THE AUTHOR:
Lara Fernanda Yokota, Associate at Toledo Marchetti Advogados
At the 10th edition of the Paris Arbitration Week, Clube dos Arbitralistas Lusófonos (“CAL”) hosted the 9th Lusophone Arbitration Meeting, co-organized byAna Gerdau de Borja Mercereau (Citadelle Disputes) and Eduardo Silva (Dispute Resolution Office), at the law firm Freshfields LLP, in Paris. This year’s panel explored the intersection between digital assets and international arbitration.
Moderated by Lino Diamvutu (Universidade Agostinho Neto), the panel featured João Mattamouros Resende (Cuatrecasas), Mariana França Gouveia (Vieira de Almeida & Associados), Marina Gouveia (Loopa Finance), and Ricardo Saraiva (Miranda & Associados). Opening remarks were delivered by Eduardo Silvaand Yuri Mantilla (Freshfields LLP), while closing remarks were given by Ana Gerdau de Borja Mercereau.
This report outlines some of the key takeaways from the event. In accordance with the Chatham House Rule, speakers are not individually identified. Moreover, the views expressed by one speaker do not necessarily reflect those of the other panelists.
Back to Basics: Blockchain Technology
The discussion began with a brief introduction to blockchain technology. As explained by one panelist, blockchain is a decentralized, distributed, and immutable digital ledger that functions as an online database for sharing information and recording transactions across a vast network of computers. This infrastructure enables the exchange of digital assets, which are digital representations of value, moveable, and cryptographically validated. To put this into perspective, the speaker made a parallel between digital assets and securities.
Another key concept introduced was that of smart contracts. According to a panelist, smart contracts are computer programs that operate on blockchain technology, enabling the automatic execution and management of agreements when predefined conditions are met. These conditions often rely on oracles—external data sources that act as a bridge between smart contracts and the real world. Interestingly, as one panelist observed, an arbitral tribunal may function as a “human oracle” by confirming or rejecting whether such predefined conditions have been satisfied. Possible limitations to smart contracts may be the “dualist” character of conditions to be met, which do not always correspond to nuanced realities.
Resolution of Disputes Involving Digital Assets
With these foundational concepts in place, the panel turned to dispute resolution. As one speaker highlighted, disputes in the blockchain ecosystem may arise from programming errors in smart contracts, inaccurate data provided by oracles, changes in circumstances, or external disruptions such as cyberattacks.
To address such disputes, another speaker explained that dispute resolution may occur either on-chain or off-chain. On-chain resolution is conducted primarily through mechanisms on the blockchain, including systems such as Kleros, a protocol built on platforms like Ethereum, where users act as jurors and vote on outcomes. Off-chain resolution, by contrast, involves traditional legal processes, including arbitration proceedings concerning digital assets. While on-chain resolution resembles contractual adjustments, off-chain processes entail formal adjudication by courts or arbitral tribunals.
One speaker noted that due to the rapid growth of digital asset transactions, several dispute resolution mechanisms have been created, tailored to the specific type of disputes arising from the blockchain. However, many of these mechanisms, sometimes referred to as arbitration, may not be considered as such under most national laws, in which case the decisions rendered are not arbitral awards subject to recognition and enforcement.
In this context, one speaker emphasized that blockchain technology introduces several practical nuances and challenges. For example, smart contracts may be classified as boilerplate (adhesion) contracts (contratos de adesão), meaning that specific legal requirements applicable to such contracts may also apply. In Brazil, for instance, arbitration clauses in boilerplate contracts must be in writing either in an attached document or highlighted in bold and require a separate signature or initials. Failure to meet these requirements may render an arbitration clause embedded in a smart contract unenforceable.
Another practical challenge concerns the enforcement of arbitral awards. Because digital assets exist in a virtual environment, determining the appropriate jurisdiction for enforcement may depend on factors such as the domicile of the individual controlling the private keys. However, identifying this individual can be difficult due to the anonymity inherent in blockchain systems. If the key holder cannot be identified or refuses to cooperate, or if the private keys are lost, the asset may become effectively inaccessible, undermining enforcement efforts.
These complexities also affect third-party funding. As noted by a panelist, while such funding is available for disputes involving digital assets, using third-party funding remains relatively rare. This is largely due to the risks associated with blockchain technology, including unregulated or opaque exchange platforms, potentially abusive limitation-of-liability clauses, lack of specialized legal counsel retained, and concerns about the counterparty’s solvency and about whether enforcing a future award would be viable.
Conclusion
The panel highlighted the unresolved complexities of the intersection between digital assets and international arbitration. While blockchain technology introduces innovative mechanisms and solutions, it also raises significant legal and practical challenges in dispute resolution, particularly in relation to risk allocation, jurisdiction and enforceability. Despite these hurdles, the prevailing view was one of cautious optimism: as regulatory frameworks evolve and market practices mature, jurists are likely to adapt and offer better solutions for the practical challenges of resolving disputes involving digital assets.
ABOUT THE AUTHOR
Lara Fernanda Yokota is a Doctoral student at the University of São Paulo. She is an Associate (Arbitration) at Toledo Marchetti Advogados. She holds a bachelor’s degree in law from the University of São Paulo and a master’s degree in conflict of laws and international business law from the University Paris 1 – Panthéon Sorbonne.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
