Blockchain technology is praised as the new foolproof technology everywhere.
From cryptocurrencies to self-executing smart contracts, blockchain technology
is the new change bringing data security. As online transactions increase,
issues of frauds and scams attacking cryptocurrency exchanges are also seen.
e-commerce disputes are difficult to take to the public courts. Hence, Online
Dispute Resolution (ODR) is the new solution for resolving it. This article
considers the impacts and uses of blockchain technology on ODR rulemaking. Also,
the article tries to explain the term blockchain technology and the mechanism of
ODR in detail.
Cross-border transactions or e-commerce have attained astonishing growth over
the past few years. Disputes, resolution, and enforcement were always part of
contracts. When the contracts are not limited to people in a specific area,
disputes also arise between people from different areas which cannot be governed
by the courts of a certain area of jurisdiction. This calls for the importance
of Online Dispute Resolution (ODR).
While ODR serves as an efficient mechanism for dispute resolution in the modern
world, how can these decisions be enforced to preserve the trust placed in this
mechanism? For this, we need to consider the possibilities of utilizing the
technology to address the needs of dispute resolution. We can attain a better
understanding of the same by discussing an overview of ODR and the historical
background of blockchain technology. The following sections cover the
definitions of ODR, blockchain technology, and talks about the possible impacts
of blockchain technology on the rulemaking mechanism of ODR.
Online Dispute Resolution
Online Dispute Resolution is a mechanism that combines Alternative Dispute
Resolution (ADR) and technological infrastructure to settle/resolve disputes
outside the courts. ODR covers disputes that arise in cyberspace but has a
source outside it. Originally the purpose of arbitration (ADR) was to settle
disputes outside the court for the convenience of the parties and to ease the
pressure on the courts. As we enter the cyber era, the method of dispute
resolution has become convoluted and expensive. ODR offers a provision of an
easy, competent, and transparent way to resolve disputes of companies with
high-volume and low-value.
Although ODR is said to be an easy and efficient method, it has its own set of
shortcomings. Due to the restraints of territorial boundaries, ODR lacks a legal
instrument which can be legally applicable for cross- border Online Dispute
Resolution. Also, another unresolved problem is enforcement. There should be a
body to assure the compliance of decisions of the mechanism so that the purpose
of the resolution system is not wasted. As ODR is slowly becoming one of the
major forms of dispute resolution, it is important to consider the possibilities
of a more able version of ODR with the help of blockchain technology.
Blockchain Technology- History
1991- Chain of blocks, cryptographically secured, explained in detail by Stuart
Haber and W Scott Stornetta marks the beginning of blockchain technology.
1998-Nick Szabo, a computer scientist starts working on a mechanism called a
‘bit gold’, which is a form of decentralized digital currency.
2000-The theory of cryptographically secured chains was published by Stefan
2008-Developer(s) operating below the nom de guerre Satoshi Nakamoto releases a
report establishing the model of a blockchain.
2009-Nakamoto implements the first blockchain as the public ledger for
2014-The technology is separated and its potential for both financial and
inter-organizational transactions are analysed. Then occurs the birth of
Blockchain 2.0, with applications beyond currency and for banking, finance, and
even governmental transactions.
Working Of Blockchains And Cryptocurrencies
Cryptocurrencies can be construed by their inherent decentralization, which
facilitates the advancement of escrow services and smart contracts without the
pre-requisite of a trusted institutional third party. The foremost celebrated
example of blockchain technology is bitcoin. Its objective when it was
released was to overcome the weakness of the centralised modes of digital
By solving this, bitcoin facilitated online transactions without the
need to resort to a third party. Cryptocurrencies bypass the claimed
shortcomings of ancient monetary establishments with a safe and secure (
cryptographically- usage of numbers which cannot be easily deciphered by third
parties) ledger, that provides each info transparency.
Possible Impacts Of The Blockchain Technology
Towards judicializationThe concept of blockchain technology is summarised with the perception of
decentralisation. The white paper by Satoshi Nakamoto drafted the technical
solutions allowing the maintenance of a mechanism to make payments without a
trusted third party. Behind the smokescreens of ‘code as law’, what the
bitcoin system aims to develop is a dimension of transnational social
interaction that inherently tends towards judicialization. Bitcoin can be thus
considered a revolutionary change in terms of third-party transactions. Although
Nakamoto’s vision was not completely exercised, the current developments in the
field of blockchain technology are substantiating this.
Self- enforcing bitcoin arbitrationWith bitcoin, the users can have a sophisticated devised private adjudication
system. The device works like a lock with two keys. The two parties can use this
device to store their coins which can be opened when the conditions of the
contracts are fulfilled. If one or both parties are not satisfied with the
execution of the contract, neither party can access the coins individually,
making them get a private adjudicator to view the facts of the case and resolve
the dispute. The private adjudicator conducts a rudimentary form of arbitration
Blockchain technologies and smart contractsEthereum was introduced in 2015 to overcome the drawbacks of bitcoin. When two
Ethereum users enter a contract, the contract can be translated into a software
script thus trusting the technology rather than the good faith of each other in
the enforcement of the contract.
Although we can say that the use of blockchain technologies in ODR can benefit
society, sometimes it can curb justice too. The low-value cases hardly exceed
the litigation threshold in public courts, it can be a cause of concern whether
they can be resolved by ODR. At this time, when block-chain based applications
are more practical and easy to use and methods like smart contracts are gaining
popularity, a strong legal system should react to it.
Questions on regulating
cryptocurrency, regulating communities advocating for them should be answered.
But there are certain questions that need attention, but we seldom focus on; the
irreversibility of blockchain transactions and their meaning from a legal
perspective, infrastructure for such redress mechanisms, assumptions within the
smart contracts, etc should be properly addressed.
- Blockchain and Online Dispute Resolution by Koji Takahashi :: SSRN
- Blockchain and the Inevitability of Disputes The Role for Online.pdf
- Blockchain dispute resolution: a better alternative for the
decentralised world? - Taylor Vinters
- History of blockchain | Technology | ICAEW
- Online Dispute Resolution (ODR): A Positive Contrivance To Justice Post
Covid- 19 - Litigation, Mediation & Arbitration - India
- The Role of International Rules in Blockchain-Based Cross-Border
Commercial Disputes - viewcontent.cgi
- The expression ‘code as law’ finds its origins in Lawrence Lessig, Code
and Other Laws of Cyberspace, Version 2.0 (2nd edn, Basic Books, New York
ODR – Online Dispute Resolution
ADR – Alternative Dispute Resolution