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Smart Courts, Smart Contracts, and the Future of Online Dispute Resolution

The Authors present a critical assessment of ODR+ mechanisms to settle Belt & Road Initiative disputes (primarily smart courts and smart contracts).

Published onJan 05, 2022
Smart Courts, Smart Contracts, and the Future of Online Dispute Resolution


This article presents a critical assessment of online dispute resolution (“ODR”), (particularly in its evolved form involving smart courts and smart contracts) (“ODR+”), which is a mechanism that China may consider for settling its Belt & Road Initiative (“BRI”) disputes. As the first article to address the emerging dispute settlement technologies in the BRI context, it suggests guidance for policy makers and practitioners. Furthermore, the article asks the key question of whether ODR+ can result in a more convenient and efficient processing of BRI disputes and hence be assimilated into (and potentially fill some of the gaps of) the current BRI dispute settlement framework. Additionally, whilst attention is also given to recent proposals for such ODR+ (and the implementation of ODR+) in China and certain other States who participate in the BRI, it is more significant to address whether the BRI as a whole should (and can) embrace ODR+ as regards dispute settlement; alternatively, whether embracing ODR+ might merely be an artificial capitulation to the apparent conditions of modern society (a vanity project) more than a superior system for administering dispute settlement.

I. Introduction

ODR, which is defined as “the introduction of information and communication technology (ICT) into the processes of dispute resolution,” has already developed significantly in China.1 Although ODR originally aimed primarily at introducing a more convenient dispute resolution mechanism for e-commerce disputes,2 it has now evolved to include smart courts3 and become part of a “narrative of blockchain technologies and smart contracts ‘taking over’ the law”4 (what this article calls “ODR+”). In this regard various commercial platforms internationally began to show a varied interest in ODR and slowly these entities started to commercialize their own ODR systems.5 Hence, several big-name ODR systems such as eBay’s dispute resolution platform,6 Smartsettle,7 VirtualCourthouse,8 and Modira evolved.9

In recent years, various government entities have also shown interest in ODR.10 The Office of Government Information Services11 and the National Mediation Board12 in the United States are promoting and adopting ODR as an effective method of resolving problems with the citizens. Similarly, In India, the practice of Lok Adalat is gaining popularity. Lok Adalat is considered one of the Alternative Dispute Resolution (“ADR”) mechanisms, where disputes/cases pending in the court or at the pre-litigation stage are settled amicably.13 Lok Adalat earlier used to be an offline exercise. However, last year, SAMA, the newly evolved ODR platform in India, collaborated with the District Legal Services Authorities of states like Rajasthan, Bihar, and Kerala to efficiently conduct online Lok Adalats.14

On March 3, 2021, the Chinese Ministry of Justice issued a guideline pushing for the development of China's “internet arbitration systems.”15 The recently-published guideline highlighted the importance of ODR in accomplishing the aim of restoring economic growth while also controlling the spread of COVID-19. It encourages dispute resolution organizations to improve their online capabilities, such as online case management systems and interfaces. The recommendations urge arbitration institutions to broaden their usage to cover disputes arising from a return to work after a lengthy absence, such as financial concerns, labor disputes, and work injury compensation.

Furthermore, in recent years China has arguably become a global leader in the development of ODR+.16 However, ODR+ mechanisms have not been implemented in conjunction with China’s Belt and Road Initiative (hereinafter “BRI”) project, meaning dispute settlement lacks a single, unified and well-structured dispute settlement mechanism (“BRI DSM”).17 This article argues that ODR+ is well placed to fill this gap, especially since ODR+ is also a natural extension of China’s “digital silk road” introduced in 2015.18 As such, the purpose of this article is not to describe the dispute settlement challenges in the BRI context but rather to kickstart a discussion of the use of ODR+ as a means of BRI dispute settlement.

Nevertheless, the significant challenges with dispute settlement in the BRI context can be restated briefly as follows. All of the challenges generally relate to the fact that there is no specific BRI treaty (such as a Free Trade Agreement (“FTA”)).19 Firstly, it is unclear what the concepts of “BRI” and “BRI disputes” are.20 Secondly, it is unknown who can participate in BRI dispute settlement.21 Thirdly, the optimal means to settle a BRI dispute has not been defined, especially since the States participating in the BRI (hereinafter “BRI Countries”22) vary significantly in geopolitical terms.23 Fourthly (and as a consequence of the preceding reasons), BRI disputes are not treated in a uniform way; instead, many different types of BRI disputes can be identified, such as investment disputes or trade disputes, which may lead to “strategic forum shopping” since BRI disputes have “overlapping jurisdictions.”24 This means that investment disputes might go to investment arbitration but trade disputes might go to the WTO, for instance.

