http://kluwerarbitrationblog.

com/2017/05/04/machine-arbitrator-are-we-ready/

Machine Arbitrator: Are We Ready?

Jos Mara de la Jara, Alejandra Infantes and Daniela Palma/May 4, 2017

A group of lawyers has been coveted in recent years by the most prestigious law firms. They are
supposed to predict results more accurately than Gary Born, create more persuasive stories than
Stanimir Alexandrov and even issue better awards than Gabrielle Kauffman-Kohler. Their names
are Watson, Ross, Lex Machina and Compas they are Machine Learning Systems (MLS) with
natural language capability and the capacity to review thousands of decisions in merely seconds.

Computer systems are constantly evolving and their use by lawyers has grown steadily. For
example, DRExM has been recently used in Egypt to resolve construction disputes, as it has the
ability to recommend the most suitable dispute resolution technique, depending on the nature of
the dispute, the evidence and the relation between the parties.

In this scenario, it is important to ask whether technology might replace arbitrators in the near
future. In order to perform such evaluation, we will resort to the legal framework of several
countries from Latin America, as well as the provisions of the UNCITRAL Model Law. Then, we
will explore whether MLS would perform better than humans do. Finally, we will turn to the
crystal ball to predict which discussion might lay in the arbitration market of the future.

Are parties able to appoint Machine Learning Systems as arbitrators?

Naturally, none of the revised arbitration laws expressly forbids the appointment of a computer
as an arbitrator. Instead, every provision regarding the validity of the arbitration agreement only
defines it as the submission of a dispute to the arbitrators. In turn, the definitions of arbitral
tribunal only state that parties may appoint a sole or a plurality of arbitrators. Thus, based on
this circular argument, both an arbitration agreement referring the dispute to a Machine Learning
System arbitrator and the composition of a tribunal by such machine would be valid.

However, the Arbitration Acts from Peru (art. 20), Brazil (art. 10), Ecuador (art. 19) and
Colombia (art. 7 domestic arbitration) include specific references to arbitrators as people or
require them to act by themselves. For example, the Peruvian Arbitration Act states that any
individual with full capacity to exercise his civil rights may act as an arbitrators.

In contrast, legislation from Chile, Colombia (international arbitration) and Mexico, as well as
the Model Law, do not contain a specific reference to arbitrators as people nor require them to
be in capacity to exercise their civil rights. Arguably, this legal loophole would enable users to
designate a computer as an arbitrator in these countries.

Despite of that, legal status of MLS might change in the future. For example, members of the
European Parliament have proposed to provide legal status to robots, categorizing them as
electronic people and holding them responsible for their acts or omissions. This kind of
regulation would open new doors, arguably allowing parties to appoint computers, even in
countries that require people arbitrators.

Furthermore, even if parties were not allowed to appoint computers as arbitrators, that does not
mean they cannot agree to use them. Even if arbitration laws do not apply, courts should still
enforce such agreements as a matter of contract law.

Besides these normative considerations, we believe the appointment of machine arbitrator could
be held back based on a supposed breach of international public order. According to Gibson, this
concept evolves continually to meet the needs of the political, social, cultural and economic
contexts. However, change takes time.

Hence, one might argue that an award rendered by machine arbitrators should be set aside for
defying the international public order, as it lacks key human characteristics such as emotion,
empathy and the ability to explain its decision.

Would machine arbitrators perform better?

Even though technology has evolved dramatically in the last years, a MLS is still not able to
accurately read, predict nor feel emotions. In our view, the lack of emotional processing would
be a great handicap for a machine arbitrator. To illustrate this point, let us review what happened
to Elliot, one of Antonio Damasios patients.

Elliot had a tumor the size of a small orange. Even though the operation was successfully
performed, Elliots family and friends noticed something strange in his behavior after the
procedure.

Before deciding where to eat, Elliot scrupulously scanned the menu of each restaurant, where he
would sit, the lighting scheme and attended each establishment to verify how full it was. Elliot
was no longer Elliot. Although his IQ had remained intact, he had the emotional life of a
mannequin. Without emotion he was unable to make decisions.

