Navigating and managing disputes in the metaverse
While the metaverse provides significant opportunities for businesses, those opportunities give rise to unique challenges when disputes arise. Immersive shared environments where people can connect regardless of physical location are not new, given the existence and popularity of multiplayer online gaming (MOG) for two decades. However, while these MOG environments have introduced real world, in game, commercial elements they remain self-contained worlds governed by the terms of the license under which players agree to participate. The metaverse will not be so easily governed; the opportunities presented by it requires a significant degree of autonomy for participants so rules governing conduct will be consequently disaggregated. This gives rise to a number of issues as to how disputes between individual or corporate participants and/or against platform providers will be resolved.
Whilst not exhaustive, the following are likely to give rise to unique issues in the metaverse to be considered:
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Navigating and managing disputes in the metaverse
While the metaverse provides significant opportunities for businesses, those opportunities give rise to unique challenges when disputes arise. Immersive shared environments where people can connect regardless of physical location are not new, given the existence and popularity of multiplayer online gaming (MOG) for two decades. However, while these MOG environments have introduced real world, in game, commercial elements they remain self-contained worlds governed by the terms of the license under which players agree to participate. The metaverse will not be so easily governed; the opportunities presented by it requires a significant degree of autonomy for participants so rules governing conduct will be consequently disaggregated. This gives rise to a number of issues as to how disputes between individual or corporate participants and/or against platform providers will be resolved.
Whilst not exhaustive, the following are likely to give rise to unique issues in the metaverse to be considered:
Key legal risks / issues
- operation of jurisdiction, applicable law and dispute resolution mechanisms needs to be carefully considered
- opportunities for fraud, particularly through use of deepfake techniques are enhanced
- the impact of outages and other service disruption, such as cyber/data security breaches, and how that is resolved and remedied
- party to party disputes are likely to be difficult to resolve without verification and enforceable contracts in the ‘real world’
- the likely increased use of AI to supplement service delivery will increase risk of liability for ‘negligence’ in providing services
- inherently transient identities, and distributed and liquid asset bases of metaverse participants makes enforcement particularly challenging
Questions to consider
- before engaging with counterparties on the metaverse, are you clear you know who you are dealing with (what jurisdiction are they based, who ‘owns’ them, what assets they may have and where, etc.)?
- do you have a contract in place with the counterparty that makes it clear how a dispute, if it was to arise, will be resolved? Consider whether your existing contracts are sufficiently broad to cover a ‘virtual’ dispute in the metaverse?
- is the dispute resolution mechanism set up in the relevant metaverse and/or the smart contract adequate, how will it work in practice and be enforced if the worst happens? Is recourse to national courts, arbitration or other mechanism most suitable for the goods and services being supplied and the issues that may arise?
- what law will govern the relationship?
- how will service disruption be managed and resolved, and when the relationship ends for whatever reason, how will the exit be managed and work in practice given the mix of physical and virtual goods and services provided?
Contact
James Hyde
Partner, International Head of TMT Disputes jameshyde@eversheds-sutherland.com View James Hyde's full contact details
Phillip Richardson
Click on the topics of interest available below to explore the legal issues arising in the metaverse. We will be releasing further reading on a variety of topics periodically.
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