Part II of this article explains further how ODR has evolved as a concept and introduces how ODR+ can be utilized in the settlement of BRI disputes. In Part III this article summarizes the developments regarding ODR+ in China and selected other BRI Countries. Part IV of this article explains how a BRI smart court would work and then introduces some examples of smart contracts that are relevant from a BRI dispute settlement perspective. In Part V, this article examines the potential means for China to introduce a common ODR+ framework in the BRI, presenting an analysis of how ODR+ can be assimilated into the existing BRI dispute settlement framework and introducing some global approaches towards ODR. Part VI of this article introduces some of the limitations of ODR+ in the BRI dispute settlement context. Part VII concludes.

II. ODR as the Fourth Party in BRI Dispute Resolution

This section presents an explanation of how ODR has evolved as a concept and then introduces how ODR+ can be utilized in the settlement of BRI disputes. The ODR industry only began to emerge after 1998 and was initially understood solely as a means of resolving disputes vis-à-vis “an online entity rather than a physical entity.”25 However, ODR “evolved greatly in its fairly short life,”26 and the emergence of dispute resolution via the internet (“e-ADR”27) also introduced the idea of technology being the fourth party in dispute resolution, i.e., stepping away from a triangular idea of dispute resolution of two disputants and one neutral party towards a rectangular idea involving two disputants, one neutral party, and one computer.28

While the term “ODR” has changed from its original usage, since there is still a divide between the original understanding of ODR and its modern equivalent, in this article, we use the term “ODR+” to include all technology that assists or affects dispute resolution, such as smart courts and smart contracts, but also artificial intelligence (“AI”), big data and the blockchain (amongst others).29 Technology is now the generic term for all of the above and remains the fourth party in dispute resolution (for now). Over time technology might become the neutral party, and dispute resolution may revert to a triangular idea of dispute resolution.

Returning to the BRI, this article will use the concept of ODR+ and focus on the two distinct innovations of smart courts and smart contracts (which incorporate all of the technologies mentioned). The concepts of smart courts and smart contracts will also be considered separately since the use of both (or either) has the potential to reshape BRI dispute settlement. In such a way, ODR+ can play a role in building the BRI DSM; there is a vacuum in the BRI dispute settlement context, and ODR+ can be a way to (partially) fill this vacuum.

Please note that this article attempts to highlight the main features of ODR+; however, more detailed and comprehensive studies of these technologies can be found elsewhere.30 Instead, the focus of this article is on the application of ODR+ to BRI dispute settlement.

A. From the “Multi-Door Courthouse” in the US, to the “Smart Courts” in the BRI

Smart courts are the modern equivalent of the “multi-door courthouse.”31 In his seminal paper, Frank E. Sander introduced the idea that there should be a “screening process” of all disputes, through which disputes could then be channeled toward the appropriate forum, such as adjudication, ombudsman, mediation, etc.32 However, whilst Sander imagined that court clerks would conduct the screening process, in smart courts, technology replaces the court clerks. Indeed, smart courts are defined as dispute settlement, which “relies on computer technologies that enable big data use, blockchain formation and advisory and determinative forms of artificial legal intelligence,” which truly defines the modern equivalent of the “multi-door courthouse.”33

In the BRI dispute settlement context, the implementation of smart courts represents the first way that ODR+ can participate in the BRI. Smart courts have already been introduced in many places, including China.34 As a system of advanced case management, smart courts have massive potential in the BRI in two main ways. First, smart courts can minimize the possibility of forum shopping since smart courts can determine the forum best placed to resolve the dispute. Second, smart courts can increase access to justice, since in BRI dispute settlement, there is a very real problem of one State not trusting dispute settlement conducted outside of that State.35 However, with a centralized smart court, the “algorithmic approaches [can be] even more trusted than human-powered resolutions.”36

B. The Potential Role of “Smart Contracts” In BRI Dispute Settlement.

The second way that ODR+ can participate in BRI dispute settlement is via smart contracts. Although smart contracts originated in Bitcoin and other cryptocurrencies (independently from ODR), smart contracts are predicted to be the future of ODR—and even the future of law.37 Smart contracts are “computer code that is placed on a blockchain,” which have a “self-performing, self-enforcing quality” since the code is immutable, meaning the code by default cannot be changed, thus ensuring performance.38