In sum, emotions are critical for humans. This would be a great handicap for machine arbitrators.
As explained by Allen, computers cant spontaneously feel emotions, because they cant
recognize nor understand cues as facial expression, gestures, and voice intonation. In turn,
machines cant convey information about their own emotional state by using appropriately
responsive cues.

In this sense, Nappert and Flader state that failure to give proper recognition to the parties
emotional reactions arguably hampers the arbitrators understanding of the case as it discounts
the part played by the parties emotions in the circumstances leading up to the dispute.

Emotions act as a source of information, cause of motivation and influence information

processing by coloring our perception, memory encoding and judgments. Without them, our
decisions are not human.
Also, specific emotions as anger play an important role in legal decision making. As explained
by Terry Maroney, anger generates a predisposition towards fighting against injustice. Thus,
angry arbitrators are prone to feel an intense desire to repair an unfair situation, even if that
means taking more risks to fix the current scenario.

Moreover, Machine Learning Systems also lack empathy. That is, the ability to understand the
intentions of others, predict their behavior, and experience the emotion they are feeling.

This emotional intelligence trait requires the development of metacognition; meaning, thinking
about thinking, thinking about feeling and thinking about other thoughts and feelings. However,
this feature hasnt been achieved by computers yet.

Empathy is crucial in arbitration. As Frankman explains, arbitrators need to put themselves on

the parties shoes to understand their hopes, struggles, expectations and assumptions. It is only
after this cognitive exercise that arbitrators are ready to fully understand the dispute and reach an
award.

Furthermore, Machine Learning Systems are not yet able to explain their own decisions. This
could be a problem, even where unreasoned awards are allowed if agreed (e.g. Per). For
example, computers would not be able to issue final judgements regarding a preliminary decision
subject to an appeal for reconsideration. Arguably, this could feed resistance against machine
arbitrators, based on due process.

Notably, the European Unions General Data Protection Regulation which takes effect on May
2018 forbids automated decisions regarding profiling if the algorithms cannot be later
explained to its users (right to an explanation). According to Burrel, this will create several
problems, as corporations might try to conceal information from public scrutiny, access to codes
will probably be not simple enough for ordinary citizens and, specially, there will be a mismatch
between the mathematics involved in machine learning and the demands of human-scale
reasoning and style of interpretation.

In sum, machines are limited. In our view, an emotionless arbitrator without empathy and the
ability to explain itself would not be able to fully understand the drama of the parties, their intent
and the provided meaning besides the written text of the contract and documents.

Having said that, we do believe MLS could assist arbitrators. For example, HYPO is a computer
that could guide arbitrators in the search for precedent, explaining similarities and differences
between cases and even suggesting possible arguments that could be used for the resolution of
the dispute. In such cases, the system would not make the decision, but only act as a guide for
arbitrators. In this scenario, it would still be up to the human arbitrators to attribute intent and
meaning to the evidence.

Final remarks
The arbitration legal framework was not designed to expressly forbid nor allow the appointment
of computers as arbitrators. As technology evolves, the time to amend our laws might come
sooner than expected.

Therefore, we encourage arbitration practitioners to discuss what would change if machine

arbitrators are appointed. How would the standard of conflicts of interests apply? Would it be
possible to appoint a computer in a panel with two human arbitrators? How would they
deliberate?

Technology will no doubt eventually catch up and provide solutions. Prehistoric lawyers who try
to cling to tradition and suppress innovation will remain at the middle of the evolutionary chain.
Hence, it is up to the arbitration community to express its needs for empathetic arbitrators that
are able to explain and feel their decisions. After all, as Sydney Harris said, the real danger is
not that computers will begin to think like men, but that men will begin to think like computers.

* The authors would like to acknowledge and thank Christopher Drahozal, Sophie Nappert and
Miguel Morachimo for their assistance and contribution to this work.

