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Do we need to rethink the New York Convention in view of New Arbitration Technologies?

Technology is an all-pervasive element in the modern world and is an inherent part of innovation in all fields. Technological innovation has been evolving the way we communicate, partake in business activities, shop, research, analyse data etc. The impact of technologies in the field of communication has enhanced several business experiences to a large extent.

Law is also a profession that requires immense communication between clients, parties, judges and other relevant actors relevant to a legal proceeding. Communication by email has been deeply integrated across all fields of law, activities such as issuance of notices, submission of petitions and communications leading to arbitration agreements are often carried out using electronic means of communication. Electronic communication has therefore, since decades, been a very common practice in law, especially in the field of International Commercial Arbitration.

The impact of Covid 19 pandemic has encouraged a shift in position, allowing methods of electronic communication to be commonly used in the primary legal functions such as arbitration proceedings. The Committee for Preparation of Graded Action Plan of the Delhi High Court, in its meeting held on 14.05.2020, directed DIAC (Delhi International Arbitration Centre) to start taking up matters through video conferencing, after which the Guidance Note for Conducting Arbitration Proceedings by Video Conference was published.[1] Similarly the Seoul Protocol on Video Conferencing in International Arbitration was introduced at the 7th Asia Pacific ADR Conference.[2]

Such technology has been around for decades and has already, through case laws and other guidelines, been fairly incorporated in the realm of Arbitration. The question of uncertainty remains in the incorporation of new age technologies that have not yet been so widely incorporated that they can be deemed indispensable in the course of daily activities.

New technologies are those which are still upcoming and are being constantly developed and include technologies such as Machine Learning, Blockchain and Natural Language Processing (NLP). These upcoming technologies, herein after referred as New Arbitration Technologies, are yet to be fully explored with regards to their scope in Arbitration proceedings and its auxiliary processes.

In this day and age of technological innovation, persons with technological expertise ensure that any new technology is explored and applied to its largest extent, while developing field-specific applications of such technology. There is already some development in legal technological application, through which new technology tools have been created for legal practitioners such as counsels as well as arbitrators.

Such technologies are aimed at decreasing the workload of legal practitioners, in order to make legal services more efficient. The New York Convention and other International Arbitration Laws have evolved immensely through time, especially with the advent of new technologies and new businesses.

Arbitration, as a field in itself, is a relatively new and progressive form of dispute resolution. It needs to cautiously apply new Arbitration Technologies, while broadening the provisions of the New York Convention, so as to allow such applications that are essential towards making Arbitration speedier, cost effective and efficient.

Role of Artificial Intelligence in Arbitration
The first and the rather extensive New Arbitration Technology is Artificial Intelligence (AI). Artificial Intelligence should not be considered as a specific technology, as it is rather an umbrella term that covers a variety of technologies and processes within its categories and sub-categories. The easiest way to understand Artificial intelligence is by considering the two types of Artificial Intelligence mechanisms.

The first type is the rule-based learning which is ideal for static and slowly-changing scenarios, while the second is machine learning which includes a process where the AI "identifies patterns and varies its algorithm based on already-existing data and user feedback".[3] Machine Learning is used in most AI based applications as opposed to the rule-based learning technology.

Use of Machine Learning allows such applications to produce better outcome as and when data input is increased; it also includes the usage of subcategories of machine-based learning such as deep learning, predictive analysis, Natural Language Processing, along with many others. Such tools or applications can perform legal tasks in a far more efficient manner and reduce the workload of legal practitioners. A deeper analysis of AI technologies and their scientific processes shall remain outside the purview of this research paper.

For the purpose of the study of AI and its role in Arbitration, it is important to bifurcate 2 categories of procedures of arbitration which are, auxiliary procedures and primary procedures. While arbitration requires auxiliary tasks to be carried out, such as research, drafting, analysis of data and documents, its primary procedures are those that are directly and closely linked to the arbitration procedure. All such primary procedures of Arbitration are governed by the law, such as the New York Convention. Therefore, we make a distinction between AI's role in the two procedures.

