Lending — Dispute Pathway

Status: v0.1 draft. Slots lending disputes into the Dispute Settlement Centre architecture defined by Charter v4.5 Amendment 03. Counsel posture confirmed by Drew 2026-06-05; per-jurisdiction counsel review continues as a parallel workstream, not a build gate; the real-world claims threshold and the named court are jurisdiction-specific.

Where this sits in the Custody Framework

This document operates under Category B of the Custody Framework Charter — the escrow-only category that governs lending pool capital, loan accounts, collateral escrow, and the Circle Protection Reserve. Member vote does not apply to Category B custody; the rule is constitutional. Accounts are opened in the name of the Members' own co-operative legal form, with a multi-signature mandate held by the Lending Committee.

Category A — regular cycle contributions in single-jurisdiction Circles, which may be Member-to-member or escrow-held by Member vote — is outside this surface. Category C — Circles that cross a jurisdictional boundary — adds the escrow-only rule to all funds in those Circles; this surface inherits Category C when the Circle is cross-border.

What disputes this pathway covers

This pathway covers disputes about lending that occur on Circlworld:

Loan installments marked late when the borrower disputes the date or amount.
Balance discrepancies.
Collateral release disputes (the loan was repaid; the release is not happening).
Guarantor call disputes (the call is improper or the amount is wrong).
Default declarations the borrower contests.
Pool stake accounting disputes (the pool contributor's locked / free balance does not match expectations).
Returns calculation disputes.
Withdrawal-request handling.
Disclosure-form accuracy disputes (the unsecured / secured split was wrong; the affordability cap was wrong; the formula inputs were wrong).

Disputes not covered by this pathway:

Tax matters → revenue authority, not the platform.
The regulated lending entity's insolvency → resolution authority of the entity's jurisdiction.
Allegations of criminal conduct → law enforcement of the entity's jurisdiction.
Disputes between Circlworld and a regulator → not a member-facing pathway.

The four stages

Stage 1 — Conciliation Office (free)

The first stop. The Conciliation Office is an AI-assisted (with the Member's affirmative request only — per inviolable principle 3) and human-staffed surface that:

Helps the disputant articulate the dispute clearly.
Pulls the loan record, the disclosure form, and the relevant audit trail entries.
Identifies the counterparty (the circle's / federation's lending pool as lender, pool contributor, guarantor) and routes the dispute to them.
Offers a structured response window for the counterparty.
Records the outcome.

Most disputes resolve here. Free for both sides. Outcomes:

Resolved — the parties agree on a fix; recorded; closed.
Escalate to Stage 2 — no agreement; either side may escalate.

Time to Stage 1 outcome: target 14 days from intake.

Stage 2 — Mediation Room (cost-shared)

A structured mediation, facilitated by a Member or external mediator from the DSC's mediator panel. The mediator does not decide; the parties decide. The mediator helps the parties find a settlement.

Cost is shared 50/50 between the disputant and the counterparty, with a fee waiver for disputants demonstrating financial hardship. The fee structure for the mediator panel is documented in the DSC charter.

Outcomes:

Settled — both parties sign a settlement; recorded; closed.
Escalate to Stage 3 — no settlement; either side may escalate.

Time to Stage 2 outcome: target 30 days from Stage 1 escalation.

Stage 3 — Decision Room (cost-shared, binding within the platform)

A binding decision by a Member-elected Decision Panel or, for matters above a complexity threshold, an external arbitrator drawn from the DSC's arbitrator panel.

The decision is binding within the platform — the lender (the circle's / federation's lending pool in its own co-operative form), the pool contributors, and the borrower respect the decision for matters covered by the Platform Indemnification. The decision does not bind a regulator or a court.

Cost is shared 50/50 with a hardship waiver. The Decision Panel's procedure is documented in the DSC charter.

Outcomes:

Decided — the panel issues a written decision; the parties implement it.
Escalated to court — only if the disputed amount exceeds the platform's small-claims threshold for the jurisdiction (see §4 below) or if the dispute concerns a matter the panel does not have jurisdiction over (insolvency, criminal conduct, etc.).

Time to Stage 3 outcome: target 60 days from Stage 2 escalation.

Stage 4 — Real-world claim (outside the platform)

Where the matter is not resolvable within Stages 1–3, it proceeds in the courts of the jurisdiction in which the circle's / federation's own co-operative form is registered. The Member Borrowing Agreement, Member Pool Contributor Agreement, and Guarantor Terms select that forum. The platform does not adjudicate Stage 4 matters.

1. Eligibility for Stages 1–3

Any lending dispute may begin at Stage 1. The Conciliation Office routes appropriately.

Stages 2 and 3 are accessible only after the prior stage has been exhausted.

The disputant must be:

A Member of Circlworld in good standing for the loan's pool, OR
A non-Member guarantor / pool contributor where the guarantee or pool contribution was made through the platform.

2. Time limits

Disputes must be raised within:

Three months of the disputed event for installment / balance / late-payment matters.
Six months of the disputed event for default declarations or collateral release matters.
Twelve months of the disputed event for guarantor call disputes.

Disputes raised outside the time limit may be considered at the Conciliation Office's discretion where the disputant shows good cause (illness, absence, lack of notice).

3. Evidence and audit trail

The platform's audit trail is the canonical record. The disputant, the counterparty, the Conciliation Office, the Mediation Room facilitator, and the Decision Panel all have access to the loan record, the disclosure form, the security postings, the repayment history, and any prior correspondence on the platform.

The disputant and the counterparty may submit additional evidence at any stage. Evidence is logged on the dispute case file.

4. The small-claims escalation threshold (jurisdiction-specific)

The threshold above which a dispute may escalate to court rather than Stage 3 is jurisdiction-specific:

United Kingdom: small-claims threshold £10,000 (Civil Procedure Rules Part 27).
Jamaica: Resident Magistrate's Court threshold J$1,000,000.
Other jurisdictions: as documented in the Jurisdiction Disclosures.

Below the threshold, the parties must complete Stages 1–3 before going to court. Above the threshold, parties may escalate after Stage 1 or Stage 2 with the agreement of the disputant.

5. Hardship fee waiver

The cost share at Stages 2 and 3 is waived for a party demonstrating financial hardship. The waiver criteria are documented in the DSC charter and include receipt of means-tested benefits, recent default on a different loan, and active engagement with the Care Concierge.

The waived share is absorbed by the platform from the dispute-pathway operations budget.

6. Confidentiality

Stages 1–3 are confidential between the parties, the facilitator, and the Decision Panel. The dispute outcome is recorded on the loan file in a redacted form (the fact of dispute, the stage of resolution, the headline outcome) but the substantive content is not surfaced to other Members.

Stage 4 is governed by the public-court rules of the jurisdiction.

7. Pulse and visibility

The Pulse system never surfaces dispute substance. The fact that a loan is "in dispute" may appear on the loan's status pill (visible to the borrower, the pool contributors, the guarantors), but the content does not.

8. The platform's role

Circlworld:

Operates the Conciliation Office, the Mediation Room, and the Decision Room.
Maintains the mediator and arbitrator panels.
Records the audit trail.
Routes claims to the appropriate counterparty.
Does not adjudicate as Lender or Pool Contributor. The platform is neutral within the pathway; the parties make their case to the facilitator / panel.

You agree to use the pathway in good faith. You agree not to use it as a tactic to delay legitimate enforcement.

Reminder: v0.1 draft. Counsel review per jurisdiction will confirm the small-claims threshold, the named court, and the binding-arbitration clauses where applicable.