Cryptotribunals: The Unavoidable Change of Arbitration?

By: Cayetana Sanaolalla (Dublin City University Law & Tech)

In this blog post, author Cayetana Santaolalla (Dublin City University) writes about the evolving role of arbitration in the digital age and its intersection with blockchain technology.

Arbitration, as Rubellin-Devichi (1965) and Lew (2005) expressed, can be viewed as a conflict resolution mechanism that operates autonomously, independent of state or judicial authorities. These authors even considered it a non-national system for settling commercial disputes, existing on the margins of traditional legal frameworks. According to this perspective, arbitration functions as a self-contained process, detached from national legal orders—an idea closely linked to the emerging concept of arbitration in the metaverse, where blockchain, smart contracts, game theory, and cryptocurrencies or tokens play a key role.

The integration of arbitration into so-called cryptotribunals brings together law, technology, dispute resolution, justice administration, smart contracts, AI, and blockchain-based assets. Arbitration itself is a dispute resolution mechanism where parties, often through an arbitration clause, agree to entrust their case to a chosen arbitrator with recognized expertise.

Significant advancements in the field are already underway, including the development of crypto arbitration courts that leverage blockchain technology to resolve disputes. This innovative approach has the potential to radically transform the way justice is administered in the future. Several platforms, such as Aragon and Kleros, offer decentralised arbitration services, each operating with distinct methodologies.

Virtual arbitration courts function as decentralised, open justice platforms, typically running on public blockchains. While their service offerings vary, two fundamental innovations stand out. First, the random selection of arbitrators, ensuring impartiality, and second, on-chain enforcement, which enables the automatic transfer of cryptocurrencies, tokens, or other digital assets through smart contract execution.

These developments challenge the traditional legal and judicial framework, which struggles to adapt to digital realities that operate beyond national borders. Cryptotribunals, grounded in blockchain, smart contracts, and cryptocurrencies, signal a shift toward a new paradigm of dispute resolution—one that redefines legal authority in a decentralised digital environment…

CONTINUE READING…