Abu Dhabi court slaps ₹63 lakh costs on law firm for citing non-existent, AI generated authorities

A court in Abu Dhabi has imposed costs of over ₹63 lakh on law firm MIO Legal Consultants LLP for improper use of artificial intelligence (AI) tools which led to pleadings containing non-existent, mis-cited and misapplied legal authorities [Arabyads Holding Limited Vs Gulrez Alam Marghoob Alam].

Justice Paul Heath KC of the Abu Dhabi Global Market (ADGM) Court of First Instance held that the firm breached its professional duties by filing pleadings without adequate verification of the authorities cited by them in the pleadings.

By way of a judgment delivered on December 18, 2025, the Court ordered MIO to pay AED 282,508 (approximately ₹63.3 lakh) on an indemnity basis as wasted costs incurred by Arabyads Holding Limited.

The Court held that the defects in the pleadings bore all the hallmarks of hallucinatory results produced by AI tools when used without adequate verification.

Reliance on technology does not dilute a lawyer’s core professional obligations, the Court underscored.

While recognising that AI tools can play a legitimate role in modern legal practice, Justice Heath emphasised that they carry inherent risks, particularly the risk of fabricated or misleading outputs.

“Lawyers using AI tools for research purposes should start from the premise that all authorities revealed by AI research may not necessarily exist,” the Court said.

Justice Heath warned that the obligation to verify authorities lies squarely with the lawyer placing material before the Court:

“Without undertaking that verification task, the lawyer runs a serious risk that the Court may be misled.”

The underlying commercial dispute arose from a claim filed by Arabyads Holding Limited, an ADGM-incorporated company, against its former employee Gulrez Alam Marghoob Alam, alleging breaches of an employee share option plan and grant agreement.

Arabyads moved the Court seeking damages, declarations that Alam was a “bad leaver”, and directions for transfer of shares. According to the defendant, the equity value at stake exceeds USD 11.2 million.

After the claim was filed, Alam instructed MIO Legal Consultants LLP to act on his behalf. The firm filed a defence along with applications seeking transfer of the matter and joinder of additional parties.

However, the defence documents — running into hundreds of pages — soon came under scrutiny.

Arabyads complained that the same contained numerous false authorities, incorrect citations, and references to cases that did not support the propositions advanced. Its counsel submitted that substantial time and cost were spent attempting to verify authorities that either did not exist or were fundamentally misrepresented.

Justice Heath agreed.

Rejecting the explanations offered by the law firm, the Court observed:

“It is disingenuous to suggest that judgments were read when some of them did not exist...One cannot read a document that does not exist.”

The Court also expressed concern at citations which mixed jurisdictions and years in ways that could not plausibly be explained as typographical errors.

The Court rejected arguments based on time pressure, lack of resources, or non-payment of fees, holding that such factors cannot excuse the filing of unreliable pleadings.

If a lawyer considers himself unable to competently conduct litigation, the correct course is to seek permission to withdraw, not to place defective material before the Court, the judge said while imposing costs.

[Read Order]