Author: Layan Al Fatayri*
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International arbitration is a widely preferred method for resolving commercial and investment disputes due to its key advantages of neutrality, flexibility, and globally enforceable awards. It allows for an impartial forum, often outside the disputing parties’ territories, and gives each party the freedom to appoint arbitrators with expertise in the relevant legal fields. The binding nature of arbitral awards, reinforced by international conventions like the New York Convention and ICSID Convention, ensures their global recognition and enforcement, making arbitration more efficient than litigation, where court judgments may not be as widely upheld. Additionally, arbitration offers confidentiality and is considered faster and more cost-effective than traditional court proceedings.
However, the landscape of international arbitration is facing a profound shift with the introduction and use of artificial intelligence (AI).[1] As the digital era expands, the use of AI has not only invaded aspects of our daily lives but also the legal field, including international arbitration. AI has been integrated into various stages of the arbitration process.
It seems obvious that AI has a powerful impact on international arbitration and the arbitration process. Therefore, it is important to tackle the role and impact of AI in international arbitration by examining its benefits and challenges to determine if there is a big deal from using such tools in the arbitration field.
Benefits
AI technologies are being integrated into the dispute resolution mechanism and fundamentally altering how disputes are managed and resolved. AI technologies have the potential to revolutionize international arbitration in several key areas.
From the initial stages of selecting arbitrators – where AI can analyze vast amounts of data to identify the most suitable arbitrators based on their expertise, past rulings, and even potential biases – to the drafting of awards and briefs, AI is playing an increasingly pivotal role.[2] AI can enhance data analysis and research by processing vast amounts of information quickly, offering insights that would take human arbitrators much longer to uncover. In international arbitration, AI tools can analyze legal precedents, case laws, and arbitration awards from various jurisdictions to identify relevant patterns and provide predictive analytics, aiding lawyers and arbitrators in making more informed decisions.[3]
One of the most significant impacts of AI in international arbitration is its potential to bridge the gap between different legal traditions on the use of AI. When parties from different countries or legal systems engage in international arbitration, they may face challenges due to differences in laws, legal principles, and practices on the use of AI in the arbitration process. This can create uncertainties and complexities, especially when the parties are unfamiliar with each other’s legal frameworks. AI can help address these challenges by encouraging legal practitioners, arbitration organizations, and legislators to establish and release guidelines standardizing the use of AI in arbitration. For example, the Silicon Valley Arbitration & Mediation Center (SVAMC) has introduced guidelines promoting a standardized method for handling AI in arbitration. These detailed recommendations reflect an increasing awareness that as AI technologies advance, the regulatory structures overseeing their application in legal settings must evolve as well. This shift emphasizes the need to update legal frameworks to align with technological progress, ensuring the protection of fair arbitration and confidentiality principles.[4] By offering a harmonized framework for AI-use, this sets the stage for an international standard in AI arbitration. Such a standard is crucial for maintaining consistency and predictability in resolving disputes using AI tools, which in turn helps build trust and confidence in the arbitration process and increases the benefits and significant positive use of AI.[5]
Additionally, AI can streamline document review and the e-discovery process, which are often time-consuming aspects of international arbitration. Through natural language processing (NLP) and machine learning algorithms, AI can efficiently sift through large volumes of documents to identify relevant information, reducing the time and costs associated with manual review.[6]
Furthermore, AI’s predictive analytics capabilities can forecast arbitration outcomes by analyzing past cases with similar issues or fact patterns. This allows parties to assess the probability of success and decide whether to proceed with arbitration or seek a settlement.
AI-powered tools can also assist in drafting legal documents and contracts, ensuring consistency and minimizing human error. For example, AI-based translation tools can facilitate communication and document exchange in international arbitration, where different languages are often involved.
Finally, AI can support virtual hearings by managing scheduling and enhancing the efficiency of remote proceedings. Ongoing research into using AI as a decision-maker, or “AI judge,” in arbitration raises fundamental questions about the nature of justice and decision-making, highlighting the evolving role of AI in the legal field.
Challenges
While the benefits of AI in international arbitration are evident, several challenges and concerns must also be addressed to ensure the responsible and effective use of such tools.
