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.
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.
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.
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).
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.
A secret will, for the moment
Caroline Greenwell and Peter Carlyon write for New Law Journal on the issue of companies exaggerating their green credentials
The extent and impact of greenwashing by companies, the reputational damage where they’re caught out and potential regulatory action.
Patrick Gearon FCIArb
Patrick Gearon, Georgina Munnik, Sam Saunders and Simone Sancandi produce the Chambers Global Practice Guide on the enforcement of judgments in Bahrain
Phase out of temporary restrictions on use of winding up petitions
Hannah takes a look at the recent UK Government announcement on statutory demands and the presentation of winding up petitions
WHAT NEXT FOR NIGHTCLUBS?
Hugh Gunson quoted by the Daily Express on IR35 tax fines following the news that HMRC was forced to issue tax penalties to several Government departments
HMRC was forced to issue several Government departments with tax penalties in recent months as IR35 failings were unearthed.
Patrick Gearon FCIArb
Patrick Gearon and Haleema Wahid write for The Oath on the rise of litigation
Patrick and Haleema consider some of the litigation funding options available in the UAE, with a particular emphasis on third-party funding.
Gareth Mills writes for Lexology Getting The Deal Through on technology disputes in Bahrain
The most common disputes occur following perceived or actual failures to deliver required technology services an lack of clarity.
International Arbitration in India and Around the World
Rupa Lakha joined the panel discussing the latest developments in construction and dispute resolution.
Gabrielle Shovlin writes for the Practical Law Dispute Resolution Blog on when witness evidence waives privilege
Be careful what you reference: when witness evidence waives privilege.
Be careful what you reference: when witness evidence waives privilege
Gabrielle looks at the recent decision in Scipharm Sarl v Moorfields Eye Hospital NHS Foundation Trust and its impact on privilege
Hugh Gunson quoted by Accountancy Age on why HMRC needs to rebuild taxpayers' trust after its Loan Charge failings
"HMRC needs to listen to the criticisms made in relation to its handling of the loan charge and reflect on them to achieve real change."
Ongoing supply chain crisis looms large over upcoming allergen law change
Ghassan El Daye
Emaratyah, Al Bayan Newspaper and 24.ae publish comments from Ghassan El Daye on the UAE’s new federal law to establish a National Human Rights Institution
Ghassan comments on the latest proposals to establish a National Human Rights Institution.
Ghassan El Daye
Al Bayan Newspaper quote Ghassan El Daye on the move by the UAE’s Federal Public Prosecution to allow the payment of fines through instalments
The UAE Courts have ensured that services are made available to provide alternative and more accessible options.
Paula Boast, Thanos Karvelis, Niel Coertse and Mazin Al Mardhi write for the International Comparative Legal Guide - International Arbitration 2021
The guide covers common issues in international arbitration laws and regulations across 36 jurisdictions.
Charles Russell Speechlys advises Appital Ltd on £2.5m Investment led by Frontline Ventures
Appital is an Equity Capital Marketplace which aims to bring innovation to Equity Capital Markets.
The Business Magazine, Insider Media, Business South and The Surrey Chambers of Commerce report on the firm's involvement in Appital's £2.5m growth capital investment
The injection will accelerate the development of Appital’s technology infrastructure, integration with financial institutions.
Scope of an adviser’s duty of care: a purposive approach
The Supreme Court provides guidance on determining the scope of a defendant adviser’s duty of care.
Edward Craig and Simon Heatley write for Practical Law on the scope of a defendant adviser’s duty of care
The Supreme Court has provided authoritative guidance on the correct approach to determining the scope of an adviser’s duty of care.