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http://www.youngicca-blog.com/machine-arbitration-and-machine-arbitrators/

Machine Arbitration and Machine Arbitrators

By Jack Wright Nelson (King & Wood Mallesons)

Artificial Intelligence (AI) will revolutionise legal practice. Over the next 20 years, the
technologies with which we currently practice law will themselves begin to practice law.

These changes are starting now. Last month, an American law firm began using an AI researcher
that can conduct legal research faster and cheaper than a human. Some commentators predict the
mass redundancy of junior lawyers all together.

Arbitration is not immune to this technological advancement. Imagine an AI lawyer that is

capable of understanding argument, ascertaining facts, and determining the applicable law. There
is one particular role that would treasure the neutrality and independence that such intelligent
technology could provide that of the arbitrator.
This post explores whether our current arbitral framework could allow such an AI lawyer, a
machine arbitrator, to resolve disputes between parties who have consented to this machine
arbitration.

Would a machine arbitration agreement be enforced?

In our hypothetical scenario, a contractual dispute has arisen between Alpha Limited (Alpha)
and Omega Corporation (Omega). Both are commercial entities, carrying on business in Hong
Kong.

Fortunately, the relevant contract between Alpha and Omega has a dispute resolution clause,
Clause 22.

Clause 22: Settlement of Disputes

22.1 Any dispute, controversy or claim arising out of or relating to

this contract, or the breach, termination or invalidity thereof,
shall be settled by arbitration in accordance with the UNCITRAL
Arbitration Rules.

So far, so standard. But Alpha and Omega have amended the standard clause, as follows:

22.2 The number of arbitrators shall be one.

22.3 The sole arbitrator shall be version 3.2 of the machine arbitrator program
DecisionMakerPlus, as released by Dyno Corporation on 31 August 2022.

22.4 All references to the arbitrator in the UNCITRAL Arbitration Rules shall be considered as
references to the machine arbitrator program stated in Clause 22.3 of this contract.

22.5 The place of arbitration shall be Hong Kong.

22.6 The language to be used in the arbitral proceedings shall be English.

When negotiation fails to resolve the contractual dispute, Omega commences a court action
against Alpha in Hong Kong. Can Alpha rely on Clause 22 to stay these court proceedings?

Hong Kongs Arbitration Ordinance (Cap. 609) (Arbitration Ordinance) incorporates the
UNCITRAL Model Law on International Commercial Arbitration (Model Law). Section 20 of
the Arbitration Ordinance reproduces Article 8(1) of the Model Law, providing that:

[a] court before which an action is brought in a matter which is the subject of an arbitration
agreement shall refer the parties to arbitration unless it finds that the agreement is null and
void, inoperative or incapable of being performed. (emphasis added)
Applying Article 8(1) to Clause 22 gives rise to two questions. First, whether Clause 22 is an
arbitration agreement for the purposes of the Model Law. Second, whether Clause 22 is null
and void, inoperative or incapable of being performed.

The answer to question one seems to be yes. Clause 22 clearly states that the parties have waived
their right to have their disputes resolved in court. In doing so, it grants jurisdiction over their
dispute to an arbitrator. Accordingly, Clause 22 meets the definition of arbitration agreement
stated in the Model Law:

An agreement by the parties to submit to arbitration all or certain disputes

which have arisen or which may arise between them in respect of a defined
legal relationship, whether contractual or not.

The answer to question two seems to be no. Null and void and inoperative refer to situations
where the validity of the arbitration agreement has been impugned. In our hypothetical, no such
issues arise. The contract between Alpha and Omega is valid and has not been affected by duress
or any other vitiating factors.

Whether Clause 22 is incapable of being performed is a less straightforward question.

Assuming (as we are) that DecisionMakerPlus exists, then it appears that Clause 22 is capable of
being performed.

