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by Sadie Williamson, Aug 07, 2018

Blockchain Technology Is Now Entering the Dispute Resolution Arena


Justice

In any area where money is involved, disputes are also going to be found. As a result of this, dispute resolution services are flourishing with big businesses across the globe catering to the needs of the warring parties.

However, the resolution process is time-consuming and costly. Invaluable amounts of effort and resources are wasted in the lengthy procedure to reach a decision, which may still be perceived as unfair, owing to procedural complexities. But blockchain technology may offer a solution.

Efficient Legal Services and Dispute Resolution

Many initiatives have been launched to make the dispute resolution process faster, more efficient and inherently unbiased, including attempts to take the process online. For instance, the online legal assistance service Rocket Lawyer allows instant online creation of legal forms and documents, in addition to offering a secure storage facility, e-signatures and lawyer reviews. LegalZoom is a similar online venture providing personalized online legal services and legal documents for small businesses and families. However, the utility of these platforms has remained confined to tailor-made documents and services that primarily focus on contacts drafting, issuing legal notices of disputes and filing of the necessary responses.

Another area where disputes are common is within the gig economy marketplace and on payment processing platforms such as  Freelancer, Fiverr and PayPal. Though such portals have their own dispute resolution methods, they operate in a centralized manner with a limited number of in-house decision-makers operating opaquely. They are also often accused of missing the fair and necessary assessment required with regard to the quality of work done.

Despite all such offline and online attempts to improve the legal service and dispute resolution processes, the core issues around dispute resolution methodology (including time delays, high cost, centralization and the high possibility of biased decisions) remain largely unattended.

Can a Blockchain-Based Dispute Resolution System Help?

With the growing adoption of blockchain technology, distributed ledgers are emerging as disruptors across a variety of service sectors. Many attempts are being made to put legal and dispute resolution services on a blockchain to harness its significant benefits.  Such blockchain systems can provide decentralized and timely decision-making, low procedural costs, transparency and high probability of fair judgments.

Mattereum, which offers legal-technical interface, connecting digital assets on a blockchain with goods and services of the real world, claims to be the first “Internet of Agreements” (IoA) project for legally enforceable smart contracts. Agrello allows a user to easily create and manage smart-contract-based legal agreements by engaging the automated, artificial intelligence (AI)-powered counselors. Jury Online also uses smart contracts and additionally offers a panel of independent, verified arbiters to create a better dispute resolution system.

JUR, supported by its native token, is another attempt to build a dedicated consensus- and blockchain-based platform to offer legal and dispute resolution services with an aim to improve on the traditional ways in which contractual disputes are resolved. Beyond offering facilities for creating smart legal agreements (SLAs), JUR offers additional services. A user can make secure escrow deposits linked to the SLAs, which will get automatically transferred to the beneficiary once the set criteria are met. JUR also supports direct settlement of payments and easy withdrawal facility. It can be used to secure payment/collateral guarantee for contracts and transactions, thereby eliminating the counterparty risk.

However, the primary feature for which JUR stands out is its dispute resolution mechanism. JUR claims to resolve contractual disputes within 24 hours. Based on a game theory and antibias concept, the platform’s dispute resolution system is supported by a legal community of authorized network participants who use a token-backed, consensus-based voting system to arrive at a decision.

Essentially, any users can stake their JUR tokens to become a juror (called an “oracle” in the JUR system). Multiple such oracles verify the raised dispute and cast a vote on the blockchain for a decision. If their valid and timely decision goes against the majority vote, they lose the staked tokens, which go as a reward to the oracles who voted in favor of the majority decision. This stake- and voting-based dispute resolution system ensures that the oracles (jurors) act responsibly with proper accountability and fairness while deciding on the matter as they may lose monetarily for wrong decisions. All of the involved entities benefit from timely judgments, zero- to low-costs linked with the procedure, process transparency, fair and unbiased decision-making and rewards for fair jurors. JUR is also planning to open its APIs for third-party use, where other real-world entities like Freelancer or PayPal can outsource their dispute resolution work, saving on costs while not compromising on the quality of the dispute resolution process. 

While other forecasting platforms like Augur and Gnosis also support such voting-based decision-making and can potentially be used for dispute resolution, JUR presents itself as a dedicated “juror” platform with devoted focus on dispute resolution and legal services. It takes a more granular approach, supporting in-depth assessment of cases of any magnitudes. From large corporations to small and medium businesses to freelance individuals, anyone can utilize the service. Barring a small “gas” charge that goes toward voting system operations, the resolution is available at nearly zero cost.

The Bottom Line

“Justice delayed is justice denied,” is an old saying, but despite recent technological advances, the challenges in securing timely and low-cost resolution of big and small disputes continue. Blockchain-based systems attempt to offer a pragmatic solution capable of serving all kinds of entities, though their success will depend upon their mass adoption.