Smart contracts : legal regulation in a decentralised environment

Abstract

Smart contracts are the latest legal enigma and electronic challenge to the traditional notion of contract. Ever since their introduction smart contracts have been a point of legal contention from which legal challenges and issues have emerged. This Dissertation focuses principally on the Maltese scenario and seeks to identify the legal issues presented by smart contracts when set against traditional contract law within the Maltese Civil Code. This presents hurdles such as essential requisites for validity and form requirements. However, the smart contract was preceded by the electronic contract which is a worthy point of reference and analysis as its treatment may provide guidance for that of smart contracts. This analytical overview addresses theoretical and practical legal issues surrounding smart contract use and seeks to addresses the essential question; could a smart contract be considered a legally valid contract in Malta? The search for legal certainty is further explored within the recent Maltese legislation covering the blockchain field with a focus on the Innovative Technology Arrangements and Services (ITAS) Act. Although other jurisdictional approaches are succinctly examined the focus is on Malta and this presents a further question; does the ITAS Act already hold the answers as to whether smart contracts are considered to be legally valid contracts in Malta? Through the analysis carried out, this Dissertation strives to assess the vacuum of ambiguity surrounding the legal treatment of smart contracts, pushing for the attribution of legal certainty to the smart contract context. It concludes that legal certainty is imperative as without it smart contracts can never reach their full potential under the Maltese legal framework. A cut-off research date of 15 April 2019 was established due to the ever-evolving developments in this field.