The Creation of the AI Arbitrator

Construction contract disputes often proceed in arbitration rather than litigation. Frequently, the arbitrator of choice in such contract disputes is the American Arbitration Association (AAA), which handles thousands of construction arbitration matters on an annual basis. Bridget McCormack, president and CEO, describes the AAA as 100-year-old nonprofit with a history of leading the alternative dispute resolution services industry by incorporating technological innovations.

The AAA’s embrace of artificial intelligence (AI) was made official on November 3, 2025, through the release of its pilot AI Arbitrator, a proprietary system developed in collaboration with Quantumblack, AI by McKinsey, a leading AI and advanced analytics consulting firm. The AAA claims it trained its AI Arbitrator by exposing the model to the types of documents that a human arbitrator would review in similar matters, as well as to reports of human arbitrators that detail the reasoning of why and how specific arbitration decisions were reached.

Notably, the AI Arbitrator is not entirely new and, despite its technological forwardness, is greatly based on an existing procedure. The AAA already has a documents-only arbitration process in place which allows a human arbitrator to decide certain construction disputes based only on written submissions, evidence, and documents, and without in-person hearings or testimony. In kicking off its pilot AI system, the AAA focused on these types of disputes because they tend to involve factual issues of contract, payment, and scope of work that closely align with documentary evidence. The AAA’s stated mission, in part, is to afford parties a more-scaled and less-costly process by which to navigate smaller construction disputes.

The AAA does have a point. Construction litigators understand what too often comes as a surprise to clients who find themselves in a legal altercation — construction matters are notoriously complex, document heavy, and lengthy, necessitating a great deal of attorney time. Unfortunately, when disputes are relatively minor, this reality sometimes means that the costs of pursuing arbitration or litigation can trump any potential recovery. The AAA suggests that use of its new AI Arbitrator could help offset these costs with a potential 35% cost savings.

While potential cost savings are a plus for construction professionals and consumers alike, the concept of the AI Arbitrator does not come without limitations or concerns. Clients and attorneys would understandably be hesitant to pass important decisions to a robot. So how does the AI Arbitrator work, and what safeguards are put in place to prevent the AI Arbitrator from going rogue, invoking images of the dangers posed in the movie Terminator?

The Process of AI Arbitration

Currently, use of the AI Arbitrator is limited to two-party, documents-only construction matters. And for now, many of the steps of AI arbitration are identical to AAA’s previous documents-only process; those that are not, are (at least for now) supervised by humankind:

• First, the claimant files its position statement through the AAA and the respondent is invited to respond. It is the AI Arbitrator, rather than a human, who extracts the parties’ claims from the position statements.
• After this, the claimant and the respondent each upload their supporting exhibits and legal authority, including relevant statutes and case law. The AI Arbitrator, rather than a human, generates editable descriptions of the law for each side.
• AI then generates a conflict checklist which the human parties must review and confirm. The AAA then assigns a human arbitrator which parties can either consent to or object to with reasonable explanation.
• The case next proceeds by the AI Arbitrator’s production of a case summary which the human parties are able review the summary for accuracy and provide feedback.
• The human arbitrator then reviews the parties’ feedback, edited case summaries, and evidence before sending them to the AI Arbitrator for final analysis.
• The AI Arbitrator generates a draft of the award, which the human arbitrator reviews and revises as necessary, before signing and issuing the award.

Conclusion

AI Arbitrator promises a less expensive and more streamlined process to handle smaller disputes. However, construction professionals and those contracting for construction should consider working with an attorney to become more familiar with the potential benefits and risks of AI arbitration. As the practice of law necessarily evolves with technology, more questions and disputes are bound to arise including the enforceability of AI arbitration provisions in contracts, the ability to appeal a decision made by an AI arbitrator, and actual versus perceived cost savings. The future of AI has not been written, and it should be addressed with (human) eyes wide open.

Click here to read the original blogpost from Anya L. Pardy of Ally Law member firm Williams Parker.