By Leslie King O’Neal
Canadian Provincial Court Annuls Arbitration Award, Citing Improper AI Use
For the first time, a court has vacated an arbitration award because the arbitrator used Generative AI without telling the parties and the award contained several hallucinations—non-existent cases, fake articles, non-existent arbitration awards.[i] These cited references were central to the Arbitrator’s reasoning. Based on these facts, the court concluded the Arbitrator improperly delegated his decision-making authority. For this reason, it annulled the arbitration award.[ii]
Nothing Inherently Wrong with Using Reliable AI Tools
The Canadian court stated, “while there is nothing inherently wrong with using a reliable artificial intelligence tool, current regulations impose a duty of oversight on lawyers and parties to ensure the accuracy of their procedures. The pitfalls for decision-makers are even greater.”
Court Outlines Risks Involved in Arbitrator AI Use
Although arbitrators may use AI tools, the court noted they must be aware of the risks AI presents:
- Hallucinations—it’s well known that AI tools create false references, both to case law and other authorities, that appear authentic. The arbitrator must check all references.
- Absence of Human Discretion—AI tools are powered by algorithms which lack community values or understanding of specific circumstances.
- Bias—AI tools reproduce the bias in their training data; companies often refuse to disclose the source code to explain the algorithm.
- Lack of confidentiality—Information submitted to public AI tools in particular may be integrated into its training data and may be disclosed.
- Public confidence—Parties may lose confidence in arbitration proceedings if they find an AI tool decided their case (without their knowledge) rather than a human being.
Not a Bright Line Rule Against AI Use
Nevertheless, the court did not state that every award involving use of AI or even containing erroneous references should be vacated. Rather, the court must weigh the nature of the breach, the severity of the impact on the proceeding’s integrity and how the breach impacted the award. Here, because the false references were the crux of the award, annulment was appropriate.
The AI Hallucination Issue Continues to Plague Lawyers, Judges & Arbitrators
Unfortunately, court cases involving AI hallucinated citations are commonplace these days. There is a database that tracks cases involving GenAI hallucinations (1556 so far).[iii] This blog highlighted a case where the losing party moved to vacate an award, asserting the arbitrator used ChatGPT to write it.
Arbitrators Have Less Power to Sanction Attorneys for Hallucinations
Courts have imposed various types of sanctions to punish lawyers, parties and law firms for submitting pleadings, memoranda and briefs with false citations. Arbitrators have less authority and fewer tools to attempt to prevent or to punish false citations in arbitration proceedings.
Lawyers and Arbitrators Must Master AI Tools
As AI tools become more and more prevalent, lawyers and arbitrators must master their use. This requires standards, guardrails, training and thoughtful supervision. Some courts have enacted new rules and some legislatures have enacted laws to require this in litigation.[iv] However, arbitration rules currently don’t address AI use directly. The most comprehensive guidelines specifically for AI use in arbitration are the Silicon Valley Arbitration & Mediation Center’s Guidelines on the Use of AI in Arbitration[v]and the Chartered Institute of Arbitrators (CIARB) Guideline on the Use of AI in Arbitration[vi].These guidelines cover AI use by arbitrators, parties, lawyers, fact witnesses and expert witnesses. They provide sample agreements and orders for arbitrators and parties.
A Clear Message for Arbitrators
For arbitrators, like judges, AI tools (or any other tools or assistants) cannot replace the deliberative function. Asking any tool to draft the reasoning for an award without carefully checking the citations and the quotations constitutes abdicating the arbitrator’s essential function. AI tools can assist and can make arbitrators more efficient, but the arbitrator remains the key to the process.
Takeaways from ARIHQ v. Sante Quebec
- Arbitrators should be transparent about their AI use. Parties should know about an arbitrator’s AI use.
- Arbitrators may use AI tools but cannot delegate decision-making authority.
- Arbitrators (like all AI users) must check all citations and quotations that AI tools generate.
- Adopting AI guidelines for arbitrators, parties, counsel, fact witnesses and expert witnesses at the beginning of a case is good practice.
[i] ARIHQ v. Sante Quebec (Quebec Superior Court, April 22, 2026) 2QCCS 1360
[ii] Under Quebec law, the only way to challenge an arbitration award is through application for annulment under Article 648 of the Code of Civil Procedure.
[iii] Damien Charlotin, AI Hallucination Cases, https://www.damiencharlotin.com/hallucinations/
[iv]Effective June 15, 2026, the Florida Supreme Court adopted amendments to Florida Rules of General Practice and Judicial Administration 2.525 requiring signers of any document filed in Florida courts to represent that “the legal authorities identified exist and are accurately cited. It also expressly authorizes courts to impose appropriate sanctions for “any filing inconsistent with” this representation. https://flcourts-media.flcourts.gov/content/download/2489374/opinion/Opinion_SC2026-0673.pdf.
The Louisiana legislature amended the LA Code of Civil Procedure (HB 178, Act 250) to provide that attorneys, as officers of the court, shall exercise reasonable diligence to verify the authenticity of evidence before offering it to the court. https://www.legis.la.gov/legis/ViewDocument.aspx?d=1425558
[v] https://svamc.org/wp-content/uploads/SVAMC-AI-Guidelines-First-Edition.pdf
[vi]Guidance 18 https://www.ciarb.org/resources/professional-practice-guidelines/international-arbitration/
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