A court decision in France technically holds no bearing in most other countries.
France is a sovereign nation and other sovereign nations are not necessarily obligated to respect its laws (and vice versa). While this is the foundation of statehood, it raises the question of what legal system digital nomads can follow.
In a Plumia Talks live interview, international arbitrator and ArbTech co-founder Sophie Nappert discussed the concept of borderless dispute resolution via arbitration and the critical role technology is set to play in its future.
Arbitration 101
While sovereign courts are typically the highest authority in each respective country, there’s a second type of legal dispute that Nappert believes can be more effective for borderless living – arbitration.
Within arbitration, all parties agree to the terms they will be bound by. The job of an arbitrator is much like that of a private judge, to listen to all the evidence and render a decision in line with the terms everyone has agreed to.
Arbitration started in commercial contexts, such as someone not paying for goods or services. Over time, it evolved to become a useful tool for avoiding a costly and lengthy court motion, as well as an opportunity to work with subject matter experts on complex topics, or to protect intellectual property from becoming public record.
Arbitration is recognized globally. Over 160 countries are signed up to the New York Arbitration Convention, a private international law treaty that recognizes and enforces foreign arbitral awards. This means, for example, that an arbitrator’s decision in New York would be respected in a London or Paris court, as the US, UK and France are all contracting states.
The primary difference between arbitration and court is consent. Arbitration cannot happen without all parties consenting to enter into arbitration and consenting to the terms of the discussion. If any party doesn’t consent, they cannot be compelled into it the way they can in a court of law.
The benefits and drawbacks of arbitration
As with any form of dispute resolution, arbitration has benefits and drawbacks.
Benefits
✦ Portability of decisions: Because of the New York Convention, arbitration decisions are respected globally in ways that sovereign court rulings are not.
✦ Flexibility: Arbitration can take whatever form and contain whatever rules of discussion that the parties agree to (provided certain rules of basic fairness are met).
✦ Speed: While arbitration is generally a lengthy process, it’s often faster than court proceedings.
Drawbacks
✦ Costs: Nappert says the costs of arbitration are so high that it’s unlikely to be worth pursuing unless the decision is worth at least $100,000 to the parties involved.
✦ Applicability: Arbitration’s complexity means it’s not the best route for simple cases because the negotiations would outweigh the value of the case.
✦ Access: Due to the costs and complexity of entering arbitration, Nappert says it isn’t accessible for many people who might benefit from its speed and globally-binding decisions.
How technology impacts dispute resolution
Nappert is cautiously optimistic about the role technology will play in the future of dispute resolution. She sees three key ways in which technology could make arbitration more accessible.
Firstly, Online Dispute Resolution (ODR) offers a digital option; there is no conversation or trial. Parties agree to the terms and conditions set ahead of time (by a vendor like eBay), submit all their evidence, and an online arbitrator reads the information and renders a binding decision.
Nappert says ODR is impactful because it’s quick and easy to access, but there is no opportunity for appeal and no opportunity to explain your case verbally, so it isn’t a perfect solution.
Nappert is also excited by smart contracts, self-executing legal documents in which agreements are written into lines of code. She says they are a way to “eliminate a lot of people that right now make a lot of money off the back of people who transact.”
However, she also clearly states that she doesn’t view smart contracts as a form of arbitration or justice. Instead, they’re a way to be more efficient in the delivery of goods and services. Since the terms of a smart contract are automatically executed, Nappert feels they could be a great way to make arbitration less necessary overall.
And thirdly, blockchain is decentralizing arbitration. In these instances, multiple people stake crypto on a blockchain to act as arbitrators, theoretically removing any bias that might exist in a single arbitrator.
Nappert does have concerns with blockchain-based systems, though, owing to incentive structures. Current projects put bounties on specific outcomes, meaning that individuals are paid out more or less depending on the outcome of the case. To Nappert, this is equivalent to “putting money at the heart of justice”, which can open the door to corruption.
For Nappert, a healthier peer-to-peer justice system isn’t monetarily incentivized. She says: “It's almost a philosophical point, but it's a very important one: what sort of justice do you want?”
Watch our full interview with Sophie Nappert:
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