Digital Assets and Electronic Trade Documents in PIL: Law Commission of England and Wales Consultation Paper

On 5 June 2025, the Law Commission of England and Wales published a consultation paper (paper; summary) making proposals for reform on certain rules of private international law that apply in the context of digital assets and electronic trade documents.

The Commission also made proposals for reform of section 72 of the Bills of Exchange Act 1882. Separately, the Commission published an FAQ document concerning property issues in permissioned DLT systems.

They would like to hear from anyone with an interest in or awareness of this area of law. The deadline for responses is 8 September 2025.

The Law Commission describes the problem that the consultation paper addresses and its provisional proposals as follows.

The Problem

When parties to a private law dispute are based in different countries, or the facts and issues giving rise to the dispute cross national borders, questions of private international law arise: in which country’s courts should the parties litigate their dispute, and which country’s law should be applied to resolve it?

When answering these questions, private international law has traditionally placed significant emphasis on geographical location, with rules pointing to “the courts of the place where the property object is situated” or “the law of the place where the damage occurred”.

New technologies – and particularly wholly decentralised applications of distributed ledger technology (DLT) – pose novel problems for private international law because they challenge this reliance on geographical location. DLT uses a network of computers – potentially located in many different places in the world – to record and store data (and crypto-tokens), meaning it can be difficult to “locate” an asset or activity in any one place. This gives rise to legal uncertainty and the application of rules that lead to arbitrary results when applied to the modern digital and decentralised environment.

Those who invest in or use emerging technologies need a clear legal landscape, with modern, fit-for-purpose laws that reflect how these emerging technologies are actually used in modern commercial practice.

Provisional Proposals

In the context of international jurisdiction, the Commission considers how the existing jurisdictional gateways for property and tort can be applied in the context of crypto litigation. The Commission also proposes the creation of a new free-standing information order to help claimants who have lost crypto-tokens through fraud or hacking obtain information about the perpetrators or the whereabouts of their tokens without having to go through the existing gateways.

In the context of applicable law, the Commission identifies wholly decentralised uses of DLT as being particularly problematic for private international law, and suggests that a different approach is required that would no longer require courts to identify a single applicable law. Rather, the courts should take into account a range of factors to determine a just outcome of the dispute, including the legitimate expectations of the parties. We note that this might involve taking into account the terms of a protocol that participants have signed up to.

The Commission also makes proposals to modernise section 72 of the Bills of Exchange Act 1882, a private international law provision that identifies the law applicable to particular contractual issues arising in connection with bills of exchange and promissory notes. These proposals, if implemented, would apply to relevant documents in both paper and electronic form.