It was debtor’s son and legal cynic Charles Dickens who declared that “the one great principle of the English law is, to make business for itself”. Yet the proper functioning of law is a necessary to all business. Private contracts are only worthwhile if both parties can be sure that their agreement will be upheld and, if necessary, enforced.

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Historically, all societies have sought to establish a system of enforcement to facilitate enterprise. Whether rooted in familial honour, guilds and societies, or the state, the security of trade has been an essential prerequisite to prosperity. Our own common law has been a vital part of England’s role as a centre of international commerce, with our well-respected judges called on to arbitrate all manner of worldwide agreements, and the effectiveness of our contracts underpinning centuries of economic growth.

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In the twenty first century, however, it is easy to see elements of our legal system which Dickens would recognise. Not merely the mahogany clad courts and robed judges (which arguably give our system an archaic allure and boost their reputation for probity), but the delays and costs which undermine the availability of the system.

The cost of securing justice is often prohibitive. This puts a particular strain on small and medium enterprises, who often find that enforcing their legal rights is too much of a strain on cash-flow, leading to them writing off significant amounts of money owed to them. One survey suggested that Britain’s SMEs were owed in total £255bn from late payments. This lack of payment has its own consequences, impacting the amount those businesses can invest in driving themselves forward.

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Beyond our borders, the law can be even more absent. In many developing countries, legal infrastructure is poor. Low education rates make the law inaccessible, whilst the courts can be inefficient and plagued with corruption. A lack of legal enforcement makes it easy for new businesses to be bullied, whilst also discouraging outside investment. Trade, and therefore economic development, is undermined by this lack of a comprehensive legal system.

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Technology may, however, offer promise to both western countries and the less economically developed. Both block-chain technology (which uses algorithms to create publicly verified ledgers) and artificial intelligence can combine to produce an international legal system which is robust and reliable.

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 The concept of a “smart contract” was first mooted in 1996 by computer scientist Nick Szabo, but has become popularized by the growth of crypto-currencies. Though technically complex, the idea is quite straightforward. Contracts are created which, rather than paper and signatures, use electronic protocols. These can be further amended, for example to be recorded through algorithmic ledgers to ensure authenticity and to use artificial intelligence to track performance. At their highest, smart contracts can become self-enforcing, bypassing the need for court action altogether.

Where disputes do occur, artificial intelligence can be used to mediate and arbitrate in a way which is both cost effective and free from undue outside influence. Utilising logic, probability and machine learning to get to the heart of disputes, a technological system can be low-cost, accessible and fair. Such a system could easily function to resolve simple contractual disputes, with international enforcement underpinned by the New York Convention on Arbitration.

AI “judges” could automatically assess disputes, analysing submissions for relevant points through linguistic analysis, assessing photographic and other evidence. This system could produce a binding determination, or encourage parties to agree a solution, acting as a mediator between their positions. Indeed, this is already done millions of times a day, as many leading online retailers employ AI to resolve disputes on their platforms. 

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