Decentralised Justice Systems (DJS) are a new form of dispute settlement powered by blockchain technology and cryptocurrency that has proven useful when solving disputes due to its costs and procedural efficiency. A DJS decision is rendered in the cyberspace and generally self-enforced in the blockchain if the dispute involves cryptocurrency. Nonetheless, it is unclear what would be the treatment of decisions rendered in a DJS if parties seek their enforcement in national courts, an issue that is likely to gain importance as the technology behind DJS develops, and the prospects of its entrance in the market of medium and large disputes increase.

This work argues that DJS decisions can be enforced in the national courts of New York Convention on the Recognition and Enforcement of Foreign Awards (New York Convention or Convention) Contracting States via an evolutionary interpretation of the treaty’s provisions. To do so, it sets out four issues at stake to enforce DJS – the territoriality criterion for the application of the Convention, DJS as arbitrators, the definition of award under the Convention and its form requirements. It addresses them by contrasting the interpretation of the Convention made by national courts of the Contracting States with an evolutionary interpretation of the treaty. 

Internet users have grown to almost five billion in just 22 years.1Abby McCain, How fast is technology advancing? [2023]: Growing, evolving and accelerating at exponential rates, ZIPPIA (Jan. 11, 2023), https://www.zippia.com/advice/how-fast-is-technology-advancing/#:~:text=This%20is%20up%20from%20a,hit%201.43%20billion%20in%202022.X1  This is approximately 62% of the current world population.2The world population prospect for 2022 is 8 billion people. See United National Department of Economic and Social Affairs, World population prospects 2022, UNITED NATIONS (2022), https://www.un.org/development/desa/pd/sites/www.un.org.development.desa.pd/files/wpp2022_summary_of_results.pdf.X2  On one of its many applications, internet has changed the way international business and transactions operate by eliminating geographical limitations for the exchange of information.

That, however, is not all. Only ten years after the internet’s big boom, blockchain technology came into existence. The blockchain is a form of connectivity in which information and any of its variations are registered in an unalterable network. The chain comprises all the network’s devices.3Georgios Dimitropoulos, The Law of Blockchain, 95 Wash L Rev 1117, 1127-1129 (2020)X3  Consequently, it is virtually impossible to hack,4Santiago Enrique Rodríguez, The what, the why, and the how: Blockchain as a solution for Institutional Arbitration, 37 SPAIN ARBITRATION REVIEW 77, 79 (2020). X4 because hackers must enter all the chain’s devices to modify any information. Therefore, the blockchain creates a “secure transfer of value and data directly between parties.”5Organization for Economic Co-operation and Development, OECD Blockchain Primer 3, OECD (Jul 27, 2019), available at https://www.oecd.org/finance/OECD-Blockchain-Primer.pdf.X5  Put simply, blockchain technology is a new form of bookkeeping6Peter L. Michaelson & Sandra A. Jeskie, Arbitrating Disputes Involving Blockchains, Smart Contracts, and Smart Legal Contracts, 74 (4) AAA-ICDR DISPUTE RESOLUTION JOURNAL 89, 92 (2019).X6 that ensures the fidelity of the information presented in the system.

Initially, blockchain became a business network to decentralize payments from the control of financial institutions by using cryptocurrencies, the blockchain’s coinage.7Julie Pinkerton, The History of Bitcoin, the First Cryptocurrency, U.S. NEWS (Aug. 7, 2023), https://money.usnews.com/investing/articles/the-history-of-bitcoin#:~:text=%22In%20June%202011%2C%20it%20hit,was%20worth%20more%20than%20%241%2C000. X7  Now, it has evolved to serve as a platform for automating international transactions by the implementation of self-enforceable agreements. There are smart contracts (SCs) and smart legal contracts (SLCs).8Darcy W. E. Allen, et al., The Governance of Blockchain Dispute Resolution, 25 HARV NEGOT L REV 75, 78 (2019). See also Bronwyn E. Howell & Petrus H. Potgieter, Uncertainty and dispute resolution for blockchain and smart contract institutions, 17 JOURNAL OF INSTITUTIONAL ECONOMICS CUP, 545 (2021), available at doi:10.1017/S1744137421000138. X8 SCs are completely self-enforceable, upon the meeting of the conditions expressed in the program.9Georgios Dimitropoulos, The Law of Blockchain, 95 WASH L REV 1117, 1135 (2020).X9 Currently, SCs cannot foresee every possible scenario involving a transaction, and their code is not built to deal with uncertainty.10Bronwyn E. Howell & Petrus H. Potgieter, Uncertainty and dispute resolution for blockchain and smart contract institutions, 17 Journal of Institutional Economics CUP 545, 549 (2021), available at doi:10.1017/S1744137421000138.X10   As a consequence, parties will look to avoid uncertainty by coding as many scenarios as possible, increasing negotiation costs.11Darcy W. E. Allen, et al., The Governance of Blockchain Dispute Resolution, 25 HARV NEGOT L REV 75, 81-82 (2019).X11  As an alternative, parties can conclude SLCs which are “an amalgam of [SC] and traditional contract[s].”12Peter L. Michaelson & Sandra A. Jeskie, Arbitrating Disputes Involving Blockchains, Smart Contracts, and Smart Legal Contracts, 74 (4) AAA-ICDR DISPUTE RESOLUTION JOURNAL 89, 95 (2019).X12  While the SLC is concluded as if it was a plain contract, it might contain, for example, a self-enforceable clause for payment.13Peter L. Michaelson & Sandra A. Jeskie, Arbitrating Disputes Involving Blockchains, Smart Contracts, and Smart Legal Contracts, 74 (4) AAA-ICDR DISPUTE RESOLUTION JOURNAL 89, 95 (2019).X13  Parties might choose one or the other depending on factors that increase the likelihood of encountering an unexpected scenario, like the contract's duration or the market's volatility.14Smart contracts are less suitable for executory contracts. See Bronwyn E. Howell & Petrus H. Potgieter, Uncertainty and dispute resolution for blockchain and smart contract institutions, 17 JOURNAL OF INSTITUTIONAL ECONOMICS CUP 545, 551 (2021), available at doi:10.1017/S1744137421000138.X14  SCs and SLCs’ popularity is likely to grow exponentially.

SCs and SLCs generally include dispute settlement (DS) clauses opting for a DJS, especially in case of SCs.15This work assumes that the electronic form of the dispute resolution clause in SCs is no limitation for its validity under Art. II of the New York Convention to narrow the scope of the discussion to the recognition and enforcement of DJS decisions. Two reasons sustain this assumption. First, the general tendency of states is to allow the conclusion of electronic agreements, especially after the sanitary crisis that started in 2020 by the COVID 19 propagation. For example, there are states like the UK where the encouragement of electronic commerce goes as far as being recognized as a matter of public policy. Second, paragraph 57 of the Explanatory Note on the United Nations Convention on the Use of Electronic Communications in International Contracts States that the convention applies to arbitration agreements in electronic form and recognizes its validity. Thus, there is a tendency among states to allow the conclusion of arbitral agreements by electronic means, and code is one of them. See U.N. Comm. on International Trade Law, Explanatory Note on the United Nations Convention on the Use of Electronic Communications in International Contracts ¶ 57, Jan. 2007, UNCITRAL; see also Haitham A. Haloush, Jurisdictional Dilemma in Online Disputes: Rethinking Traditional Approaches, 42 (3), AMERICAN BAR ASSOCIATION STABLE (Publisher), 1129, 1132 (2008), available at https://www.jstor.org/stable/23824404. X15  DJS solve blockchain disputes by cyber proceedings that conclude with a decision rendered by a jury or a tribunal which is then implemented using computational code. Although DJS’ were designed for blockchain disputes, they are not limited to them. Pursuant to the principle of freedom of contract, and due to their cost and efficiency, they are an attractive option for regular or off-chain disputes.16The off-chain and on-chain classification is taken from the categories of blockchain governance. See. Georgios Dimitropoulos, The Law of Blockchain, 95 WASH L REV 1117, 1178-1179 (2020). Also See Peter L. Michaelson & Sandra A. Jeskie, Arbitrating Disputes Involving Blockchains, Smart Contracts, and Smart Legal Contracts, 74 (4) AAA-ICDR DISPUTE RESOLUTION JOURNAL 89, 96 (2019); see also Ramona Elisabeta Cirlig, Party Autonomy in Determining the Law Applicable in International Commercial Arbitration and its Limits Derived from the New York Convention, 34 SPAIN ARBITRATION REVIEW 47, 49 (2019). X16  Thus, there is a need to determine the legal treatment that states will give to DJS decisions and whether they will recognize and enforce them.

This work deals with the possibility of enforcing DJS decisions under the New York Convention17Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 330 U.N.T.S. 38, 7 I.L.M. 1046. [hereinafter New York Convention]. X17 asserting that such scenario is possible by interpreting its provisions in an autonomous and evolutionary manner.

Chapter two explains how DJS operate and the issues surrounding their enforcement as arbitral awards within the scope of the Convention [II]. Chapter three describes the Contracting States’ approaches to the Convention’s territoriality criterion to conclude that there is a tendency to exclude DJS decisions from its scope of application [III]. Chapter four sets out an autonomous and evolutionary interpretation of the Convention’s provisions to disregard the Contracting States’ local approaches to the territoriality criterion, and justify the enforcement of DJS decisions [IV]. Following the comparative process of chapters three and four, chapter five conducts an evolutionary interpretation of the Convention while addressing the rest of the issues surrounding the enforcement of DJS decisions [V]. Finally, chapter six deals with the possibility of states refusing the enforcement of DJS decisions under Art. V (2) of the Convention and suggests a solution through blockchain governance [VI].