Artificial Intelligence has already made its way into the auxiliary functions of Arbitration as the New York Convention and other International Arbitration Laws do not specify provisions that closely monitor the method of the parties, their counsel or the arbitrators. That is not to say that these auxiliary functions are not essential in nature, in fact a large portion of the practitioners' and arbitrators' time, effort and expertise is required in research-based work.

Most international commercial arbitration have extensive documents and data which are required as they pose relevant to the arbitration proceedings. AI assistance in the field of Arbitration is already an ongoing evolution where several companies and organisations are already dedicated to provide AI based tools.

For example, Clause-Builder which is developed by American Arbitration Association provides an AI based service that drafts arbitration agreements for clients, taking into consideration policy issues and the unique circumstances of the parties.[4] Another example is Kira Systems which is a machine learning contract analysis software which assists the parties by pointing out ambiguities in their contracts.[5]

AI can assist the Arbitration proceedings without requiring any amendment of the New York Convention. The key considerations are auxiliary functions and the assisting role of AI, as the application of AI in this aspect of Arbitration is solely dependent upon the parties and individuals with no or minimal mandate from the New York Convention.

The first use of AI in assisting Arbitration relates to research and contract review. As exemplified above, there are already services existing for the purpose of contract review. Another such software has been developed by ROSS intelligence which uses machine learning to carry out AI based research and highlight documents that are relevant to a certain case.[6]

 Because such tools are based on machine learning, the outcomes will only improve with the flow of time and data input. Research is a tasking job for legal practitioners and a machine learning software that does the same job in a more efficient manner, as it can sift through more data than humans, allows the legal practitioners to focus on other aspects of the arbitration.

Another use of AI assistance in Arbitration is that of Data Analysis. AI-based legal data analysis tools help compile and extract information from case documents. Moreover, the AI itself can give suggestions as to which points are undermined or strengthened by certain data information, which may be of immense use to the Arbitrator.[7] AI driven predictive analysis is also proving to be useful, as legal practitioners can consult their clients on the basis of outcomes provided by the AI software. A lawyer named Huong Ngyuen used a predictive analysis AI software which predicted the outcome of the litigation and encouraged the parties to resort to arbitration seeking a more amicable solution.[8] Predictive analysis softwares collect data from past cases and use algorithms to determine the most predictable outcomes of a specific case. As the testimony of Ngyuen depicted, such softwares can be used to encourage the parties to resort to arbitration by realising the potential risks and outcomes of litigation.

Translation and language processing is already a very common AI based software with uses in several industries, of which Arbitration is also one, as International Awards are often required to be translated under Article IV(2) of the New York Convention which states "If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for the recognition and enforcement of the award shall produce a translation of these documents into such language".[9]

All of these AI based softwares are already in existence and will continue to grow in the field of International Commercial Arbitration. Such assisting use of AI specifically aids aspects which are not of relevance under the New York Convention. There is no requirement of amending the New York Convention so as to allow such use of AI in Arbitration. However, encouragement of such usage of AI could be initiated by the way of guidelines or protocols.

The question of an Artificial Intelligence arbitrator is, however, more complicated as it would require the New York Convention as well as the other governing laws to be either broad enough so as to include an AI arbitrator or to expressly allow an AI to be an arbitrator. An AI Arbitrator would be a software that would replace the natural person as an Arbitrator and perform all functions of an arbitrator, including but not limited to rendering an arbitration award within the meaning of Article I of the New York Convention.[10] At the very outset, the two major advantages of an AI Arbitrator are that the AI would not possess the same biases or prejudices which would cause a human arbitrator to discriminate between the parties and that an AI arbitrator would have access to data which would not be retainable by a human arbitrator, increasing the probability of a more logical and sound decision making.

The parties to an arbitration have autonomy in appointing their arbitrator with due regards to the provisions and requirements of the governing law. An AI can be an arbitrator unless the law restricts the appointed to be limited to only natural persons, ie: humans. Article I (2) of the New York Convention states that arbitral awards shall be recognised which are not only rendered by "arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted".[11] Under Article I (2), the New York Convention does recognise the awards that are rendered by legal persons.

