 13 (1) no. 4 Autonomous Ordinance), the results of the inspection must be documented and immediately forwarded to the KBA and the competent authority upon request. The inspection must be carried out by persons meet the same technical criteria of a Technical Supervisor (§ 13 (2) Autonomous Ordinance).

The Autonomous Ordinance also provides for further obligations for the Halter to adhere to certain requirements pre-driving, during drives and specific organisational and documentary obligations (§ 13 Autonomous Ordinance).

According to section 1f (3) StVG, the manufacturer (Hersteller) has to:

• prove to the KBA and competent authorities that the electronic and electrical architecture of and associated with the MVADF is secured against attacks;
• provide a risk assessment to the KBA, with evidence of: (i) how it was carried out; and (ii) that critical MVADF elements are protected against hazards;
• provide evidence of the MVADF's sufficient and secure network connection;
•  provide in the operating manual and to the KBA a binding declaration of the MVADF's autonomous capabilities;
•  offer to provide training to persons involved in the operation of the MVADF; and
•  immediately notify the KBA and state authority in the event the OEM detects there is manipulation of the electronic and electrical architecture of the MVADF.

The requirements to be met by manufacturers appear to be rather extensive. A notable example is their responsibility to ensure a sufficient and secure network connection. In reality this appears to be a shared responsibility between network providers and the manufacturers, and is also dependent on the locations of the DOA. However, it should be noted that the onus is upon the manufacturers to determine the DOA for the time being (zunächst) and to obtain the respective state authority's approval. It remains to be seen how manufacturers, Halters and relevant third parties (e.g. mobile network operators) will share responsibilities in reality.

3.5 Data Processing

The Halter is primarily responsible for the collection, storage and transmission of data generated by the MVADF (see section 1 g (1) StVG). Notably, the Halter is, inter alia, required to save:

• position data, and data on the activation and deactivation of autonomous functions (including usage of alternative driving manoeuvres);
•  other operational data (including data on speed, acceleration, longitudinal and traverse direction);
• system monitoring data (including data on software status, environmental conditions, network connection data, status of lighting equipment and power supply); and
• commands and information sent externally to the MVADF.

According to section 1 g (2) StVG, the above data is stored (i) if the Technical Supervisor has intervened, (ii) in case of a conflict scenario, in particular if an MVADF is involved in an accident or near-accident, (iii) in events of unplanned lane changes, or (iv) if the autonomous systems are disrupted (the latter including where the MVADF fails to act as it should).

Section 1 g (3) of the StVG only partially reflects the principles set out in Article 25 (1) and (2) of the General Data Protection Regulation (privacy-by-design and privacy-by-default). According to said section of the StVG, the manufacturer must inform the Halter in precise, clear and "easy" language of the setting options for privacy and for the processing of data generated when the MVADF is operated in the autonomous driving function. In other words, the vehicle's default settings must be set in a privacy-friendly manner in regards to the privacy-by-default principle, and the software must enable the Halter to make corresponding changes to the settings.

On the request of the KBA and/or state authorities the Halter shall transmit the data to them, as long as the request is "necessary for monitoring the safe operation of the MVADF".

The KBA and state authorities can use such data for necessary monitoring of the MVADF and, if the data is depersonalised, use it for traffic-related public interest purposes (e.g. for "scientific research in the field of digitisation, automation and networking") and traffic accident research (section 1 g (5), (6) StVG). This is limited to research by universities, research institutions, and certain federal, state and local authorities (including the authorities responsible for approval and monitoring of DOAs).

While the Autonomous Act neither addresses the technical requirements for how data will be collected and transmitted, the Autonomous Ordinance governs such issues. Besides, the Autonomous Ordinance specifies framework regulations of the Autonomous Act on data storage in its Annex II without any essential changes.

3.6 Liability & Insurance

The Autonomous Act does not provide changes or updates to the current liability framework in relation to road traffic. The Halter is liable for damages caused in connection with the use of an MVADF (absolute liability as set forth in section 7 (1) StVG). Consequently, the Halter must purchase and maintain liability insurance (section 1 Obligatory Insurance Law (Pflichtversicherungsgesetz, "PflVG")). As MVADFs are not controlled by a driver in the traditional sense, there is no room for making such de-facto driver (Fahrzeugführer, section 18 StVG) liable as well. In other words, from the perspective of the damaged person, this person loses another potential debtor apart from the Halter. However, in the event that the Technical Supervisor has breached duties when exercising its supervisory role and has acted culpably, the Technical Supervisor may be personally liable in connection with damages caused by such a breach.

Consequently, the Autonomous Act provides for an amendment of section 1 Obligatory Insurance Law, obliging the Halter to purchase liability insurance for damages caused by the Technical Supervisor. The extent and scope of this insurance, however, is not defined within the Autonomous Act. It is not yet clear how the motor insurance market will position itself in this regard, in particular how respective terms and insurance premiums will turn out to look like.

3.7 Subsequent Activation of autonomous functions

Fully aware of rapid progress in the CAV sector, the Autonomous Act lays down rules for vehicles with deactivated preinstalled "dormant" autonomous capabilities. However, such deactivation must not be subsequently cancelled in whole or in part (section 1h (2) StVG). Namely "over-the-air" software updates from the manufacturer could initiate such subsequent activation of inactive, "dormant" autonomous faculties. However, according to section 1h (2) StVG, this is only allowed if (i) the approval of the KBA has been obtained and (ii) relevant and sufficient national or international law is adopted.

3.8 Testing

The Autonomous Act lowers legal requirements for testing purposes.

