Research project

Investigator:

Soterios Loizou

Abstract:

This research project will explore the impact of the blockchain technology and smart contracts on the regulatory framework of international commerce. On the basis of a succinct overview of this new automated system of communicating and conducting business, this paper will illustrate that the gradual development and use of blockchain  platforms will truly transform the centuries-old system of international trade. The paper will comprise four parts. Firstly, it will describe the key-features of the blockchain technology and smart contracts. Secondly, it will juxtapose the current and the future systems of entering into and carrying out international business transactions. This second part will amplify the benefits associated with the use of smart contracts and blockchain nodes at all stages of international commerce, that is, from the conclusion of the sale of goods, carriage, and insurance contracts, to the resale and monitoring of the goods in transit, and to the delivery, distribution, and retail of the products to the end user. In particular, it will be shown that the blockchain technology can mitigate the thorny issues arising from the fragmentation of legal orders, the physical circulation of paper documents, and the infamous distrust divide between merchants. The third part will illustrate the bottom-up legal convergence that is bound to take place in commercial practice. The repeat use of smart contracts and rigid commands will lead, also, to the practical harmonization of international business transactions. Trade practices in trusted blockchain networks will render the current legal framework obsolete and will bind for recycling innumerable tons of commercial paperwork, case law, statutes and conventions, and, of course, past scholarly writings. What academics and practitioners have strived to achieve in a “draft it and they will use it” fashion through uniform law conventions and soft law instruments will be achieved almost instantaneously thanks to a technological advancement that caters to the needs of the mercantile community. As progressive legal theorists would put it, the blockchain is leading to the creation of truly “stateless law.” Lastly, the fourth part of the analysis will delineate a new regulatory framework, which could cope with the challenges posed in contracting and international trade by the blockchain revolution. Novel issues, such as hacking attacks, coding errors, black outs, or network entrance difficulties, will require affirmative action by the international legislator. Only the rapid regulatory response paired with the necessary implementation window of the new technology would allow for the simultaneous growth of international commerce and the effective regulation of international trade.