This post is based on a research seminar held at the University of Aberdeen on 27 March 2019
Blockchain and other types of distributed ledger technology (DLT) have attracted significant interest and become a much-debated topic, particularly after it was realised that their potential goes far beyond underpinning cryptocurrencies. Their ability to time-stamp data and to safeguard data integrity, traceability, immutability and transparency while preserving privacy is considered as a game-changer in many areas. This can be particularly true for areas which are traditionally paper-intensive and do require storing, verifying and sharing data in a safe and secure environment, like cross-border legal cooperation.
In the cross-border context it is a major problem for lawyers and courts to communicate very sensitive documents in a secure manner to defendants and other lawyers, to courts and to officials. Indeed, it is not only communicating the documents but also proving the communication of the documents and their safe storage which is necessary in order to formally initiate a legal action and for other parties to be served, to proceed with the action, and to conclude the action. Can blockchain, or DLT in general, offer any help to those involved in cross-border legal cooperation to resolve these difficulties?
Cross-Border Legal Cooperation and its Operation under the HCCH Conventions
As the fourth dimension of private international law, legal cooperation is concerned with different aspects of cooperation among judicial and administrative authorities in cross-border cases such as cross-border child abduction, protection of children and vulnerable adults, child support and family maintenance. Cross-border legal cooperation is regulated and facilitated under the legal framework established at international and regional levels by multilateral instruments (e.g. conventions of the Hague Conference on Private International Law (HCCH)) or bilateral instruments.
HCCH conventions often require communication via central authorities of states in relation to cross-border cases. These central authorities coordinate legal cooperation among states and, where necessary, directly communicate with individuals, entities, or their representatives. Within this scope, central authorities forward requests, verify compliance with legal requirements, make administrative arrangements and enable the continuing exchange of data across borders. In most cases, legal cooperation of this kind is burdensome, paper-intensive and costly.
Currently, communication between central authorities takes place by way of postal correspondence or e-mail and telephone calls in urgent situations. Sending physical documents is vulnerable to various risks, such as loss or alteration. It is also slow and inefficient. Electronic means of communication, such as emails, are utilised under some HCCH conventions. However, they include some other risks, such as cybersecurity in the public sector. In particular, the transfer of sensitive data (such as health in respect of the HCCH Protection of Adults Convention or family life in respect of the HCCH Child Abduction Convention) requires additional protective measures. Especially in urgent matters, however, state officials might run into problems with the use of insecure means of communication, such as unencrypted e-mails and social media accounts. This entails the risk that confidential data can be disclosed to the public. Data storage is also problematic, regardless of whether data is exchanged by paper-based or electronic means. Each state keeps its records in files, in paper or electronic format and with differing degrees of security, which may or may not be the same as the records of other states. This introduces further issues regarding the lack of data monitoring and traceability.
There is a clear need for uniform technical standards for the exchange of data and a single contemporary real-time communication system to facilitate the operation of the HCCH conventions. This is reflected in the mandate that the HCCH Council has recently given to the Permanent Bureau:
“Electronic transmission of requests
40. Council mandated the Permanent Bureau to conduct work with respect to the development of an electronic system to support and improve the operation of both the Service and Evidence Conventions. The Permanent Bureau was requested to provide an update at Council’s 2020 meeting. The update should address the following issues: whether and how information technology would support and improve the operation of the Conventions; current practices on the electronic transmission of requests under the Conventions; legal and technological barriers to such transmission and how best to address these; and how a possible international system for electronic transmission would be financed.”
At this point, the question arises whether blockchain, or DLT in general, could offer any help in supporting and improving the operation of the HCCH conventions in the context of a future communications and storage system or platform, and therefore enhance cross-border legal cooperation.
