Abstract
A new legal field is emerging around blockchain platforms and automated transactions. Understanding the relationships between law, legal enforcement, and these technological systems has become critical for scaling blockchain applications. Because ‘smart contracts’ do not themselves constitute agreements, the first necessary ‘legal’ development for transacting with these technologies involves linking computational transactions to natural language contracts. Various groups have accordingly begun building libraries of machine readable transaction modules that correspond to natural language contracting elements. In doing so, they are creating the building blocks for ever more complex transactions that will ultimately define the entire envelope of computational legal conduct in these environments, and likely standardise the field. However, also critical to emerging blockchain ‘legalities’, is the capacity for dispute resolution and legal enforcement. Beyond the performance of parties, or the quality of goods and services transacted, new mechanisms are also needed to address the performance of the computational transaction systems themselves. Such mechanisms are necessary to address the reality that smart contracts cannot be forced to perform actions beyond the parameters of their coding, even by a judicial order. Legal tools, both technological and institutional, are thus being developed to ‘soften’ the effects of self-executing transactions. In this article we treat these developments as law-making practices that are constitutive of an emerging legal field. Legal engineering exercises of this kind are not novel, and by drawing on historic examples from the common law and international arbitration, we gain insights into the competitive dynamics likely to be shaping legal engagements on the blockchain.
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Notes
For background on the idea that a contracting system combined with a system of dispute resolution can be jurisdictionally generative, see Teubner (1997a, b), including Teubner’s chapter ‘Global Bukowina’ at pp. 3–28. For a discussion of the jurisdictions of investor-state arbitration see, for example, Dolzer (2005, p. 953).
The role of standards in ‘private food law’ is a good example. See e.g. van der Meulen (2011). Van der Meulen describes how ecosystems of private enforcement orbit standardisation, with the food industry using certification marks, accreditation, auditing and arbitration as its enforcement arsenal.
In particular, the Legal Industry Working Group. ‘The Legal Industry Working Group is focused on two primary objectives. The first objective is educating the legal industry about the benefits of blockchain technology for their profession. The second is the development and standardization of core ethereum enabled technology. We define “legal industry” at this point to primarily mean large global law firms and corporate in-house counsel.’ See The Legal Industry Working Group (undated).
‘Your agreement is translated to Agrello’s smart agreement markup language and reflected in a public blockchain. In parallel, a legally binding document, written in natural language, is created and digitally signed.’ Agrello (2017).
See e.g. Dorsett and McVeigh (2012), where they describe the ‘technologies of jurisdiction’.
Maitland says ‘There was no great need for a perfectly stereotyped uniformity; the fact that a writ was penned, and that it passed the seal, was not a fact that altered rights or secured the plaintiff a remedy; it still had to run the gauntlet in court, and might ultimately be quashed as unprecedented and unlawful.’ … ‘Still, to return to my point, the granting of a newly worded writ was no judicial act; to grant one which could not be maintained was no act of justice; it might be a very proper experiment.’ Maitland (1889, p. 105).
Maitland and Montague (1998, p. 101), where the authors note: ‘He who knows what cases can be brought within each formula knows the law of England. The body of law has a skeleton and that skeleton is the system of writs.’
See e.g. Dawson (1969), for a description of the role of adjudication in generating jurisdiction.
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Goldenfein, J., Leiter, A. Legal Engineering on the Blockchain: ‘Smart Contracts’ as Legal Conduct. Law Critique 29, 141–149 (2018). https://doi.org/10.1007/s10978-018-9224-0
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DOI: https://doi.org/10.1007/s10978-018-9224-0