The Use of New Technologies in International Arbitration

Author: Zhen Qin

As a general matter, the use of technology in the legal industry is no longer out of the ordinary,[1] yet, recently, an emerging generation of technological tools are playing increasingly important roles in the legal profession.[2] In particular, the unique features of international arbitration make the technology’s application in this field especially interesting. Some people argue that the new technologies will not pair well with international arbitration: Because of the confidential, private nature of international arbitration, data analytics tools such as Context, a tool developed by LexisNexis that can, among other things, analyze the likelihood of winning or losing a motion on a user-designated issue by a user-designated judge, could be less accurate when used in international arbitration context than in litigation context, because there would be less data, namely publicized arbitration awards, to be analyzed.[3] Conversely, others argue that international arbitration is a seemingly great match with new technologies such as cryptocurrencies or other “decentralized digital assets,” in terms of “neutrality, cross border enforceability and the flexibility to tailor specific arbitration rules.”[4] In this blog, I will briefly discuss the issues and trends in the usage of the new technological tools in the context of international arbitration.

The use of technology in the legal industry in general, and in the international arbitration field specifically, can roughly be broken down into two categories. In the first category, the technological tools are not involved in deciding or predicting the outcome of a legal and/or arbitral proceeding. Instead, the tools are used to increase the efficiency of the legal and/or arbitral workflow. Examples in this category include online signatures, e-filing, and videoconferencing.[5] The second category contains tools to predict, or even decide the outcome of a legal and/or arbitral proceeding. Examples in this category include Context by LexisNexis, the data analytics tool mentioned above, and a now well-known tool designed for use in arbitrations specifically–Arbitrator Intelligence, which aims to “to increase transparency, accountability, and diversity in arbitrator selection by making key information about arbitrators’ past decision-making more generally available through publication of AI Reports.”[6]

The first category is now more or less accepted by the lawyers and parties in international arbitrations. For example, Opus 2 Magnum is widely used “as an online platform that facilitates communication and procedural understanding between parties in arbitration.”[7] Because this category of technology usage mostly focuses on smoothening the process of dispute resolution, and because one of the reasons that parties choose arbitration, as opposed to a long litigation proceeding, is efficiency, it is not surprising that the parties who choose arbitration will also favor a more streamlined process facilitated by technological tools. However, it could be argued that in the business-to-business international arbitrations, “both the parties and their lawyers tend to be highly risk-averse” to the extent that “they are less willing to experiment with new technologies.”[8]

The second category of usage was not available until recently and has attracted more attention to the controversial issues involved for several reasons. First, as I mentioned above, having confidentiality as one of international arbitration’s “selling points” has imposed limitations on the accuracy of data analytics tools.[9] Nevertheless, supporters of using data analytics in international arbitration have argued that we can still be confident in the small data samples available.[10] There are also technical products that focus on some specific areas of international arbitration, such as investor-state arbitration, which could have more available data to be dug.[11]

Second, using technological tools in the legal and/or arbitral decision or prediction process raises an accountability issue. A natural question would be: If it is not a human being that is making the decision, who should be responsible for it? Can the client blame the attorney for not choosing a suitable arbitrator, if, upon the client’s consent, technological tools are significantly involved in that attorney’s decision process? One could also seek further inquiries: whether “an arbitrator [might] feel pressured into agreeing with the analytic tool;”[12] whether, as projects tend to focus on the most available data, namely “older awards and judgments,” legal decisions facilitated by projects would not “properly reflect the open and contested nature of law,”[13] in other words, whether computer programs are able to take the unique factors in each case into account in order to generate a fair decision for the individuals; and whether common-law attorneys and judges can still develop the body of law in the same manner once a significant portion of that legal reasoning and judgment is taken over by technological tools.[14]

There are many interesting questions and concerns to be addressed in the usage of new technologies in international arbitration. After all, such usage is an innovation that has not emerged for a long time. It is now clear that at least the first category of technology usage has been widely favored.[15] For the second category, I believe that experimenting with available products, such as Arbitration Intelligence and ArbiLex, will give us more experience and insight into how these tools will shape the practice of arbitration.

[1] See e.g., Francisco Uríbarri Soares, New Technologies and Arbitration, 7 Indian J. Arb. L. 84 (2018).

[2] See e.g., Benjamin Roe, The Year Ahead – Innovation: A new generation of legal analysis tools is emerging, Global Arb. News (Jan. 21, 2019), https://globalarbitrationnews.com/the-year-ahead-innovation-a-new-generation-of-legal-analysis-tools-is-emerging/ (last visited Feb. 22, 2019)

[3] See, Karen Maxwell, Computer says no: data analytics in arbitration, Thomson Reuters (Feb. 9, 2018), http://arbitrationblog.practicallaw.com/computer-says-no-data-analytics-in-arbitration/.

[4] Supra note 1, at 88.

[5] See Edwin Montoya Zorrilla, Towards a Credible Future: Uses of Technology in International Commercial Arbitration, 16 German Arb. J. 106, 109 (2018).

[6] Catherine A, Rogers, Arbitrator Intelligence: The Basics, Kluwer Arb. Blog (Feb. 27, 2018), http://arbitrationblog.kluwerarbitration.com/2018/02/27/ai-3/ (last visited Feb. 22, 2019).

[7] Supra note 5, at 109.

[8] Id. at 110.

[9] See supra note 2.

[10] See generally, Brian Canada, Debi Slate and Bill Slate, A Data-Driven Exploration of Arbitration as a Settlement Tool: How Can We Express Confidence in Small Data Samples?, Kluwer Arb. Blog (Oct. 19, 2018), http://arbitrationblog.kluwerarbitration.com/2018/10/19/a-data-driven-exploration-of-arbitration-as-a-settlement-tool-how-can-we-express-confidence-in-small-data-samples/(last visited Feb. 22, 2019).

[11] Supra note 2 (“ArbiLex, a new entrant in this field, has based its system around investor-state arbitration, where awards are typically public.”)

[12] Supra note 3.

[13] Supra note 5, at 112.

[14] Supra note 2 (“And how can the common law continue to develop, in the absence of the “life blood” of court decisions and arbitral awards subject to appeal?”)

[15] 2018 International Arbitration Survey: The Evolution of international Arbitration, 28 The Australian Corporate Lawyer 10 (2018), https://acla.acc.com/documents/item/2066/ (last visited Feb. 22, 2019) (“Technology is widely used in international arbitration, and an overwhelming majority of respondents favoured its greater use in the future of ‘hearing room technologies’, ‘cloud-based storage’, ‘videoconferencing’, ‘AI’ and ‘virtual hearing rooms.’”)