Assessing Blockchain’s Potential for Digitalisation of Cross-Border Legal Cooperation: A Possible Model and Challenges to Overcome
Blockchain offers an open-source protocol which is decentralized and consistent through the network. In very basic terms, this type of DLT digitally records transactions (i.e. data) in blocks. Each block is then chained to the next block by the use of cryptography, forming the blockchain. Data added to the blockchain is time-stamped, and available and visible to each node of the network (see the Whitepaper on Bitcoin by its pseudonymous founder Satoshi Nakamoto). Therefore, it is almost impossible to remove or change the data secretly.
There are different types of blockchain (for example, see Distributed Ledger Technology: beyond block chain, A report by the UK Government Chief Scientific Adviser, Government for Science, 2015), as follows:
- public or private depending on whether it is facilitated by a specific entity or by no entity,
- permissioned or permissionless depending on whether it is open to only a limited and pre-defined number of participants with permission or to anyone, and
- any combination of the first two types.
Regardless of its type, blockchain (indeed DLT in general) offers several advantages, including data monitoring, traceability and transparency, privacy, data integrity, immutability, verification of receipt, high-level security and immunity, direct peer-to-peer real-time communication bypassing intermediaries, and, as a result, building trust among the participants of the network.
These are the elements which have the potential to truly transform the way that cross-border legal cooperation operates. We suggest the establishment of a fully digital platform of communication based on DLT to enhance the operation and effectiveness of the HCCH conventions. However, we think that such a platform does not necessarily need to build on blockchain. Indeed, this type of DLT may not be the best choice here as there are scalability issues with blockchain arising from the predetermined size of blocks and the high energy consumption, raising environment and sustainability concerns (see e.g., the Bank of Settlement (BIS) Annual Economic Report 2018, Chapter V).
The model we are suggesting is a private and permissioned DLT platform which is facilitated by an international organisation (like the HCCH) and, in the first instance, open only to the relevant authorities of states acting under the HCCH conventions. The platform should operate based on membership, which means that states that wish to use it must first agree to its terms and conditions set by the platform facilitator. The platform facilitator should also be responsible for providing users with legal and technical support. Based on the lessons learned from this first generation of the platform, the use of the platform could be extended in the future to more complex forms.
There are, however, various challenges with the use of DLT, as already identified in a number of reports and research papers (for example, see the UK Cryptoassets Taskforce Final Report 2018 and “Can Blockchain revolutionize international trade?” by E Ganne). We therefore have to acknowledge that the establishment and success of the model we are suggesting for cross-border legal cooperation would be dependent on overcoming these challenges:
- Technological challenges: It is most likely that DLT platforms for legal cooperation will also be established at national and regional levels. Indeed, the recent developments within the European Union (EU) indicate that the EU is increasing technical standards to enhance legal cooperation between authorities of EU Member States. For digitalisation of judicial cooperation, there are proposals for amending the EU’s Service Regulation and the Taking of Evidence Regulation. The current discussion points in this context are whether to base judicial cooperation on a secure decentralised IT system comprising interconnected national IT systems and whether e-CODEX should be the software solution. Given these developments, we believe that the main issue on the technological side will be how platforms using different types of DLT and codes will interoperate. There will be other questions as well, such as whether data will be able to be standardised in the same manner in different platforms and whether states will be able to provide sufficient infrastructure, budget and training to make this work.
- Legal and political challenges: There will be legal challenges too because there is no legal framework which provides international legal standards for DLT platforms, for instance in data protection and compliance, and which deals with the implications of the platforms. Due to divergent national rules and practices, legal uncertainties will remain as to the legal status and validity of transactions and communication conducted via the platform. A widely-accepted legal regime at international level on DLT platforms is likely to be subject to further political challenges.
- Psychological challenges: Psychological challenges are likely to arise due to the lack of technological understanding and the ‘novel and untested’ label that DLT currently has. One might have reservations against diverting from the traditional model to a novel and untested model.
Nevertheless, considering the fascinating progress made in just ten years from the first implementation of blockchain in the context of cryptocurrencies, we may get there sooner than we expect. A fast, efficient, and paper-less cross-border legal cooperation system may not be as far away as was once thought.