UK Begins Research on Law Reform for Use of Blockchain Smart Contracts

The U.K. Law Commission has launched research investigating reforms that would bring legal clarity to the use of blockchain-based smart contracts.

Jul 20, 2018 at 6:00 a.m. UTC
Updated Sep 13, 2021 at 8:11 a.m. UTC

The U.K. Law Commission has launched a research project investigating reforms that would bring legal clarity to the use of blockchain-based smart contracts.

According to a working paper published on Thursday, the independent agency has already this year carried out initial research on the topic and a more formal project is due to start in the summer. The agency said the work is to "ensure that the law is sufficiently certain and flexible to apply in a global, digital context and to highlight any topics which lack clarity or certainty."

"There is a serious intention to take forward reform in this area," it added.

The Law Commission believes that smart contracts have the advantage of increasing "trust and certainty" and boost transaction efficiency among businesses. As such, the current legal system should adapt to the nascent technology to make the U.K. attractive for enterprises, it argued.

The working paper states:

"It is important to ensure that English courts and law remain a competitive choice for business. Therefore, there is a compelling case for a Law Commission scoping study to review the current English legal framework as it applies to smart contracts."

The effort follows a report published by the commission in December 2017 which outlined 14 areas – including the use of smart contracts – that are set for law reform after a year-long public consultation process.

The commission said at the time that the smart contract research process could take 9–18 months to complete, adding:

"There are questions about how this feature (smart contract) would interact with contract law concepts such as implied terms or contracts which are held to have been void from the outset. There are also questions about data protection law."

Last year, John Thomas, the top judge for England and Wales also made notable remarks at a lecture hosted by the Law Commission, saying that British law may need to be updated to account for blockchain-based smart contracts.

U.K. flag and court image via Shutterstock

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