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JAMS Smart Contract Clause and Rules (DRAFT)

In a continuing effort to provide our clients with the highest quality dispute resolution services, JAMS offers clauses, rules and procedures designed to meet the parties’ needs in a variety of situations, including smart contracts. JAMS draft rules and clauses are being provided for review and comment. JAMS can be contacted at solutions@jamsadr.com.


Notice: These Rules are the copyrighted property of JAMS. They cannot be copied, reprinted or used in any way without permission of JAMS, unless they are being used by the parties to an arbitration as the rules for that arbitration. If they are being used as the rules for an arbitration, proper attribution must be given to JAMS. If you wish to obtain permission to use our copyrighted materials, please contact JAMS at 949-224-1810.


Model Dispute Resolution Clause

 

The Parties agree that any and all disputes, claims or controversies arising out of or relating to this Agreement shall be submitted to JAMS, or its successor, for mediation, and if the matter is not resolved through mediation, then it shall be submitted to JAMS, or its successor, for final and binding arbitration.

Any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, will be referred to and finally determined by arbitration in accordance with the JAMS Smart Contract Rules. The seat of the arbitration will be [location]. The language to be used in the arbitral proceeding will be English. Judgment upon the award rendered by the Arbitrator(s) may be entered by any court having jurisdiction thereof.

 


JAMS Rules Governing Disputes Arising out of Smart Contracts

Table of Contents

Rule 1.

Scope of Rules

Rule 2.

Party-Agreed Rules and Emergency Relief Procedures

Rule 3.

Amendment of Rules

Rule 4.

Conflict with Law

Rule 5.

Commencement and Appointment

Rule 6.

Preliminary and Administrative Matters

Rule 7.

Interpretation of Rules and Jurisdiction Challenges

Rule 8.

Representation

Rule 9.

Withdrawal from Arbitration

Rule 10.

Ex Parte Communications

Rule 11.

Arbitrator Disclosures and Replacement

Rule 12. 

Ascertainment of Facts and Law

Rule 13.

Award of the Arbitrator

Rule 14.

Enforcement of the Award

Rule 15.

Confidentiality and Privacy

Rule 16.

Waiver

Rule 17.

Disqualification of the Arbitrator as a Witness or Party and Exclusion of Liability

Rule 18.

Fees

    

Rule 1. Scope of Rules

(a) The JAMS Smart Contract Rules (“Rules”) govern disputes arising out of Smart Contracts.

(b) JAMS may, in its discretion, assign the administration of the dispute resolution process to any of its Resolution Centers.

(c) The term “Party,” as used in these Rules, includes Parties to the Arbitration process and their counsel or representatives.

(d) The term "Smart Contract" refers to a computer protocol intended to digitally facilitate, verify or enforce the negotiation or performance of a self-executing contract, when the terms of the agreement between the parties are directly written into lines of computer code that exist across a distributed, decentralized blockchain network.

(e) “Electronic filing” (e-filing) means the electronic transmission of documents to and from JAMS and other Parties for the purpose of filing via the internet. “Electronic service” (e-service) means the electronic transmission of documents via JAMS' Electronic Filing System to a Party, attorney or representative under these Rules.

(f) Terms not defined herein shall have the meaning ascribed to them in the contract that gives rise to the dispute.

Rule 2. Party-Agreed Rules and Emergency Relief Procedures

(a) The Parties may agree on any rule not specified herein or in lieu of these rules that are consistent with the applicable law and JAMS' policies ("Party-agreed Rules"). Any such Party-agreed Rules shall be provided to JAMS within one week of the effective date. The Party-agreed Rules shall be enforceable as if contained in these Rules. To the extent any Party-agreed Rules do not address issues raised in an arbitration, the Rules shall govern. Any Party-agreed Rules shall include the mechanism for enforcement of an Arbitration Award.


(b) Emergency Relief Procedures. The Parties agree that JAMS' Emergency Relief Procedures for Smart Contract disputes will apply to the Arbitration, unless they agree in writing to opt out of those Procedures in their Arbitration Agreement or by subsequent written agreement.

Rule 3. Amendment of Rules

JAMS may amend these Rules without notice. The Rules in effect on the date of the commencement of an Arbitration (as defined in Rule 5) shall apply to that Arbitration, unless the Parties have agreed upon another version of the Rules.

Rule 4. Conflict with Law

If any of these Rules, or modification of these Rules agreed to by the Parties, is determined to be in conflict with a provision of applicable law, the provision of law will govern over the Rules in conflict, and no other procedure will be affected.

