Full interview transcript
MOHIT
Good morning, Sneha. Thank you for joining us in today's interview. To all our readers Sneha is a law graduate from NUALS, Kochi. She's also a Web3 lawyer and she's done her masters from NUS in Singapore.
SNEHA
Hi Mohit. Thank you so much for having me. And thank you so much for working on putting Technology and ODR on the map.
MOHIT
So the reason why I've called you here today is to talk about your platform Resolutio. I understand that Resolutio is slightly different from traditional ODR platforms in the sense it uses blockchain technology to operate. To begin with some basic questions. Can you explain in very simple terms how blockchain technology works in ODR?
SNEHA
Sure. Thank you for the question Mohit. So there are different ways you can look at it. So if you are already familiar with blockchain, you know that it's a database that you can rely on which helps you secure your transactions, which makes sure that your transactions are transparent. So there's a great degree of reliability on transactions on the blockchain. So when you talk about using blockchain for ODR, what you're essentially trying to do is make ODR transactions, whether they be arbitration, mediation, negotiations, etcetera, more reliable and more secure.
So this could mean that you use blockchain for all elements of ODR, so right from conflict prevention to enforcement of a decision such as an arbitration decision or a mediation decision. So let's look at it in stages, right? So to start with let's look at conflict prevention. So let's say there's a contract between parties to perform certain obligations. Ideally, you enter into a regular contract on paper or a verbal contract. So if you were to use a smart contract on the chain, what this would do is this would help automate certain processes of the contract. So if I were to look at an example, let's say I wanted to buy a car from you and I want to transfer both the physical car as well as the papers related to this. Now, if this were a smart contract, what it would ensure that we can draft it in such a way that when the stipulated amount for the car is transferred to your account, the contract automatically recognizes that this amount has been transferred and then the papers are transferred back to me.
Now a lot of people argue that we are not ready for smart contracts, or legal contracts yet especially let's say when physical goods are involved, right? So while this is partially true thanks to technologies like IoT, we might eventually reach a space where physical transactions too can be automated using technology.
MOHIT
What is IoT?
SNEHA
Internet of Things where physical objects itself can be connected to the network. So coming to conflict prevention. When a contract itself can be automated, there is less likelihood of persons breaching the subcontract. Now, the concept of smart contracts, while it has existed for decades. So the term Smart contract with legal connotation was first used by Nick Szabo in one of his blogs. When he spoke about smart contracts and automated contracts, he also suggested, or he also spoke about how in some cases it might be necessary to have a dispute resolution mechanism because what if a contract automatically enforces things? But you know let's say there were other instances that had to be taken into account, which would nullify it.
In such cases, what you can do, is you can connect your smart contract to a dispute resolution mechanism, like say, arbitration. So here what happens is you can automate certain processes of arbitration, such as initiation of the dispute, collection of evidence, selection of arbitrators, enforcement of disputes, etcetera, using smart contracts so that I can help with a few examples as well. So, right from the initiation of the official dispute, when there is a breach that has been automatically detected or when either or, when the parties want to initiate the dispute manually, what you can do is you can of course initiate arbitration, and the notifications are sent to all parties here. The notifications can be recorded on chain if you choose to do that. Therefore, there is a trail of evidence as to when certain aspects of the dispute have taken place. Once the dispute has been initiated, the evidence for the dispute would already have been collected on chain. Since the contract is already a smart contract and you've drafted it in such a way that certain details of the performance of the contract have been collected, right? It is easier to verify the said evidence. So let's just say if this is a contract for a certain shipment of meat being, transported from one country to the other in a container that is temperature modulated, you can use certain technologies like oracles, for instance, to collect the temperature of the container and store that data on the chain. So, if there is a dispute, parties can rely on that secure data instead of spending money on proving evidence pertaining to the case.
MOHIT
So I feel like this is a little bit at the intersection of both automating dispute prevention strategies with the use of blockchain and also, in case there are other variables which have not been accounted for, then you also have dispute resolution capacities within this. So it's like mixing a little bit of technology automation with dispute resolution.
SNEHA
Exactly. You ideally want to automate it, but, when human intervention is necessary, you supplement that with the peer resolution.
MOHIT
Got it. Makes sense. Okay. That's helpful. Thank you, Sneha. Now you know, this brings me to my second question. Can you tell me a little bit about how your platform Resolutio works?
SNEHA
Resolutio is essentially a creator's platform to help creators, where we provide preemptive tools to protect themselves from disputes and also post-dispute tools. So what we've started off with is dispute resolution for creators. So we've designed a dispute resolution process using blockchain technology and eventually AI as well, where members of the community, the creator community, are provided certain tools to adjudicate disputes, and the enforcement of the dispute is also automated using blockchain technology. So what we are relying on is something called crowdsource dispute resolution. So normally when you think of dispute resolution, arbitration, mediation, etcetera, you think you need to be assisted by a legal professional but if you look at eBay's ODR platform, which is one of the first platforms to successfully use ODR they used crowdsource dispute resolution they relied on laypersons, not legal persons to resolve disputes, and it was a huge success. So that's a similar process that we are relying on where we look at members from within the creator community who understand how the ecosystem works, and provide them with those tools, essentially web2, and web3 tools so they can effectively resolve disputes.
