Finance industry chiefs said that the lodging of the Electronic Transactions (Electronic Agents) (Guernsey), 2019, Ordinance would offer certainty around the use of new technology – boosting confidence and enabling adopters of technology solutions to use the island.
‘Our ability to respond quickly to change has long been one of Guernsey’s strengths and world-first confirmation of legal certainty underpinning the development of smart contracts and AI will be a powerful legislative tool kit for the island,’ said Dominic Wheatley, chief executive of Guernsey Finance, the promotional agency for the island’s finance industry.
The new law will allow the formation of a contract through the interaction of electronic agents, on the presumption that natural persons [legal term for real human being in contrast with an artificial person] intended to create a legally binding contract.
It will also cover interactions between an electronic agent and a natural person. Electronic agents will be able to be involved in transactions in several ways without revoking the legal validity of a contract.
Andy Sloan, deputy chief executive, strategy, Guernsey Finance, said: ‘As outlined in the financial services policy framework, published in December, our strategy is to lead the way in the creation of a safe and secure environment for the adoption and exploitation of current and future technologies in the provision of specialist financial services.
‘Guernsey has been open to the exploitation of technology in financial services and boasts many examples of excellence, including the world’s first commercial deployment of blockchain in private equity, market-based provision of electronic CDD services, and the world’s first listing on a regulated exchange of notes digitised on a blockchain by Northern Trust, The ID Register, and Solidum Re respectively.’
The new legal developments build on Guernsey’s existing electronic transactions legislation, which dates back to 2000, in offering express confirmation that so-called ‘smart contracts’ – where computer code carries out a task in response to information received, without further human input – will be legally recognised.
The laws of most jurisdictions do not yet explicitly address electronic agents. Guernsey’s move is being seen as an important development in progressing the island’s digital ambitions and positioning local law as the international law of choice for commercial contracts for those seeking to use smart contract technology.