In the BRI dispute settlement context, the use of smart contracts has the potential to be a game-changer since the use of smart contracts potentially eliminates the need for courts altogether, i.e., by forcing agreements to be made through code instead of judges.39 In particular, since smart contracts consist of “if/then” clauses in code (which provide for each obligation and eventuality), once formally created, smart contracts are self-enforcing, running in the cloud and when an “if/then” clause switches from false to true, automatic enforcement is triggered.40 Therefore, smart contracts potentially go much further than the case management system of smart courts and generate automatic adjudication by AI. This is also particularly welcome in the BRI, since: First, there would not be the concern as to which State is hosting the adjudication since the computer would conduct the enforcement automatically. Second, there would not be a concern as to the governing rules, since smart contracts are “the rules that participants have collectively signed up to that govern the evolution of the ‘facts’ in the distributed ledger” (blockchain), allowing the distributed ledger (blockchain) to be “authoritative with respect to the existence, status, and evolution of the underlying legal agreements they represent.”41

Smart contracts can also be understood as the equivalent to “escrow-based dispute resolution.”42 This concept again comes from Bitcoin and is that the transactions are locked by a multi-signature wallet and only unlocked by the keys of both parties or by an adjudicator (which is a computer that makes and enforces an award automatically).43

III. Developments Regarding ODR+ in China and Some Other BRI Countries

China is positioned to lead the BRI in dispute settlement via ODR+ and this section summarizes the development of smart courts and smart contracts in China.44 Additionally, a summary of the developments in selected other BRI Countries (namely the United Arab Emirates (UAE), Malaysia, and Kazakhstan) is also presented to demonstrate that China does not have a monopoly on ODR+ and can consider the approaches made in its partner BRI Countries. There are also other BRI Countries (such as Pakistan,45 South Korea,46 and Singapore47), and non-BRI Countries (such as Netherlands,48 UK,49 India,50 and the US51) which have also introduced aspects of ODR+.52

A. China

Smart courts: Quite apart from the launch of three internet courts53 (with Hangzhou reported to be the world’s first), the basic structure of a nationwide smart court in China has already been formed.54 This consisted of three steps: (1) the establishment of a “shared website” for all courts in China to conduct all operations online, (2) the establishment of a judicial transparency platform,55 and (3) the deep integration of technology into the courts.56 This occurred following the Outline for National Informatization Development Strategy introduced in 2016,57 which incorporated the smart courts construction and two strategic five-year plans.58 These strategies and reform plans continued the robust reforms regarding the use of technology in the Chinese Courts (ongoing since the 1990s).59 To further cement this structure (and make the system of smart courts public-facing), China has also already implemented the China Judicial Process Information Online, China Court Hearing Online, China Judgments Online, and China Enforcement Information Online.60

Smart contracts: With regards to smart contracts in China, although cryptocurrency is banned by the People’s Bank of China, the ban did not affect blockchain research.61 Therefore, smart contracts are being rapidly developed by both the public and the private sector. Indeed, in the private sector especially, smart contracts are widely used, for instance, in financial services, the food industry, logistics, legal services, intellectual property, and many other sectors.62

B. United Arab Emirates

Smart courts: The UAE (and Dubai in particular) has a progressive approach towards smart courts. The UAE has long been the leading country in e-commerce innovation in the Middle East (demonstrated by its 2002 e-transactions law) and the UAE is now a leader in smart courts as well.63

Smart contracts: The UAE (including Dubai) is arguably a world leader regarding smart contracts, having had a comprehensive blockchain strategy since 2017 and the world’s first blockchain court in 2018.64

C. Malaysia

Smart Courts: Malaysia is a progressive country with regards to smart courts and had already introduced a “complete E-court system” in 2011.65 Malaysia has also introduced a specific technology court and is also a pioneer in the Islamic sector, introducing several innovations, including E-Shariah.66

Smart Contracts: Malaysia is also progressive with its use of smart contracts (particularly as regards financial transactions). For instance, despite its ban on Bitcoin, the Central Bank of Malaysia is keen on developing expertise regarding smart contracts and blockchain (and has initiated this by promulgating the Financial Technology Regulatory Sandbox Framework in 2016).67 Immediately afterward several fintech companies began developing blockchain and smart contract products, including in the Islamic finance sector.68

D. Kazakhstan

Smart Courts: Kazakhstan introduced robust ICT in courts in 2013 and continues this approach through several national strategies including the Strategy for Digitalizing the Judicial System of the Republic by 2022 that was adopted by the Supreme Court in 2019.69 The technologies are very comprehensive, bringing ICT to every aspect of the Kazakh judicial system, with the highlight being the Törelik system, a judicial Internet portal with 5,000 daily users.70