However, the biggest challenge would be demonstrating this fact in court, as judges may not be
familiar with machine arbitrators such as DecisionMakerPlus. Fortunately, this issue is not
intractable. It would likely arise in the early days of machine arbitration, before familiarity with
the relevant technology spreads throughout the legal profession.

Would a machine arbitrators award be set aside?

Imagine now that the machine arbitration has taken place and DecisionMakerPlus has rendered a
written, reasoned and signed award in Alphas favour (the Award).

The Award complies in every aspect with Section IV of the UNCITRAL Arbitration Rules. But
Omega refuses to honour the Award, and applies to the Hong Kong court to have the Award set
aside. Is Omega likely to succeed?

Section 81 of the Arbitration Ordinance reproduces Article 34 of the Model Law. This Article
provides the limited grounds on which arbitral awards may be set aside. Two of these grounds,
Articles 34(1)(a)(iv) and 34(2)(b)(ii) may be opposable to the Award.

Article 34(1)(a)(iv) provides that an arbitral award may be set aside if:

the composition of the arbitral tribunal or the arbitral procedure was not in
accordance with the agreement of the parties, unless such agreement was in conflict with a
provision of this Law from which the parties cannot derogate, or, failing such agreement, was not
in accordance with this Law.
(emphasis added)

In our hypothetical situation, both the composition of the arbitral tribunal and the arbitral
procedure was clearly in accordance with the relevant arbitration agreement, namely Clause 22.
But did Clause 22 conflict with a mandatory provision of Hong Kong law?

The answer seems to be no. Nowhere does the Arbitration Ordinance state that arbitrators must
be human or that the arbitral procedure must include a human element.

The Arbitration Ordinance does contain numerous assumptions that arbitrators are human, most
notably by adopting the Model Laws consistent use of the pronouns he and his. However,
Section 7(1) of Hong Kongs Interpretation and General Clauses Ordinance (Cap. 1) provides
that [w]ords and expressions importing the masculine gender include the feminine and neuter
genders. In English, a machine arbitrator would most likely take the neuter pronoun (it).
Accordingly, it seems that the use of masculine pronouns does not (at least in Hong Kong) imply
a requirement that the arbitral tribunal comprise humans.

The second ground for setting aside that is potentially opposable to the Award is Article 34(1)(b)
(ii) of the Model Law. This Article provides that an arbitral award may be set aside if:

the award is in conflict with the public policy of this State.

Hong Kong courts typically adopt a narrow approach to public policy, only setting aside arbitral
awards when fundamental notions of morality and justice have been compromised.

Whether Hong Kong courts would consider that the Award did compromise these fundamental
notions is, of course, an untested and open question. However, it is hard to deny that a machine
arbitration would give rise to public policy concerns. Further, it is highly likely that if Alpha
sought enforcement outside of Hong Kong, then some national courts would refuse enforcement
on public policy grounds.

These concerns would likely impede the widespread adoption of machine arbitration. However,
if the commercial users of arbitration consistently elected for machine arbitration to resolve their
commercial disputes, then public policy concerns would eventually recede in the face of this
consent.

Indeed, in many jurisdictions arbitration was itself considered to be contrary to public policy
through its displacement of national courts. Todays judicial recognition of the legitimacy of
arbitration shows that with time and experience comes familiarity, and ultimately acceptance.

Conclusion

The advent of AI will revolutionise legal practice. This post has offered one perspective on the
potential impact for those working in the arbitration arena, arguing that there is no explicit bar to
machine arbitration or machine arbitrators in one Model Law jurisdiction. Public policy concerns
are likely to arise, but these are posited to diminish over time.

The exponential nature of technological advancement necessitates prompt action to address the
legal, ethical and practical challenges raised by machine arbitration. The development of
specialised arbitral rules and frameworks to govern and administer machine arbitration will be
essential should this technology become reality.

Perhaps these rules and frameworks should be drawn up today. After all, the Permanent Court of
Arbitration published their Optional Rules for Arbitration of Disputes Relating to Outer Space
Activities in 2011, well in advance of widespread commercial spaceflight. Similar foresight in
respect of machine arbitration may minimise the hazards that tend to accompany consequential
change.

