VDP-44 Dispute Resolution Process

[theobtl]

Summary

This proposal introduces a Dispute Resolution Process to systematically prevent and resolve any tensions and conflicts. The process consists of escalating steps from Conciliation to Mediation to an internal VitaDAO Arbitral Tribunal and, finally, to online Third-Party Arbitration with enforceability of awards through VitaDAO. It is open to all members of VitaDAO to resolve disputes, including violations of VitaDAO’s Code of Conduct. In the event that a matter may be of a criminal nature, the Dispute Resolution Process will not be able to provide any criminal recourse and the matter will be referred to third parties.

Credits

The Dispute Resolution Policy & Process described below was authored by Ezanne Tessendorf, a lawyer experienced in dispute resolution, and reviewed by the VitaDAO Legal Working Group.

Motivation

Like any organisation, VitaDAO is not free of occasional tensions and conflicts. With a growing number of stakeholders and increasingly higher stakes, we believe that our DAO should rely on proven methodologies to resolve such disputes professionally and thoroughly. Having a Dispute Resolution Process (alongside an updated Code of Conduct, see VDP-37) in place not only provides VitaDAO with a reliable framework to cope with disputes, but also reassures all of VitaDAO’s stakeholders that they can rely on that and disincentivizes anyone from causing unreasonable conflicts.

Specification

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VitaDAO Dispute Resolution Policy & Process

Version 1 | May 2022

TERMS

Applicant means the aggrieved party instituting proceedings against the Respondent in line with the provisions of this Dispute Resolution Policy.

Respondent means the party against which the Applicant has instituted proceedings in line with the provisions of this Dispute Resolution Policy.

The VitaDAO Commission means the Dispute Resolution Commission of VitaDAO that comprises 2 (two) VitaDAO members and who have only administrative powers in line with the provisions of this Policy.

Dispute Resolution means the process described herein to resolve any controversy, dispute, or claim between VitaDAO members regarding any matter related to their work with VitaDAO or to any violations under the Code of Conduct.

Commissioner means any such person appointed by the VitaDAO Commission to act as an independent third-party intermediary between an Applicant and Respondent in either of the processes as recognized and outlined by this Dispute Resolution Policy and shall not include any member of the VitaDAO Dispute Resolution Commission.

VitaDAO Tribunal means any such 3 (three) members as appointed by the VitaDAO Commission to hear a matter referred to Arbitration and shall comprise any 1 (one) member of the VitaDAO Legal Working Group and 2 (two) other independent Mediators who are not VitaDAO members.

Third-party arbitration means the process set out in clause E below.

The Referral Document means a completed and submitted Dispute Resolution Form as completed by the Applicant and submitted electronically to the VitaDAO Commission.

A. SCOPE AND OUTLINE

a. This Dispute Resolution Policy finds application to any member of VitaDAO and sets out the line of processes and recourse available to effectively address and resolve any dispute regarding any matter related to the work of VitaDAO members or to any violations under the VitaDAO Code of Conduct. To achieve this, the Policy recognizes by order, Pre-Conciliation, Conciliation, Mediation, Arbitration, and Third-Party Arbitration as the stages of the VitaDAO Dispute Resolution Process.

B. REFERRING A DISPUTE

a. In the event of a Dispute, the Applicant shall refer such matter for Conciliation to the VitaDAO Commission by submitting a completed Dispute Resolution Form to the VitaDAO Commission.

b. The VitaDAO Commission may refuse to accept the Referral Document in the event that the Applicant has not completed all parts of the Referral Document.

c. Upon the Commission’s receipt of a Referral Document in line with (a) and (b) above, it shall, within 10 (ten) days of receipt thereof, appoint a Commissioner to act on its behalf as an intermediary third party to assist the parties in resolving the dispute.

d. Upon appointing a Commissioner, the Commission shall give the parties to the dispute at least 10 (ten) days’ notice of a Conciliation hearing.