Rule 5. Commencement and Appointment

In the event that parties to a Smart Contract are unable to agree on their rights, obligations, performance or other term of the Smart Contract, and to ensure that such disputes are determined quickly, a Party may initiate an Arbitration with JAMS as follows:

(a) Any party may demand Arbitration by filing a Demand for Arbitration, Arbitration Statement or any other records and data associated with or reflecting the terms of the Smart Contract. The documents and/or data shall be transmitted to JAMS electronically, and electronic copies shall be transmitted to the other Parties utilizing the electronic forms and filing directions provided by JAMS on its website at www.jamsadr.com. The Arbitration Statement shall set forth in detail the factual and legal issues submitted for Arbitration and shall be sent no later than 10 days following the Demand.

(b) Within 72 hours after the Arbitration Statement is filed and served, the Parties shall appoint an Arbitrator, who shall be a JAMS panelist. JAMS shall appoint an Arbitrator administratively from its panel if the Parties fail to appoint an Arbitrator within the 72-hour time period.

(c) The Arbitration shall commence on the date that JAMS receives its Filing Fee and the Demand, Arbitration Statement and any other records and data associated with or reflecting the terms of the Smart Contract, and JAMS confirms the appointment of the Arbitrator. Unless the Arbitrator decides otherwise, the fees and expenses of JAMS and the Arbitrator shall be paid by the Parties, divided equally among them.

(d) If a Party that is obligated to submit to the Arbitration process fails to agree to participate within 72 hours of receiving the Notice of Commencement, JAMS shall confirm in writing that Party’s failure to respond or participate, and the Arbitrator shall schedule, and provide appropriate notice of, a Hearing or other opportunity for the Party demanding the Arbitration to demonstrate its entitlement to relief.

(e) The date of commencement of the Arbitration is the date of the Commencement Notice but is not intended to be applicable to any legal requirements, such as the statute of limitations, any contractual limitations period or claims notice requirements. The term "commencement," as used in this Rule, is intended to pertain only to the operation of this and other Rules.

(e) Electronic Filing. Information should be delivered to JAMS and the Arbitrator in the manner designated by JAMS at the time of the dispute. 

Rule 6. Preliminary and Administrative Matters

(a) JAMS may convene, or the Parties may request, administrative conferences to discuss any procedural matter relating to the administration of the Arbitration.

(b) Each Party is responsible to pay its share of the fees and expenses of JAMS and the Arbitrator. In an Arbitration in which the Arbitrator determines that two or more Parties are aligned with the same commonality of interest against another Party, those Parties shall be charged with one share, and the Claimant shall be charged with one share.

(c) If, at any time, any Party has failed to pay fees or expenses in full, JAMS may order the suspension or termination of the proceedings. JAMS may so inform the Parties in order that one of them may advance the required payment. If one Party advances the payment owed by a non-paying Party, the Arbitration shall proceed, and the amount of that advance deposit will be taken into consideration in the Arbitrator’s decision, consistent with Rule 17. An administrative suspension shall toll any other time limits contained in these Rules or the Parties’ Agreement.

(d) JAMS does not maintain an official record of documents filed in the Arbitration. If the Parties wish to have any documents returned to them, they must advise JAMS in writing within thirty (30) calendar days of the conclusion of the Arbitration. If special arrangements are required regarding file maintenance or document retention, they must be agreed to in writing, and JAMS reserves the right to impose an additional fee for such special arrangements. Documents that are submitted for e-filing are retained for thirty (30) calendar days following the conclusion of the Arbitration.

Rule 7. Interpretation of Rules and Jurisdiction Challenges

(a) Once appointed, the Arbitrator shall resolve disputes about the interpretation and applicability of these Rules and conduct of the Arbitration process. The resolution of the issue by the Arbitrator shall be final.

(b) Jurisdictional disputes, including disputes over the formation, existence, validity, interpretation or scope of the agreement under which Arbitration is sought, and who are proper Parties to the Arbitration, shall be submitted to and ruled on by the Arbitrator within 72 hours of the issue being raised. The Arbitrator has the authority to determine jurisdiction issues as a preliminary matter.

(c) Disputes concerning the appointment of the Arbitrator or the Arbitrator's continued service shall be resolved by JAMS.

