Grounded or Groundless? The Supranational Approach in Light of the Digital Assets Bill

This post was written by Aygun Mammadzada, Lecturer (Assistant Professor) in Law at the Swansea University. It is the fifth contribution to the EAPIL online symposium on the Law Commission of England and Wales’s Consultation Paper on Digital Assets and Electronic Trade Documents in Private International Law. The post is based on the author’s presentation at the Journal of Private International Law Biennial Conference of September 2025) and outlines arguments that elaborated in a forthcoming article. The post offers a concise reflection of that work, while also relying on the author’s own response to the Law Commission’s Consultation Paper. Readers are encouraged to participate in the discussion by commenting on this and the previous posts.

The EAPIL Symposium on Digital Assets has already seen sharp and insightful criticism of the Law Commission’s proposed ‘supranational approach’ to private international law issues relating to digital assets (here and here). Earlier contributions have questioned its conceptual coherence, its practical feasibility, and its departure from traditional conflict-of-laws reasoning.

This post does not seek to repeat those valuable critiques. Instead, it takes a complementary perspective: it re-examines the supranational approach through the lens of the Property (Digital Assets etc.) Bill (“Digital Assets Bill” hereinafter), most likely soon to become an Act. Once enacted, the Act will supply the normative and conceptual foundation upon which private international law questions will inevitably rest. In fact, when read alongside the Digital Assets Bill, which recognises digital assets as a third category of property, the supranational approach appears increasingly detached.

The Digital Assets Bill: Reframing Property Foundations for the Digital Age

The Digital Assets Bill marks a pivotal step in English law’s modernisation of property concepts for the digital age. By recognising crypto-tokens and similar digital assets as a new category of personal property, the Bill confirms English law’s capacity to adapt established private law principles to technological change.

This recognition is not merely symbolic. It provides the foundation for ownership, transfer, and protection of digital assets within a stable legal framework. In doing so, the Digital Assets Bill preserves English law’s hallmark virtues: conceptual clarity, adaptability, and predictability as essential qualities for maintaining the UK’s standing as a global commercial and dispute resolution hub. It is precisely against this principled and structured property foundation that the Law Commission’s supranational approach begins to look unsteady.

The Supranational Turn: From Lex Situs to ‘Just Disposal’

Under conventional English conflict of laws rules, lex situs as the law of the place where the property is situated governs proprietary disputes. The rule anchors rights to a specific jurisdiction, providing clarity and foreseeability.

Based on the proposed supranational approach, the Law Commission, however, concludes that the lex situs rule cannot meaningfully apply to decentralised crypto tokens that “exist nowhere and everywhere.” It therefore proposes abandoning localisation altogether. Courts, instead of identifying a governing law through connecting factors, would resolve disputes by focusing on what is “just” in the circumstances, taking into account a wide range of contextual elements, including the parties’ expectations.

While this appears pragmatic, it effectively replaces rule-based determination with judicial discretion. The resulting framework may look flexible but functions unpredictably, particularly in transnational commercial settings where certainty and enforceability are indispensable.

Reassessing the Supranational Vision

The proposed approach becomes troubling. First of all, it relies on indefinite discretion without principle. The pursuit of justice is an unquestionable objective and we would ordinarily apply the multilateralist approach to achieve just. Yet,replacing connecting factors with “justice” as an open-ended guiding standard risks subjective and inconsistent results. Judicial discretion, untethered from doctrinal anchors, threatens the very values of uniformity, predictability and neutrality that conflict rules are designed to ensure.

This leads to the fragmentation of legal certainty. Cross-border commercial actors depend on predictable conflict rules to structure transactions and assess risk. Without clear localisation principles, it becomes impossible to determine the applicable law for transfer, title, or security rights over digital assets. As Matthias Lehmann astutely observed in his contribution to this symposium, such an approach will result in highly divergent substantive rules, since there will be no PIL mechanism to determine which national law applies, and each court will apply its own rules (which it may call ‘supranational’). This observation strikes at the heart of the problem: a “supranational” framework without a supranational authority risks generating disunity rather than convergence.

