Guest blog: International arbitration and the rise of innovative tech

  • 9 April 2018

The second edition of the International Chamber of Commerce’s (ICC) European Conference on international arbitration is underway in Paris today. As the arbitration community gathers for the kick-off event of Paris Arbitration Week, Linklaters partners, Pierre Duprey and Roland Ziadé give us their inside take on one of the conference’s much-anticipated panels—Tomorrowland: Artificial intelligence, smart contracts, blockchain and the end of arbitration as we know it—in this guest blog for ICC.

Linklaters partners, Pierre Duprey and Roland Ziadé
Linklaters partners, Pierre Duprey and Roland Ziadé

A recent trend in mergers and acquisitions (M&A) concerns the technology industry. With the emergence of artificial intelligence and innovations in terms of smart living, the tech industry has attracted significant investment—not just from specialist companies but also non-tech firms. The latter type of operations—known as technology convergence—may be illustrated by Amazon’s acquisition of major supermarket chain, Whole Foods, or Japan’s SoftBank’s acquisition of ARM, a British chip maker.

Europe saw a spike in M&A transactions last year. For example, French M&A reached a 10-year high with a value of US$245.8 billion—approximately 29% of overall European transactions. Several factors have influenced this surge of activity in the region. Such elements most notably include the French presidential elections and the announcement earlier last month of the French deficit falling below the European Union’s 3% threshold for the first time in a decade. As a result, this may have inspired some international businesses to regain confidence in the European economy.

The legal industry is another example of a sector that has begun to show interest in applying innovative technologies to the provision of its services. Legal tech raises several questions—not only about the future of our profession as lawyers, but about its implications in terms of responsibility, probability of error in processing data or confidentiality. To better understand these implications, several initiatives have been developed. For example, the Ethics and Governance of Artificial Intelligence Fund—co-founded by the MIT Media Lab and Harvard University’s Berkman Klein Center for Internet and Society—aims to support research that shows the impact of artificial intelligence on other disciplines, including the labour market, education and law.

In international arbitration, software programmes may help to reduce time and costs in arbitration by streamlining document review or assisting with legal research. Some tools may even help to establish forecasts or probabilities of success (or failure) based on an analysis of case law and findings by individual arbitrators. However, if access to information on past or pending cases is necessary to set up appropriate algorithms and ensure reliable results, then the biggest hurdle will be to overcome the restrictions imposed by confidentiality, which is at the heart of the practice of international arbitration.

Given the sensitivity of information exchanged between parties, institutions and arbitrators, cybersecurity is increasingly becoming an issue in international arbitration. For example, individuals working on a case tend to sit in different jurisdictions and communicate using various media, including unencrypted email. Large amounts of information, including documents, therefore travel across borders in an unsecured way. This means that the risks of exposure to cyber-attacks are relatively high. Institutions and organisations have been raising awareness of these issues by forming working groups and releasing reports, such as the ICC Commission on Arbitration’s 2017 Report on the Use of Information Technology in International Arbitration. More and more law firms, including Linklaters, are also achieving certification to the ISO 27001 standard—a specification for an information security management system—to ensure compliance with strict information security requirements. It may also be up to the parties and arbitrators to adopt guidelines to verify that necessary measures are taken to prevent risks.

Along with the emergence of artificial intelligence and the development of smart technology in many industries, intellectual property rights are becoming progressively central for many businesses and investors. This is because they play a fundamental role in driving innovation. Given the financial interests at stake in tech-related industries, a growing number of companies turn to international arbitration to resolve highly technical disputes revolving around intellectual property. In some cases, arbitrators may be called on to fill in contractual gaps regarding licencing terms. New types of disputes may also arise with the use of innovative technologies. One may question whether arbitration is the appropriate forum for these types of disputes bearing in mind the powers of arbitrators and subsequent concerns regarding the enforceability of decisions thus rendered.

We look forward to hearing more about these subjects during the ICC European Conference today, in addition to exchanging insightful ideas with participants in order to better anticipate the issues that our clients face today and that more will face tomorrow.

*Disclaimer: The content of this interview does not reflect the official views of the International Chamber of Commerce. The opinions expressed are solely those of the authors and other contributors.