Authored By : Shahzanan Fakih
Lebanese university
This article examines the emerging concept of smart arbitration and its growing relevance in the digital economy. As blockchain technology, smart contracts, and decentralized commerce reshape global transactions, traditional dispute-resolution mechanisms struggle with issues of speed, jurisdiction, anonymity, and enforcement. Smart arbitration whether understood as AI enhanced proceedings or as mechanisms designed for blockchain-based disputes offers improved efficiency, transparency, and adaptability. Through an analysis of institutional developments by the ICC, SIAC, and JAMS, as well as the role of the New York Convention, the article explores how innovation must align with established legal frameworks to maintain enforceability and legitimacy. It also addresses key ethical and procedural challenges, including algorithmic bias, data-protection concerns, and unequal access to technology. The study concludes that smart arbitration can strengthen international dispute resolution if technological progress is balanced with fairness, due process, and global legal standards.
Introduction
In recent years, the use of digital technologies , particularly blockchain, smart contracts, artificial intelligence, and decentralized platformshas increased in commerce. Traditional arbitration even Online or Electronic arbitration, the most popular alternative dispute resolution method long known for its flexibility and efficiency in resolving cross-border disputes, faces the challenge of adapting to a digital economy where transactions are automated and their execution automatic, and where the identities of the parties are often anonymous.
As global trade moves toward digitalization, legal systems must evolve to ensure effective, fair, and enforceable dispute resolution. In this context, smart arbitration has emerged as a response to the need to resolve disputes with specific characteristics. More than just a technological innovation, it represents a potential paradigm shift in how justice is achieved in business law. By
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combining technological efficiency with the principles of arbitration, it promises to redefine the balance between speed, cost, and fairness in dispute resolution, particularly through a decentralized network.
There is no specific law for smart arbitration yet; it is a modern concept that combines law and technology, building upon the established legal framework of arbitration. What exists is a law for traditional arbitration in most countries and electronic arbitration in some.
This article argues that smart arbitration is a necessary evolution of dispute resolution in the digital era, offering a framework that combines technological innovation with established arbitral principles to meet the challenges posed by blockchain transactions, decentralized commerce, and automated agreements. Its objective is to critically examine how smart arbitration can improve efficiency, transparency, and enforceability in international business disputes, while also addressing the legal, procedural, and ethical questions that must be resolved to ensure its legitimacy and acceptance within the global legal order.
The information will be gathered from academic articles, institutional reports, and current developments. Since smart arbitration is new, much of the material will come from scholarly debate and pilot projects, not codified law.
This article adopts an analytical approach, critically examining the opportunities and challenges of smart arbitration in the digital era. It also employs a comparative perspective, highlighting how different arbitral institutions are adapting to technological innovation in dispute resolution. The objective is to evaluate whether smart arbitration can enhance efficiency, transparency, and legitimacy in international business disputes.
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1- Smart Arbitration as a Necessary Evolution in the Digital Era : A- Definition :
Smart arbitration is a flexible concept, without a single authoritative definition. In some contexts, it refers narrowly to mechanisms designed to resolve disputes arising from smart contracts and blockchain transactions, where arbitral awards may even be coded into automated systems. “Smart arbitration is the process of granting an arbitration award by machine in case of a dispute in connection with the smart contract.”1
In other contexts, it is understood more broadly as the use of artificial intelligence and digital technologies to enhance arbitral proceedings, from online hearings to AI-assisted case management. This duality reflects both the adaptability and the uncertainty of smart arbitration: while its flexibility allows innovation across different jurisdictions and institutions, the absence of a unified definition raises questions about consistency and global legitimacy.
B- Distinghing between Smart , Electronic and Traditional Arbitration :
Traditional arbitration is a process led by human arbitrators who follow established rules and procedures, usually through hearings, written submissions, and physical evidence, while electronic arbitration is essentially the same process conducted online using digital tools like email, video hearings such as Zoom or Microsoft Teams , and electronic filing but without the use of blockchain or artificial intelligence. Smart arbitration goes further by integrating technology and AI into arbitration, either to resolve disputes arising from smart contracts on blockchain or to enhance arbitral proceedings with tools such as automated case management, digital evidence, and AI‑assisted decision support. The help of AI in smart arbitration can be either largely or partially .
1 Artem Svistunov , “Smart Arbitration The Concept”, (PureLegalTech , 17 June 2020) < www.purelegaltech.com > accessed 23 November 2025.
