AI and Arbitration: China’s efforts

This is the third article in Clyde & Co’s latest international arbitration series covering the topic of AI in international arbitration. In this piece, Legal Director Qiao Kang from our Beijing office provides the legal perspective from China.

Legislation 

Artificial Intelligence (AI) and generative AI, in which AI algorithms can create new outputs based on its training data (GenAI), are powerful tools in driving efficiencies and productivities. In recent years China has stepped up its regulation of AI as it attempts to balance its regulation and development and has prioritised the regulation of AI as a part of its legislative plan.

2021 was a hub of activity in China for regulating and defining the scope and use of AI. Significantly, China promulgated the Data Security Law of the People's Republic of China 2021, which sets out the principles of algorithm governance. At a policy level, the National New Generation Artificial Intelligence Governance Specialist Committee published the Ethical Norms for New Generation Artificial Intelligence, the purpose of which is to incorporate ethics into the entire AI life cycle and to provide ethical guidance to individuals and institutions engaged in AI-related activities.

Several measures and provisions were subsequently released to deal with specific issues relating to AI. For example, in December 2021, the Cyberspace Administration of China (CAC), the Ministry of Industry and Information Technology (MIIT), the State Administration for Market Regulation (SAMR) and the Ministry of Public Security (MPS) jointly published the Provisions on Administration of Algorithmic Recommendation in the Internet Information Service to regulate algorithm discrimination. Shortly after this, in 2022, the CAC, MIIT and MPS jointly published the Administrative Provisions on Deep Synthesis in Internet-based Information Services to regulate deep synthesis and avoid deepfakes.

On 13 July 2023 China moved first in the global race to regulate GenAI by issuing the Interim Measures for the Management of Generative Artificial Intelligence Services. Compared with an earlier draft for public consultation, the published measures have adopted a “classified and graded” approach in regulating GenAI and have eased certain regulations in recognition of the potential of AI in igniting China’s economic growth. 

AI in arbitration 

In December 2022, the Supreme People’s Court of the People’s Republic of China issued the Opinions on Regulating and Strengthening the Applications of Artificial Intelligence in the Judicial Fields (Opinions), which set out key principles when using AI in the field of dispute resolution such as safety and legality, fairness and justice, and transparency and credibility. The Opinions encourage the application of AI in alternative dispute resolution (including arbitration).

Like other major jurisdictions, China has adopted the position that AI shall take a supportive role in the judicial decision-making process. The Opinions make clear that any content generated by AI shall be for reference purposes only and shall never substitute a judge or tribunal when making decisions.

Embracing AI

In addition to the relatively traditional use of AI in labour-intensive areas such as legal research, similar case search, and translation, some arbitration commissions in China have used AI in the following matters:

Case management

During the pandemic, major arbitration commissions in China moved proceedings online (including case management and hearings) signalling a shift towards the digitalisation of arbitration.

Effective from 1 January 2024, the amended arbitration rules of the China International Economic and Trade Arbitration Commission (CIETAC) prompt the digitalisation of arbitration proceedings. Electronic filing and service of documents electronically or via a centralised information system are permitted (and preferred) under the amended arbitration rules and e-versions will prevail if there is any inconsistency with the hard copies, unless otherwise agreed by the parties. The e-signing of arbitration awards is of the same effect as a handwritten signature.

This shift towards digitalisation has, in turn, opened the door for arbitration commissions to engage AI to help develop further efficiencies. For example, by using AI to verify the identity of parties attending a hearing as opposed to traditional ID checks.

Simultaneous interpretation and transcript generation

By using AI, it is now possible to have a simultaneous interpretation of different languages during a hearing which is then automatically generated into a hearing transcript. This has the benefit of reducing costs (in respect of equipment and professional interpreters) and allows the parties to immediately correct transcripts.

Draft award review

One of the major arbitration commissions in China has now used AI to review a draft award prepared by the tribunal. This has the potential of lowering the burden on internal resources and improving the quality of awards by checking for typos, potential inconsistencies in the operative part of the award and any references to the relevant factual evidence.

The future of AI in arbitration 

One key area of debate is the deployment of AI prior to the issue of arbitration proceedings and the use of AI to predict the outcome of an arbitration.

Supporters believe such technology will help parties to understand their respective positions and consider it to be fair and reasonable for parties to have an idea of the outcome of a potentially lengthy and expensive process before committing their time and money.

The ‘doomers’ query whether such a consultancy has the potential to mislead the parties on the outcome of an arbitration which may, in turn, serve to block a prospective and meaningful claim. There are also concerns surrounding the use of GenAI in this context due to predicted outcomes in a case being generated by data trained with ‘old’ precedents and patterns which may not align with new realities. 

China’s Opinions indicate support of this application of AI as a means of alternative dispute resolution. With this in mind, we consider the use AI and GenAI as a means of increasing the efficiency and accuracy of arbitration will continue to gain momentum throughout 2024.

This series will continue next week with the perspective from Germany.