C. CONCILIATION

The powers and responsibilities of the VitaDAO Commission and the appointed Commissioner:

a. Pre-Conciliation

i. The appointed Commissioner may, through any electronic means and without delving into the facts that gave rise to the dispute, contact both parties before the set date of the Conciliation hearing in an attempt to amicably resolve the Dispute by attempting to reach the desired outcome as defined by the Applicant.

ii. In the event that an amicable outcome is reached through (i), the Commissioner shall record such outcome on the Resolution Certificate, and provide a copy thereof to all parties involved, including the VitaDAO Commission.

iii. In the event of (ii), the Dispute shall be deemed to be settled in full and final and the Applicant shall have no further or additional claims against the Respondent on the same merit.

iv. Nothing in this Policy shall compel any party, including the Commissioner, to engage in Pre-Conciliation proceedings or talks as outlined in this Policy, and whereas the matter shall then at first be heard at the Conciliation hearing and without any prejudice to any refusing party.

b. Conciliation

i. During Conciliation proceedings, the appointed Commissioner shall act as an independent third-party intermediary to both parties.

ii. In the event that the Respondent fails to be present at Conciliation proceedings, the Commissioner shall stand down the matter for no more than 48 hours to secure their participation in the proceedings. Should the Respondent fail to partake in the proceedings even after the 48 hour given timeframe, the Applicant shall be allowed to pursue the Dispute in terms of Clause E of this policy.

iii. Any and all discussions, negotiations and outcomes almost reached during the process shall be confidential and private and conducted on a without prejudice basis. No party may refer to anything said or offered at this stage of proceedings during any subsequent proceedings.

iv. During Conciliation proceedings, the appointed Commissioner shall, through structured conversation, seek to reach the desired outcome as defined by the Applicant without primarily focussing on the facts that gave rise to the dispute.

v. Where the Respondent agrees to the Applicant’s desired outcome, the Commissioner shall record such outcome on the Resolution Certificate and provide a copy thereof to all parties involved, including the VitaDAO Commission. In this event, the Dispute shall be deemed to be settled in full and final and the Applicant shall have no further or additional claims against the Respondent on the same merit. This stage of the proceedings shall take no more than 72 (seventy-two) hours to complete).

vi. Where the Respondent does not agree to the Applicant’s desired outcome, the Commissioner shall end Conciliation proceedings and immediately proceed afresh with the matter to the Mediation process. In this event, any negotiations, discussions, or outcomes almost reached during the Conciliation hearing shall no longer be binding on any party and the Dispute shall be deemed to have not been heard.

D. MEDIATION OF DISPUTES

a. A dispute shall be Mediated where Conciliation proceedings have failed.

b. Mediation proceedings must be recorded by the Commissioner and detailed notes of the proceedings must be kept.

c. During Mediation, the Commissioner shall give regard to the facts that gave rise to the referral of the dispute and structurally assess these facts as follows:

i. At first, the Applicant shall have the opportunity to provide evidence and give testimony to the events that gave rise to the dispute.

ii. Thereafter, the Respondent shall have an opportunity to give testimony to the events that gave rise to the dispute.

iii. Both the Applicant and the Respondent shall be allowed to submit any evidence and call any witnesses to attest to their versions.

iv. Where a witness is not available to testify on behalf of either the Applicant or the Respondent in terms of iii), the Commissioner may stand down the matter for no more than 48 hours to secure the presence of a witness for either party and enable them to testify.

v. Both the Applicant and the Respondent shall, in an orderly fashion, be allowed to put questions to one another and their witnesses in an attempt to clarify any uncertainty on the end of any party.

vi. The Commissioner may interrupt both parties and their witnesses and ask them to elaborate on any testimony given or to ask any clarifying questions.

d Upon evaluating the facts as presented by both parties, the Commissioner shall, guided by a balance of probabilities, suggest an appropriate outcome and sanction to the parties.

e. Should the parties accept the outcome and sanction proposed by the Commissioner, the Commissioner shall provide for such outcome on the Resolution Certificate, to be signed between the Parties. In this case, the Dispute shall be deemed to be settled in full and final and the Applicant shall have no further or additional claims against the Respondent on the same merit.

f. Should the Applicant not accept the outcome and sanction proposed by the Commissioner or where the Applicant is willing to accept the outcome and sanction proposed but the Respondent is not, the Applicant may, within 10 (ten) days thereof refer the matter to the VitaDAO Tribunal for Arbitration. Failure by the Applicant to do so shall be interpreted as their intention to abandon their dispute against the Respondent and the applicant shall have no further or additional claims against the Respondent on the same merit.