The definition of the term arbitrator is broad enough to consider persons other than human to be arbitrators. The New York Convention has been open to amendments aimed at allowing the use and application of technology in order to increase the efficiency and speed of the arbitration proceedings. Wider interpretations, in the wake of new technologies, have been adopted in the past with regards to the Convention. One such interpretation was "recommended by UNCITRAL in 2006 as regards Art. II (2) of the Convention enlarging the application of the said provision to arbitration agreements concluded via e-mail or other instantaneous means of communication".[12]

Considering that the Convention came into existence long before the possibility of AI could even be contemplated, the absence of a provision on AI Arbitrators should not be construed as a restriction on the same, rather the pattern of wider interpretation hints towards a possibility where Article I(2) could be construed as to include AI Arbitrators. The subsequent hurdle which may be faced shall depend on the Domestic law of the country where the arbitration takes place.

Under Article V(1)(d) of the New York Convention, the parties may approach to seek the rejection of the enforcement or recognition of the award on the grounds that the award "was not in accordance with the law of the country where the arbitration took place".[13] Article V (2) (b) of the New York Convention states that enforcement or recognition could also be rejected on the grounds that the "recognition or enforcement of the award would be contrary to the public policy of that country".[14]

This provision would require the appointment of an arbitrator to be in accordance with, and not contrary to, the public policy of the country which is the place of arbitration, however the standards of public policy are always subject to change.

According to the aforementioned provisions, along with a public policy argument, it may be the case that the laws of the country which is the place of arbitration specifically require a natural person to be an Arbitrator. This might complicate the situation further which would then force parties, who wish to appoint an AI Arbitrator, to avoid such countries as the place of arbitration in order to circumvent the domestic laws or grounds of domestic public policy.

Appointment of legal status to AIs by countries also might be an approach to include AI Arbitrators within the ambit of the New York Convention. Under the same provision, the parties may also contend on the ground that they did not expressly agree to appoint an AI Arbitrator, similar to a reaction in the case of human arbitrators. This provision could also be interpreted to mean that appointment of AI Arbitrators is possible if it has been expressly mentioned by the parties in the arbitration agreement.

A very interesting obstacle brought to attention by Gülüm Bayraktaroğlu Özçelik, relates to the "possible prejudice that human arbitrators may have regarding the inclusion of AI in the decision making-process".[15] This obstacle especially would apply to cases where there are more than one arbitrators and only one is an AI while the others are humans. The human arbitrator may restrict the functioning of the AI arbitrator or his/her actions against the AI may be discriminatory and driven by prejudice. The possibility of AI arbitrators working alongside with human arbitrators is slightly farfetched and may not be possible without governing guidelines of amendments.

Role of Blockchain in Arbitration
Blockchain technology forms a basis for a decentralised storage platform that securely stores information. It is also known as a ledger, as it holds potential to store all kinds of information, out which the most popular is the storage of information related to financial transaction. A particular Blockchain is comprised of several blocks, each storing a particular set of data. These blocks are stored on various nodes (computers), which ensure that no single person or entity can manipulate the ledger without everyone else knowing".[16]

Law, not limited to arbitration, is a very data heavy field where a large number of documents, contracts or awards may be relevant for each case. It also becomes essential to ensure that all the relevant documents or data is void of any kind of tampering or manipulation. The scope of security of blockchains can be realised by understanding the concepts of cryptographic fingerprint and consensus protocol.

The cryptographic fingerprint, also known as a hash, is unique to each block and "serves as a kind of seal, since altering the block would require generating a new hash".[17] The hash also serve as the links in the blockchain: each block includes the previous block's unique hash.[18] In simpler terms it means that in order to alter a block, the hash of that block, along with the hash of every previous block will have to be altered, making it tamper proof and immutable.

The consensus protocol ensures the uniformity of data as all the nodes agree on the same history of data shared across them. A secured, accessible and tamper-proof online ledger is exactly what the field of arbitration may benefit from. Blockchain technology can be relevant in the backend process of arbitration, such as storage of research, data, contracts and other documents.

