UK: Are Smart Contracts A Real Thing Yet?

Last Updated: 2 January 2017
Article by Adrian Shedden

An Update From The Second R3CEV Smart Contracts Template Summit.

In August, we reported on the challenges and opportunities discussed at the roundtable summit on smart contract templates. The second summit on 16 November was again held simultaneously in London and New York, and hosted by Barclays and blockchain technology company R3CEV LLC, which now leads a consortium of around 70 global financial services companies. There were many experienced attendees, including investment banks, ISDA, FIA, and UCL's computer science unit, amongst others.

Smart contracts promise much: they simplify and automate, increase standardisation, offer electronic execution, provide immediate integration of contracts into data pools, and self-execute. Easier said than done; how do you simplify complex multilateral agreements?

Inevitably, much of the language and discussion remains intellectual and techy, so we've pulled out some of the key themes from this summit. For those that want to get into the detail the presentations from the event are now publically available

The requirements for smart legal agreements?

The first research paper by Barclays and UCL looked at the foundations, design landscape and research directions of smart contract templates. Their upcoming second research paper looks at the key requirements for smart legal agreements to become reality:

  • Methods for creating and editing.
  • Standard formats for storing, exchange and retrieval.
  • Methods to add signatures.
  • Methods to link legal prose and smart contract code.
  • Methods to engage with a dispute resolution process.

Standards, interoperability and avoiding unnecessary variation

Interoperability is still (and will continue to be) an ongoing theme. The standardisation of language, templates and underlying tech is still a long way off and there is plenty of variation in the markets for various financial products (derivatives, trade finance, etc). The issues are ultimately business (not academic) problems, so standardisation will therefore require a change in business culture, as well as the legal framework with the ultimate form of smart contracts decided by the community.

There are now discussions about whether we can have multiple standards - to reflect multiple financial products – connected by an interchange format. ISDA is already engaged in respect of OTC derivatives and the FIA is putting smart contracts on the 2017 agenda. And more wide-spread collaboration between 20-odd trade associations is also on the horizon.

Lawyers need to engage (and disrupt themselves?)

As for legal prose templates for particular financial products, law firms have been heralded as a great source - but, before we can glow with pride, it was noted that we're still far too slow and cumbersome, and need to engage on developing and rationalising the legal prose aspects to match developments on the code developer side. Though, we have (rightly) been warned to leave our precious egos at the door when it comes to pushing style over substance in potential templates.

The evolving role of discretion and data vendors

Discretion is still a concern, especially in the multi-lateral context of cleared derivatives; it has been called 'the enemy of smart contracts'. Oracles are a popular potential solution to act as a "single source of truth" and could perhaps be built into the core processing of smart contracts to ensure automation, especially when combined with AI (although this is still the realm of future tech). But there are questions as to whether the use of oracles perhaps unnecessarily centralises data sources which may introduce legacy and cost issues down the line. The challenge here is for data vendors to collaborate.

Approaches to dispute resolution

Dispute resolution wasn't discussed in detail during the first conference but was a major part of the second and the drive was that this should be considered in parallel with questions of enforceability and determining appropriate templates.

There were strong reminders (e.g. from the Ethereum DAO) that a smart dispute resolution mechanism needs to be built into the contracts. Potential options included negotiation, mediation, arbitration and the courts (in order of increasing formality, time, cost and complexity). Ultimately, arbitration (e.g. by the Electronic Data Interchange, etc) is seen as a natural fit for borderless and automated contracting thanks to the availability of expert tech knowledge and reduced costs compared to the courts.

2017 is the year to make things real

A phenomenal amount has already been accomplished since the first summit in June. Though much remains to be done:

  • Following the first Barclays/UCL research paper, a second is expected to be released soon and there is a need to expand the range of research papers, both on developing code and dealing with outstanding conceptual issues.
  • Explore evolving Financial products Markup Language (FpML), including legal prose and in parallel with code.
  • Push for better collaboration across financial services companies, trade bodies, data vendors, ratings agencies and lawyers with emphasis on standardisation. Banks should catalyse a lawyer forum to containerise terms (and leave gold-plating at the door!).
  • Explore the use of oracles and aggregators of feeds.
  • Work needs to be done to explore whether and how code can replace legal prose (for example literate script to embed code in text).
  • It may be useful to have a straw man forum, user group and mock court with use cases to help smart contracts work streams mature.
  • New tech will need to run alongside the old for quite some time, and we need to find points for interaction between them.

This article was co-authored by Nathan Dudgeon.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.