E. ARBITRATION OF DISPUTES (VITADAO TRIBUNAL)

a. Any matter pursued by the Applicant beyond Mediation shall be heard by the VitaDAO Tribunal.

b. The Respondent may not refuse to partake in these proceedings.

c. The VitaDAO Tribunal shall comprise any such 3 (three) members as appointed by the VitaDAO Commission to hear a matter referred to Arbitration and shall comprise any 1 (one) member of the VitaDAO Legal Working Group and 2 (two) other independent Mediators who are not VitaDAO members. No member of the Tribunal hearing a particular matter shall have also been a Commissioner to the same dispute throughout the earlier of the Dispute Resolution Process.

d. The Tribunal shall notify the parties, including the VitaDAO Commission of an arbitration hearing at least 10 (ten) days prior thereto.

e. Before commencing with Arbitration proceedings, the VitaDAO Tribunal may, through one of its members and for a brief period not exceeding 60 minutes, revert to Conciliation in an attempt to amicably resolve a dispute in line with Conciliation proceedings provided for by this Policy.

f. During Arbitration, the VitaDAO Tribunal shall give regard to the facts that gave rise to the referral of the dispute and structurally assess these facts as follows:

i. At first, the Applicant shall have the opportunity to provide evidence and give testimony to the events that gave rise to the dispute.

ii. Thereafter, the Respondent shall have an opportunity to give testimony to the events that gave rise to the dispute.

iii. Both the Applicant and the Respondent shall be allowed to submit any evidence and call witnesses to attest to their versions.

iv. Where a witness is not available to testify on behalf of either the Applicant or the Respondent in terms of iii), the Commissioner may stand down the matter for no more than 48 hours to secure the presence of a witness for either party and enable them to testify.

v. Both the Applicant and the Respondent shall, in an orderly fashion, be allowed to put questions to one another and their witnesses in an attempt to clarify any uncertainty on the end of any party.

vi. Any member of the VitaDAO Tribunal may interrupt either party and their witnesses and ask them to elaborate on any testimony given or to ask any clarifying questions.

g. Upon hearing testimony by both parties, the VitaDAO Tribunal shall, on a balance of probabilities and by a majority, make a finding in favor of either the Applicant or the Respondent. The VitaDAO Tribunal may stand down the matter for no longer than 10 (ten) days before making a finding.

h. In the event that the VitaDAO Tribunal finds in favor of the Applicant, it shall take account of the desired outcome initially sought by the Applicant and if such desired outcome is reasonable, impose it as a sanction or impose an appropriate and corresponding sanction. In this case, the Tribunal shall record such outcome on the Resolution Certificate and provide a copy thereof to all parties involved, including the VitaDAO Commission.

i. In the event that the VitaDAO Tribunal finds in favor of the Respondent, it shall record such outcome on the Resolution Certificate and provide a copy thereof to all parties involved, including the VitaDAO Commission.

j. Any finding by the VitaDAO Tribunal shall be final and binding on both the Applicant and the Respondent.

k. In the event that either party is dissatisfied with the outcome of the VitaDAO Tribunal, any such party shall have the right to pursue the dispute through Third-Party Arbitration by electronically noting their intention thereof to both the Applicant, the Tribunal, and the VitaDAO Commission.

F. ARBITRATION OF DISPUTES (THIRD-PARTY ARBITRATION)

a. Reference to Third-Party Arbitration shall be administered using a suitable arbitration system approved by the VitaDAO members in accordance with its rules. If off-chain, then the dispute shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules. In any event, the tribunal will consist of one arbitrator. The language used in the arbitral proceedings will be English. Costs shall be borne by the party initiating the dispute, who shall have the right to request a costs award from the other party. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

b. Notwithstanding the above, any VitaDAO member can also refer a dispute to be finally determined by majority vote of the VitaDAO members.

