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Ichika Aoi
Ichika Aoi

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Law Blocks Birth of a New Legal Era Decentralized Justice

The appearance of Web3 which features decentralization, openness, and greater utilization for individual users, has led many to aspire for an alternative manner of resolving disputes; and that’s when decentralized justice was born, ADR (Alternate Dispute Resolution).

Decentralized justice has come to show us a way out, an alternative way of doing things through the usage of game theory, blockchain, and crowdsourcing applied to different particular cases, which highly shortens the period in which conflicts are resolved and helps achieve justice.

Law Blocks Decentralized justice for resolving disputes quickly and economically.

Let’s first turn our attention again to smart contracts. Smart contracts “can be identified as programs that execute tasks based on specified logic and agreements. These programs run on decentralized networks whose ledgers cannot be altered or changed after a transaction is pushed. This self-execution feature is what differentiates smart contracts from traditional contracts, which on the other hand, are sets of agreed-upon terms which are enforceable by law and are described in a natural, human language.”

The ability of smart contracts to self-execute brings legal certainty to these interactions. Nevertheless, it also has its limitations. For instance, smart contracts are unable to deal with subjectivity. What does this mean? It means smart contracts — at the moment — are specific and objective. If ‘A’ occurs, they execute ‘B’ according to predetermined rules (algorithm). Nevertheless, they are unable to determine more subjective legal criteria that characterize traditional contracts, such as whether the party has satisfied the required effort standards or whether an indemnification clause should be triggered. This is the key point where decentralized justice takes an essential role. Let’s provide an example to clarify this.

Thus, during negotiations and the making of the smart contract, all involved should consider including a clause and establish technical possibilities of accessing a dispute resolution platform in case any conflicts arise directly into the execution of the smart contract process, the platform to resolve the disputes is Law Blocks which is a part and parcel of the contract, when all the resources of Law blocks are utilized and disputes not settled then we can make use of Arbitration Courts and Centres all over the world to resolve disputes.

How should the decentralized system guarantee legal certainty and fair outcomes? Each legal system needs to guarantee and maintain the procedure by which justice is achieved.

This means:

(i) The procedure should be public,

(ii) The decision-making should be logical, understandable and according to the rule of law,

(iii) Judges decision should be accurately justified,

(iv) there should be consistency in the resolution of similar disputes, which allows for the predictability of future outcomes,

(v) and judges should be impartial, which means they shouldn’t be biased due to a close connection to the parties or the subject being treated.

Fulfilling these requirements is not difficult when the system is decentralized and based on the blockchain. This is because, for starters, the blockchain guarantees transparency by storing information that cannot be altered without recording the changes made. This enables objective and immutable decision-making. Such courts or rather dispute resolution tribunals are usually built as DAOs. In simple terms, a DAO — a decentralized autonomous organization — is composed of a collection of smart contracts that work according to specific procedures and rules.

In this manner, the utmost strength of DAOs is that the decisions are made by the community as if it were a democracy. Every member of the DAO has voting power over the decision-making process and the next steps for the organization to flourish. This also ensures a diversity of thoughts emerging together, as well as democratic decision-making. Thus, the combination of immutable decision-making, transparency, and governance right in the hands of the community is the essence of decentralized justice. These features provide greater effectiveness to the justice system as it allows everyone to participate in the decision-making process, which prevents future power abuses, and enables a fully transparent procedure without any possibility of corruption or tampering with evidence.

Two other key elements of decentralized justice are:

(1) LBT crypto-economic incentives

(2) and reaching a fair solution.

LBT crypto-economic incentives are usually given to agents in order to assure a fair ruling. Decentralized dispute resolution platforms don’t rely on the ‘good morals’ of judges or juries, but rather offer economic incentives for those who prove having fulfilled a desirable behavior; which means they will earn a profit only if they provide a justified decision that’s coherent with the vote of the majority. As regards reaching a fair solution, all the previously provided arguments have been trying to acknowledge that doing so requires the fulfillment of specific conditions, such as an impartial judge, transparency in the procedures, and immutable decision-making, among others.

To sum up, basically, decentralized justice systems should comply with the following features -

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