Third Key Solutions Decentralized Arbitration and Mediation Network to bridge law and smart contracts

Smart Contracts are among the hottest of all topics in the FinTech world today, but how exactly does a nation’s justice system recognize, interface with, and acknowledge the outcomes from smart contracts?

Ever since Nick Szabo coined the term ‘smart contract‘ in 1994, it has been up in the air on how these self-contained, instruction-driven, money-toting and protecting contracts would interface with existing legal systems around the world.

However, the problem isn’t simply making them seamlessly sync up; after all, smart contracts are just computer code and can be designed to do anything we find useful that combines documents, value, and instructions. The real problems for states are those of jurisdiction and inclusion. Each legal system has its own set of rules, while smart contracts will be happy to run in any nation, or none at all.

Third Key SolutionsCEO Pamela Morgan and CTO Andreas Antonopoulos believe that they have come up with the start of a solution for this problem with a framework for the basis of a global legal system.

Reasoning that all code is decentralized, and now with Bitcoin, money can be decentralized too, the duo concluded that the solution to the problem of jurisdiction needed to be fully decentralized as well. Smart contracts need a decentralized legal system, and therefore so would any legal process using smart contracts.

Along this line of thought, the duo penned a proposal for the Decentralized Arbitration and Mediation Network, or DAMN, for short. The comical name belies the serious intentions of their project. “We are people who do serious work, without taking things too seriously,” Morgan told BraveNewCoin.

“Ultimately it shouldn’t really matter what the traditional legal world thinks of [the name] -the point is to resolve disputes without them.”
— – Pamela Morgan, CEO Third Key Solutions

The major problem that DAMN targets is the underlying issue with all smart contracts today, one that creates a catch-22 problem that slows down their adoption. It is still rare for all parties of a business transaction to be included in a single transaction. Take a property sale, for instance. Rarely is person A selling to person B and no other parties are involved in the sale. Title companies, escrow agents, taxing authorities, lien holders, and many other possible parties aren’t included in a simple two-party smart contract for that sale.

Too much of the interaction is outside the scope of a smart contract until the day comes where smart contracts are the norm. Without them being ubiquitous already, they aren’t as useful, but without them being useful, it will be difficult for them to become widely adopted. The answer, according to Antonopoulos and Morgan, is to make a decentralized application that acts as the gateway between the old and the new.

“The DAMN project aims to bridge that gap by providing a tool that will allow traditional commercial contracts to incorporate a dispute resolution smart contract and the outcomes of smart contracts, in a broadly recognized and legally enforceable way.”

• DAMN proposal

The as-yet unfunded project is “about creating an open source, dispute resolution framework, designed specifically for smart contracts,” Morgan explained. “One that recognizes that smart contracts are inherently borderless and identity-optional, and builds upon that premise.”

“With this project, we hope to decentralize and uncouple the functions of dispute resolution from national borders. We hope to offer solutions that provide real value to contract parties, making for more efficient, effective, accessible, inexpensive applications of justice in commerce.”

• DAMN proposal

The ambitious proposal is filled with the hopes and dreams of cryptoanarchists and futurists everywhere, but it is still in the early stages.  “We will decide if, when, and how to move forward once we’ve gauged community interest,” Morgan told BNC.

The project is restricted to only dispute resolution and mediation for now. It doesn’t mention nor include any other type of law like criminal law, but they are possible ‘upgrades’ for the future. “The scope of the project is to provide ADR for commercial contracts,” Morgan reasoned. “Others could take our project and attempt to build broader dispute resolution, but that’s not our focus.”

Other than the project description and plan, there is a preliminary budget on the page listing the proposed funding needed in stages, divided up into milestones. “We are considering submitting a proposal to the DAO,” Morgan explained about the plan for finding the funds needed, “but we’re open to other funding options so long everyone agrees to open source all work product.”

The first milestone they’re hoping to fund is for the initial legal and systems research, which they feel needs about three months and US$30,000 to get through the process of identifying “the most promising legal structures that can be used to bridge smart contracts and traditional commercial contracts,” Morgan told BNC.

While the project is open source, it is still considered an important project at their company. “Third Key Solutions will continue to provide key consulting and management services,” Morgan said. “While it may seem that DAMN is unrelated to [Third Key Solutions], our customers have been asking for these kinds of services for quite some time.”

The sentiment doesn’t give them more control over it than others in this open-source project, however. “Project activity will occur on public forums and open platforms, such as Github, reddit, etc.”

The DAMN application itself will be a design unlike any other program before it. “The proposal is to build software for a decentralized arbitration and mediation network … that creates open source software,” Morgan explained. It must therefore connect in a decentralized manner like Bitcoin does while behaving like a decentralized network of contract users that customizes and spits out those contracts for individual use.

“Third Key Solutions is not proposing to run this software itself, rather the proposal is for anyone (including a DAO) to be able to run a suite of DRC, offering arbitration and mediation services, using the software we produce.”

• Pamela Morgan, CEO Third Key Solutions

Morgan indicated that “the first implementation will probably be in Ethereum,” but it will interface with any digital currency by design, creating currency-agnostic smart contracts.

Most people could easily come up with dozens of excuses why a global, borderless, opt-in justice system can’t be built, but Antonopoulos and Morgan don’t see any insurmountable reasons standing in the way, at least pertaining to arbitration and mediation. If successful, The DAMN project would be on the path to one day completely decentralize the state’s most central and basic of services; law itself.