Online dispute resolution is a perfect fit for BRI
On November 7, 2023, in Suzhou, workers at the Zhangjiagang Port Group Co., Ltd. terminal are loading domestically produced construction vehicles for export to countries participating in the BRI. Photo: CFP
Recently, Jamieson M. Kirkwood, a postdoctoral fellow in Finance, Technology, Regulation and Sustainable Development at the Faculty of Law at the University of Hong Kong, and Julien Chaisse, a professor at the Faculty of Law at City University of Hong Kong, published an article titled “Smart Courts, Smart Contracts, and the Future of Online Dispute Resolution.” CSST conducted an interview regarding the latest developments in Online Dispute Resolution (ODR) with one of the authors, Professor Chaisse, as well as Mark McLaughlin, Visiting Assistant Professor at the School of Law at Singapore Management University.
ODR in foreign-related economic disputes
According to professor McLaughlin, “out of necessity, the international dispute resolution landscape has undergone a seismic shift in the use of ODR over the past three years. The pandemic has created a generation of legal and business professionals who are acutely familiar with online platforms, and consider ODR a viable and legitimate means by which to resolve their disputes. This shift in perspective is reflected in our research in the Singapore International Dispute Resolution Academy IDR Survey. Among users of international arbitration, support for the use of online platforms was 47% in 2020 and has risen to 89% in the 2022 iteration of the survey. To that extent, ODR will continue to grow in line with industry confidence. While in-person hearings will remain an important fixture for complex, high-value disputes, the burgeoning institutional support for ODR may create a more cost-effective option for many cases. Given the length and cost of investment disputes, I can see ODR being deployed in a similar manner for certain stages in an arbitration/mediation, for example on some procedural matters. For highly complex cases that require the cross-examination of multiple witnesses, in-person hearings will likely remain preferable.”
He continued to explain that many of the advantages of ODR that exist in a commercial context, like accessibility, flexibility, and efficiency, apply equally to state owned enterprises. Despite their designation, many such enterprises operate autonomously and on a commercial basis, and so the advantages of ODR apply to a similar extent. One potential issue that may arise for state owned enterprises relates to the security of information. The physical infrastructure of the internet falls under the sovereignty of the state in which it is located. Therefore, concerns about monitoring or surveillance may be particularly acute for state enterprises engaged in critical sectors of the economy. Institutions and firms should develop advanced cybersecurity practices to meet the obligation of confidentiality while complying with local laws.
“Given the size and scale of the Belt and Road Initiative, several aspects of ODR may prove beneficial. The use of a standardised ODR model, such as the APEC Collaborative Framework, may provide a default mode of dispute resolution that is accessible by Chinese parties and their counterparts in host countries. Platforms that offer document translation may also create greater understanding between the parties. Overall, the potential for greater efficiency offered by the appropriate use of ODR proceedings can prevent BRI projects from becoming embroiled in protracted litigation,” he said.
ODR+: combing blockchain, AI
According to Professor Chaisse, the ODR+ system represents an evolved version of ODR, leveraging emerging technologies such as blockchain, artificial intelligence, and machine learning to enhance the dispute resolution process. The ‘plus’ in ODR+ indicates the integration of these technologies, allowing for transparent, efficient, and secure mechanisms, such as Smart Contracts, which automatically execute contractual obligations when predefined conditions are met, and Smart Courts, which facilitate automated yet equitable legal adjudications.
Chaisse continued to explain that the ODR+ initiative is in its initial stages of development, with countries involved in the BRI progressively assessing its vast potential. An illustrative example of this is China’s spearheading of the formation of e-BRICS, a concerted endeavour aimed at enhancing digital collaboration among the BRICS nations. This initiative not only showcases the potential to boost the digital economy, but also opens avenues for resolving disputes efficiently through the ODR+ mechanism. In line with these advancements, Chaisse’s proposition underlines the need for a collaborative strategy in which multifaceted stakeholders come together to untangle the complex web of international relations and economics. Thus, the ODR+ initiative should foster a platform where cooperation transcends borders, industries, and sectors, knitting a network fortified with shared knowledge, technological prowess, and a unified vision for the future. It is imperative to approach this from a ground-up perspective, fostering grassroots engagements and empowering local entities with the necessary knowledge and tools to engage productively in the ODR+ framework. Moreover, establishing educational initiatives and think tanks can work to develop blueprints that ensure that the system is fair, accessible, and efficient for all involved parties.
The future of ODR+
In the evolving landscape of dispute resolution, smart courts and contracts have emerged as pivotal elements in the ODR+ framework. At the heart of this innovation are smart contracts that leverage blockchain technology, a decentralised and immutable ledger system that imparts a high degree of security and transparency to the contractual processes. By automating the execution of contract terms upon the fulfilment of stipulated conditions, they substantially reduced the scope of disputes rooted in contract violations. The automated, self-executing nature of smart contracts can herald a transformative shift in how businesses transact and resolve disputes, fostering a climate of trust and predictability. Complementing these are smart courts, which are judicial platforms imbued with artificial intelligence capabilities. These platforms aim to streamline judicial processes and offer swift and unbiased resolutions to disputes. By utilising deep-learning algorithms, they can analyse vast arrays of legal precedents and data points to aid in more informed, precise, and timely judicial decisions. This not only serves to drastically reduce the procedural delays that traditionally plague the legal system, but also mitigates the uncertainties that often arise due to human error or bias.
He continued: “Taking a step further, I envisage the incorporation of innovations, such as decentralised identity solutions which prioritise user privacy and consent, allowing for secure, privacy-preserving, and trustworthy transactions and interactions. Meanwhile, the advent of quantum-resistant cryptographic algorithms promises to build a fortress of security, shielding the ODR+ ecosystem from potential vulnerabilities posed by the quantum computing revolution, thus keeping pace with the ever-evolving technological landscape. In the near future, we could witness a more harmonised integration of these technologies within the ODR+ framework, setting a stage where contractual obligations are not just legally binding, but technically binding as well. This synergy could potentially give rise to a more fluid, organic, and responsive legal ecosystem that adapts in real time to the nuanced dynamics of international transactions and relations. Moreover, by fostering a proactive approach to dispute resolution, where disputes are anticipated and resolved even before they escalate, ODR+ could revolutionise the legal landscape, shifting the focus from remediation to prevention. For instance, it could facilitate the creation of predictive models that help foresee potential disputes, thereby allowing parties to proactively undertake preventative measures.”
“International organisations can play a pivotal role in facilitating cross-border collaboration, establishing norms and standards for ODR+ systems, and ensuring interoperability and harmonisation among different legal systems. Collaborative platforms involving UN bodies such as UNCITRAL could be sought to foster a global consensus on ODR+ implementation. All in all, the integration of smart courts and contracts in the ODR+ paradigm promises not just a transformation but also a renaissance in the international dispute resolution arena, offering a path that navigates through transparency, efficiency, and foresight, aligning with the principles of justice while embracing the prowess of technology.”
“I foresee the gradual integration of more advanced AI algorithms in dispute resolution, with a continuous emphasis on enhancing security through quantum-resistant technologies. Moreover, ODR+ systems could potentially be integrated into IoT, offering a seamless dispute resolution ecosystem in the connected world of the future,” said Chaisse.