In ThoughtLeaders4 Private Client: Arbitrating Blockchain and Smart Contract Disputes: The Smarter Solution?

Associate Jessica Lee penned an article on arbitrating blockchain and smart contract disputes for a special issue on cryptocurrency disputes published by ThoughtLeaders4 Private Client.

Crypto Insight 2022, released on July 28, features a series of articles examining various areas of disputes where crypto is involved, including fraud and asset recovery, HNW divorce, private client services and dispute resolution.

In her article, Lee noted that blockchain functionality is rapidly expanding through the advent of smart contracts, with uses ranging from creating currencies and storing data to enabling users to engage in financial borrowing and saving through DeFi (decentralized finance) platforms.

“The attraction of blockchain technology for many enthusiasts is its speed and efficiency, its immutability, pseudonymity, and its decentralized nature,” Lee wrote. “So, when it comes to resolving blockchain and smart contract disputes, users are likely to seek out methods of dispute resolution which stay true to the ethos of blockchain technology and enable disputes to be resolved quickly while maintaining consumer autonomy and financial privacy.”

Arbitration is likely to be an appealing mechanism for settling disputes arising on the blockchain, Lee explained, adding that, in the blockchain space, there is “off-chain” arbitration (traditional arbitration using existing commercial arbitral rules or dedicated blockchain rules) and “on-chain” arbitration using smart contracts to automate all or some of the arbitral process.

Lee concluded that on-chain arbitration may offer a quick and cost-efficient solution to resolving blockchain and smart contract disputes. “However, there are issues which have not yet been tested, such as whether such decisions will ultimately be upheld and enforced by local courts, which may leave on-chain decisions open to further challenge,” she wrote.

Read the full article here.