The Governance of Blockchain Dispute Resolution

By Darcy W.E. Allen, Aaron M. Lane, and Marta Poblet

Blockchain technology acts as infrastructure for self-executing smart contracts. Because contracts are incomplete and some parties are opportunistic, these new contracting possibilities create dispute resolution challenges. For instance, will smart contracts be recognized, and any disputes resolved, within the existing territorial courts? In this article, we first map some institutional governance possibilities for contracting parties (e.g. mediation, private arbitration, and courts) to create a Dispute Resolution Possibility Frontier (DRPF). Second, we provide case studies of emerging blockchain-based dispute resolution mechanisms. Blockchain-based smart contracts create a source of new disputes requiring resolution, but also can serve as a technology that facilitates new methods of dispute resolution, including for disputes arising from traditional legal contracts. Contracting parties will subjectively make tradeoffs for their most effective dispute resolution mechanism, and the costs of dispute resolution will change over time through a process of institutional innovation.

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