• news-banner

    Expert Insights

The Digital Dispute Resolution Rules – How Novel Are They?

The Digital Dispute Resolution Rules (the “Rules”) were recently published in April 2021 by the UK Jurisdiction Taskforce of LawTechUK.

The Rules were preceded by an internationally well-received Legal statement on cryptoassets and smart contracts (the “Legal Statement”), published by the same UK Jurisdiction Taskforce in November 2019. The Legal Statement sought to clarify key questions regarding the legal status of, and the basic principles applicable to, cryptoassets and smart contracts under English law.

The Rules are the logical next step, creating a procedural framework that addresses the specific issues outlined in the Legal Statement. The aim of the Rules is to facilitate the rapid and cost-effective resolution of disputes arising out of novel technologies including digital assets, smart contracts, blockchain and fintech.

Set out below are key features of the Rules with analysis on key and novel aspects, as well as the benefits of providing for dispute resolution under them.

Quick Procedure

The Rules provide that the tribunal is to use its best endeavours to resolve disputes within 30 days of its appointment. This is shorter than the average arbitration procedure (the average for an LCIA arbitration, for example, is 16 months).

This is also shorter than some of the expedited procedures available at other arbitral institutions, such as the expedited procedure available under the ICC Rules, the time limit for which is 6 months.

This default position may be particularly attractive to parties in the technology sector given its fast pace.

Decision Makers with Specialised Expertise

Under the Rules, the appointing body - the Society for Computers and Law - will appoint an arbitrator with the appropriate degree of experience and technical expertise. In addition, the parties are permitted to express preferences as to the qualifications of the arbitrator and their level of experience. These preferences must be considered by the appointing body.

Expert determination is also an option under the Rules and, again, the parties may express their preferences in this regard.

This will be attractive in relation to novel technology disputes where the dispute may well raise specific and difficult technical questions.

Optional Anonymity

This means that while the parties must identify themselves to the arbitral tribunal, they need not identify themselves to each other. As with most arbitrations, proceedings under the Rules are confidential.

The anonymity of the procedure may be attractive to parties that enter into smart contracts or other digital relationships anonymously and want access to dispute resolution without sacrificing their anonymity.

Enforcement

The Rules provide for arbitration under the English Arbitration Act 1996. Arbitral awards are enforceable across the globe pursuant to the New York Convention (there are currently 168 countries signed up to this).

Given the cross-border nature of digital transactions and potential jurisdictional issues posed by the decentralisation of blockchain, being able to rely on the New York Convention to facilitate enforcement will no doubt appeal to parties.

Enhanced Powers of the Tribunal in Relation to Digital Assets

The arbitral tribunal has the power to “at any time to operate, modify, sign or cancel any digital asset relevant to the dispute using any digital signature, cryptographic key, password or other digital access or control mechanism available to it. The tribunal shall also have the power to direct any interested party to do any of those things.”

This is important given that interim remedies may be particularly necessary in disputes involving new digital technologies, for example stopping transactions being executed on a blockchain (given the irreversible nature of these transactions).

Uniquely, the Rules also allow for arbitrators to implement decisions directly on-chain using a private key, removing the need for third-party involvement or enforcement action. This may allow parties to bypass traditional enforcement mechanisms (subject to the parties’ cooperation in providing the necessary access).

Conclusion

The Rules certainly have novel features that will be attractive to commercial parties in the technology sector. It may prove to be the case that, given the expedited procedure under the Rules, they will be most suited to technology disputes of lower value and less complexity. At present, the Rules are very much in their infancy and the level of uptake and their efficacy is yet to be seen.

Nevertheless, the technology sector is usually quick to embrace change. As the Rules are incorporated into contracts with increasing frequency, one would expect the industry to gain increasing confidence with the procedure. In turn, the Rules should provide welcome legal security to those operating in this sector.

Our thinking

  • Claims for reasonable financial provision beyond the grave?

    Jennifer Doggett

    Insights

  • Arbitration Rules – How Different Are They?

