Decentralised autonomous organisations and the future of arbitration: a critical examination of on-chain and off-chain mechanisms

Abstract

Decentralised Autonomous Organisations (DAOs) raise fundamental questions for private law. While scholarly and regulatory attention has primarily focused on the legal status and governance of DAOs, comparatively little consideration has been given to how disputes involving these organisations should be resolved. This article examines the suitability of dispute resolution mechanisms for DAO-related disputes. Analysing the principal categories of disputes that have emerged in practice, the article critically evaluates blockchain-based dispute resolution mechanisms alongside traditional arbitration, in light of due process, enforceability, party autonomy, and the unique features of decentralised governance. It argues that neither purely code-based dispute resolution nor conventional litigation provides a satisfactory response to the complexity of DAO disputes. It concludes that arbitration, appropriately adapted to the technological and organisational realities of DAOs, offers the most promising framework for balancing decentralisation, legal certainty, and procedural fairness within the evolving Web3 ecosystem.