Smart contracts: Whilst the public sector is constrained due to Kazakhstan’s national strategies (see above), the development of smart contract and blockchain technologies is booming in the private sector. For instance, smart contracts are being developed in the finance sector,71 the energy sector,72 supply chain management,73 healthcare,74 tourism, and hospitality (among others).75

IV. Smart Courts or Smart Contracts in the BRI—Why Not Have Both?

This section explains how a BRI smart court would work and then introduces some examples of smart contracts that are relevant from a BRI dispute settlement perspective. China’s Supreme People’s Court (“SPC”) in 2015-16 proposed the introduction of Smart Courts, which, according to Chief Justice Zhou Qiang, would make full use of ICT, including cloud computing, internet, artificial intelligence and big data, to modernize the judicial capability and the trial system in the country.76 The aim is “to build a judicial mechanism that is open, dynamic, transparent, and convenient and improve public understanding, trust, and supervision of the judicature.”77

A. BRI Smart Court

Imagine a BRI-wide smart court, which could be set up using blockchain technology. There could be either (i) a BRI Smart Court Light (“BRI SCL”) or (ii) a BRI Smart Court Complete (“BRI SCC”) (the features of both of which are described below). Imagine that any claimant in a BRI dispute could simply log on to a BRI smart court web-app and register a claim. The claimant (and defendant) could receive electronic notifications at every stage of the claim until it is resolved. All correspondence could be placed on the system, and wherever possible, the computer would generate an outcome using AI. Does this sound too incredible? Well, it is essentially the Törelik system (mentioned above) that is currently used in Kazakhstan.78

Of course, the BRI is very different from Kazakhstan, and the implementation of a BRI smart court (either light or complete) is problematic for many reasons, such as those mainly relating to the sovereignty (and confidentiality) of the parties (i.e., how can a party be compelled to do something with which they disagree). In this regard, however, international economic law already provides answers (e.g., the transactional approach).79 Still other issues include the difficulty to synchronize cases with external forums (be they arbitration centers, even national courts, etc.)

Figures 1 and 2 show the differences in the operation of a BRI SCL and a BRI SCC.

Figure 1: BRI Smart Court Light (BRI SCL)

The key difference is that the BRI SCC would be linked to an official register of BRI projects “BRI Project Registry” (hosted on the blockchain). This would make the BRI SCC far more robust, since it would only accept claims in relation to projects registered in the BRI Project Registry. Furthermore, in such a case the authority of the BRI SCC would be automatic, meaning that if either party acts in contravention of the SCC’s instructions, then the registered project party could be subject to disciplinary proceedings or punitive measures (for example, struck off the BRI Project Registry and blacklisted).

Figure 2: BRI Smart Court Complete (BRI SCC)

This perhaps sounds authoritarian and unrealistic, but nevertheless it is an idea to implement a robust BRI smart court (and to improve the integrity of BRI projects). On the other hand, the BRI SCL is a more realistic idea as BRI project parties can continue as they are at the moment, although the BRI SCL could help to improve the transparency of BRI dispute settlement. Furthermore, the BRI SCL could greatly increase access to justice, the efficiency of the settlement process and lower dispute resolution costs, which could be especially appealing to smaller-sized enterprises.

B. Smart Contracts in the BRI

With regard to the use of smart contracts in the BRI, many of the underlying contracts in BRI projects are appropriate for tokenization (especially with respect to generic documents relating to fields such as finance, construction, and manufacturing or logistics).80 Examples of such contracts in the finance, construction, and manufacturing or logistics sectors are provided below.

1) Finance

Smart contracts are particularly appropriate for financial transactions. This is not surprising considering that smart contracts originated from the technology undergirding many cryptocurrencies. The basic premise is that after the contract is tokenized, the code will be executed automatically and impartially by computer systems which “significantly decreases transaction costs” (since there are no traditional trust-building costs due to the use of blockchain technology), rendering such contracts much more profitable.81 Examples include complicated and costly letters of credit, bonds, and security agreements.82 Additionally, in China, there is also pioneering research in the context of smart loans.83

2) Construction

The construction industry potentially represents a particularly “fertile area” for smart contracts, frequently because there is often a need for speed (especially in international construction contracts where time can be of the essence).84 In BRI projects, it can be expected that parties will be prepared to consider self-enforcing smart contracts, which potentially provide a win-win rather than risk the cost, delay, and uncertainty involved in conventional contract disputes. Using smart contracts can also streamline some of the contract documentation at the time of entering into the contract rather than at the time of the dispute.

