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Part of A study examines the role of artificial intelligence in professional arbitration practice.

How could legal uncertainty over AI arbitration affect EPC's contracts?

Possible What happens if… A possibility worth considering, not a forecast.

Legal questions may increase risk for EPC's complex contracts Mayer Brown lawyers have questioned whether the American Arbitration Association's AI Arbitrator structure—where the AI drafts an award for a human arbitrator to review and sign—satisfies legal compliance, particularly concerning California's SB 574. Since the American Arbitration Association provides dispute resolution services for complex EPC contracts, this legal uncertainty could increase the perceived risk and complexity of resolving disputes related to EPC's agreements. The AI Arbitrator is currently expanding to two-party business-to-business cases, but the lack of clear legal guidance on its structure remains an open question for courts and legislatures.

Reported by 1 independent outlet Written Yesterday
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How it reaches EPC

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The facts so far

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  • Mayer Brown lawyers question whether the association's "AI drafts, human signs" structure satisfies legal requirements.techtimes.com
  • California's SB 574 takes effect on January 1, 2027, barring arbitrators from delegating any part of decision-making to generative AI tools.techtimes.com

Why it matters

For EPC, the viability and predictability of its dispute resolution mechanisms are critical to managing the risk inherent in complex contracts. If the AI-assisted arbitration structure is found to be non-compliant with evolving legal standards, it could force EPC to rely on slower, more traditional arbitration methods, potentially increasing costs and timelines for dispute resolution.

This legal debate is part of a broader industry shift toward integrating AI into legal services. The American Arbitration Association is actively expanding its AI Arbitrator to two-party business-to-business cases, but the lack of clear judicial precedent on AI-assisted awards means that the entire sector faces regulatory and legal scrutiny.

What we don't know yet

  • Will courts rule that the human review and revision of the AI draft satisfies the requirements of California's SB 574?
  • How will the American Arbitration Association adapt its rules if regulatory bodies impose stricter limits on AI use in arbitration?

What would change this answer

A court rules that the AI Arbitrator structure violates existing arbitration lawsThe legal uncertainty would become a concrete operational risk, potentially forcing EPC to seek alternative, non-AI-assisted dispute resolution methods.
The American Arbitration Association releases updated rules clarifying the compliance of its AI structureThe legal risk would decrease, providing greater predictability for EPC and other commercial parties using the service.

Who else could feel it

Other possible ripples from the same event.

Reporting

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The full eventLawyers Question Compliance of American Arbitration Association's AI Arbitrator Everything aboutEPC

Brind's analysis is written by AI from the reporting linked above and can be wrong. This explainer is a possibility worth considering, not a forecast: steps marked as Brind's reasoning are not stated in the reporting. It is not investment advice; do your own research.