REUTERS | Jorge Adorno

Are there “digital gaps” in our law?

In February 2016 an 18-year-old cyclist, travelling at 18 mph on a fixed-wheel track bike with no front brakes, crashed into and killed a 44-year-old woman as she was crossing Old Street in London. The tragic accident exposed a potential gap in UK criminal law.

The offence of causing death by careless and dangerous driving applied only to “mechanically-propelled vehicles”, which excluded bicycles. The offence of “dangerous cycling” (without causing death or injury) covered only the manner of the cycling, unlike the dangerous driving offence, which covers both the manner of the driving and the state of the driven vehicle.

To overcome this conundrum, the prosecution had to dust off a Victorian statute, the Offence Against the Persons Act 1861, and charge the offender with causing bodily harm to a person by “wanton or furious driving or racing” of a vehicle, which was originally aimed at deterring people from driving horse carriages dangerously. However, unlike dangerous driving, which carries a maximum sentence of 14 years, the 1861 Act only carries a maximum two-year sentence. In the aftermath of this case, debate raged about whether the law was failing to keep pace with modern-day life and if specific new cycling laws were required.

Adapting English law for the digital revolution

The Law Commission is essentially grappling with the same question of the adequacy of existing law, albeit in a different context, in its project analysing whether English law needs updating:

“to ensure that [it] can accommodate two emerging technologies that could revolutionise commerce: smart contracts and digital assets.”

This project builds on the research undertaken by the LawTech Delivery Panel, which resulted in publication of the Legal Statement on the Status of Cryptoassets and Smart Contracts in November 2019. In a previous post, I discussed the Panel’s findings in relation to how smart contacts are likely to be treated under English law. The Panel’s conclusion is worth repeating:

“English law is well able to deal with technological developments and it has an impressive track record of doing so.”

Although the English common law system and its world-class judiciary are capable of meeting the demands posed by modern technologies, critically analysing the existing law is still valid. The process will help to identify any potential gaps and uncertainties, with a view to addressing them and ensuring that English law and jurisdiction remain as competitive as ever. In the United States, the process of making legislative changes to address matters arising from the use of blockchain technologies, including digital assets and smart contracts, is well underway. More than 20 states have introduced over 50 different bills concerning such technologies.

The Law Commission aims to publish a consultation paper in the first half of 2021 and currently invites all interested parties to join their stakeholder list by contacting the Commission at This project is a great opportunity for in-house lawyers with an interest in digital assets and smart contracts to shape future laws in these areas. After all, in-house lawyers will be on the front-line advising businesses on how to apply these new laws and explaining what impact they will have on their operations.

Blockchain: legal and regulatory guidance

Another notable recent development in this space is the publication of Blockchain: Legal & Regulatory Guidance by the Law Society and Tech London Advocates. It provides in-depth analysis of the advantages and disadvantages of smart legal contracts and gives some real-world examples of their use. The guidance contains extensive analysis of data governance issues, including the application of the existing data protection regime on blockchain technologies, and poses several questions for the data protection authorities, including:

  • How should the notion of personal data be interpreted in the context of blockchains where, as the authors suggest, it is near-impossible to achieve anonymisation?
  • Does the use of a blockchain automatically trigger an obligation to carry out a data protection impact assessment?
  • How should “erasure” of personal data be interpreted in the context of blockchain technologies?

In addition, it gives a detailed overview of the common types of blockchain consortia, which are collaborative ventures between various organisations aimed at the development and promotion of the use of blockchain technologies. The guidance also covers a variety of other issues, including:

  • Data security technologies.
  • Intellectual property.
  • Regulation of cryptoassets.
  • Taxation of cryptoassets.
  • The impact of blockchain on in-house tax functions.

The section on dispute resolution will be of interest to both lawyers who are involved in smart contracts or cryptoassets, and to litigators and commercial lawyers advising on jurisdiction clauses in contracts. The alternative Distributed Ledger Technology-based dispute resolution mechanisms, which are discussed in the paper, might not be too far off either. The UK Justice Taskforce’s Consultation Paper on Dispute Resolution and Smart Contracts highlights the intention to prepare an English law clause that recognises the validity of such alternative dispute resolution mechanisms.

Time to get on the learning curve

The COVID-19 pandemic has dramatically accelerated the use of technology in all walks of life, including legal services. Even the most “technology-resistant”, centuries-old laws and legal practices have had to give way to modern-day realities. For example:

  • The Wills Act 1837 has been amended to allow for video-witnessing of wills.
  • The Land Registry now accepts electronic signatures and has recently announced that it will publish guidance on a more sophisticated form of electronic signature that will not require witnessing.
  • The common video-hearing platform is being rolled out across the courts and tribunals as part of the HMCTS accelerated reform programme.

In the foreword to the Blockchain: Legal and Regulatory Guidance, the Rt Hon Sir Geoffrey Voss, Chancellor of the High Court, points out that:

“[the] sudden acceleration in use [of tech and lawtech] has only emphasised our need to understand the ways in which technology is affecting our professional lives. Lawyers face a steep learning curve. They will need to become familiar with [Distributed Ledger Technology], smart legal contracts and crypoassets – conceptually and functionally.”

The message is clear: although still in its infancy, these technologies are here to stay and can no longer be ignored by lawyers, whatever their area of legal practice. Lawyers should start learning about these technologies now and get involved in the process of creating our laws so that they are fit for the coming “digital revolution”.

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