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The Singapore Law Gazette

Digital-Friendliness and Developing Safeguards

The Next Step of Tackling Dispute Resolution in the Digital Economy

In 2020, COVID-19 forced countries to close borders and separated people physically for months. In response, people turned to the digital sphere to connect, change and continue, which sparked a global digitalisation wave. Digital cross-border interactions became more commonplace. Digitised processes greatly improved efficiency. However, these revolutionary developments also gave rise to increasingly diverse and complex issues that were challenging to resolve.

Against this backdrop, the United Nations Commission on International Trade Law (UNCITRAL), a legal body within the United Nations system mandated to harmonise and modernise international trade law, agreed that there was a need to monitor the changing landscape of international dispute resolution. Launched in 2021, UNCITRAL’s Dispute Resolution in the Digital Economy Initiative (DRDE) sought to explore the impact of digitalisation on dispute resolution to identify legal issues and normative gaps. These findings would then be used to update existing UNCITRAL instruments or develop new ones.

Two Sides to Every Story

As a general overview, DRDE found that certain universal benefits of technology – such as providing improved speed and efficiency, as well as reduced costs – indeed also applied to dispute resolution. For instance, where once written submissions were typed, copied and delivered via physical mail, now e-mail is predominantly used to communicate these documents electronically and instantaneously.

Another major use case for technology in dispute resolution is in case and knowledge management. Legal practitioners are increasingly leaning on information search functions and artificial intelligence (AI) tools as part of their knowledge management strategy. These tools can rapidly analyse and extract targeted information from large volumes of information and electronic documents, as well as – in some cases – even support strategic decision-making. The advent of generative AI has only further expanded AI’s potential to transform how the legal industry operates.

However, as fundamental norms were developed at times when communications were mainly paper-based, DRDE also observed that there remain legal obstacles which may hinder us from fully leveraging the benefits of technology. Data privacy ranks foremost among these concerns. With the amount of sensitive data being input and stored electronically for legal use, questions naturally arise around database access, regulating the scope of accessible information, cybersecurity and more. Given the sensitive nature of most case data, these questions must be addressed to spur digital adoption.

Of further concern is that the use of certain technologies risks undermining the core principles of dispute resolution, such as due process and fairness. For instance, our findings show that it is felt in practice that the risk of manipulation increases when electronic means are involved in relation to evidence – especially with regards to AI. Another issue revolves around equal access; are virtual hearings fair if one party is not digitally literate or does not have access to a stable Internet connection? Or if an international dispute hearing is conducted in an unfavourable timezone for one party? These problems require further discussion.

Promoting Digital-Friendliness Through Electronic Awards

Despite the limitations of paper-based processes, digital-friendliness in dispute resolution has been relatively slow to take off. There are areas in which the benefits of digitalisation remain untapped. One area with the potential to promote digital-friendliness in dispute resolution is in that of electronic awards. A paper-based arbitral award requires many physical signatures to create and reliance on a mail service to deliver, and COVID-19 has shown that this practice is highly vulnerable to disruption. In contrast, electronic awards can be signed asynchronously and be transmitted instantly regardless of location, which would accelerate their execution.

Drawbacks notwithstanding, paper-based awards are still prevalent due to various perceptions. Amongst them, often pointed out is the requirement under Article IV of the New York Convention for awards to be “duly authenticated” originals for recognition and enforcement. Given that specific definitions of what constitutes proof of authentication and what is “original” remain grey areas, dispute resolution practitioners largely prefer to err on the side of caution and use physical signatures or documents to avoid debate. Until there is greater clarity on this issue, many are likely to hesitate on electronic adoption.

There are arguments that Article IV only sets the standard for arbitral awards, not the ceiling. Some jurisdictions and arbitration rules already allow the use of digital signatures, make provisions for electronic awards to be used as long as all parties are in agreement, and/or outright accept electronic award certification and transmission. Nonetheless, acceptance of electronic awards in international arbitration is at best exceptional due to the uncertainty that persists. Hence, there is a call for a unifying legal framework with clear and comprehensive provisions for the use of electronic awards, such as in the form of a supplementary convention or a protocol to the New York Convention. Reducing ambiguity around the agreed parameters of recognition and enforcement of electronic awards will almost certainly improve confidence and accelerate acceptance.

Developing Necessary Safeguards Around Artificial Intelligence

DRDE recognises the complex nature of the debate around the use of technology – AI, in particular – in dispute resolution. At first glance, the advantages of AI are apparent. It is already playing a vital support role by helping lawyers and arbitrators carry out due diligence tasks, e-document production, contract review and legal research. AI’s capacity for factual analysis and text mining can help process complex information, while deep learning applications can identify and extract conflicting statements. The abilities of generative AI are expected to further transform dispute resolution with prospects of automating award drafting and even decision-making in part, or perhaps in whole.

However, there are also distinct grey areas that must be carefully navigated. For instance – as proven in recent news over ChatGPT-driven false case submissions – AI is not infallible and human oversight is still necessary. It is also not immune to unconscious bias, which risks being cemented and perpetuated, particularly because what it knows is based off the training material it has access to. There are also larger confidentiality and cybersecurity issues to address, as well as more ethical questions over whether there is a need to preserve the human identity of an arbitrator to ensure due process and avoid imbalance.

We have seen different jurisdictions adopt their own safeguards for AI use in dispute resolution. Some courts have issued practice directions that compel counsels to declare the type of AI tool used and in what scope. Other judges have required counsels to file certifications asserting that they have not used generative AI in their submission, or – if used – that it has been verified by a human. Such safeguards are prudent given AI’s current limitations. However, over time, AI is highly likely to find its way into playing a much larger role in dispute resolution as the technology evolves, and so these safeguards must also evolve to become more robust so as to ensure that the foundation of dispute resolution is not undermined. We must not lose sight of the fact that dispute resolution is human-centred and that its very purpose is to deliver justice through a mechanism humans can trust, which has to date been driven by their peers.

The Future of Dispute Resolution in the Digital Economy

At these crossroads, consensus on the ideal way forward requires striking a balance between current normative values in the dispute resolution community and accepting new innovations for the sake of user-friendliness and improved efficiency. That is the goal that initiatives such as DRDE aim to support. We should not shy away from change, but rather accept that change is simply part of living and find ways to adapt alongside it.

Coping with new issues and methods of dispute resolution requires updates to existing instruments and/or the creation of new tools to suit. In this, it is important to adopt a comprehensive approach to reflect different perspectives from different parts of a world that has become ever so economically interdependent. This ensures that any changes will have been thoroughly considered and will remain both relevant and fair to all corners of the world to the best of our ability – in this new digital economy and beyond.

Legal Officer
UNCITRAL Secretariat 

Takashi Takashima is a Legal Officer at the International Trade Law Division (ITLD) of the United Nations Office of Legal Affairs, which functions as the substantive secretariat of the United Nations Commission on International Trade Law (UNCITRAL). He manages UNCITRAL’s project on the stocktaking of dispute resolution in the digital economy (DRDE) and assists in the servicing of UNCITRAL Working Group II on dispute settlement. He was a panellist at Singapore Convention Week 2023, organised by Ministry of Law, Singapore.