Introduction
I often imagined once and yet again going to the moon with blockchain technology. But how would I ever imagine that legal battles can be fought on blockchain? But obviously from the trend on which blockchain is treading we might even wake up to a protocol that might open us up to see dead men walking.
It is so easy to see when you look closely that in the traditional legal system, if the verdict of a jury must slide in your favor, then hiring the best minds in the legal field as your solicitors should most stand tall on you wish list. But as good as that seems it comes with a huge price tag that most often might be excruciating. This and other factors have swayed many from the process, causing many to fall back on their resignation to losses than signing up to unending legal clashes that might cost as much or even more,small businesses ventures mostly affected.
But what if you are sure, that your appearance in court wouldn’t cost you a penny?
What if you are sure that the party with the money bag or with the loudest voice won’t influence the legal proceedings and decision of the jury?
What if I told you that Kleros births a new ray of hope that surpasses your expectation or anything you are used to, in litigation?
What if I told you that your legal Wars can be fought on blockchain?
Most likely I will see you in court tomorrow, ready to re-ignite your case again.
Backgr ound
Many might pretend not to agree to the fact that frictional issues are bound to occur every now and often, but with financial engagements resulting from business transactions the number of this disputes tend to skyrocket, surpassing what is ordinarily expected. How this disputes are resolved tend to birth a huge traction that most times birth legal wars and running battle between parties involved.
Ligation most times, might turn out to become a massive process that may require a huge amount of financial involvement, with almost all processes dependent on the final decision of a Judge or jury. But with the processes surrounding legal battles comes a few problems that might stand tall, in the way of justice to the common man.
Some of this might include:
- Adulteration of the Jury’s decision birthed by corrupt practices
- Low financial capacity of either party to follow true with the legal war.
But with the inception of blockchain technology, we have noticed the birth of many projects that has placed it feet forward in and around the business horizon, sliding on different transactions. And with the transaction comes complains, dissatisfaction and most times disputes. These transactions that births dispute as well as resolution in the blockchain lithosphere include:
To Escrow:
- P2P funding
- Exchanges from one crypto-currency to another crypto-currency and exchanges from crypto to fiat currency
- Transactions involving purchases and reception goods and services
- Transaction involving services and their quality
Micro tasking:
Kleros might be used to handle disputes arising from the pit fall in the quality of the execution of tasks that require handling. This Eventuality might lead to a situation where the pit fall in qualityand as such rewards for the task executed might be withheld.</p.
Insurance:
Kleros litigation system can also be you used to handle legal war between and insurance outfit and its clients. Most times a client might sign up and makes deposit that matches up the requirement of the contract with an insurance company so as to get a covering in event of sad eventuality as stipulated by the contract document. In event of this eventuality it is expected that the company verify the claim and pays the compensation as follows. In event where the dispute arises from the process. Kleros sets in to birth a solution.
Oracles:
This is observed in situation where a question is ask and multiple answers a received if the answer given are coherent then a reward is issued out to those with answers that flow with that of the majority. In situations where there are scattered pieces of answers there tend to be dispute birthed to ascertain who is actually correct with the answer. This can therefore becomes an opening tor Kleros to make a bold statement.
Social networks:
In many social media platforms, there are few activities that the platform might consider unacceptable eg. Spamming. When it is observed the platform owners might wish go a step further to punish or even block the account involved. But if the media site is hinged on blockchain a dispute process requiring arbitration is created and further pushed to the edges of the Kleros for proper handling as the process below stipulates in this exposition.
These processes go a bit further to birth a situation where negotiation, reconciliations, mediation, litigation and arbitration might be required.
But we already know smart contract are great in this line of direction, but to a large extent we need to integrate the ability to make considered properly informed decision based on proof made available (and sometimes consider some emotional leakages), by passing this proof through the assessment table of those who are considered experts in the field subjected to scrutiny.
This process might help in reaching a height in final decision to ascertain, what is and what should be. With this properly thought out, the Kleros team came up strong with a solution, this solution will break the known norms, going a step further to disrupt the traditional legal system, making Litigation and Arbitration a property of blockchain technology. You can be sure of what to expect from this innovation.
Kleros Solution to Legal Wars
The big question still remains: what is Kleros? How does it work?
