One thing people don't seem to understand - there's nothing about smart contracts that precludes human involvement (private arbitration). The difference is that you get to choose exactly when and where to bring that in.
How do you guard against a malicious party obtaining cryptographic proof they're a "court" and using it to overrule any contract that respects the court's judgements?
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It'd be the same mechanism as for verifying that any account can do a certain action. I don't see it as having anything unusual. Also, it would be in the narrow scope allowed by the creators of the contract, not just overruling things
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