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http://www.sovereigntylaw.com/2017/03/artificially-intelligent-arbitration-logical-endpoint-adr/

Artificially Intelligent Arbitration: The Logical Endpoint of ADR

By Evan Hebert on March 27, 2017

The Rise of Artificially Intelligent Arbitration

Can a computer resolve a legal dispute? At first blush, the idea sounds ludicrouseven
dystopian. But AI technology currently being developed seeks to predict how a judge will rule
given a set of facts. Why not cut out the middleman, and simply have computer programs that
adjudicate?

In the context of commercial dispute resolution outside traditional legal fora, the prospects for
adjudication by algorithm, or even AI, are bright. Considering the main goals of alternative
dispute resolution (ADR)reducing costs, promoting adjudicatory expertise, and preserving
business relationships between the partiesartificially intelligent arbitration will increasingly
come into focus as the technology allowing digital decisionmaking develops. The rise of smart
contracts, which are written in terms of machine-readable if-then statements, will also enable
artificially intelligent arbitration.
Due Process and Contracts that Speak for Themselves

In my most recent post on legal automation, I wrote that the true value of hiring an attorney lies
in making a real person responsible for your problems. In the context of commercial contracts,
however, there is a particular drive to take the human element of interpretation out of the dispute.
The goal, in other words, is to let the contract speak for itself. Technology makes this possible in
a much more literal way than could ever have been envisioned by the framers of traditional,
four corners contract law.

Arbitration by AI also sidesteps some of the due process concerns that would prevent, for
example, replacing federal district court judges with supercomputers. Parties in digital arbitration
would consent to the dispute resolution process in advance and a court could review the
decisions of the arbitrator under the same principles as current arbitration jurisprudence.
Arbitration rules, such as the American Arbitration Associations Large, Complex Commercial
Disputes procedures, can be easily adapted to fit AI adjudication. Parties could limit the issues
that go before the digital arbitrator. For example, if the parties wanted to argue about discovery
in front of a person, rather than a computer, they could so contract.

The Value of a Human Judgement

What is the value of human judgement in adjudication? Its easy to imagine questions of law or
fact that can be best resolved by a computer, such as the calculation of damages or applicability
of certain contractual language to a particular interpretive issue. More difficult judgements
involve considerations of justice, such as the weight that should be given to parties bargaining
power in determining consent or the materiality of information to a particular dispute. Short of
hooking witnesses up to a heart monitor during deposition, its nearly impossible to rely solely
on objective information in determining the credibility of testimony. Over time, however, an
artificially-intelligent arbitration program could conduct a number of these adjudications and
learn how to balance considerations of justice and fairness. AI adjudicators are only as cold as
their programming.

Over repeated iterations, AI will gain sufficient experience to enable it to conduct all but the
most difficult, fact-intensive adjudications. Consequently, the value of a human adjudicator will
diminish. Human arbitrators will assist, rather than direct, the process of submitting evidence and
conducting interrogatories. Again, all this is consistent with the movement aimed at reducing the
human element in contract law. Moreover, the decision to use automation will be driven by the
same consideration that primarily drives arbitration in the first place: cost.

Recommendations for Automated Arbitration

Arbitration rules should provide for judicial review in exceptional circumstances or under a
deferential standard such as clear error. In order to facilitate judicial review and preserve
notions of due process, the program should issue a reasoned judgement in natural text; this would
form the basis for a record on appeal. An arbitration program should also be able (similar to a
jury) to certify questions to the parties or an overseeing judge. There should be a presumption
that certain issues, such as contract formation, are to be handled by a human being. Having a
computer determine whether you have consented to its authority crosses the line from efficient to
dystopian. In the end, automated arbitration will succeed in contexts where the parties seek to
eliminate the ever-fallible human element. In some sense, then, this is but the logical endpoint of
the alternative dispute resolution movement.

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