DJS emulates conventional adversarial proceedings to settle bilateral disputes in the blockchain. They are decentralized because they operate in the blockchain with no anchor to a state’s jurisdiction to govern the proceeding.1Maxime Chevalier, From Smart Contract Litigation to Blockchain Arbitration, a New Decentralized Approach Leading Towards the Blockchain Arbitral Order, 12 (4) JOURNAL OF INTERNATIONAL DISPUTE SETTLEMENT 558, 565 (2021), available at https://doi.org/10.1093/jnlids/idab025.X1 

DJS generally work as follows: the claimant files a claim in the DJS, the defendant submits a response, both parties present digital evidence, and a collegiate body (jurors or tribunals) rules on the dispute. Finally, the decision is self-enforced using blockchain in two ways. It could take the form of an SC itself or become an order (also called oracle) in computational code to enact the preestablished consequence that an existing SC forecasts in case of a breach.2Darcy W. E. Allen, et al., The Governance of Blockchain Dispute Resolution, 25 HARV NEGOT L REV 75, at 87, 93 (2019). X2 

Kleros is an example of a DJS. Its procedure is akin to the description above. However, it has three key features. First, Kleros’ decisions are taken by a jury selected by the system. Jurors have different specializations and are elected from a pool according to their expertise. Second, parties can challenge the decisions within the system by filing an appeal. Parties can file as many appeals as they see fit, one after the other. Every time there is an appeal, however, a jury twice as big as the last one will solve the dispute, increasing the costs. This is to dissuade parties from such recourse. Finally, jurors are not obliged to state the reasons for their decision. The matrix asks them a yes or no question regarding their findings in a specific case.3Federico Ast, Kleros, a Protocol for a Decentralized Justice System, MEDIUM (Sept 11, 2017), https://medium.com/kleros/kleros-a-decentralized-justice-protocol-for-the-internet-38d596a6300d.X3  Even though Kleros is currently used in minor cases, their developers expect to eventually enter the market of medium and large disputes.4Fernando Quirós, Federico Ast, cofundador y CEO de Kleros: X4 

Can DJS proceedings be considered as arbitrations? Arbitration works under the belief that parties can decide to opt-out of the jurisdiction of states’ judiciary to submit their dispute to a private tribunal and proceedings of their choice.5THOMAS SCHULTZ & THOMAS D GRANT, ARBITRATION: A VERY SHORT INTRODUCTION 20 (Oxford University Press 2018).X5  Thus, arbitration as a concept may differ from arbitration as a legal institution. As a concept, it only refers to the submission of a dispute to a private person whose decision the parties have agreed to implement. As a recognized legal institution, arbitration encompasses states’ legislations, finding limitations for its use. For example, while an arbitration regarding family law is conceptually an arbitration, there are jurisdictions in which states have prohibited arbitration in matters of family law,6THOMAS SCHULTZ & THOMAS D GRANT, ARBITRATION: A VERY SHORT INTRODUCTION 20 (Oxford University Press 2018) at 25.X6 making them inarbitrable.7For the concept of arbitrability see Loukas A. Mistelis, Part I Fundamental Observations and Applicable Law, Chapter 1, in 19 INTERNATIONAL ARBITRATION LAW LIBRARY – ARBITRABILITY: INTERNATIONAL AND COMPARATIVE PERSPECTIVES 1, 3-6 (Loukas A. Mistelis & Stavros Brekoulakis eds., 2009). X7 

When arbitration is recognized as a legal institution in a domestic jurisdiction, the arbitrators’ awards are final.8GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 3520 (Kluwer Arbitration, 3rd ed. 2021).X8  The award’s creditor can draw upon a state’s means of compulsory enforcement to oblige the debtor’s compliance. Also, awards can only be challenged in domestic courts on a specific number of grounds, narrowed to reduce a state’s regulatory power, enhancing the principle of parties’ autonomy.9U.N. Comm. on International Trade Law, Model Law on International Commercial Arbitration (1985) with amendments as adopted in 2006 (Vienna: UN, 2008), UNCITRAL [hereinafter UNCITRAL Model Law], Art. 34.X9  The importance of the recognition of arbitration by states relies on these features.

DJS proceedings are conceptually arbitrations.10The platform is the administrator of the proceedings. See U.N. Comm. on International Trade Law, Technical Notes on Online Dispute Resolution ¶ 26, UNCITRAL (2017).X10  Parties agree on a procedure and choose their private adjudicators. Likewise, they accept to be bound by an eventual decision. Thus, also conceptually, DJS decisions are awards. The issue is whether DJS decisions can be regarded as enforceable awards under the Convention.

For the New York Convention to be applicable, the decision must be taken by an arbitral tribunal, comply with formalities and be rendered in a different state than the one where enforcement is sought.11UNCITRAL Model Law, supra note 26, Arts. 10, 31; New York Convention, supra note 17, Arts. I and IV.X11  Hence, there are four issues to analyze while determining the possibility of enforcing DJS decisions by way of the Convention. These are:

1. Whether the DJS platforms can be characterized as arbitrators, or the anonymous jurors appointed in DJS like Kleros can be categorized as arbitrators.
2. Whether the DJS decisions can be defined as awards in either the Contracting states’ national legislation or the Convention.
3. Whether DJS decisions adopt the form of an award as provided in the Convention or the Contracting States’ national legislation.
4. Whether DJS decisions comply with the Convention’s territoriality requirement.

It is worth mentioning that there are considerations for enforcing DJS decisions that are not part of this analysis as they are better dealt with by modifying the DJS’ protocols.  For example, blockchain members only know the other participants’ cryptographic private keys but not their physical identity.12Maxime Chevalier, From Smart Contract Litigation to Blockchain Arbitration, a New Decentralized Approach Leading Towards the Blockchain Arbitral Order, 12 (4) Journal of International Dispute Settlement 558, 563 (2021), available at https://doi.org/10.1093/jnlids/idab025.X12  This issue, which makes the enforcement of a DJS decision in the physical world near impossible, is better solved by creating a rule in the DJS by which the parties will provide information about their physical identity to the system. Furthermore, when this is the case, the code could include a condition by which the physical identity of the counterparty will be revealed if there is a DJS decision in need of enforcement in national courts.

Art. I (1) sets out the Convention’s scope of application. The Convention applies to awards “made in the territory of a State”1New York Convention, supra note 17, Art. I (1). X1 different than the State of the enforcement action, or “not considered as domestic awards”2Id.X2 in that State. This chapter deals with the treatment of the territoriality requirement in the Contracting States’ national legislations and judicial interpretations of the Convention. First, it shows states’ tendency to reject “a-national” decisions as awards within the scope of the Convention and the scholarly assertion that the same logic applies to DJS decisions [A]. Second, it describes a clever but ineffective option to enforce DJS decisions as traditional awards [B]. Finally, it presents the USA and France’s approaches to recognizing and enforcing “a-national” awards as a further practical step towards the enforcement of DJS decisions [C].

A.    States are likely to disregard decentralized decisions

This segment explains the foundations of the current discussion surrounding the territoriality criterion of Art. I (1) of the Convention and its connotations in enforcing DJS decisions.

Territoriality appears to be a criterion derived from common sense. Sovereignty is generally understood in its Westphalian definition, perceiving interaction between states as the polarized representation of regulatory and political power.3Rainer Grote, Westphalian System, in MAX PLANCK ENCYCLOPEDIA OF PUBLIC INTERNATIONAL LAW (Anne Peters & Rüdiger Wolfrum dirs., 2006).X3  States hold a police powers’ monopoly within their territories and are equal in the realm of international law.4Id.X4  Thus, states can conclude international agreements to affect their monopoly of power in favor of other states to recognize and enforce their judicial decisions. For the equation to work, every binding decision relies on a state, that has agreed to be part of this international system for the enforcement of such decisions.

It seems that the arbitral system also works under the same logic. Under Art. 1 (3) of the UNCITRAL Model Law, territoriality determines whether an arbitral proceeding is regarded as international and, in consequence, within the law’s scope of application.5UNCITRAL Model Law, supra note 26, Art 1 (3). Also U.N. Comm. on International Trade Law, A/CN.9/WG.II/WP.49 at 6-7, Note on the Model law on international commercial arbitration: territorial scope of application, UNCITRAL, available at https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/acn9_wg.ii_wp.49_e.pdf. X5  Further, the territoriality criterion in Art. I (1) of the Convention was instituted with the apparent assumption that every arbitral decision must be anchored to a state’s legal order. Thus, this logic commands that every arbitration needs to be governed by the law of a physical seat to be enforced under the Convention.6Emmanuel Gaillard, International Arbitration as a Transnational System of Justice in ARBITRATION: THE NEXT 50 YEARS 66, 67 (Albert Jan van den Berg ed., Wolters Kluwer 2012).X6 

Nonetheless, the Convention has two unique features that empower the tendency to accept a broader interpretation of the territoriality criterion. First, Arts. V and VII have been interpreted to offer the possibility to enforce an award regardless of, for example, the fact that proceedings were set aside in the seat of the arbitration.7Furthermore, Art. V (1) (d) of the New York Convention provides that the composition of the arbitral tribunal will be firstly determined by the agreement of the parties. The law of the seat is only a default rule in case of lack of agreement. See Roy Goode, The Role of the Lex Loci Arbitri in International Commercial Arbitration in 17 (1) ARBITRATION INTERNATIONAL 019, at 23.X7  Second, awards rendered in states that are not a party to the Convention also fall within the scope of Art. I (1).8New York Convention, supra note 17, Art. (I) 1. X8  The default rule is that Contracting States must recognize and enforce arbitral awards seated in states that are not obliged to reciprocate them. In other words, the Convention general framework departs from the PIL rule on reciprocity. Consequently, states need to make a reservation to apply reciprocity to Art. I (1).9It takes the name of “reciprocity reservation”. X9  Currently, roughly 75 of more than 160 nations have made this reservation.10Contracting States, NEW YORK ARBITRATION CONVENTION, https://www.newyorkconvention.org/countries (last visited Sep. 7, 2023).X10  More than 50% of the signatories agree with the Convention’s default framework, allowing the recognition and enforcement of arbitral awards regardless of whether the State of the seat has ratified the treaty.

