New technologies refer to the ground breaking innovations that strive to improve the human life by attempting to make it easier for humans to execute tasks. They are brought to life by the ever questioning minds of the technologically savvy generation of the time. They include the emergence artificial technologies, big data, blockchain, machine learning, and text-mining, to mention but a few.
My interest in this paper, however, is investigating how the ever dynamic ground breaking ‘blockchain’ technological trend is likely to impact on the international commercial arbitrations. In the process of answering this, I will venture into explaining the concept of international commercial arbitration, elucidate on what block-chain technologies are, and at the end dissertate on how international commercial arbitration is affected, either negatively or positively, by ‘blockchain’ technology.
International commercial arbitration
International commercial arbitration has no single definition. Different people, as a result being influenced by different factors, define international commercial arbitration in different ways. For example Duhaime’s Law Dictionary defines it as:
a commercial dispute subject to arbitration and in which a significant international elements exists such as, for example, the head offices of the disputants are different countries or the performance of the underlying contract is in a foreign state.1
Consequently, what we can agree on are the common features such as; having more than one party with opposite interests regarding a commercial issue in determination, subjecting the dispute to a ‘neutral’ mediator or a person who has no interest to the question to be determined, and of course, the subject matter or at least the parties must be having an international character. International character here means across-the-border or transnational nature of the transaction or parties involved in the agreement leading to the disputes subjected to arbitration. Sometimes, the seat of arbitration and the manner in which the arbitration is agreed to be conducted gives it the international character.
Blockchain is principally a new filing system for digital information, which stores data in an encrypted, distributed ledger format. Because data is encrypted and distributed across many different computers, it enables the creation of tamper-proof, highly robust databases which can be read and updated only by those with permission.2 Bernard Marr summarized it as thus:
It is clear that data held on a blockchain is by its nature highly secure, thanks to the cryptography which is inherent in its filing system. What this means is that blockchains are ideal for storing the highly sensitive, personal data which, when smartly processed, can unlock so much value and convenience in our lives. Think of smart healthcare systems that make accurate diagnoses based on our medical scans and records, or even simply the recommendation engines used by Amazon or Netflix to suggest what we might like to buy or watch next.
Of course, the data which is fed into these systems (after being collected from us as we browse or interact with services) is highly personal. The businesses that deal in it must put up large amounts of money to meet the standards expected of them in terms of data security. And even so, large-scale data breaches leading to the loss of personal data are increasingly common (and increasingly large!).
Blockchain databases hold their information in an encrypted state. This means that only the private keys must be kept safe – a few kilobytes of data – in order for all of the data on the chain to be secure.3
Impact of Blockchain on International Commercial Arbitration
As explained by Gauthier Vannieuwenhuyse, new technologies, including blockchain, have made it to the legal world, simplifying all phases of the dispute resolution process.4 Of course, the innovations come with their own challenges that beg to be addressed by the dispute resolution process but of concern now is how this novel trends impact on the international commercial arbitration.
It is apparent that international commercial arbitration and blockchain technology once belonged to different worlds as they were discovered by generations separated by thousands of years, however, what cannot be denied is that the two trends, while basking in their own paradigms with occasional interactions, have the potential to become even more revolutionary when intentionally designed to work together. Mutually, the two can enhance the aptitudes of each other, while improving on their respective outputs by opening up opportunities for better results.
It therefore follows that arbitration and blockchain technology share a mutually beneficial relationship. Blockchain will improve efficiency through making information needed for international commercial arbitration readily available and in the form stored. This is buttressed that the information stored is generally secured and can be easily extracted for employment by an arbitral tribunal.
It is also seen that the employment of blockchain will cut on the costs of conducting the arbitral tribunal hearings and in deed reduce the on the general costs related to the conduct of the arbitration. For example, there will be less need for data clerks, fewer data recovery and processing people, fewer experts to analyze data where data has been analyzed and stored ready to be used, and fewer witnesses to put the evidence to court if the parties agreed prior to the hearing on the admission of the blockchain data.
2 Bernard Marr, Artificial Intelligence and Blockchain: 3 Major Benefits Of Combining These Two Mega-Trends, https://www.forbes.com/sites/bernardmarr/2018/03/02/artificial-intelligence-and-blockchain-3-major-benefits-of-combining-these-two-mega-trends/#49383b124b44
3 Bernard Marr, ibid.
4 Gauthier Vannieuwenhuyse, 'Arbitration and New Technologies: Mutual Benefits' (2018) 35 Journal of International Arbitration, Issue 1, pp 119–129
- Quote paper
- Adams Rajab Makmot-Kibwanga (Author), 2018, International Commercial Arbitration and Blockchain Technology. A Synergy?, Munich, GRIN Verlag, https://www.grin.com/document/454741