Artificial Arbitrators – A New Way Towards Dispute Resolution

Artificial Arbitrator

If the human Arbitrators are completely replaced by the Artificial Arbitrators then the whole arbitration proceedings would be different. The conflicting parties will not have to appoint any arbitrators nor do the court will be involved in appointing the same. Learn all about the concept in this article.

I. Introduction

“I don’t see that human intelligence is something that humans can never understand.”

~ John McCarthy, March 1989

Artificial Arbitrators in dispute resolution is a whole new level of heights which science and technology had achieved in the last two decades. It has been etched deep down in every possible field and thinking about doing anything without the help of IT is nearly impossible. Artificial intelligence (AI) is one of the very significant parts of the technological revolution.

Artificial Intelligence has made all the machines imitate the capabilities of human beings. It manifests human-like intelligence and has become part of our everyday life. It has changed the manner in which the commercial transactions are conducted, the manner in which the business is being carried out, and also not to forget the dispute arousal and its resolution.

The conventional method of Arbitration has been changed and disrupted by Artificial intelligence. In order to increase the efficacy of the arbitrational proceedings (high speed and low cost), various stakeholders have tapped into this technology.  So, the question that arises here is whether depending upon Artificial Intelligence for dispute resolution is a boon or bane.

II. Understanding Artificial Intelligence

Professor John McCarthy, the father of AI has explained that Artificial Intelligence is the science and engineering of making intelligent machines, especially intelligent computer programs.[i]  It is a discipline of computer science to do those tasks which require human knowledge and intelligence. It is the process of combining large quantities of data with efficient asynchronous software applications and advanced analytics to produce useful results. The word “intelligent” in the Phrase Artificial Intelligent tells us its ability to learn automatically from the data, patterns, and algorithms involved in the provided information.

The current achievement of AI is that it can do so many complicated things and complex reasoning without any human intervention.[ii] Because of this reason it has paved its path and marked its importance in so many fields. Arbitration is one of the fields that are yet to be fully explored by AI.

AI could be a game-changer in the field of law. For example, before passing any arbitral award it can dive into millions of precedents with just a click of a button and hand us over with the most rational decision without any bias. In this blog post, we will be identifying all the possible advantages AI can have along with the risks involved and try to analyze whether having “Artificial Arbitrators” is practical or not.

Artificial Arbitrators

The term Artificial Arbitrators sounds really interesting and fascinating especially during the time of the pandemic. It sounds like good news for our overburdened judiciary. Currently, AI has been involved in legal work such as research, drafting, discovering documents, interpreting the law, etc.[iii]

If the human Arbitrators are completely replaced by the Artificial Arbitrators then the whole arbitration proceedings would be different. The conflicting parties will not have to appoint any arbitrators nor do the court will be involved in appointing the same. The computer program will decide the entire matter on basis of the algorithm involved in the data provided to the machine. A fully automated machine will be performing the work with any human involvement.

The functions that the artificial arbitrators would have to perform are:

  • The decision can be based solely on the basis of the algorithm provided to the machine. Social intelligence is one attribute that has to be present in the machine.
  • There should exist a system to accept the cases automatically.
  • A system to check the conflicts between the parties.
  • It has to accept the appointments of new cases, providing dates for the pending cases without any human involvement.
  • The system should understand the know-how the legal provisions involved in the conflict.
  • Finding the evidence electronically.
  • Discovering the documents and analyzing them.
  • Hearing the witness, ensuring their credibility by checking their behaviour and changes in their expression.[iv]

When all these things are done, the artificial arbitrator can give the judgment. The speciality of this artificial arbitrator is that they not only have to give the judgment but also have to provide necessary clarification and justification for arriving at the particular decision. Which makes it quite trustable. Also, unlike human beings, computers can work day in and day out without getting exhausted. They can perform different humungous works simultaneously. Using these systems would be highly inexpensive once developed and brought into the field for use. They are free from all the bias and can give the awards without any prejudice.

III. Benefits of Artificial Arbitrators

  • Logical and Impartial

A human Being is always said to be influenced by some of the other things. His being completely unbiased and rational is not very prevalent.  At a very minuscule level, we have observed some kind of biasness in passing judgment. Though they are said to be very rational they can get influenced by any external factors, experiences, and thinking. AI programs are free from these kinds of factors. They are programmed in such a way that input, processing, and output are the only way for them to work. So, a sign of their fidelity in passing an arbitral award is negative. Their decisions are much more rational than human beings.

  • Time saver

Arbitration proceedings were meant to reduce the burden of the judiciary and to provide speedy judgments for particular kind of cases like commercial disputes. Parties find this a hassle-free way to resolve their disputes in time. The presence of an impartial third party ensures fair resolution. Artificial arbitrators will eliminate any wastage of time in research and analysis and other legal labour such as drafting etc.  Thus, proves to be a time saver.

  • Light on the pockets.

Human skills and labour will not be involved by the Artificial Arbitrators. Just like any other machine, this machine also produces cheap products. the parties will have to pay less as compared to the conventional method of arbitration.

