An Abu Dhabi court has imposed a costs penalty of more than ₹63 lakh on MIO Legal Consultants LLP after finding that the firm relied on artificial intelligence tools that produced fictional and wrongly cited legal authorities, which were then placed before the court without proper verification.
The ruling came from Justice Paul Heath KC of the Abu Dhabi Global Market (ADGM) Court of First Instance, who held that the firm failed in its core professional duty by submitting pleadings containing authorities that were either non-existent, inaccurately cited, or entirely irrelevant to the arguments advanced.
In a judgment delivered on December 18, 2025, the Court ordered the firm to pay AED 282,508 as wasted costs on an indemnity basis to Arabyads Holding Limited, which had incurred substantial expense responding to the defective filings.
The Court noted that the errors bore the unmistakable signs of “hallucinated” outputs commonly associated with unverified use of AI research tools. While acknowledging that such technology can assist legal practice, Justice Heath made it clear that its use does not reduce a lawyer’s personal responsibility to ensure accuracy.
According to the Court, any lawyer using AI-assisted research must proceed on the assumption that the results may be unreliable or entirely fabricated unless independently checked. The obligation to verify cited authorities, the judge stressed, rests squarely with the lawyer placing material before the court.
The dispute itself arose from a commercial claim filed by Arabyads Holding Limited against its former employee, Gulrez Alam Marghoob Alam, concerning alleged breaches of an employee share option plan and grant agreement. Arabyads sought damages, declarations branding Alam a “bad leaver,” and directions for the transfer of shares. The defendant has stated that the equity value involved exceeds USD 11.2 million.
After the claim was filed, Alam engaged MIO Legal Consultants LLP, which submitted a defence along with applications seeking transfer of the proceedings and the addition of new parties. Those filings ran into hundreds of pages but soon drew sharp criticism.
Arabyads pointed out that the defence was riddled with false authorities, flawed citations, and references to cases that did not support the propositions attributed to them. Its legal team told the Court that significant time and cost were wasted attempting to verify judgments that either did not exist at all or were fundamentally misrepresented.
Justice Heath agreed, dismissing the firm’s explanations in strong terms. The Court remarked that it was untenable to claim that judgments had been read when some of them did not exist, adding pointedly that “one cannot read a document that does not exist.”
The judgment also highlighted citations that blended jurisdictions and time periods in ways that could not realistically be dismissed as simple clerical mistakes. Arguments based on workload pressures, limited resources, or unpaid fees were also rejected, with the Court holding that none of these could justify filing unreliable pleadings.
If a lawyer believes they cannot properly conduct litigation, the Court said, the appropriate response is to seek permission to withdraw from the case — not to burden the court with defective and misleading material.
