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The Use of Blockchain Technology in Online Dispute Resolution

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.

Introduction
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 Konst.

2008-Developer(s) operating below the nom de guerre Satoshi Nakamoto releases a report establishing the model of a blockchain[1].

2009-Nakamoto implements the first blockchain as the public ledger for transactions.

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[2]. Its objective when it was released was to overcome the weakness of the centralised modes of digital currency.

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[3].

Possible Impacts Of The Blockchain Technology

  • Towards judicialization

    The 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’[4], 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 arbitration

    With 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 here.
     
  • Blockchain technologies and smart contracts

    Ethereum 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.

Conclusion
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.

References
  1. academic.oup.com/ulr/article/24/2/430/5490658
  2. bitcoin.org/bitcoin.pdf
  3. Blockchain and Online Dispute Resolution by Koji Takahashi :: SSRN
  4. Blockchain and the Inevitability of Disputes The Role for Online.pdf
  5. Blockchain dispute resolution: a better alternative for the decentralised world? - Taylor Vinters
  6. blockchain-for-future-business/
  7. delivery.php
  8. History of blockchain | Technology | ICAEW
  9. Online Dispute Resolution (ODR): A Positive Contrivance To Justice Post Covid- 19 - Litigation, Mediation & Arbitration - India
  10. script-ed.org/article/blockchains-and-online-dispute-resolution-smart-contracts-as-an-alternative-to-enforcement/
  11. The Role of International Rules in Blockchain-Based Cross-Border Commercial Disputes - viewcontent.cgi
  12. www.bitrated.com/
  13. www.mediate.com/articles/larsond2.cfm
  14. www.uncitral.org/pdf/english/texts/odr/V1700382_English_Technical_Notes_on_ODR.pdf
End-Notes:
  1. https://www.icaew.com/technical/technology/blockchain/blockchain-articles/what-is-blockchain/history
  2. https://codingcompiler.com/blockchain-for-future-business/
  3. https://script-ed.org/article/blockchains-and-online-dispute-resolution-smart-contracts-as-an-alternative-to-enforcement/
  4. 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 2006) 1–8.
Abbreviations:
ODR – Online Dispute Resolution
ADR – Alternative Dispute Resolution

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