Smart contracts have the same legal status and enforceability as regular contracts in the UK, an influential legal body in the country has said. In a 46-page legal statement, the UK Jurisdiction Taskforce of the LawTech Delivery Panel noted that smart contracts satisfy the requirements of contracts in English law and are therefore enforceable by courts, marking a potential tipping point in adoption of smart contract technologies in the country.
“Watershed for English law”
The surprise advancement in the recognition of smart contracts within UK law follows a six-month consultation, and ensures that there are no legal roadblocks in the nation’s uptake of smart contract technology. The move will be widely welcomed by those working in the field as providing legal certainty to the fast-growing sector, and is also likely to boost England and Wales as the jurisdiction of choice for agreements based on encryption technologies. Sir Geoffrey Vos, chancellor of the High Court, was full of praise for the landmark ruling and the fact that the UK has done things the right way round, in stark contrast to other nations:
This is a watershed for English law and the UK’s jurisdictions. No other jurisdiction has attempted anything like it. Other jurisdictions have addressed the problem differently, starting with regulation and remedies, and worked backwards.
In a nod to the regulatory issues currently being played out in America, particularly with regard to Facebook’s Libra token, Vos added that, “There is no point in introducing regulations until you understand the legal status of the asset class you are seeking to regulate.”
UK Keen to Take the Lead in Blockchain
The reason for the UK acting quickly regarding the legal classification of smart contracts was highlighted by Jenifer Swallow, director of the Lawtech Delivery Panel, who referencing its potential in the coming years:
The worldwide smart contract market is expected to reach $300m by 2023 and the World Economic Forum predicts 10% of global GDP will be stored on the blockchain by 2027. It is great to see the adaptability of our common law system to fast-changing technology, demonstrated in this landmark legal statement from the UKJT.
Presidential hopeful Andrew Yang’s recent comments highlight the difference in attitude between the UK and the US – Yang accused congress of a lack of “a base level of understanding” about cryptocurrencies, adding that, “In order to regulate technology effectively, our government needs to understand it.” In this case, it seems, the UK has one up on its old friend.