New Digital Dispute Resolution Rules

Lawtech UK is a government-backed initiative that promotes the digital transformation of the UK legal sector. Its UK Jurisdiction Taskforce (“UKJT”), which is chaired by the Master of the Rolls, Sir Geoffrey Vos, has recently published the UK’s first Digital Dispute Resolution Rules (the “Rules”). These are intended to “facilitate the rapid and cost-effective resolution of commercial disputes, particularly those involving novel digital technology such as cryptoassets, cryptocurrency, smart contracts, distributed ledger technology, and fintech applications.” 

The Rules have several key features:

• If a dispute arises, it will be resolved via arbitration:  Arbitration is a well-known ADR system which is governed in England by the Arbitration Act 1996 and is enforceable around the world via the New York Convention. The Rules also envisage that the parties can agree that certain technical disputes should go to expert determination, which is a contractual process that is simpler than arbitration. The Rules will apply to any resulting arbitration or expert determination.

• The decision-maker will be experienced in the digital sector: The appointing authority is the Society for Computers and Law, an organisation dedicated to technology and law. It will appoint an arbitral tribunal or an expert appropriate for the subject-matter of the dispute.

• The procedure will be expedited: The arbitral tribunal or the expert must try to determine the dispute within 30 days of their appointment, or within such other time-period agreed by the parties. This is a “best endeavours” obligation rather than a strict deadline, so it is possible that the process might run for longer than 30 days.

• The use of technology is encouraged: This means adopting technologies that will streamline the dispute process such as submitting evidence and arguments electronically and using digital signatures on arbitral awards. The arbitral tribunal or expert will also have the power to operate, modify, sign or cancel any digital asset relevant to the dispute using any digital signature, cryptographic key, password or other digital access or control mechanism available to them.

• The parties may remain anonymous: The parties can agree that the process can be anonymous, for example to reflect the fact that the transaction has taken place anonymously on a blockchain. The claimant or respondent will then provide identity details confidentially to the arbitral tribunal or the expert alone.

• Disputes can be consolidated: Arbitral tribunals appointed in different arbitrations under the Rules can agree that the arbitrations must be consolidated. This might be appropriate if multiple disputes arise in the context of one digital transaction. The arbitrators can also agree between themselves that some or all of the members of the different tribunals will make up the tribunal in the consolidated arbitration.

Tech companies may want to incorporate the Rules into their contracts in the future, and might also consider amending existing contracts to refer to them. The UKJT recommends that the Rules can be incorporated into contracts by inserting the text: “Any dispute shall be resolved in accordance with UKJT Digital Dispute Resolution Rules”. Alternatively, parties can agree to use the Rules at the time when a dispute arises. 

It is yet to be seen if many tech companies will use these Rules, or whether they will prefer national court litigation or other, more established arbitration rules. But sector-focussed dispute rules have proved popular in other industries, and access to decision-makers with expertise in digital technologies might be a strong selling-point for the Rules.

The Rules can be found here.