One major concern is bias and fairness. AI systems rely heavily on the data they are trained on; if this data is biased, AI’s predictions and decisions may also reflect these biases, potentially leading to unfair outcomes.[7] This issue is particularly significant in international arbitration, where it is crucial to consider the cultural, legal, and social differences that vary across jurisdictions.[8]
Another challenge is maintaining confidentiality and security. As arbitration often deals with sensitive and confidential information, the use of AI could increase the risk of data breaches, making it essential to ensure robust security measures are in place to protect the integrity of the arbitration process. Additionally, AI lacks the nuanced understanding and human judgment that experienced arbitrators provide. Arbitration is not merely a mechanical application of rules; it requires a deep appreciation of the context, motivations, and cultural factors that influence the parties involved. Without this human arbitrator touch, AI might lead to oversimplified or inappropriate decisions.
Finally, the use of AI in arbitration raises significant regulatory and ethical questions. If an AI system makes an incorrect or biased decision, it is unclear who would be held accountable. Establishing clear ethical guidelines and regulatory frameworks is therefore critical to ensure that AI is employed in a manner that is both responsible and transparent, safeguarding the integrity of the arbitration process.[9]
Conclusion
We can deduce that the integration of AI into international arbitration has a powerful impact on the arbitration process and international arbitration in general by increasing efficiency and reducing the time cases take, especially with the increased use of arbitration as a dispute resolution mechanism. Despite the challenges that could arise from the integration, application, and use of these tools, these challenges are not challenges that we cannot overcome and can be effectively addressed with the right safeguards and governance. With carefully addressing and assessing these challenges, there is no big deal about using AI in the international arbitration field, increasing the benefits of international arbitration as a dispute resolution mechanism. The overall impact of AI is more of a natural progression, enhancing arbitration without fundamentally altering its core principles. As long as the technology is carefully managed, it enhances efficiency, reduces costs, and improves consistency in decision-making, without posing a significant threat to the arbitration process as a whole.
*Layan Al Fatayri holds both an LL.B. and an LL.M. with honors from Université La Sagesse. She is currently a Ph.D. candidate at the University of Debrecen, Géza Marton Doctoral School of Legal Studies in Hungary. Layan’s experience includes roles at prominent organizations such as UNHCR, participation in various international legal conferences, and published works. She is also a member of Young ICCA, which operates under the International Council for Commercial Arbitration, a mentee in the current 11th cycle of the Young ICCA Mentoring Programme, and a member of the Australian Center for International Commercial Arbitration.
[1] Janine Haesler & Tim Isler, “Navigating the Main Impacts of Artificial Intelligence in International Arbitration: Insights from the ICC YAAF Workshop,” Kluwer Arbitration Blog (Mar. 17, 2024). https://arbitrationblog.kluwerarbitration.com/2024/03/17/navigating-the-main-impacts-of-artificial-intelligence-in-international-arbitration-insights-from-the-icc-yaaf-workshop/.
[2] Meriam Al-Rashid & Ulyana Bardyn, “The Role of Artificial Intelligence in International Arbitration,” Global Arbitration Review (Jul. 25, 2019). https://globalarbitrationreview.com/review/the-arbitration-review-of-the-americas/2020/article/the-role-of-artificial-intelligence-in-international-arbitration#:~:text=Against%20this%20backdrop%2C%20AI%20is%20now%20poised%20to.
[3] Id.
[4] “JAMS Sets New Standard with AI-Specific Arbitration Rules,” Newsline ( May 13, 2024). https://newsline.haystackid.com/jams-sets-new-standard-with-ai-specific-arbitration-rules/.
[5] Id.
[6] Cole Stryker & Jim Holdsworth, “What is NLP (natural language processing)?” IBM ( Jun. 6, 2024). https://www.ibm.com/topics/natural-language-processing.
[7] Elliot Friedman, Marta García Bel, Veronika Timofeeva, & Desmond Chong, “Generative AI: Opportunities and Risks in Arbitration,” Freshfields (2024). https://www.freshfields.com/en-gb/our-thinking/campaigns/international-arbitration-in-2024/generative-ai-opportunities-and-risks-in-arbitration/.
[8] “Algorithmic Bias and Fairness: A Critical Challenge for AI,” Just Think (2024). https://www.justthink.ai/blog/algorithmic-bias-and-fairness-a-critical-challenge-for-ai.
[9] Brian Spisak, Louis B. Rosenberg, & Max Beilby, “13 Principles for Using AI Responsibly,” Harvard Business Review (Jun. 30, 2023). https://hbr.org/2023/06/13-principles-for-using-ai-responsibly.