Global law firm Herbert Smith Freehills (HSF), IBM and tech network Data61 have formed a consortium to build the Australian National Blockchain (ANB) – the country’s first cross-industry, large-scale, blockchain platform to enable businesses to make use of smart contracts.
IBM told Artificial Lawyer that this is just the first stage in a global roll-out of their blockchain tech in this way that will allow lawyers and corporates to properly engage with smart contracts (i.e. natural language legal contracts with coded, self-executing elements), as well as to exchange data and confirm the authenticity and status of legal contracts via the system. It will also allow legal contracts to be linked with IoT devices.
Australia has been seen as a perfect place to pilot this national project as it is a single legal jurisdiction, it’s also a common law country with a lot of interest in this technology.
The project will leverage the Hyperledger platform, starting off by exploring more day to day uses of a permissioned blockchain, before moving to a full rollout of the use of smart contracts in later 2019. It would appear that the smart contract software is to be provided via IBM, though the parties said they are ‘aware’ of companies such as Clause, which has pioneered the software behind smart contracts and also works with IBM.
Speaking to Artificial Lawyer, two of the key people behind the project, HSF’s Natasha Blycha and Paul Hutchison, Vice President and Partner, Cognitive Process Transformation, IBM Global Business Services, said that the global law firm will provide the legal expertise for the smart contracts.
Blycha added that it was not just a matter of having a normal legal contract, plus some self-executing clauses, but rather that the firm had been working on making additional changes to such contracts in terms of their legal content to underpin the use of the coded aspects.
Commenting on the scale of the endeavour Hutchinson said: ‘[Although this is a national project] this is not a piece of Government infrastructure, but we want it to be used by the Government.’
Given that this is designed to be country-wide in scale, it will – it is hoped- see large numbers of law firms and companies making use of the platform eventually.
He added that the exact way that this would be paid for, whether paid for as a type of subscription for each company and law firm making use of it, or some other method, had yet to be decided as they were still in pilot phase.
Artificial Lawyer suggested that perhaps this would end up like the mobile telecoms infrastructures that countries have today, given that once most large companies and law firms placed some of their contract data on a national blockchain then in effect you had a ‘National Contract Library’ which was a type of public good. That perhaps could then see governments take ownership of it and perhaps ask for bids from tech companies to help run it. However, these are early days, and how governments seek to work with this tech remains to be seen.
Hutchinson also stressed that this was one of the most ambitious blockchain projects IBM had worked on, as before they had focused on specific industry verticals, such as shipping with Maersk, or on the healthcare sector. Whereas, in this case, the system would in theory connect all types of companies and institutions together that wanted to be on it. It would also bring in – as a necessity to make it workable – law firms from across the country, if not the world.
Blycha concluded that this is a major development: ‘This is a step change in the law.’
She added that it could take as long as 10 years for most law firms to move to making regular use of smart contracts, but she was optimistic that this coming change was very real.
Whichever way one looks at this, it would appear to be a very ambitious project that if it succeeds could truly move forward the use of smart contracts among lawyers. Much still needs to be done, but this is an impressive step.
Clearly this development is a big one and Artificial Lawyer will keep you posted of further developments.
How does IBM intend to overcome the following challenges that have hindered most blockchain implementations which include scalability, performance, efficiency and security. Alternative architectures have been proposed and been developed notably DAG, and while this provides some progression these also succumb to the above challenges. In my investigation one such blockchain 4.0 Atlas City has through science, maths and economics it attempting to create a new blockchain that has overcome by design some if these challenges by addressing the three fundamentals’- this includes trustless consensus for the verification of transactions, a distributed ledger that can scale linearly in an unbounded fashion with low latency and smart contracts written in C++or C#. The issue of hyperledger security at DEFCON in the US was brought to the forefront when someone was able to demonstrate the basic flaw I believe.