United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards

 

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Decentralized Law: The legal jurisdiction of each Blockchain Trust®  is New York, USA, based on the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the "New York Convention"). In other words, every owner of a Blockchain registered Trust Company agrees to abide by the above-mentioned U.N. Convention if any disputes arise and accepts the "SEAT OF ARBITRATION" in New York, USA, or any Member State of the UNCITRAL Convention.

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Each Blockchain Corporation or Blockchain Trust is constituted, registered and established on the Blockchain Networks and abides to the Laws and Regulations of the United Nations Commission on International Trade Law (UNCITRAL) regarding the international sale of goods; international commercial dispute resolution, including both arbitration and conciliation; electronic commerce; insolvency, including cross-border insolvency; international transport of goods; international payments; procurement and infrastructure development; and security interests.

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The New York Convention has been signed by 172 Nations, which can be verified on the United Nations website by clicking here...

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Why is the United Nations Commission on International Trade Law (UNCITRAL) valid in 172 countries?

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The United Nations Commission on International Trade Law (UNCITRAL) is not directly "valid" in countries in the way a law or regulation might be. Instead, UNCITRAL plays a crucial role in developing and harmonizing international trade laws and practices. Its influence and acceptance across a large number of countries stem from several factors:

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1. United Nations Affiliation:

   • UNCITRAL is a core legal body of the United Nations General Assembly. Its legitimacy is derived from its affiliation with the United Nations, which is a global organization representing a vast majority of the world's countries.

2. Global Representation:

   • UNCITRAL is composed of representatives from various legal systems around the world. Its membership is geographically diverse, allowing for a broad range of perspectives in the development of international trade laws.

3. Development of Model Laws:

   • UNCITRAL develops model laws and guidelines that serve as templates for countries to adopt or adapt in their domestic legal systems. These model laws aim to standardize international trade practices, making it easier for countries to engage in cross-border commerce.

4. Harmonization of Laws:

   • UNCITRAL works towards harmonizing international trade laws to facilitate smoother global trade. The harmonization process helps reduce legal barriers and uncertainties for businesses operating across borders.

5. Uniform Interpretation:

   • The work of UNCITRAL contributes to a more uniform interpretation and application of international trade laws. This uniformity enhances legal predictability and reduces disputes arising from conflicting legal frameworks.

6. Recognition of UNCITRAL Texts:

   • Many countries have recognized the importance of UNCITRAL's work and have incorporated UNCITRAL texts into their national laws. This recognition helps create consistency in the application of international trade rules.

7. Promotion of Best Practices:

   • UNCITRAL promotes the adoption of best practices in international trade, covering areas such as arbitration, electronic commerce, and procurement. Countries that adopt these best practices benefit from a more efficient and modern legal framework.

8. Arbitration Rules:

   • UNCITRAL has developed widely accepted rules for international commercial arbitration. The UNCITRAL Arbitration Rules are commonly used in international arbitration proceedings, contributing to the organization's global influence.

 

It's important to note that while UNCITRAL's work is highly influential, its texts are not automatically binding on member states. Countries may choose to adopt, modify, or reject UNCITRAL texts based on their own legal and policy considerations. The acceptance of UNCITRAL principles and model laws in 172 countries reflects a broad consensus on the importance of harmonizing international trade laws for the facilitation of global commerce.

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The United Nations Commission on International Trade Law (UNCITRAL) is a subsidiary body of the General Assembly. It plays a crucial role in improving the legal framework for international trade by preparing international legislative texts for use by States to modernize the law of international trade and non-legislative texts for commercial parties in negotiating transactions.

 

UNCITRAL legislative texts address the international sale of goods; international commercial dispute resolution, including arbitration and conciliation; electronic commerce; insolvency, including cross-border insolvency; international transport of goods; international payments; procurement and infrastructure development; and security interests. Non-legislative texts include rules for the conduct of arbitration and conciliation proceedings, notes on organizing and conducting arbitral proceedings, and legal guides on industrial construction contracts and countertrade.

 

INCREASING POPULARITY IN THE USE OF E-COMMERCE

 

Taking into account international legal instruments, such as the 1985 UNCITRAL Model Law on International Commercial Arbitration, as subsequently revised, particularly concerning article 7, the UNCITRAL Model Law on Electronic Commerce, the UNCITRAL Model Law on Electronic Signatures, and the United Nations Convention on the Use of Electronic Communications in International Contracts.