Rule 8. Representation

(a) The Parties, whether natural persons or legal entities, such as corporations, unincorporated associates, LLCs or partnerships, may be represented by counsel or any other person of the Party’s choice. Each Party shall give prompt written notice to JAMS and the other Parties of the name, address, telephone number and email address of its representative. The representative of a Party may act on the Party’s behalf in complying with these Rules.

(b) Changes in Representation. A Party shall give prompt written notice to the Case Manager and the other Parties of any change in its representation, including the name, address, telephone number and email address of the new representative. Such notice shall state that the written consent of the former representative, if any, and of the new representative has been obtained and shall state the effective date of the new representation. Notice shall be given pursuant to the administrative policies of JAMS in effect at the time of the Arbitration.

Rule 9. Withdrawal from Arbitration

No Party may terminate or withdraw from an Arbitration after the Commencement (see Rule 5), except by written agreement of all Parties to the Arbitration.

Rule 10. Ex Parte Communications

No Party may have any ex parte communication with the Arbitrator regarding any issue related to the Arbitration. The Arbitrator may authorize any Party to communicate directly with the Arbitrator by email or other written means as long as copies are simultaneously forwarded to the Case Manager and the other Parties. The Arbitrator is authorized to obtain information directly from the Smart Contract.

Rule 11. Arbitrator Disclosures and Replacement

(a) If, for any reason, the Arbitrator who is selected is unable to fulfill the Arbitrator’s duties, a successor Arbitrator shall be chosen in accordance with these Rules. JAMS will make the final determination as to whether an Arbitrator is unable to fulfill his or her duties, and that decision shall be final.

(b) Any disclosures regarding the selected Arbitrator shall be made immediately upon the Arbitrator’s appointment. Such disclosures may be provided in electronic format, provided that JAMS will produce a hard copy to any Party that requests it. The Parties and their representatives shall disclose to JAMS any circumstances likely to give rise to justifiable doubt as to the Arbitrator’s impartiality or independence, including any bias or any financial or personal interest in the result of the Arbitration or any past or present relationship with the Parties or their representatives. The obligation of the Arbitrator, the Parties and their representatives to make all required disclosures continues throughout the Arbitration process. The Arbitrator shall be under a duty at all times to act impartially and fairly and shall serve as an independent neutral.

Rule 12. Ascertainment of Facts and Law

(a) Upon commencement of the Arbitration, the Arbitrator is empowered to take the initiative in ascertaining the facts and the law, and to exercise sole discretion in managing the Arbitration process. Among other things, the Arbitrator may require the Parties to make additional factual submissions, such as sworn witness statements and business documents. The Arbitrator may interview important witnesses after notice to the Parties and, affording opportunity to attend, may request and consider expert reports and may call for memoranda on legal issues.

(b) Discovery shall be limited to the deposition of one competent individual expert witness as to the meaning of the Smart Contract coding. The only documentation that will be reviewed or considered by the Arbitrator shall be the written contract, the computer code and the witness's testimony. The Arbitrator shall have the ability to hire an expert to answer any questions about the applicable code. All costs related to the use of an expert witness shall be borne equally by the Parties.

Rule 13. Award of the Arbitrator

(a) The Arbitrator shall issue a written Award (“Award”), which shall be final and binding upon the Parties. The Award shall be issued through JAMS as soon as practicable but in no event later than thirty (30) calendar days after the appointment of the arbitrator or within any later time agreed upon by the Parties. This 30-day period also may be extended by the Arbitrator in his or her sole discretion for up to 14 days in the event that JAMS has requested any Party to make an additional fee and expense deposit and funds have not been deposited as requested or advanced by another Party pursuant to Rule 18.

(b) Any Party may request clarification of the Decision within 120 hours after issuance, and the Arbitrator shall endeavor to respond within an additional 120 hours, and any payment or performance in accordance with the Decision shall be made immediately thereafter. Unless the Parties agree otherwise, the Decision shall state reasons therefor and shall be admissible in later administrative, arbitral or judicial proceedings between the Parties.

(c) Interim Measures. The Arbitrator may grant whatever interim measures are deemed necessary, including injunctive relief and measures for the protection or conservation of property and disposition of disposable goods. Such interim measures may take the form of an interim or Partial Final Award that can be filed with any court of law for enforcement purposes, and the Arbitrator may require security for the costs of such measures. Any recourse by a Party to a court for interim or provisional relief shall not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate. The code will govern interpretation of the Smart Contract, and the terms of the Smart Contract, to the extent they are reduced to the English language, shall be considered by the Arbitrator only if there is an ambiguity or logic contradiction in the code.

