Smart contracts are blockchain contracts which are self-enforced and self-executed. The concept of self-execution highly relates to an alternative system of justice rather the traditional court system. Thus, the smart contracts swift the concept of justice established by the state to an alternative form of justice which can be termed user self-controlled justice. Formal definitions as well as working conditions of the latter concept should be developed if an innovative and decentralized environment operating on this type of justice is to be deployed. Additionally, a key factor of the legal framework and regulatory environment is the trust from interested parties. Thus, if conflicts arise during smart contract formulation or execution, then the several parameters influencing mediation process should be objectively addressed. Underlying this work is the argument that dispute resolution services in general and mediation in particular should operate not only under well-established regulatory rules but also under rules pertaining to the behaviour of the parties involved since automation can contribute to self-determination based on values and norms of said parties. We propose a system architecture for smart contracts where the mediation process incorporates functional aspects such as previous related cases, visualization options, and legal context, but also behavioral ones such as emotional entity similarity and digital trust.
of trust becomes harder to address. Consequently, the online mediation process becomes more challenging.
Technology advances have changed the way legal ser- When parties involved in smart contracts require a
vices are delivered. The changes do not include only the dispute be resolved, the Mediator must ensure that the
way courts have been organised but also the introduction legal interests of all parties and the related parameters
of innovative dispute resolution mechanisms. Alterna- will be considered in the outcome. As mentioned in [
In the currently prevalent neoclassical economic the- respect, equality, and privacy. ory trust in third parties is irrational. Therefore, it may • The self-determination principle overturns the well be assumed that in a smart contract environment traditional principles of mediation. there can be no trust in general as almost by definition • Parties feeling that they have determined the outtransactions take place automatically between unrelated come and not a third party. parties. Moreover, considering that such transactions can naturally involve entities of diferent business cultures and practices in various geographic location, the issue
Using artificial intelligence (AI) to incorporate the
above principles into an automated platform is
challenging. In this paper we will describe how these human
related aspects can be partially addressed using an
automated mediation platform. This paper is structured as
follows. Section 2 presents the recent scientific literature
in smart contracts and proof mechanisms. In section 3
we describe the process of mediation as an alternative
dispute resolution mechanism. Thus, we provide a basic
understand of the particular requirement of such a
process. In section 4 we propose a system architecture that
will enable automated mediation. At the end in section 5
we conclude this work and discuss future directions. It
should be highlighted that throughout the text the terms
parties or parties involved refer to the entities
participating to the formulation or execution of a smart contract.
2. Previous Work
interactions. The trust in blockchain stacks from a legal
perspective is discussed among others in [
resolution (ADR) explained in definition 1. ADR lays the groundwork for legally acceptable conflict management in general and digital dispute resolution in particular including special smart contract clauses.
Smart contracts are increasingly becoming an integral
part of digital world [
The proof mechanisms of various blockchain stacks • Negotiation.
are the focus of [
The problem of trust on online environments have the discussion the mediator first explains to the parties
been discussed in Web trust [
The mediation process introduces the idea of a facili- based on self-determination can lead viable solutions and tator party, namely an entity that will assist in finding a reinforce the confidence of the parties in both their commutually accepted solution. This is a step further than petence and the interaction quality. Furthermore, it has traditional negotiation since the parties negotiate on their been argued that the concept of self-determination can own. Involved parties expect the facilitator to help the be achieved only if the parties actively and directly parnegotiation process and even propose a solution. More- ticipate in the process and choose and control the norms over, it is of paramount importance the facilitator to be to guide their decision making therefore feel that that the trusted by these parties. As a rule, the harder the conflict agreement they reached was their own and not forced severity, then less obvious the solution is. In mediation to accept or not accept a settlement which reflect a third the third party has no authority to impose a settlement. party’s norms, experience or will.
As mentioned, the mediation process is straight for- The concept of self-determination is connected with ward and simple. A third party chosen by the parties’ the concept of autonomy which is defined as a second function as facilitator when they meet to discuss and order capacity of person to reflect critically upon their attempt to solve their dispute. The mediation process ifrst order preferences (say one is envious -first order is based on the consensus and its enforcement is based preference- and does not want to be envious-second oron the party’s acceptability of the outcome. Thus, the der preference) and the capacity to change these in light central person in the mediation process is the mediator. of higher order preferences and values. Moreover, the He is facilitator whose main responsibility is to create the concept of self-determination is related to fundamental environment where the parties can discuss about their values as participation, dignity, respect, privacy, equity issues and try to find a workable solution for all of them. and access. These values maybe fundamental for the The mediator needs to have some qualities in order to settlement process since settlement may be based on imsuccessfully perform the assigned role. portant non-legal principles or interests which may be
The EU Directive on Mediation recognized the impor- more important to the parties than the legal consideratance of the role of mediators and in order to ensure tions. These values of dignity, respect etc are the ones the quality of mediation encourages the development of which highlight the importance of party involvement voluntary codes of conduct by mediators and the develop- in the negotiation and decision-making components of ment of other quality control mechanisms. The European mediation to the outcome fairness. Code of Conduct for Mediators also set some voluntary rules which serve as guidelines for efective mediation services. In US the Model Standards for Mediation also
Smart contracts are contracts written in code which run when the programmed conditions are met. Thus, the happening of the pre-specified events will trigger their execution. They are automated and unchangeable. They can be either drafted contracts or standard form contracts and in both cases they are easily and quickly adopted. The transparency of the system together with the automation benefits the parties since there is little space for diferent interpretations.