 

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HOW IS INTERNATIONAL LAW CREATED?

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No central authority, constitution, or government exists to create and enforce international law. There are three ways of making international law:

 

1. International conventions and Agreements

States signing treaties with one or multiple states. It creates a body of law that governs their interactions.

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2. International custom, a practice accepted as law.

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3. The general principles of laws that are recognized by civilized nations.

 

The second and third methods involve terms like "accepted" and "recognized," respectively. It implies that international law is accepted over time due to consensus.

 

There are a lot of prominent organizations that create international law, such as the United Nations (U.N.) and the European Union (U.E.). And other organizations focus on specific areas of economic cooperation, including the World Trade Organization (WTO) and the International Maritime Organization (IMO).

 

INTERNATIONAL LAW = DECENTRALIZED LAW

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For the most part, one can argue that international laws are followed voluntarily; hence, there is no requirement for a central authority to be effective. It leads to a pivotal deduction:

 

The creation of international laws doesn't require the involvement of national governments.

 

Once a piece of legislation or practice becomes accepted and recognized, it eventually becomes part of international law, one of the highest and most effective forms of law in existence.

 

If a group of unelected bureaucrats can create worldwide-accepted regulations, why can't the crypto-community do the same?

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Plenty of examples prove that private law deals can be more effective and efficient in relationships between individuals who are of no direct concern to the State.

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Private individuals and organizations can create laws to govern their actions. Examples are copy-right laws, Lex Mercatoria (a private legal system for international trade), and globally active sports organizations such as FIFA.

 

PRIVATE LAW BY CONTRACT: freedom to operate, i.e., perfect sync with Blockchain's motto

 

Apart from these widely followed laws, there is a more exclusive form of private law: “law by contract.” These laws have more room for freedom to engage in contracts. They offer flexibility in determining the governing laws, and they are enforceable worldwide, especially when subjected to arbitration.

 

INTERNATIONAL ARBITRATION: contracts to create a private body of law

 

Arbitration is a private court system for resolving disputes. Parties who arbitrate have decided to resolve their conflicts outside any traditional judicial system. In most instances, arbitration delivers a final and binding decision, producing an enforceable award in a national court.

 

An arbitration agreement creates a unique body of private law. Those involved consent to be subjected to this body of law by signing the agreement. They have the autonomy to choose those who rule on any dispute, and they can even select their governing laws. And thanks to the New York Convention (1958), arbitration awards are enforceable in almost any country in the world.

 

During the Convention, it was agreed that arbitration cases decided in the correct form in one of the contracting States are directly enforceable in other States without a local court case.

 

At present, 169 countries are part of the New York Convention. In the international arbitration framework, contracting parties are free to create their private law systems. If needed, the government in any member State enforces the ruling.

 

BUILDING BLOCK OF DECENTRALIZED LAW: laws for the community built by the community

 

There are absolutely no reasons why the Blockchain community should wait for any government to enact legislation. Decentralized Law and Private Law already streamlines the interactions of (large) groups of individuals worldwide. Moreover, private governing laws already exist, and private court systems are created by contract.

 

Decentralized private law is limited to what isn't regulated, but this still leaves massive areas open to disruption and innovation. Private law (by contract) forms the ideal building block for Decentralized Law.

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CONSENSUS JURISDICTIONS: solution to a legal system tied to a physical ground

 

The concept of jurisdiction is essential. After all, how does a system that only exists in cyberspace relate to the real world?

 

“Jurisdiction” can have two meanings: the authority of a court to rule on a specific case and the territory in which this authority is limited. Nowadays, states have the right to enforce their laws and punish for non-compliance.

 

Our legal system's usual concept of jurisdiction is tied to physical locations. It must be acknowledged when we want Decentralized Law to have any meaning in the real world. Luckily, the third form of jurisdiction does not involve a territory; a court can have jurisdiction by consent (or contract).

 

Consensus Jurisdictions

 

After going through all the sections above, taking history as proof, we are now sure about the possibilities of creating private bodies of law that bind the contracting parties.

 

But the question arises, “why should there be a limit to the amount of people that sign a contract?”

 

Technology exists for a collective to sign a contract as if accepting any website's terms and conditions page. This way, a jurisdiction by consensus can be created, where the participants have agreed to cooperate under a specific set of rules.

