- in European Union
- within Litigation, Mediation & Arbitration, Employment and HR and International Law topic(s)
The United States government is encouraging the rapid advancement of artificial intelligence (AI), yet it has not established a federal regulatory framework for AI use.
For example, President Trump's Executive Order 14179, titled "Removing Barriers to American Leadership in Artificial Intelligence," rescinded earlier AI safeguards and instructed various federal agencies to fast-track AI adoption under a less centrally regulated framework.
Meanwhile, debate over the One Big Beautiful Bill Act (OBBB) revealed how sharply divided lawmakers are on AI oversight. The U.S. House of Representatives proposed blocking state and local AI rules for a decade. The U.S. Senate initially put forth a similar provision that carried a financial condition. But the AI moratorium provision was ultimately stripped from the OBBB due to a lack of majority support. As a result, states retained the power to regulate AI.
California, Colorado, Tennessee, Texas and New York are among the states taking AI regulation into their own hands. These states have enacted or proposed laws regarding AI regulation to address issues such as consumer data privacy, AI use in high-stakes decisions such as hiring and housing, and intellectual property creation. As a result, companies face the daunting task of navigating different rules in every state, not to mention international regulations. It also means that laws passed without AI in mind, such as those related to deceptive marketing practices, will now have to be interpreted to account for AI, as in the context of advertisers using synthetic content.
The lack of centralized regulation and the existence of a patchwork of state regulations are both likely to result in more civil litigation to address AI risks. But litigation has long-standing problems, from high costs to slow resolution, that are particularly acute in the context of AI-related disputes.
For businesses innovating with or relying on AI, the question is no longer whether disputes will arise; it's how to resolve them efficiently, fairly and across jurisdictions with conflicting laws.
This is where alternative dispute resolution (ADR), and JAMS in particular, fills a critical AI legal governance gap.
The Coming Wave of AI Disputes
AI disputes are already emerging across a wide spectrum of business and legal litigation:
- Data privacy and security breaches, where confidential training data is misused or exposed
- Intellectual property conflicts, such as allegations of copyright infringement for AI training or disputes over ownership of AI-generated content
- Bias and discrimination claims arising from automated decision-making in employment or consumer services
- Contractual disputes, including misrepresentation of an AI system's performance metrics
Litigation poses significant risks to companies: It is slow, costly and public. Disclosure of trade secrets or sensitive data is always a consideration. Court dockets may also not keep up with the speed of technological advancement.
ADR, by contrast, offers confidentiality, efficiency and the ability to select neutrals with relevant technical knowledge. But conventional ADR rules were not built with AI in mind. Recognizing this, JAMS became the first ADR provider to release specialized Artificial Intelligence Dispute Resolution Rules (JAMS AI Rules), effective June 2024.
The JAMS AI Rules: Designed for Modern Technology and Modern Disputes
The JAMS AI Rules provide a tailored framework that balances fairness, efficiency and confidentiality. Three features stand out:
- Neutrals with AI experience (Rule 15(b)): JAMS proposes arbitrator candidates with proven technical and legal backgrounds and experience in AI disputes. This eliminates the need for parties to spend substantial time educating a neutral on technical concepts and instead engages arbitrators who can directly address complex issues, from algorithm design to model performance.
- Built-in protective order (Rule 16.1(a)): Confidentiality is critical in AI cases. The JAMS AI Rules include a default AI Disputes Protective Order to safeguard algorithms, training data and system artifacts unless the parties agree otherwise. This protects intellectual property while facilitating the early exchange of information, which accelerates dispute resolution.
- Independent expert review (Rule 16.1(b)): On joint request, the arbitrator can designate independent experts, for example, to review AI systems in a secure environment. Experts prepare focused reports in response to arbitrator questions, helping narrow technical issues while minimizing both costs and disclosure risks.
Taken together, these features streamline the AI dispute resolution process, reduce costs and protect sensitive data.
The JAMS AI Clause: Building Preparedness Into Agreements
Just as important as the rules themselves is the ability to prepare and plan. The JAMS AI Model Dispute Resolution Clause provides a contractual mechanism for businesses to designate ADR as the forum for AI-related disputes. Including the clause in contracts, licenses and service agreements gives parties confidence that if disputes arise, they can be handled under the JAMS AI Rules by qualified neutrals.
This forward-looking approach is particularly critical in an environment where AI rules will likely vary by state. By agreeing to ADR up front, companies can sidestep jurisdictional uncertainty and secure a consistent, enforceable framework for dispute resolution.
The JAMS AI Rules Bridge Regulatory Differences
In this disjointed environment, businesses cannot assume disputes will be confined to one jurisdiction or governed by uniform standards. ADR provides flexibility. Parties can choose applicable rules, designate governing law and rely on neutrals with cross-jurisdictional experience.
For companies deploying or investing in AI systems, waiting for clear legislation is not an option. Innovation happens too quickly, and disputes are inevitable. The prudent step is to plan for resolution before conflicts arise:
- Add the JAMS AI Model Dispute Resolution Clause to contracts and agreements.
- Adopt the JAMS AI Rules as the governing framework for disputes.
- Rely on the AI Disputes Protective Order to protect data integrity and trade secrets.
By doing so, businesses safeguard their investments, reduce uncertainty and reinforce trust with partners, clients and regulators.
Closing the AI Oversight Gap With ADR
AI is evolving faster than the laws that govern it. With federal policy prioritizing rapid adoption and states empowered to regulate independently, companies face a regulatory environment that increases reliance on private civil litigation. ADR is uniquely positioned to bridge this gap.
The JAMS AI Rules, Model Dispute Resolution Clause and AI Disputes Protective Order offer organizations of all types a tested, neutral and confidential framework for resolving disputes that will only grow in frequency and complexity. In a world of accelerating innovation and fragmented governance, planning for dispute resolution is not just prudent; it is essential.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
