Introduction
Contemporary jurisprudence is an increasingly complex field requiring a deep understanding of the underlying processes and procedures. While courts remain the primary institutions for resolving legal cases, more and more people and businesses turn to alternative dispute resolutions (ADR) due to the possibilities this approach provides to all parties involved in the conflict (Howell & Potgieter, 2021). The main benefits of ADR are quick and efficient settling of the issue, significantly lower economic costs, and the possibility to mitigate or avoid damage to reputation and business relationships (Alaloul et al., 2019).
Solving a dispute without involving third-party institutions helps preserve the normal project workflow and established plans without taking the case to court. Negotiation is the simplest form of alternative dispute resolution, which can help settle minor disagreements or misunderstandings quickly. However, the effectiveness of this method depends significantly on the disputants’ willingness to search for a compromise (Alaloul et al., 2019). Recent developments in AI and blockchain technologies gave rise to an even more efficient way to solve disputes online, making it a potential successor to conventional legal management procedures.
Discussion
Despite being a relatively new trend in the area, implementing AI and blockchain technologies has several potential applications in the existing practice. In the wake of the growing globalization of business, the number, scope, and variety of trade agreements keep increasing, which inevitably leads to the rising demand for alternative dispute resolutions (Alarie et al., 2018). An ADR method that is relatively popular in this context is arbitration, which is based on attracting a competent and unbiased expert or a group of experts (“What is ADR?” n. d.). The explosion in commercial arbitration between companies with highly complex structures and varied dispute topics puts high pressure on the existing ADR systems and procedures requiring new solutions, including blockchain technology (Alarie et al., 2018). The data storage and management possibilities it provides allow for the development of smart contracts aimed at eliminating contract drafting, judicial intervention, and human factors from the dispute alternative resolution process (Howell & Potgieter, 2021). While the technology implementation is sometimes criticized for the regulatory issues it presents, many scholars agree on its potential for use in the field.
While providing a number of benefits mentioned above, existing mediation and arbitration procedures still suffer because the participants’ personal attitude determines the outcome of an agreement. Despite the rather rigid nature of programmed contracting limiting the possibility of changing the contract details mid-way, their trustworthiness, clarity, and certainty make them a viable option for consideration in alternative dispute resolutions (Howell & Potgieter, 2021). Werbach (2018) argues that blockchain technology in alternative dispute resolution allows the parties to trust the resolution outcome without the need to trust other members of the agreement. In combination with the efficiency and reliability of blockchain technology, it provides ground for future research and development of the solution, though the need for a working regulatory framework remains (Howell & Potgieter, 2021). One of the main advantages of high-tech ADR solutions like this is the possibility of quick online procedures. Additionally, the options for process automation make blockchain technology even more attractive for large international business entities.
Today, several systems for smart contracting incorporating blockchain technologies exist for a wide range of smart contracts, from fairly simple to extremely complex, though with limited usage. Those include the Kleros dispute resolution system utilizing Crowdsourced Online Dispute Resolution (CODR) that, as Lesaege and Ast explain, operates on the Ethereum blockchain for online decentralized automated dispute resolution (as cited in Howell & Potgieter, 2021). Kleros acts as an optional supplementary arbitrator that can operate in different legal jurisdictions and provide unbiased resolutions based on a combination of answers from independent jurors, preserving anonymity and excluding biased judgment (Howell & Potgieter, 2021). While this approach is most suitable for the simplest cases, it allows traditional judges to focus more on more complex appointments. This way, they can exercise their skills and knowledge to make more responsible decisions that potentially have long-lasting consequences for the legal system (Howell & Potgieter, 2021). However, some scholars propose solutions that can enhance the efficiency and applicability of systems like Kleros.
One of the potential options to optimize the efficiency and increase the applicability of solutions like Kleros is utilizing artificial intelligence to compensate for the imperfect nature of blockchain-based ADR systems. For example, Alarie et al. (2018) propose incorporating AI and deep learning algorithms to gather data from real-life court hearings and arbitrations to develop more flexibility and broader applicability for fully automated online ADR services. The growing accessibility and variety of legal data that can be used to teach artificial intelligence algorithms open ways for significantly reducing the costs and time of legal transactions (Alarie et al., 2018). While the existing solutions already find limited use in real-life practice, future research on the topic can further prompt the development of the high-tech aspect of alternative dispute resolution into a separate area of jurisprudence.
Conclusion
The recent developments of AI and blockchain technologies have sparked a rising interest in incorporating these solutions into legal practice. It can potentially provide the accessibility and speed in online contracting that is unachievable for human workers. The most promising field of using blockchain-based solutions like Kleiros is the online ADR, while artificial intelligence can potentially automate this process entirely. While these systems are still not widely incorporated today, future research and development can significantly change the way legal contracting and dispute resolution are carried out.
References
Alaloul, W. S., Hasaniyah, M. W., & Tayeh, B. A. (2019). A comprehensive review of dispute prevention and resolution in construction projects. MATEC Web of Conferences, 270. Web.
Alarie, B., Niblett, A., & Yoon, A. H. (2018). How artificial intelligence will affect the practice of law. University of Toronto Law Journal, 68, 106–124. Web.
Howell, B. E., & Potgieter, P. H. (2021). Uncertainty and dispute resolution for blockchain and smart contract institutions. Journal of Institutional Economics, 17(4), 1–15. Web.
Werbach, K. (2018). Trust, but verify: Why the blockchain needs the law. Berkeley Technology Law Journal, 33(2), 487–550. Web.
What is ADR? (n. d.). New York State Unified Court System. Web.