KLEROS - DEMOCRATIZING ACCESS TO JUSTICE

With the appearance of Ethereum, innovation was smart contracts. These help in the negotiation and definition of agreements that lead to actions once a series of specific conditions are met. These programs inhabit ecosystems not controlled by the parties involved. When a pre-programmed condition is triggered, without human intervention, the intelligent contract executes the corresponding contractual clause, with the objective of providing greater security than the traditional contract law and additionally reducing transaction costs associated with contracting.

Thus, a new window was opened for the negotiation of real and digital assets, the contracting of financial or insurance products, the deposits in guarantee, the operations of buying and selling financial instruments in the stock markets, of syndicated loans.

An interaction between human beings that can be solved without the intervention of the parties, seems somewhat contradictory, but until now it has worked, at least in most cases.

We can not fail to recognize that there are disputes every day due to non-compliance with all the expectations initially set in a contract.

When we talk about Blockchain, we are also talking about constant evolution. Kleros came to evolve the nature of smart contracts, implementing consensus mechanisms in the resolution of conflicts, promoting participation and encouraging honesty in the opinion of neutral, non-biased third parties, who act as arbitrators in the resolution of disputes by applying a protocol of decision for a multipurpose court system.

Delivering rewards with financial incentives Kleros relies on specialized juries in commercial categories to decide the fairest way to enforce the terms of an intelligent contract. If there is a disagreement between the parties in the business, commercial funds are retained until the Jury reaches a consensus by vote.

Some types of properties such as trademarks, copyrights and patents can easily be intelligent properties since they can be encoded and processed as digital documents. However physical assets is where the owners are most exposed to fraud.

In smart contracts, Kleros must be implemented as his referee. Thus, the creators of contracts choose how many members of the jury and the specialized court that will make the decision of the contract in the event of a dispute.

1. Arbitrated Contracts
First, smart contracts must be registered in Kleros, providing information about the subject or motive of the dispute, in order to assign the specialized court in the matter, and define the number of judges that will be part of it. A series of tabulated or standard contracts will also be available.

In the coding of contracts, developers must include the judgments to be voted by the jury. These must be defined as options. They must also specify the specific actions to be carried out in case one of these is selected.

For Kleros, maintaining privacy is paramount. With the applications ready for this, the juries will be able to exchange information with the involved parties in an encrypted way using asymmetric encryption (hash). Thus, the sensitive information of the process will not be exposed to external observers.

Any pinakion token holder (PNK) can apply to the courts and participate as a jury in the resolution of disputes. The possibility of receiving an economic reward will serve as an incentive to participate. With the putting into play of a certain amount of chips, the application is created and depending on the amount contributed, the probability of being chosen will increase. The greater the amount of tokens you deposit, the greater the probability that you will draw as a jury. The final selection of juries will be made at random. Once the court reaches a final decision the Pinakios put into play may be withdrawn by the jury members who have voted according to the winning option.

For this Kleros implemented the slightly modified mechanism based on the SchellingCoin method. Where each holder of a coin votes by secret ballot and after everyone has voted, the results are revealed. The parties that voted as the majority are rewarded with 10% of their currencies. The parties that voted differently to the majority lose 10% of their currencies. In order to receive a reward, the jurors are encouraged to vote honestly and with the expectation that everyone will act in the same way.

Once the evidence has been evaluated, the jury issues its commitment to support one of the options through a hash represented by its unique Ethereum address. This vote can not be changed.

The commitments remain invisible to the other members of the jury and communication between them is not allowed either. This is intended to minimize the possibility that the opinion of some influence the decision of others thus altering the final result.

When the contract has been finalized, the votes shall be revealed, which must coincide. Jurors who do not reveal their vote will be penalized. Finally, the votes are added and the smart contract is executed. The option with the most votes is considered the winner.

Creating a dispute or an appeal will require the payment of arbitration fees which may be paid by the party to the dispute that creates the dispute, if so specified in an arbitrable contract. The members of the jury will also receive benefit from these fees, the amount of which will be determined by the sub-court where the dispute is resolved.

There is also the possibility of using these payments as security for the conclusion of the contract. Thus, if one of the parties does not comply with the payment, it could be considered as loser of the litigation. If both parties deposit the funds, the winning party will be reimbursed when the dispute ends.

Many people and even small businesses that do not have the economic resources to sustain a legal dispute in traditional courts, are limited in their access to justice.

Due to the low costs of arbitration and the speedy resolution of disputes offered by Kleros , the costs involved in the conclusion of a litigation are drastically reduced.

It is no longer necessary to invest large sums in professional fees. Having to pay for a team of specialist lawyers and spending hours and days attending courts will be a thing of the past.

Thanks to these advantages, many will be able to attend to their legal disputes with the support of arbitrated intelligent contracts in a decentralized platform with consensus policies that allow for the delivery of justice, obtaining a fast and reliable response. The participants as jurors also benefit from economic incentives that are assigned according to equity criteria.