The integration of blockchain technology with arbitration mechanisms: its efficacy and implementation in international arbitrationMuhammad Ayaan Shehryar1,†,∗, Areej Anwar2,‡
1Martens Rechtsanwälte, Munich, Germany
2Esquare Legal, Dubai, United Arab Emirates
† Current address: Esquare Legal, Dubai, United Arab Emirates
‡ Current address: Barsols Legal Consultants, Islamabad, Pakistan
Citation: Shehryar M, Anwar A. The integration of blockchain technology with arbitration mechanisms: its efficacy and implementation in international arbitration. Law Ethics Technol. 2025(3):0008,
https://doi.org/10.55092/let20250008. DOI: 10.55092/let20250008Abstract: The integration of blockchain technology in arbitration presents a paradigm shift of traditional justice towards decentralized justice, thereby challenging traditional legal frameworks by offering improved efficiency, transparency and autonomy. This article examines blockchain arbitration through the Kleros Mechanism, which utilizes smart contracts, crowdsourced jurors and token-based incentives to resolve disputes in a tamper-proof and decentralized manner. The integration of cryptographic validation, anonymized juror selection and multi-round appeal mechanisms addresses the gaps between traditional contracts and smart contracts on blockchain. The procedural fairness of blockchain mechanism is addressed by analyzing both objective and subjective criteria, and compliance of the Kleros Mechanism with traditional jurisprudential principles. Analysis of empirical data, supported by interviews, highlights the significant potential of blockchain technology in enhancing the efficiency of dispute resolution. Kleros, as an example, resolves disputes in an average of just 13.23 days and has less than 3 pending cases. However, enforcement of blockchain-based arbitral awards is challenged by traditional enforcement standards, including decentralized proceedings, anonymity of jurors, classification of the nature of arbitral awards, formal validity requirements, arbitrability and public policy considerations. The potential limitations of blockchain also have an impact on blockchain arbitration, including digital fragmentation, limitations of smart contracts including flexibility and automatic enforcement. To reconcile blockchain arbitration with international award enforcement standards, the proposed measures include standard cryptographic validation of awards, model clauses specifying the seat of arbitration, hybrid mechanism with institutional oversight and jurisdictional compliance. This research presents a balanced approach between technological innovation and traditional legal frameworks, ultimately advancing the argument of a democratized and equitable future through decentralized justice.
