In a famous law review article published in 1890, future US Supreme Court Justice Louis Brandeis and Samuel Warren sketched out a new era of privacy law. Drawing on ancient cases, the two lawyers explained the evolution of society and law which necessitates a new right
to be let alone. The authors call for the common law to evolve to meet the new threats. They didn't ask for a new statute or regulation to be passed because in their view it wasn't necessary, since the common law can adapt to any change. From the second sentence of the paper:
Political, social, and economic changes entail the recognition of new rights, and the common law, in its eternal youth, grows to meet the demands of society.
The Timeless Common Law And Modern Tech
Brandeis & Warren's powerful statement on the common law is timeless but the spirit that animated it is not prevalent today. Regulators and regulatory schemes are the word of the day. But is it true that there's no place for their thinking? I think there is. And I think there is even for complex emerging areas of technology, like DeFi (decentralized finance), stablecoins, and the myriad global developments in the world of permissionless systems.
Tackling Today's Problems
Common law doctrines are flexible principles that courts and lawyers use to view disputes/complaints. They are the structural building blocks of the law in the same way as structures like while loops are a building block of comptuer programs. They can be assembled in different ways to get to different conclusions, and they can be implemented in any language for use with any problem. Similar ideas exist in cultures throughout the world, but the particular system of the common law developed in the UK many centuries ago has been particularly influential globally. And it contains within it principles for harmonious relations between people, by providing ways of resolving problems in which a right answer is arrived at. It'a a messy system, and it's an imperfect system, but this is the nature of people. New technologies aren't reasons to discard these tools any more than smart contracts are a reason to invent new programming primitives.
New legal challenges are confusing at the onset but courts quickly grapple with them, guided by lawyers and their clients. The law evolves to meet the need of society. New blockchain technologies are novel technologies, but the problems related to their use are not new. People have always taken more than they deserve and wronged others.
DeFi And Stablecoins
Stablecoins are a brand new technological idea but the problems related to their use aren't particularly new. If someone takes your money or property wrongly then the common law has a reply, and it is the same if that property/money is a stablecoin. If a stablecoin manager (e.g. the people behind Tether or USDC) wrongly seize the value of tokens from a person, there's a reply to this problem too. The doctrines and ideas are easily applied to these new circumstances.
DeFi is making waves because it is now possible to do certain kinds of person-to-person exchanges of asset types using computer programs that run autonomously on blockchains. To the extent that the autonomy of the programs prevents someone from achieving a legal result that they would like, this is a problem of enforcement and not of the rules. Is the idea really so novel anyway? People have long placed traps out in the wild to catch animals, and they sometimes catch people without an intention to do so. But if the person who laid the trap can be discovered than the victim of the trap may have a claim for that person's wrongful conduct, if, for example, they laid the trap on a common footpath. This is a legal action that would be recognizable to 1600s peasants in the UK and the analogy to DeFi bugs isn't too hard to see. Similar analogies and past practices can be drawn on to tackle problems people experience with new technological systems that operate without human supervision. Or, perhaps there is a human supervisor (despite insisting otherwise, like many DeFI projects do), and that person may be liable. Either way, someone either laid the trap or managed the trap, and in any area of human endeavour there are people who can be held to account for what they've done.
Bitcoin and Ethereum are neutral technological networks that are used with their native currencies and smart contracts. The ways in which these can be used or abused by people are many, but it's hard to think of examples that can't be dealt with by common law but could be dealt with by regulation, statute, or adminstrative action.
The Common Law Reputation & Courts
The unwillingness of courts to help with problems, the costs of going to court, and the myriad problems that exist around getting justice around the world are severe problems but not problems with the common law itself. In my own country, the glacial pace of justice and costs of court are significantly caused by underfunding of courts and creation of bad rules by regulation, not the common law itself. A technologist might see this as all being the same system, but the legal rules are separate from their mode of enforcement. There is of course a long history of the common law not being within reach of regular people, but this problem is widely considered among lawyers to be so severe as to sometimes be referred to in Ontario as a
crisis. But it is not a crisis of bad court decisions, it's a crisis of no court decisions, or expensive/slow decisions. The common law is not to blame.
Enforcement & Globalization
A good criticism of the above that could be raised is that the common law is not good at grappling with problems that happen across borders. This is because of the state, which depends legal authority within its borders, crashing into the reality of borderless smart contracts and cross-border transactions. These are admittedly big challenges, but they are already of the sort that's been dealt with for centuries. People going to other countries, or acting from one country in a way that affects another, is not a new problem. The problems of globalization are more about streamlining systems and improving the functioning of these systems more than they are a novel problem.
Common Law At Work
The common law is always available to be used. The idea that any area of human relations is a
Wild West and needs
regulation is misleading because the common law is universal and extends to any actions within the place of jurisdiction. The common law is impacted by statutes, and law today is a complicated story that is tough to deal with in a short blog post. It's hard to say how things should be, or even how things are, in such a complicated world of law. But it's clear that the common law is alive and well, and should be thought of more often when looking for solutions to problems, no matter how novel the technology appears.