Kleros is a decision protocol for a multipurpose court system able to solve every kind of dispute. It is an Ethereum autonomous organization that works as a decentralized third party to arbitrate disputes in every kind of contract, from very simple to highly complex ones. Every step of the arbitration process (securing evidence, selecting jurors, etc.) is fully automated. Kleros does not rely on the honesty of a few individuals but on game-theoretical economic incentives.
With ligation birthed into action when one party feels dissatisfied, Kleros spins a leverage that many in the blockchain (Off chain) horizon would wish to take advantage of. Kleros follows to a great extent, the principles of the traditional legal system, where evidences are portrayed and assessments are made by the Jury. The evidences help the team of judges which are largely decentralized, to arrive at a (decision) consensus.
Kleros is cheap, and its decision binds all parties involved using blockchain smart contract, giving them a chance to appeal their plea further, in cases of dissatisfaction with the outcome of the judgment dished out by the jury.
How Kleros works?
Kleros follows the modus operandi of Schelling Coin Mechanism where the opinion of the majority turns out to became the truth of the situation (in this type of mechanism, the individuals that make up the opinion poll are unable to communicate with each other). Schelling Coin Mechanism goes a step further to birth high standards by introducing a procedure where participant are incentivized for telling the truth as well as open them up losses when they favor a lie. Birthing a sense of transparency to the process
Take for instance, FC Barcelona played a football match against Alves FC on 18 of August 2018 and I missed out on the match action and the sequential outcome of the result and I wanted to find out if FC Barcelona won or lost. I popped-up a question: Did Barcelona win or lose the football match against Alves Fc? With this question an opportunity is birthed to each Schelling Coin holder. The votes are casted secretly such that the next individual participating in the voting exercise is unaware of the decision of another participant. (It is eminent that the Real Madrid fans might want to a paint picture that might always create shades of FC barcelena as a failed team).
After voting, the individuals whose votes are coherent with the majority (fans from all around the world with no emotion for both teams) get incentivized reward by a certain percentage of the token. Those whose votes are incoherent with the majority lose the same percentage of their token by which the majority was rewarded (that is to say if a Madrid fan votes against the truth his token is taken from him and is used as an incentive for the greater coherent majority). This process forms the governing principle of Kleros. But there is more to the processes that circumvents Kleros.
The Kleros Methods
Kleros is design on blockchain, after the similitude of a traditional court system or the eminent legal system but, it is hinged on blockchain such that it is ran via smart contracts. With Kleros the initiator determines the number of judges that will make up the jury.
The initiator also chooses the type of court (sub-court) where his or her dispute can be settled in case frictional eventualities arise. This selection is largely dependent on the type of business that the parties are invested in. (Business disputes around Aviation industry might as well be handle by the Air transport), In my own terms as an architect I might prefer to choose an architectural court.
Processes surrounding the kleros ecosystem might be similar to what is obtainable in our traditional law court, where the team of judges might have to share some information about the situation before coming up with a final verdict on the matter. This data sharing across the jury is done such that it is kept away from the blockchain, outside the view of the public. This action births privacy to the process of decision making.
Furthermore, the Kleros systems give everyone with a flair for handling litigations, an opportunity to become part of the jury. The process is such that users with an interest in this line of direction are incentivized with reward token in the form of litigation fees for their activities as a juror in the process of dispute resolution. Users who are motivated enough to become jurors declare their intention using Pinakion token (PNK)
The kleros system model of selection of judges for dispute resolution oscillates around a process where the users intending to be jurors deposits pinakion token, to enhance their chances of nomination. With this principle it is clear that users with more pinakion token, have greater chances of getting nominated to be part of the team of judges.
This therefore streamlines away user with little or no engagement on platform from becoming judges. This simulation goes a step further to curtail and eliminate the activities of fraudster who wish to hijack the system of justice by enforcing their presence as judges with an intention to disrupt the process, if the selection was done randomly.
Kleros Assessment And Legal Proceedings
After a case of dispute is initiated, jurors selected based on the amount of pinakion token they have deposited, evidence are required to backup claims. This been submitted to the team of judges a quick assessment of the situation follows suit. But it is eminent to note that the system is designed such that an individual juror cannot to be influenced by any other member of the team.
