The cryptosphere is booming. New cryptoassets are issued on a daily basis and other applications utilising distributed ledger technology (DLT) are receiving substantial investment from established players and disruptive start-ups. With growth comes a rise in potential and actual disputes. It is therefore timely for this sector to give careful thought as to whether projects, transactions and investments make suitable provision for dispute resolution.
Disputes arising from DLT applications share many similarities with those in other fields of commercial activity. National courts are hearing disputes concerning parties’ failure to perform contracts involving cryptoassets, ownership disputes, IP rights and frauds. On the other hand, aspects of these disputes are novel and may create barriers to securing effective redress. The intangible nature of cryptoassets, the lack of physically established exchanges, potential anonymity (or pseudonymity) of counterparties and immutability of distributed networks all create obstacles to obtaining and enforcing remedies from national courts.
This article explains how arbitration agreements can (and have) been used in the cryptoasset and smart contract contexts to provide effective dispute resolution and provides an overview of some of the many options that creators, users and investors select.