AI can make arbitration efficient and cost-effective: Singapore Chief Justice Sundaresh Menon

Chief Justice of the Supreme Court of Singapore Sundaresh Menon recently highlighted the potential of Artificial Intelligence (AI) to address some of the most pressing challenges surrounding international arbitration, particularly those concerning cost and complexity..Generative AI can play a pivotal role in making arbitration more efficient and cost-effective, Justice Menon said.He detailed two primary applications of AI in the field - first, enhancing traditional legal tasks such as research and drafting; and second, assisting arbitrators in managing the ever-increasing volume and complexity of information. "To make arbitration more efficient and cost-effective, we can think of the utility of generative AI on 2 levels. The first use of AI is one that many of you would already be familiar with. Generative AI can use, support and enhance the work of lawyers and the performance of traditional legal tasks such as legal research and drafting and preparing summaries. Most legal professionals have already started to integrate generative AI aspects of legal work or expect to do so in the future. What we must ensure is that lawyers are equipped with the necessary knowledge and skills to use AI effectively," he said..Justice Menon made the observations at the Singapore International Arbitration Centre (SIAC) annual conference held at the Trident, Mumbai on Friday..His remarks come at a time when arbitration faces heightened scrutiny over its costs and the consistency of ethical standards. The judge in his speech outlined several key trends that have shaped the current arbitration landscape. He noted the shift from informal dispute resolution to a system governed by extensive procedural rules, which has led to increased costs. He referred to this as the "problem of industrialisation", noting that such procedural developments often result in unnecessary costs for parties involved..Another significant trend he pointed out was the growing professionalisation and diversification within the arbitration community. While diversity is seen as positive, it has also led to variations in values and understandings about arbitration, potentially causing missed expectations and undermining confidence in the system. "How can it be that judges and lawyers are subject to codes of conduct, of professional conduct rules in their own jurisdictions, whereas we are hesitant to even have guidelines in the case of arbitration?" Menon questioned, calling for a broader consensus on ethical values and principles in arbitration..Further, he opined that arbitration is increasingly becoming a mandatory mode of dispute resolution, especially in cross-border disputes. He cited a troubling example from the United States where mandatory arbitration clauses are prevalent, limiting access to the courts for many workers. "Arbitration, which began and was intended to be a quick, simple and effective means of dispute resolution is instead becoming a tool to block access to justice and the vindication of rights.".Justice Menon also addressed the decline of trust in public institutions, a global trend impacting the legal field. He observed that distrust is now considered society’s default emotion, a challenge that extends to arbitration as well. "The legitimacy of the judiciary rests upon a broad acceptance that courts can be depended upon to dispense justice, and if that trust erodes, so too will trust in the justice system as a whole and in the rule of law," he said.In discussing the inherent features of arbitration that may undermine trust, Menon pointed to confidentiality, party-appointed arbitrators and limited recourse to courts for error correction as factors that could exacerbate trust issues. He stressed on the need for introspection on whether greater transparency and accountability could improve confidence in the arbitration process..On practical reforms, Justice Menon emphasised the importance of addressing the cost of arbitration to ensure fair access to justice. He cited recent judicial decisions highlighting concerns over arbitration costs, such as the Supreme Court of Canada’s ruling in Uber Technologies Inc. v. Heller and a decision by the Polish Supreme Court. "These cases show that there is real concern over the cost of arbitration, which needs to be addressed so that we can secure trust and the presumptive enforceability of arbitration agreements," he said. He insisted that institutions should consider introducing rules on costs that provide a common framework for assessing reasonableness and proportionality..Justice Menon also commended the efforts of the Singapore International Commercial Court (SICC) to control costs through procedural innovations. "Shortly after the commencement of proceedings and even before the first case management conference, the parties are required to estimate the cost that they have incurred today, as well as their overall costs in the event the matter proceeds to trial or to a hearing on the merits," he explained. This proactive approach helps the court to manage and streamline disputes more effectively, he said..Menon concluded his address by urging the arbitration community to explore innovative approaches and work collaboratively to uphold the integrity and efficiency of the arbitration process.