Legal Q and A: AI and construction dispute arbitration
Attorney Michael J. Vardaro, managing partner at Zetlin & De Chiara LLP in New York City, is a former construction worker with a degree in civil engineering who focuses his practice on construction litigation, drafting and negotiating construction contracts and providing advice to a variety of construction industry clients. He successfully represents clients in complex commercial and construction litigation matters in venues across the country and has extensive experience resolving claims through mediation as well as representing clients before administrative boards and arbitration panels.
Vardaro also drafts and negotiates complex construction contracts for various project types around the world and regularly counsels clients with respect to professional licensing, corporate organization and transition, general business matters, risk management and insurance issues. He works extensively with regard to advancements in the construction process, including design build, integrated project delivery (IPD), building information modeling (BIM) and sustainable/green design and construction.
In this edition of Legal Q and A, attorney Michael J. Vardaro, answers questions about the American Arbitration Association–International Centre for Dispute Resolution’s (AAA-ICDR) recent approval of an artificial intelligence (AI) option for certain construction disputes.
Q. How does the AI arbitration hybrid work, and how will it be different from how arbitration currently works?
MV. The parties that have agreed to arbitrate elect the AI Arbitrator option. The parties will be limited to documentary submissions and once they are made, the AI Arbitrator will provide its understanding of the facts, and each party will have the opportunity to review and confirm that the AI Arbitrator understanding of the submissions is accurate.
The AI Arbitrator will then evaluate the merits of each claim, generate explainable recommendations and draft a proposed award. This proposed award is then evaluated by a human arbitrator and issued.
This groundbreaking change in the way that this form of arbitration will be handled is that AI will be tasked with the review, analysis and determination of the dispute. While the process does not entirely rely on AI, as the "human-in-the-loop" framework provides for human oversight, most of the analysis will invariably be delegated to the AI Arbitrator.
Q. What sort of construction disputes would qualify for AI arbitration?
MV. The AI Arbitrator option will currently handle arbitrations that are conducted: (1) between two parties, and (2) entirely on the submission of briefs and supporting documents.
At the present time, the AI Arbitrator option will not apply to arbitration proceedings where live witnesses would testify or present facts and arguments, although the AAA-ICDR eventually plans to expand the program to more complex matters and non-construction cases.
Q. Is there any pushback on this AI arbitration hybrid thus far? If so, what are the significant points of disagreement?
MV. The AI Arbitration option was released on Nov. 3, 2025. It will take some time to get a read on how the construction industry will embrace this dispute resolution option.
One of the key concerns of using AI for dispute resolution is protecting against a situation where the AI hallucinates or is otherwise inaccurate. Given the limited right of appeal from arbitration awards, these concerns are valid and the AAA-ICDR has sought to address these concerns by incorporating the "human-in-the-loop" framework.
This framework is intended to provide human oversight by the parties and by a human arbitrator to ensure that the process is not derailed by errors.
Q. How far are we from seeing this as a norm in construction arbitration?
MV. As with any technological advancement, AI Arbitrator will likely have adamant early adopters and others who would refuse to allow AI to decide a dispute. As AI capabilities improve on a daily basis it seems likely that this option may provide to be an efficient mechanism for certain disputes.
The AAA-ICDR decision to begin implementing the AI Arbitrator option on cases involving just two parties with no live testimony seems to be a prudent one as it is likely these are the disputes that are best served at the present time with this option.
There is no doubt that AI will have its place in arbitration proceedings, whether to assist arbitrators in understanding the issues or in the case of the AI Arbitrator option in providing an initial draft of an arbitration award.
Q. Do you foresee AI becoming more of a factor in settling disputes outside of arbitration in pre-lawsuit negotiations, court proceedings, et cetera?
MV. The benefits of AI with respect to attempting to resolve disputes before they become an arbitration or a litigation are powerful.
Before AI, construction counsel would need to do their best in analyzing and explaining to their own client how strong the other side’s position was. Now, with AI, the legal analysis created by counsel can be uploaded to certain AI packages that will evaluate the position and provide arguments against the position with supporting legal precedent. This ‘objective’ viewpoint provides insight to a client that might not otherwise be as developed or understood.
Equipped with a more robust understanding of all perspectives, each client can better analyze potential risk and potentially move closer to an early compromise.
To read the full article published in The Construction Broadsheet, click here.