Smart Contract Dispute Resolution blockchain, law, blockchainlaw? - - PowerPoint PPT Presentation

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Smart Contract Dispute Resolution blockchain, law, blockchainlaw? - - PowerPoint PPT Presentation

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Smart Contract Dispute Resolution blockchain, law, blockchainlaw? 14 September, Bern Content Legal Tech What is a Smart Contract? The need for Smart Contract Dispute Resolution? How Smart Contract Dispute Resolution works Automated

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Smart Contract Dispute Resolution

blockchain, law, blockchainlaw? 14 September, Bern

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Content

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Automated Dispute Resolution How Smart Contract Dispute Resolution works The need for Smart Contract Dispute Resolution? What is a Smart Contract? Legal Tech

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Technology in the Legal Industry

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Automated Dispute Resolution How Smart Contract Dispute Resolution works The need for Smart Contract Dispute Resolution What is a Smart Contract? Legal Tech

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Legal Tech: Nothing but hot air?

Hype

  • With the help of complex neural

networks (i.e. in an enormously structured/suitable environment) Google's AlphaGo wins against the World Champion in Go (2016)

  • "LegalBase will revolutionize the

legal market" (2016)

Reality

  • AlphaGo's successor, DeepZenGo,

loses all games at the World Championship 2017, just to win some games later, but to start losing again.

  • LegalBase goes bankrupt (2017)

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Legal Tech: Nothing but hot air?

Hype

  • "AskKelson will soon answers all

legal questions using artificial intelligence" (2012)

  • "The rental control will take effect

not least thanks to LegalTech / Access to Justice" (2015)

Reality

  • AskKelson was found to have

copied the results of Frag-Einen- Anwalt.de (2015)

  • Miethelden (and many other funded

startup companies) are bankrupt (2018), Mietpreisbremse is considered a fail

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Legal Tech: Risks?

Hypothesis 1: Legal Tech will not replace highly qualified legal work or make it redundant in the foreseeable

  • future. The more legal, complex

and individual the process, the less suitable it is for the use of Legal Tech Hypothesis 2: Within standardized procedures and/or matters with a high repetition rate, Legal Tech can already make a considerable contribution to accelerating and simplifying even those procedures that were previously reserved for processing by lawyers.

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Legal Tech: Opportunity?

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Opportunity! Legal Tech is a great opportunity for legal departments as well as for lawyers to relieve themselves of tasks that require the involvement of a qualified lawyer for control purposes only. Legal Tech allows users to focus on challenging and complex tasks. This is also true for dispute resolution procedures.

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

What is a Smart Contract?

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Automated Dispute Resolution How Smart Contract Dispute Resolution works The need for Smart Contract Dispute Resolution What is a Smart Contract? Legal Tech

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Innovation

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No Innovation

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  • Complicated cases
  • Legal assessment

Court Proceedings

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  • Assessment of facts
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12 Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Smart Contracts are neither smart nor contracts. (In most cases.)

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A Smart Contract is software.

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14 Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

A Smart Contract is (usually) only used to perform an obligation.

The obligations are performed when predefined conditions are met.

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Smart Contracts perform a (legal) contract

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If($a>$b) { print $a } else print $b; if $a == $b { $dbh = new PDO('odbc:example', 'mydatabase', 'mybase'); $count = $dbh- >exec("INSERT INTO `db` SET `value` = '".$a."''"); print "successfully inserted"; } If($a>$b) { print $a } else print $b; if $a == $b {$ dbh = new PDO('odbc:example', 'mydatabase', 'mybase'); $count = $dbh- >exec("INSERT INTO `db` SET `value` = '".$a."''"); print "successfully inserted"; } If($a>$b) { print $a } else print $b; if $a == $b { $dbh = new PDO('odbc:example', 'mydatabase', 'mybase'); $count = $dbh- >exec("INSERT INTO `db` SET `value` = '".$a."''"); print "successfully inserted"; } If($a>$b) { print $a } else print $b; if $a == $b {$ dbh = new PDO('odbc:example', 'mydatabase', 'mybase'); $count = $dbh- >exec("INSERT INTO `db` SET `value` = '".$a."''"); print "successfully inserted"; }

0x456 0x789 0x123

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16 Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

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17 Smart Contract Dispute Resolution | 14 September 2018 CMS Germany if flight_is_on_time() { pay_to_airline(ticketprice); } else { pay_to_airline(ticketprice * 0.75); pay_to_customer(ticketprice * 0.25); }

?

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18 Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

?

if flight_is_on_time() { pay_to_airline(ticketprice); } else { pay_to_airline(ticketprice * 0.75); pay_to_customer(ticketprice * 0.25); }

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The need for Smart Contract Dispute Resolution

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Automated Dispute Resolution How Smart Contract Dispute Resolution works The need for Smart Contract Dispute Resolution What is a Smart Contract? Legal Tech

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

False performance of (legal) contract

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  • 1. Contract/law and

SC do not comply with each other ("Non-Compliance").

  • 3. Contract/law

contains undefined legal terms. Contract Smart Contract code […] In case of flight delay, the customer receives 25% of the ticket price. if flight_is_on_time() { pay_to_airline(ticketprice); } else { pay_to_airline(ticketprice * 0.75); pay_to_customer(ticketprice * 0.25); } Except when the airline is not responsible for the delay. Except when the ticket costs less than 100 Euro.

  • 2. Contract/law is

not mapped in the SC completely ("loophole").

