Growing complexity of global trade has stretched the length and expense of international arbitration
In international arbitration, decision-makers, their institutions, and disputants are “just scratching the surface” on artificial intelligence’s ability to transform the process, says Andrew McDougall.
Much of the conversation on how AI will alter justice-system processes focuses on the risks associated with the rapidly developing technology. When it comes to the document intensity, geographical distance, and an arbitrator’s ability to digest massive information and draft an award, McDougall says AI and other technology can increase procedural efficiency and improve decision-making – and are already doing so.
A partner at White & Case LLP in Paris, McDougall has done international arbitration for 23 years. Mainly he acts as counsel for one of the parties, but he also occasionally works as an arbitrator. His practice involves energy, infrastructure, post-M&A, sports, joint-venture disputes, and disputes involving state-owned entities. McDougall represents Canada as a member of the International Chamber of Commerce's International Court of Arbitration.
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Examples of recent arbitrations in which he has been involved include a series of disputes related to the US$5.5 billion Panama Canal expansion project, as well as several disputes arising from the construction of a nuclear power plant in Finland that was completed 14 years late and for billions of Euros more than expected. He also recently acted for a Brazilian telecommunications company in a complex contractual dispute concerning its obligations to a co-investor on an African venture following the Brazilian company’s merger with a Portuguese telecom.
Traditionally, one of arbitration’s advantages is its speed and affordability relative to the court system, says McDougall. But as cross-border trade has grown in magnitude and complexity, and as the world has become globalized and smaller, international arbitration has become more protracted and more expensive, he says.
“There comes a point where the arbitration process becomes more expensive, or at least as expensive, and longer than in certain jurisdictions in the world,” says McDougall.
“Technology can play a massive role in helping this issue. There's a big move in the international arbitration world among practitioners, arbitrators, and arbitral institutions, like the International Chamber of Commerce, London Court of International Arbitration, and so forth, to push for the use of technology to improve the speed with which the proceedings are done.”
In Canadian and US courts, litigation involves a massive number of documents. In the arbitration world, the prevailing desire is to manage the process so that it does not effectively become private court litigation, says McDougall. Arbitrators tell parties to limit the amount of paper they present so they can digest it and render a decision in two years rather than 10, he says. “This is where AI can play an essential role, and I think we're just scratching the surface on that.”
McDougall has cases where each side’s written briefs are over 1,000 pages. With expert reports and evidentiary exhibits presenting email correspondences, memos, and meeting minutes, he says the document load reaches tens of thousands of pages per side.
“A huge opportunity for the arbitral process is for the arbitrators to start using artificial intelligence tools to study that information, rather than simply sitting down with a book and turning the pages, electronically or physically, because it's just too much.
“The consequences are that they're just not reading everything – they can't,” says McDougall. “Or if they are, they're having trouble absorbing it, which means things are getting lost. It also means the advocates are not being very good advocates at the end of the day.”
In one ongoing arbitration on which McDougall is counsel, he has colleagues involved in New York, Toronto, and Montreal, and opposing counsel is participating from Vancouver and Calgary while the seat of the arbitration is in Ottawa. The parties to that arbitration are based in Germany, Bermuda, the Netherlands, and Canada.
In international arbitration, participants have traditionally flown in from around the world, and the flights, hotels, food, and booking of hearing rooms was a huge cost, says McDougall. When the pandemic hit, after an initial hesitation, arbitrations went ahead virtually. He says the debate was over whether virtual hearings would disappear when lockdowns ended, whether some would continue, or whether there would be hybrid hearings. The result is that virtual hearings are more frequent but will not replace in-person hearings completely, and there are now far more hybrid hearings.
“The hearing process has changed dramatically, and I think it will continue to change as technology improves.”
During McDougall’s career, the technology transcribing arbitration hearings has also improved significantly, and the hearing’s record is now available electronically and is accessible instantly throughout the proceeding, he says.
The third area where McDougall says technology can enhance the international arbitration process is the arbitrator’s or arbitrator panel’s deliberation and drafting of the reward.
“We're talking about complex cases. Sometimes, these awards can be four, five, or six hundred pages and very complex decisions. Is there room for technology to assist the arbitrators in rendering their award and putting the award together? That is an area I don't think has really been explored yet.”