The unique features of the Convention and the principle of autonomy of the parties as the foundation of the arbitral system11Ramona Elisabeta Cirlig, Party Autonomy in Determining the Law Applicable in International Commercial Arbitration and its Limits Derived from the New York Convention, 34 SPAIN ARBITRATION REVIEW 47, 49 (2019). X11 are the basis for a debate as old as the Convention.12The travoux preparatoires registered a debate on the territoriality criterion that ended in the Contracting States leaving Art. I as it is but modifying Art. V to fit the possibility to relax the criterion. See (a) Awards X12  The issue is whether the territoriality criterion of the Convention, understood as the unchanging requirement that an arbitral award be connected to a state law via the seat of arbitration, is preferred to an absolute application of the principle of autonomy of the parties, which would allow the parties to proceed with an arbitration without a designated seat. Accepting that there is a primacy of the principle of autonomy of the parties comes with embracing the idea that a-national awards, or awards without a seat, are enforceable under the Convention.13Marike & Paulsson, THE 1958 NEW YORK CONVENTION IN ACTION 107-109 (Kluwer Law International 2016). X13 

While arguing the possibility of enforcing an award set aside in the court of the seat, Prof. Emmanuel Gaillard explains that the debate is about legitimacy. Any position on this matter will depend on one of three competing visions of international arbitration.14Emmanuel Gaillard, International Arbitration as a Transnational System of Justice in ARBITRATION: THE NEXT 50 YEARS 66, 67 (Albert Jan van den Berg ed., Wolters Kluwer 2012).X14  First, the monolocal vision contests that the arbitral proceeding is preauthorized by the law of the seat. Hence, an award set aside at the seat cannot be enforced in a different jurisdiction.15Id.X15  Second, the Westphalian vision believes the law of the seat is one of several laws relevant to international arbitration. Of course, another relevant law is the law of enforcement. Thus, the award’s legitimacy can be based on different legal systems.16Id.X16  Finally, the transnational vision “considers that international arbitration is anchored in the collectivity of legal systems.” In other words, international arbitration is an “a-national legal order, not an autonomous legal order.”17Id. at 69.X17  Hence, the legitimacy of awards is based on majoritarian principles and not on “idiosyncratic or outdated rules of law.”18Id. at 70.X18  The Convention allows for the enforcement of set aside awards under the Westphalian and transnational approaches to international arbitration.19Id.X19  Likewise, the transnational view enables the possibility to enforce an award rendered with no seat.

The majority view on the discussion is that a-national awards fall outside the Convention’s scope. It relies on the plain text of Art. I (1), the fact that other provisions recognize the role of the lex arbitri,20Roy Goode, The Role of the Lex Loci Arbitri in International Commercial Arbitration in 17 (1) ARBITRATION INTERNATIONAL 019, at 23.X20 and an inference from the Convention’s legislative history asserting that Contracting States intended to exclude this type of awards from the treaty’s scope of application. In Prof. Van den Berg’s words:  

The Convention applies to the enforcement of an award made in another State. Those who advocate the concept of the ‘a-national’ award, on the other hand, deny that such award is made in a particular country (‘sentence flottante’, ‘sentence apatride’). How could such award then fit into the Convention's scope?21ALBERT JAN VAN DEN BERG, THE NEW YORK CONVENTION OF 1958 (Deventer, Kluwer Law and Taxation Publishers 1981).X21

Art. 36 of the UNCITRAL Model Law uses the exact wording as Art. V of the Convention. Thus, the debate regarding recognizing a-national awards in national legal systems resembles the one under the Convention. However, some states have decided to lean their legislations toward rejecting a-national awards. For example, Art. 840 (5) of the Italian Code of Civil Procedure and Art. 1076(1)(A)(e) of the Netherlands Private International Law Act provide for the mandatory refusal of enforcement in cases in which the award has been set aside by the courts of the seat,22Roy Goode, The Role of the Lex Loci Arbitri in International Commercial Arbitration in 17 (1) ARBITRATION INTERNATIONAL 019, at 24. X22 creating the logical necessity for every arbitration to have a seat.  

In sum, the majority view on the Convention’s territoriality criterion, and which has been incorporated in some national systems, is that a-national awards fall outside of the scope of the Convention since they are not rendered in connection with a seat. Thus, awards should have a seat for enforcement under the Convention.

The majority view arguments to reject the enforcement of a-national awards are applicable to DJS decisions due to its even greater level of decentralization. Referring to Kleros, Mauricio Virues asserted that “[g]iven that Kleros … decisions cannot be … considered 'foreign' by any of the contracting States[,] [they fall] out of the scope of [the] New York Convention”.23Mauricio Virues Carrera, Accommodating Kleros as a Decentralized Dispute Resolution Tool for Civil Justice Systems: Theoretical Model and Case of Application 8-9, available at https://ipfs.kleros.io/ipfs/QmfNrgSVE9bb17KzEVFoGf4KKA1Ekaht7ioLjYzheZ6prE/Accommodating%20Kleros%20as%20a%20Decentralized%20Dispute%20Resolution%20Tool%20for%20Civil%20Justice%20Systems%20-%20Theoretical%20Model%20and%20Case%20of%20Application%20-%20Mauricio%20Virues%20-%20Kleros%20Fellowship%20of%20Justice.pdf (last visited Aug. 13, 2022).X23 

Thus, the narrow view on the territoriality criterion of the Convention and a-national awards creates a tendency to interpret DJS decisions as falling outside the Convention’s scope of application. There are two pragmatic reasons to rethink this approach. First, that blockchain creates a new reality for international transactions that will be limited in development if the regulation’s approach is not dynamic. Second, and likewise, disregarding DJS decisions under the Convention without considering their purpose and functionality is against the treaty’s purpose. These issues will be dealt with in chapter three below.

B.    The enforcement of a Kleros decision as a national award in Mexico: a clever but ineffective solution.

At this point of the analysis, it is important to disregard what seems to be an obvious observation against the relevance of this study. States generally recognize parties’ autonomy to a large, but not absolute, extent. Thus, if the seat of the arbitration is of secondary importance in practice, why wouldn’t the parties agree on a seat that allows waiving the awards’ challenge and use a DJS for their arbitral procedure? Furthermore, why would the parties not agree that the DJS decision is rendered in a way that complies with the formal requirements of the physical world to be enforced? Said differently: if parties can adapt DJS technology to the current arbitral system, is there a need to contest the narrow interpretation of the territoriality criterion adopted by most states in their national interpretations of the Convention?

This issue is addressed in three steps. First is the possibility of adapting DJS’ technology to traditional arbitration through the example of a national award enforced in Mexican courts. Second is the option of adjusting this solution to international arbitration. Third is the disadvantages of following this seemingly pragmatic approach. 

First, a case of enforcement of a national arbitral award whose ruling was decided by Kleros jurors in the courts of Jalisco, Mexico is empirical evidence that applying DJS technology to traditional arbitration is possible. The case related the breach of a lease of MXN$4.000,00 (US$200) per month. The lease contained an arbitration agreement (AA) in which parties appointed a sole arbitrator (SA) and agreed that a Kleros jury would solve the merits of their disputes. Furthermore, the parties waived their right to challenge the award.  Both parties were Mexicans, the property object of the lease was in Jalisco, and the seat of the arbitration was also Jalisco.

The lessor instituted arbitral proceedings to terminate the agreement due to the lease’s lack of payment. As the parties agreed in the AA,24Id. Annex I: Original Arbitration Agreement, at 28-30.X24 the proceedings concluded in a month and envisaged the following steps: (i) the claimant sent his claim and the supporting evidence via email to the SA;25Id. Annex II, at 32. X25 (ii) the SA notified the defendant,26Id. Annex II, at 33-34.X26 and the latter submitted her response and evidence; (iii) the SA drafted a Procedural Order No. 1 summarizing the parties’ positions, listing the evidence and outlining the procedure to submit the dispute to Kleros;27Id. Annex III, at 37-39.X27 (iv) the SA submitted the electronic file and the order to Kleros for adjudication;28Id. Annex III, at 40.X28 (v) Kleros initiated a proceeding in its system and appointed a jury; (vi) the jury came to a decision declaring the breach;29Id. Annex IV, at 43.X29 (vii) the SA was notified with the decision; and, (viii) rendered an award implementing it.30Id. Annex V, at 45-50.X30 Then, the claimant filed for enforcement of the award in the courts of Jalisco, which recognized and enforced it under Jalisco’s Code of Civil Procedure.31Id. Annex VIII, at 63-65.X31 The parties to the lease agreement came up with a clever solution to submit their disputes to Kleros while ensuring its enforcement by agreeing that the decision will be rendered in the form of a traditional award.

Second, to implement this solution in international arbitrations, parties should agree on a seat for the proceedings depending on their type of contract and the DJS they wish to implement. If the dispute is regarding an SC or an SLC, the seat should be in a place in which these contracts are regulated, to avoid the risk that the award is set aside for breach of public policy.32Peter L. Michaelson & Sandra A. Jeskie, Arbitrating Disputes Involving Blockchains, Smart Contracts, and Smart Legal Contracts, 74 (4) AAA-ICDR DISPUTE RESOLUTION JOURNAL 89, 129 (2019).X32  Also, if the DJS chosen by the parties provides for a revision in the system, like in the case of Kleros, parties will need to find a jurisdiction in which the right to challenge an award is waivable, as it happens in France33CODE OF CIVIL PROCEDURE, Art. 1522 (Fr.).X33 or Switzerland.34FEDERAL ACT ON PRIVATE INTERNATIONAL LAW, Art. 192 (Ch.). X34  This way, they will ensure there is no re-litigation. It goes without saying that this option solves not only the issue of the territoriality of the award but those surrounding the award’s definition, its formal requirements, and the DJS as arbitrators, which will be dealt with in chapter four.

However, there are three reasons to deem this option inefficient.

First, it allows the parties to challenge the validity of the AA in the courts of the seat via Art. II of the Convention, before initiating proceedings in the DJS. This denaturalizes DJS’ proceedings applied to SCs and SLCs, abolishing some of their benefits. One of the reasons Kleros proceedings are expedited is because juries cannot decide jurisdictional issues.35Maxime Chevalier, From Smart Contract Litigation to Blockchain Arbitration, a New Decentralized Approach Leading Towards the Blockchain Arbitral Order, 12 (4) JOURNAL OF INTERNATIONAL DISPUTE SETTLEMENT 558, 569 (2021), available at https://doi.org/10.1093/jnlids/idab025.X35  There is no doubt about the parties’ agreement to access the DJS since it is coded in detailed conditions. The same happens with their capacity, certified via their cryptographic private keys. In other words, DJS replaced judicial revision of the AA’s validity with the coded corroboration of the parties’ agreement. Thus, the dispute is solved directly on the merits. Likewise, the legality of the AA is determined by the parties’ agreement coded in the blockchain. Attaching it to national legislation is against the chain’s nature, which was created to avoid states intervention.36Georgios Dimitropoulos, The Law of Blockchain, 95 Wash L Rev 1117, 1120 (2020).X36 

Second, it adds a further obstacle to enforce DJS’ decisions. In the case above, the SA did not resolve the dispute. It operated as a formal nexus between the parties and the real adjudicators in the DJS. Thus, courts of enforcement will need to assess the legality of this theoretically feasible situation. The outcome will depend on the treatment that each legislation gives to arbitrators. If the enforcement is sought in a jurisdiction in which arbitrators are equated to judges in their duty to preserve the rule of law,37Like it happens, for example, in Italy where arbitrators are equated to judges. See CODE OF CIVIL PROCEDURE, Art. 824-bis (It.).X37 the courts of enforcement might be obliged to make a two-step analysis to determine if both the SA and the jury in the DJS are arbitrators within the scope of their national law. In an unfavorable scenario, enforcement could be rejected due to violation of public policy for lack of the minimum due process guarantees in the proceeding –i.e.– the right to be judged by a competent and state recognized authority.38Council of Europe, European Convention for the Protection of Human Rights and Fundamental Freedoms, as amended by Protocols Nos. 11 and 14, Art. 6(1) (Nov. 4, 1950), ETS 5, available at https://www.refworld.org/docid/3ae6b3b04.html (last visited Sep. 7, 2023).X38  Under this solution, the issue of whether DJS or their juries are arbitrators for the purposes of enforcement remains outstanding. It is preferable to assess this issue directly, to seek a greater degree of certainty regarding the applicability of the Convention to DJS decisions.

