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This innovation proposes the AI-Smart Arbitration Model as an integrated dispute resolution framework designed to address the legal, technical, evidential, and enforcement challenges arising from blockchain-based commercial transactions, smart contracts, decentralised finance, and digital asset ecosystems. Existing arbitration and online dispute resolution mechanisms remain largely inadequate for such disputes because they were primarily developed for conventional contractual relationships, human-executed obligations, documentary evidence, and territorially identifiable assets. They therefore lack sufficient procedural and technical capacity to interpret autonomous code execution, examine on-chain transactional evidence, assess oracle failures, preserve blockchain-based evidence, and enforce awards against cross-border digital assets. In response, the proposed model combines the procedural legitimacy of traditional arbitration with the analytical capacity of artificial intelligence (AI) and the evidential integrity of blockchain technology.

Methodologically, the innovation is grounded in doctrinal legal research supported by a qualitative approach. Primary data obtained through semi-structured interviews with legal practitioners, arbitrators, blockchain experts, technologists, and institutional stakeholders, statutes, arbitral rules, judicial decisions while secondary data consists of, institutional guidelines, scholarly literature, and policy documents. The collected data is analysed through content analysis in order to identify legal gaps, procedural limitations, technical requirements, and governance principles relevant to the proposed model.

The model operates through a structured multi-stage process covering dispute initiation, jurisdictional screening, case classification, blockchain-anchored evidence submission, AI-assisted smart contract analysis, tribunal support, award drafting, and dual enforcement through both traditional legal mechanisms and on-chain execution. Its core contribution lies in creating a technologically competent yet legally accountable arbitration framework in which AI functions as a procedural and analytical support tool, while final adjudicative authority remains vested in human arbitrators. The model enhances access to justice by improving cost predictability, procedural efficiency, evidential reliability, and enforceability for individuals, businesses, arbitration institutions, and digital market participants.

From a Malaysian perspective, the model offers a timely contribution to the development of legal-technology infrastructure, digital economy governance, fintech regulation, and Malaysia’s positioning as a competitive regional hub for technology-assisted arbitration. It may support Malaysian arbitration institutions, regulators, courts, and digital market actors in responding more effectively to disputes arising from blockchain, smart contracts, digital assets, and cross-border Web3 transactions. From a global perspective, the model contributes to the emerging discourse on AI-assisted arbitration, blockchain evidence, smart contract dispute resolution, and the modernisation of international commercial arbitration. It offers a scalable and interdisciplinary framework capable of strengthening trust infrastructure in decentralised commercial communities, supporting national and transnational digital economy governance, and reducing the environmental and administrative burdens associated with conventional dispute resolution. Overall, the AI-Smart Arbitration Model advances a novel, adaptive, and enforceable dispute resolution mechanism for the emerging digital economy.