Arbitration System

TOS provides a protocol-level arbitration system for resolving disputes in escrow transactions. The system features multi-tier dispute resolution with independent arbiters, committees, and appeals.

Implementation Status

Feature	Status
Design Specification	Complete
Independent Arbiter Registration	Planned
Arbitration Committees	Planned
Dispute Filing & Resolution	Planned
Appeal Mechanism	Planned
Stake Management	Planned

The arbitration system is currently in the design phase. Implementation is planned for a future release.

Design Philosophy

The arbitration system is built on proven patterns from the KYC committee infrastructure:

Reuse Proven Patterns: M-of-N voting mechanism from KYC committees
Multi-tier Architecture: Independent Arbiters -> Committee -> DAO/Global
Stake-based Trust: Arbiters stake tokens as collateral
Reputation System: Track arbiter performance for quality assurance
Appeal Mechanism: Parties can appeal to higher tiers

Multi-Tier Architecture


                    Tier 3: DAO / Global Committee
                              |
                              | Appeals
                              |
                    Tier 2: Regional Arbitration Committees
                              |
                              | Appeals
                              |
                    Tier 1: Independent Arbiters
                              |
                              |
                    Escrow Dispute Filed

Tier 1: Independent Arbiters

Single arbiters designated at escrow creation:

Lower cost for small disputes
Faster resolution
Suitable for escrows < $10,000

Tier 2: Arbitration Committees

Regional committees with multiple arbiters:

M-of-N voting for decisions
Higher trust for larger disputes
Professional arbiters with domain expertise

Tier 3: DAO / Global Committee

Final appeal authority:

Handles appeals from Tier 2
Governance-level decisions
Arbiter slashing for misconduct

Expertise Domains

Arbiters can specialize in specific domains:

Domain	Description
General	Catch-all for unclassified disputes
SmartContract	Smart contract disputes
Payment	Payment and settlement disputes
DataService	API and data feed disputes
AIAgent	AI Agent service disputes
DigitalAsset	NFT and digital asset disputes
DeFi	DeFi protocol disputes
CrossChain	Cross-chain bridge disputes

Dispute Resolution Workflow

1. Dispute Filing

Either party in an escrow can file a dispute:


Escrow State: InProgress
      |
      | FileDispute (by payer or payee)
      v
Escrow State: Disputed
Dispute Status: Filed

2. Evidence Collection

Both parties submit evidence during the evidence period:


Dispute Status: Filed
      |
      | SubmitEvidence (both parties)
      v
Dispute Status: EvidenceCollection
      |
      | Evidence deadline reached
      v
Dispute Status: UnderReview

3. Arbitration Decision

The assigned arbiter(s) review and vote:


Dispute Status: UnderReview
      |
      | VoteDispute (by arbiter(s))
      v
Dispute Status: Voting
      |
      | Threshold reached
      v
Dispute Status: Decided
Decision: PayerWins / PayeeWins / Split

4. Execution

The decision is executed to release funds:


Dispute Status: Decided
      |
      | ExecuteDecision
      v
Dispute Status: Resolved
Funds: Released to winner(s)

Dispute States

State	Description
Filed	Dispute filed, awaiting arbiter assignment
EvidenceCollection	Evidence submission period
UnderReview	Under arbitration review
Voting	Voting in progress
Decided	Decision made, awaiting execution
Appealed	Appeal filed
AppealReview	Appeal under review
Resolved	Funds released
Cancelled	Parties settled

Dispute Outcomes

Outcome	Description
PayerWins	Full refund to payer
PayeeWins	Full release to payee
Split	Partial refund/release to both parties

Arbiter Registration

Requirements

Minimum stake (collateral)
Domain expertise declaration
Fee structure (basis points)
Min/max escrow values willing to handle

Arbiter Account Structure


pub struct ArbiterAccount {
    /// Arbiter's public key
    pub public_key: PublicKey,
    /// Display name
    pub name: String,
    /// Expertise domains
    pub expertise: Vec<ExpertiseDomain>,
    /// Status (Active, Suspended, Exiting, Removed)
    pub status: ArbiterStatus,
    /// Stake amount (locked tokens)
    pub stake_amount: u64,
    /// Fee in basis points (100 = 1%)
    pub fee_basis_points: u16,
    /// Reputation score (0-10000)
    pub reputation_score: u16,
    /// Statistics
    pub total_cases: u64,
    pub cases_completed: u64,
    pub cases_overturned: u64,
}

Stake Management

Arbiters stake tokens as collateral to ensure honest behavior. The stake lifecycle includes registration, updates, and withdrawal with a cooldown period.