3) Manufacturing and Logistics

Smart contracts are already starting to appear in the manufacturing and logistics industries out of the desire to move past opaque information flows that have long hindered traceability and hassle-free trade. Moreover, there is already a cloud-based supply chain industry developing blockchain and allied technologies to solve the previous problems of monitoring assets and securing traceability.85 Nowadays, smart contracts are expected to shorten the chain of third-party agents greatly and speed up delivery (which in turn can reduce the price for the consumer and reduce wastage due to practically flawless data and process integrity). Many of the manufacturers and logistics providers deploying or developing such technology are already in BRI Countries.

V. The Modalities to Implement a Common ODR+ Framework in the BRI

This section examines the modalities for China to implement a common ODR+ framework in the BRI and presents an analysis of how ODR+ can be assimilated into the existing BRI dispute settlement framework. This section primarily explores China’s leadership of the BRI (from an ODR+ perspective), including the BRI law-making process, China’s network of FTAs, the CICC, and the establishment of new ODR+ organizations. Additionally, we examine the steps made by the United Nations Commission on International Trade Law (“UNCITRAL”) and the EU towards implementing a common framework for ODR and the World Bank’s approach towards “increasing connectivity” and “outsourcing justice” via the small states, smart solutions project.

A. China’s leadership of the BRI (from an ODR+ perspective)

Although China only officially began developing the digital silk road in 2015, already by October 2017, China had been perceived as utilizing it to position itself as a “cyber superpower” (and ODR leader).86 Indeed, this theme was made evident by Chinese President Xi’s words that “there can be no modernization without information technology.”87 In the following section, we consider whether this leadership contributes to lawmaking in the BRI.

1) Law-making through BRI leadership

The first way for China to implement a greater role for ODR+ in the BRI is by directly creating a legislative pathway. This is part of how China can use the BRI to create international law.88 Indeed, it is logical that China develops law via the BRI. In fact, the BRI includes developments in the law that are expected to enhance international trade, and ODR is part of that, although these measures are also criticized for being primarily designed to “improve China’s image” and to enlarge China’s “economic and political role” in the other BRI Countries.89

However, since the BRI exists without a treaty,90 and is made up of dozens of independent and sovereign States,91 China is not able to legislate (on its own) for a more significant ODR+ framework across the BRI.

2) Investment Treaties

Another way for China to implement a greater role for ODR+ in the BRI is via a free trade agreement. China has an extensive network of FTAs. According to the UNCTAD database, China currently has 126 active investment treaties (including 107 Bilateral Investment Treaties and 19 other Treaties with Investment Provisions).92 This network is one of the world’s largest, and it has been substantially analyzed.93 However, none of the existing investment treaties refer to ODR (or ODR+), meaning that China would need to either update the existing treaties (which is unrealistic) or negotiate a new BRI FTA (which seems unlikely). Alternatively, China could also propose a specific ODR+ treaty, and BRI Countries would be free to accept or reject such treaty.

3) The China International Commercial Court

A third possible way for China to implement a greater role for ODR+ in the BRI is through updating the procedural rules of the China International Commercial Court (“CICC”), which was established in 2018 as a part of China’s SPC.94 The procedural rules issued in 2018 are quite brief and do not specifically allow for ODR (or ODR+).95 Nevertheless, the CICC was actually designed to operate in some ways as a multi-door courthouse. This is because the CICC was designed to operate as a “one-stop shop” for BRI disputes, wherein disputes could be “allocated” to arbitration or mediation institutions.96

4) The establishment of ODR+ organizations

Another possible way for China to implement a greater role for ODR+ in the BRI is to establish new organizations. For example, in 2018, Hong Kong’s justice department supported the establishment of, a dedicated online dispute settlement tool for major BRI infrastructure projects, as an alternative method of resolving BRI disputes online.97 eBRAM, which stands for Electronic Business Related Arbitration and Mediation, is however run as a private organization and does not aim to operate as a public smart court or to specifically support the use of smart contracts. eBRAM instead has a two-fold objective: first, to cost-effectively facilitate business negotiations and prevent disputes involving enterprises worldwide, including in China’s BRI region as well as the Greater Bay Area and Mainland-focused enterprises; second, to meet the demand (driven by the expansion of e-commerce) for legal and dispute resolution services across borders to be resolved online utilizing innovative technology and AI. Nevertheless, eBRAM is an example of a new organization that could be established within the BRI vis-à-vis ODR+ (and eBRAM also has the potential to evolve and fit into a BRI-wide ODR+ system).

