A lot of lawyers ask us how the blockchain is relevant to the law. A lot of technologists are telling lawyers to embrace the blockchain as the future. There is a lot of talk about the potential use of blockchain in law such as multi-party contracts, chain of evidence, discovery and settlement procedure. But there is another area which we believe will be a game changer in the future of law – dispute resolution.
Many traditional lawyers would understandably ask how blockchain could be used in a dispute resolution setting. Will it involve using AI and machine learning to adjudicate disputes? This is quite a likely scenario in the future but AI is often times, for good reason, categorized into another type of technology. Many of us legal futurists debate whether it is blockchain or AI that would have the most impact on the future of humanity and there are many good arguments for both sides. However, that might be a bit beyond the scope of this article. In this article, we are looking at the way blockchain, and the economic incentives and motivations that underlie that technology, would impact the future of dispute resolution.
It’s hard to talk about dispute resolution and blockchain without mentioning Kleros. These guys are clearly at the forefront of this technology and are probably the first to implement this theory using this platform. Usually when we talk about blockchain, we think of how the architecture itself can optimize potential outcomes and this has brought about a whole new area of study called token economics. However, at Kleros, they go beyond that and apply game theory to it as well. Federico Ast, the co-founder and CEO of Kleros is clearly one of the sharpest mind in cyrptoeconomics and his vision of reinventing the future of jurisprudence is nothing short of inspiring. So in many ways Kleros is taking legal formalism by the horns.
What Kleros is proposing is a fresh approach that takes us back to the Classical Age of the ancient Athenians. They invented a rather complex system of jurisprudence technology known as kleroterion whereby jurors are selected at random so as to avoid any biases or manipulation it the process. The inherent solution lies in the collective wisdom of the jurors. So basically Kleros is trying to implement this very system using blockchain technology so as to reach any jurisdiction in the world for any dispute across nations. So this is somewhat different to Online Dispute Resolutions (ODRs) which we find on e-commerce platforms as this is really trying to fundamentally change the entire process from the bottom up.
The key to Kleros is using an incentive system based on game theory as popularized by the great man himself, Thomas Schelling. It is interesting to note that it does not intend to replace governments or the existing court systems but one cannot help but wonder the shift in mindset should this system become widespread in the legal system. There is certainly proof that collective wisdom can work and it would be interesting to see where this technology goes.