Blockchain and smart contracts in the innovation of law in the third millennium. Conclusion.
Conclusion[1]
In 2001 Natalino Irti[2] claimed that globalisations in the electronic network reaches its highest and most noteworthy level and that in the cyberspace the locations of the individual computers cannot be identified with certainty.; in effect it consists of a non-place, given that places are confined to earth, sea and air. Globalisation has deeply modified the sources of production of the law, since law is destined to find application beyond all state borders tends to form in the different points of the planet[3].
It has already happened with the internet, the web of webs, by its nature extended all over the planet, decentralised and without hierarchy, which doesn’t allow recourse to the traditional instruments used to anchor a particular case in point to a place, and thus to an applicable rule[4]. With blockchain everything exacerbates, because the human factor is completely missing, the intermediary subject which on the internet guarantees the development of the virtual market.
We have to rethink the relationship between code and laws considered the strong collision between blockchain and the current law, created for a socio-economic paradigm in which there is an operating, controlling and so responsible, entity, to whom the acts are imputable. One thinks of the organisations launched in blockchain, the so-called DAO (Decentralized Autonomous Organization) operating through smart contracts, which function entirely without human intervention and thanks to an autonomous code, where the consent of the subject against whom the effects of the activity of the software will be expressed (only) in the initial phase of adhesion.
The absence of territorial borders and physical frontiers in the virtual space, requires us to reconsider the legal regulation of the relations that unfold on the web. The law must, therefore, search for forms of regulation not anchored in territory. This gives rise to a dual problem, as it involves deciding, on the one hand, the normative source charged with disciplining the new economic “virtual”relations, that is, it must be at a supranational level[5], on the other hand, as a logical corollary, it involves searching for forms of regulation not anchored in territory, which enables governance of the transnational, electronic economy[6]. The doctrine most attentive to the study of legal trends in the virtual world, in an attempt to answer the question what form of governance would be possible and most suitable for electronic trade has outlined the solution reducing it to three basic models: a) the first would see internet regulated by the current state conventual law in force; b) the second considers innovation necessary, both in the law and in the sources to adapt them to the legal phenomenon which arises in cyberspace; c) the third believes that the internet shouldn’t be governed by any rules, namely, that it requires a special-purpose order governed by a computer science law. Another doctrine[7] speaks instead about “lex cryptographic”, whose private legal system within which operates the frameworks based on a code and launched in blockchain. Blockchain also needs stability and foreseeability, which Reidenberg himself invokes. Governance of the web left to lex informatica or cryptography could lead to the formation of technical rules outside the democratic process, creating at the same time a parallel order to the physical world.
The question is therefore, whether blockchain can be effectively self-regulated in an autonomous form with respect to the legal order of a given country, in whose environment effects must be explained. It is plausible to believe that in order for the assets traded in blockchain to take effect also in the physical world, those same assets must be subsumed in a legal norm which confers legal effects on them[8]. In fact, if the results of a transaction taking place between two subjects in blockchain do not have protection in the physical world, the value of such a new economic paradigm is significantly reduced. The certainty of relations is tied to the effective possibility for the parties of being able to enforce their rights. The legislature determines the means, the rules and the effects for the application of rights and the extension of protection.
In order for the technology of Distributed Ledgers to be developed to their full potential, must be part of an adequately structured, relevant and versatile regulatory framework, able to develop pari passu with the technology development in place. The computer code must, therefore, consider the rule, cannot be disassociated from it and should commit to an interaction that would tend to eliminate conflicts.
The rule, obviously, cannot be (only) that of one state. In the wake of all that is happening at the European level regarding means of electronic identification trust services and to the adoption of solutions based on blockchain, it appears necessary to adopt an approach which tends to “adapt” the system of regulatory sources and which foresees an “interoperability” of authoritative regulation instruments and of conventional instruments at the international level, in order to prevent local lawmaking, unsuitable for the regulation of global social phenomena, like those under consideration, detached from a specific territory and, therefore, difficult to regulate with the law of a (single) legal system. Some forms of blockchain, especially those privately-owned, can already be inserted in the currently existing legal framework, others will need new rules in order to give legal certainty to subjects and to the market, and lifeblood to the development of emerging ecosystems.
In such a framework, computer law, understood as a combination of technical rules (represented by the technological structure and by the standards of the web) which convey legal choices and which imposes behaviour to the users of the web, would constitute an objective source of amendments to the contract ex-art. 1374, Italian civil code. The contract, therefore, would become the “instrument of legal innovation”, and “not yet the law”, not necessary to regulate the new economy[9]. The agreement of the parties together with the contribution of other elements with it would go therefore to resolve contractual regulation, which would become the result between “wish + rule”[10]. However, just with the prospect of such integration, a coordinated approach to this global phenomenon appears essential, according to a perspective that looks at the interests to be safeguarded in the light of the new types of services and of the opportunities which the new technologies make available. Fundamental will be the confrontation between developers, regulators and legislators in a contest necessarily international, in order to create a supranational framework, considered as an international standard, inclined towards technological development, but at the same time attentive to the rights of the individual and of companies.
[1] This is the concluding chapter from the English version of “Blockchain and smart contracts in the innovation of law in the third millennium”, in M. Giuliano, Diritto dell’Informazione e dell’Informatica (Il), fasc.6, 1.12.2018, pag. 989.
[2] N. Irti, Norme e luoghi. Problemi di geo-diritto, Roma-Bari 2001, p. 65
[3] F. Galano, La globalizzazione nello specchio del diritto, Bologna, 2005, p. 34 ss.
[4] C. Rossella, Commercio elettronico. La governance di Internet tra diritto statuale, autodisciplina, soft law e lex mercatoria, Milano, 2006, p. 5.
[5] G. Alpa, New economy e nuove professioni: il diritto privato e l’attività forense nell’era della rivoluzione digitale, in Contratto e impresa, 2000, p. 1175.
[6] R. Reidenberg, Lex Informatica: The Formulation of Information Policy Rules through Technology, in Texas Law Review, 1998, p. 553 ss.
[7] A. Wright, Blockchain and Law, The Rule of Code, Harvard University Press, 2018, passim.
[8] A. Falzea, Ricerche di teoria generale del diritto e di dogmatica, Teoria generale del diritto, Milano, 1999, 17.
[9] F. Galgano, Diritto ed economia alle soglie del nuovo millennio, in Contratto e impresa, 1, 2000, 197.
[10] G. Alpa, Corso di diritto contrattuale, Milano, 2006, p. 5.