Since their design is diferent from traditional contracts several novel issues arise one of which is how the dispute will be resolved. Smart contracts as the traditional contracts may include a jurisdictional clause as well as define the method by which the dispute will be resolved. Thus, we could possibly follow an approach where we don’t differentiate smart contracts from traditional contracts and apply the same alternative dispute procedure. One other approach might be to develop a new system to govern the enforcement of these contracts. In this work, the first approach will be considered where a specially designated smart contract clause determines an alternative dispute resolution system, specifically mediation. parties in a simple and plain way is required.
In addition to the system design, the system should also address other legal issues such as a plan on how the data will be accessed and protected. Moreover, there should be mechanisms for system failure thus it is important the drafting of the relevant clause with specific attention to liability clauses. In cases the system for whatever reason needs to be terminated there will be an alternative system that can facilitate the discussion. Moreover at the end of the session and after an agreement has or has not been reached the system will evaluate itself and improve. The evaluation of the system will include whether the desired result has been achieved and ask and evaluate the parties experiences.
4.3.1. Overview
4.3.2. Blockchain e-contract creation module
contract creation and execution system. In this system
4.2. Mediation platform characteristics the legal contract is transformed to contract written in
We believe that the already mentioned principles of me- code and it is automatically executed. This module is
simdiation process should be incorporated on the Mediation ilar to the one presented in detail in [
One of the main drivers for the parties to participate in 2 presents a generic outline of a workflow execution an automated mediation platform is to meet their expec- process. tation for reducing their costs, reduce error possibilities, save time and achieve a direct and fast access to justice. Moreover, achieving a system design that can be 4.3.4. Behavioural matching module conceived as transparent and fair, considering equally This module will collect the profile of the parties. Each for the parties an increased trust in the service can be party when registering to the mediation platform they acachieved. The introduction of the Mediator Platform that cept that when alerts occur the mediation process will be provides clear and accurate information about the scope, triggered and a similar clause is added to their e contract. the benefits, the consent and withdrawal options as well Moreover, they provide some details regarding their proas the limitations of the adoption of the system to the file. If accepted they also provide their accounts in social media like Twitter. The behavioural and afective matching module, selects are related information and extracts the emotional profile and the behavioural profile of the users. For example, how extrovert the users are, their homophily, their degree of influence in the network, etc.
When two parties are in conflict their similarity in computed. The latter can be done with a number of metrics such as the cosine similarity. 4.3.5. Data mining module
4.3.6. Mediator negotiation module The mediator software is responsible for proposing a fair deal to both parties. Initially the mediator reveals successful solutions to similar cases based on the data mining module. If the parties agree to select one of these cases then the problem is solved and the accepted report is generated. If not then each agent of each party is entering the negotiation platform. Following for example an alternating ofers protocol, the ofers of both sites are sent to the mediator software that will return with a proposal that optimizes the diferences of the two parties. The mediator module extends the traditional agent negotiation by introducing an entity that is aware of all related information. This entity also has the trust of both parties. Each party is represented by an agent that has a utility function that wants to maximize. An example negotiation system can be formed on BDI agents. Agents can be formed following the belief-desire-intention model. Each agent based on its beliefs it selects an appropriate action. Agents execute actions based on a set of rules. The mediator is a special agent responsible for the collaboration of the agents while parties are the agents that negotiate.
In this paper we discussed the behavioural aspects that need to be considered in order to establish efective dispute resolution principles in cases of conflicts related to smart contracts. The principal findings are the following: the existing principles of neutrality and impartiality has proven not to be efective and trustworthy. In contrast the principle of self determination and the related moral values of the parties should be the centre of the mediation process. The self-determination makes the parties to trust the procedure as well feel that this is their outcome and not somebody else. Therefore, we propose online mediation systems with AI design that considers these parameters as the central role of the mediation. Additionally, other instruments can be supportive of this efort such as creating dispute resolution ethical/behavioural guidelines to clarify what the parties expect from the dispute resolution mechanism, Instruments of cooperation among smart contract parties: parties less cooperate if they think that their ethical and behavioural aspects will be ignored. In contrast, if they believe that all aspects will be considered the degree of cooperation will be improved as well as guidelines help guide mediators in making an overall assessment of the parties’ discussions, these guidelines can be embedded in the software and also presented in the parties at the beginning of the process. In the future we plan to elaborate more in each of the module and select algorithms that lead to self-determination.