 

CONSENSUS JURISDICTION ENFORCEMENT: taking one step at a time

 

If needed, such a system could be enforced in the real world. After all, the New York Convention already exists a framework for enforcing private contracts.

 

Subjecting a Consensus Jurisdiction to this framework is surprisingly simple; it is just a matter of adding a clause to the Consensus Contract explaining that any disputes arising under it are subject to arbitration and said framework. In other words, every owner of a Blockchain registered Trust Company agrees to abide by the above-mentioned U.N. Convention if any disputes arise and accept the "SEAT OF ARBITRATION" in New York, USA.

 

The jurisdiction that arbitrators would have been restricted to whatever has been agreed upon. In addition, there are significant areas of public law that private contracts cannot "breach," including family, criminal, or tax law.

 

Therefore, initial use cases are likely to be industry-specific collaborations with a set of guiding principles for relatively standardized recurring transactions. Examples could be found in decentralized organizations, ICO's, international trading, e-commerce, and international freelancing.

 

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DECENTRALIZED ARBITRATION ENFORCEMENT FRAMEWORK: resolution for the arising disputes (if any)

 

To the origin of laws, rules and regulations are dispute. So, the next important question that needs to be addressed is, “what if a dispute arises?” After all, Decentralized Law only has value if it can be enforced.

 

As discussed, international arbitration provides the ideal framework for the enforcement of private Decentralized Law:

 

What is the decentralized law enforcement framework?

 

The New York Convention requires contracting States to recognize and enforce arbitration awards made in other contracting States. It refers to a physical location. A "Seat of Arbitration" is necessary for one of the participating States for this to work.

 

Luckily, online arbitration has existed since 1985 with the foundation of the Hong Kong International Arbitration Centre, which offers an entirely online arbitration procedure.

 

Other Ideas on Enforcement of Rulings: 2-step system

 

People working on decentralized arbitration believe that laws and enforcement through existing legal systems are unnecessary. Only those who perform large transactions or listed multinationals need a legacy legal system backing. 

 

A logical solution would be a two-step system, with a fully decentralized system, arbitration first, and international arbitration only when the first step has not resulted in a favorable outcome.

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THE DECENTRALIZED LEGAL SYSTEM: system created by the people and for the people

 

This system is not created and enforced by a few people who have concentrated powers in a government but is created and accepted by the public and open-source process.

 

A system that exists in cyberspace but has force in the real world. This framework can govern all four types of decentralized legal applications.

 

​The first building block will be Private law by contract. The main reasons are that there is a wide variety of freedom to engage in contracts, they offer flexibility in determining the governing laws, and are enforceable worldwide.

 

CONTRACT ENFORCEMENT ACROSS BORDERS

 

When looking at contracts, the following clauses are usually included:

 

1) a selection of the governing laws, and

2) a selection of the court to rule on the dispute.

 

The parties are often free to choose these, but most contracts select a court system and governing law of the country of one of the parties.

 

But what if something goes wrong?

 

Suing a contracting party in a traditional court system is cumbersome:

 

1. It is a lengthy process

2. It consists of complex language

3. Lack of knowledge or neutrality may be an issue

4. The problem of coming to common ground. Differences in the legal system often cause the ruling of one country to not be enforceable in another country.

 

Thus, the concept of international arbitration was developed.  Arbitration gave a private court system for resolving disputes, and thanks to New York Convention (1958), the arbitrations are enforceable globally. As stated above, currently, 169 countries are part of the New York convention.

 

 

CONCLUSION ON DECENTRALIZED LAW

 

The more we wait, the more leverage the influential people and bureaucratic governments will have over us. We find no reasons why the decentralized industry should wait for any government to enact legislation.

 

THE CONVENTION ON THE LAW APPLICABLE TO TRUSTS AND ON THEIR RECOGNITION UNDER PRIVATE INTERNATIONAL LAW HAS BEEN SIGNED AND RATIFIED IN 1985

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Done at The Hague, on the first day of July, 1985, in English and French, both texts being equally authentic, in a single copy which shall be deposited in the archives of the Government of the Kingdom of the Netherlands, and of which a certified copy shall be sent, through diplomatic channels, to each of the States Members of the Hague Conference on Private International Law at the date of its Fifteenth Session. CLICK HERE FOR THE FULL CONVENTION...

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