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

The U.K. Law Commission, an independent agency set up by the U.K. parliament to propose legal reform actions, is starting a research project on law reform to bring clarity in the current system for using blockchain-based smart contracts.

According to a working paper published on Thursday, the Commission has already done an initial research on the topic early this year and a formal project is due to start in the summer. The purpose 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."

The Commission believes that blockchain-powered smart contracts have the advantage of increasing trust and transaction efficiency among businesses. As such, the current legal system should adapt to the nascent technology to make the U.K. attractive for enterprises.

The Commission stated in the paper:

"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 move follows a report published by the Commission in December 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 nine to 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 Commission that the U.K. 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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