Is it easier to conduct legal proceedings with blockchain and “smart” contracts?

The new technology of “blockchain” makes it possible for parties to enter electronically into a contract without an intermediary. These contracts are the so-called “smart contracts”. There are high hopes for this development. For many companies, it could lead to major changes. But, for companies that anticipate to it quickly, there are a lot of opportunities as well. Nevertheless, these changes also have legal consequences.

What are the consequences of blockchain and smart contracts on legal proceedings?

Blockchain allows parties to agree on, for example, entering into, adjusting and terminating an agreement. This also includes the consequences of it. The data and documents relating to this agreement are linked together in a blockchain as a chain of files. As a result, the blockchain technology provides all parties with insight into, for example, the status of an agreement, the actions that preceded it and the consequences thereof.

Data storage

Everything would be stored in a blockchain. Not only documents, (legal) actions and their consequences, but also the correspondence about them would usually be stored in a blockchain. This also applies to all other relevant data relating to the agreement.

If a dispute arises about the agreement or its interpretation, the parties’ arguments can be deduced from the available documents and data on the blockchain. Other agreements made by the parties, which are and not included in the agreement, are also available in the blockchain for both parties.

All relevant documents and data can be stored in the blockchain. If it comes to legal proceedings, it will be easier for parties to provide evidence. Because most of the other party’s arguments are also available, it is easier to conduct legal proceedings.

Certainty

By using blockchain, the parties can more easily evaluate the chances of a judicial procedure. All documents and data added to a blockchain, cannot be unilaterally changed or removed by a third party or by one of the parties. This offers a certain degree of certainty. The parties can assume that each party has the same data and documents. They can assume that the documents and data recorded in the blockchain are accurate. This accuracy provides trust which benefits the legal certainty and the evidence position of the parties.

Evidentiary value of documents

With the introduction of the Dutch Act of documents and electronic legal transactions in 2010 (Wet geschrift en elektronisch rechtsverkeer), electronic documents have conclusive evidentiary value when certain conditions are met. A conclusive evidentiary value means that the judge in legal proceedings must in principle assume that the content of the documents is correct. Because of this conclusive evidentiary value, a blockchain agreement offers a greater degree of legal certainty and a stronger case to prove for the party relying on the agreement.

Conclusion

From a legal point of view, blockchain will make it easier to gather evidence in a judicial procedure and facilitate an evaluation of the evidence position of the parties’. For more information about this subject, please contact us by filling out the form at the bottom of this page or call us directly on +31 20 5210 130