Dispute Resolution On Europechain

Dispute Resolution On Europechain

September 14, 2020

Each blockchain consists of hardcoded contracts. They take care of building the blocks and all that goes with that. Initially no formalized governance existed, which has led to many accidents (such as hard forks or inertia). Modern blockchains generally have a written governance in place. Often with some sort of central entity (notably a foundation or a DAC) or decision making body that e.g. regulates how to update the code.

With Europechain the wish to be fully GDPR compliant also comes with the need of a central entity that makes decisions regarding requests of the data subjects and is responsible for data protection. This resulted in a system of checks and balances that secure the absolute integrity of the chain while introducing some levers necessary to comply with the GDPR and other EU regulation.  As is the case with other modern blockchains, such governance is laid down in contracts.  

Contracts, whether hard coded or not, codify the interaction between humans and between organizations. And every contract is subject to disputes. Even a hardcoded outcome can be overthrown by a judge. Further: contracts, however skilled their drafting, will not provide answers in all (un)thinkable circumstances. Also, not all decisions by block producers or Europechain, will be happily accepted by all parties. All this will lead to clever lawyers trying to find loopholes and some additional turnover by starting proceedings.

How to resolve blockchain disputes?

The big question is, how to resolve such disputes? Disputes between the parties to the various constituting Europechain agreement. Such parties could be block producers but also dApp providers or account holders. And of course Europechain itself.

It is important to make arrangements for dispute resolution primarily because of the international cooperation a blockchain always is. If such agreements are not made, basically, any party to a Europechain contract (an account holder, block producer, dApp) that has a dispute with another party, will have to take that dispute to the competent court. Which court may not be a court of such party’s own country (and likely will not be). That means hiring local lawyers and long and typically expensive proceedings. Some jurisdictions allow for courts that work cost efficient and relatively cheap (Germany, Switzerland, the Netherlands). Many, many others however, are notorious for the costs of the proceedings (the USA for instance) or the prohibitive length of them (Italy).

To prevent all that, one can contractually stipulate to oblige the parties to use a form of alternative dispute resolution (ADR). Alternative in respect of the courts. A worldwide system acknowledges such possibility. A form of ADR is arbitration. Instead of adhering a (local) court to get a verdict, the party concerned will ask for a verdict by one or more arbitrators. If such arbitrators work professionally and are independent, their verdict has the same strength as a verdict issued by a local court (thought there are some administrative issues). The way the arbitrators rule, has to comply with the basic rules of fair trial. It is possible to write one’s own arbitration rules or one can simply adhere to those of a professional arbitration organisation.   

Resolving disputes on the Europechain Public Blockchain

With the Europechain Public Blockchain, we have chosen for arbitration. We have further decided not to write our own rules now but refer to a professional organisation. Any and all disputes are to be handled through the proceedings of our ADR provider. The ADR provider we chose is WIPO. WIPO is short for World Intellectual Property Organization and is in our digital world probably best known for their worldwide domain name dispute resolutions. However, their arbitrators are also involved in software related disputes. WIPO is an agency of the United Nations and therefore a truly international organisation.

Any and all disputes in relation to the Europechain agreements are therefore to be handled by the WIPO ADR. The WIPO ADR allows for various proceedings. We have chosen WIPO’s Expedited Arbitration. Because those rules are much faster (and time is of the essence with distributed ledger technology) and are cheaper than the ordinary WIPO arbitration. Under these rules a sole arbitrator rules over the case. The rules are pretty straight forward: the claimant files his complaint, pays the fees of the tribunal and the arbitrator. The defendant reacts (and pays the fees). The arbitrator is elected by the parties and if the parties do not agree on the arbitrator, selected through a so-called “list-procedure”. The arbitrator may decide on additional written statements and if one of the parties wishes to do so there will be a hearing. The place of the hearing is to be decided by WIPO (taking the parties view into due consideration). The verdict is binding on the parties. There is also the possibility of emergency measures.

The full rules can be found here.

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