We automate certain parts of dispute resolution, for example, the adjudicator selection is automated, so we use a smart contract wherein interested members can vote or rather elect to take part in a certain dispute, and the smart contract randomly selects three adjudicators where the likelihood of their selection is directly proportional to their subject matter experience. So certain elements are automated, but certain elements like core adjudication are still reliant on human intervention.
MOHIT
Now, if I understand correctly, the eBay platform, the jury selection, I think it was Modria, after the technology behind the resolution centre for eBay, right?
SNEHA
I think it was eBay's in-house solution, which Mr. Colin Rule had developed if I'm not wrong and then later on he went on to build Modria.
MOHIT
So a few weeks ago, we interviewed Chiitu Nagarajan ma'am who actually worked on Resolution Center with Mr. Colin Rule and if I understand correctly, Resolution Center was the name of the platform, but Modria was the name of the company which eventually they sold. And, it's actually very interesting that you talk about this, you know, we spoke to one of the legends and now we are looking at how that affects other developments in technology today. So that's really nice to see, you know, that's your inspiration cause she is an inspiration to me too.
You talked about some of the tools that are available to adjudicators and you also mentioned the jury, sort of this thing. But, in your opinion, don't you think that the whole jury system works better or, you know, is better suited for the west because they actually have that sort of civil law system?
SNEHA
So I wouldn't say that the jury system per se is suited for any jurisdiction because essentially what you're doing is you are taking laypersons who are not familiar with the law as lawyers, and then you're providing them with the facts and evidence and you're trusting them to make that decision. So with the jury system, they don't have anything to lose per se. So if they make a wrong decision, nothing can really go wrong.
MOHIT
Except for the parties.
SNEHA
Except for the parties. Exactly. So there's nothing that can go wrong for the jury members themselves, but with the dispute resolution mechanism or the pathway that we are following, which is also being followed by several other, blockchain dispute resolution mechanisms, the adjudicators themselves have something to lose if they would or adjudicate this, honestly.
So how this works is that we have two levels that we follow. The first level that we built out is based on a similar solution that Cleos also follows. So you have adjudicators who have to stake a certain amount of money to be able to participate thereafter if they have adjudicated honestly that is, if they've formed part of the majority, then they get their stake back and they get a reward and this is based on both rational choice theory and game theory. So what we can conclude from both theories is that each person acts in a way that brings the most benefit to them individually.
What is asked of them is to vote honestly, and when they're told that if they form part of the majority they get their rewards as well as the stake back, they are more inclined to vote honestly and the success of Kleros’s adjudications would go on to show that this works.
But we are still working on adding more layers to this, such as how we are different from Kleros in this aspect and some other platforms that we don't just choose any person to become adjudicators for the dispute. We have a thorough review process where we check what their standing in the creator community is. We have also set up a DAO, which is a Decentralised Autonomous Organization to completely decentralise the process. So we wouldn't be selecting these persons, but members of the tower would be collectively choosing who is eligible to adjudicate the dispute. So yeah, that's how we ensure that there is honesty in what comes out.
MOHIT
Interesting. Because when I joined some of those Kleros’s telegram groups, I noticed most, if not all of the adjudicators on Kleros are actually not from India. Because in India, since Nanavati, the jury system has not existed, and for good reason also. I'm quite excited to see how this plays out, and I am very interested to also learn a little bit more about how your autonomous selection technology works.
SNEHA
Yeah. Sure. Just to add to what you'd mentioned earlier, about how the jury system might be different from what we are following. So with automated dispute resolution and with crowdsource dispute resolution, the eventual effect that we want to have is to make dispute resolution accessible for all. Now, if you look at some of these arbitration reports by Queen Mary, CIArb, or ICC, some of the factors which add to these high costs are the involvement of lawyers, expert arbitrators, costs that go into proving evidence, etc.
So, while lawyers and expert arbitrators are very much necessary for high-value disputes. For some disputes, low-value disputes for participants have very limited resources to take up that dispute. It's important to have a simpler process, right? So these dispute resolution mechanisms, and if you look at Kleros as well, it's individuals who are fighting the cases themselves. So there are no complicated laws per se. Of course, we guide them using tools we provide as we bring to their notice what the law generally is. We don't make any deductions or conclusions or provide any legal opinion, but provide simple facts and provide the law as such, so that parties can represent themselves in these informal dispute translation processes and the adjudicators don't have to be specifically legally trained to take it up.
