Introduction
Artificial Intelligence (AI) has changed several aspects of work and the professional services industry. Can the role of an arbitrator be replaced by an algorithm/AI? What legal risks/accountability questions does it present? In a three-part series of thought leaderships, we analyse the opportunities and challenges that may arise from the proposed application of Artificial Intelligence in arbitration proceedings.
In this article, we discuss the emergence of alternative modes of dispute resolution specifically focusing on international commercial arbitration. The article proffers the legal framework and the key features of international commercial arbitration and the definition of AI.
Alternative Dispute Resolution (ADR)
Alternative Dispute Resolution mechanisms are “alternatives” to litigation. Litigation is the submission of disputes to courts for final determination. Due to growing dissatisfaction with litigation in terms of –costs, time, uncertainty, damage to relationships and the dependence on local law—litigants began to explore alternative modes of dispute resolution outside traditional litigation. There are several forms of alternative dispute resolution. They include; negotiation, mediation, arbitration and conciliation.
Arbitration
Arbitration emerged as one of the popular modes of ADR. Arbitration is defined as a method of dispute resolution involving one or more neutral arbitrators appointed by the parties and whose decision is binding.[1] Parties typically agree on what law may govern such an arbitration and may retain autonomy over the terms of appointment of the arbitrators and the choice of the seat and place of arbitration. Arbitration generally is a preferred mode of dispute resolution because of several reasons. They include the expertise and neutrality of arbitrators, the confidentiality that arbitral proceedings offer, and the possibility of customizing the arbitral proceedings to the needs of the parties. Further, arbitral proceedings are often faster and produce predictable outcomes. The availability of arbitration as a mode of dispute settlement has often led to the increase of foreign direct investment for different countries.
International Commercial Arbitration
Arbitration can be categorized as international where the dispute has significant international elements for instance where the parties’ businesses are headquartered in different countries or the contract underlying the dispute is to be performed in a foreign country.[2] The internationality of an arbitral dispute can also be a matter of agreement between the parties.[3] Parties often prefer international arbitration because it offers enforceability of awards in various jurisdictions.
Institutional and Adhoc Arbitrations
International commercial arbitrations may be adhoc or institutional. It is adhoc where the parties agree to conduct the arbitral process without any supervision by an established arbitral institution.[4] Arbitrations conducted under the UNCITRAL Rules are cited as an example of adhoc arbitrations.[5] On the other hand arbitrations supervised by arbitral institutions like London Court of Arbitration are institutional.[6] Other institutional arbitrations are; the International Chamber of Commerce (ICC), Internation Centre for Dispute Resolution (ICDR), and German Arbitration Institute (DIS). Locally, Uganda has the International Centre for Mediation and Arbitration in Kampala (ICAMEK). Parties often choose a specific arbitral institution primarily for (1) its reputation as a professional case manager, (ii) positive past experiences and (iii) the expertise of the arbitrators. International commercial arbitrations are mostly institutional.
Enforceability
The other key attribute of ICA is that arbitral awards under ICA are recognizable and enforceable in the courts of the state parties to the New York Convention.[7] However, the recognition of the award and enforcement thereof may be denied inter alia where the composition of the arbitral authority or the procedure was not in accordance with the law of the country where the arbitration took place.[8] The recognition and enforcement of an award may also be refused under the said Convention where the award is contrary to the public policy of the said country.[9] Thus, awards that are not consistent with law and public policy at the seat of arbitration are at the risk of being denied enforcement under the New York Convention.[10]
Artificial Intelligence (AI)
Artificial Intelligence is the capability of a computer program to perform tasks or reasoning processes that are normally associated to the intelligence of human beings.[11] AI may also refer to the study of ideas to bring into machines that respond to stimulation consistent with human responses such as contemplation, judgment and intention.[12] AI technologies have the capacity to engage in critical appraisal and selection of differing opinions within themselves and ultimately make decisions which would normally require human expertise.[13]
Capability of AI
AI systems are also said to have the ability to learn and adapt as they make decisions.[14] The ultimate goal of AI is reportedly to solve a wide range of practical problems, boost productivity and foster new discoveries across industries.[15] AI is credited for transforming tasks that require brain power.[16] The said technologies are already being applied in several sectors including finance, security, health care and criminal justice.[17] ICA has not been an exception.[18]Artificial intelligence system run on algorithms. Algorithms can be biased by the data that they rely on.[19] After all, algorithms are only as good as their data.[20] In these circumstances, even as one considers the applicability of AI in arbitration, they ought to consider how the risk of bias may be minimized.