Finally, adapting DJS to traditional arbitral proceedings limits the development of international arbitration as it does not deal with the new technologies’ regulatory challenges. This is a concern because it could institute a states’ practice in favor of the territoriality principle in a globalized world in which decentralized dispute settlement is a plea for efficiency. There are two considerations. First, the institution of a states’ practice in favor of the territoriality principle will complicate, if not make it impossible to interpret the Convention in favor of the direct enforcement of DJS decisions in the future.39Vienna Convention on the Law of Treaties, May 23, 1969, Art. 31 (3) (b), 1155 U.N.T.S. 331.X39  Second, improving DJS’ technology will take longer due to the increased risks of implementation in medium and large disputes. In consequence, implementing DJS decisions in the form of traditional awards is contrary to the reality of blockchain applied to international transactions and could affect the technology’s development. Consequently, dealing with the possibility to enforce DJS decisions by interpreting the Convention is preferable.

C.    The USA and France interpretations of the New York Convention’s territoriality criterion: a step towards the enforcement of DJS decisions

There are jurisdictions whose national legislation and courts’ interpretation of the Convention adopt a broader approach to the territoriality criterion that may allow enforcement of DJS decisions. This segment deals with the USA and France’s acceptance that a-national awards fall within the scope of the Convention and its application to DJS decisions.

First, US courts have accepted the possibility to apply the Convention to enforce a-national awards, or awards without a seat. The US Court of Appeals for the Ninth Circuit enforced an award rendered by the Iran-United States Claims Tribunal holding that an award need not be rendered under a national law to be enforceable under the Convention.40Islamic Republic of Iran v. Gould Inc et al., 887 F.2d 1357 (9th Circuit. 1989).X40 It relied on Art V (1) (d), which does not allow parties to resist enforcement if the procedure was in accordance with their agreement. In other words, it interpreted the provision as an indication that parties can validly decide to detach their proceedings from any seat. The court clarified that Art. I (1) of the Convention does not include a “separate jurisdictional requirement that the award be rendered subject to a national law.”41Id. X41 

It is uncertain if the US courts would allow the enforcement of DJS decisions following the same logic adopted for a-national awards since cyberspace is qualified as a “no place.” However, it is reasonable to expect that US courts would accept that there is no need to render an a-national award in a physical place for its enforcement under the Convention, given that they already excluded the need of a lex arbitri. In any case, the risk exists. The outcome is contingent on the interpretation of the US courts regarding the requirement of having an award rendered in a different territory than the enforcement proceedings.42New York Convention, supra note 17, Art. I (1).X42  In other words, a decision to enforce a DJS in the US will depend on the way judges solve the issues surrounding jurisdiction over cyberspace and the blockchain. Suppose they decide to allow self-regulation in the blockchain by application of the parties’ autonomy principle. In that case, DJS decisions will be enforceable under the US approach to the Convention’s territoriality criterion.

Second, the courts in France have held that parties can agree to detach the arbitration from any seat. This conclusion came from the French perception of international arbitration which is “based on the premise that there is an arbitral legal order, which is distinct from the legal order of individual states … [and that] this arbitral legal order – and no national legal order – … confers juridicity to arbitration.”43Dominique Hasher, The Review of Arbitral Awards by Domestic Courts – France, in 6 IAI SERIES ON INTERNATIONAL ARBITRATION: THE REVIEW OF INTERNATIONAL ARBITRAL AWARDS 97 (Emmanuel Gaillard ed. Juris 2010).X43 

The courts understand international arbitration as a separate regime, unrelated and more important than national law.44Paris Cour d’Appel [Paris Court of Appeal] Dec. 18, 2018, Rev. Arb. 847, New Euro. Corporate Advisory Ltd v. Innova 5/LP-ès Qualités de Liquidateur de la Société Twelve Hornbeams Sarl (Fr.).X44  On that note, the Court of Appeal of Roen decided to enforce an award based on an AA that expressly excluded any national law as lex arbitri.45Rouen Cour d’Appel [Rouen Court of Appeal] Nov. 13, 1984, 982/82, Société Européenne d’Etudes et d’Entreprises (S.E.E.E.) v. République Socialiste Fédérale de Yougoslavie ; see also Paris Court d’Appel [Paris Court of Appeal], 9 Dec. 1980, Rev. Arb. 306, Société Aksa v. Société Norsolor (Fr.).X45  Even though the courts in France have not dealt with the enforcement of DJS decisions, a favorable decision seems likely.

In sum, both the USA and France interpretations that the scope of the Convention includes the enforcement of a-national awards are aligned with the path to recognition and enforcement of DJS decisions. Thus, they are likely to become popular forumsfor the enforcement of DJS decisions, or at least their courts will be the starting point to attempt their enforcement.

The broad and narrow interpretation of the Convention’s territoriality criterion leads to different results. While the broad interpretation is likely to allow the enforcement of DJS decisions as a-national awards, the narrow interpretation deems them as falling outside the scope of the Convention. This limits the adaptability of the Convention to new realities and the uniform application of its provisions in the Contracting States’ courts. The issue is the different interpretations of the Convention performed by the Contracting States.46Cristina M. Mariottini & Burkhard Hess, Chapter 3: The Notion of “Arbitral Award”, in 61 INTERNATIONAL ARBITRATION LAW LIBRARY: AUTONOMOUS VERSUS DOMESTIC CONCEPTS UNDER THE NEW YORK CONVENTION 27, 49 (Franco Ferrari & Friedrich Jakob Rosenfeld eds., Kluwer Law International 2021).X46  The problem is evident when analyzing DJS decisions, the way states understand blockchain and cyberspace, and any other technology to decentralize commercial operations.

This chapter deals with the possibility that DJS decisions meet the territoriality criterion via an autonomous and evolutionary interpretation of the New York Convention. First, it analyzes the theory of sovereignty over cyberspace and the existence of an autonomous legal order in the blockchain. It does so by showing that the traditional approach to territoriality is not fit for the new reality created by the blockchain [A]. Second, it proposes an autonomous and evolutionary interpretation of Art. I (1) of the Convention to contest that DJS decisions comply with the Convention’s territoriality criterion [B].

A.    The territoriality of international awards and the jurisdiction over cyberspace: Westphalian Sovereignty against the blockchain legal order

This section explains the struggle to regulate the internet. Then, it justifies changing the theoretical foundations of jurisdiction over the internet to deal with blockchain, which will shape the new cyberspace.1This work understands cyberspace as a global infrastructure “consisting of the interdependent network of information systems structures including the Internet, telecommunications networks, computer systems, and embedded processors and controllers.” See Definition of cyberspace, COMPUTER SECURITY RESOURCE CENTER, https://csrc.nist.gov/glossary/term/cyberspace (last visited Sep. 7, 2023).X1

For the first time in history, humanity started interacting outside the physical world using the internet. Thus, states have had issues deciding whether internet should be regulated, finding ways to create minimum standards for internet navigation, and identifying which of its spheres will be relevant for their legal systems. There are two primary considerations. First, the access to cyberspace’s democratization allows categorizing it as a global public good.2Joanna Kulesza & Rolf Weber, Protecting the Internet with international law, 40 105531 COMPUTER LAW & SECURITY 1, 7 (2021), available at https://www.sciencedirect.com/science/article/pii/S0267364921000042. X2  Second, there are no treaties or international instruments in which states have come to an agreement on how to regulate cyberspace at an international level.

The current approach to regulation is that every state creates legislation prohibiting several types of conduct performed on the internet.3Id. at 9.X3  Hence, the attempts to regulate the internet are concentrated on rejecting its delocalization and adapting it to the Westphalian concept of sovereignty.4Even though the Westphalian concept of sovereignty is not applicable. See Id.X4  In consequence, states deem their jurisdiction over the internet as being of a local or national nature. Also, they only regulate the effects that the internet might have in their territories, but they cannot shape the way it is used, creating conflicting de facto jurisdictions.5Haitham A. Haloush, Jurisdictional Dilemma in Online Disputes: Rethinking Traditional Approaches, 42 (3) AMERICAN BAR ASSOCIATION STABLE (Publisher) 1129, 1134 (2008), available at https://www.jstor.org/stable/23824404.X5 

An example of the above is the 2018 Cambridge Analytica scandal involving Facebook users’ personal information. The matter became so significant that Mark Zuckerberg, Facebook’s CEO, was summoned to the US Senate to explain the company’s actions.6Facebook, Social Media Privacy and the Use and Abuse of Data : Hearing on Hart 216 before the S. Comm. on Commerce, Science, & Transportation (Apr. 10, 2018), available at https://www.commerce.senate.gov/2018/4/facebook-social-media-privacy-and-the-use-and-abuse-of-data.X6  For the same matter, Facebook had to pay a fine in the UK in the amount of GBP 0.5 million.7Paolo Zialcita, Facebook Pays $643,000 Fine For Role In Cambridge Analytica Scandal, NPR (Oct. 30, 2019), https://www.npr.org/2019/10/30/774749376/facebook-pays-643-000-fine-for-role-in-cambridge-analytica-scandal?t=1659627829342.X7  Nonetheless, there was no possibility to oblige Facebook to comply with a unified and worldwide standard on the use and protection of its users’ personal data. Also, most states could not impose substantive sanctions against the company’s assets, so they could only condemn it via statements. Facebook’s policies on personal data changed from that day but was shaped solely by those states with some sort of control over the company’s transactions.

