Views
Conflicting Views on the Restatement (Third) of Conflict of Laws
The American Law Institute is currently drafting the Restatement (Third) of Conflict of Laws. Lea Brilmayer (an eminent scholar of conflict of laws and a professor at Yale Law School) and Kim Roosevelt (the Reporter for the Restatement (Third) and a professor at the University of Pennsylvania Carey Law School) recently engaged in a spirited debate about the current state of that project. Brilmayer and Daniel Listwa argued here that the current draft needs less theory and more blackletter rules. Roosevelt argued in response that the critics identify a problem that does not exist and propose a solution that would make things worse.
This exchange — the latest back-and-forth in a conversation between these interlocutors — is likely to prove illuminating to anyone curious about the status of the Restatement (Third) in the United States.
Can Blockchain Arbitration become a proper ‘International Arbitration’? Jurors vs. arbitrators
Written by Pedro Lacasa, Legal Consultant, Universidad Nacional de Asunción
There is no doubt that the use of emerging technologies has impacted the international arbitration arena. This tech revolution was unprecedently accelerated by the 2020 pandemic whilst national States’ borders were closed, and travel activity diminished (if not directly forbidden by some States).
The increase of the application of the Blockchain technology in commercial contracts and the proliferation of smart contracts (even though some think they are in essence merely a piece of software code[1]) have reached the point of being a relevant part of international commerce and suddenly they demand more attention than before (see the overview of these new technologies and its impact in arbitration here http://arbitrationblog.kluwerarbitration.com/2019/01/27/2018-in-review-blockchain-technology-and-arbitration/).
The omnipresence of technology in arbitration and the application of the blockchain technology to dispute resolution mechanisms in the international arena led to the naissance of the ‘blockchain arbitration’.
But just because a method focuses on dispute resolution, is not ipso facto a proper ‘arbitration’.
While the utilization of a trusted chain of information enhanced by technology is encouraged in arbitration proceedings, particularly in international arbitrations, we must underscore the fact that not any dispute resolution mechanism is a proper ‘arbitration’… not even if based on the blockchain.
Blockchain arbitration models do not share some of the essential features of arbitration. The parties cannot choose the arbitrator in charge freely. They cannot easily choose aspects like the language of the procedure, the nationality of the arbitrators, the qualification of the arbitrators, the applicable law, etc. If the parties choose the arbitrators based on their qualifications or nationality, such choices can directly impact the availability of the existing ‘blockchain arbitrators’. A fortiori, the parties cannot choose the applicable law to the arbitration itself or to the merits of the dispute either.
Nominating the arbitrators
In Kleros, one of the most popular blockchain arbitration applications, the candidates for adjudicators first self-select themselves into specific courts (i.e., specific types of disputes) and then, the final selection of the adjudicators is done randomly (meaning a party cannot directly nominate someone in particular as an arbitrator for the underlying dispute). As it specifies in its whitepaper[2] “contracts will specify the options available for jurors to vote”, meaning the contract itself is the first factor that restrain party autonomy. In Kleros anyone can be an adjudicator. The probability of being drawn as an adjudicator for a dispute is proportional to the amount of tokens such user stakes within the platform.
Whilst other platforms such as Aragon[3] use the same drafting (of adjudicators) system, networks such as Jur[4], Mattereum and Sagewise[5] use a system that go a step closer to the International Arbitration legal framework (like the 1958 New York Convention, the UNCITRAL Model Law, etc.) in order to make their awards more enforceable worldwide but still lack the flexibility of a wider private autonomy and the role of the conflicts of laws, both present in classical international commercial arbitration processes.
These blockchain-based dispute resolution adjudicators are referred also as ‘jurors’[6]. ‘Jurors’ are Blockchain users elected to vote in favor of one of the parties to the underlying dispute utilizing the Schelling Point method.
But without even analyzing what the Schelling Point methodology has to do with the art of rendering justice in a definitive and final manner, we must ask the question: if the ‘jurors’ have more features of a jury and not of an arbitrator, why do we call a mechanism that solves disputes through decisions made by jurors and not by arbitrators arbitration?
Moreover, these jurors, like users of the Blockchain, have a direct economic interest in serving as jurors in the dispute at hand[7]. However, to think that an arbitrator decided to assume the task of being a part of an arbitral tribunal in an international arbitration constituted to resolve an international dispute, only because that would mean eventually more money to him, is an obscure idea at best. Such arbitrator was elected because of his or her qualities, experience, background, and reputation. This also occurs in domestic arbitrations. Nonetheless, such private autonomy is not possible in some blockchain arbitrations.
It is one thing to refer to such mechanisms as blockchain-based methods. But it is completely different is to maintain that such mechanisms are indeed ‘arbitrations’ stricto sensu[8], just like suggested by many authors[9] and professional associations such as the Blockchain Arbitration Society
Although the global society must embrace all the tech innovations regarding dispute resolution, the clear definition of what is an ‘arbitration’ and what is not should be a healthy practice.
