Le Café des Arbitres, or LCDA, a series of Paris-based conferences hosted by Queen Mary University of London’s School of International Arbitration, marked its 10th anniversary with an event discussing the impact of technology and artificial intelligence and whether international arbitration as an industry will survive.
The conference began with a Q&A session featuring arbitrators Yves Derains of Derains & Gharavi, Sophie Nappert of 3 Verulam Buildings, Annet van Hooft of van Hooft Legal and Loukas Mistelis of QMUL, moderated by Julie Audoux of Maj Avocat.
The first question was, “What makes a good arbitrator?” The consensus was that it means being decisive and having a clear- headed understanding that the role of an arbitrator is to decide cases and not judge people. One panellist said arbitrators must hold a “steady course” as there can be manipulation attempted by counsel on either side of a matter. The panel also pointed out the value of arbitrators having experience as counsel or tribunal secretary. The cross-fertilisation between the work of counsel and arbitrators is a key ingredient to the recipe of being an effective arbitrator. One panellist encouraged aspiring arbitrators to consider a wider range of legal markets than just Paris or London. Asian, Latin American and Middle Eastern markets also have many opportunities. The panellists were unanimous that the road to becoming an arbitrator was a long one.
Another question was “What are the most significant developments in the last 10 years of international arbitration?” It was observed that digitisation through paperless procedures and remote case management conferences had greatly increased the efficiency and convenience of arbitral proceedings. Further, greater diversity (not only in gender, but also disability and social mobility) in arbitration practice was flagged. However, panellists said more needs to be done to support green arbitrations. It was noted that over the past 25 years there has been a great democratisation of arbitral expertise, with arbitration now being embraced by lawyers from a wider range of countries and legal traditions, whereas before arbitral expertise was concentrated in a much smaller community.
Despite these steps forward, the panellists warned against the increasing burden of procedural rules in some cases, a phenomenon also called judicialisation. It was noted that these rules can become overly burdensome in very small or high-value matters. Other panellists warned that the rules concerning disclosure of conflicts of interests by arbitrators varies by jurisdiction and institution. These differences have created a “disclosure paranoia” among arbitrators when attempting to comply with these often unclearly drafted rules.
Finally, the panel also noted that arbitration places significant pressure on arbitrators. They cautioned that it can be challenging for arbitrators to maintain their professional commitments, family life, and mental health. Several panellists conceded that these challenges are felt throughout the legal sector, including among young associates and counsel. One noted that, while he never insists on his staff staying late in the office, he never feels disconnected from his work when he goes home.
The second panel considered the impact of technology, particularly artificial intelligence (AI), on arbitration in practice. It featured Carlos Carvalho of Opus 2, Julien Fouret of Eversheds Sutherland and Julia Zeidan of Jus Mundi. It was moderated by Maria Fanou of QMUL.
The panel observed that AI, as a scientific discipline devoted to recreating human reasoning has existed for at least the past 20 years. AI has been used to produce many tools people use in their daily life and is also reasonably available to lawyers. The usefulness of these AI tools is essentially contingent on how well lawyers’ needs are understood by an AI tool’s designers.Currently, AI tools do not match the futuristic vision often touted at conferences. This is because AI tools have only been implemented in some disjointed aspects of legal practice, for example document review and disclosure. The remainder of legal work relies on legacy systems. More modern systems allowing seamless cooperation by lawyers working on a matter, better integration of AI tools, and the identification and automation of often repeated tasks is needed. Otherwise, the benefit of these disjointed uses of AI tools will always be limited to the individual tasks they perform. This modernisation needs to happen in both firms and institutions.
As AI is further integrated into the legal sector, larger firms may create or expand the role of innovation officers to identify the best use cases for AI tools. This may not be an option for smaller firms, although the price of accessing these tools will decrease as the technology is better understood. Relatedly, law firms will become increasingly interested in candidates that understand the capabilities of AI tools.