The problem is even deeper. States cannot create rules to ensure their citizens’ rights are respected on the internet.  Even though there could be decisions in which national courts determine a violation of rights, the use of the power of police for compliance will depend on the ability of the State to interfere with the rights or assets of the person or company committing the violation. The truth is that most of the infringements will not even be noticed by the states due to their lack of relevance and judicialization. Realistically, most operations on the internet are governed by the terms and conditions of the different platforms, regardless of their compliance with any national law.

There is a scholarly opposition to the “nationalization” of the internet for regulation purposes. The criticism is that it denies its decentralized nature and status as a global public good. States should be worried about internet governance by doing their due diligence and accepting they have shared jurisdiction over the internet on an international level.8Roy Balleste & Joanna Kulesza, Signs and Portents in Cyberspace: The Rise of Jus Internet as New Order in International Law, 23 (4) FORDHAM INTELLECTUAL PROPERTY MEDIA & ENTERTAINMENT LAW JOURNAL 1311, 1319 (2013), available at https://ir.lawnet.fordham.edu/iplj/vol23/iss4/4.X8 

In any case, the territorial approach to internet’s regulation has prevailed since it is not difficult to spot the links between the object of regulation and the physical world by locating it and its assets. This is not the case when dealing with the blockchain.

An operation in the blockchain does not involve a developer incentivized to comply with certain regulations due to the potential risks for its rights or physical assets. It does not have a specific server located in a physical place to store the information. It uses nodes located all over the world.9Maxime Chevalier, From Smart Contract Litigation to Blockchain Arbitration, a New Decentralized Approach Leading Towards the Blockchain Arbitral Order, 12 (4) JOURNAL OF INTERNATIONAL DISPUTE SETTLEMENT 558, 564 (2021), available at https://doi.org/10.1093/jnlids/idab025.X9  Likewise, it generally involves cryptocurrencies, which were specifically created to bypass the costs of financial institutions and state regulation with them.10Georgios Dimitropoulos, The Law of Blockchain, 95 WASH L REV 1117, 1120 (2020).X10  Finally, transactions are self-executed within the system. For these reasons, it is said that blockchain “promises a spaceless economy.”11Id. at 1161.X11 

While the internet changed the way people interact, it is undeniable that blockchain departs from the known cyberspace and creates a new reality in which there are self-sufficient cyber communities with no strings attached to any state. The blockchain has a clear jurisdiction to prescribe, adjudicate and enforce transactions,12This is the criteria to determine the existence of a legal system. See Thomas Schultz, Private Legal Systems: What Cyberspace Might Teach Legal Theorists, 10 (1) YALE JOURNAL OF LAW AND TECHNOLOGY 151, 173 (2008), available at http://digitalcommons.law.yale.edu/yjolt/vol10/iss1/5. X12 using code to generate an effect that looks a lot like the states’ police powers. Thus, it goes as far as creating a legal order autonomous from any state’s jurisdiction.13Georgios Dimitropoulos, The Law of Blockchain, 95 WASH L REV 1117, 1122 (2020).X13 

Even though it seems that the general understanding is that states have no jurisdiction over the blockchain,14Peter L. Michaelson & Sandra A. Jeskie, Arbitrating Disputes Involving Blockchains, Smart Contracts, and Smart Legal Contracts, 74 (4) AAA-ICDR DISPUTE RESOLUTION JOURNAL 89, 122 (2019).X14 they have started to regulate some of its developments. For example, in states like the UK, cryptocurrencies are considered money for tax purposes.15Georgios Dimitropoulos, The Law of Blockchain, 95 WASH L REV 1117, 1134 (2020). X15  Again, the method merely adapts what was previously done with internet regulation. The steps are finding a connection with the physical world and then regulating as if cyberspace was part of it.

What is important for this work is to spot the problems in the very logic of this approach, that assumes that the jurisdiction of cyberspace is of national or local nature because the regulation is national. There are two issues. First, it rejects the international effects of cyberspace, its nature, and worldwide reach. Second, it allows states to regulate the internet as a form of interaction between people, but it does not allow cyberspace users to benefit from the treaties created by states for other transnational interactions, like the Convention.  

The same effect with no disadvantages can be accomplished if the theoretical assumption changes to accept that the legitimacy of every national cyber regulation comes from a shared jurisdiction of states over cyberspace at an international level.16Some will go as far as contesting the existence of a Jus Internet as an adaptation of the Roman institution of Jus Gentium to cyberspace. See Roy Balleste & Joanna Kulesza, Signs and Portents in Cyberspace: The Rise of Jus Internet as New Order in International Law, 23 (4) FORDHAM INTELLECTUAL PROPERTY MEDIA & ENTERTAINMENT LAW JOURNAL 1311, 1317 (2013), available at https://ir.lawnet.fordham.edu/iplj/vol23/iss4/4. X16  This way every state has the right to regulate the internet’s impact in their territories, but they also acquire an international obligation of due diligence and a tendency for uniformity in the treatment of cyberspace. This can be done by application of the general principles of Public International Law (PIL), such as cooperation and good faith.17Joanna Kulesza & Rolf Weber, Protecting the Internet with international law, 40 105531 COMPUTER LAW & SECURITY 1, 9 (2021), available at https://www.sciencedirect.com/science/article/pii/S0267364921000042. X17 

The assumption that jurisdiction over the internet is of local nature is unsustainable when analyzing the new reality offered by blockchain technology. This reality is better explained if cyberspace is understood as a global public good that is used for people’s interactions and in which there is room for states’ regulation due to their shared jurisdiction at an international level. Hence, states hold the power to regulate cyberspace with the limits portrayed by the recognition of the parties’ autonomy principle. Thus, some of the features and alleys of cyberspace cannot be regulated as they are legitimized in cyber communities which do not abide by rules from the physical world but are operating without affecting any national legal system. Therefore, one of the aims should be to create ways to ensure cooperation between these blockchain communities and the physical world.18Roy Balleste & Joanna Kulesza, Signs and Portents in Cyberspace: The Rise of Jus Internet as New Order in International Law, 23 (4) FORDHAM INTELLECTUAL PROPERTY MEDIA & ENTERTAINMENT LAW JOURNAL 1311, at 1313, 1349 (2013), available at https://ir.lawnet.fordham.edu/iplj/vol23/iss4/4. X18 

By accepting that there is a shared and non-absolute jurisdiction over cyberspace, states would be in a better position to interpret the existing framework and apply it efficiently to the new challenges brought by technology. For the purposes of this work, this new assumption allows contesting that the issue of DJS decisions is of transnational nature, when there are no indications that the matter is local or national, and therefore it should be solved by interpreting the existing international framework. In other words, it is a way to ensure that the discussion remains in the realm of international law, even though the regulation over cyberspace tends to be national.

B.    The autonomous and evolutionary interpretation of Art. I (1) of the New York Convention towards the acceptance of the transnational approach to arbitration

Changing the assumption for the jurisdiction over cyberspace locates the phenomenon of blockchain in the realm of international law. Generally, this new reality would not have a specific effect since there are no international treaties dealing with cyberspace. Nonetheless, it also allows interpreting treaties whose scope might encompass one of the multiple applications of the blockchain. This section interprets Art. I (1) of the Convention to contest that DJS decisions fall within the Convention’s territorial scope of application. To do so, it deals with two issues. First is the need to interpret the Convention’s provisions autonomously from the Contracting States’ national legal systems. Second is the possibility to give a new interpretation to the territoriality requirement in Art. I (1) of the Convention due to the new circumstances that international transactions face with the implementation of the blockchain.

First, the Convention must be interpreted autonomously from the Contracting States’ national laws. The Convention is a framework treaty. It aims to unify the proceedings for the enforcement of arbitral awards among the Contracting States. Thus, the interpretation of its provisions is not governed by party autonomy or the law of the seat.19Franco Ferrari & Friedrich Jakob Rosenfeld, Chapter 11: The Interplay of Autonomous Concepts and Municipal Law under Article V(1)(d) of the New York Convention, in 61 INTERNATIONAL ARBITRATION LAW LIBRARY: AUTONOMOUS VERSUS DOMESTIC CONCEPTS UNDER THE NEW YORK CONVENTION 273, 247 (Franco Ferrari & Friedrich Jakob Rosenfeld eds. Kluwer Law International 2021).X19 It is governed by the rules on interpretation under Customary International Law (CIL) codified in Arts. 31, 32, and 33 of the Vienna Convention on the Law of Treaties (VCLT).20Vienna Convention on the Law of Treaties, May 23, 1969, Art. 31 (3) (b), 1155 U.N.T.S. 331.X20  Furthermore, a uniform interpretation of the Convention is likely by using rules of international law. Uniformity contributes to the Convention’s goal to ensure the effectiveness of arbitration by safeguarding the recognition and enforcement of arbitral awards.21Cristina M. Mariottini & Burkhard Hess, Chapter 3: The Notion of “Arbitral Award”, in 61 INTERNATIONAL ARBITRATION LAW LIBRARY: AUTONOMOUS VERSUS DOMESTIC CONCEPTS UNDER THE NEW YORK CONVENTION 28, 49 (Franco Ferrari & Friedrich Jakob Rosenfeld eds., Kluwer Law International 2021).X21  Consequently, an autonomous interpretation of the Convention is preferred over the national perception of its provisions.

Pursuant to Art. VII (1), courts have held that they are allowed to use national conflict of law rules in an enforcement proceeding under the Convention if the analysis triggers the application of a law that is more favorable for the recognition or enforcement of the award.22Bundesgerichtshof [BGH] [Federal Court of Justice] Sep. 21, 2005, III ZB 18/05 (Ger.), https://newyorkconvention1958.org/index.php?lvl=notice_display&id=278 (the application of German conflict-of-laws rules via Art. VII (1) of the New York Convention directed the Court to apply Dutch law, which contained more liberal formal requirements for an arbitration agreement than those under Art. II).X22  This possibility is not limited by the autonomous interpretation of the Convention. The interpretation is to determine the meaning of the treaty’s wording and its scope of application as a framework treaty. Furthermore, it ensures that the Convention is not interpreted to widen its scope instead of broadening it according to its object and purpose. Said in a different way, the autonomous interpretation of the Convention allows unifying the understanding of its provisions to ensure that national legislations do not take steps backwards on recognizing and enforcing awards. That is precisely the aim of the interpretation to allow the enforcement of DJS decisions under the Convention.

