LEGAL AUTHORITY AND ENFORCEABILITY OF SMART CONTRACTS IN BLOCKCHAIN

During the roundtable discussion, there was debate about the relation between Blockchain and the legal system. At the moment, many questions around the legal enforceability of anything that happens on the Blockchain remains uncertain. As Dr Kelvin Low of Singapore Management University, pointed out “Technologists do not understand what ledgers represent legally. Ledgers are not authoritative”. More specifically, Dr Low took objection to various Blockchain startups that aim to digitise assets. For example, DigixGlobal is digitising gold in Singapore. Other companies like Everledger and Provenance are looking into other assets such as diamonds and apparel. Dr Low also points out that “To digitise assets that exist in the old world such as diamonds, presents some issues. Uninformed third parties may be disadvantaged”. These legal questions are pertinent and need to be resolved. Depending on the institutional system, they will either have to be resolved before an issue emerges by introducing new laws, extending the application field of the law, or they will be resolved through case A more aspirational idea was proposed by Otonomos Blockchain developer Mr Thanabalan who argued that we, as a society, need to radically rethink the way we design systems, away from using a centralised approach. He suggested that there might be alternatives to “monetary policy which is dependent on the central bank or a legal system which is dependent on the courts”. In theory, decentralised courtrooms could be woven into smart contracts in such a way that arbitration of non-compliance or force majeure becomes a full-time job, with the potential advantage that the different parties to the contract could agree on the specific court (and virtual jurisdiction) in which they would want to be heard. Such a court would need to become holder of the assets and its decisions would need to be respected, if not the problem of enforcement would re-emerge.