AI and Arbitration
How can AI be applied in ICA? Can AI take on the role of an arbitrator in ICA? What are the risks associated with such an opportunity? In the second series, we will discuss the role of an arbitrator and the applicability of AI in arbitration proceedings.
Conclusion
As discussed above, arbitration has become the preferred mode of ADR for international commercial disputes. Arbitration is faster, efficient and offers more predictability in terms of the decision that will be made. We have noted that arbitration can be adhoc or institutional. AI on the other hand, are computer programs that have been designed to perform human functions. In the next article, we will explore whether AI can be applied in arbitral proceedings.
Contacts for Publication
John F. Kanyemibwa, Team Leader jfk@handgadvocates.com
John is the Interim Chairperson of the International Centre for Arbitration & Mediation in Kampala (ICAMEK). He has over 30 years post qualification experience and has been ranked as a leading lawyer, “Band 1” by Chambers and Partners. John holds a Master of Laws (LLM) degree in Commercial & Corporate Law from the University of London, UK. He also possesses an LLM in Oil & Gas from the Uganda Christian University. He completed his Bachelor of Laws degree from Makerere University. He holds a Post Graduate Diploma in Legal Practice from the Law Development Centre.
Joel Basoga, Senior Associate and Head TMT, jbasoga@handgadvocates.com
Joel is a graduate of the University of Oxford. He holds an advanced master’s degree (LLM) in technology, competition and data privacy law from the University of Michigan, among others. He writes and advises clients regularly on legal aspects pertaining to technology. He routinely handles disputes in corporate finance, antitrust law/competition, debt management, international commercial arbitration, employment and technology related matters. He worked in the Dispute Resolution Department of Freshfields Bruckhaus Deringer in London, United Kingdom
Sources
1 Black’s Law Dictionary, 7th Edition, Thomson West, (1999) 100
2 Article 1(3)(a) and (b) of the Model Law
3 Article 1(3)(c) of the Model Law
4 Simon Geenberg & Flavia Mange, ‘Institutional and Adhoc Perspectives on Temporal Conflict of Arbitral Rules’, Kluwer Law International (2010) <https://www.kluweronline.com> 1st August, 2024
5 Sandra Rajoo ‘Intitutional and Adhoc Arbitrations: Advantages and Disadvantages’, The Law Review (2010) 547 <https:www.sandrarajoo.com> accessed on 1st August, 2024
6 ibid 5
7 Article V
8 Article V (d)
9 Article V 2(b)
10 Thomas Snider, Sergejs Dilevka and Camelia Aknouche ‘Artificial Intelligence and International Arbitration: Going Beyond E-mail’, Dubai International Financial Centre, (2018)
11 Francesca Rossi, ‘Artificial Intelligence: Potential Benefits and Ethical Considerations’, European Parliament (2016) <www.europarl.eu> accessed on 1st August, 2024
12 Shukla Shubhendu and Jaiswal Vijay, ‘Applicability of Artificial Intelligence in Different Fields of Life’, International Journal of Scientific Engineering and Research (IJSER) (2013) <https://pdfs.semanticscholar.org> accessed on 1st August, 2024
13 ibid 12
14 Darrel M West and John R Allen ‘How artificial intelligence is transforming the world’, Brookings (2018) <https://www.brookings.edu> accessed on 1st August, 2024 15 ibid 14
16 World Bank, ‘The Impact of Technological Revolution on Labour Markets and Income Distribution’ (2017) <https://www.un.org> accessed on 1st August, 2024
17 West (n 14)
18 Winston Maxwell, ‘The future of arbitration: New technologies are making a big impact-and AI robots may take on “human”roles’ Hogan Lovells Publications (2018) <https://.hoganlowells.com> accessed on 1 August, 2024
19 Andrew Guthrie Ferguson, Facial Recognition and the Fourth Amendment, 105 MINN. L. REV. 1105 (2021) at 115520 Buolamwini Joy & Timnit Gebru, “Gender Shades: Intersectional Accuracy Disparities in Commercial Gender Classification.” In Conference on Fairness, Accountability and Transparency, 77–91. PMLR, 2018 at 77.
