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Litigating Smart Contract Disputes


The hype around blockchain and smart contracts is like nothing we have seen, possibly since the Internet. For a disputes lawyer, the technology raises twists on some historical issues such as personal jurisdiction and choice of law. Another issue -- does the code that makes up smart contracts satisfy the statute of frauds?

But smart contracts will also raise issues that courts have not had to deal with in connection with more traditional contracts. For example, smart contracts are supposed to be immutable.  Yet, in dealing with issues such as rescission, repudiatory breach, or changed circumstances, it is necessary to alter the status quo. In addition, it is inevitable that there will be coding errors in a smart contract. Who will be liable? Relatedly, what are the implications for liability in situations in which an attacker exploits a vulnerability in the code to cause a result other than that intended by the parties to the contract? Still another issue concerns dispute resolution. Is it wise for parties to agree that their blockchain and smart contract disputes be arbitrated?

The chairman of the litigation department of our New York office, David Zaslowsky, published an article in Law 360 that took a closer look at litigating smart contract disputes. The full text of the article may be found here.