diff --git a/backend/src/dispute-flow/README.md b/backend/src/dispute-flow/README.md
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+# Dispute Flow Implementation
+
+This directory contains the implementation of the dispute flow according to the specification in `docs/dispute-flow.md`.
+
+## Structure
+
+- `dispute-flow.service.ts` - Main service logic
+- `dispute-flow.routes.ts` - API routes
+- `dispute-flow.model.ts` - Database models
+- `dispute-flow.tests.ts` - Unit tests
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diff --git a/backend/src/dispute-flow/dispute-flow.model.ts b/backend/src/dispute-flow/dispute-flow.model.ts
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+import { Knex } from 'knex';
+
+export interface Dispute {
+  id: number;
+  deal_id: number;
+  opened_by_user_id: number;
+  status: 'open' | 'evidence' | 'mediation' | 'resolved' | 'cancelled';
+  reason_code: string;
+  summary: string;
+  requested_outcome: string;
+  final_decision?: string;
+  final_reason?: string;
+  decided_by_user_id?: number;
+  decided_at?: Date;
+  created_at: Date;
+  updated_at: Date;
+}
+
+export interface DisputeEvent {
+  id: number;
+  dispute_id: number;
+  event_type: string;
+  actor_user_id: number;
+  payload_json: any;
+  created_at: Date;
+}
+
+export async function createDisputeTables(knex: Knex): Promise<void> {
+  const disputeExists = await knex.schema.hasTable('disputes');
+  if (!disputeExists) {
+    await knex.schema.createTable('disputes', (table) => {
+      table.increments('id').primary();
+      table.integer('deal_id').notNullable().references('deals.id');
+      table.integer('opened_by_user_id').notNullable().references('users.id');
+      table.enu('status', ['open', 'evidence', 'mediation', 'resolved', 'cancelled']).notNullable().defaultTo('open');
+      table.string('reason_code', 64).notNullable();
+      table.text('summary').notNullable();
+      table.string('requested_outcome', 64).notNullable();
+      table.string('final_decision', 64);
+      table.text('final_reason');
+      table.integer('decided_by_user_id').references('users.id');
+      table.timestamp('decided_at');
+      table.timestamp('created_at').defaultTo(knex.fn.now());
+      table.timestamp('updated_at').defaultTo(knex.fn.now());
+    });
+  }
+
+  const disputeEventExists = await knex.schema.hasTable('dispute_events');
+  if (!disputeEventExists) {
+    await knex.schema.createTable('dispute_events', (table) => {
+      table.increments('id').primary();
+      table.integer('dispute_id').notNullable().references('disputes.id');
+      table.string('event_type', 64).notNullable();
+      table.integer('actor_user_id').notNullable().references('users.id');
+      table.json('payload_json').notNullable();
+      table.timestamp('created_at').defaultTo(knex.fn.now());
+    });
+  }
+}
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diff --git a/backend/src/dispute-flow/dispute-flow.service.ts b/backend/src/dispute-flow/dispute-flow.service.ts
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+++ b/backend/src/dispute-flow/dispute-flow.service.ts
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+import { Knex } from 'knex';
+import { Dispute, DisputeEvent, createDisputeTables } from './dispute-flow.model';
+
+export class DisputeFlowService {
+  constructor(private knex: Knex) {}
+
+  async init(): Promise<void> {
+    await createDisputeTables(this.knex);
+  }
+
+  async createDispute(disputeData: Omit<Dispute, 'id' | 'created_at' | 'updated_at'>): Promise<Dispute> {
+    const [dispute] = await this.knex('disputes').insert(disputeData).returning('*');
+    
+    // Log the creation event
+    await this.logDisputeEvent(dispute.id, 'dispute_created', disputeData.opened_by_user_id, {
+      ...disputeData,
+      disputeId: dispute.id
+    });
+
+    return dispute;
+  }
+
+  async getDispute(id: number): Promise<Dispute | null> {
+    return await this.knex('disputes').where({ id }).first();
+  }
+
+  async updateDisputeStatus(disputeId: number, status: Dispute['status'], updatedByUserId: number): Promise<void> {
+    const dispute = await this.getDispute(disputeId);
+    if (!dispute) {
+      throw new Error(`Dispute with id ${disputeId} not found`);
+    }
+
+    await this.knex('disputes')
+      .where({ id: disputeId })
+      .update({ status, updated_at: this.knex.fn.now() });
+
+    // Log the status change event
+    await this.logDisputeEvent(disputeId, 'status_changed', updatedByUserId, {
+      oldStatus: dispute.status,
+      newStatus: status
+    });
+  }
+
+  async addEvidence(disputeId: number, evidenceData: any, uploadedByUserId: number): Promise<void> {
+    const dispute = await this.getDispute(disputeId);
+    if (!dispute) {
+      throw new Error(`Dispute with id ${disputeId} not found`);
+    }
+
+    // Log the evidence upload event
+    await this.logDisputeEvent(disputeId, 'evidence_added', uploadedByUserId, {
+      ...evidenceData,
+      disputeId
+    });
+  }
+
+  async resolveDispute(disputeId: number, decision: string, reason: string, resolvedByUserId: number): Promise<void> {
+    const dispute = await this.getDispute(disputeId);
+    if (!dispute) {
+      throw new Error(`Dispute with id ${disputeId} not found`);
+    }
+
+    await this.knex('disputes')
+      .where({ id: disputeId })
+      .update({
+        status: 'resolved',
+        final_decision: decision,
+        final_reason: reason,
+        decided_by_user_id: resolvedByUserId,
+        decided_at: this.knex.fn.now(),
+        updated_at: this.knex.fn.now()
+      });
+
+    // Log the resolution event
+    await this.logDisputeEvent(disputeId, 'dispute_resolved', resolvedByUserId, {
+      decision,
+      reason,
+      disputeId
+    });
+  }
+
+  async logDisputeEvent(disputeId: number, eventType: string, actorUserId: number, payload: any): Promise<void> {
+    await this.knex('dispute_events').insert({
+      dispute_id: disputeId,
+      event_type: eventType,
+      actor_user_id: actorUserId,
+      payload_json: payload,
+      created_at: this.knex.fn.now()
+    });
+  }
+
+  async getDisputeEvents(disputeId: number): Promise<DisputeEvent[]> {
+    return await this.knex('dispute_events').where({ dispute_id: disputeId }).orderBy('created_at', 'asc');
+  }
+}
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