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C- The Rise of Blockchain , Smart Contracts and Decentralized Commerce :
Blockchain, smart contracts, and decentralized commerce have rapidly transformed global trade by creating secure, transparent, and automated systems. Blockchain provides tamper‑proof records, smart contracts enable self‑executing agreements without intermediaries, and decentralized marketplaces allow peer‑to‑peer transactions that reduce costs and increase trust.
According to Statista, the global blockchain technology market will skyrocket from $17 billion in 2023 to over $943 billion by 2032, highlighting the growing importance of integrating this technology into ecommerce operations.2
D- Traditional Dispute Resolution Struggles in Digital Transactions :
Traditional dispute resolution struggles with speed, cost, and cross‑border enforcement in digital transactions because the nature of digital commerce is very different from traditional business. In many blockchain or decentralized platforms, the parties are often anonymous, which makes it difficult to identify them for legal proceedings. The language of smart contracts is usually encrypted and highly technical, creating barriers for courts and arbitrators who rely on clear evidence. Moreover, the parties are often located in different countries and hold different nationalities, which complicates jurisdiction, increases costs, and slows down enforcement across borders.
Beyond anonymity, encryption, and nationality issues, several other factors explain why traditional dispute resolution struggles with digital transactions:
-Jurisdictional uncertainty: It is often unclear which country’s courts or laws apply in decentralized commerce.
-Speed mismatch: Digital transactions happen instantly, but arbitration or litigation can take months or years.
2 Annie Laukaitis , “Blockchain in Ecommerce : Transforming Digital Transparency and Security “ < www.bigcommerce.com > accessed 23 November 2025 .
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-High costs: International arbitration involves travel, translation, and complex procedures, which are expensive compared to the low‑value or high‑volume nature of blockchain transactions. -Evidence challenges: Blockchain records and smart contracts are difficult to interpret without technical expertise.
-Enforcement difficulties: Even if an award is granted, enforcing it across multiple jurisdictions is slow and uncertain.
-Cultural and language barriers: Parties from different nationalities may face communication problems, adding delays and misunderstandings.
E- From Optional to Inevitable :
Smart arbitration is not optional but necessary to keep pace with technological change because the rise of blockchain, smart contracts, and decentralized commerce has created disputes that traditional methods cannot handle efficiently. Transactions today are instant, borderless, and often involve anonymous parties using encrypted languages, which makes slow, costly, and paper‑based arbitration unsuitable. By integrating AI and digital tools, smart arbitration offers faster resolution, transparent records, and solutions that match the speed and complexity of modern commerce, ensuring that dispute resolution evolves alongside the digital economy rather than falling behind.
2- Efficiency and Transparency: Evaluating the Promise of Smart Arbitration : A- Efficiency Gains in Smart Arbitration :
Smart arbitration offers clear advantages over traditional methods, especially in terms of efficiency and transparency. Efficiency gains come from faster resolution through automation, reduced costs by minimizing travel and paperwork, and streamlined procedures that match the speed of digital transactions.
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B- Transparency Through Blockchain and Digital Records :
Transparency is strengthened because blockchain records provide immutable evidence and reliable audit trails, ensuring that all parties can trust the integrity of the process. Together, these features make smart arbitration a practical solution for resolving disputes in the digital economy.
C- The Expanding Role of AI in Dispute Resolution :
In addition , AI plays a central role in smart arbitration because it can support or transform the way disputes are resolved. When used partially, AI helps human arbitrators with tasks like organizing documents, checking consistency in arguments, translating languages, or scheduling hearings, which saves time and reduces costs. When used largely, AI can analyze evidence, predict possible outcomes, and even draft parts of decisions, making the process faster and more data‑driven. However, this deeper involvement also raises questions about fairness, bias, and whether parties feel they had a real chance to be heard. 3
D- Institutional Approaches : ICC , SIAC and JAMS :
ICC, SIAC, and JAMS have each taken steps to adapt their arbitration rules to address disputes involving smart contracts and digital technologies.
I-ICC (International Chamber of Commerce) :
– The 2021 ICC Arbitration Rules provide flexibility for complex, multi‑party and multi‑contract disputes, which is important for blockchain and smart contract cases. 4
– Flexible rules that can accommodate smart contract disputes.
3 Leon Alexander and Hannah Chua , “AI in Arbitration – A Perspective from Singapore “ ( Clyde & Co , 5 September 2025 ) < https://www.clydeco.com/en/insights/2025/09/ai-in-arbitration-a-perspective-from-singapore > accessed 24 November 2025 .
