Use Of Artificial Intelligence In Arbitration

Post published:July 14, 2021
Post category:Blog
Reading time:8 mins read

Artificial Intelligence In Arbitration

Written By: Shreem Thite

Introduction

With the Covid-19 pandemic compelling all industries to adopt flexible working practices, there has never been a more important time than 2020 to grasp the wonders of technology. Throughout the year, technology has kept businesses, workplaces, and all other entities up and operating. This is also true in the arbitration field. The majority of international arbitral institutions were obliged to use remote forms of dispute resolution as a result of global lockdowns, raising several questions about the system’s hazards and benefits.

To take this discourse a step further, there are parts that advocate for the progressive replacement of the human role in arbitrations with a totally machine-driven system. The desired outcome is a more efficient, well-calibrated, and quick system of arbitration that is free of the biases and preconceptions that are frequently blamed for the failure of in-person arbitrations.

AI is the science of making a computer sentient in such a way that it can imitate human intellect while doing tasks. It is widely assumed that artificial intelligence (AI) will be able to play a substantial role in arbitrations. AI systems are thought to be more precise and effective. For example, an AI system was shown to be 79 percent accurate in a 2016 research on the predictability of European Court of Human Rights (“ECHR”) judgments. The approach was shown to be 70.2 percent accurate in a similar test utilizing Supreme Court rulings in the United States.

Artificial Intelligence Vis-À-Vis Arbitration

An AI-based arbitration system could be very useful in assisting a traditional arbitration system. However, there may be a few essential issues to consider.

In arbitration, a counsel’s responsibilities include formulating statements of claim and defense, filing and preparing appropriate petitions, arguing before the tribunal, and cross-examining witnesses, among others. When addressing AI-based arbitrations, one fiercely debated subject is whether the system will eliminate the need for humans to participate in the process.

While no such technology has yet been developed, some key functions that an AI council should be able to perform include the ability to process large amounts of documents and files, acquiring knowledge of the law and procedure in the sector in which the dispute has arisen, and having the necessary legal acumen to connect the facts with the legal position in order to defend the client.

Ai Arbitrator

The appointment of arbitrator(s) by the parties is the first step in any arbitration. In some ways, an arbitration in which a human arbitrator is replaced by an AI arbitrator may be advantageous and unfavorable. Parties spend a lot of time going back and forth in appointing an arbitrator in various disputes. In this case, an AI arbitration would save the parties a lot of time and effort. However, having a computer as the arbiter has a number of drawbacks that a party may have to deal with.

The AI arbitrator’s decision-making power is the first and most significant drawback. The submission of claims and defenses by both parties is the second stage of arbitration.

The challenge is whether an AI arbitrator would be capable of processing both sides of the argument, connecting the facts to the law, and then rendering a verdict. This is an important point since a machine, especially an AI machine, is only as intelligent as the data it is fed.

Arbitration decision-making capabilities cannot be limited to technical questions because arbitrations may involve a variety of issues that require an arbitrator (human or AI) to use individual judgment and skill, such as questions of bona fides, a party’s ability to pay, or the ability to judge a witness’ facial expressions and body language during cross-examination.

Arbitral Award Through Artificial Intelligence

In a typical arbitration, the award stage is when the arbitrator uses his mind to analyze the facts against the legal backdrop. This is exactly what an AI-driven arbitration system would accomplish. However, there are two major challenges that an AI arbitration could encounter. To begin with, in a typical arbitration, nominated arbitrators have years of experience in this area, allowing them to gain the necessary competence and abilities. That is not a skill that an AI system possesses. And this could be significant in arbitration when a thorough knowledge of the award’s commercial implications is required.

Second, arbitral decisions must include proper reasoning to explain how and why the arbitrator reached a certain conclusion in diverse jurisdictions. An AI system would fail in this situation because reasoning and presenting the reasons is a delicate human process that the AI system would be unable to accomplish. Furthermore, several jurisdictions need arbitral awards to be signed or written in order to be valid, thereby ruling AI arbitration out.

Conclusion

In every AI discussion, the topic of whether AI will eventually replace humans in the arbitration industry surfaces. And the answer is a resounding, emphatic no. At the very least, AI in its current state is not advanced enough to capture the arbitration market. While AI’s involvement in arbitrations may be steadily increased in order to aid humans, a fully AI-driven arbitration may not be appropriate for all types of business disputes due to their sheer complexity. Even if arbitrations were to be replaced by AI, parties may struggle to afford the high costs of AI systems.