Rule 14. Enforcement of the Award

(a) The Award will be made in writing and will be final and binding on the Parties. The Arbitrator will state the reasons upon which the Award is based, unless the Parties have agreed that no reasons are to be given.

(b) The Parties will undertake to carry out the Award without delay.

(c) If the arbitration law of the country where the award is made requires that the Award be filed or registered by the Arbitrator, the Arbitrator will comply with this requirement within the period of time required by law.

(d) At the request of any Party, the Administrator will provide it, at cost, with a copy of the Award certified by JAMS. A copy so certified will be deemed to comply with the requirements of Article IV(1)(a) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, June 10, 1958.

(e) If the Arbitration is rendered in the United States, proceedings to enforce, confirm, modify or vacate an Award will be controlled by and conducted in conformity with the Federal Arbitration Act, 9 U.S.C. Sec 1 et seq. or applicable state law. The Parties to an Arbitration under these Rules shall be deemed to have consented that judgment upon the Award may be entered in any court having jurisdiction thereof.

Rule 15. Confidentiality and Privacy

(a) JAMS and the Arbitrator shall maintain the confidential nature of the Arbitration proceeding and the Award, including the Hearing, except as necessary in connection with a judicial challenge to or enforcement of a Decision, or unless otherwise required by law or judicial decision.

(b) The Arbitrator may issue orders to protect the confidentiality of proprietary information, trade secrets or other sensitive information.

Rule 16. Waiver

(a) If a Party becomes aware of a violation of or failure to comply with these Rules and fails to object promptly in writing, the objection will be deemed waived, unless the Arbitrator determines that waiver will cause substantial injustice or hardship.

(b) If any Party becomes aware of information that could be the basis of a challenge for cause to the continued service of the Arbitrator, such challenge must be made promptly, in writing, to the Arbitrator or JAMS. Failure to do so shall constitute a waiver of any objection to continued service by the Arbitrator.

Rule 17. Disqualification of the Arbitrator as a Witness or Party and Exclusion of Liability

(a) The Parties may not call the Arbitrator, the Case Manager or any other JAMS employee or agent as a witness or as an expert in any pending or subsequent litigation or other proceeding involving the Parties and relating to the dispute that is the subject of the Arbitration. The Arbitrator, Case Manager and other JAMS employees and agents are also incompetent to testify as witnesses or experts in any such proceeding.

(b) The Parties shall defend and/or pay the cost (including any attorneys’ fees) of defending the Arbitrator, Case Manager and/or JAMS from any subpoenas from outside Parties arising from the Arbitration.

(c) The Parties agree that neither the Arbitrator, nor the Case Manager, nor JAMS is a necessary Party in any litigation or other proceeding relating to the Arbitration or the subject matter of the Arbitration, and neither the Arbitrator, nor the Case Manager, nor JAMS, including its employees or agents, shall be liable to any Party for any act or omission in connection with any Arbitration conducted under these Rules, including, but not limited to, any disqualification of or recusal by the Arbitrator.

Rule 18. Fees

(a) Each Party shall pay its pro rata share of JAMS' fees and expenses as set forth in the JAMS fee schedule in effect at the time of the commencement of the Arbitration, unless the Parties agree on a different allocation of fees and expenses. JAMS’ agreement to render services is jointly with the Party and the attorney or other representative of the Party in the Arbitration. The non-payment of fees may result in an administrative suspension of the case in accordance with Rule 6(c).

(b) JAMS requires that the Parties deposit the fees and expenses for the Arbitration from time to time during the course of the proceedings and prior to the Hearing. The Arbitrator may preclude a Party that has failed to deposit its pro rata or agreed-upon share of the fees and expenses from offering evidence of any affirmative claim at the Hearing in the matter.

(c) The Parties are jointly and severally liable for the payment of JAMS' fees and the Arbitrator’s compensation and expenses. In the event that one Party has paid more than its share of such fees, compensation and expenses, the Arbitrator may award against any Party any such fees, compensation and expenses that such Party owes with respect to the Arbitration.

(d) Entities whose interests are not adverse with respect to the issues in dispute shall be treated as a single Party for purposes of JAMS’ assessment of fees. JAMS shall determine whether the interests between entities are adverse for purpose of fees, considering such factors as whether the entities are represented by the same attorney and whether the entities are presenting joint or separate positions at the Arbitration.

 

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