Financial news

The Law Commission, the statutory independent body constantly reviewing the law of England and Wales and offering recommendations for change, has launched a call for evidence to inform its project on private international law in the context of digital assets and electronic trade documents.

Having launched a digital assets report in June 2023, the Law Commission is also seeking views on draft legislation as well.

Digital assets and ETDs in private international law

In its call for evidence, the Law Commission aims to gain a better understanding of the most challenging and prevalent issues that digitisation, the internet, and distributed ledger technologies pose for private international law.

When parties to a private law dispute are based in different countries, or the facts and issues giving rise to the dispute cross national borders, questions of private international law arise: in which country’s courts should the parties litigate their dispute, and which country’s law should be applied to resolve it?

The project has a particular focus on crypto-tokens and electronic trade documents. This is because these assets are prevalent in market practice, whilst also posing novel theoretical challenges to the traditional methods of private international law.

Digital assets and personal property rights

Additionally, the Law Commission is also launching a short consultation exercise on draft legislation to confirm the existence of a third category of personal property into which crypto-tokens and other assets could fall.

Its report in June concluded that certain digital assets, including crypto-tokens and non-fungible tokens (NFTs), are capable of attracting personal property rights. However, because digital assets differ significantly from physical assets, and from rights-based assets like debts and financial securities, they do not fit within traditional categories of personal property. The Law Commission recommends that legislation should confirm the existence of a ‘third’ category of personal property.

It has prepared draft legislation to reflect this recommendation and is seeking views on the draft clauses as to their potential impact.