The case for smart legal contracts
Supply chain blockchain start-up Sweetbridge has joined the Accord Project to create smart legal contracts for trade financing. Sweetbridge brings their global trade and supply chain expertise while the Accord Project offers their smart legal contracts stack for Sweetbridge.
The Ethereum project introduced smart contracts and opened up blockchain technology to a wider group of entrepreneurs. Smart contracts execute automatically and allow asset transfers based on predetermined terms and conditions. Once the execution activates and writes to the blockchain, you cannot reverse it.
Coupled with blockchains’ decentralized and immutable records, smart contracts allow start-ups to create new business models. Thousands of blockchain start-ups have created innovative ‘Distributed Apps’ (DApps) or launched their own ‘Initial Coin Offerings’ (ICOs). Even government organizations like the Law Commission in the UK have expressed interest in smart contracts.
However, the blockchain has perhaps even more potential with smart legal contracts. These will use the smart contract code to improve how we manage legal contracts, and . could make agreements stable while improving the ease of enforcing them.
It’s trickier than it seems, however, since different countries have their own legal frameworks making it hard to implement automated contracts. Businesses, standards organizations, and governments need to work together to create standard frameworks.
The Accord Project is a consortium to create the right tools for legally enforceable smart contracts. Technology giants like IBM, banks like Standard Chartered, and over 50 law firms are working on the project. The consortium focuses on enterprise blockchain platforms since businesses are their primary audience.
The expertise of Sweetbridge
Sweetbridge has global trade, supply chain, and trade financing expertise. They have also formed the Sweetbridge Alliance to develop blockchain use cases. ShipChain and Energy Blockchain Network (EBN) are alliance members, as is Blockchain Research Institute (BRI), a blockchain think-tank. Mattereum, a blockchain start-up in the legal field provides dispute resolution support in their network. The Alliance funds projects and pools their resources. The alliance connects the member start-ups to the markets for closing ‘Proof of Concepts’ (PoCs). It also provides various acceleration services to the member start-ups.
Sweetbridge has made a lot of progress already. They’ve built their core protocols (‘Identity’ and ‘Accounting’ to name two), they’ve built their ‘Member’ app, which allows secure access to the their ecosystem using the aforementioned protocols, and they’ve released the alpha version of a wallet. The company plans to follow it up with an accounting interface.
The Accord Project supports R3 Corda and Hyperdeger Fabric, while also collaborating with the Ethereum Enterprise Alliance. They have worked with the Sovrin Foundation and Open Identity Exchange for distributed ledger identity. Hyperledger Consortium and the Institute of Electrical and Electronics Engineers are their partners. The International Association for Contract and Commercial Management is another participant.
The Accord Project incubates an open-source protocol, and enterprises can build applications on it. It also develops technical specifications, data schemas, models, and templates. Sweetbridge and the Accord project have complementary capabilities. This partnership will likely make legally enforceable smart contracts a reality.