Second, according to Art. 31 of the VCLT, a treaty must be interpreted in good faith and in accordance with: (i) the ordinary meaning of its terms; (ii) its context, and (iii) considering its object and purpose.23Vienna Convention on the Law of Treaties, May 23, 1969, Art. 31, 1155 U.N.T.S. 331.X23  The recourse to the treaty’s preparatory work is reserved for when the interpretation leads to an ambiguous, obscure, unreasonable, or absurd result.24Vienna Convention on the Law of Treaties, May 23, 1969, Art. 32, 1155 U.N.T.S. 331.X24  Every treaty interpretation must follow the steps set out in Art. 31 VCLT.

As a rule, the interpreter will analyze the ordinary meaning of the terms of the treaty in two moments in time: the conclusion of the treaty and the moment the interpretation is carried out. This exercise is the content of the contemporaneity principle of interpretation.25Eirik Bjorge & Robert Kolb, Part V: Treaty Interpretation, 20.- The Interpretation of Treaties over Time in THE OXFORD GUIDE TO TREATIES 489, 493 (2nd ed.) (Duncan Hollis ed. 2020.X25  Nonetheless, this rule is not absolute. There are exceptions that allow the interpreter to analyze the meaning of the treaty’s terms solely with the context set out when the interpretation is taking place. This is called evolutionary interpretation and is a tool to implement the principle of evolution of treaties.  This principle consists in the ability of treaties to adapt to new realities when their terms cannot reasonably apply in the way they were used in the past.26Id. at 494.X26 

There are two scenarios where the evolutionary interpretation is accepted. First, when the wording of the treaty is proof of an implied choice of the parties to make it subject to an evolution of its content. Second, when there are objective reasons to opt for an evolutionary interpretation in absence of a guide as to the parties’ intentions.27Id. at 495.X27  The Convention meets both scenarios.

First, the Convention is a framework treaty with general rules for the recognition and enforcement of arbitral awards. It was open for signature after the United Nations Conference on International Commercial Arbitration held in New York City in 1958. The Conference’s Final Act gives context to the Convention’s provisions. It expresses the goal of states to increase arbitration’s effectiveness and that the Convention was one of the many tools they saw fit for the mission.28UNCITRAL, Final Act of the United Nations Conference on International Commercial Arbitration ¶ 1, E/CONF.26/8 Rev.1 (1958).X28  The other enlisted fronts to work in favor of arbitration are: the creation of new arbitral institutions, publishing the information on arbitral laws, and procuring uniformity in national arbitral laws.29Id. at ¶ 16.X29  The Contracting States wanted to protect the right of their citizens to opt for an arbitral proceeding to solve their transnational disputes at an international level, admitting that there is room for change and aiming that it will be aligned with a broad room for arbitration. They wanted to ensure the party’s autonomy prevalence.

With this intention in mind, one can understand the way the Convention is drafted. Art. I (1) does not define arbitral award. Also, the territoriality criterion is descriptive rather than prescriptive.  It states that the Convention applies to awards rendered in a place different than the enforcement territory to characterize awards as foreign, as opposed to national awards which are governed by the relevant local law. By reading the Convention this way, the second scenario of application of Art. I (1) becomes obvious. The Convention also applies to awards rendered in the place of enforcement but characterized as non-domestic according to the local arbitration law. Thus, the seat system is a way to give nationality to an award and determine if it is local or foreign in the enforcement stage. In other words, it is just a formal rule the parties can opt-out from.30Haitham A. Haloush, Jurisdictional Dilemma in Online Disputes: Rethinking Traditional Approaches, 42 (3), AMERICAN BAR ASSOCIATION STABLE (Publisher), 1129, 1140-1141 (2008), available at https://www.jstor.org/stable/23824404.X30 

Likewise, Art. I (1) of the Convention is drafted in a way that ensures the broadest possible application. The provision repealed the reciprocity rule to determine the Convention’s scope of application. The text mandates that any foreign award is to be enforced under the treaty. This intention can also be identified in the treaty’s text. Art. X (1) creates the obligation for the Contracting States to declare that the Convention extends to all the territories under their control. The New York Convention was created to become a framework treaty accepted worldwide, in all territories, and across all jurisdictions. Thus, the Contracting States intended for the Convention’s provisions to be capable of adapting and evolving over time.

Rendering awards in a physical seat was the only foreseeable option when the Convention was opened for signature. Cyberspace was far from becoming a reality. Hence, the wording of Art. I (1) is adapted to the context of the treaty’s signature, in which it was unthinkable that people could interact on a decentralized and transnational platform, far from the reach of states’ legal systems. In any case, the fact that the wording of the Convention is adapted to a certain reality does not contradict the fact that it suggests that the Contracting States chose to allow the evolutionary interpretation of its text.

Second, the Convention does not include rules for the interpretation of its provisions and there is an objective reason to make an evolutionary interpretation of its terms: efficiency. Assuming that the future tendency in international transactions is to use blockchain, DJS will become the most popular mean for solving international commercial disputes. The Convention at its very core is a recognition of the principle of autonomy of the parties and the right to choose arbitration to solve their disputes. Blockchain and DJS represent a new expression of such autonomy. On that note, DJS decisions encompass the goal of the Convention which is to recognize decisions rendered in arbitral proceedings pursuant to the agreement of the parties. Thus, Art. I (1) of the Convention should be interpreted in an evolutionary manner.

To make an evolutionary interpretation, the interpreter must follow the same steps provided in Art. 31 VCLT. The aim is to employ the new reality as context for the plain meaning of the treaty’s terms. Up to this point, the context of the treaty’s creation was useful to find that the Convention’s terms can be subject to an evolutionary interpretation.  The next step is to establish the ordinary meaning of Art. I (1) solely in the context of blockchain and cyberspace, in light of the object and purpose of the Convention.

As already established, DJS decisions are rendered in the cyberspace. That means the proceedings are “everywhere and nowhere at the same time.”31Id. at 1140.X31  Thus, the notion of the arbitral seat and foreign award need adjustments. On this point, it has been said that the concept of foreign or national awards is no longer relevant in cyberspace arbitrations and the application of the Convention should concentrate exclusively on whether the decision deserves to be enforced.32Id. at 1145.X32  This view should not be accepted as it disregards the terms of Art. I (1) without interpreting them. It does not adapt the current system to enforce DJS decisions.  

Considering DJS decisions as the product of a new form of arbitration created in the blockchain, and with the assumption that States have shared sovereignty over cyberspace at an international level, an evolutionary interpretation of Art. I (1) of the Convention allows for the enforcement of DJS decisions. Where the Convention says it “shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought,”33New York Convention, supra note 17, Art. I (1) (emphasis added).X33 the ordinary meaning should be that the Convention applies to any award rendered outside of the jurisdiction of the State where the enforcement is sought. Thus, national courts will determine if the award is national or foreign considering the reality of the transaction, like the US approach to non-domestic awards, but with a presumption in favor of accepting that there is international jurisdiction over decisions rendered in the cyberspace. This way, DJS decisions comply with the requirement of Art I (1) and fall within the Convention’s scope of regulation.

This interpretation is consistent with the Contracting States’ practice, which is one of the criterions to consider when interpreting a treaty according to Art. 31 VCLT,34Vienna Convention on the Law of Treaties, May 23, 1969, Art. 31, 1155 U.N.T.S. 331.X34 but in an indirect manner. As it was explained in chapter two, the general tendency of national courts is to disregard decentralized decisions from the scope of application of the Convention. Hence, the position of the Contracting States contradicts the evolutionary interpretation of the treaty. Nonetheless, the general view of states on this issue comes from their understanding of jurisdiction. A-national awards are not accepted as part of the scope of application of the Convention because the general understanding is that they are not anchored to any jurisdiction. Thus, it can be said that the states’ practice in its core is to enforce arbitral awards that come from a jurisdiction different than the one of the enforcement state. If the assumption changes to accept a shared jurisdiction over the cyberspace at an international level, state practice remains consistent, while accepting the evolution of the concept of jurisdiction to deal with the reality created by cyberspace and the blockchain.

Finally, DJS can be perceived as the sacralization of the transnational approach to arbitration, which states that its legitimacy comes from an international consensus,35DOLORES BENTOLILA, 43 INTERNATIONAL ARBITRATION LAW LIBRARY: ARBITRATORS AS LAWMAKERS 5-6 (Kluwer Law International 2017).X35  given its self-enforcement capabilities.36Maxime Chevalier, From Smart Contract Litigation to Blockchain Arbitration, a New Decentralized Approach Leading Towards the Blockchain Arbitral Order, 12 (4) JOURNAL OF INTERNATIONAL DISPUTE SETTLEMENT 558, 575 (2021), available at https://doi.org/10.1093/jnlids/idab025.X36  The same goes for the assumption that there is a shared jurisdiction over the blockchain. It helps to build in favor of the existence of an arbitral legal order that is not anchored to any jurisdiction and which states have recognized because of an international consensus found in the Convention’s provisions.  Hence, the evolutionary interpretation of Art. 1 (1) has the potential not only to allow for the enforcement of DJS decisions but to terminate the debate regarding the different views about the legitimacy of international arbitration by preferring the transnational approach.

This chapter deals with the remaining issues to enforce DJS decisions under the Convention. It uses the same structure as the analysis regarding the territoriality criterion in Art. I (1) of the Convention, contrasting national courts interpretations of the Convention and making an autonomous and evolutionary interpretation of its provisions. First, it deals with whether DJS platforms or jurors can be understood as arbitrators under the Convention [A]. Second, it analyses whether DJS decisions can be considered arbitral awards [B]. Finally, it contests that DJS decisions comply with the formal requirements for arbitral awards under the Convention [C].

A.    DJ platforms or jurors as arbitrators

In an oversimplification, DJS’ like Kleros rely on people for the decision-making process. Juries are human beings that have agreed to solve a dispute using their expertise. Thus, they are arbitrators in the ordinary meaning of the word, a group of persons that adjudicate a dispute by agreement of two parties. Hence, there should be no need to go any further in the analysis on whether DJS decisions are rendered by arbitrators.

Nonetheless, there are two considerations. First, even though juries decide on the dispute, the code implements it. Thus, the allocation of responsibility behind the implementation of the decision should have some influence on who is considered the adjudicator in DJS disputes. Second, juries are generally anonymous. This could complicate the enforcement of a DJS decision given the possibility that having an unidentified decision maker violates the public policy of the place of enforcement.1New York Convention, supra note 17, Art. V (2) (b).X1  Thus, this section addresses the possibility that the DJS themselves are considered as arbitrators, allocating the liability for implementing the award in the blockchain on them to ensure the recognition and enforcement of the award. This is regardless of the possibility that the platforms’ protocols reveal the identity of the arbitrators, oblige them to give reasons for their decisions, and make them sign the awards, which will also ensure the enforcement of DJS decisions under the Convention.

