Quebec Superior Court Sets Aside Arbitral Award Drafted with Artificial Intelligence

The story begins with a fairly ordinary dispute between a healthcare provider and Quebec’s public health network. Centre de Santé Osman, an intermediate residential care resource, was claiming approximately $1,225,000 from the CIUSSS du Centre-Sud-de-l’Île-de-Montréal (now Santé Québec) for residential placements declared available between 2019 and 2022, for which no users had been referred.

The CIUSSS refused to pay. The institution’s position, communicated in November 2021, was « clear and final ». However, the Association des ressources intermédiaires d’hébergement du Québec (ARIHQ) did not transmit its notice of disagreement until nearly three years later, on August 1, 2024 — whereas the National Agreement binding the parties provides for a strict 90-day deadline.

On August 8, 2025, arbitrator M^e Michel A. Jeanniot rendered an award rejecting the dispute as being out of time. The award concluded that the deadline clause was valid and binding on the parties. As to the result, the decision was not particularly surprising.

It was upon reading the reasons that the Applicants made a troubling discovery.

The Applicants’ lawyers did what any rigorous practitioner would do after reading a decision: they tried to consult the authorities cited by the arbitrator. And there, surprise.

In paragraph 71 of his award, the arbitrator cited a certain Frédéric Bachand for an article titled « Prescription et déchéance : frontières mouvantes et enjeux pratiques », supposedly published in Développements récents en droit des contrats by the Bar of Québec in 2016. This article does not exist.

Further on, in paragraphs 84 and following of his award, the arbitrator relied on three decisions to support his main reasoning:

And it continues. In paragraph 105 of his award, the arbitrator invoked an « arbitral instance » titled Arbitrage CHU Ste-Justine (D.T.E. 2018-30) to support the validity of a 30-day contractual deadline. SOQUIJ confirmed that this decision does not exist. The neutral citation closely resembles a real decision (Sonin v. Université Concordia), but that case has absolutely nothing to do with the proposition for which it was cited.

Justice Sheehan made the essential observation: these phantom references lay at the very heart of the arbitrator’s reasoning. They constitute the only doctrinal and jurisprudential authorities relied upon as legal support for the award. The other citations appear only in sections summarizing the parties’ positions.

To fully appreciate the scope of this decision, one must understand that an arbitral award is, in principle, final and without appeal. This is one of arbitration’s defining features: by consenting to it, parties agree to forgo the usual judicial recourses.

The only way to challenge an award is through the application for annulment under article 648 of the Code of Civil Procedure. And the grounds for annulment are exhaustive: the court cannot review the merits of the dispute, nor pronounce on the soundness of the reasoning, nor even on the reasonableness of the result.

The Applicants invoked two grounds: the award would be contrary to public order (because it upholds a contractual deadline shorter than the legal limitation period), and the arbitration procedure had not been respected (because the arbitrator had allegedly delegated his function to artificial intelligence).

Justice Sheehan dismissed the first argument. He reaffirmed a well-established principle: even an error of law, even on a public-order provision, is not a ground for annulment. The court can intervene only if the result of the award (and not its reasoning) offends fundamental principles of Quebec public order. The Court of Appeal has already confirmed that contractual notice deadlines like the one in the National Agreement are valid.

It is on the second argument — the failure to respect the arbitration procedure — that the decision turns.

The core of Justice Sheehan’s reasoning rests on an ancient principle of administrative and arbitration law: delegatus non potest delegare — one who receives a power cannot delegate it.

In arbitration, this principle takes on particular resonance. The parties choose their arbitrator. They select that person based on expertise, experience, availability, and sometimes reputation. In the case at bar, the choice had to be made from a limited list of ten arbitrators predesignated in the National Agreement. This choice is not incidental: it is the cornerstone of contractual arbitration.

Justice Sheehan articulates three pillars that lead to the same conclusion:

The judge nevertheless takes care to specify that this rule does not prohibit all use of tools. The arbitrator may consult researchers, clerks, translation or citation aids. He may even consult colleagues. But the responsibility for drafting must remain with the decision-maker, and third-party participation must not undermine the integrity of the process.

Justice Sheehan does not demonize artificial intelligence. He even cites with approval Justice Morin, who recently observed in Specter Aviation Limited v. Laprade that « any technological measure capable of fostering citizens’ access to the justice system should be welcomed and regulated rather than proscribed and stigmatized ».

Indeed, a growing number of legal professionals use Large Language Models (LLMs) to summarize documents, identify relevant materials within gigabytes of data, transcribe audio files, or refine the drafting of existing texts. These uses are legitimate.

But the use of AI in a judicial context presents specific risks that Justice Sheehan details with precision:

Justice Sheehan also cites the Canadian Judicial Council Guidelines, published in September 2024, which are unequivocal: no judge is authorized to delegate decision-making authority, whether to a judicial assistant, an administrative assistant, or a computer program, regardless of its capabilities.

This rule, which applies to judges, logically extends to arbitrators. Justice Sheehan confirms it: the same principles apply to any decision-maker entrusted with an adjudicative function.

The judgment carefully avoids laying down an absolute rule. Justice Sheehan specifies that not every award containing erroneous references or involving the use of AI should necessarily be set aside.

The analysis must be contextual. The court must weigh:

A minimal use of AI on a peripheral issue would likely not result in annulment. Similarly, when the standard of review is different — for example on appeal or judicial review — a reasonable decision could survive a procedural breach.

But in the case at bar, the breach was massive. The entire body of doctrinal and case-law references serving as the foundation of the award was fabricated. The breach struck at the very integrity of the reasoning. It was likely to affect the parties’ confidence not only in the award itself, but in the arbitration regime as a whole.

As the judge notes, « a party may reasonably believe that a more thorough verification of the decisions [by the arbitrator] would have prompted him to reconsider his position ». In other words: the breach probably had a determinative impact on the result.

The judgment ARIHQ v. Santé Québec belongs to a recent wave of Canadian and foreign decisions sanctioning the inappropriate use of artificial intelligence in the justice system. But the great majority of these cases involved lawyers or self-represented litigants who had filed pleadings containing hallucinations.

The originality of the Sheehan decision lies in the fact that it targets a decision-maker. And it lays down a principle that extends well beyond the case at bar.

For arbitrators, administrative judges, and other adjudicators, the message is clear: the tool may assist, but it can never replace the deliberative function. An arbitrator who asks ChatGPT (or any other LLM) to draft his reasons, and who simply copies them without verification, abdicates his function.

For parties to an arbitration, the decision opens a new avenue of analysis. Before treating an award as « final and without appeal », it becomes prudent to systematically verify the cited authorities. A single fabricated citation will not necessarily lead to annulment, but a saturation of phantom references may suffice to overturn the presumption.

For lawyers and counsel, the lesson is more nuanced. AI remains a valuable tool. The Superior Court expressly recognizes this. But the obligation of human verification — what the Quebec Superior Court’s October 2023 notice called « rigorous human oversight » — remains non-negotiable.