Australian Federal Court Directs Parties to Examine AI for Mediation Preparation

The Federal Court of Australia has directed parties in R&B Investments Pty Ltd (Trustee) v Blue Sky Alternative Investments Limited (in liq) (Security for Costs and AI) [2026] FCA 1265 to examine whether artificial intelligence can assist in preparing a complex proceeding for mediation and trial. Justice Lee made the direction under s 37P(2) of the Federal Court of Australia Act 1976 (Cth) in proceedings involving an extensive documentary record. The parties must confer with suitably qualified technology experts on the suitability of AI for identifying, collating, and synthesising information relevant to the facts in issue, identifying areas of agreement and disagreement, and simplifying the dispute.

The Court’s direction also requires the parties to consider using AI to prepare chronologies and summaries of primary documents, including by reference to specified issues, and to manage and interpret relevant documents and other data. Following that conferral, the parties are to provide the Court with a report and/or draft protocol and are required to have regard, to the extent necessary, to the Federal Court’s General Practice Note – Use of Generative Artificial Intelligence Practice Note (GPN-AI). The direction does not mandate the use of any particular AI system or technology.

In explaining the direction, Justice Lee observed that the proceeding contained an enormous quantity of contemporaneous material that would need to be collected, searched, understood and synthesised before it could be made useful to the parties and the Court. His Honour stated that the purpose was not for a machine to determine what happened, but to use technology to organise and synthesise primary information so that professional and judicial judgment could be applied to what matters. The judgment further states that any methodology adopted would require safeguards including traceability to underlying documents, the ability to identify and challenge errors, protection of privileged and confidential material, and continuing human supervision.