4 2021 Arbitration Rules ( International Chamber of Commerce ) < https://iccwbo.org/dispute-resolution/dispute resolution-services/arbitration/rules-procedure/2021-arbitration-rules/ > accessed 24 November 2025 .
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II- SIAC (Singapore International Arbitration Centre) :
– The 2025 SIAC Arbitration Rules (7th Edition) introduced new provisions to enhance speed, cost‑effectiveness, and user experience. 5
– Updated rules with efficiency and openness to digital arbitration.
III- JAMS (Judicial Arbitration and Mediation Services) :
– JAMS has gone further by publishing Rules Governing Disputes Arising out of Smart Contracts, offering specific clauses and procedures tailored to blockchain‑based agreements. 6 – In 2024, JAMS also introduced Artificial Intelligence Disputes Rules, recognizing the overlap between AI systems and smart contract disputes. 7
Together, these institutions show that smart arbitration is becoming mainstream, with different regions experimenting in their own way to meet the demands of blockchain and digital commerce.
3- Enforceability and Legitimacy in a Global Context :
A- New York Convention 1958 :
Even if arbitration is conducted through digital platforms or involves smart contracts, the resulting smart arbitration awards must still be recognized and enforced under the New York Convention (1958). This treaty is the backbone of international arbitration, ensuring that arbitral awards are enforceable across more than 170 jurisdictions. In practice, this means that while
5 SIAC Rules 2025 (Singapore International Arbitration Centre ) < https://siac.org.sg/siac-rules-2025 > accessed 24 November 2025 .
6 Sam Brown , “Arbitration of cryptoasset and smart contract disputes : arbitration unchained ?”(Practical Law , 19 July 2023 ) < https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2023/08/arbitration-of cryptoasset-and-smart-contract.pdf > accessed 24 November 2025 .
7JAMS Artificial Intelligence Disputes Clause , Rules and Protective Order ( 14 June 2024 ) < https://www.jamsadr.com/files/uploads/documents/jams-ai-rules.pdf > accessed 24 November 2025 .
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smart arbitration introduces automation, blockchain records, and AI‑assisted procedures, the award itself must meet the Convention’s requirements: it must be valid, final, and not contrary to public policy. Without recognition under the New York Convention, smart arbitration would lack enforceability, which is why aligning digital innovations with established international law is essential for legitimacy and global acceptance.
B- Due Process Challenges in Automated Arbitration :
Automated arbitration awards raise serious questions about whether they meet due process standards such as notice, impartiality, and the right to be heard. On the one hand, digital platforms can ensure that parties receive timely electronic notice and that blockchain records provide transparent evidence trails. However, efficiency through automation risks undermining fairness if decisions are rushed or generated without meaningful human oversight. Impartiality may be compromised if AI systems inherit bias from their training data or if algorithms are not transparent enough for parties to challenge. Most critically, the right to be heard could be weakened if parties feel their arguments are processed mechanically rather than genuinely considered by a human arbitrator. For smart arbitration to gain legitimacy, automated awards must be carefully designed to preserve these fundamental guarantees, blending technological speed with safeguards that ensure justice is not sacrificed for efficiency.
In international arbitration, no matter how innovative the process becomes with AI, blockchain, or automation, the ultimate test is whether the award can be executed and enforced. Efficiency, transparency, and technological sophistication are valuable, but they mean little if the final decision cannot be recognized under frameworks like the New York Convention. That’s why every experiment with smart arbitration must balance innovation with enforceability: the legitimacy of arbitration rests not only on speed and fairness, but on the ability to turn an award into a binding outcome across jurisdictions.
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C- The Seat of Arbitration : Delocalized vs. Decentralized Models :
Traditionally, the seat anchors the legal framework — it determines which national law governs the procedure, how courts can intervene, and whether awards are enforceable under the New York Convention.
– Delocalized arbitration: This concept suggests arbitration can “float” above national laws, minimizing the role of the seat. The idea is that awards should be enforceable internationally without being tied too tightly to one jurisdiction. It’s been debated for decades, especially in cross‑border commerce.
– Decentralized arbitration: This goes further, using blockchain and smart contracts to remove reliance on any single legal system. Platforms like Kleros or other blockchain‑based tribunals operate without a traditional seat, relying instead on code and community consensus.
The challenge is clear: delocalization still assumes some legal framework exists for enforcement, while decentralization risks awards being unenforceable under the New York Convention because they lack a recognized seat. That’s why the seat of arbitration remains the most difficult issue . Therefore , innovation must reconcile with enforceability in real courts.
