Topic: Decentralized Law - How Do We Get There? (Read 334 times)

This process of interaction of decentralized law with national governments I have named Legal Reflexivity. I got this idea from George Soros. He applies it to finance, though. For example, most people base their valuation of a stock price on the fundamentals of a company. The amount of profit. Costs. Etc. But if a stock tanks, it might also affect the fundamentals of the company. Maybe a bank wants to see a higher interest rate on a loan, or suppliers start to charge differently. So not only do the fundamentals influence the stock price, the stock price also influences the fundamentals. Their relationship is reflexive.

The same can be seen in the legal systems. Judges and legislators don't live in a bubble, they are influenced by market practices, news and public opinions. If you can influence this, you influence the law (George Soros is, some might say unfortunately, very good at this). The process of law creation is not linear, and governments look at how things are done around the world. As such, private parties can massively influence law creation (in certain areas). Examples have been given above.

If crypto communities come up with their own rules and standards for cooperation that are fair and clear governments really don't have much to say about it. And maybe they might incorporate some ideas because why reinvent the wheel? Just look at what has happened with copyright licenses, for example. Non of this is new...

Thank you for introducing me to the concept of netiquette. I didn't know it.

Law is about more than imprisonment and death sentences...

I support this opinion. Think of cryptocurrency not as a thing that is bigger than anything, it is still part of the cyberspace and saying that you should have a decentralized law which could be subjected to many reforms, plus a lot of things can happens while this is implemented, this law sounds like just a netiquette. If people are voting to pursue this, then governing bodies will have to agree on and your suggested rules and regulations will again be subjected to laws that will conform different country. On a side note, cryptocurrency is very hard to govern because this was its selling point from the very start, the anonymity it offers.

The question is can we really have a decentralized law, yes we can and this is because environment differs and our reaction and interaction is part of our realities and our systems, custom and traditions including norms and laws are a function of them. I think however that the laws don't differ from crimes like murder which is usually either life imprisonment or death sentence.

Thank you for your ideas. I think the only thing we disagree on is the definition of government. I am using a broad definition, and in that definition parliament is partly responsible for the governance of a State. As such, it is part of the government. For simplicity, let's look at the definition of the Parliamentary system from Wikipedia:

A parliamentary system or parliamentary democracy is a system of democratic governance of a state (or subordinate entity) where the executive derives its democratic legitimacy from its ability to command the confidence of the legislature, typically a parliament, and is also held accountable to that parliament. In a parliamentary system, the head of state is usually a person distinct from the head of government. This is in contrast to a presidential system, where the head of state often is also the head of government and, most importantly, the executive does not derive its democratic legitimacy from the legislature.

Countries with parliamentary democracies may be constitutional monarchies, where a monarch is the head of state while the head of government is almost always a member of parliament (such as the United Kingdom, Denmark, Sweden, and Japan), or parliamentary republics, where a mostly ceremonial president is the head of state while the head of government is regularly from the legislature (such as Ireland, Germany, India, and Italy). In a few parliamentary republics, such as Botswana, South Africa, and Suriname, among some others, the head of government is also head of state, but is elected by and is answerable to parliament. In bicameral parliaments, the head of government is generally, though not always, a member of the lower house.

Parliamentarianism is the dominant form of government in Europe, with 32 of its 50 sovereign states being parliamentarian. It is also common in the Caribbean, being the form of government of 10 of its 13 island states, and in Oceania. Elsewhere in the world, parliamentary countries are less common, but they are distributed through all continents, most often in former colonies of the British Empire that subscribe to a particular brand of parliamentarianism known as the Westminster system.

As mentioned in the article, the national systems of governance are not where we should look at when trying to come up with an alternative system, because of the processes you so wonderfully describe are to rigid and as seen above, just apply to one system of government that is not universal. So this is not what we should be debating.


We can extrapolate this idea. Does it make sense for us to wait for each country to have its owns rules for a border-less international system in this age of mobility and commerce? As I argued in the article, we need to look at legal systems that are not restricted by physical jurisdictions.

I say that the areas most interesting to explore can be found in international private law (or maybe international or natural law?).

Feel free to contribute...

