When Online Dispute Resolution Meets Blockchain
* Article: When Online Dispute Resolution Meets Blockchain: The Birth of Decentralized Justice. by Federico Ast. Stanford Journal of Blockchain, Law and Policy, June 2021
URL = https://stanford-jblp.pubpub.org/pub/birth-of-decentralized-justice/release/1?
"This paper reviews the main theoretical principles underlying the nascent field of decentralized justice and the early empirical experience in real life use cases. Part of the Blockchain & Procedural Law seminars (Max Planck Institute Luxembourg for Procedural Law).
The Online Dispute Resolution ("ODR”) industry was born in the 1990s. As the Internet became a part of people’s everyday lives, many also sought to leverage the web’s potential for the creation of virtual courts that would greatly increase the efficiency of dispute resolution procedures. This vision, however, failed to fully materialize. To some extent, early ODR solutions only brought an incremental innovation that streamlined existing alternative dispute resolution procedures, but did not create any disruptive innovation with the potential of generating a more than 10x advantage over existing methods. In recent years, a number of technological innovations in computer networks such as blockchain and the growing use of cryptocurrencies enabled new types of mechanism designs for online dispute resolution. This emerging approach, which may be called decentralized justice because of the decentralized nature of blockchain and of juror networks, enables the possibility of a radical increase in the efficiency of dispute resolution. This Essay reviews the main theoretical principles underlying the nascent field of decentralized justice and the early empirical experience in real life use cases."
Excerpt
From the conclusion, by Federico Ast:
"In 2001, Ethan Katsh, the “father” of Online Dispute Resolution, observed: “The power of technology to resolve disputes is exceeded by the power of technology to generate disputes.” In this context, the field of decentralized justice emerges as a credible new framework for dispute resolution.
In this paper, we have introduced the concept of decentralized justice, with its antecedents, definition and future challenges.
In the first section, we reviewed a number of academic fields and socio-economic trends leading to the birth of decentralized justice. From a theoretical perspective, decentralized justice comes from streams of research in the fields of cryptography, computer science, game theory and collective intelligence.
In the second section, we presented the main features of decentralized justice. We defined decentralized justice systems as decentralized autonomous organizations which comply with the required features of the rule of law, rely on cryptoeconomics for incentivizing decision making and result in fair procedures and outcomes.
In the third section, we presented a number of technical, market, legal and moral challenges for decentralized justice on the path to becoming a viable efficient method for dispute resolution. The advent of the Internet brought a new set of rules that has been presented as a form of Lex Informatica. It is a system of customary rules and technical standards elaborated by those who interact on the global Internet network. The system operates transnationally, across borders, independent of national boundaries and domestic laws. Lex Informatica is unilaterally imposed by online service providers onto their users, by restricting the type of actions that can be performed on a digital platform. But these norms are not a direct expression of the will of users. They represent the interests of those in charge of maintaining the platform.
To a certain extent, it can be argued that ODR platforms failed to have a massive impact because they only applied digital tools in order to streamline old court procedures instead of rethinking how a dispute resolution system could be reinvented with the tools of the digital age—in particular, a technology such as blockchain, with the ability of producing digital legal order.
Blockchain has enabled a new mechanism which also relies on technical means in order to coordinate behavior. Yet as opposed to Lex Informatica, whose rules are ultimately dictated by a centralized operator, the rules established by a blockchain protocol are established by the community and for the community, and must be enforced through a mechanism of distributed consensus involving all network participants. Blockchain enables a whole new body of law made of rules administered through self-executing smart contracts and decentralized organizations. This new system, which some call Lex Cryptographia, operates independently of any third party authority or intermediary operator. Decentralized justice systems based on innovative cryptoeconomic mechanisms can produce radical efficiencies able to handle microdisputes and enforce rulings. For such a mechanism to reach mainstream adoption, it also needs to satisfy the basic requirements of transparency, accountability, accessibility, fairness and due process enshrined into our common understanding of the rule of law.
Decentralized justice is still in the early stages of development, and there is much potential for innovation and improvements. But the goal is clear in creating a fundamental governance infrastructure that is native to the Internet Age. Just as cryptocurrencies provide banking to the unbanked, decentralized justice can provide justice to the “unjusticed.”
(https://stanford-jblp.pubpub.org/pub/birth-of-decentralized-justice/release/1?_
More information
For more excerpts, see our entry on Decentralized Justice