B. Global Approaches to ODR (and similar innovations)

This section examines some global approaches to ODR (and similar innovations). It focuses on three dimensions: (1) UNCITRAL Technical notes on ODR, (2) the EU’s “Consumer ODR” platform, and lastly, (3) the World Bank’s approach towards small states. Firstly, the section discusses how the fact that UNCITRAL technical notes are mere guidelines, not regulations, did not help it achieve its desired objective. UNICITRAL was also perceived to be too early to develop a single ODR regulatory framework. Secondly, the section discusses the Consumer ODR platform introduced by the European Union (“EU”), which is user-friendly and runs parallel to domestic courts. Lastly, it considers the World Bank initiative to enable some small states to use international trade and telecommunications technology to outsource various services, including justice.


In 2010 the UNCITRAL directed its Working Group III to formulate proposals to implement a global system of ODR in relation to “cross-border electronic transactions.”98 UNCITRAL had become concerned that consumer disputes submitted to national courts were becoming increasingly difficult to handle mainly because of the low-value, high-volume claims, resulting in a significant disconnect between the low values of the transactions and the high costs of litigation.99 The outcome of the Working Group was a set of Technical Notes on ODR that UNCITRAL finalized and adopted in 2016.100 The Technical Notes on ODR were a non-binding descriptive document and did not generally achieve what was anticipated.101 The fact that UNCITRAL produced a set of technical notes and not a set of regulations was seen as a “failure to produce concrete results”—and an acknowledgment that it is still not feasible to intertwine national legal systems, culture, and the needs of countries in various stages of development and historical experiences “in a single, coherent and consistent ODR regulatory framework.”102 This is something that the BRI should consider.

2) The EU Approach

The EU introduced an EU-wide “Consumer ODR” platform in 2016, managed by the European Commission and with instructions in all European languages.103 The platform was established as a “Consumer ODR” platform (i.e., to assist in resolving e-commerce disputes between European consumers and European traders) and runs in parallel to national courts as it does not seek to “deprive consumers or traders of their rights to seek redress before the courts.”104 The platform, which is reported to be easy to use, fast, and inexpensive, operates via EU traders providing links on their websites to the EU ODR platform and to certified ODR providers to resolve cross-border transactions e-commerce disputes in the EU.105 The promulgation of the EU ODR regulation and the establishment of the EU ODR platform could also be considered a “pilot” scheme in the EU for the later introduction of smart courts.106

3) “Small States, Smart Solutions” – Proposal of the World Bank

Several international organizations, but chiefly the World Bank, have been examining the means of increasing the connectivity of so-called “small states” (countries with a population of less than 2 million).107 In particular, the World Bank has been considering how some small states use international trade and telecommunications technology to outsource various services, including justice, but also banking supervision, public utilities regulation, medicine, and education. For instance, the World Bank notes how small Caribbean nations have largely and successfully outsourced “justice” to two supra-regional courts—the Caribbean Court of Justice and the Eastern Caribbean Supreme Court.108 In an ODR context, this is notable because both of these courts have robust e-filing/e-litigation portals.109 With regards to the BRI, the case could be made that the smaller BRI Countries might be better served by outsourcing BRI dispute settlement to a BRI smart court.

VI. The Limitations of ODR+ in BRI Disputes

This section introduces some of the limitations of ODR+ in the BRI dispute settlement context. Here we attempt to organize these limitations into (A) inherent limitations (for instance, the fact that BRI projects are often complex); (B) technological limitations (divided into (1) lack of flexibility, (2) lack of retroactivity, and (3) lack of infrastructure); and (C) political limitations. However, it must be acknowledged that the limitations overlap between categories. Also, there is no hierarchy of limitations intended, as each limitation is important. ODR as a dispute settlement mechanism has been described as “stinky, repugnant and drab,” and therefore it is also to be expected that there similarly will be substantial criticism of ODR+ mechanisms.110

A. Inherent Limitations (Highly Complex Projects)

The current understanding of the parameters necessary for the operation of smart courts and smart contracts is the ability to reduce disputes down to “single issues  . . . resolved [or allocated] acceptably by algorithms.”111 However, it is asserted that only certain kinds of disputes, namely routine, standardized, uncomplicated, local, and two-party disputes, could be reduced in such a way, and such simple disputes are rarely to be found in BRI projects. This is because BRI projects often consist of a multitude of complicated and connected agreements and frequently involve several parties with mostly cross-border transactions. Additionally, smart courts and smart contracts are largely untested with regards to cross-border transactions, and hence (without implementing legislation) it is hard to see how the decisions of smart courts and smart contracts in BRI projects could be relied upon (see also Section C on Political Limitations).