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

False performance of (legal) contract

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  • 1. Contract/law and

SC do not comply with each other ("Non-Compliance").

  • 3. Contract/law

contains undefined legal terms.

  • 2. Contract/law is

not mapped in the SC completely ("loophole").

  • 4. Smart Contract is

provided with wrong information.

  • 5. Smart Contract is

provided with inconsistent information.

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

False performance of (legal) contract

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  • 1. Contract/law and

SC do not comply with each other ("Non-Compliance").

  • 3. Contract/law

contains undefined legal terms.

  • 2. Contract/law is

not mapped in the SC completely ("loophole").

  • 4. Smart Contract is

provided with wrong information.

  • 5. Smart Contract is

provided with inconsistent information.

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No software is free of bugs

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 "The only way of writing less bugs is writing less code"  Challange: Smart contract perform obligations and move assets! Canadian stock market: 14 million dollar loss due to smart contract error

Quelle: btc-echo.de

Cryptocurrency Ethereum: Crowdfunding project DAO deprived of millions.

Quelle: heise.de

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No proper performance of contract in case of bugs in code

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If($a>$b) { print $a } else print $b; if $a == $b { $dbh = new PDO('odbc:example', 'mydatabase', 'mybase'); $count = $dbh- >exec("INSERT INTO `db` SET `value` = '".$a."''"); print "successfully inserted"; } If($a>$b) { print $a } else print $b; if $a == $b {$ dbh = new PDO('odbc:example', 'mydatabase', 'mybase'); $count = $dbh- >exec("INSERT INTO `db` SET `value` = '".$a."''"); print "successfully inserted"; } If($a>$b) { print $a } else print $b; if $a == $b { $dbh = new PDO('odbc:example', 'mydatabase', 'mybase'); $count = $dbh- >exec("INSERT INTO `db` SET `value` = '".$a."''"); print "successfully inserted"; } If($a>$b) { print $a } else print $b; if $a == $b {$ dbh = new PDO('odbc:example', 'mydatabase', 'mybase'); $count = $dbh- >exec("INSERT INTO `db` SET `value` = '".$a."''"); print "successfully inserted"; }

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What does that mean in practice?

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

How it works

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Automated Dispute Resolution How Smart Contract Dispute Resolution works The need for Smart Contract Dispute Resolution What is a Smart Contract? Legal Tech

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PayPal Dispute Resolution

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Simple question:

Where is the money and where is the product?

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PayPal: Claims

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Dispute Resolution for Smart Contracts

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Smart Contract runs

Grace period expired? Party raised an

  • bjection?

Arbitration library triggers arbitration Parties trigger Smart Contract Dispute resolution is being performed Results are being sent to Smart Contract no no yes yes Smart Contract sends result to parties

yes no

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Example: Request for Arbitration

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Jonatan wishes to refer a dispute to arbitration. Agreement: Coffee Agreement of July 14, 2017 Smart Contract: 0xca34b7d915458ef540ade6068dfe2f44e8fa733c Contact details Jonatan: jonatan@cms-hs.com, Nymphenburger Str. 75, 80636 Munich, 0x14724a09acff6d2a60dcdf7aa4aff308fddc160c Contact details Joerg: joerg@cms-hs.com, Nymphenburger Str. 10, 80335 Munich, 0x4b0847b0513fdc7c541b6d9d7e929c4e5364d2db

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Moving Forward

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Automated Dispute Resolution How Smart Contract Dispute Resolution works The need for Smart Contract Dispute Resolution What is a Smart Contract? Legal Tech

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Automation – Autonomous Driving

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Level 0 No automation Level 1 Automation of driver assist function such as ABS and cruise control. Level 2 Partial automation of central driving functions including steering and acceleration. Level 3 Conditional automation of

  • driving. A human is required

to take over, if needed. Level 4 All driving functions automated but is constrained to known use cases. Level 5 Full automation.

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Challenges for Dispute Resolution Procedures

Mass procedures Complex technical cases

International disputes

Complex & extensive cases Workload of neutrals Information

  • verkill

Smart Contracts

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Applications and Forms of Automatisation

Streitiges Verfahren  Consensual vs. Adverserial dispute resolution  Resolving disputes on facts vs. Disputes on legal questions  Assisted dispute resolution vs. Full automatisation

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Automated Consensual Dispute Resolution Procedures

Streitiges Verfahren Streitiges Verfahren

Double Blind Bidding Evaluate &

  • ptimise

Settlements Communication support

?

Common agreements database

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Automated Adverserial Dispute Resolution

Streitiges Verfahren Streitiges Verfahren

PayPal Dispute Resolution Crowdjustice / Ujuj Smart Contract Arbitration UDRP

?

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Automatisation in Different Stages of Proceedings

Commencement Legal assessment Taking of evidence Summarising facts

Streitiges Verfahren

Appointment of neutrals Establishing relevant facts Fact gathering Finding solutions

Moderating

Enforcement

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The Future?

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Conclusion

38 Blockchain und Konfliktlösung | 09. November 2017 CMS Hasche Sigle

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Smart Contract Dispute Resolution | 14 September 2018 CMS Germany

Thank you very much – Questions?

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  • Dr. Markus Kaulartz

Rechtsanwalt CMS Hasche Sigle E: markus.kaulartz@cms-hs.com T: +49 89 23807-305 Falco Kreis Rechtsanwalt CMS Hasche Sigle E: falco.kreis@cms-hs.com T: +49 89 23807-341

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