With greater access to AI tools and automation, some tasks may eventually be completely automated. However, these efficiencies will be at the cost of learning opportunities for lawyers in junior positions. Firms will have to decide how their use of AI tools will impact staff responsibilities and recruitment. Law firms may use gains in efficiency delivered by these tools to either reduce their staff and maintain their caseload or maintain their staff and increase their caseload.
The panellists discussed remote hearings in arbitration. While imperfect, these hearings were necessary during the pandemic, as the 2021 QMUL Survey in partnership with White & Case also captured, and generally they were more environmentally friendly. It was felt that users of arbitration were too readily returning to a default preference for in-person hearings. The decision to proceed through in-person or remote hearings should be considered in every case.
The panel also pondered how to best use AI in arbitral proceedings. Is it appropriate for AI to decide cases? The debate concluded with the moderator asking Chat-GPT whether it would be ethical for it to draft an arbitral award. Chat-GPT confirmed that it does not have the “capacity to make ethical decisions or provide legal services”. While it “can provide general information and guidance, [it is] not equipped to provide legal advice or create legal documents”.
The final panel focused on whether arbitration will continue to be a widely used dispute resolution mechanism in light of its rising costs and the backlash against investment arbitration in particular. The panel was moderated by Mistelis and included Nadia Darwazeh of Clyde & Co, Isabelle Michou of Quinn Emanuel and Olivia De Patoul of Deminor.
To ensure arbitral efficiency, it was suggested that, while arbitration was a revenue generating industry, counsel should be focused on streamlining claims to prevent excessive costs for clients. This may include discouraging clients from advancing meritless claims. While counsel may not wish to be seen to be obstructing clients, a panellist argued that not advancing meritless claims would protect a counsel’s credibility.
The ways in which law firms structure their fees were debated. It was felt that it is very difficult at the outset to determine the amount of work required in any given arbitration. Therefore, time-based fee structures were still appropriate. However, where firms are better able to predict the work required, they may consider alternative fee structures. For example, they may be able to provide estimates to clients of how much a matter dealing with early dismissal may cost.
There is also a role for arbitrators in driving efficiency. Over time, both the duration of cases and the length of individual submissions have ballooned. Arbitrators can proactively address this by challenging counsel on the need to pursue certain issues and providing feedback to parties on what the tribunal sees as the key issues requiring attention.
Regarding the role of third-party funders in arbitration, it was pointed out that, while third-party funders may or may not exercise control over a matter, they can produce overall efficiencies in a case. This is because the work done by the funder to accurately assess the value of a case operates as additional due diligence. This work can resolve issues with a case before it reaches a tribunal, where those issues would take longer to deal with. The role of third-party funding is expanding as the market for it matures. Initially funding was only sought either for high-profile and very high-value disputes or particularly desperate cases. The use of funding for litigation and arbitration is now more widespread, particularly in common-law countries.
Another important question was whether there is a rising preference for courts over arbitral tribunals? Some courts have, in an attempt to attract international disputes, allowed proceedings to be conducted in English. While these courts might compete with arbitration, they are unlikely to replace arbitral tribunals as a means of resolving international disputes. At present, the flexibility, confidentiality and accessibility of international arbitration remain sufficiently attractive to international parties.
Finally, the moderator asked panellists what change they would like to see in arbitration over the next decade. They responded with a warning about the increased costs involved in arbitration and a call to ensure that arbitration remains affordable (particularly in the realm of investment arbitration). The need for greater diversity in arbitration at every level, but particularly at the partner and tribunal levels, was also highlighted.
Le Café des Arbitres is co-organised by Loukas Mistelis, Julie Audoux and Maria Fanou. The event was held in Paris on 7 November 2023 at Maison Boetie and was sponsored by Deminor, Jus Mundi and Opus 2.
Reporting by Michael Hingston, LLM candidate at QMUL.
This article was originally published by the Global Arbitration Review, 26 February 2024.