Furthermore, the “self-enforcement” mechanism, an essential feature of smart contracts, could also prove to be unsuitable for complex and cross-border BRI projects as the mechanism of escrow (which relies on keeping the funds stored until the contract has been performed) may be difficult to reconcile with high-value BRI contracts. In this context, it has been suggested that the blockchain technologies involved could be used instead only as case management tools.112

B. Technological Aspects

This section introduces the technical limitations of ODR+ in the BRI dispute settlement context. These limitations are broadly divided into (1) lack of flexibility, (2) lack of retroactivity, and (3) lack of infrastructure. Firstly, we argue that frequent alteration or interpretation of terms with multiple meanings is restricted in smart contracts. This leads to a rigid process that might not be compatible with legal agreements in BRI projects. Secondly, this section discusses smart contracts’ lack of retroactivity as they only provide a dispute resolution option if used at the start of transactions. Lastly, it argues that there is a lack of systematic infrastructure and human resources within the industry as a whole.

1) Lack of Flexibility

Whilst ODR+ mechanisms promote greater certainty in BRI dispute settlement, the certainty comes from a less flexible and more rigid process. This is especially the case with regard to smart contracts, where rigidity has potential disadvantages. For example, if the project data is already registered in a smart contract, it will be technically challenging to make alterations or corrections.113 However, legal agreements in BRI projects, which could be multi-year contracts, will often require flexibility to make changes and the need for open-ended terms that outline performance obligations.

Additionally, in cross-border BRI projects, different legal systems attach different meanings to common terms or use very different terminology. For instance, it might be difficult to define what constitutes appropriate performance (or to foresee the most cost-effective or efficient manner of performance), and hence one contracting party may promise to act in “good faith,” while another party may promise to use “best efforts.” In such cases, the value of keeping contracts open-ended or ambiguous (producing more efficient contracts by providing flexibility and smoothing the negotiation process) might be lost.114

In the same vein, there might be some open-ended or unstructured terms that are still “not suitable for being memorialized into the strict logic of code” (such as representations and warranties), since such terms might not be able to be fulfilled “solely by referencing data stored or managed within a blockchain-based network.”115 Indeed, such terms (in their current form) are neither binary nor standard and are perhaps impossible to capture via the current smart contract apparatus. Instead, it is stated that smart contracts can only suitably deal with straightforward matters and are “less capable in dealing with commercial scenarios which may be so complex and unpredictable that the code would fail to embed all possible answers to all possible questions.”116

2) Lack of Retroactivity in Smart Contracts

Smart contracts only provide a dispute resolution option if used at the start of transactions (and at all stages throughout the transaction).117 This is a significant limitation, which stems from the fact that (i) smart contracts consist of “the rules that participants have collectively signed up to”; (ii) these rules govern the evolution of the “facts” in the distributed ledger (blockchain); and (iii) accordingly, the distributed ledger (blockchain) can only be “authoritative with respect to the existence, status, and evolution of the underlying legal agreements they represent.”118

3) Lack of Infrastructure

Besides the other technical limitations, the implementation of ODR+ in BRI dispute settlement currently faces a significant lack of infrastructure and human resources especially within the courts, and within industry. If the infrastructure is substandard, mistakes could be introduced into the ODR+ system and make it less reliable—not to mention that there would be increased security risks. For example, the code in smart contracts needs to be written perfectly and precisely (and void of any mistakes). If humans make “clerical errors while writing the code or entering data,” then the “whole system could be endangered.”119 In the BRI dispute settlement context, this means that it is essential that future generations of court staff and lawyers are increasingly technologically savvy. It also requires that a unified system that can communicate with different countries’ courts systems is established, especially for cross-border transactions. Further, it would likely also modify the role of third-party agents in BRI projects since project parties (and lawyers) may have to consult specialist coders of smart contracts when making new kinds of contracts.

C. Political Aspects

There are also several limitations that relate to the political aspects of implementing ODR+ in BRI dispute settlement. Many of these limitations are practical and relate to the requirement of BRI-wide implementation, such as a BRI ODR+ treaty.