No, you didn't understand!
There are no multiple branches of the government as you envision them.

In most countries the procedure is this:
a) you have parliament election in which the upper and the lower house is elected.
b) the party or alliance with the majority of seats will propose a government that will be ut in charge if they get the majority vote.
c) the parliament proposes and votes laws, the parliament has the power to topple a government through a vote of no confidence

You really need to study this a lot more before coming with solutions as this one...


Yeah, because it worked wonderfully in the past, each village with its own rules, perfectly in this age of mobility and commerce.

What about religious decentralized jurisdictions without clear monarchy like caliphate/pope?

Impartiality is one of the key benefits of arbitration. This is exactly why large companies dealing with States opt for arbitration; to prevent ending up in a court in the country they are in dispute with (and dealing with so called "home court advantage").

If you think domestic court systems are neutral, try winning a court case in Thailand after a traffic accident, suing an Arab male under Sharia law if you are a woman, or getting a ruling on your smart contract in Egypt or India where court cases can last decades. Or try Indonesia, where court cases are often won by those who pay the judge the most. I even heard that it is hard for Dutch people to win court cases in Belgium against locals!

Another benefit is that arbitration awards cannot be endlessly appealed against. This can be beneficial, as a friend of mine just found out after being unable to pursue a clear victory because he cannot pay the cost of going through a domestic court system on the other side of the world.

And don't forget that a ruling of your domestic court might not be directly enforceable in the country of your contracting party.

We are talking about a global system here. Arbitration works right now. Examples provided above.

Thank you for your feedback.

1. I understand that there are multiple branches of government, and that the executive branch doesn't always create the laws, and the judiciary branch adjudicates using existing laws. The overall idea is that most of the laws existing on the national level are created by a (relatively) small group of people organized in a government and applied a top-down fashion (=not decentralized). I didn't see why this has to be specified further in a summarizing article, but I'll make a note to mention it in further publications.

2. International laws are created by international organizations (OECD, UN, FATF), multilateral conventions and agreements, international custom (as evidence of a general practice accepted as law), the general principles of law recognized by civilized nations, and the rulings of the international court. Unlike with national governments, there is no central authority, there is no constitution, and there is no central enforcement agency. This is a decentralized system, but highly influenced by powerful (often unelected) actors and ideologies.

I also observe that international law is becoming more influential in our daily lives (think KYC), that this is at the expense of the sovereignty of national governments (and the individual). This process is real and accelerating. And I am not sure this is a good thing. I wrote about it here:

Lesson 2 – How is International Law Created? - https://decentralizedlegalsystem.com/law/international-law/

It might actually be too topsy-turvy in real life. There will probably be overlapping inconsistencies with the general laws imposed nationally.

But my point is here is more devolution of powers, more autonomy to local or smaller units of the government or even of villages or groups. Central powers need to be trimmed down to the minimum. That is more or less a decentralized approach.

We still talking about a regular court proceeding here. If we are talking about the "scope of a contract" that kind of situations can still be heard and tried in a civil court since it is related to obligations and contracts. Comparing it to a arbitration court and a civil court I think you will still have a more neutral and fair side if it is coming from the domestic laws you have as a basis for their disputes on the contract. I wouldn't still see arbitration as a good fit in this industry especially with unique situation we have.

I read your article and I have some comments:

1 - Governments don't really create laws anymore,  specially since French revolution.  Ok, governments do, but they are not the main creators of law: the parlament is (the house and the Senate in most countries).

Unless you are in a very authoritarian regime, governments just create a few laws.  This is due to the separation of powers, also know as checks and balances.

Government is the Executive,  the Parlament is the legislator and the Judiciary are the judges of the laws created by the parliament.

This is good, because the parlament is way more decentralized(hundreds of members) than the government (one person)

This first part you should verify , because anyone who understands a little about laws will notice this mistake.

2 international law.
Those are created by governments and just confirmed (or not) by the local parliaments.

Those laws are centralized imo. They are throw away by the UN (Which is controlled by some people), and reduces the soberany of countries.  A global government is way worse and centralized than a lot of smaller ones.