Stake Lifecycle


RegisterArbiter          UpdateArbiter           RequestArbiterExit
(stake tokens)           (add stake)             (start cooldown)
     |                       |                        |
     v                       v                        v
  [Active] ───add stake──> [Active] ──deactivate─> [Exiting]
     |                                                |
     | SlashArbiter                     cooldown done |
     v                                   (14 days)    v
  [Slashed]                             WithdrawArbiterStake
  (partial)                              (return stake)
                                              |
                                              v
                                           [Removed]

Withdrawal Rules

Request Exit: Arbiter requests exit, status changes to Exiting
Cooldown Period: 14 days (~80,640 blocks)
Complete Cases: Must have no active cases
Withdraw: Stake returned to arbiter’s balance

The 14-day cooldown period prevents arbiters from exiting immediately after misconduct, allowing time for disputes to be filed.

Slashing

Arbiters can be slashed for misconduct:

Biased or incorrect decisions (overturned on appeal)
Failure to respond within deadlines
Collusion with parties
Repeated poor performance

Arbitration Committees

Committees are regional groups of arbiters for higher-value disputes:

Committee Structure


pub struct ArbitrationCommittee {
    /// Committee ID
    pub id: Hash,
    /// Regional jurisdiction
    pub region: KycRegion,
    /// Committee name
    pub name: String,
    /// Member arbiters
    pub members: Vec<ArbiterMember>,
    /// Governance threshold (M-of-N)
    pub threshold: u8,
    /// Arbitration threshold (for disputes)
    pub arbitration_threshold: u8,
    /// Expertise domains
    pub expertise_domains: Vec<ExpertiseDomain>,
    /// Base arbitration fee
    pub base_fee: u64,
    /// Minimum arbiter stake
    pub min_arbiter_stake: u64,
    /// Maximum dispute value
    pub max_dispute_value: u64,
}

Arbiter Roles in Committee

Role	Weight	Capabilities
Lead	3x	Assign cases, initiate governance
Senior	2x	Higher vote weight
Arbiter	1x	Standard voting
Observer	0x	No voting (trainee)

Appeal Process

Filing an Appeal

Either party can appeal a Tier 1 or Tier 2 decision:


pub struct AppealDisputePayload {
    /// Dispute ID to appeal
    pub dispute_id: Hash,
    /// Appeal reason hash
    pub reason_hash: Hash,
    /// Supporting evidence
    pub evidence_hash: Option<Hash>,
    /// Appeal fee (typically 2x base fee)
    pub appeal_fee: u64,
}

Appeal Handling

Appeal filed with fee (typically 2x base arbitration fee)
Parent committee/tier reviews the case
Original decision upheld OR overturned
If overturned, original arbiter may be penalized

Appeal fees are non-refundable unless the appeal succeeds and the original decision is overturned.

Transaction Types

TX ID	Name	Description
33	RegisterArbiter	Register as independent arbiter
34	UpdateArbiter	Update profile/stake
36	RegisterArbitrationCommittee	Create committee
37	UpdateArbitrationCommittee	Modify committee
38	FileDispute	File escrow dispute
39	SubmitEvidence	Submit evidence
40	VoteDispute	Cast arbitration vote
41	ExecuteDecision	Execute decision
42	AppealDispute	Appeal decision
43	VoteAppeal	Vote on appeal
44	SlashArbiter	Slash stake (governance)
45	RequestArbiterExit	Start exit cooldown
46	WithdrawArbiterStake	Withdraw after cooldown
47	CancelArbiterExit	Cancel exit request

Fee Structure

Operation	Fee
Dispute Filing	1% of escrow value (min $10)
Evidence Submission	Free
Arbiter Vote	Paid from dispute fee
Appeal (Tier 1 -> 2)	2x base fee
Appeal (Tier 2 -> 3)	3x base fee

Timeline Constants

Constant	Value	Description
Evidence Period	7 days	Time to submit evidence
Decision Deadline	14 days	Max time for arbiter decision
Appeal Window	7 days	Time to file appeal
Cooldown Period	14 days	Arbiter exit cooldown
Case Grace Period	30 days	Complete assigned cases

Integration with Escrow

The arbitration system integrates with the escrow transaction type:


pub struct EscrowPayload {
    /// Payee address
    pub payee: PublicKey,
    /// Amount in escrow
    pub amount: u64,
    /// Designated arbiter (Tier 1)
    pub arbiter: Option<PublicKey>,
    /// Or designated committee (Tier 2)
    pub committee_id: Option<Hash>,
    /// Deadline for completion
    pub deadline: u64,
    /// Description hash
    pub description_hash: Hash,
}

Reputation System

Arbiters build reputation through successful case resolution:

Metric	Impact
Cases completed	+10 points per case
Decision upheld on appeal	+50 points
Decision overturned	-100 points
Response time	+/- based on speed
Stake amount	Higher stake = more trust

Reputation affects:

Case assignment priority
Maximum escrow values handled
Fee earning potential