Conclusion
Overall, the technology evolution within the dispute resolution mechanisms is here to stay. This disruption needs a twofold adaptation: on one hand, the parties on an international contractual commercial relationship must adapt themselves to the new ways of solving disputes. The same goes for Sovereign States, that must update their domestic and international legislation to recognize and somehow regulate such new dispute resolution mechanisms.
On the other hand, these platforms for dispute resolution must adapt to the historical surrounding of the conflict solving industry, calling a dispute resolution mechanism for what it is and avoid euphemisms.
Lastly, the misconception on the dispute resolution mechanisms and international arbitration procedures may provoke a confusion to the detriment of the users of such digital networks.
[1] See Charlie Morgan ‘Will the Commercialisation of Blockchain Technologies Change the Face of Arbitration?’ [Kluwer Arbitration Blog, March 5, 2018] available at http://arbitrationblog.kluwerarbitration.com/2018/03/05/topic-to-be-confirmed/.
[2] Kleros white paper [September 2019] available at https://kleros.io/whitepaper.pdf.
[3] See “Juror staking” and “ Juror drafting” https://github.com/aragon/whitepaper.
[4] See “Open Justice Platform” in Jur’s whitepaper V 3.0.0 [March 2021], available at https://jur.io/wp-content/uploads/2021/03/jur-white-paper-v.3.0.0.pdf.
[5] See Darcy W.E. Allen, Aaron M. Lane & Marta Poblet, ‘The Governance of Blockchain Dispute Resolution’ [Harvard Negotiation Law Review, vol. 25, issue 1, Fall 2019] 75-102.
[6] Maxime Chevalier, ‘From Smart Contract Litigation to Blockchain Arbitration, a New Decentralized Approach Leading Towards the Blockchain Arbitral Order’ [Journal of International Dispute Settlement, vol. 12, issue 4, December 2021] 558 – 584 https://academic.oup.com/jids/article-abstract/12/4/558/6414874?redirectedFrom=PDF.
[7] Kleros white paper [September 2019] available at https://kleros.io/whitepaper.pdf.
[8] See for example Sharath Mulia & Romi Kumari, ‘Blockchain Arbitration: The Future of Dispute Resolution’ [Fox Mandal, November 2021] available at https://www.foxmandal.in/blockchain-arbitration-the-future-of-dispute-resolution/.
[9] For example, see Ritika Bansal, ‘Enforceability of Awards from Blockchain Arbitrations in India [August 2019] available at: http://arbitrationblog.kluwerarbitration.com/2019/08/21/enforceability-of-awards-from-blockchain-arbitrations-in-india/.
Conference Report: EAPIL YRN Conference on National Rules on Jurisdiction and the Possible Extension of the Brussels Ia Regulation
The following conference report has been provided by Benjamin Saunier, Research Assistant at the Université Paris 2 Panthéon-Assas and Doctoral Candidate at the Université Paris 1 Panthéon-Sorbonne.
The EAPIL Young Research Network held a conference on the topic Jurisdiction over non-EU defendants – Should the Brussels Ia Regulation be extended? on Saturday 14 and Sunday morning 15 May. The conference took place in Dubrovnik, Croatia, at the International University Centre operated by the University of Zagreb, which had co-funded the event together with the EU Commission. It gathered specialists from all over the world, including the non-EU Member States.
The conference was part of an ongoing research project directed by Drs Tobias Lutzi (Cologne/Augsburg), Ennio Piovesani (Torino) and Dora Zgrabljic Rotar (Zagreb). As explained by the organisers at the outset of the conference, the project, launched in June 2021, was inspired by Article 79 of the Brussels Ia Regulation, which provides for the EU Commission to come up with a report on the application of the Regulation, addressing in particular the need to extend its rules to defendants not domiciled in a member state. While the report has yet to be released, the organisers rightly felt it was of great interest to compare the practice of Member States for those cases where the defendant is not subject to rules of direct jurisdiction in the Regulation.
A questionnaire on autonomous, national law on international jurisdiction was sent last year to the 23 participants in the project, who cover 17 Member States of the EU. The questionnaire contained the following questions (here summarised):
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– What are the sources of rules on international jurisdiction in your country?
– How is the domicile defined for jurisdictional purposes? Is there a general rule of jurisdiction based on a ground other than domicile of the defendant?
– Is there a forum necessitatis? What are the equivalents of the Regulation Article 7(1) for contractual claims, 7(2) for torts, 8(1) for close connection between defendants, and the equivalents of protective heads of jurisdiction such as the one for consumer law disputes?
– Is your country party to any (bilateral or multilateral) treaty that provides direct rules of jurisdiction in civil and commercial matters?
The national reports were submitted last February and the organisers were able to share some of their (preliminary) conclusions, which will eventually make their way into a book along with the national reports and some of the interventions heard in Dubrovnik. Not all of the findings could be introduced in this report, which only serves as a short teaser for the book.
Tobias Lutzi pointed out that most of the states surveyed, which already make up for the majority of the EU Member States, have adopted specific rules for international jurisdiction. Some of these countries have already extended the rules of the Regulation, or taken substantial inspiration from them. Even courts of the member states that have not adopted specific rules on international jurisdiction did on some occasion take some inspiration from the EU rules when applying the principle of ‘double functionality’, which sees international jurisdiction as entailed by local jurisdiction. This was addressed in details by the members of the first panel of Saturday, which focused on the topic of the influence of EU law on national rules and was composed of Tess Bens, Dr Stefano Dominelli, Dr Dafina Sarbinova and Benjamin Saunier.
