Metaverse’s First Arbitration Proceeding

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Author: Rana Sajjad*


The notice of arbitration has been filed with the “Independent and Neutral Arbitration Center” headquartered in the “City of Justice.” The governing law is “Most Modern Law,” and the seat of arbitration is “Pro-Arbitration Courts City.” The Claimant, “Dreams Do Come True,” a theme park located in “Fantasia,” is claiming payment of USD 1 million from “Build the Future,” a school located in “Rise and Shine” city, for their failure to pay the total amount of unpaid park tickets of 5,000 students over a period of 3 years along with damages.


The sole arbitrator, Mr. “Fairest of them all,” will teleport his hologram to “Pro-Arbitration Courts City” to conduct the arbitration proceeding. Counsel for the Claimant is rather uncomfortable with proceedings conducted by an arbitrator who will neither attend in person, nor remotely but as part of an Augmented Reality (AR) setup. On the other hand, counsel for the Respondent is happy to have his hologram at the hearing along with 2 witnesses, senior officials of “Rise and Shine” school, the Respondent.


Welcome to metaverse’s first arbitration proceeding! Sounds too fantastical to be true? Or a bit far-fetched or even freaky? Aah, the prospect of finally having the opportunity to design a beautiful and wondrous little imaginary world of arbitration. How cool would it be to have so much leeway for designing and structuring your arbitration proceedings? As that magical voice at Disney Land keeps reminding us: “Dreams do come true.” But arbitration is too serious a business to be compared to Disney Land, right? It is not fun and games. After all, you are talking about a lot of money at stake, the claims and grievances of large and powerful companies, and some very accomplished lawyers and arbitrators who are all key stakeholders in these proceedings. So, maybe we should not get carried away by all this hoopla about designing our own imaginary arbitration proceedings. But in light of the rapid technological changes around us, there is this sense of inevitability about the technological takeover of what we do and how we do it. Therefore, moving with the times or, better still, trying to stay ahead of the curve will hold us in good stead.


Since we are now in the dream and imagination mode, let us first consider the new metaverse paradigm—the design of the arbitration proceeding and the legal regime governing it. Would we need to develop consensus amongst all the stakeholders, including parties, counsel, arbitrators, arbitral institutions, governments, and multilateral institutions? Should we all agree to have just one metaverse template for the arbitration proceedings under standardized rules that give parties no leeway in designing their proceedings? This would preserve some type of order and avoid creating a hotchpotch that may undermine the predictability and integrity of the arbitration proceedings. In other words, a unified rather than a scattershot approach would be preferable.


In terms of the seat and venue, to keep things simple, should we still have an actual city in the real world as the seat while the venue is the metaverse? In light of the growing acceptance of virtual hearings, cyberspace is now a widely accepted venue, and the metaverse, at least based on my understanding, should not be very different. But if the seat is somewhere in the metaverse, I wonder how the courts would look and function while granting interim relief and enforcing or setting aside arbitral awards.


In line with the metaverse theme, could we be imaginative with the governing law, too? Or do we stick with having a governing law of a modern jurisdiction, a country in the real world, at least until the metaverse, in general, or a “country” inside it in particular offers a more modern and effective governing law?


To put all these considerations into context, let us zoom out and try to view the bigger picture of how an arbitration proceeding could benefit from the emergence of the metaverse. Ultimately, it should be about redesigning the critical elements, subtracting redundant elements, and replacing the costly physical, in-person ones with digitalized or “metaversized” versions. For instance, the wide acceptance and adoption of virtual hearings has confirmed that lawyers, witnesses, and arbitrators do not need to be in the same room for the hearing to be effective and meaningful. An arbitration proceeding in the metaverse could essentially be an extension of that, perhaps a more real, authentic, immersive version, especially if you have holograms teleported to the physical venue of the proceeding.


Metaverse optimists believe it can make the physical world better by helping participants learn from their experiences in the metaverse and redesign their real-world experiences. Think of Roblox, the global online game platform that gives players autonomy, fuels their creativity, and powers their imagination to create something they like and manifest their artistic and technical talents. You may discover a neat method to design your house while playing Roblox or come up with an elegant solution to the problem of parking your car outside your office. The question for arbitration practitioners, then is if the metaverse can help us reimagine an arbitration proceeding whereby both the physical and virtual worlds are infused to create an ideal hybrid proceeding, a proceeding in which we can choose the best of the physical world and design and adapt the remaining parts in the virtual world. The inflection point may be nigh, so let us put our metaverse hats on and start imagining that sweet spot where proceedings of both the real-world arbitration and metaverse arbitration can integrate seamlessly. One overriding consideration, though, has to be ensuring that creativity does not come at the cost of due process and the core principles and advantages of arbitration that we have always promoted and upheld.


Metcalfe’s law holds that the value of a network grows in direct proportion to the number of connected nodes within the network. Applying this law to the metaverse leads to the conclusion that as the number of connected participants and the number of valuable experiences in the metaverse grows, the value of the metaverse will grow in direct proportion. If we map this onto the world of arbitration, a valuable arbitration metaverse would take shape organically as a product of the choices made by each individual participant. The onus then is on us to reimagine and adapt arbitration proceedings to the metaverse, which would not only make arbitration cater to the evolving needs of a more extensive and more diverse user base, but it would, in turn, also accelerate arbitration’s growth as a preferred dispute resolution method.


* Rana Sajjad is a dual-qualified lawyer (licensed in New York and Pakistan). He is the Managing Partner of Triage Law, a Lahore-based commercial and arbitration law firm, and the Founder & President of the Center for International Investment and Commercial Arbitration, Pakistan’s first international arbitration center.