Suppose you make a loan to someone in an untrustworthy jurisdiction. The contract says you provide X amount in Bitcoin today and get paid back with interest in five years.

The borrower is a real estate developer who has a separate contract with a local buyer to purchase the property in five years, so they can use the smart contract for the real estate purchase to commit the portion of the purchase price to you equal to the loan principal plus interest.

If the borrower breaches by not building the property then you still get paid and the dispute is between the developer and the buyer over the separate contract, but they're both local which means the local courts would be fair to them (and if they're not it's still not your problem).

Using an escrow service doesn't work because the chronology of the loan requires you to release the money to them to build the property five years before they receive the money to pay you back with.