Arbitrators Can Use AI But Content Must Be Critically Reviewed, Independently Verified: Allahabad HC's Justice Shekhar B. Saraf

"Though AI can be used by the arbitrators to make their jobs easier, the same should not be used as a substitute for carrying out analysis, and if that is done, it is required to be critically reviewed, independently verified, and, where necessary, corrected before inclusion in the final award".

While praising arbitration for its benefits, such as being a faster and more cost-effective dispute resolution method, Justice Saraf highlighted the enforcement of awards as the most significant shortcoming in its wider acceptance as a dispute resolution mechanism.

"At first glance, issue of non-enforcement may appear to stem merely from judicial attitude towards arbitration. One may feel that there is much judicial intervention as we Judges normally like to interfere whenever given the opportunity. However, deeper look revels a more complex challenge. The risk of non-enforcement arises not from judicial scepticism alone, but often from inherent defects in the award itself that unfortunately prevent enforcing courts from executing it as a decree".

He further stated that

"All the arbitrators, while being adjudicators, are not Judges. Since their award emerges from a private process that ultimately requires enforcement by the court, it is justified that courts exercise prudence in reviewing such awards whether it be at the stage of setting aside of an award or at the stage of enforcing such an award. Accordingly, there definitely exist a pressing need for arbitrators globally to strive to adopt the best possible standards as far as drafting of awards is concerned to ensure that arbitration as a phenomenon operates as an effective alternative dispute resolution mechanism".

Justice Saraf highlighted that even failure to mention the correct names of parties can result in the vacation of an award. Citing an example of the case, DJP and others v DJO, which was before the Singapore Court of Appeal, Justice Saraf stated that excessive copy-pasting from other arbitral awards can also lead to their setting aside, i.e., non-enforcement.

Lastly, he pointed out that applying arithmetic formulas or using the best judgments in passing an award may result in setting aside an award. He said that if the formula is not in the contract, it cannot be used unless it is in conformity with the industry's international standards.

"an enforceable award is nothing but a judgment being given by the arbirtral tribunal, and accordingly, requires to ensure proper legal reasoning being provided therein for the simple reason that the award is for the benefit of not just the parties to understand the result of the lis but is required to be coherent and precise so that the same can be enforced", he added.

While making recommendations, Justice Saraf stated that in cases where there is a jurisdictional challenge, it is always preferred that the issue of jurisdiction precedes the substantive determination on merits.

He further added that where a question of liability arises, it should be addressed before the assessment of the quantum. Lastly, he stated that preliminary issues should be resolved prior to related or dependent matters to ensure the enforcement of awards.