Muhammad Shehryar, Munimah Riaz
This article examines whether the procedural framework of the Federal Tax Ombudsman (“FTO”) in Pakistan, established under the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000, to adjudicate complaints of maladministration arising under federal fiscal statutes, may be strengthened through the integration of Kleros, a blockchain-based crowdsourced dispute resolution mechanism. Drawing upon an original empirical dataset of one hundred and twenty-four cases registered between January 2023 and February 2025, the article finds that the average resolution period of cases before the FTO is approximately 191.3 days, rising to 503.3 days for complex matters that traverse review, representation, and remand, whereas the Kleros mechanism resolves disputes in an average of 13.23 days across 2,111 adjudicated cases. The article also situates its findings within institutional economics, identifying the FTO as a hierarchical governance structure and the Kleros mechanism as a market-based alternative. It views the difference in resolution times as a measure of transaction costs for taxpayers and administration. By measuring these costs, the article depicts that a market-based adjudicatory system significantly reduces them, enhancing institutional efficiency. It provides empirical evidence, illustrating the welfare gains from institutional substitution in transaction cost economics and institutional change. Against this benchmark, three integration models are proposed, namely a hybrid concurrent fact-finding model, a delegated crowdsourcing model with conditional executive review, and an amicus curiae model for technically complex matters such as the taxation of digital assets, each anchored in the updates introduced under Kleros V2, including Soulbound Tokens that enable expert-gated juror selection. The article identifies two structural gaps that necessitate reform, namely the revolving-door capture within the FTO secretariat and the jurisprudential bottleneck created at the Presidential secretariat following the jurisprudence of the Supreme Court of Pakistan. It concludes that phased, pilot-based integration, commencing with the amicus curiae model in respect of complex subject-matter complaints, is jurisprudentially defensible, economically efficient, and operationally feasible within the legal framework of Pakistan.