According to section 1i StVG, MVADFs can also be used outside of DOAs in order to allow a larger operating range for them (prototypes) as part of their testing. In return, higher requirements are placed on the technical supervision and monitoring of the test vehicles. Above all, instead of simply being able to deactivate the vehicle, it must also be possible to override it on site, i.e. for a human being present in the vehicle to take over control of the vehicle.

In order to obtain a permit for merely testing MVADFs as defined in § 1 d StVG, the Halter must submit an application to the Federal Motor Transport Authority, present a development concept and document the testing (§ 16 Autonomous Ordinance).

3.9 International Framework: UN and EU

German laws on CAVs are required to comply with relevant international regulations that Germany is a signatory to. Currently, there are limited international regulations in relation to CAVs. United Nations Economic Commission for Europe ("UNECE") is at the forefront of the legal framework for CAVs and has issued international standards, including key principles for safety and security of Level 3 or higher CAVs and rules on Automated Lane Keeping Systems.

Legally, Germany cannot pass national rules that contradict EU vehicle legislation. At EU level, the approval framework for motor vehicles is currently set by Regulation (EC) 2018/858. According to its scope of application and the technical specifications, this regulation assumes the presence of a person driving the vehicle and thus comprehensive controllability of the vehicle. In contrast, autonomous driving functions are characterized precisely by the fact that they do not provide for a human being to engage in driving. Therefore, level 4 autonomous driving functions could be regulated by law at national level in accordance with the derogation procedure from Articles 42 and 43 of Regulation (EC) 2018/858.

4. Summary

4.1 Interim state

The Autonomous Act explicitly addresses that it be subjected to review in 2023, and to be amended as soon as sufficient requirements for the approval and operation of Level 4 CAVs are in place at EU level. For this reason, too, depersonalised and empirical evaluations of the application of its regulations are planned for after 2023 and, if necessary, until 2030 (section 1l StVG). The focus will be on (i) its impact on the development of autonomous driving, (ii) its compatibility with data protection regulations, and (iii) the findings obtained on the basis of testing approvals pursuant to section 1i StVG.

Germany is part of various UNECE working groups and is "actively lobbying for the adaption of international rules and standards" to CAVs. Germany has been chairing a CAV-specific working group (GRVA Working Party) which is focusing on harmonising the international rules on IT and software related issues and practical requirements for CAVs. In the context of the EU, the EU Member States agreed on important steps in the Amsterdam Declaration in 2016 and, as previously stated, Regulation (EC) 2019/2144 will, in conjunction with implementing acts, provide the initial EU framework for the approval of CAVs (and in particular MVADFs) in the EU. We can expect Germany to cause the EU to use the Autonomous Act's leading principles as blueprint for EU legislation.

4.2 International Standards

The Autonomous Act is one of the first pieces of legislation globally addressing even the possibility of Level 4 CAVs. Its regulatory framework intentionally left gaps with regard to procedural and technical gaps; the recently-issued Autonomous Ordinance filled all of those gaps.

According to a KPMG-study, Singapore had the most advanced legislation in relation to CAVs in 2020. Their current legal framework includes a definition of CAVs that broadly encompasses Level 3 to Level 5 CAVs. It also enables consumers to operate such CAVs as long as they have specific authorisation from the Singapore Land Transport Authority. This framework, however, is in the context of trials and therefore does not go as far as the Autonomous Act, which allows for CAV's operation within their regular use.

The Netherlands, another front runner in terms of policy, has adopted a bill on autonomous driving for Level 5 CAVs. Again, however, this is for experimental use (if large scale).

The EU Commission plans to adopt technical regulations for CAVs within 2022 on the basis of Regulation (EC) 2019/2144 as amended on 6 July 2022. The consultation period for these technical regulations ends on 28 September 2022. It is possible that the EU will subsequently adopt a regulatory framework that replaces the Autonomous Act in whole or in part.

In August 2022, the UK government announced that it is planning to introduce self-driving vehicles - subject to certain preconditions - from next year, with full implementation planned for 2025. The proposals are built upon the UK Law Commissions regulatory recommendations released in January 2022. Notably, however, legislation will only be tabled when the parliamentary timetable allows and, as yet, the proposals have not reached a landing in relation to the ethics of CAVs.

Shenzhen (China) has allowed the operation of CAVs on specific road sections approved by the traffic authority since 1 August 2022. According to the Shenzhen transport authority, 145 km of road have already been cleared for testing and 93 licences have been issued, including 23 for testing driverless vehicles with passengers.

In the US, the National Highway Traffic Safety Administration modified the terminology of the Federal Motor Vehicle Standards with effect from 6 September 2022 by revising the wording of safety regulations in a way that took into account highly automated driving functions (example: the term "steering control system" will replace "steering wheel"/"steering control").

With its legislation on autonomous driving, Germany has taken on a pioneering role for level 4 CAVs. In this respect, the statement that Germany is currently in pole position worldwide is justified. The pole position is important at the start. However, the next few years will show to what extent the regulations of the AF Act and the AF Regulation will also become established internationally and initially at the EU level. Technological progress in Germany is directly related to digital infrastructure. Faster data service coverage (powered by RAN infrastructure or satellites) will directly translate to a higher density of CAV use in Germany. In this context, one of the core claims of the German federal digital strategy dated 18 August 2022 attracts particular attention. Germany wants to achieve nationwide uninterrupted mobile coverage by 2026 for everyone. The automotive market keeps moving rapidly and as always, it will be exciting to see which turns it will make!

Authors: Thomas Sacher, Partner; Volker Germann, Counsel; Konstantin Filbinger, Associate; Ali Clift, Trainee Solicitor