Reputation Arbitration: Building A Decentralized Reputation System For Arbitrators?

Under arbitration, the parties submit their disputes to an arbitral tribunal (or sole arbitrator) who rules on pre-hearing disputes, conducts the arbitration, and issues a binding award on the parties. However, the desirability of arbitration as a dispute-resolution mechanism rests largely on the perception of the reputation of the arbitrators. On the one hand, the arbitrator has a reputational concern, in the sense that he/she wishes to appear competent, independent, and impartial to the parties. The reputational concern could stem from a desire to boost his/her prestige, his/her revenue, or his/her experience. On the other hand, clients value arbitration when an independent, impartial, and correct decision is made. Now, could a blockchain based reputation system be implemented for arbitration?

Importance of Reputation

Reputation is the result of all your previous interactions with another person in a specific context. For example, if one has a history of calmly talking about contemporary trends in the field of Mergers and Acquisitions (M&A) with a professional colleague, both can be reasonably confident that any future trends that come up will be discussed calmly. A negative interaction might signal that he or she is not the right person to discuss contemporary trends the M&A context. The same goes for arbitration. If an arbitrator has a bad history (or reputation) in any past or pending cases involving a party, the arbitrator is unlikely to be appointed for a future dispute.

Some arbitral institutions have been creative enough to develop mechanisms to select and monitor their recommended arbitrators, to reduce problems of reputation and bias. For example, the parties may consult, eliminate, and rank names from list of arbitrators held by arbitration institutions. For example, with the "list and appointment" service provided by the American Arbitration Association (AAA), if the parties are unable to agree on an arbitrator, each party ranks the arbitrators in order of preference. The AAA invites the highest-ranked mutually agreeable candidate and simplifies conflicts check. In the event and arbitrator declines, the AAA invites the next highest-ranked candidate. Similarly, the Permanent Court of Arbitration (PCA) uses a "list-procedure". The PCA communicates to each of the parties an identical list containing at least three names for a potential arbitrator. Each party may return the list after having deleted the name or names to which it...