The Challenge of Globalization
Globalization has blurred the physical divide. People get to know, interact and transact with people from different parts of the world.
On one hand it creates opportunity to strike alliances trade and strike profitable deals but at the same time there are difference of opinion which may lead to a dispute.
Current Disputes resolution System
Our current legal system is not the best way to solve these disputes.
As current legal systems are brick and Mortar institution loaded with work, have a sluggish pace of execution an are expensive.
Moreover they are not equipped to handle cases that are very technical in nature or exist in cyberspace where it is difficult to ascertain jurisdiction and often the cost of litigation is much more then the money at stake.
Kleros is the solution for dispute resolution
The idea behind Kleros is to use technologies like crowdsourcing of jurors. In case of a dispute the users of the system are connected to the jurors who examine the facts and the terms of the contract binding the disputing parties.
Based on this information they make a decision.
The best part is that these jurors are subject matter experts from the chosen field in which the dispute has arisen.
Thus they understant the nitty gritties of the case and can understand the case better as compared to people from other fields.
There are several jurors who work independently and work towards coming at the right conclusion.
How Kleros works
Contracts in the digital world are bound by smartcontracts.
The users are required to choose Kleros as a means of adjudication in case a dispute were to arise.In case there is a dispute between the dealing parties the Kleros dispute management system can be triggered.
Here the contract details, the facts of the case and the possible outcomes are sent out to the KlerosSelection of Jurors
A set of jurors making up the tribunal is drawn from a pool of jurors.
The selected jurors are passed on the details of the case.
Who come out with their decisions individually.
The majority decision is considered as the final decision.Enforcement
The final decision is enforced by way of a smartcontract.
In case an involved party does not agree with the decision they can again trigger the same process with higher number of jurors.
This is the overall process of resolution.
Kleros: Resolution Mechanism
At the time of making the contract involved parties can include the kleros solution as a way of dispute resolution.
They need to pick a court out of the general court option. This is to enable the right kind of people or jurors make the decision in case a dispute arises.
It also needs to be decided how many jurors would be appointed. There are picked from a pool of jurors present who are relevant to the sub court in whose jurisdiction a case is to be subjected.
So if the dispute is about Insurance in general and car insurance in particular then the jurors would be picked from experts in that field.
A live demo to see how Kleros works
To illustrate how the process would work a live example has been set up by Kleros.
Here the jurors have to decide if the uploaded picture is a doge picture or not.
Giving a right decision would earn them a reward and giving a wrong decision would cause them to a penalty token payment.
How Kleros and the incentive process works
The whole Kleros system is incentive and fee based system.
All fee and incentives are paid in PNK tokens that is like money of the Kleros system.
First when the Kleros system is used both parties (disputing parties) pay an arbitration fee.
Based on the nature of dispute a set of jurors is drawn from a suitable pool.
To be elegible to be drawn a juror is to pay PNK coins. The more tokens a juror stakes ,more is the probability of being picked up in a random selection process.
The case details and the possible options are shared with the selected juror bench.
The jurors do not know each other nor are they aware of the other jurors decision.
Their job is to make the right decision based on the information provided.
Suppose 7 jurors are selected and 4 of them make a decion in favor of one party and remaining 3 decide in favor or the other party.
In such a case the majority decision is considered as the final verdict and a smartcontract releases the payment of tokens in case of the winning party.
Suppose A & B have a dispute about an insurance cover.
Person A had an insurance cover for his car but when he claimed the insurance. The cover provider refused to pay stating that the damage to A's car happened due to A's fault and thus B is not liable to cover the cost of repair.
The majority of jurors who are knowledgable about insurance matters decide in favor of A and thus the smartcontract releases the payment to A
The arbitration fee paid by A is also refunded and B has to bear the arbitration charges.
For the jurors a set amount of tokens are deducted from the jurors who took a wrong decision.
The deducted PNK tokens are distributed as a reward to the winning jurors.
Earning tokens as a reward for a correct decision and deduction of tokens as penalty helps create an environment for correct decison taking.
Here is a video description to explain how the system works
More Information & Resources:
- Kleros Website
- Kleros WhitePaper
- Kleros Medium
- Kleros YouTube
- Kleros Telegram
- Kleros Twitter
- Kleros Github
- Kleros Forums
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