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Visualization of the Dispute Resolution Process

Click here for the full resolution.

Implementation

If and once this proposal passes the phase 3 on Snapshot, this proposal will be in effect immediately. The specification above on the Dispute Resolution Process will be made accessible through at least one more of VitaDAO’s channels (TBD., likely Notion). This includes a formatted PDF version of the Dispute Resolution Process above as well as all related resources and links, such as the Code of Conduct, the Dispute Referral Form and a Dispute Resolution Certificate Template.

• Agree

• Agree with revisions (please comment)

• Disagree

[Jesse]

Thank you Ezanne and Theo for putting this together. Adoption of a formal dispute resolution process is an important step in the evolution of VitaDAO.

A few comments and proposed edits:

1. Clarification on the Commissioner vs. the VitaDAO Commission vs. the VitaDAO Tribunal.

The Commissioner is an independent third party intermediary appointed by the VitaDAO Commission, so the Commissioner must be someone who is not part of VitaDAO. What are the criteria for the Commissioner? I propose a quality control, i.e. only someone with qualifications, like an attorney or someone otherwise properly trained by an internationally accredited institution in dispute resolution.

The VitaDAO Commission are 2 members of VitaDAO. How will conflicts of interest be dealt with? For example, when a complaint is being brought against a member of the VitaDAO Commission, or a person with whom that member is a close affiliate. I propose the Dispute Resolution Form is amended to (a) list the names of the 2 members of the VitaDAO Commission and (b) provide a way for the applicant to note whether the complaint involves one of those 2 members. The applicant should be able to remain anon, receive a message from a non-conflicted member, and proceed with the compliant.

The VitaDAO Tribunal The qualification requirement above should be implemented here too. The 2 independent mediators who are not VitaDAO members should be attorneys or otherwise trained in an accredited institution in dispute resolution.

2. Opt out

I propose that applicants should be informed that they can opt out of: (a) a written submission of the form and request a phone call or, (b) the conciliation or mediation steps, moving straight to the VitaDAO Tribunal.

3. Right to request a costs award

I propose clarifying this language to be a bit stronger for worried applicants, changing “Costs shall be borne by the party initiating the dispute, who shall have the right to request a costs award from the other party” to say “The Applicant’s costs shall be borne by the Applicant, who shall have the right to request that the arbitrator requires the Respondent to pay the Applicant’s costs, including attorneys fees, of bringing the dispute if the dispute is resolved in the Applicant’s favor.”

4. §F(b) the VitaDAO member-Applicant’s power to refer a dispute to be finally determined by majority vote of the VitaDAO members.

Here, a bit of clarification would be helpful to highlight what this means: an applicant who is a VitaDAO member can take the arbitrator’s award to a vote of VITA token holders, asking the token holders to vote to enforce the award against the Respondent(s), rather than taking the arbitrator’s award to a court and asking a court to enforce it.

5. §K of the Dispute Resolution Form

§K reads “By completing and submitting this form, you agree that a copy of this submission will be shared with the party against whom proceedings are being instituted.”

I think this should be clarified with a promise of confidentiality to reassure worried applicants:

“Your submission of this form will be kept confidential. However, in the event that this dispute proceeds to Mediation, the VitaDAO Tribunal, or Arbitration, you understand that a copy of this submission must be shared with the Respondent.”

Summary

In sum, I proposed (a) a few changes to the language of the Dispute Resolution Policy & Process and (b) the language/logic of the Dispute Resolution Form.

[EzanneTess]

For clarification on the intention of the different roles:

The VitaDAO Commission and the VitaDAO Dispute Resolution Commission

1. These terms are synonymous, but there should actually only be one term here to avoid any confusion.
2. This Commission consists of 2 people. It’s not necessary for these individuals to have a legal background. They will solely serve an operational purpose. Ideally, these individuals will have to monitor the designated email address for any new dispute resolution submissions that came in and then from there, be guided by the DRP to 1) appoint a Commissioner to resolve the dispute and act solely as a point of contact only from an ops perspective.
3. These individuals should not get involved in the dispute itself at any stage other than operational as explained above.

