The United Nations Commission on International Trade Law (‘UNCITRAL’) creates a legal framework to regulate international trade. One of UNCITRAL’s primary aims is that of adequately addressing the legal issues brought about by instruments such as Artificial Intelligence (‘AI’) and smart contracts, owing to the fast pace at which such technologies are emerging and evolving. By doing so, UNCITRAL recognises the profound impacts AI and smart contracts – as part of the diverse array of emerging technologies – may have on the legal sphere.
UNCITRAL regulates AI and smart contracts in the groundworks laid by its model laws such as The Model Law on Electronic Commerce (1996) and the Model Law on Electronic Signatures, which laws take cognisance at law of said instruments. Even though the main scope in mind when enacting these laws was not to regulate AI and smart contracts, the legal basis they provide is crucial for the adequate integration of such instruments.
Moreover, one may consider the Model Law on Electronic Transferable Records (2017), which aids in using electronic records as equivalents to the traditional transferable documents. This is particularly relevant in the realm of smart contracts, since it is customary that they include digital transactions benefitting from legal recognition and the platform for functional equivalence as provided by this model law in particular.
In addition to the above-mentioned model laws, one ought to heed the Electronic Communications Convention. Said Convention applies to every electronic communication exchanged between parties whose places of business are in different states when at least one party has its place of business in a Contracting State (Art. 1) and may also apply as a result of the parties’ choice.
Legal challenges brought about by AI are faced in the realm of dispute resolution when one considers the steep rise of decisions driven by AI and automated contract execution. In light of these risks, UNCITRAL, in 2017, developed a set of technical notes pertaining to Online Dispute Resolution (ODR), with the aim of providing a framework and platform for the resolution of disputes born out of a diverse array of online transactions, such as those involving smart contracts.
Through the promotion of efficient mechanisms in the realm of dispute resolution, UNCITRAL’s primary aim is to work towards the smooth functioning of the digital economy, even where there may be conflicts which arise.
Moreover, UNCITRAL’s Working Groups permit the active exploration of possible legal implications of AI and automated systems. The discussions held focus on certain critical issues such as accountability and fairness when applying AI. AI, and its use, are becoming more pervasive by the minute, meaning that said discussions, and solutions proposed, are essential in identifying regulatory and legal loopholes and gaps.
UNCITRAL, as part of its strategy, collaborates with many other international organisations. Through its liaison with entities such as the International Telecommunication Union (ITU) and the World Intellectual Property Organisation (WIPO), UNCITRAL aims to harmonise certain standards and regulations relevant to AI and smart contracts, with this approach ensuring that global legal and regulatory standards move at the same fast pace of technological advancements, creating an environment which eases innovation.
UNCITRAL promotes the adaptation of existing legal frameworks in an effort to accommodate AI, smart contracts and a myriad of other emerging technologies. This may be seen in updates given to traditional contract law principles in an effort to recognise automated decision-making processes. UNCITRAL, as such, mandates that legal systems are to be cognisant of innovation.
Therefore, with the continuous evolution of AI and smart contracts, UNCITRAL’s commitment to keeping tabs of important developments and all emerging challenges is evident. UNCITRAL aims to ensure that the legal environment moves at the same pace as technological progress, since this eases international trade and protects the rights of all stakeholders.
In conclusion, the regulation of AI and smart contracts on the part of UNCITRAL is evolving, which balances the evolution of legal frameworks vis-a-vis new frontiers. Through Its approach, UNCITRAL provides a harmonised legal foundation which promotes and upholds innovation, safeguarding all users in the digital economy.
Author: Karl Cauchi
For any additional information or assistance please contact Dr Ian Gauci.
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