    Mazin Al Mardhi

    Insights

  • Charles Russell Speechlys advises Development Partners International and Verod Capital Management on investment into Pan African Towers

    Adrian Mayer

    News

  • Charles Russell Speechlys successfully advises the Joint Liquidators of LB GP No.1 Ltd in Lehman Brothers litigation before the High Court in London

    Daniel Moore

    News

  • Reciprocal Enforcement of Judgments between Mainland China and Hong Kong

    Stephen Chan

    Insights

  • AGBI quotes Paula Boast on Saudi Arabia’s new civil code

    Paula Boast MBE

    In the Press

  • The new Building Safety Regulator’s approach to enforcement

    Charlotte Healy

    Insights

  • Property118 schemes for landlords – a mistake worth fixing?

    Hugh Gunson

    Insights

  • Confidentiality in Arbitration - A Cloak with Holes

    John Olatunji

    Insights

  • Enforcement of Foreign Judgments: Bahrain

    Patrick Gearon FCIArb

    Insights

  • Copyright and AI: Part 2 – Infringement by machine?

    Nick White

    Insights

  • Is the tide turning on environmental regulation? Assessing the future impact of the OEP

    Rachel Warren

    Insights

  • Greenwashing: the story so far

    Caroline Greenwell

    Insights

  • Solicitors Journal quotes Hugh Gunson on a £1.4bn tax fraud case in the Supreme Court

    Hugh Gunson

    In the Press

  • Enforcement of Foreign Judgments: United Arab Emirates - DIFC

    Patrick Gearon FCIArb

    Insights

  • Lexology In-Depth: Technology Disputes Edition 3 - Bahrain

    Gareth Mills

    Insights

  • Tech Monitor quotes Gareth Mills on the CMA restricting Meta from using certain customer data

    Gareth Mills

    In the Press

  • Dubai Court of Cassation Extends Arbitration Agreement Across Subsequent Contracts

    Peter Smith

    Quick Reads

  • Arbitration is Cheaper – Myth or Reality?

    Thomas R. Snider

    Insights

  • The rise in ESG reporting requirements for UK directors and of related shareholder activism

    Stephen Burns

    Insights

  • Nigeria's challenge to US$11 billion award succeeds in the High Court of Justice of England and Wales

    John Olatunji

    Quick Reads

  • International Arbitration 2023: Practical cross-border insights into international arbitration work in the UAE

    Thanos Karvelis

    Insights

  • An important reminder for employers on World Menopause Day

    Isobel Goodman

    Quick Reads

  • UAE Polishes Federal Arbitration Law

    Peter Smith

    Quick Reads

  • What next for HS2?

    Richard Flenley

    Quick Reads

  • Mediation as a pillar of dispute resolution: it’s happening, embrace it

    Jamie Cartwright

    Quick Reads

  • A warning to all businesses: significant fine underscores the importance of maintaining workplace Health & Safety

    Rory Partridge

    Quick Reads

  • Product compliance and Brexit - UK Government concedes to CE markings indefinite recognition

    Jamie Cartwright

    Quick Reads

  • Recognising financial abuse in a relationship

    Vanessa Duff

    Quick Reads

  • Has the Orpéa plan impaired shareholder's consent? - Le plan de sauvegarde d'Orpéa n'a-t-il pas vicié le consentement des actionnaires historiques ?

    Dimitri-André Sonier

    Quick Reads

  • Don’t push it… Quincecare duty clarified

    Caroline Greenwell

    Quick Reads

  • Pandora Papers: HMRC nudge taxpayers to come out of their box

    Hugh Gunson

    Quick Reads

  • DIAC Issues First Annual Report

    Georgia Fullarton

    Quick Reads

  • Dispute Resolution: The Case for Mediation

    Marjan Mirrezaei

    Quick Reads

  • Machinery Regulations respond to the rise of AI

    Jamie Cartwright

    Quick Reads

  • Delay could bar your probate claim

    Katelyn Silver

    Quick Reads

  • Saudi Center for Commercial Arbitration publishes new Arbitration Rules

    Peter Smith

    Quick Reads

  • From Farm to Fork: The Vital Role of Traceability in Meeting the UK's Sustainable Food Demands and Fighting Food Fraud

    Jamie Cartwright

    Quick Reads

  • Latest drama in UK’s Succession-style family feud over estate of self-made millionaire, Kevin Patrick Reeves

    Jessie Davies

    Quick Reads

  • ESG Litigation - new laws, same procedures?

    Jamie Cartwright

    Quick Reads

Back to top