There are no restrictions to the methods used prior or supplementary to the arbitration under the New York Convention. The point to consider is the role and relevance of blockchain in the forefront of arbitration, with regards to storage of Arbitral Awards. Arbitral awards are documents of great importance in a proceeding for the enforcement of such awards.

Article IV of the New York convention relates to the recognition and enforcement of arbitral awards and states that a:
Duly authenticated original award or a duly certified copy thereof along with the agreement is a prerequisite for initiating the recognition or enforcement of the arbitration entered to by the parties.[19]

The onus to prove such arbitration award, for the purposes of enforcement, lies upon the applicant making such request. Blockchain can easily automate the task of proving the existence of an agreement or a clause without unnecessary human intervention, reducing the legal costs, time and effort of the parties, legal practitioner as well as the arbitrators.

The purpose behind the requirement of a duly authenticated copy of the award is that it has the seal of approval of the arbitrator and is devoid of any tampering or fraudulent intervention. A cryptographic fingerprint would ensure that the award is tamper-proof and also provide a seal which is unique to every block, or arbitration clause in such a case.

The New York Convention has removed the requirement of double exequatur which relates to the process where confirmation in the place of arbitration is mandatory before the international recognition of such award.[20] The New York Convention as well as other International Arbitration Laws are aimed towards increasing the ease and efficiency of recognition of foreign arbitral awards. The integration of Blockchain for storage of arbitral awards aligns with the aim of the New York Convention and will result in less burdensome enforcement and recognition of foreign awards.

Conclusion
Although new age technologies have already started to enter the field of arbitration, their use is not as common as the use of older technologies such as electronic communications. A significantly large number of arbitrators have not yet adopted new age technologies, although a gradual shift towards such trend can be observed, as increasing number of companies and firms develop AI based Arbitration softwares and applications.

The New York Convention, although it does not directly contemplate such technologies, does not entirely restrict the use of technologies such as Machine Learning, Blockchain, Language processing, Translation and several other AI technologies. There are several applications of New Arbitration Technologies which are merely auxiliary to the actual arbitration process and do not require the New York Convention and other International Arbitration to expand their usage and application.

Blockchain and other such technologies such as text mining are also in the same position where they can continue to be applied in Arbitration without requiring an amendment. The growing popularity and use of such technologies is fairly predictable in the near future, while the question of AI Arbitrators and other such direct usage of technologies may depend on the nature of future legal discourse and subsequent amendments.

End-Notes:
  1. Delhi High Court, Guidance Note for Conducting Arbitration Proceedings by Video Conference. accessed October 10, 2021
  2. Seoul Protocol on Video Conferencing in International Arbitration. accessed October 10, 2021
  3. Chauhan AS, Future of AI in Arbitration: The Fine Line between Fiction and Reality (Kluwer Arbitration Blog September 25, 2020) accessed October 10, 2021
  4. Özçelik GB and Özçelik ŞB, Use of AI-Based Technologies in International Commercial Arbitration (2021) 12 European Journal of Law and Technology
  5. Ibid
  6. Cheung KC, Top 10 Applications of AI in Law - Algorithm-X Lab (Algorithm August 28, 2020) accessed October 12, 2021
  7. Ibid
  8. Ibid
  9. Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1959
  10. Ibid
  11. Ibid
  12. Özçelik GB and Özçelik ŞB, Use of AI-Based Technologies in International Commercial Arbitration (2021) 12 European Journal of Law and Technology
  13. Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1959
  14. Ibid
  15. Özçelik GB and Özçelik ŞB, Use of AI-Based Technologies in International Commercial Arbitration (2021) 12 European Journal of Law and Technology
  16. Duarte M, Could Blockchain Help the Recognition of International Arbitration Awards? (Kluwer Arbitration Blog March 15, 2018) accessed October 12, 2021
  17. Orcutt M, How Secure Is Blockchain Really? (MIT Technology Review April 2, 2020) accessed October 13, 2021
  18. ibid
  19. Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1959
  20. ibid
Written By: Archit Dubey (Student at O.P Jindal Global Law School)

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