Abstract
The contribute that the blockchain technology and smart contracts could give to the dispute resolution space is debated among many legal professional communities. The idea is that developing blockchain-based adjudication protocols could simplify the resolution of disputes between private actors and make proceedings more efficient.
This work is expression of a joint conceptual planning, however Alessandro Palombo, Ph.D., wrote Sects. 1, 2, and 3, while Raffaele Battaglini, LL.M., wrote Sects. 4 and 5. The authors would like to express their profound gratitude to Luigi Cantisani, LL.M., and Michele D’Asaro for their precious help while writing this chapter.
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Notes
- 1.
Szabo NJ (1994) Smart Contracts. http://www.fon.hum.uva.nl/rob/Courses/InformationInSpeech/CDROM/Literature/LOTwinterschool2006/szabo.best.vwh.net/smart.contracts.html.
- 2.
The concept of “smart contract” was first introduced in 1994 by Nick Szabo. In 1995, the Author defined smart contracts as “as a set of promises, specified in digital form, including protocols within which the parties perform on the other promises”. Smart contracts became popular as a result of the success of the Ethereum blockchain in 2015. The legal issue to be discussed is when a smart contract can be considered legally binding, in other words when a smart contract becomes a smart legal contract. Very briefly, smart contracts concerning basic sale contracts based on facta concludentia and transactions not requiring formalities can be considered a transposition of a valid legal contract. However, we would like to highlight the importance of connecting traditional legal contracts to smart contracts for the purpose of having a solid legal basis empowered by automation, to achieve “smart legal contracts”. In its recently published consultation paper, the UK Jurisdiction Taskforce said: “A smart contract may or may not have legal ramifications as it is merely computer code, whereas a “smart legal contract” refers to a smart contract that either is, or is part of, a binding legal contract” (available at https://www.lawsociety.org.uk/news/stories/cryptoassets-dlt-and-smart-contracts-ukjt-consultation/). Such a paper illustrates three models for smart contracts and smart legal contracts: the “Solely Code Model” which is code standing by itself (i.e. without being housed within any form of natural language contractual architecture), the “Internal Model”, i.e. a contract written in a document comprising natural language and code and the “External Model”, i.e. a contract entirely in natural language but including an agreement for certain aspects of the contract to be performed using a program designed for this purpose.
- 3.
Kleros Short Paper v1.0.7, available at https://kleros.io/whitepaper_en.pdf.
- 4.
Grigg (2004).
- 5.
Mattereum protocol, available at https://mattereum.com/upload/iblock/784/mattereum-summary_white_paper.pdf.
- 6.
OATH Protocol Blockchain Alternative Dispute Resolution Protocol, available at https://www.oathprotocol.com/files/OATH-Whitepaper-EN.pdf.
- 7.
More information available at www.jur.io.
- 8.
Jur Whitepaper V2.0.2, available at https://jur.io/wp-content/uploads/2019/05/jur-whitepaper-v.2.0.2.pdf.
- 9.
The parties signed a traditional car sale and purchase agreement under Austrian laws. Then they used the Jur Beta Platform to manage proof of car’s delivery and payment of the price. First, the parties established that evidence of car delivery would have been delivery of documents and car keys. Then, the purchaser transferred Jur tokens worthy USD 10.000,00 to an escrow smart contract on Jur technology. Once evidence of documents and keys delivery was given by uploading pictures to the blockchain through the Jur Beta Platform, the escrow smart contract transferred the purchase price to the seller’s wallet.
- 10.
A token is a representation of value in digital form. It is based on cryptography and blockchain technology. Tokens are usually divided in three main categories according to their function: payment tokens are utilized as means of exchange, utility tokens are those required to access a digital platform and security tokens incorporate or represent voting rights, profit rights or assets.
- 11.
The Swiss Financial Market Supervisory Authority (FINMA) is in charge of supervising the financial market in Switzerland. On 16 February 2018, FINMA disseminated “Guidelines” on initial coin offerings. Companies willing to issue tokens in Switzerland are required to liaise with FINMA in order to properly qualify the legal nature of the tokens to be issued. In the event of payment and utility tokens, it is usually suggested to obtain a so-called “no-action letter” from FINMA stating that the token is not a security tokens subject to regulated offering.
- 12.
In particular, Anti-Money Laundering Act of 10 October 1997.
- 13.
- 14.
- 15.
Schelling (1958).
- 16.
Sugden (1995).
- 17.
McAdams (2000).
- 18.
De Freitas et al. (2019).
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Palombo, A., Battaglini, R. (2021). Justice for All: Jur’s Open Layer as a Case Study, Towards a More Open and Sustainable Approach. In: Cappiello, B., Carullo, G. (eds) Blockchain, Law and Governance. Springer, Cham. https://doi.org/10.1007/978-3-030-52722-8_19
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