UK Jurisdiction Taskforce of Lawtech UK consults on digital dispute resolution rules

February 18, 2021

In November 2018, the UK Jurisdiction Taskforce published its Legal Statement on the Status of Cryptoassets and Smart Contracts. The Legal Statement expressed the view that cryptoassets were property and smart contracts were contracts under English law. 

The UK Jurisdiction Taskforce is now consulting publicly on a set of Digital Dispute Resolution Rules which can be incorporated into on-chain digital relationships and smart contracts. A key objective is to allow those involved to take full advantage of the flexibility offered by UK arbitration to tailor dispute resolution procedures to the distinctive features of such technologies, and to ensure that disputes will be resolved quickly by arbitrators with appropriate expertise. 

The proposed rules provide for:

  • Arbitral or expert dispute resolution in very short periods;
  • Arbitrators to implement decisions directly on-chain using a private key; and
  • Optional anonymity of the parties.

The draft rules provide for arbitration pursuant to the English Arbitration Act 1996, which gives parties and arbitrators a great deal of autonomy in how their disputes should be resolved. To take effect, the rules must be agreed to by the parties, either before a dispute has arisen (by appropriate incorporation into their legal relationship) or afterwards by agreement. An option is also provided for expert determination, if the parties choose it.

The rules define a digital asset as including a cryptoasset, digital token, smart contract or other digital or coded representation of an asset or transaction. A digital asset system means the digital environment or platform in which a digital asset exists. 

Rule 15 of the draft rules provides that English law applies to the rules, and, unless the parties agree otherwise, disputes shall be resolved in accordance with English law.

Respondents to the consultation are asked:

  • Is there a need for or advantage in a new arbitral process aimed at facilitating the rapid, informal and cost-effective resolution of disputes arising out of novel digital technologies?
  • Does the process as described in the draft Rules meet that need?
  • And if not, why?

The consultation ends on 5 March 2021 and it is hoped to publish the Digital Dispute Resolution Rules for use by commercial parties in Spring 2021.