ADR for AI-Generated Content Disputes: Copyright Arbitration for AI-Created Works

The Copyright Office of the Hong Kong Special Administrative Region confirmed in its 2025 public consultation paper that the current Copyright Ordinance (Cap. 528) does not recognise a human author for purely AI-generated works. This regulatory gap creates immediate legal exposure for any business in Hong Kong that commissions, purchases, or distributes content created by generative AI tools. A company that publishes an AI-generated image, text passage, or music track may discover that a third party holds copyright in the underlying training data, or that no party holds any enforceable copyright at all. The absence of clear statutory protection means that standard litigation — which relies on proving authorship and ownership — becomes unpredictable and prohibitively expensive. Arbitration offers a contractual mechanism to resolve these disputes without waiting for legislative reform. The Hong Kong International Arbitration Centre (HKIAC) reported in its 2024 caseload statistics that 23% of new filings involved technology-related contracts, a category that increasingly includes AI-generated content licensing. This article explains the procedural steps for drafting an arbitration clause tailored to AI-generated content disputes, the jurisdictional questions parties should expect, and the practical limits of arbitration where no copyright exists to arbitrate.

Why Copyright Arbitration for AI-Generated Works Requires a Different Approach

The Copyright Ordinance (Cap. 528) grants protection only to works in which a human author has exercised sufficient skill and judgment. Section 2(1) defines an “author” in relation to a literary, dramatic, musical, or artistic work as the person who created it. The Hong Kong government’s 2025 consultation paper on AI and copyright explicitly states that this definition does not extend to a machine or algorithm. This creates a binary outcome: either a human contributed enough to qualify as author, or the work falls into the public domain. Arbitration can resolve disputes over the first scenario but cannot create copyright where none exists under the statute.

Step 1: Identify the Human Contribution Threshold in the Contract

Parties should define in their licensing or commissioning agreement what level of human input triggers copyright protection. The court procedure is to examine the degree of human selection, arrangement, and modification of AI output. In the illustrative English case Express Newspapers v. Liverpool Daily Post (1985), the court held that a computer-generated grid of numbers did not attract copyright because the human operator had not exercised sufficient skill in the final arrangement. The same logic applies to AI-generated text and images in Hong Kong. An arbitration clause should require the arbitrator to apply the Cap. 528 standard: did the human prompter or editor contribute an independent intellectual creation? If the contract does not specify this standard, the arbitrator will apply the default statutory test, which may produce a result neither party anticipated.

Step 2: Draft a Clause That Expressly Covers AI-Generated Content

A standard HKIAC arbitration clause referring to “all disputes arising out of or in connection with this agreement” is sufficient for most commercial contracts, but it may not cover disputes over whether the content itself is copyrightable. The legislation provides that copyright is a property right (Cap. 528, s. 4), and an arbitration clause must capture disputes over the existence of that right. A recommended formulation is: “Any dispute arising out of or relating to the copyright status, ownership, or infringement of any work generated or assisted by artificial intelligence tools shall be finally settled by arbitration administered by the Hong Kong International Arbitration Centre under the HKIAC Administered Arbitration Rules.” This clause makes explicit that the arbitrator has jurisdiction to decide the threshold question of copyright subsistence, which a court might otherwise treat as a non-arbitrable statutory issue.

Jurisdictional Issues Specific to AI-Generated Content Arbitration

The court procedure is clear: an arbitrator cannot decide a question that the parties have not agreed to submit. If a third party — someone not a signatory to the arbitration agreement — claims copyright in an AI-generated work, the arbitrator has no jurisdiction over that third party. This is a structural limitation that parties must address at the contract stage.

The Problem of Third-Party Training Data Claims

Many AI-generated content disputes involve allegations that the output reproduces copyrighted material from the training dataset. The party that trained the AI model is rarely a party to the licensing agreement between the content creator and the end user. In Getty Images v. Stability AI (2023, UK High Court), the claimant alleged that the defendant’s model had reproduced Getty’s copyrighted images. The Hong Kong equivalent would be a claim by a copyright holder against the user of an AI tool, not against the tool’s developer. An arbitration clause between the content creator and the end user cannot bind the training data copyright holder. The practical solution is to include a warranty in the licensing agreement that the AI-generated content does not infringe third-party copyright, and to make that warranty subject to arbitration. The arbitrator can then decide whether the warranty has been breached, even if the third party is not present.

