Preparing for Disputes

Contracts negotiated at machine speed can be breached at machine speed. A pre-configured dispute resolution path helps your organization resolve disputes without months of litigation.

Configuring a DRC in Dealroom is planned and not yet available. This guide describes how it will work; the settings below cannot be set today.

Why Dispute Readiness Matters

When your agent negotiates a contract that includes Gavel automated arbitration as the dispute resolution mechanism, you need to know what that means in practice, before a dispute arises, not after.

The Gavel Protocol

Gavel offers dispute resolution in 4 tiers, designed for agent-to-agent commerce: fast and electronic. No legal opinion has yet been obtained on whether Gavel awards are binding, and escrow is on testnet only. Each tier escalates in formality, cost, and time, giving parties the opportunity to resolve disputes at the lowest appropriate level.

Tier 1: Automated Negotiation

Up to 4 hours

Both parties' positions are submitted electronically. The system attempts to find a resolution using structured negotiation, similar to how Dealroom's compromise algorithm works, but applied to the dispute itself.

Tier 2: AI Mediation

Up to 3 days

An AI mediator analyzes both positions, the contract terms, and relevant precedent. It proposes a non-binding settlement. Parties can accept, reject, or counter-propose.

Tier 3: AI Arbitration

Up to 7 days

An AI arbitrator reviews all evidence and prepares a decision. Optional Neutral Counsel reviews the proceeding for procedural fairness. The hosted Gavel service does not issue awards today, and no legal opinion has yet been obtained on whether Gavel awards are binding.

Tier 4: Human Arbitration

Up to 14 days

A human arbitration panel reviews the case. This is the fallback for high-value or complex disputes where parties want human judgment. Neutral Counsel is mandatory.

The Dispute Resolution Clause (DRC)

A DRC is a machine-readable JSON object that defines how disputes under a contract will be resolved. When your agent selects Gavel arbitration in a Dealroom contract, these parameters govern the dispute process.

Annotated DRC

drc.json

{
  "@context": "https://protocol.gavel.legal/v1",
  "@type": "GavelDRC",
  "parties": [
    {
      "id": "did:web:your-agent.example.com",
      "type": "agent",
      "principal": "did:web:your-org.example.com"
    },
    {
      "id": "did:web:counterparty-agent.example.com",
      "type": "agent",
      "principal": "did:web:counterparty.example.com"
    }
  ],
  "disputeParameters": {
    "governingLaw": "US-CA",
    "seat": "virtual",
    "language": "en",
    "maxClaimValue": {
      "amount": 50000,
      "currency": "USDC"
    }
  },
  "resolutionTiers": [
    {
      "tier": 1,
      "method": "automated-negotiation",
      "timeLimit": "PT4H"
    },
    {
      "tier": 2,
      "method": "ai-mediation",
      "timeLimit": "P3D",
      "neutralCounsel": false
    },
    {
      "tier": 3,
      "method": "ai-arbitration",
      "timeLimit": "P7D",
      "neutralCounsel": true
    },
    {
      "tier": 4,
      "method": "human-arbitration",
      "timeLimit": "P14D",
      "neutralCounsel": true
    }
  ],
  "escrow": {
    "chain": "base",
    "token": "USDC",
    "stakePercentage": 5,
    "releaseConditions": {
      "mutualAgreement": true,
      "arbitralAward": true
    }
  },
  "precedentOpt": {
    "publishAnonymized": true,
    "queryPrecedent": true
  }
}

parties

Identifies each party: agents reference their human/org principal via the principal field

disputeParameters

Governing law, seat of arbitration, language, and maximum claim value in stablecoin

resolutionTiers

Which resolution tiers to use and their time limits. You can include 1-4 tiers

escrow

Blockchain escrow: chain (Base or Ethereum), token (USDC or DAI), percentage each party must stake

precedentOpt

Whether to publish anonymized awards and query prior decisions for similar cases

Configuration Decisions

Choose your DRC parameters based on your organization's risk profile and typical contract values.

How many tiers?

Micro-transactions ($100-$1,000): 2 tiers (automated + AI mediation). Standard ($1,000-$50,000): 3-4 tiers. Enterprise ($50,000+): all 4 tiers with Neutral Counsel.

Escrow percentage

The stake each party deposits. Higher stakes discourage frivolous disputes but require more liquidity. Typical range: 2-10% of the maximum claim value.

Chain selection

Base L2: lower gas fees, faster settlement, suitable for most disputes. Ethereum: higher security and decentralization, suitable for very high-value disputes.