Firstly, a substantial limitation regarding the implementation of a BRI-wide ODR+ dispute settlement system is that there is no BRI-wide instrument for regulating ODR+. This means that the use and jurisdiction of ODR+ is subject to national law, and there is no enforcement mechanism. Although, on the one hand, ODR+ decisions are meant to be self-enforcing, while on the other hand, smart court and smart contract decisions are generally not recognized by law.120 This means that ODR+ decisions are still unreliable (and not enforceable). For instance, the conundrum would likely lead to complications in cross-border situations in BRI projects, since “without a meaningful way to enforce a judicial decision, any judicial decision is almost without real effect.”121 One possible option to make ODR+ decisions enforceable would be to render such decisions enforceable in the same way as arbitral decisions (under the New York Convention) or mediation decisions (under the Singapore Convention).

Secondly, even if the decisions were enforceable, this does not mean they would be considered fair. Indeed, since the dispute settlement of BRI projects will often require “complicated legal, moral, and political judgments to determine outcomes” it is nonetheless difficult to understand at present “how software algorithms can make the reasonableness determinations needed” to make and justify the judgments required in cross-border BRI project disputes.122 Additionally, if the BRI ODR+ system is to be trusted by BRI project parties, it will need to produce outcomes that are visibly fair and just, and not only convenient, efficient, and cheap. In this regard, the question of whether an ODR system can deliver will depend on “whether the algorithms used to run the systems can be programmed to be reasonable, caring, and fair.”123 Otherwise, the more efficient and less expensive processing of disputes might be considered “a capitulation to the conditions of modern society more than a superior system for administering justice.”124

Finally, there are a plethora of remaining practical issues, as follows.

(i) Consent: In connection with the enforcement of ODR+ decisions, there is a significant issue of consent. It is unrealistic to believe that BRI project parties can be forced to use smart contracts or take their disputes to a BRI smart court, but what happens when one party takes the case to a BRI smart court while the other party rejects the decision? Or, similarly, what happens if there is partial use of smart contracts?

(ii) Data protection and privacy: There might be issues due to the anonymity frequently used in smart contracts where the parties cannot easily be identified, or conversely, when parties are submitting their information into the blockchain. There may also be problems produced due to judicial transparency.

(iii) Jurisdiction: There is also the substantial question of who should host the smart court. For instance, would the BRI countries be willing to ratify a treaty where the smart court sits in China? Moreover, would China be willing to ratify a treaty where a BRI smart court sits in a neutral country, for instance Singapore?

VII. Conclusion

This article has presented a critical assessment of ODR+ mechanisms to settle BRI disputes (primarily smart courts and smart contracts), and as the first article to address such emerging dispute settlement technologies in the BRI context, has suggested some guidance for policymakers and practitioners.

We have suggested that implementing ODR+ mechanisms in the BRI can result in more convenient and efficient processing of BRI disputes. Examples of recent proposals in China and certain other States that participate in the BRI were given; however, it is acknowledged that there is a huge difference between implementing ODR+ mechanisms under national law versus implementing ODR+ mechanisms in accordance with international law.

The idea of a BRI smart court was distinguished from the use in the BRI of smart contracts. The two mechanisms could (and should) run in parallel so as not to exclude non-users of smart contracts from a BRI smart court. Indeed, a BRI smart court can be implemented immediately, although it might only have low usage in its early years. Specific suggestions of how a BRI Smart Court Light could be implemented were made. Use of the BRI Smart Court Light would be voluntary, and over time, the capacity of (and confidence in) the institution would grow. It is suggested that to encourage non-Chinese users, the smart court could be hosted outside of China, for instance in Singapore (or via Singapore and hosted in the Cloud). Proposals for a more robust version of a BRI smart court i.e., a BRI Smart Court Complete, were also made, although it is acknowledged that such a complete smart court could probably not operate easily without a specific BRI-wide smart court treaty. This is because it cannot be expected that a BRI smart court could realistically apply in cases where the BRI project partner’s parent state (in other words, the country where the party has legal personality) has not signed up to a BRI-wide smart court treaty.

The use of smart contracts should be encouraged in the BRI. Although the use of smart contracts will face many hurdles, largely due to attempts to condense “open-ended and flexible terms” into “binary, rigid options,” it is believed that smart contracts will improve over time. Additionally, where flexibility is necessary, there is no reason why the code should not select the option of a specialist third-party expert. At least in such cases, the contract would still remain a “self-enforcing” smart contract, as the third-party expert could be selected by AI (and the expert decision inserted into the blockchain), and the contract could still be adjudicated smoothly in a binary fashion. Therefore, embracing ODR+ in the BRI would not necessarily be a vanity project, but rather a potential means to continue the development of the digital silk road by distributing justice via AI.


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