The Seat of Arbitration Determines the Applicable Copyright Law

The Arbitration Ordinance (Cap. 609) gives parties freedom to choose the seat of arbitration. If the seat is Hong Kong, the arbitrator must apply Hong Kong law, including Cap. 528, to the copyright question. If the seat is another jurisdiction, the arbitrator applies that jurisdiction’s copyright law. This matters because different jurisdictions take different positions on AI-generated works. The United States Copyright Office, for example, requires a human author and has rejected registration for AI-generated images (2023 policy statement). The UK Copyright, Designs and Patents Act 1988, s. 9(3), provides that the author of a computer-generated work is “the person by whom the arrangements necessary for the creation of the work are undertaken.” A Hong Kong-seated arbitration that applies Cap. 528 will reach a different result than a London-seated arbitration applying the UK Act. Parties should specify the seat and the applicable law in the arbitration clause.

Procedural Steps for Initiating an AI-Generated Content Arbitration

The HKIAC Administered Arbitration Rules (2024 version) provide the default procedure for Hong Kong-seated arbitrations. The steps below assume the parties have a valid arbitration agreement that covers AI-generated content disputes.

Step 1: Serve a Notice of Arbitration Identifying the Specific Work

The Notice of Arbitration must identify the AI-generated work in dispute with sufficient particularity. The HKIAC Rules, Article 3(3)(b), require a reference to the arbitration agreement. The notice should also state the date the work was created, the AI tool used, and the human input claimed. This specificity is necessary because the arbitrator must decide whether Cap. 528 applies to that exact work. A generic description such as “the image generated by Midjourney on 1 January 2025” is acceptable, but the party should attach a copy of the work and the prompt log if available.

Step 2: Apply for an Early Determination of the Copyright Subsistence Question

The respondent may apply under Article 23 of the HKIAC Rules for an early dismissal if the claim is manifestly without legal merit. In an AI-generated content dispute, the respondent can argue that the work does not meet the Cap. 528 threshold for copyright protection, and therefore the claimant has no proprietary right to arbitrate. The tribunal will decide this as a preliminary issue. The court procedure is that the arbitrator must give reasons for the decision, and those reasons are final and binding on the parties. This early determination can save significant costs if the work is clearly machine-generated with negligible human input.

Step 3: Prepare Expert Evidence on AI Tool Functionality

The arbitrator will need to understand how the specific AI tool operates to assess the human contribution. Expert evidence on the tool’s architecture, training data, and output generation process is admissible. The parties should agree on a single joint expert if possible. The HKIAC Rules, Article 27, allow the tribunal to appoint its own expert. The cost of expert evidence in AI disputes can be substantial; parties should budget for this at the outset.

Practical Limitations and the Need for Legislative Reform

Arbitration cannot solve the underlying legal uncertainty. If Cap. 528 does not recognise copyright in a purely AI-generated work, an arbitral award that declares copyright exists is unenforceable because the arbitrator has exceeded his or her jurisdiction. The court procedure for setting aside an award under Cap. 609, s. 81, includes the ground that the award deals with a dispute not contemplated by the arbitration agreement. A tribunal that purports to create a copyright right that the statute does not provide has likely exceeded its authority.

The 2026 Legislative Timetable

The Hong Kong government’s 2025 consultation paper proposes amendments to Cap. 528 that would introduce a new category of “computer-generated works” with a reduced term of protection, similar to the UK model. The target date for the legislative amendment bill is 2026. Until that amendment passes, parties relying on arbitration must accept that the arbitrator can only apply existing law. The practical takeaway is to include contractual warranties and indemnities rather than relying on copyright protection alone.

Cost-Benefit Analysis for Small and Medium Enterprises

The HKIAC’s 2024 statistics show that the median arbitration cost for disputes under HK$5 million is approximately HK$350,000 in legal fees and arbitrator costs. For a small business that has published a single AI-generated marketing image, this cost may exceed the commercial value of the dispute. The Small Claims Tribunal (Cap. 338) has jurisdiction over monetary claims up to HK$75,000 but cannot hear copyright disputes, which are outside its statutory jurisdiction. Parties with low-value AI-generated content disputes should consider mediation first. The Hong Kong Mediation Accreditation Association Limited (HKMAAL) maintains a panel of mediators with technology expertise.

Actionable Takeaways

1. Include an arbitration clause in every AI-generated content licensing agreement that explicitly covers disputes over copyright subsistence, ownership, and infringement, and specify the seat as Hong Kong with Cap. 528 as the governing law.
2. Require the content provider to warrant in writing that the AI-generated work does not infringe third-party copyright in the training data, and make that warranty subject to arbitration.
3. Budget for expert evidence on AI tool functionality in any arbitration involving AI-generated content, as the arbitrator will need technical evidence to assess the human contribution threshold.
4. Consider mediation as a first step for disputes valued under HK$500,000, because arbitration costs may exceed the commercial value of the claim.
5. Monitor the 2026 legislative amendment to Cap. 528, which may introduce statutory protection for computer-generated works and change the legal basis for arbitration in this area.

This does not constitute legal advice. Consult a solicitor for your specific case.