Editing Arbitration DAO (section)

== Overview ==
The basic type of judicial governance is arbitration. Arbitration allows a [[DAO]] to review the automated outcome of a work smart contract (WSC). The "[https://ethereumclassic.org/why-classic/code-is-law code is law]" assumption of [[wikipedia:Web3|Web3]] makes such review difficult in a [[DAO#Primary DAOs|primary DAO]]. Nevertheless, the code is law standard is necessary when a DAO allows open access to pseudonymous members.

However, rigid contracts following code is law are not good for business. Business contracts demand all parties perform in a predictable manner under assumptions about the future business environment.  But no one can predict the future. Business must be able to continue when an eventuality occurs that was not anticipated in the smart contract. Parties to the smart contract must be able to come to some consensus on what is fair in those circumstances. The existence of a meaningful reputation system motivates the parties to behave as well as possible. Nevertheless, sometimes, even if both parties are behaving with the best intentions of honoring the spirit of good business, irreconcilable differences in perspective about what is fair are inevitable. In such cases a third party is necessary to adjudicate and resolve the dispute.