Each and everyone in the team of judges that make up the jury are given options, options to which their vote can be casted based on their individual analysis of the dispute. After voting have been done and revealed the result of the votes are aggregated by a smart contract to verify which party wins the law suit
To maintain trustworthiness in the system, it is design such that the next judge wouldn’t know what option the other favors, and judges whose decision isn’t coherent with the group that make the majority are stripped of the token.
This token is collected from those incoherent judges and used to incentivize the larger group that make up the majority. Judges who any reason refuse to reveal their votes are penalized.
Notice this, users who involve themselves in the process of litigation as jurors are incentivized. This incentive comes in the form of Arbitration Fees which is determined by an Arbitrable smart contract. This smart contract states which party is responsible for the payment of the litigation fees. That has earlier been determined by the court involved with the dispute resolution. Although other times the process might get a little bit more complicated than that.
In _rst instance, each party will deposit an amount equal to the arbitration fee in the smart contract. If one party fails to do so, the smart contract will consider that the court ruled in favor of the party who deposited the arbitration fee (without even creating a dispute in the court). If both parties deposit the funds, the winning party will be reimbursed when the dispute is over.
In appeals, both parties have to deposit the arbitration fees. The appellant also has to deposit an extra stake proportional to the appeal fees which will be given to the party winning the dispute. This way if a party makes frivolous appeals to harm the opposing party, the opposing party will get a compensation for the time loss, while if the appeals are _nally ruled to be legit, the stake will be returned to the appellant.
Going a step further, we all know what the trend legal battle follow, most often parties involved in a legal turmoil feel overly disenfranchised by the decision of the jury in the traditional legal setting. This therefore has motivated many to plea the case in a higher court of appeal. With the probability of this eventuality to follow suit on blockchain, Kleros platform has also made provision for the legal battles to continue further in the form of appeals, in situation where a party wish for further redress. But this comes with a higher price.
In a situation where previous judgment is seen as unfair by one of the parties, that party can go forth with its best foot forward to file an appeal. The appeal process in Kleros is such that number individual jurors that make up the jury is twice as much the panel that handle the first judgment plus one.
This therefore births a situation where the cost of running the appeal is increased immensely due to incentivized reward due to for the large number of jurors, therefore making it difficult for any party to bribe their way through the process of decision making, because of the exponential increased in cost with every subsequent appeal.
In Kleros it should be noted that an individual is only allowed to serve in just one sub-court that he/she is most skilled in. This is because if the opportunity is given, many will want to serve as jurors in almost every court, with a bid to leverage of the tokenization meant for jurors which comes as litigation fees. With each sub-court mostly independent of another; each court is governed by it set of rules and policies that binds all members and how disputes litigated.
Use Case Scenario of Kleros Litigation
Maxie is an Architect that is largely invested in architectural design process he is located in South Africa, and Moses is a business man located in Cuba. Both man are lovers of blockchain technology and as such have themselves sign up to an online decentralized market place where users have the leverage of show casing the skills and businesses. Moses wishes to build a home (residential building) and wishes that his acquisition is done free of the government aid and mortgage plans which is extremely expensive if you put the odd and the stake together.
Moses overtime on the online platform got to find out that by floating piece of information on the internet that Maxie is an Architect with a massive reputation on the online decentralized (blockchain) market place. After a good view of his online portfolio Moses was impressed and therefore went ahead to contact Architect Maxie with the intention of having to do business with him. Maxie was therefore contacted but there was more.
Moses gave Maxie a brief on the details of the kind of design that would tickle him to his toes. Part of what the design entails was a garage (Moses wanted a proposed structure where his new Range Rover would be parked inside his building streamlined out of the view of his visitors) and heap roof that looked like an envelope: something similar to the building of his business associate
The requirements were put down in the contract document (most likely a smart contract), with the sum and the method of payment agreed. The payment was such that the first half was to be paid at the initial stage of the process and second half will be paid after the Maxie most have finished with the design, with all funs held up in a smart contract until the design was finally handed over Moses. But with Moses experience on blockchain, he went a step further. He integrated that in any case of eventuality or pit fall that might lead to an occurrence of dispute between the both parties Kleros should escrow (or handle) the process of litigation.
