Slide deck of Federico Ast presentation of decentralized justice at the "Blockchain and Procedural Law: Law and Justice in the Age of Disintermediation Automating Legal Instruments" conference at the Luxembourg Max Planck Institute. December 2019.

1. FEDERICO AST
CEO, Kleros
federico@kleros.io
When Blockchain Meets
Law: the Birth of
Decentralized Justice
BRUNO DEFFAINS
Professor, Université Paris 2
bruno.deffains@u-paris2.fr

2. Arbitration

3. The New York
Convention (1958)

7. Global
Work

8. Global
Investment

10. Online Dispute
Resolution

14. Blockchain

17. Game Theory
and Mechanism
Design

21. Kleros and the
Birth of
Decentralized
Justice

22. The Contract

24. How does it
work with
Kleros?

25. Arbitrator

26. Jurors

27. Alice
Wins
Arbitrator

28. How are
jurors
selected?

30. Pinakion (PNK)

34. Cryptoeconomic
Incentives

37. Choose a Square
If you choose the same as the majority, you win $20.

39. Jurors vote
independently and are
rewarded to vote like
the majority

40. Users trying to game
the system will
lose money
on average
$

41. Honest users
will
make money
on average
$

42. Doges on Trial

43. Users send images
and jurors decide
whether they should
be accepted in the
list...

44. Users earn a small
reward for each
accepted Doge
image...

45. Users could earn
$12,000 if they got
jurors to accept a
cat in the list

49. Doge: 0
Not Doge: 3
REJECTED

51. Doge: 3
Not Doge: 0
ACCEPTED

52. Appeal

53. The Appeal
System

54. First
Instance
Vs.

55. Second
Instance
Vs.

56. Third
Instance
Vs.

57. Fourth
Instance
Vs.

58. Fifth
Instance
Vs.

59. Sixth
Instance
Vs.

60. Doge: 7
Not Doge: 0
ACCEPTED

62. Doge: 3
Not Doge: 0
ACCEPTED

63. Appeal

64. Doge: 1
Not Doge: 6
REJECTED

65. The “Cat in the Snow”

69. Does the image clearly
show a cat?

71. Kleros
Team
Won
2 - 1

76. Defining
a
New Field

77. DECENTRALIZED JUSTICE
DECENTRALIZED CRYPTOECONOMICS FAIRNESS
The dispute
resolution procedure
is encoded as a
decentralized
autonomous
organization with the
capacity to produce
rule of law.
The system uses
economic
incentives to reach
the desired
outcome.
Decisions made
by the system
are perceived
as fair.

78. Decentralized
Rule of Law
Feature
1

79. The system is encoded as a
decentralized autonomous
organization which produces rule
of law.

80. The six features of the rule of law
(Weingast and Hadfield, 2013):
1 The decision making logic is publicly available.
2 The institution resolves ambiguity.
3 The decision-making logic is stable.
4 The system gives predictable results to novel
inputs.
5 It's impersonal.
6 It can produce new rules by soliciting information
from users.

81. The decision
making logic
is publicly
available.
Condition
1

82. Yes, it’s open
source code
deployed on the
blockchain.
Condition
1

84. The institution
resolves
ambiguity.
Condition
2

85. Yes, a set of rules
that determine
how decisions
should be made in
case of dispute.
Condition
2

87. The decision-
making logic
is stable.
Condition
3

88. Yes, rules don’t
change often.
Condition
3

89. The system
gives
predictable
outcomes to
novel inputs.
Condition
4

90. Yes,
jurisprudence
helps predict how
the system is
likely to rule in a
given case.
Condition
4

92. The decision
making logic
is impersonal.
Condition
5

93. Yes, users
operate under
pseudonyms.use
rs operate under
pseudonyms.
Condition
5

94. The system can
produce new rules
by soliciting
information from
users.
Condition
6

95. Yes, rules change
with community
feedback and
voting.
Condition
6

97. Crypto
Economic
Incentives
Feature
2

98. The system relies onrelies
on economic incentives to
reach the desired outcome.

99. Pinakion (PNK)

100. Fairness
Feature
3

101. The system
produces fair
decisions.

102. Daniel Dimov’s Framework
of Procedural Fairness

103. PROCEDURAL FAIRNESS
Expertise Independence Impartiality Transparency
Fair
HearingDecision
Control
Process
Control
Providing
Reasons
Length of
Procedure
Consistency Accuracy
Correctability
Ethicality

104. Challenges of
Decentralized Justice:
- Technical
- Market
- Legal
- Ethical

105. Technical
Challenge
1

106. Will decentralized justice
systems be able to
withstand collusion,
bribery, 51% attacks, etc.?

107. Market
Challenge
2

108. What are the industries
where decentralized justice
models will be more
prevalent?

109. Which business models
will arise?

110. Legal
Challenge
3

111. How will decentralized
justice systems interact
with existing regulation?

112. Will decentralized justice
systems be accepted as
legally valid arbitration
under UNCITRAL rules?

113. Ethical
Challenge
4

114. Is decentralized justice a
fair method for dispute
resolution?

115. DECENTRALIZED JUSTICE
DECENTRALIZED CRYPTOECONOMICS FAIRNESS
The system operates
as a decentralized
autonomous
organization with the
characteristics of
rule of law.
Agents are subject
to economic
incentives to
provide rulings.
Decisions made
by the system
are perceived
as fair.

116. Courts
Banks
Encyclopedias
Analog
Centralized
Digital
Centralized
Digital
Decentralized

117. FEDERICO AST
CEO, Kleros
federico@kleros.io
When Blockchain Meets Law:
the Birth of Decentralized
Justice
BRUNO DEFFAINS
Professor, Université Paris 2
bruno.deffains@u-paris2.fr