The AAA-ICDR AI Arbitrator: A New Era In Construction Arbitration?

On 3 November 2025, the American Arbitration Association – International Centre for Dispute Resolution (AAA-ICDR) launched its AI arbitrator, a groundbreaking development in the field of international arbitration and alternative dispute resolution. It marks the first time a major arbitral institution will allow parties to elect an AI arbitrator to resolve disputes.

The AI arbitrator is limited to documents-only construction arbitrations commenced after 3 November 2025. Both parties must opt in to use the AI arbitrator.

Despite its name, the AI arbitrator shall still operate with a human in the loop. The AI arbitrator analyses the parties' submissions and produces a draft award based on learned legal reasoning. Once the draft award has been produced by the AI, a human arbitrator reviews, validates and signs the final award.

This article provides an overview of how the AAA-ICDR's AI arbitrator works, the proposed time and cost saving benefits of the service, as well as the key insights construction and legal teams should be aware of.

How does the AI arbitrator work?

The AI arbitrator has been trained on over 1,500 past construction arbitration awards and has been refined through input from construction practitioners and arbitrators from AAA-ICDR's Construction Panel, in collaboration with McKinsey.

During the arbitral proceedings, the parties upload their submissions and supporting evidence to the AAA-ICDR Case Management Platform. The AI arbitrator then reviews and analyses those documents and provides a summary of the factual and legal arguments made in respect of each claim. The parties review those summaries and provide confirmation that the AI arbitrator has correctly understood the case presented.

Once all party submissions and evidence have been submitted and the requisite confirmations have been provided, a draft award is generated by the AI arbitrator and presented to a human arbitrator. A human arbitrator, selected by the AAA-ICDR and trained specifically for AI-led cases, then reviews the draft, makes revisions if necessary, and issues the final award.

What are the stated benefits of the AI arbitrator?

The AAA-ICDR estimates that the use of an AI arbitrator may reduce the total time to resolve disputes by 20–35% and reduce costs by an estimated 30–50%.

The process is designed to make arbitration more affordable and accessible. In an industry where cash-flow is so important, the prospect of such savings will be attractive to smaller contractors and subcontractors, as well as to larger entities with a large volume of lower-value construction disputes. It is no secret that full arbitral proceedings can take up significantly more time and cost than originally anticipated. That is particularly so where a three-member Tribunal is utilised, with Awards sometimes taking over a year to be produced. For a smaller contractor that is especially reliant on cash-flow, that can represent a significant issue.

Insights

The AAA-ICDR's move is undeniably bold and innovative. Discussions around AI decision-makers have been taking place for some time now and the AAA-ICDR is the first institute to make such a substantive step towards that becoming a reality.

Arbitration has traditionally been a human-centric process, grounded in nuanced judgment and procedural fairness. By introducing AI into the decision-making process, even with human oversight, the AAA-ICDR is challenging long-held assumptions about what constitutes a "fair hearing".

That will inevitably lead to concerns about due process. Although the AI arbitrator is not fully autonomous, critics may argue that delegating the initial analysis and drafting to a machine raises due process risks. For instance, Article 1450 of the French Code of Civil Procedure requires a human arbitrator. Similarly, the EU AI Act classes decision making as a "high risk" activity requiring human oversight. The risk of set-aside applications or enforcement challenges under the New York Convention is a concern.¹

The AAA-ICDR has emphasised that the AI arbitrator will provide explainable recommendations, but the opacity of AI decision-making – especially in complex legal reasoning – could still be problematic. Parties may struggle to understand how certain conclusions were reached, even if the final award is reviewed by a human.

Indeed, questions remain as to how much discretion the human arbitrator may have on the draft award. For example, if the human arbitrator's discretion strays into the subjectivities of the dispute and arguments in question, that may arguably take away from the intended objectivity of the AI-led process.

Further, all of the usual concerns surrounding AI remain such as concerns around confidentiality, hallucinations and data privacy. We explore these concerns further in our article on the use of AI in international construction projects.

Notwithstanding these concerns, this pilot could set a precedent for expanding AI arbitrators into other sectors or for higher value disputes. While this could increase access to justice, it also raises the spectre of over-reliance on AI in areas where human empathy and discretion are crucial.

As one of the world's leading arbitral institutions, the AAA-ICDR's adoption of AI could influence other arbitral bodies to follow suit. Institutions like the ICC, LCIA, and SIAC may soon face pressure to develop or adopt similar technologies to remain competitive.

Key takeaways and next steps

The AAA-ICDR's AI arbitrator represents a transformative step in the evolution of arbitration and the use of AI in dispute resolution. While it promises efficiency, cost savings and accessibility, it also raises important questions about fairness, transparency and the future role of human arbitrators. It remains to be seen whether the benefits promised will become a reality or whether its use will simply lead to increased procedural challenges, particularly at enforcement stage.

As the arbitration community watches closely, the success – or failure – of this initiative could shape the trajectory of AI in dispute resolution for years to come.

Footnote

1 For example, a US court has already been asked to set aside an American Arbitration Association award, alleging that the sole arbitrator "outsourced his adjudicative role to artificial intelligence".

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