With the first part of the payment dished out, Maxie went to work to birth Moses a design that meets up with his inner desires, in the process, falling a bit short of the details for reasons undefined. In place of the garage, Maxie designed Moses a car port and instead of a heap roof similar to what Moses had seen in friend structure Maxie went forward to design a monolithic roof. Though the design stood firm on the edges of a high percentage of functionality, it fell short of the Moses (desires) inhibitions.
With this situation at hand Moses triggers a litigation process with Kleros due to his dissatisfaction with the design created by Maxie.
That morning, it occur to Samson a freelance Architect in South Korea to check through the Kleros network if he could find a dispute he could hinge unto as a juror and earn some extra token for his input. In the process of his search he stumbles into Moses report and gets up to speed with the process. First off, to monetize of the process and secondly to see what the designs from that part of the world might look like. Samson therefore deposits his pinakion coin. So also did the many other Architects form around the world who wish to join the process (deposit their pinakion token).
Eight of them with the highest amount of the pinakion token where then recruited and notified that they were successful with the selection process to become a part of the team with Samson as a juror.
The team of nine jurors were given five days to assess the evidence put toward by Moses which includes the contractual terms and the proposed Architectural design of Maxie. After the five days interval, individuals in the jury will have his/her vote casted to favor of the following:
- Pay Maxie for his design
- Give Maxie two weeks for Design modification
- Reimburse Moses his money back
The nine members of the team downloaded the evidence and put it under criss-cross analysis, in the process they found out that Maxie has made a stunning Architectural design for Moses but it fall short of the design requirement of Moses as stipulated in the contractual document. Having a proper view they unanimously voted for the option Give Maxie two weeks for design Modification.
After the unanimous vote that favored Give Maxie two weeks for design Modification.With this platform stopped any other dispute request until the two weeks intervals exhausted, with Moses hopefully thinking that Maxie will recreate a modification that will suit his best intention. But over the process of time Maxie got himself busy chasing a new project leveraging of the time given and before long the time elapsed and suit got reopens again with Maxie starting up with the modification process but could not have it completed within the time frame
Now with the new evidence at hand (the unfinished modification) the jury swings into action to cast their vote. After the process of voting, the option voted for, was revealed by the jurors and aggregated by a smart contract to find out what was proposed by the jury. It was therefore observed that one juror refused to reveal his vote and as such was penalized. Two jurors tend to favored Give Maxie two weeks for design Modification, One favored Pay Maxie,and the other five saw Maxie as an unserious Architect and favored the option Reimburse Moses Money back.
Forthwith Moses money is forwarded back to his wallet address by the smart contract and the deal was called off.
The judges whose judgment were incoherent with the majority where striped of a percentage of their token as earlier stipulated in the smart contract and used as incentivized token used to reward those jurors whose judgment was coherent with the majority.
With this massive analysis, it is an open secret that Kleros birth a litigation system on blockchain that might birth a disruption of the traditional legal system. This it will do through it incentivized reward structure for jurors and low cost for parties involved in dispute, as the expensive services of a solicitor in the traditional legal system might be eliminated. Going a step further to bring transparency into the legal system and making it extremely difficult for money bags to buy their way through the justice system through bribe offering to Judges and jury team.
If the dispute originates from irregularities surrounding small sum from transactions of small business, the business owner most times might decide to bear the loss rather than run into huge legal turmoil that would drain the firm financially and in the end birth an infinitesimal advantage. But with the advantage created by Kleros they can seek redress without having to face the disadvantage of high litigation fees.
The big business moguls, on the other hand are not left out of the advantage that Kleros births. Take for instance Ebay, a company deeply rooted in e-commerce. Transactions on the platform most times birth disputes in the horizon. This dispute may emanate from delay in delivery, pitfall in the quality or specification of products (as describe or seen online before payment), product damage while on transit etc.
The process of dispute resolutions and reconciliation might tend to hamper the main objective of these firms. But what if there is a system that can handle these resolutions? What if kleros took the burden of dispute resolution of the shoulders of these organizations? These companies would be better off handling their traditional business model (e-commerce), leaving Kleros to handle their dispute resolution and surrounding issues.
The Team Behind the Project
The Advisors
The Road Map
The analysis on this subject was first analyzed on this post
For More Information:
- Kleros Website
- Kleros WhitePaper
- Kleros Medium
- Kleros YouTube
- Kleros Telegram
- Kleros Twitter
- Kleros Github
- Kleros Forums