The next issue is whether the company that owns the DJS could sit as an arbitrator. National legislations do not generally prohibit this possibility, but the underlying assumption is that the arbitrators should be natural persons. For example, the UNCITRAL Model Law assumes that the arbitrators will be natural persons by using the pronouns he/she or his/her in its text.2UNCITRAL Model Law, supra note 26, Art. 11; see also João Ilhão Moreira & Riccardo Vecellio Segate, The ‘It’ Arbitrator: Why Do Corporations Not Act as Arbitrators?, 12 (4) JOURNAL OF INTERNATIONAL DISPUTE SETTLEMENT 525, 536 (2021), available at https://doi.org/10.1093/jnlids/idab022.X2  The same happens with the national arbitration laws of the United Kingdom and the USA.3Id. at 537-538.X3  However, in states like Qatar, the role of an arbitrator is reserved for natural persons only.4Civil and Commercial Arbitration Law 2017 (State of Qatar), Art. 11.1.b.X4  There are different views in national legislation on this issue. Thus, as with the territoriality criterion of Art. I (1), an autonomous interpretation of the Convention is preferred to procure uniformity on whether corporations can sit as arbitrators.

Art. I (2) provides that awards made by appointed arbitrators and by “permanent arbitral bodies” are within the scope of the Convention. Furthermore, the Convention does not assume arbitrators can only be natural persons. On the contrary, it expressly accepts awards rendered by arbitral bodies.5João Ilhão Moreira & Riccardo Vecellio Segate, The ‘It’ Arbitrator: Why Do Corporations Not Act as Arbitrators?, 12 (4) JOURNAL OF INTERNATIONAL DISPUTE SETTLEMENT 525, 537 (2021), available at https://doi.org/10.1093/jnlids/idab022.X5  It will be a matter of interpretation of what the provision means by arbitral bodies. Traditionally, it might be understood that the Convention refers to arbitral institutions whose existence has been accepted by the State in which they are located, like the ICC Court of Arbitration or the SCC Arbitration Centre. Nonetheless, an evolutionary interpretation of the provision allows the inclusion of DJS as arbitral bodies, since the parties agreed to submit their disputes to them, and they exist in the cyberspace. Again, this position builds in favor of the transnational approach to arbitration, with the AA being sufficient to determine the existence of such arbitral body.

However, the Convention does not specify if the appointed arbitrators should be natural persons. Thus, understanding the DJS as a corporation appointed in an ad hoc arbitration could also be an option. An autonomous and evolutionary interpretation of the Convention in this matter creates the possibility of comparing DJS decisions to arbitrators or arbitral institutions. Therefore, the criterion in Art. I (2) of the Convention is met since DJS decisions are rendered by arbitrators.

B.    DJS decisions and the arbitral award’s definition

The Convention is applicable to “arbitral awards” according to its Art. I (2).6New York Convention, supra note 17, Art. I (1).X6  Nonetheless, it does not provide a definition of arbitral awards. The same happens with the UNCITRAL Model Law where arbitral award is not defined either. They solely provide for arbitral awards’ formal requirements, an issue that is addressed in the next section, and their characteristics. Regarding the latter, Art. V (1) (e) of the Convention and Art. 36 (1) (a) (v) of the UNCITRAL Model Law provide that an enforceable award must be final and binding between the parties.

The definition of arbitral awards for both the Convention and the UNCITRAL Model Law should be pragmatic. An arbitral award is a decision rendered by an arbitrator or arbitral body after a proceeding to solve a dispute referred to them by the agreement of the parties. Under this definition, DJS are arbitral awards. The issue is the finality and binding effect of DJS decisions, which are the requirements for their enforceability under both the Convention and the Model Law.

First, the finality requirement is met if the arbitral award cannot be subject to challenge or revision. DJS decisions comply with it when the proceeding in the revision mechanism ends, and the code is enacted. Thus, DJS decisions are final when the decision is rendered in the system or when the code is enacted, depending on whether the dispute is regarding an SC, an SLC, or a traditional contract. At this point, it is futile to analyze the finality requirement linked to the seat of arbitration. The use of the seat was already disregarded for the territoriality criterion of the Convention. Thus, the rest of the issues to enforce DJS decisions under the Convention should follow the same fortune.

Second, there is a debate regarding the enforceability of arbitral awards. The issue is whether the binding effect of arbitral awards required by the Convention is met if the decision comes from a contractual source, or the award must be binding according to the law of the seat.7Cristina M. Mariottini & Burkhard Hess, Chapter 3: The Notion of “Arbitral Award”, in 61 INTERNATIONAL ARBITRATION LAW LIBRARY: AUTONOMOUS VERSUS DOMESTIC CONCEPTS UNDER THE NEW YORK CONVENTION 28, 34 (Franco Ferrari & Friedrich Jakob Rosenfeld eds., Kluwer Law International 2021).X7  The general view is that arbitral awards must be binding according to the law of the seat and the binding effect of the award by the contractual agreement of the parties is not enough to avail recourse to the Convention.8Id. at 35-38. X8  Nonetheless, states like Italy have interpreted the Convention as lacking a requirement for the award to be judicially binding in the law of the seat. Thus, contractual finality is enough to enforce an award using the Convention. The Italian courts reached this conclusion with the assumption that the Convention is a framework treaty that should be interpreted in a flexible manner, beyond concepts and provisions of their own national law.9Id. at 39-41.X9  In other words, the Italian courts performed an autonomous and evolutionary interpretation of the Convention.

At first sight, DJS decisions fall in the discussion on its bindingness. If that is the case, the Italian interpretation should be preferred. The ordinary meaning of “binding” in the context of a treaty whose goal is to protect the recourse to arbitration, as an expression of the principle of autonomy of the parties, can only be that the parties acquired the obligation to comply with the juries’ decisions, regardless of its source.

However, the assumption that there is a shared jurisdiction over cyberspace is another way to solve this issue. It can be contested that the judicially binding character of DJS decisions comes from all the other states where the enforcement is not sought, since they share jurisdiction over cyberspace. This is just an extra step in the evolutionary interpretation for the territoriality criterion carried out in the last chapter.

In conclusion, an autonomous and evolutionary interpretation of the Convention allows the conclusion that DJS decisions are binding arbitral awards.

C.    Formal requirements for arbitral awards

Finally, there is the issue of the formal requirements that the Convention and national laws demand on arbitral awards. On the one hand, Art. IV of the Convention imposes three formal requirements for enforcement of awards: (i) presenting the original or certified copy of the award, (ii) the AA and (iii) their translations to the language of the State of enforcement.10New York Convention, supra note 17, Art. IV. X10  On the other hand, the formal requirements in Art. 31 of the UNCITRAL Model Law are that the awards are: (i) made in writing, (ii) signed by the arbitrators, (iii) with a statement of the reasons for the tribunal’s decision, (iv) and with determinations of the date (v) and place of arbitration.11UNCITRAL Model Law, supra note 26, Arts. 31 (1), (2), and (3). X11   

The UNCITRAL Model Law standard is incompatible with DJS decisions because it requires the determination of the place of the arbitration. It assumes that every award must have a seat and nationality. The other requirements can be met by changing the system’s rules to reveal the identity of the jurors or to render the decision itself, sitting as arbitrator, and implementing the obligation to express the reasons for the decision. The Model Law standard is higher than the one of Art. IV of the Convention. For the Convention is enough if the decision is in writing and the originals or certified copies of the award and the AA are provided to the court of enforcement.

It has been said that the formal requirements for the enforceability of an arbitral award are to be understood from the national law of the enforcement state, as it is the way a state implements the Convention. Furthermore, one view on digital blockchain awards is that lacking a determination in the Convention on what is the meaning of having an award in writing, their enforceability will depend on the standard in the law of enforcement.12Maxime Chevalier, From Smart Contract Litigation to Blockchain Arbitration, a New Decentralized Approach Leading Towards the Blockchain Arbitral Order, 12 (4) JOURNAL OF INTERNATIONAL DISPUTE SETTLEMENT 558, at 572-573 (2021), available at https://doi.org/10.1093/jnlids/idab025.X12  This creates a complication for the enforcement of DJS decisions in Model Law jurisdictions. While Art. 7 provides for the possibility to conclude an AA by electronic means, Art. 31 implies that the award should be physically rendered, in hard copies, and manually signed by the arbitrators. This approach is far behind the current reality of international transactions. Now, the identity of a person is easily determined by electronic means with encrypted information. Tools like electronic signatures and tokens allow for signing documents with the guarantee of the signatory’s identity. This is especially true regarding blockchain technology, in which the cryptographic key is an irrefutable way of identification, and the DJS is easily recognizable. Furthermore, even a debate on whether DJS decisions comply with the Model Law’s formal requirements on awards proves that the Convention’s standard is to be preferred since it is less restrictive. This is a scenario in which the national standard is less favorable for enforcement of the award. Thus, Art. VII of the Convention is inapplicable. The Convention should be applied autonomously from the Contracting States’ national law when their formal requirements on awards are more burdensome than the ones in the Convention.

Next, the issue is whether DJS decisions are in writing according to Art. IV of the Convention. The provision does not describe the criteria for the writing requirement, it merely states that the party seeking to enforce an award should provide the courts of enforcement with the original or certified copy of the decision. In other words, a corroboration of the award’s authenticity is enough to meet the criterion. The term “original” must be interpreted under the CIL rules on treaties interpretation, instead of applying the Contracting States’ national laws. Also, the term is broad enough to conclude that the Contracting States had the intention to allow an evolutionary interpretation of the criterion. The ways to corroborate the authenticity of a document have changed since the Convention was concluded. This new reality allows the interpreter to determine what is the ordinary meaning of an original document in the context of blockchain and cyberspace.

The answer is somehow less formalistic than that expected in the traditional definition of original documents, while complying with any possible standard of documents’ authentication. Instead of a signature with a certification of authenticity, an original document in the blockchain will have a specific identification in the chain, including its creator and any modification within. Thus, the courts of enforcement can corroborate that the decision was rendered by a DJS, based on the specific contract from which the dispute between the parties arose. This with a higher level of certainty than any other certification in the physical world, which may depend on the corroboration of the document made by a third person who has been entrusted with the responsibility to certify the veracity of documents. By interpreting the Convention in an autonomous manner and accepting the evolutionary interpretation of the requirements in Art. IV, the interpreter can ensure compliance with the goal of the Convention to promote the effectiveness of arbitration worldwide. Hence, the interpretation is consistent with all the steps in Art. 31 of the VCLT. 

