The Law Commission of England and Wales has started a government-commissioned review that "aims to provide clarity on how private international law rules can apply to emerging technology, such as digital assets and electronic trade documents."  This is part of the Law Commission's other projects on emerging technologies - including digital assets, smart contracts, electronic trade documents and decentralised autonomous organisations.

What's the issue?

The Law Commission says:

In many cases involving emerging technology, it is unclear which courts have the power or jurisdiction to hear the dispute, and which law should be applied. The problem is partly driven by digital location – because digital assets are intangible and often distributed, their geographical location can be hard to pinpoint, creating an array of legal issues.

One of those issues is expected to be which court has jurisdiction; should any proceedings be brought in the courts in England or should they be brought elsewhere?  And how would any dispute about which courts have jurisdiction be resolved?  Addressing these and other uncertainties about which law, which court are important to ensure that parties know what happens in the event of a dispute concerning digital assets.

The Law Commission's project is intended to provide clarity in these areas of uncertainty.  The uncertainties are clearly important and with potential for law reform; when choosing which projects to take on the Law Commission considers the area of law reform based on its 'importance – the extent to which the law is unsatisfactory, and the potential benefits from reform.'

The Law Commission’s review also aims to support the growth of 'new, innovative digital technologies in the UK'.  This is to help meet the Government’s stated goal of 'the UK becoming a global hub for digital assets, along with its wider ambitions for economic growth.'

What other emerging technologies has the Law Commission been working on?

The Law Commission's projects have addressed legal uncertainties and potential areas for law reform in a range of emerging technologies:

  • Digital assets review – digital assets include crypto-tokens and non-fungible tokens (“NFTs”). In July 2022, the Commission published a consultation, which is open until 4 November.
  • Smart contracts review (which we wrote about here) – smart contracts are legally binding contracts in which contractual terms are defined in and/or performed automatically by a computer program. This project was completed in November 2021.
  • Electronic trade documents review – in March 2022, the Commission published law reform recommendations to allow for the legal recognition of electronic versions of trade documents. The resultant Electronic Trade Documents Bill was introduced to Parliament on Wednesday 12 October.
  • Decentralised autonomous organisations (“DAOs”) review – DAOs are a new form of online, decentralised organisational structure. The Commission will publish a call for evidence later this year.

The review into Which Law, Which Court? will consider some of the issues in the Law Commission's other work but will run as a separate project.

What next?

The Law Commission will publish a consultation paper in the second half of 2023.  The Law Commission uses consultation papers to:

'set out in detail the existing law and its defects, giving the arguments for and against the possible solutions and inviting comments. The paper is circulated widely to all interested individuals and organisation, and to the media. We actively encourage feedback from any interested member of the public, including comments on problems we may not have dealt with or the likely effect of something we have proposed. You can respond to any of the Commission’s open consultations.'

If you would like to discuss the legal issues concerning emerging technologies which you are procuring, developing and deploying, and what regulation is on the horizon, please contact Tom Whittaker or Brian Wong.