  • Free of errors

The human brain can make an error but machines cannot. These errors can be reduced or even eliminated by the Artificial Arbitrators if the proper and accurate algorithm is used. The interpretation of the provision, evidence collection, preparation of documents will be done error-free.

  • Quick Award

Artificial Arbitrators can enforce the award immediately unlike the present way of arbitration. The parties do not have to wait for the enforcement of the award.

IV. Risks associated with Artificial Arbitrators

  • Inaccurate algorithm

  These artificial arbitrators are the brainchild of human beings. There exists a minuscule possibility that an error can be made while making an algorithm. Thus, it would be a huge drawback and the decision made by the system would be inaccurate and erroneous.

  • Rigid design

Unlike the human arbitrators who look into every case deeply, researching analyzing all the judgments and every other factor before reaching any conclusion, the Artificial Arbitrator works on a few algorithms. All the decisions would be the outcome of the permutation and combination of this algorithm. Since we know that the types of cases that come for arbitration are not similar to each other. Different cases require a different approach. Applying the same few algorithms to different cases would lead to erroneous decisions. It would create a rigid structure.

  • Unreliable

People will not trust this fully automated justice delivery system easily as it solely works on algorithms. It would appear very ambiguous to them as to how the machine came up with the particular conclusion. The absence of proper reasoning and transparency is the reason why they will not rely on the artificial arbitrator.

  • Reduced transparency

In the conventional way of arbitration, the arguments are made in front of the parties, the evidence is produced, they witness the entire process of giving the arbitral award. They know the reasoning behind the conclusion. Therefore, the process is very crystal clear. But when the decision is given by the system based on an algorithm, the transparency disappears. Parties do not know how it has come to this conclusion. They are not aware of the algorithm and how does it work.

  • Risk to confidentiality

Artificial arbitrators are nothing but software. In the present world, there exists a lurking hacker who wants to get information as important as involved in the arbitration. The software can be hacked very easily leading to the theft of confidential information.

One of the important pillars of arbitration is confidentiality. This automated justice delivery system is prone to hacking, it will risk confidential information without knowing.

Also, there are people who will be having full access to the system thereby destroying the pillar of confidentiality. There is a threat as to how the information of the parties is used and how many people have the access to the algorithm. The confidentiality factor is at risk.

  • Mega investment

Replacing the conventional arbitration method with a new automated one will require both investments as well as training. The initial investment would be a lot high, considering the factor that new software is being developed. AI algorithms put in the dynamic systems will require a huge cost. In a country like India, the required number of artificial arbitrators would be really high, and developing every single one of them is a costly process.

However, once it is done and all the people are used to it, the cost of proceeding will very less as to be compared to the traditional way.[v]

V. Conclusion

Alternate dispute resolution has been very famous among people for quite a long time now. Nobody wants to spend years looking for judgment. Anything which is quick, effective, and saves time will be accepted by both the present generation and for a future one.

The scope of Artificial intelligence is way higher than anything else in the near future. Hence, the demand for Artificial Arbitrators is going to be very high. No matter how appealing it may sound, it surely creates many hurdles. Artificial Arbitrators are going to give the judgment based on the system installed and the algorithm put. It finally comes to the decision and skips the reasoning part.

A judgment without reasoning is against the jurisprudence of fair justice. People will not be able to make an appeal before the higher court as they are unaware of the reason why such a decision was taken. On the other side, it could be very advantageous if proper checks and balances are made. All the complexity of the court will be removed, the decision would be given in very little time, the cost of proceeding will decline remarkably.[vi]

However, we have no legislation that includes Artificial Intelligence in our judiciary. But in near future, it is going to pave its way towards arbitration. Keeping in mind all the risks that will be accompanied by this new development, our researchers should start working on removing the cons associated with artificial intelligence. we have already identified the loopholes that may exist if AI merges with the arbitration. So, the only step that should be taken now is to research and develop ideas to avoid it. And then all we have to do is to wait for the time when AI in arbitration will be normalized like any other software that we are using right now.


References

[i] McCarthy, J., 2021. What is AI? / Basic Questions. Available Here

[ii] Paisley, K. and Sussman, E., Artificial Intelligence Challenges and Opportunities for International Arbitration, New York State Bar Association, 2018

[iii] Paul Bennett Marrow, Mansi Karol, Steven Kuyan, Artificial Intelligence, and Arbitration: The Computer as an Arbitrator—Are We There Yet? 74, DRJ, 35, 2020.

[iv] Horst Eidenmüller, Faidon Varesis, What is an Arbitration? Artificial Intelligence and the Vanishing Human Arbitrator, NYUJLB, 2020.

[v] Anandaday Mishra, Artificial Intelligence (AI) & its effects on Arbitration, Tax Guru (March 26, 2021, 9:28)

[vi] Paul Bennett Marrow, Mansi Karol, Steven Kuyan, Artificial Intelligence and Arbitration: The Computer as an Arbitrator—Are We There Yet? 74, DRJ, 35, 2020.


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