Lawtech: The UK Jurisdiction Taskforce and Evolving Technology

bitcoin in book

The UK Jurisdiction Taskforce is one of six taskforces of the Law Society’s ‘LawTech Delivery Panel’, which includes industry experts and members of the government and judiciary. Its objective is to demonstrate that English law and the jurisdiction of England and Wales together provide a state-of-the-art foundation for the development of distributed ledger technology, smart contracts and associated technologies.


“Smart contracts will only finally take off when market participants and investors have confidence in them. Mainstream investors still need to be convinced that their legal rights can be protected when they trade in cryptoassets and enter into smart contracts.”

 Chancellor to the High Court, the Rt Hon Sir Geoffrey Vos, chair of the UKJT


Status of Cryptoassets and Smart Contracts in the UK

In 2019, the UKJT launched a public consultation on cryptoassets and smart contracts under English and subsequently published a legal statement to relieve legal uncertainty around evolving technology.

According to the statement, cryptoassets (such as cryptocurrencies Bitcoin, Ethereum, etc) are to be considered property and to be treated as property in law. Therefore, laws concerning the passing of property on death, bankruptcy and insolvency will apply to any crypto assets.  However, the statement also significantly outlines that cryptocurrency cannot be ‘possessed’ according to current laws, as cryptocurrency is not physical. As a result, cryptoassets do not constitute ‘goods’ under the Sale of Goods Act 1979 and cannot be the object of a bailment.

The UKJT statement also states that smart contracts are capable of satisfying the requirements for the formation of a valid contract under English law. Therefore, smart contracts can interpreted and enforced in Court using ordinary English legal principles. It is likely that signature requirements will be met by the use of private key encryption, although the statement shows that the UKJT do not believe that a smart contract would necessarily satisfy a requirement be ‘in writing’.

The statement was published in November 2019, and the principles contained therein have yet to be tested in English courts.


Dispute Resolution

The UKJT has proposed a set of Digital Dispute Resolution Rules for resolving disputes arising from new technologies such as blockchain and smart contracts, with consultation starting this week (22 February 2021).

A key objective of the draft rules is to allow those involved utilising smart contracts to take full advantage of the flexibility offered by UK arbitration, to tailor dispute resolution procedures to the distinctive features of evolving technologies, and to ensure that disputes will be resolved quickly, informally and in a cost-effective matter.

The proposed rules provide for:

  • Arbitral or expert dispute resolution in very short periods;
  • Arbitrators to implement decisions directly on-chain using a private key; and
  • Optional anonymity of the parties.

Proelium Law will be attending the public consultation, and it is hoped the final Digital Dispute Resolution Rules for use by commercial parties will be published by Spring 2021.

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