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2019 ITU Kaleidoscope Academic Conference

would be recognized as legitimate contracts would depend (see e.g. [58] using the wisdom of the crowd rather than
on the facts and circumstances in a particular jurisdiction, but arbitrators, but ethical issues may limit the applicability of
it appears that some jurisdictions may recognize smart this approach in healthcare smart contract disputes. While
contracts as legally binding [52] [53]. Contract law typically legislation typically directs courts to respect private
recognizes a contract established through a variety of arbitration decisions, such legislation might need extensions
different mechanisms (implied agreements, click through to support dispute resolution by smart contracts.
licenses etc.), however currently, there is not a lot of specific
legislation, regulation or legal precedent related to smart 5. CONCLUSIONS AND RECOMMENDATIONS
contracts. In the case of a private blockchain, there may be a
number of ancillary documents that users of the blockchain Emerging technologies often present a challenge or gap
may be required to agree to before using the service that can between technology advancements and the law. The gap
establish the legitimacy of the legal effect desired by the creates uncertainty that limits commercial investments and
smart contract terms. adoption of the technologies. The gap can be closed from
both sides, by designing technological solutions considering
Smart contracts are good at setting forth, ex ante, the existing legal issues and/or by changing legal or regulatory
anticipated conditions and consequences and then ensuring regimes to consider aspects of the technology solutions.
the consequences occur upon fulfillment. Legal contracts are Open source and standards can help eliminate some barriers
good at cleaning up the mess ex post, when, inevitably, to wider deployment.
things do not go according to plan [39]. Smart contracts, as
proposed by Szabo, have no explicit linkage between the Many of the technological risks of blockchain
smart contract and any external legal contracts; Ricardian implementations are not unique to healthcare use cases.
contracts explicitly link them [54]. Many smart contracts Healthcare specific blockchain design patterns and
need to interface with the outside world for information and performance benchmarks may eventually emerge through
those external data sources are called oracles. Oracles can be the open source communities as the healthcare use cases
humans though perhaps more typically some external entity evolve. Evolution of blockchain capabilities and design
makes its data feed available to the smart contract. patterns to support confidentiality and selective disclosure
may be particularly helpful for healthcare applications. The
Smart contracts can include “self-help” enforcement blockchain work on zero knowledge proofs (e.g. zcash) and
mechanisms where breaches of the contractual terms can be privacy preserving computation (e.g. [59]) seem promising
identified, and remedies enforced, through execution of the directions.
smart contract [55]. The completeness of such approaches is
one concern (e.g. did the parties identify all the possible ways While the evolution of public law and regulation will typically
in which the contract could be breached; can they agree on wait for action by deliberative bodies, private law related to
reasonable valuations for liquidation of the damages if the contracts may be more amenable to innovative approaches
form of the breach is not foreseen). Another concern arises from open source and standards. [39] identified safe harbors
when the contract is impacted by external events not foreseen and sandboxes as well as modularization or standardized terms
in the contract terms (e.g. a bankruptcy stay that impacts a in smart contracts as legal initiatives to reduce risk in
blockchain transaction, frustration or force majeure). Courts blockchain adoption. Healthcare is typically a regulated
may void contracts that exceed the limits of contract law, e.g. industry and the creation of safe harbors or sandboxes for
if the contract is unconscionable or violates some public healthcare blockchain applications would typically require
policy. Smart contracts would not provide mechanisms to actions by regulatory agencies. There are already examples of
escape the limits of contract law. Blockchains have been regulatory agencies such as the FDA experimenting with
hacked and forked which can impact the owners of assets blockchain technology to build expertise [60].
administered by the blockchain. Smart contracts may be
better positioned than the legal system to respond to such Contracts are private law, and as lawyers build expertise in
events assuming that they are foreseeable and detectable. particular transactions, they typically reuse standard terms that
experience has indicated as being enforceable to meet their
Smart contracts and oracles have been proposed as a objectives. Standardized forms may be used for particularly
mechanism for dispute resolution with courts or private common transactions. Several consortia and commercial
actors interfaced with the smart contract [56]. More entities and standards bodies are working on standardized
7
speculative and controversial approaches would be to use a terms for smart contracts though these seem to be focused on
computational mechanism for dispute resolution. The commercial transaction terms rather than healthcare
DAMN proposal [57] envisions a dispute resolution smart transaction terms. The availability of standardized healthcare
contract because arbitration is often easier to enforce transactions and processes should facilitate the development of
internationally than local court decisions. Prediction markets smart contract terms for the healthcare blockchains. Healthcare
have also been proposed for smart contract dispute resolution smart contracts could be designed to include dispute resolution

7 See e.g. OpenLaw, Clause.io, Agrello, ISO TC 307.

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