Editing Arbitration DAO (section)

=== Domain specific arbREP ===
Jurisdiction is a complex issue. There are many different arbDAOs, one for each culture in the DAO ecosystem. Different DAOs have different values and different standards for resolving disputes. This requires different expertises in arbitration, requiring multiple different knowledge bases for each jurisdiction. Each DAO is responsible for deciding which arbDAO to use, and for monitoring that arbDAO's function.

The fact that arbitrating a dispute is a separate skill from the primary work a typical DAO performs, means an arbDAO will typically have a [[Reputation#6. Limited Domain|separate REP token]], called arbREP. Therefore an arbDAO can be seen as a technically separate DAO with which the primary DAO negotiates in order to secure their work. This negotiation concerns the percentage given by each WSC to arbDAO. The result of the negotiation will depend on the type of work and the demand it has for arbitration as well as the supply of arbiters.

Two natural approaches to paying for the work of arbitrating disputes arise: paying for arbitration at the moment the trigger is pulled, or paying a general tax for every smart contract that includes the trigger. Both approaches open opportunities for [[wikipedia:Abuse_of_process|abuse of process]]. We generally favor the latter approach of a general tax from every contract, since it distributes the cost to the entire DAO. This encourages parties to participate in arbitration whenever there is a genuine dispute. This can lead to abuse of process of [[wikipedia:Frivolous_litigation|frivolous litigation]]. However this can be addressed with sanctioning. If instead, however, a large fee is associated with pulling the trigger, this would inhibit the weaker party's choice to seek resolution. This is a threat to decentralization as it enables an [[wikipedia:Economies_of_scale|economy of scale]]. It also encourages the use of the threat of [[wikipedia:Malicious_prosecutio|malicious prosecution]] or [[wikipedia:Vexatious_litigation|vexatious litigation]] by either party, encouraging competition and destabilizing the harmony of the DAO.