Tue. Jan 18th, 2022


A top-tech legal adviser has suggested the creation of a new institute of legal innovation that will see gaps in the law created by technologies such as cryptocurrencies and AI, and promote the greater use of English law in global business contracts.

Professor Richard Susskind, technology adviser to the Lord Chief Justice and a director of think tank LegalUK, believes that an independent body, in the style of the Alan Turing Institute, which is pioneering artificial intelligence research, will be areas of law highlighting that has failed to keep pace with innovation.

The institute will also promote English law to global companies as the law of choice to control transactions in new areas such as blockchain.

The proposal comes because some lawyers are worried that England’s legal sector, which employs 365,000 people, could lose out to rival centers such as Singapore and Dubai if its legislation does not keep pace with technological advances.

“The business world will be changed by technology and it will be a challenge to provide a platform for the supporting law for these new technologies,” Susskind said.

He added that a research center at the Government’s UK Innovation Strategy, published in July, aimed at making the country an international leader in areas such as AI.

Tech London Advocates, a network of technical leaders and entrepreneurs, this week published authoritative guidance on the legal and regulatory aspects of Blockchain and how it affects litigation.

Sir Geoffrey Vos, master of the roles, said at a launch event that he believes every lawyer will require familiarity with the blockchain, “smart” legal contracts, agreements where contractual obligations are laid down in computer code rather than in words, and cryptocurrencies.

Legal services contributed £ 29.6 billion to the British economy in 2019, according to CityUK, a professional body.

English law is already widely used in global corporate transactions for the financial, maritime and insurance sectors, including € 661.5tn of derivative trading contracts in 2018, according to a report by consultants Oxera.

'Mad Dog Jones' to be seen at Sotheby's non-swinging cartoon sale in London last June.

‘Mad Dog Jones’ to be seen at Sotheby’s non-swinging cartoon sale in London last June. NFT is one of the new technologies that courts are now up against © Getty Images for Sotheby’s

The UK’s reputation as a leading global litigation hub is a strong driving force for companies to opt for legal contracts governed by English law.

But the Social Market Foundation think tank has in a recent report that “there is growing evidence that English law in some areas has a desperate need for modernization” and “falls short”.

Richard Hyde, the author of the report, said: “If businesses could not use English law to draw up contracts for cryptocurrencies, AI or green investments, they would use a different system.”

He added that a failure to modernize could drive international businesses to other countries where there is more certainty about how the law handles technologies such as AI.

However, work is already underway in England and Wales to help adapt legal services.

The Lawtech Delivery Panel, an industry group chaired by Vos, issued a groundbreaking statement in 2019 that made it clear that crypto-assets can be treated by law like any other type of physical property.

Meanwhile, the Law Commission, an independent body examining whether legislation needs to be reviewed, is examining the law on, for example, self-driving vehicles.

Separately, it has recently come to the conclusion that the acceptance of smart contracts will not require changes to the legal code.

The commission also looks at digital cross-border assets, including cryptocurrencies, where it works with other jurisdictions, such as the US-based Uniform Law Commission. This should be reported in 2022.

The Ministry of Justice said the government had reviewed legislation and worked with the Law Commission on specific reform projects “to ensure that English legislation is suitable for the future”.

But there are still many areas of legal uncertainty. This includes whether existing intellectual property, tax and data protection laws apply to information stored on the blockchain, or whether existing limited liability companies covering companies also apply to blockchain related projects.

In some cross-border crypto-asset disputes, it is not clear which country has jurisdiction to decide on lawsuits, as the intangible assets are virtually held.

In AI technology, legal issues include a lack of clarity about liability for damages, and whether existing anti-discrimination laws are sufficient to deal with prejudice caused by algorithmic decision-making.

Courts in England and Wales are already fighting disputes over technologies where the law is unclear.

In September, London’s Court of Appeal rule that an AI system nicknamed Dabus could not be classified under British law as an inventor on British patent applications because it was not a person. The decision contrasted with rulings on the same case by other courts, including Australia’s Federal Court.

Recently, a high court case allegedly one of the first cases concerning the sale of non-swingable signs, digital signs representing assets such as artwork, was filed by Liverpool art collector Amir Soleymani against NFT market Nifty Gateway over the terms of a recent auction.

Miles Geffin, legal director at the law firm Mishcon de Reya, said there had been a “long period of legislative inertia” in recent years and that more clarity was needed about gaps in the law related to new technologies.

Progress is “currently fairly piecemeal,” he said, adding that “a coherent vision” and a “plan for delivery and political will” are needed.

Professor Ryan Abbott of the University of Surrey, who tackles legal challenges worldwide involving Dabus, believes more progress is needed to address legal challenges posed by disruptive technologies.

“Operational strategy, policy and legislation must all be coordinated. There is more work to be done, but there are some promising things and I think the UK is on the right track. ”

Susskind said: “An institute will be a natural focal point for imaginative thinking about new areas of technology.”



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