MOHIT
If you don't mind me asking you two questions. One, what blockchain does Resolutio use? And second, in terms of, when people are staking and just to understand the costs of conducting a dispute, can you explain a little bit about the cost generally in terms of what is the cost to the participant? What is the kind of reward for the adjudicators and effectively, how does Resolutio generate business? How does Resolutio make money with this?
SNEHA
Okay, Resolutio hasn't gone live yet, so we are just in the testing phase, so I can't get into the economics part of the revenue generation part in particular because we are still working on that. I'll take the first question on which blockchain we use. So we use FVM, which is a relatively new blockchain. So it's very expensive to put information on blockchain. Blockchain transactions are enormously expensive. So what people do is you take that information, you put it on a safe and secure storage network and usually you generate a hash ID of that and then you store that hash ID on it and then you can eventually verify whether the hash ID, which you currently have and the hash ID at the later point of time is the same to ensure whether it has been tampered with. An easy use case that you could relate to is with respect to NFT. So when you're creating an NFT, you take your artwork, you put it on a decentralised storage solution, and then you get the CID, which is the unique ID put in on chain and IPFS, so Protocol Labs is one of the largest players in this market, the decentralized storage market. And they have been doing a great job there and we have been using Protocol Labs for our evidence management. In the beginning, when we started off Resolutio, we heavily relied on Protocol Lab services. So recently they came out with their blockchain, which is FVM blockchain, and we thought it would be ideal too.
So initially we experimented with a few blockchains, and then eventually we thought FVM would be great because they're specifically built to manage data, and being a dispute resolution platform evidence management, user information management, et cetera, is very important and that's why we went with FVM. Costs are also relatively low, so we just literally deployed our smart contracts onto the main net two days back. So costs are relatively low, and gas fees are low, unlike gas fees on Ethereum, less than a dollar, I would say. Right now that's the cost of transacting. In terms of user cost or how we make money, our next phase, or rather, we've just started building our API. So with the API platforms, we'll be able to directly use this as a tool within their platform itself. So if you have an issue with let's say a metaverse or a marketplace, you can just, instead of redirecting to Resolutio, you can just go onto the platform, and initiate the dispute. So the idea is to have users of the API pay us for the dispute resolution process.
MOHIT
Makes sense. Fair enough. Okay, so the last question now. In your journey, how has your experience been convincing people to adopt blockchain technology?
SNEHA
Okay, so if I'm being honest, I haven't really tried convincing people to adopt blockchain technology yet. My time has been mostly spent exploring how blockchain can be effectively used. And I don't feel we are ready to completely switch to a blockchain-only resolution, blockchain-only mechanism. But I do feel that certain components must be taken into consideration such as arbitration selection, enforcement, etcetera. If I were to start from my time in Singapore, when I was pursuing my master's, that's when I started researching blockchain. So I'd written a research paper on blockchain and dispute resolution, and my professor was very supportive, my classmates were very excited, they were all ADR professionals. So when I started off, everybody was quite excited about blockchain dispute resolution. In my journey, my conversations with members of the legal community have been limited because I was focused on technology, so from the technical side and especially creators, people have been very excited about it. I would say the criticism primarily came from persons who were concerned about its energy consumption, environmental impact, etc, which I think are important concentrations to have. So for this reason when we started off, we researched on blockchains which used or rather blockchains which relied on sustainable solutions.
So we had explored Algorand, we had explored Polygon because of some of the associations that they had with carbon-neutral platforms. So yeah, that would be one of the criticisms we had with respect to energy consumption.
MOHIT
In comparison to platforms like Visa or MasterCard and the kind of energy they consume to process transactions online. I still feel like blockchain is still a fraction of that and considering how countries have started already to adopt blockchain for example, if I remember correctly, El Salvador now mines Bitcoin purely based on volcanic energy and geothermal energy. So, it is going to become a lot more efficient than it started off with. So yeah, I think that's about it. Do you have any closing words or any final statements for our listeners?
SNEHA
I would say if you are interested, assuming that all the listeners are into ODR and making dispute resolution accessible. I would say if you are interested in dispute resolution in general, even if it's conventional dispute resolution, please read up on technology and how technology can be used. You don't have to restrict yourself to exploring your opportunities as a lawyer or an adjudicator. You should, if you might be interested, explore how you can build solutions in the space as well because we can never have enough people there and this dispute resolution using technology is not just about making resolution accessible or preventing conflict, or making resolution affordable, it's also about how to use these technologies in a way that is sustainable. So yeah. Explore more technology.
MOHIT
Thank you so much for that, Sneha. I think the keyword is to enable technology for resolution in a sustainable manner. Thank you so much for this and thank you so much for your time.
SNEHA
Thank you, Mohit.
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