By interpreting Art. IV in this way, the Convention will become accessible for all awards rendered in cyberspace, constituting a milestone in the evolution of international commercial arbitration. Consequently, national laws might enter a period of adjustment to relax their formal requirements for the enforcement of arbitral awards, meeting the Convention’s standard.

In sum, an autonomous and evolutionary interpretation of the Convention’s provisions allows enforcing DJS decisions as arbitral awards. First, Art. I (1) territoriality would be met when the decision is rendered out of the jurisdiction of the enforcement state. DJS’ decisions are within the scope of Art. I (1) by using the theoretical assumption that there is a shared jurisdiction over cyberspace at an international level. Second, the DJS jurors are conceptually arbitrators and, in any case, the DJS could render the decisions themselves, pursuant to Art. I (2) of the Convention. Third, DJS decisions are binding awards by both contractual and jurisdictional criteria. Finally, Art. IV formal requirements allow for the enforcement of blockchain-rendered arbitral awards. Hence, DJS decisions can be recognized and enforced under the New York Convention.

The final step of this analysis is dealing with the grounds for refusing enforcement that Contracting States’ courts can raise proprio motu, according to Art. V (2) of the Convention. The enforcement of an award is to be denied when the subject matter of the dispute is not arbitrable under the law of the enforcement; or if the award is contrary to that state’s public policy. The issue is how to reconcile the autonomous and evolutionary interpretation of the Convention conducted in this work with the fact that states have a discretionary right to refuse enforcement in cases of non-arbitrability or breach of public policy.

There are three considerations. First, the issues related to the use of new technologies like blockchain, and artificial intelligence can raise public policy concerns in the enforcement stage,1Bianca Berardicurti, 25. Artificial Intelligence in International Arbitration: The World is All That is The Case, in 40 UNDER 40 INTERNATIONAL ARBITRATION 377, https://www.kluwerarbitration.com/document/kli-ka-40under40-2021-029-n?q=Artificial%20Intelligence%20in%20International%20Arbitration%3A%20The%20world%20is%20All%20That%20is%20The%20Case.X1 given the fact that most legal systems have not adopted their procedural standards for the use of these new technologies. Hence, they lack regulation. Second, blockchain creates a practical impediment for states’ regulatory powers to reach the cyber communities using this network. Hence, the only control states could exercise in the blockchain dispute settlement system is when a specific case has an enforcement stage in the physical world. In addition, there is uncertainty in the treatment that states will give to DJS decisions. Finally, DJS developers exercise a de facto jurisdiction over their proceedings in the blockchain, from their institution to their self-enforcement in the system.

There is a possible solution to allow states to set minimum standards to ensure that the enforcement of DJS decisions do not represent a violation of their public policies. The first step is accepting that some of the blockchain communities’ activities are beyond the reach of any state’s jurisdiction. Thus, the principle of autonomy of the parties is to be extended as a legal fiction encompassing these activities. This way, the factual situation in which states cannot regulate blockchain is covered by a legal fiction that creates a previous step dealing with the legitimacy of states’ control over cyberspace. When a state jurisdiction cannot reach a private activity in the blockchain it means that it is protected by the principle of autonomy of the parties, accepted and guaranteed by that state. This illusion of control reinforces the need for the theoretical assumption that states have shared jurisdiction over the blockchain at an international level. If the issue is of an international nature, the solution can be found in one of the options for cyberspace governance that have been proposed due to the lack of treaties dealing with the internet.2Joanna Kulesza & Rolf Weber, Protecting the Internet with international law, 40 105531 COMPUTER LAW & SECURITY 1, 7 (2021), https://www.sciencedirect.com/science/article/pii/S0267364921000042. X2 

The idea is that states should enter into agreements with the non-state actors operating in the blockchain to set the minimum standards needed for the recognition of their activities in national jurisdictions.3Id. at 12. X3  This way, states can accept the autonomous and evolutionary interpretations of the Convention to safeguard the possibility to enforce  DJS decisions in the physical world, while ensuring the system’s compliance with national public policy issues and clarifying the range of arbitrable disputes in their territories, all in the form of contractual obligations.

This form of cyberspace governance is opposed to the traditional view of the absolute and authoritative jurisdiction of states, which are only allowed to enter into agreements amongst themselves to regulate global public goods. However, it is a practical way to reach the spheres where states have no power by using cooperation with non-state actors. For the purposes of this work, the conclusion of agreements between the states and the DJS will allow fulfilling two significant goals. On the one hand, states can ensure compliance with minimum standards of due process and other public policy considerations. On the other hand, there will be certainty on the treatment of states to DJS decisions if one of the parties pursues enforcement in the physical world. Hence, the blockchain technology applied to dispute settlement will be able to enjoy free reign for its development and use in medium and large disputes.

Blockchain technology is shaping the future of international transactions. SCs and SLCs are automated and cost-effective options to do business. Unlike traditional contracts, SCs eliminate the risk of non-compliance. The applications of the blockchain in businesses and transactions are growing in importance. DJS’ are no exception. They are blockchain-based decentralized dispute settlement mechanisms created for disputes involving SCs and SLCs. Their decisions are self-enforceable in the blockchain. Nonetheless, DJS’ are likely to be chosen as a dispute settlement forum for traditional contracts, due to their multiple benefits when compared with conventional arbitration and court litigation. DJS is faster, cheaper, automated, and specialized. Thus, it is important to analyze the possibility to recognize and enforce DJS decisions under the Convention.

There are four issues for the recognition and enforcement of DJS decisions under the Convention. First, the territoriality criterion of Art. I (1) of the Convention. Second, the concept of arbitrators and the possibility that it includes DJS providers and juries. Third, whether DJS decisions fall within the definition of awards. Fourth, DJS decisions’ compliance with the formal requirements of Art. IV of the Convention.

First, DJS decisions are enforceable under the Convention by making an autonomous and evolutionary interpretation of its provisions. The autonomous interpretation is necessary to ensure the uniform application of the Convention since Contracting States have different views on the issue of territoriality. The main view is that all awards need to be seated or governed by a state to fall within the scope of application set out in Art. I (1) of the Convention. This logic is extended to DJS decisions given the nature of cyberspace, which is not located in a physical destination. Nonetheless, states like the USA and France have accepted the possibility to enforce a-national awards, or awards without a seat. They are examples of jurisdictions in which DJS decisions can be enforced as a-national awards even though their views come from their local interpretation of the Convention. This also constitutes a pragmatic reason to make an autonomous interpretation of the Convention since the views on the territoriality criterion are contradictory between states, which is inconsistent with the goal of the Convention to ensure uniformity in favor of international arbitration.

Art. I (1) of the Convention can be interpreted in an evolutionary manner. It is written in broad wording to include all the possible scenarios it could be extended to. Likewise, the Convention is a framework treaty for international arbitration. There are objective reasons to interpret its provisions in an evolutionary manner since arbitration is linked to the way international transactions are made, and blockchain technology has created a new reality for them. Equally, blockchain is a new expression of party autonomy, a principle protected by the Convention.

The goal of the evolutionary interpretation of the Convention’s territoriality criterion is to adapt the treaty’s text to the new blockchain reality. To do so, the assumption on the jurisdiction over cyberspace and blockchain must change. The current understanding is that cyberspace is beyond any state’s jurisdiction and any existing regulation has a local or national nature since their effects are not corroborated directly in the cyberspace but in the physical territory of the state that enacts them. The new understanding should be that states have a shared jurisdiction over cyberspace at an international level. This theoretical assumption is consistent with the nature of cyberspace as a global public good and allows it to elevate any debate regarding its changes and new technologies to the international arena. Likewise, it allows cyberspace users to benefit from the international framework existing for transnational transactions, including the Convention.

The conclusion of interpreting Art. I (1) of the Convention in an evolutionary manner is that the territoriality criterion refers to the exercise of jurisdiction of other states over the award to be enforced. In other words, the requirement is that the award does not fall within the jurisdiction of the state in which enforcement is sought. By assuming there is a shared jurisdiction over cyberspace there is a presumption that the jurisdictional requirement is met if the decision was rendered in the blockchain. Thus, DJS decisions comply with the Convention’s territoriality requirement unless there are indications that the decision is to be governed by the enforcement state’s national law.

Second, companies owning DJS can sit as arbitrators according to Art. I (2) of the Convention. The provision allows for permanent arbitral bodies to render awards, and it does not assume arbitrators must be natural persons. An autonomous interpretation of Art. I (2) of the Convention is preferable to deal with this issue since there is no uniformity on the national laws’ treatment. Also, an evolutionary interpretation of the provision should understand that DJS are permanent arbitral bodies even if they are not formally accepted as such by any state. Their legitimacy comes from the principle of autonomy of the parties governing the blockchain and the parties’ agreement to refer their disputes to the systems.

Third, the Convention does not define “arbitral award”. This is an indication that an evolutionary interpretation of this concept can take place. Thus, what is understood as an arbitral award depends on the context at the time of the interpretation of the treaty. Blockchain-rendered decisions are arbitral awards since they solve a dispute referred by agreement of the parties to a DJS, which can be equated to an arbitrator or arbitral body. Thus, the requirement is met.

Fourth, the formal requirements for the enforcement of arbitral awards in Art. 31 of the UNCITRAL Model Law assume that all awards must be physically rendered and signed. This is not the case with Art. IV of the Convention which only requires the authenticity of the decision and its translation, if necessary. The Convention is to be interpreted in an autonomous manner. Using the Model Law to modulate Art. IV of the Convention is against the Convention’s goal to create a favorable framework for international arbitration. The Convention does not provide for a criterion on documents’ authenticity, and an evolutionary interpretation taking blockchain into account concludes that the electronic certification of authenticity meets the requirement. Thus, DJS decisions are enforceable as awards under the Convention.

Finally, even though an autonomous and evolutionary interpretation of the Convention ensures the enforcement of DJS decisions in the courts of the Contracting States, there is the issue of Art. V (2) of the Convention. States can refuse enforcement of awards on grounds of arbitrability or public policy. To ensure that Contracting States’ public policy is not breached by DJS decisions, states can enter into agreements with the systems’ providers, to set minimum requirements for the proceedings. This way of blockchain governance gives non-state actors an active role in the regulation of DJS, ensuring states’ authority in arenas that are otherwise unreachable.