The Commissioner

1. As per Jesse’s comments, yes. This should be someone with a legal background. Ideally an attorney. Ideally, The Commission should have a list of attorneys or those trained to be able to resolve a dispute at hand. Practically, the VitaDAO commission will then reach out to someone from the list and share with that person (the Commissioner) the dispute resolution form and the details of the applicant and the respondent. The Commissioner shall be guided by the DRP to resolve the dispute

The Tribunal
Exactly as per Jesse’s comments. The 2/3 individuals who do not form part of VitaDAO will again be selected from the list of attorneys available.

On the right to request a costs award
I did not include this language and am happy to move ahead with Jesse’s suggestion.

§F(b) the VitaDAO member-Applicant’s power to refer a dispute to be finally determined by majority vote of the VitaDAO members.
I also did not write this language but I am also satisfied with Jesse’s suggestions.

Dispute Resolution Form
I agree with Jesse to include confidentiality language.

[EzanneTess]

I also wish to add the following comment on anonymity in general. I agree that some form of anonymity can be included in the DRP, however, I propose that it should remain within the appointed Commissioner’s discretion to which end the Applicant can remain anonymous and place it within the hands of the Commissioner to reveal the identity of the Applicant (only to the Respondent party involved in the dispute) and only if it will help to resolve the dispute. Differently put, if the only thing preventing the dispute to be resolved can reasonably be said to be the anonymity of the applicant, the Commissioner may reveal the identity of the Applicant to the Respondent party in the dispute.

[Savva]

Another issue has been discussed in the Legal WG which I would like to publicly discuss.

Basically, there are people involved in DAO that want to remain anon. That is fine, and I realise that we want to allow this as part of Web3 / DAO culture, but as a lawyer, this is a gigantic red flag and risk. If members are anon then any contractually agreed rules of the DAO are effectively unenforceable against them. This is like getting a developer to participate in your startup without signing a contract to cover IP and confidentiality. Basically, when you have to licence your IP or get investment, this will come up in due diligence and torpedo the deal. I realise that people want the ability to participate in DAOs as anons, but if you are contributing any valuable IP or getting access to confidential information (as is the case with Core or any WG members as a minimum) there needs to be a way to enforce the rules of the DAO outside purely relying on “code as law”. We are not there yet for the latter (e.g. how do you use code to enforce an injunction not to disclose confidential information regarding RCT data which could invalidate a VitaDAO owned patent and cause millions of dollars in damages or sink a deal). It would be potentially useful to post a massive bond with the DAO that can be forfeited, and maybe this would be a useful enforcement mechanism, but obviously not all will be able to afford this and there is still a need to be able to enforce injunctions or ownership of IP which a bond will not guarantee.

My proposal is we need to include KYC as part of an onboarding mechanism if you have any involvement in DAO operations. You can stay anon if only involved in governance and have no access to confidential info. This KYC information can be kept confidential to the DAO (e.g. Legal WG) and only used if necessary for enforcement e.g. transfer of IP, conflict of interest etc.

Happy to debate this point. This is one of those areas where the “real world / meatspace” comes up against the Metaverse. I think we should move towards code is law / smart contracts, but we are not there yet and is irrational to expect people to deal with a DAO if contracts are not enforceable against the members and cannot guarantee chain of title of IP.

[bowtiedshrike]

I think we’re about to get empirical data on how protective anon status is against lawsuits if 3AC rugs enough DAOs.

I suspect the number of anons who could NOT be found if millions were at stake is only a handful. If they’ve signed an agreement as an anon, that means you would most likely be able to find them and still enforce it.

Even with KYC, country of residence makes contractually agreed rules unenforceable. Does the DAO currently exclude people residing in certain countries from access to confidential data/IP?

