Methods of Resolving Disputes Arising from Smart Contracts

With the rapid development of new technologies taking place during the 4th Industrial Revolution, new types of disputes of significant specificity have gradually begun to emerge. Among such cases a special category of cases has been formed by disputes arising from smart contracts based on block chain technology. There are two possible ways to resolve such disputes. Under the first approach, they are subject to consideration by traditional arbitration institutions, guided by the usual rules and guidelines (blockchain arbitration). The second approach involves the need to create innovative applications based on blockchain technology and designed to resolve disputes arising in a digital decentralized environment ( blockchain arbitration). Such applications, in turn, are divided into two groups. The first group consists of projects involving the creation of a special arbitration combining the advantages of international commercial arbitration and blockchain technology; the second group includes projects involving the establishment of a decentralized quasi-judicial system for dispute resolution. The paper attempts to analyze the most interesting projects related to each of the listed groups and assess the prospects of their development. Based on the results of the analysis, the author comes to the conclusion that the implementation of such projects will lead to the emergence of many issues (among which the problem of choice of applicable law, determination of place of arbitration, arbitrability, as well as the possibility of recognition and enforcement of awards made by such arbitral tribunal). Under the influence of new technologies, international commercial arbitration is gaining a new direction of its development. In the future, the development of new technologies will require not only rationalization of existing dispute resolution mechanisms, but also a fundamental rethinking.

1. Bogdanova EE. Problemy primeneniya smart-kontraktov v sdelkakh s virtualnym imushchestvom [Problems of application of smart contracts in transactions with virtual property]. Lex russica. 2019;7(152):108—118. (In Russ.)

2. Zasemkova OF. Razreshenie sporov s pomoshchyu tekhnologii blokcheyn [Dispute resolution by means of blockchain technology]. Aktualnye problemy rossiyskogo prava. 2019;4:160—167. (In Russ.)

3. Allen D, Poblet M. The Governance of Blockchain Dispute Resolution [Internet]. [cited 2019 Sept 1]. Available from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3334674

4. Ast Fr, Sewrjugin S. The Crowdjure, a Crowdsourced Judicial System for the Collaboration Era [Internet]. [cited 2019 Aug 28]. Available from: https://medium.com/the-crowdjury/the-crowdjury-a-crowdsourced-courtsystemfor-the-collaboration-era-66da002750d8.

5. De Filippi P, Wright A. Blockchain and the Law: The Rule of Code. Cambridge; 2018.

6. Dispute Resolution. The Kleros Handbook of Decentralized Justice.

7. Fischetti A. Introducing the SAMBA: Project & Demo. In: Blockchain ADR Revealed. Conflict Resolution at the onset of the Fourth Industrial Revolution [Internet]. [cited 2019 Jun 28]. Abailable from: http://glip.usp.br/complete-video-blockchain-adr-14-apr-2018/.

8. Holden R, Malani A. Can Blockchain Solve the Holdup Problem in Contracts. In: University of Chicago CoaseSandor Institute for Law & Economics. Working Paper. 2018;846.

9. Kaal W, Calcaterra C. Crypto Transaction Dispute Resolution. Business Lawyer. 2018;73:109—153.

10. Koulu R. Blockchain and Online Dispute Resolution: Smart Contracts as an Alternative to Enforcement. SCRIPTed. 2016;13(1):40—69.

11. Madcuff I. Crown-Hidden, Whereabouts Unknown [Internet]. [cited 2019 Aug 29]. Available from: http://mediationblog.kluwerarbitration.com/2016/04/27/crowd-hidden-whereabouts-unknown/.

12. Metzger J. The Current Landscape of Blockchain-based Crowdsources Arbitration. Macquarie Law Journal. 2019;19:89.

13. Ortolani P. The Impact of Blockchain Technologies and Smart Contracts on Dispute Resolution: Arbitration and Court Litigation at the Crossroads. Uniform Law Abstract. 2019;24(2):430—438.

14. Szczudlik K. `On-chain` and `off-chain` arbitration: Using smart contracts to amicably resolve disputes [Internet]. [cited 2019 Aug 1]. Available from: https://newtech.law/en/on-chain-and-off-chain-arbitrationusingsmart-contracts-to-amicably-resolve-disputes/.

15. Schmitz A, Rule C. Online Dispute Resolution for Smart Contracts. Journal of dispute resolution. 2019;2:103— 125.

16. Uribarri Soares Fr. New Technologies and Arbitration. Indian Journal of Arbitration Law. 2018;7(1):92—93.