The Dutch Blockchain Coalition publishes the English version of the report ‘Smart contracts as a specific application of blockchain technology’. The report has been written by an expert group from the Dutch Blockchain Coalition and explains what smart contracts are, which legal issues organisations need to take into account, and which types of new knowledge and training are needed.
Automatic implementation of payment instructions
The use of smart contracts – entering into an agreement and/or the execution via computer codes on a blockchain – is becoming part of everyday practice in a growing number of areas. Examples are neighbours automatically sharing solar energy and settling the costs for this, and the earmarking of grants to ensure that the money ends up in the right place. Legislators did not foresee the use of smart contracts via blockchain technology, as a result of which the legal validity of these contracts cannot be assumed. The Dutch Blockchain Coalition (DBC) therefore asked an expert group to describe the most urgent legal issues and to investigate whether these have an impact on legislation and on the provision of knowledge and training.
Lawyers, programmers and entrepreneurs need to learn to understand each other
The authors of the report point to new legal issues that have arisen, for example, due to the irreversible recording of transactions in blockchains and the automatic implementation of payment instructions by devices without direct human intervention. For a smart contract to be legally valid, the legal components must be included right from the start, possibly as part of the programming for the blockchain application. This cannot be arranged in retrospect by means of a document.
Author Sandra van Heukelom, legal partner at Pels Rijcken: “Right from the start, lawyers must be able to contribute ideas to the translation of legal requirements in technological applications and business agreements. This means that lawyers, programmers and entrepreneurs need to learn to understand each other and to collaborate more closely.”
Smart contracts and curricula at universities
The curricula at universities and universities of applied sciences also need to be modified in this regard. Author Olivier Rikken, director Blockchain and Smart Contracts at AXVECO: “A new generation of professionals is expected to have expertise in various disciplines: information technology, business models and legislation.’’ The coalition will tackle the steps needed for this in its third line of action, the Human Capital Agenda in the area of blockchain.
While writing this report, Olivier Rikken and Sandra van Heukelom worked together with more than twenty experts from government, supervisory bodies, educational institutions and industry. The Dutch Blockchain Coalition is a partnership of twenty-five partners from the sectors financial services (banks, insurance companies), logistics, energy, security and ICT, government ministries, knowledge producers, and supervisory bodies such as De Nederlandsche Bank (DNB) and the Royal Notary Association (KNB). The coalition is an initiative of the Ministry of Economic Affairs and Climate Policy. The coalition partners are testing possibilities for digital identities for blockchains, investigating legislation and developing a Human Capital Agenda.
Authors Smart Contract Working Group – Dutch Blockchain Coalition:
Olivier Rikken MBA – Sandra van Heukelom – Verhage LLM – Sander Mul LLM – Jacob Boersma – Inger Bijloo LLM – Pascal Van Hecke – Arne Rutjes LLM – Femke Stroucken LLM – Joost Linnemann LLM – Hidde Terpoorten – Robert Reinder Nederhoed