Oxford University’s Business Law Expert Opens Up Smart Contracts and International Regulation Debate


There has been a lot of talk about smart contracts and their validity with regards to traditional law with a number of opinions being offered on the issue.

One of the latest of these came in form of a January 23, 2019 blog post on Oxford University’s Business Law Blog.

The post was written by Giesela Rühl, a professor of Private International Law and co-director of the Centre for European Studies at the Friedrich Schiller University in Jena, Germany and was titled “The Law Applicable to Smart Contracts, or Much Ado About Nothing?”

The post went on to argue that most of the debate surrounding the place of smart contracts in the world of traditional law is exaggerated and that smart contracts actually fall under private international law.

Much Ado About Nothing?

There has been some talk about smart contracts not being subject to the ‘law’ in a traditional sense but Ruhl argues that this belief is incorrect.

“The initial hopes that smart contracts will free the exchange of goods and services from national laws do not seem to come true. Indeed, the classic questions of contract law arise also when parties enter into a smart contract. And just like all other contracts, smart contracts demand that the law answers them. The decisive question, therefore, is not whether smart contracts are subject to the law, but rather to which law they are subject,” the blog post says.

Ruhl went deeper, citing the example of the 2008 Rome I Regulation which gives provision for civil and commercial contractual obligations and clarified that this regulation will undoubtedly apply to smart contracts.

It was stated, however, that the regulation doesn’t apply to smart contracts in the traditional sense. The Rome I Regulation applies to contractual obligations and smart contacts in themselves are not. Therefore, the regulation would apply to the contract that is enforced by the smart contract code and not the smart contract itself.

There are some situations, Ruhl says, where the Rome Regulation would apply such as a situation where “the contract is comprehensively and exclusively embodied in a software code”, or alternatively, a situation where the software is used for the execution of the contract.

The principle of party autonomy, a provision under the Rome regulation, allows parties involved to submit their contracts to the law of their choosing. This, Ruhl says, can help to give some more clarity to smart contracts because of their unique nature.

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