Then , every arbitration still requires a legal seat, because the seat determines the procedural law, the court’s supervisory role, and ultimately whether the award can be enforced under the New York Convention . That’s why parties often prefer to choose seats in arbitration‑friendly countries such as Hong Kong, the UK, Dubai, or Singapore. These jurisdictions are known for:
– Pro‑arbitration legislation (modern arbitration laws aligned with UNCITRAL standards) – Judicial support (courts that respect arbitration agreements and awards, with minimal interference)
– Strong enforcement track record (consistent recognition of foreign awards under the New York Convention)
– Global reputation (trusted hubs for international commerce and dispute resolution)
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In practice, this means that while smart arbitration may innovate with blockchain and AI, the seat remains the anchor of legitimacy. Choosing a friendly jurisdiction ensures that awards are not just efficient and transparent, but also enforceable worldwide.
4- Ethical and Procedural Challenges for the Future of Arbitration : A- Algorithmic bias , confidentiality risks and unequal access to technology :
Smart arbitration introduces new ethical and procedural dilemmas that go beyond traditional practice. Algorithmic bias threatens impartiality if AI systems are trained on skewed or incomplete data, potentially disadvantaging certain parties. Confidentiality risks arise when sensitive information is processed through digital platforms, raising concerns about cybersecurity and data protection. Finally, unequal access to technology may create an imbalance between well‑resourced parties who can leverage advanced tools and those who cannot, undermining the principle of equality of arms. Addressing these challenges will be crucial to ensure that innovation in arbitration strengthens, rather than weakens, fairness and legitimacy.
B- Data Protection in Smart Arbitration :
Smart arbitration, with its reliance on digital platforms, blockchain, and AI, introduces new challenges for safeguarding sensitive information. Because arbitration often involves confidential contracts, trade secrets, and personal data, protecting this information is critical to maintaining trust and legitimacy.
*Key Data Protection Concerns :
– Confidentiality Risks: Digital transmission of evidence and awards increases exposure to hacking or unauthorized access.
– Blockchain Transparency: While blockchain ensures immutability, storing sensitive data on chain may conflict with privacy laws ( GDPR General Data Protection Regulation is the most important framework when discussing data protection in smart arbitration ).
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– AI Data Handling: AI systems used for case management or evidence review may process large volumes of personal and corporate data, raising concerns about misuse or bias. – Cross-Border Compliance: Arbitration often spans multiple jurisdictions, each with different data protection regimes, complicating compliance.
In 2015, the Permanent Court of Arbitration (PCA) held hearings in the Philippines v. China South China Sea dispute under UNCLOS. The Philippines challenged China’s expansive territorial claims and artificial island construction, while China refused to participate. During the hearings, a cybersecurity firm discovered that hackers allegedly linked to China exploited a flaw in Adobe Flash Player to compromise the PCA’s website and load malicious code on visitors’ computers. Although this raised concerns about digital security in arbitration, no major breaches have occurred since, and experts note that risks are generally higher , from parties themselves than from arbitral institutions.8
Conclusion
Smart arbitration has emerged as a necessary response to the rapid growth of blockchain, smart contracts, and digital commerce. By integrating AI and advanced technologies, it offers faster procedures, greater transparency, and solutions that match the speed of modern transactions. However, technological innovation must remain aligned with fundamental legal principles. The enforceability of awards under the New York Convention, the continued role of the seat of arbitration, and the need to safeguard due process show that traditional foundations cannot be abandoned.
At the same time, challenges such as algorithmic bias, data-protection risks, and unequal access to technology remind us that smart arbitration is not without limitations. Its future therefore depends on striking a balance between efficiency and fairness. If developed responsibly, smart arbitration can strengthen global dispute resolution by combining innovation with the stability and legitimacy of established legal frameworks.
8 “Data Protection in International Arbitration “ ( Aceris Law LLC , 24 May 2025 ) <
https://www.acerislaw.com/data-protection-in-international-arbitration/ > accessed 24 November 2025 .
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References :
– https://www.acerislaw.com/data-protection-in-international-arbitration/ – www.bigcommerce.com
– https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2023/08/arbitration -of-cryptoasset-and-smart-contract.pdf
– https://www.clydeco.com/en/insights/2025/09/ai-in-arbitration-a-perspective-from singapore
– https://iccwbo.org/dispute-resolution/dispute-resolution-services/arbitration/rules procedure/2021-arbitration-rules/
– https://www.jamsadr.com/files/uploads/documents/jams-ai-rules.pdf
– www.purelegaltech.com
– https://siac.org.sg/siac-rules-2025
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