16 Jan 2019
The seminar was hosted by Pinsent Masons LLP. The distinguished panel comprised Marcus Killick OBE, Chair of the Gibraltar Stock Exchange and Chief Executive Officer of ISOLAS LLP; Professor Grant Jones, lawyer, accountant and ADR practitioner; Clive Freedman, barrister arbitrator and mediator at 3 Verulam Buildings; Professor Loukas Mistelis, the Clive Schmitthoff Professor of transnational law and arbitration and Director of the School of Arbitration at Queen Mary University of London; and Christopher Wray, Chief Legal Officer of Matterium, the smart contracts provider. The panel was convened by Daniel Djanogly, Vice-Chair of the London Branch, Chartered Arbitrator and partner, Head of Forensics, at CVR Global LLP.
David McIlwaine of host Pinsent Masons welcomed attendees and Daniel Djanogly introduced the distinguished panel of speakers.
Professor Grant Jones gave an introductory overview of the cryptocurrency landscape, including explanations of blockchain (the digital register of transactions in cryptocurrencies), smart (self-executing) contracts, and ITOs (initial token offering, the launch of a currency).
Marcus Killick OBE discussed regulation of the crypto-currency ecosystem. He divided issues into “thrilling” (blockchain and smart contracts), and “scary” (anonymity, speed and global reach, which present opportunities for market manipulation and criminal activity). Regulators in different jurisdictions had tended to either tolerate, treat, transfer or terminate (i.e. largely ignore, regulate, transfer risks or ban). Arbitration is not yet common, but there are some dispute resolution mechanisms developed for blockchain e.g. Jur (where other users vote on an outcome to a dispute).
Clive Freedman examined the types of legal dispute that may arise, some of which are not new e.g. formation of contract and interpreting terms. Difficulties are most likely to arise with unexpected circumstances such as supervening illegality or software failure. Given the complexity of the field, he thought expert determination might be more suitable than arbitration. Law in relation to tax, divorce and insolvency will have to develop to deal with this area.
Professor Loukas Mistelis explored how to arbitrate a blockchain and smart contract dispute, including the arbitral processes currently available – e.g. Codelegit and Confideal, which use human arbitrators, and Kleros, which uses a peer-to-peer (“jury”) system. The major arbitral institutions have not produced any special rules for this area, so the usual choice of arbitral rules and procedures e.g. UNCITRAL may apply.
Christopher Wray considered practical enforcement issues. Smart contract users are ultimately staking their real-world assets in support of their liabilities as arbitration awards would be enforced against any assets held by them.
Following lively and informed Q&A session, a reception was generously hosted by Pinsent Masons LLP.
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