Australia’s leading scientific research body is co-operating with law firm Herbert Smith Freehills and IBM to build a legal contracting blockchain platform called the Australian National Blockchain (ANB).
The aim is for the ANB to enable businesses to digitize legal contracts and exchange data affecting those contracts. Additionally, it will help confirm the authenticity and legal status of the ‘smart legal contracts’ (SLC).
The Commonwealth Scientific and Industrial Research Organisation (CSIRO) is an Australian Government corporate entity for scientific research. The organization also facilitates the use of the research. It’s CSIRO’s Data61 that’s driving the ANB project.
A smart contract is a self-executing piece of code which, if the conditions have been filled, will perform a particular function. But many smart contracts are not legally binding. However, SLC’s combine legal agreements with smart contracts. So some of the clauses in a contract are turned into code or smart contracts.
For example, sensors could record the date and time of delivery. This could trigger a smart contract to inform the bank to make a necessary payment.
Business will also have the means to manage the legal contract during its life-cycle, not only at the negotiation and signing stage but also during the contract period.
“Technologies like blockchain are set to transform the legal industry and the wider business landscape as we know it,” Natasha Blycha, Blockchain and Smart Legal Contract Lead from Herbert Smith Freehills said.
“This presents a huge opportunity for agile and forward-thinking firms and has potential to deliver significant benefits to our clients and the business community as a whole.”
What is also crucial is that because the terms of a contract will be stored on the blockchain for the relevant participants to see, there is minimal risk that parties could successfully alter the terms of the agreement.
“Blockchain will be to transactions what the internet was to communication – what starts as a tool for sharing information becomes transformational once adoption is widespread,” said
Paul Hutchison, Vice President and Partner, Cognitive Process Transformation, IBM Global Business Services said.
Herbert Smith Freehills, Data61, and IBM will first test the concept as a pilot project using an IBM blockchain.
As part of the process, regulators, banks, law firms and other businesses will be invited to participate in the pilot to test the projects’ full capabilities.
Another un-named Australian law firm is already involved in bringing the ANB to fruition.
“IBM Blockchain and the IBM Cloud provide the highest level of security to support even highly regulated industries such as healthcare and government, and IBM has extensive experience building blockchain networks and convening large consortia focused around solving important business problems,” added Hutchison.
The pilot is expected to start before the end of the year.
Other smart legal contract initiatives
A month ago the Agreements Network announced it’s working with three law firms and several technology providers on a similar initiative. Plus there’s the OpenLaw project which uses Ethereum. Both of these are focused on standardized contracts.
Accord is a very broad legal consortium that’s developing standards for smart legal contracts. Members include many of the largest law firms in the world.
Finally, Deutsche Bahn is working on a system to manage contracts with other group companies and potentially suppliers.