JAMS Introduces New Rules for AI Disputes

By Leslie King O’Neal

What Types of Disputes Do the JAMS AI Rules Cover?

AI-related disputes may occur at any point in development or use of AI systems. An AI model may not integrate into a company’s systems as promised, causing business interruption. Generative AI tools may improperly incorporate client data into training datasets, leading to claims of privacy violation or copyright infringement. A construction company may purchase an AI logistics system to improve site deliveries; if the system fails to perform, the contractor may claim damages for improperly timed deliveries that caused schedule delays.

JAMS AI Rules Don’t Cover Lawyers’ AI Use in Arbitration

The JAMS AI Rules don’t apply to lawyers’ or arbitrators’ use of AI in arbitration. At present, there are no comprehensive rules governing how AI can or should be used in arbitration or litigation. See Newman & Garrie, The Current State of US Regulation of AI Use in Dispute Resolution https://www.bakermckenzie.com/-/media/files/people/newman-bradford/the-current-state-of-us-regulation-and-the-use-of-ai.pdf?sc_lang=en&rev=d247eab55bac4d85877fc7fadc687bcc&hash=7FF222F111377356EA47F49457DA521B. Some courts have adopted local rules regarding counsel’s use of AI in court proceedings.

An arbitration organization, The Silicon Valley Arbitration & Mediation Center (http://svamc.org) published Guidelines on the Use of Artificial Intelligence in Arbitration this year (https://svamc.org/wp-content/uploads/SVAMC-AI-Guidelines-First-Edition.pdf). These guidelines address issues such as maintaining confidentiality of data submitted to AI tools, duty of competence in using AI, respecting the integrity of the proceedings and evidence. It addresses the arbitrator’s duty not to delegate decision-making to any AI tool and prohibits arbitrators from relying on AI generated information outside the record without disclosure to the parties.

JAMS Artificial Intelligence Dispute Clause and Rules

Recognizing the unique and complex issues in AI-related disputes, JAMS developed a model dispute resolution clause to be included in contracts (or agreed to after a dispute arises), arbitration rules and a protective order that governs the parties’ disclosure and use of documents, exhibits, testimony and other information disclosed in the arbitration. https://www.jamsadr.com/files/uploads/documents/jams-ai-rules.pdf. JAMS Neutrals, Ryan Abbott, M.D., Esq. FCIArb and Daniel Garrie, Esq., developed the rules to address challenges AI-related disputes pose. https://www.jamsadr.com/blog/2024/how-the-jams-artificial-intelligence-rules-will-improve-dispute-resolution

JAMS AI Model Dispute Resolution Clause

The Model Dispute Resolution Clause provides that all disputes, claims or controversies arising out of or related to the Agreement shall be submitted to JAMS for mediation. If not resolved at mediation, the dispute shall be submitted to JAMS for arbitration. There are no rules for the mediation nor does the protective order apply automatically to any mediation process. This is unfortunate, since confidentiality in mediation varies from jurisdiction to jurisdiction. See prior post, Is Mediation Confidential? It Depends! https://theconstructionadrtoolbox.com/2024/10/mediation-confidentiality-varies-by-state/. Given the heightened confidentiality concerns with AI, adapting the comprehensive protective order as a confidentiality agreement to be signed by all parties (and others involved in the dispute) before mediation begins would be a good practice.

Key Provisions of JAMS AI Arbitration Rules

1. Confidentiality

Unlike other arbitration rules, the JAMS AI Rules require “all parties and counsel to maintain confidentiality of the proceedings and the award. ” Standard arbitration rules require only the arbitrator and the organization (e.g. JAMS or AAA) to maintain confidentiality. Further, the JAMS AI Rules include an “AI Disputes Protective Order” which automatically applies to protect confidential information. The Protective Order broadly defines “discovery material” and “documents.” It provides that, “All information produced or disclosed in the Action shall be used solely for the prosecution or defense (including any appeal therefrom) of the Action and shall not be used for any other purpose.” Experts, advisors, consultants, fact witnesses or potential fact witnesses who receive Confidential or Highly Confidential Information must sign a written acknowledgment of the Protective Order. It may apply to non-parties producing information.

2. Expert & Discovery Process

The JAMS AI Rules require production and inspection of AI systems or related materials to an expert in a secure environment; the materials shall not be removed from this environment. If the parties request, the Arbitrator shall designate experts to inspect the AI systems or related materials. Parties must designate experts to inspect. Production requests are limited to documents “directly relevant to the matters in dispute” and must be “reasonably restricted” in time frame, subject matter and persons or entities. The Arbitrator may edit or limit the requests. There is an expedited schedule for completing discovery : after the preliminary conference, 75 calendar days for fact discovery and 105 days for expert discovery). The hearing is to commence within 60 days after fact discovery cutoff.

Takeaways

Because AI-related disputes will increase as AI tools become more widely used in the design and construction world, construction lawyers should be aware of the complex technical and legal issues such disputes involve. The JAMS AI Arbitration Rules offer increased confidentiality for sensitive materials and a well-defined information exchange process. Arbitration’s flexibility and privacy makes it a better option for resolving these kinds of disputes.

Notes

This post was adapted from Ralph Artigliere and Leslie King O’Neal, Pioneering Dispute Resolution: The New JAMS AI Rules, EDRM and JD Supra,https://www.jdsupra.com/legalnews/pioneering-dispute-resolution-the-new-6327319/