Background: Much Can Change Over a Week’s Time.

EOS New York published an explanation of the events that lead to the unanimous decision by Block Producers to “freeze” 7 accounts on the EOS mainnet. After evidence indicated that the legitimate owners had proven their ownership and signalled their will for account suspension, the choice to protect the property of seven accounts was made. After the freeze was completed, EOS New York requested ECAF provide a retroactive opinion within 24 hours, which they did. We did not anticipate that any subsequent statements issued by ECAF would have been haphazard, opaque, and without a process.

To say that this entire ordeal has been controversial would be an understatement.

This morning, 24 June 2018, EOS New York thought that a new ECAF statement had been issued. This new opinion statement was not a freeze request, but a request to ban accounts and move property. We had to “ask around” to validate this statement because the author named on the opinion is unknown to us, there is no central repository of ECAF opinions, there is no official communication channel, and none of this is occurring on-chain. We later learned the statement was a fake, most likely doctored to incite further controversy.

Enough.

EOS New York has been stake-elected to serve as responsible stewards of the EOS network by token-holders.

In our code of conduct we state that. “We will abide by, follow, and enforce all arbitration decisions that are enacted, without delay. We also will abstain from publishing opinions on active arbitration.” Furthermore, we state that we pledge to further EOS through advancements in technology, community organization, and EOS education for the purpose of increasing adoption. Pursuant to these efforts we have made the following decision.

Because EOS New York is unable to verify any subsequent opinion of ECAF in a transparent and secure manner on-chain, we cannot with confidence execute any statement claiming to be an ECAF opinion. We will resume normal processing once communications can be established on-chain which such that they can be audited by both EOS New York and the community.

What Are Our Next Steps?

While there is a spirit of governance that exists within the EOS community, the executional details of this system of governance are immature. That’s ok, we will not build this overnight. This does not mean that this spirit should be abandoned but rather it means that we should focus our collective efforts on more clearly defining our system of governance and building the tools we require for it to function properly

Right now, this isn’t just about ECAF, this is about arbitration as the default form of dispute resolution within EOS. So let’s work to define what arbitration is, what an arbitrator’s responsibility is, and ECAF’s role in all of this. Arbitration is not new, and we have the benefit of decades to centuries of wisdom derived from applicable experience. We need to understand that wisdom and seek to apply what we can to our own needs rather than reinvent the wheel.

What is Arbitration?

Arbitration is a form of dispute resolution meant to be a streamlined and cost-effective alternative to traditional court systems. Arbitration has been internationally recognized by 159 countries per the “New York Arbitration Convention” which originally occurred in 1959 under the authority of the United Nations. The text of this agreement is in English here. It is translated into dozens of languages here

What is an Arbitrator?

An arbitrator is a professional that works to increase communication between two sides of a dispute. They are private individuals or groups who offer their own unique experience and areas of expertise to resolve disputes on-chain. They are separate from associations like ECAF. Arbitrators may apply to one or more arbitration associations and be listed in the association’s member databases should they meet the standards of each association. It is not required that an arbitrator be a member of an arbitration association so long as both parties to a dispute consent to that arbitrator.

ECAF Mention in the Constitution Explained

The Constitution

The specific language mentioning ECAF: All disputes arising out of or in connection with this Constitution shall be finally settled under the Rules of Dispute Resolution of the EOS Core Arbitration Forum by one or more arbitrators appointed in accordance with the said Rules.

The reasons ECAF is mentioned in the Constitution are at least twofold (amongst others) and are required for arbitration to be a valid form of dispute resolution:

Parties to an agreement must agree to arbitration before-hand to use arbitration.

Parties to an agreement must agree to a specific set of arbitration rules before-hand to use arbitration.

In other words, the idea is that each token-holder agrees to arbitration and furthermore agrees to the rules of arbitration as defined by ECAF. We’ve seen no official rules for dispute resolution from ECAF except what we’ve found as “proposed” from within the EOS Go forums here. We’ve also published a copy of them here.

Our Suggestions & Proposal

We offer the following list of proposals to the community. The first is a list of suggestions to ECAF over who we have no authority. They are free to adopt or refuse our proposals with no consequence.

The second is a proposal we make while being afforded no incremental consideration compared to any other member of the EOS Mainnet. Any fruit of these proposals must be formally proposed, voted on, and ratified as any other amendment would be (once the tools to do so are available).

Suggestions to ECAF

We want to thank the members of ECAF for what has proven to be a very tough job. We respect the endeavor you have undertaken and offer these suggestions hoping to learn that you’ve already thought of them or are already developing ideas which are better.

First, we believe that renaming ECAF to the EOS Center for Dispute Resolution (ECDR, similar to the ICDR or International Center for Dispute Resolution) will more clearly delineate its role.

We suggest that ECDR define its primary roles as:

Maintaining a set of rules for dispute resolution: Example 1, 2, 3

Maintaining a database of member arbitrators who are independent of ECDR and in good-standing (i.e. see {{ regarbitrator }} proposal below)

Assisting claimants with the administrative aspects of arbitration from filing to closing.

Funding the ECDR

We are proponents of free market arbitration. Arbitrators and the ECDR are skilled professionals providing a service to token-holders and should be compensated for those services. But, to compensate them by any other means than through free market forces would create market inefficiencies. Similar to Block Producers, who had to invest in themselves with no guarantee of return, so should ECDR and similar organizations. We suggest they fund themselves by:

Charging a nominal or small percentage fee on each claim processed

Charging a member fee to arbitrators who can be found by claimants through their database.