Precedent opt-in

Publishing anonymized awards helps the ecosystem develop consistent standards. Querying precedent gives the AI arbitrator better context. Both are optional but recommended.

Pre-Built DRC Templates

Start with one of these templates and adjust to your needs.

Micro-Transactions

For x402 payments and small API transactions. Fast resolution, minimal escrow.

{
  "@context": "https://protocol.gavel.legal/v1",
  "@type": "GavelDRC",
  "disputeParameters": {
    "governingLaw": "US-CA",
    "seat": "virtual",
    "language": "en",
    "maxClaimValue": { "amount": 1000, "currency": "USDC" }
  },
  "resolutionTiers": [
    { "tier": 1, "method": "automated-negotiation", "timeLimit": "PT2H" },
    { "tier": 2, "method": "ai-mediation", "timeLimit": "P1D" }
  ],
  "escrow": {
    "chain": "base", "token": "USDC",
    "stakePercentage": 2,
    "releaseConditions": { "mutualAgreement": true, "arbitralAward": true }
  },
  "precedentOpt": { "publishAnonymized": true, "queryPrecedent": true }
}

Standard Agent Commerce

For typical A2A contract negotiations. Full 4-tier resolution with moderate escrow.

{
  "@context": "https://protocol.gavel.legal/v1",
  "@type": "GavelDRC",
  "parties": [
    {
      "id": "did:web:your-agent.example.com",
      "type": "agent",
      "principal": "did:web:your-org.example.com"
    },
    {
      "id": "did:web:counterparty-agent.example.com",
      "type": "agent",
      "principal": "did:web:counterparty.example.com"
    }
  ],
  "disputeParameters": {
    "governingLaw": "US-CA",
    "seat": "virtual",
    "language": "en",
    "maxClaimValue": {
      "amount": 50000,
      "currency": "USDC"
    }
  },
  "resolutionTiers": [
    {
      "tier": 1,
      "method": "automated-negotiation",
      "timeLimit": "PT4H"
    },
    {
      "tier": 2,
      "method": "ai-mediation",
      "timeLimit": "P3D",
      "neutralCounsel": false
    },
    {
      "tier": 3,
      "method": "ai-arbitration",
      "timeLimit": "P7D",
      "neutralCounsel": true
    },
    {
      "tier": 4,
      "method": "human-arbitration",
      "timeLimit": "P14D",
      "neutralCounsel": true
    }
  ],
  "escrow": {
    "chain": "base",
    "token": "USDC",
    "stakePercentage": 5,
    "releaseConditions": {
      "mutualAgreement": true,
      "arbitralAward": true
    }
  },
  "precedentOpt": {
    "publishAnonymized": true,
    "queryPrecedent": true
  }
}

Enterprise High-Value

For high-value contracts requiring maximum procedural safeguards.

{
  "@context": "https://protocol.gavel.legal/v1",
  "@type": "GavelDRC",
  "disputeParameters": {
    "governingLaw": "GB",
    "seat": "London",
    "language": "en",
    "maxClaimValue": { "amount": 500000, "currency": "USDC" }
  },
  "resolutionTiers": [
    { "tier": 1, "method": "automated-negotiation", "timeLimit": "PT8H" },
    { "tier": 2, "method": "ai-mediation", "timeLimit": "P5D", "neutralCounsel": true },
    { "tier": 3, "method": "ai-arbitration", "timeLimit": "P14D", "neutralCounsel": true },
    { "tier": 4, "method": "human-arbitration", "timeLimit": "P30D", "neutralCounsel": true }
  ],
  "escrow": {
    "chain": "ethereum", "token": "USDC",
    "stakePercentage": 10,
    "releaseConditions": { "mutualAgreement": true, "arbitralAward": true }
  },
  "precedentOpt": { "publishAnonymized": false, "queryPrecedent": true }
}

Connecting DRC to Dealroom

Planned and not yet available. When your agent negotiates a contract on Dealroom and selects the Gavel Automated Arbitration option in the dispute-resolution clause, the DRC parameters you configure will define the resolution procedure, and the DRC will be embedded in the agreed contract.

Escalating a Dispute

Escalation to Gavel through the API is planned and not yet available. When it ships, your agent (or your team) will escalate a breached contract with:

POST /api/v1/agent/deals/:id/dispute

Scope: disputes:create

Today the endpoint answers 501 gavel_escalation_planned and stores nothing. Only FAILED or AGREED deals will be eligible.

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