This uncertainty undermines the very function of the Digital Assets Bill as well, to create a coherent property regime for digital value. Therefore, the proposed approach leaves a doctrinal incompatibility with the Digital Assets Bill. Once enacted, it will be a property statute, not a procedural experiment. It presupposes that proprietary conflicts will continue to operate within structured, objective frameworks like lex situs or its redefined digital equivalents. Indeed, the Digital Assets Bill was designed to establish a normative framework for already existing judicial rulings which relied on the established multilateralist approach and connecting factors, e.g., in AA v Persons Unknown [2019] EWHC 3556 (Comm),Fetch.ai Ltd v Persons Unknown [2021] EWHC 2254 (Comm), Tulip Trading v Persons Unknown [2023] EWCA, Civ 83, etc.. The supranational proposal, by severing the link between substance and conflict rules, destabilises this relationship. The result is conceptual dissonance between the forthcoming Act’s property foundation and the Commission’s procedural innovation.

It is also worth noting that the supranational approach risks to depart from the Law Commission’s very own tripartite methodology in relation to digital assets (see Final Report, Chapter 2). By relying on discretion rather than principle, it halts common law development by incrementally refining doctrinal anchors. It avoids statutory reform at the precise moment when the Digital Assets Bill provides a model for targeted legislative clarity. Hence, it may sideline technical expertise, treating the problem of digital localisation as irrelevant rather than technologically solvable.

Notably, England has long prided itself on being a centre for global transactional law, dispute-resolution, and enforcement reliability. Likewise, the Law Commission several times restated that the laws of England and Wales are sufficiently flexible to accommodate digital assets (see Consultation Paper, para 1.17). To sustain this role in the digital-asset sphere, participants require clarity: what law binds my token, what court hears the dispute, what rules apply? The proposed justice-based discretion may discourage choice of English law as governing law because it reduces predictability, increases forum-shopping risk, and potentially fragments outcomes. Indeed, the Law Commission itself emphasised that “If the rules developed in relation to digital assets are inappropriate, digital asset platforms are less likely to select English law or to be based in the United Kingdom.” (see Digital assets as personal property: Supplemental report and draft Bill, para 4.9)

Altogether, instead of enhancing certainty, coherence, and responsiveness, the supranational proposal risks producing the opposite: incoherence, unpredictability, and diminished commercial confidence.

Reconceptualising Lex Situs, Not Replacing It

If digital assets are now property, the task is not to discard lex situs but to reimagine it. Several models already point the way: e.g., locating the asset with reference to the controlling person or the place of incorporation of the token issuer or linking it to the governing law of the digital system or platform. Each approach preserves the core values of private international law, certainty, foreseeability, and neutrality, while adapting them to decentralised technology. It is an evolution within the system, not an escape from it.

This is undoubtedly a complex undertaking, and the Law Commission’s sustained engagement with these challenges deserves genuine recognition. Yet, true progress may lie in aligning with the ongoing UNIDROIT and HCCH projects on Digital Tokens, initiatives where the Law Commission already participates as an Observer. Engagement through these platforms would ensure that English law’s reform remains both globally relevant and doctrinally consistent.

Grounded Leadership, Not Groundless Innovation

The Digital Assets Bill represents English law’s unique strength: principled adaptability grounded in the common law tradition. The supranational approach represents something different: innovation untethered from structure.

As the Bill becomes an Act, it will form the normative foundation for all future conflicts involving digital property. That foundation demands corresponding private international law rules that are principled, predictable, and anchored in the coherence of English property law.

English private international law does not need to transcend its structure to stay relevant. It needs to evolve within it. Its global influence has always rested not on radical departures, but on the capacity to modernise without losing doctrinal integrity to remain, quite literally, grounded.