The latest annual report from The Law Commission (an independent body responsible for reviewing existing laws and proposing legal reforms in England and Wales) included the announcement of a new effort to review the way in which the current English legal framework applies to smart contracts.
This is a valuable initiative. Of course, we have not yet reached the stage where final conclusions about the legal aspects of smart contracts’ are necessary (or even attainable). However, there is certainly a need to seriously consider and discuss the issue. The question before us is whether an analogous project should be launched in Poland – perhaps through a codification commission for smart contracts?
Smart contracts should not be considered solely within the context of contract law or even civil law. After all, many of their applications will have to be analysed in reference to public law, others will be difficult to place in any specific legal area and still others will effectively replace traditional legal institutions.
Further, current applications of smart contracts remain rather limited. Today’s smart contracts are frequently unable to function independently in complex situations which involve interactions with the physical world (not just the digital one) or require the consideration of numerous entities’ interests. As a result, there can be no doubt that smart contracts will interact with the legal system in countless ways. This means that the study of this subject has become a necessity.
Such efforts are already underway. In Poland, the Coalition for Polish Innovation has been conducting smart contract writing workshops and informational sessions for computer scientists, business executives and lawyers. The subject is also gaining interest among legal academics and researchers.
I would also recommend that these efforts include direct involvement of the public sector– which is, after all, responsible for creating and applying laws. That’s why questions regarding the future of the legal system as a whole and of smart contracts’ role in particular are of vital importance to the state. This is where the pragmatic British approach is to be commended. By studying the challenges surrounding smart contracts, the law commission wants to ensure that the English legal system plays a leading role in business matters. There can be no doubt that legal systems which will be able to effectively provide answers to key questions regarding smart contracts will open themselves to future innovations.
Such involvement might not require the establishment of a dedicated codification commission. The first steps have already been taken: the issue will be addressed by the Polish Financial Supervision Authority’s (KNF) blockchain working group. But there is still a need for more such efforts.