Example Fee Schedule: 1, 2

There are 3,301,220.36 tokens unclaimed on EOS. Of these unclaimed tokens, the total tokens which are contained in accounts that hold at least 12.5 EOS (or roughly $100 USD at current market prices) are 3,258,677.90. Each unregistered account balance will require a valid arbitrators ruling to make the necessary adjustments on-chain to allocate ownership. A 2% total fee of every claim (1% to arbitrator and 1% to ECDR) would net over $520,000 at current prices. While this is over 10,000 accounts, a process can be set up to scale proof of ownership as evidenced by the work of EOS911. Source

While the fee schedule examples we have provided may seem like “only the rich can afford justice” they are still only examples. For those individuals who wish to become an arbitrator on EOS but lack the necessary experience, presiding over claims of low amounts would be valuable experience. Another example, entire arbitration associations can be formed around the specific ethos serving small claims.

Proposal for Referendum: {{ regarbitrator }} contract

We believe that much of the controversy is indirectly due to the ethical duties of an arbitrator remaining largely undefined on-chain. We propose that, similar to the {{ regproducer }} agreement for Block Producers, we ratify a {{ regarbitrator }} agreement for similar purposes. Rather than attempt to create a set of ethical considerations for arbitrators from scratch, some of the language we propose is time-tested language from the American Bar Association Code of Ethics for Arbitrators in Commercial Disputes, a robust set of legal standards. We recognize that this a global network, not an American one. We hope that the language used here is judged on its objective merit.

In place of {{ regarbitrator }} would be the Arbitrators known EOS account name.

The intent of the {{ regarbitrator }} action is to register an account as a valid candidate for arbitrating the resolution of disputes. I, {{arbitrator}}, hereby nominate myself for consideration as a valid arbitrator for dispute resolution services deriving from on-chain disputes. If {{arbitrator}} is selected to provide dispute resolution services by consenting parties, I will sign all messages with {{arbitrator key}} and I hereby attest that I will keep this key secret and secure. If {{arbitrator}} is unable to perform obligations under this contract I will resign my position by resubmitting this contract with the null arbitrator key. I, {{arbitrator}} hereby agree to only use {{arbitrator_key}} to sign messages if accompanied by the cryptographic hash of the set of rules for dispute resolution used to resolve the dispute. I, {{arbitrator}} agree to maintain an up to date JSON file at a domain I own containing the following criteria which can be accessed by any EOS member;

(1) Location

(2) Fee Schedule

(3) Area(s) of Expertise

(4) Language(s)

(5) EOS Account Name I, {{arbitrator}} agree that I can serve impartially;

(1) that I can serve independently from the parties, potential witnesses,

and the other arbitrators;

(2) that I am competent to serve; and

(3) that I can be available to commence the arbitration in accordance with

the requirements of the proceeding and thereafter to devote the time and

attention to its completion that the parties are reasonably entitled to expect. I {{ arbitrator }} will avoid entering into any business, professional, or personal relationship, or acquire any financial or personal interest, which is likely to affect impartiality or which might reasonably create the appearance of partiality. For a reasonable period of time after the decision of a case, I {{ arbitrator }} will avoid entering into any such relationship, or acquire any such interest, in circumstances which might reasonably create the appearance that they had been influenced in the arbitration by the anticipation or expectation of the relationship or interest. I, {{ arbitrator }} should conduct myself in a way that is fair to all parties and should not be swayed by outside pressure, public clamor, and fear of criticism or self-interest. They should avoid conduct and statements that give the appearance of partiality toward or against any party. {{ arbitrator }} authority is derived from the EOS Constitution. I should neither exceed that authority nor do less than is required to exercise that authority completely. Where the agreement of the parties sets forth procedures of a specific on-chain forum to be followed in conducting the arbitration or refers to rules to be followed, it is the obligation of the arbitrator to comply with such procedures or rules so long as they do not conflict with the ratified EOS constitution. An arbitrator has no ethical obligation to comply with any agreement, procedures or rules that are unlawful or that, in the arbitrator’s judgment, would be inconsistent with the EOS Constitution. I, {{ arbitrator }} will conduct the arbitration process so as to advance the fair and efficient resolution of the matters submitted for decision. I will make all reasonable efforts to prevent delaying tactics, harassment of parties or other participants, or other abuse or disruption of the arbitration process. The ethical obligations of {{ arbitrator }} begin upon acceptance of an agreement to arbitrate a dispute and continue throughout all stages of the proceeding. In addition, as set forth in this contract, certain ethical obligations begin as soon as a person is requested to serve as an arbitrator and certain ethical obligations continue after the decision in the proceeding has been given to the parties. Once I, {{ arbitrator }} have accepted an agreement to arbitrate a dispute, I will not withdraw or abandon the position unless compelled to do so by unanticipated circumstances that would render it impossible or impracticable to continue. For where I am to be compensated for my services, I may withdraw if the parties fail or refuse to provide for payment of the compensation as agreed. If I, {{ arbitrator }} withdraw prior to the completion of the arbitration, whether upon my initiative or upon the request of one or more of the parties, I should take reasonable steps to protect the interests of the parties in the arbitration, including return of evidentiary materials and protection of confidentiality.

Conclusion

These are formative times and the world is watching as we forge the tools of EOS governance. The very real and emergency situations that we’ve been trying to deal with as a community will not slow down. We need these tools, and quickly so that we can apply governance at scale. We need a clearly defined arbitration association, a referendum contract and process, a set of voted on and approved constitutional articles, a method of overseeing worker-proposals and their execution, and more. Amazing technology is converging with a community committed to protecting life, liberty, and property. The future is very bright for EOS.