Yes, the use of decentralized law has limitations. But massive industries are currently governed by private law systems. Think for example large international sports organizations such as IOC and FIFA. These systems govern the largest events in the world and many teams, clubs and athletes.

https://www.fifa.com/about-fifa/who-we-are/legal/court-of-arbitration-for-sport/

https://guides.ll.georgetown.edu/c.php?g=364665&p=2463481

A similar framework can be used for the new decentralized applications (with some enhancements, of course... )

Those revolutions already happened. We reduced the powers of the kings and empires and now live (at least in the Western world) in societies where everybody, including the governments, are bound by the law. The discussion we should have is what part of the law the government should control and where we should do it ourselves.

As you say, certain areas are unlikely to ever be governed by voluntary cooperation. But other areas could be. Subjecting a contract or a system to private arbitration is as simple as adding one paragraph. Accepting such a system could be as easy as accepting the terms and conditions of Facebook. All the frameworks and technologies for this exist today.

You raise a good point. I have read two studies that examined the contracts signed by large multinationals. Despite all the benefits of arbitration, they still appear to prefer national legal systems as compared to arbitration (small data sample though).

Moreover, it is important to remember what arbitration can and cannot do. An arbitration court can only decide on issues within the scope of the agreement between the parties involved. It therefore cannot replace criminal law (or family, tax, nationality law, for that matter). What I propose is to decentralize those areas of law in which private parties are currently free to interact. And to gradually expand the scope, of course...

Arbitration has a working framework with force in the real world (judicial systems of the countries involved). It is widely used, also in large cases. Take for example the 713 Million USD that was awarded to mining company Gold Reserve for lost mining concessions in Venezuela.
https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/333/gold-reserve-v-venezuela

I think you're using a slightly narrow definition of law? Law isn't just what is decided by a government or a majority. There is also the option of not passing universal laws and letting people organize themselves voluntarily through the use of private law. That would result in more decentralized laws.

I somewhat think in the similar lines! In real world, decentralized laws are not meant to overrule the existing legal framework. But such kind of legal structures are good as an addition to the existing legal structure for some special groups. See the list below,

1. Laws that are made by corporates to be followed in their campus and governed by various stakeholders within their areas of responsibility
2. Laws that are created to be followed by a specific group of people like, political parties, focus groups, special benefit groups, tribes etc. These groups are mainly governed by the existing local laws but uses additional legal framework within their groups
3. Special communities like "Auroville" has a separate set of laws for their own community, can be benefited from such structures

This way decentralized legal systems can be imposed, but they may don't really have any validity in the eyes of the national legal system. I don't think it can have any other real-life application, not right at this moment!

Decentralized law is almost impossible to imagine. Law, in the first place, is a centralized aspect in our lives. There is a common and uniting law that everybody is subject to and should abide with or else the penalty will be imposed on the violators.

I guess, a decentralized law will be more observed if the coverage of the law is at the minimum. For example, we can allow each and every village or community or tribe to create their own exclusive law in line with their cultures and traditions and preferences. At least in this way, there is no one or nothing that is out there that is imposing on them what they do not agree.

And the thing is that no law or nobody can or should top anybody or a group/organization from influencing the outcome of any referendum because this is also protected by laws under the freedom of speech. Silencing or stopping anybody from using influencing the decision of the people can be tantamount to an attack of the right of expression. Media and all people are actually, in one way or another, influencing other people and organization, and there is nothing we can do with that.

As to getting there...or getting under the decentralized law system I don't see that now happening and it will never actually happen. There are many things that we need to overhaul to come up with that Utopian dream and there must even be a big revolution first needed as the catalyst so that a society can be under that state. Still, I appreciate that there are people who are thinking with this kind of mindset but just like the so many ideas that remained ideas just worthy of some discussion this idea will just remain as such.

Is arbitration really the way to go in settling disputes in the crypto industry? If we are talking about small cases then I think three parties can do it but if we are talking about big civil and criminal cases then I think  we need the judicial system to handle it for us. Settling disputes is something being already done now in our world and with the crypto industry I don't think it will work well. For on most cases we have are either from scams or stolen crypto both of which cannot be solved without seeking any help from the government. Think about a decentralized law helping us, do you think it would be any better on our part?