[Savva]

Most countries allow enforcement of foreign judgments if the anon agreed to submit to the jurisdiction of a neutral foreign court (e.g. Courts of London or even binding arbitration). It would make things difficult if the anon was based in some country where enforcement was practically impossible (e.g. Caribbean island, Syria, Iran, NK etc), but having the judgement enforceable against themselves personally and/or their assets in most jurisdictions, is going to be a massive disincentive not to break the rules of the DAO. Also, with things like IP ownership, you don’t need to enforce anything against them, the law will simply recognise ownership of IP being held in VitaDAO’s IP holding company (although in some cases, might need to sign as inventor, but it is possible to agree in advance (by deed) to appoint someone as your attorney to sign on your behalf). An injunction to stop them leaking confidential information is difficult, especially if they cannot be found. And once confidential information is published, it’s no longer deemed confidential - anyone can use it and all you can do is pursue the breaching party for damages. Hence the need to manage access to confidential information (e.g. pre-patent clinical trial data) to trusted few parties, who are appropriately KYC’d with skin in game / personal assets where a judgement could attach and incentivised not to breach.

@theobtl - to make things clear that an arbitrators or tribunals decision is binding should be amended, as shown in bold and italics

F. ARBITRATION OF DISPUTES (THIRD-PARTY ARBITRATION)

a. Reference to Third-Party Arbitration shall be administered using a suitable arbitration system approved by the VitaDAO members in accordance with its rules. If off-chain, then the dispute shall be administered by JAMS in New York pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules. In any event, the tribunal will consist of one arbitrator. The language used in the arbitral proceedings will be English. Costs shall be borne by the party initiating the dispute, who shall have the right to request a costs award from the other party. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The parties hereby submit to the jurisdiction of the arbitrators and/or relevant tribunal to determine the dispute and issue any relief, and each party irrevocably waives, to the fullest extent permitted by law, any objection that it may now or in the future have to the venue of a proceeding brought in such a tribunal and any claim that the proceeding was brought in an inconvenient forum.”

[theobtl]

Thanks @Savva! How would you suggest to change the proposal text specifically?

[Savva]

Have proposed text above in bold and italics.

Regarding KYCing of VitaDAO members involved in executive functions/accessing or contributing to IP, this should be dealt with during onboarding and not necessarily something that needs to go in the text here. But IMO it is extremely important to ensure these rules are enforceable against VitaDAO members if they are to be worth anything at all to the DAO and minimise risk of challenges to IP ownership etc, which could sink a valuable deal.

EDIT: Have proposed adding reference to KYC in the Code of Conduct / IP Policy proposed amendment here.

[bowtiedshrike]

I thought China tended to protect their nationals from foreign judgments, as does Russia. How easy is it to pursue people in Nigeria, India, Pakistan?

Seems the trust part is more important than the KYC part… we all know who Sifu is, but good luck getting him legally.

Even assuming KYC, what steps will be taken to protect confidential information from being leaked by someone returning to China or another untouchable jurisdiction to build a rival drug and/or cripple their competition?

[Savva]

China and India are starting to respect IP rights more, but there is definitely a risk of industrial espionage. Russia is the same: you can enforce IP, although it is more difficult. Nigeria & Pakistan, I have no idea. But the main point, as I set out before, is that you can secure chain of title to the IP, which does not require you to enforce it against them in their own jurisdictions. Also, if they did try to sell infringing products in a jurisdiction that does not respect IP rights, likely the market is very small and not going to have much commercial impact anyway.

As far as steps you can take, you want to minimise risk but can never exclude all risk. However, a significant risk minimisation step would be to ensure that people having access to IP are appropriately vetted and also personally identified.

[theobtl]

Could those who voted with “agree with revisions” please indicate whether their proposed revisions were resolved by changing their vote to “Agree”? Otherwise, we cannot move forward with this proposal, close this proposal and need to take it back to the legal working group for working on a new, revised version.

[theobtl]

This proposals seems blocked and cannot pass phase 2 as it is, however the underlying issue is still unresolved.

Is anyone particularly interested in the idea behind VDP-44 Dispute Resolution Process and would step up to lead a new implementation of a proposal?

Please make yourself heard in here and in our legal wg or “get involved” channel on Discord.