Dora Zgrabljic Rotar remarked that in most countries, the same definition of the domicile was applied in international and domestic cases for jurisdictional purposes (which is not to say that the definition itself is the same in all those countries). The majority of the jurisdictions surveyed use the statutory seat as well as the actual seat in order to determine the domicile of a legal person. As for bases of general jurisdiction apart from the defendant’s domicile, most of the countries surveyed seem to have one, be it habitual residence, mere presence, or property of the defendants. Only two of these countries still give relevance to nationality of either party to a litigation in that regard. The existence of a forum necessitatis is also a distinctive feature of the countries implementing it. Speakers of the second panel of Saturday (Vassiliki Marazopoulo, Giedirius Ožiunas, Dr Ioannis Revolidis, Dr Anna Wysocka-Bar), dealing with the peculiarities of autonomous law of the Member States, all had the opportunity of explaining, among other things, whether or not, and why, their home jurisdiction had a forum necessitatis rule.
The third panel of Saturday, composed of Professors Ronald Brand, Burkard Hess and Margerita Salvadori addressed the issue of “extending the Brussels Ia Regulation”, which echoes the project title “should the Regulation be extended?”. The panellists put things in a broad perspective, addressing the discrimination (Ronald Brand) and recognition and enforcement of judgements issues (Burkard Hess) that would be associated with an extension (or non-extension) of the Regulation, as well as the possibility of following a method based on reciprocity in an extended Regulation (Margerita Salvadori).
Participants were also provided with a look at the “bigger picture” thanks to the presentations on Sunday. Dr Johannes Ungerer for the UK and Dr Marko Jovanovic for Serbia both presented third state perspectives. Finally, Dr Ning Zhao gave a thorough presentation of the negotiations held in the Hague Conference since the early 1990s on the issues discussed at the conference, their achievements so far (2005 Choice-of-Court Agreements and 2019 Judgements conventions) and orientations.
The interventions and exchange among participants made for two very pleasant days. The gorgeous setting of Dubrovnik also played its part in making the conference a great success. As Ronald Brand put it, the question asked in the project title raises multiple further questions, so that it can be hoped that no matter what the future holds for the Brussels Ia Regulation, projects such as this one will be happening more and more.
News
Review of Kazuaki Nishioka, Treatment of Foreign Law in Asia, Oxford: Hart Publishing, 2023, 327 pp, hb £117
It is a great pleasure to review the book titled Treatment of Foreign Law in Asia, edited by Kazuaki Nishioka. This volume contains 17 chapters, including an introduction and conclusion, spanning 298 pages (excluding the series editor’s preface, table of contents, bibliography and index). The book examines 15 Asian jurisdictions, representing a variety of legal systems, including civil law (China, Taiwan, Japan, South Korea, Vietnam, Cambodia, Indonesia, and Thailand), common law (Hong Kong, Singapore, Malaysia, Myanmar, and India), and mixed jurisdictions (Philippines and Sri Lanka). Read more
Praxis des Internationalen Privat- und Verfahrensrechts (IPRax) 5/2024: Abstracts
The latest issue of the „Praxis des Internationalen Privat- und Verfahrensrechts“ (IPRax) features the following articles: Read more
Virtual Workshop (In English) on September 10: Nieve Rubaja on International Surrogancy Agreements From the Latin American Perspective. An Overview.
On Tuesday, September 10, 2024, the Hamburg Max Planck Institute will host its monthly virtual workshop Current Research in Private International Law at 2:00 pm – 3:30 pm (CEST). Nieve Rubaja (University of Buenos Aires) will speak, in English, about the topic
International Surrogacy Agreements From the Latin American Perspective. An Overview.
The media, judicial cases and administrative constraints show that surrogacy is a reality in Latin American countries. Regulation on this subject matter has become a need in order to protect the human rights involved, especially the rights of the children born. Over the last decades, legal systems in Latin America have been transversely affected by the emergence and progressivity of human rights. In addition, there are more than 20 countries in the region and each of them has its own historical, social and cultural shades; therefore, human rights have been a key factor for the unification of some conceptions in the region. This imprint impacts on surrogacy regulation (and bills) both for domestic and for cross-border cases. The few countries which provide rules regarding cross-border surrogacy cases choose a recognition approach. According to this, the legal parentage established abroad must be recognised in the forum if it is compatible with their international public policy, taking into account the best interest of the child. Among Latin American countries Argentina, Brazil, Mexico and El Salvador have designated representatives to participate in the Working Group on the Parentage/Surrogacy Project of the Hague Conference of Private International Law, which brings an opportunity to include Latin American voices. This meeting aims at providing an overview of the comparative analysis carried out considering the distinctive features of the region.
The presentation will be followed by an open discussion. All are welcome. More information and sign-up here.
If you want to be invited to these events in the future, please write to veranstaltungen@mpipriv.de.