The Law Commission’s consultation on private international law reforms: navigating digital assets in the modern legal landscape

The rapid digitisation of financial assets and international trade has fundamentally challenged traditional legal frameworks, creating complex jurisdictional questions that existing private international law struggles to address. The Law Commission for England and Wales has recognised this pressing need for reform and embarked on a comprehensive consultation process to modernise the rules governing cross-border disputes involving digital assets and electronic trade documents (ETDs). The Law Commission’s 5 June consultation represents a further step in one of the most significant attempts to adapt English law to the realities of the digital economy. 

Background 

The Law Commission’s project on digital assets and ETDs in private international law emerged from the recognition that technological advancement has outpaced legal development. Digital assets, including cryptocurrencies, non-fungible tokens (NFTs), and other crypto-tokens, operate across borders without regard for traditional jurisdictional boundaries. Similarly, the digitisation of trade documents promises to revolutionise international commerce, but raises fundamental questions about which courts have jurisdiction over disputes and which laws should apply.

The consultation process began in earnest with a call for evidence published on 22 February 2024, marking the formal commencement of what the Law Commission describes as addressing ‘which court, which law?’ questions in the digital context. This initiative builds upon the Commission’s earlier work on digital assets as personal property, which culminated in a final report published in June 2023 and supplemental recommendations in July 2024.

The core challenge: jurisdictional uncertainty

Private international law, also known as conflict of laws, traditionally relies on physical connections to determine jurisdiction and the applicable law. Digital assets and ETDs, however, exist in a realm where such physical anchors are often absent or unclear. When a dispute arises involving cryptocurrency transactions or electronic bills of lading, determining the appropriate forum for litigation and the governing law becomes a complex puzzle.

The Law Commission’s consultation acknowledges that current private international law rules were developed with physical assets and paper documents in mind. The emergence of digital assets that exist on distributed ledger technology (DLT) and ETDs that can be transferred instantaneously across borders has created unprecedented legal uncertainty. This uncertainty affects not only the resolution of individual disputes, but also the broader confidence in digital commerce and financial innovation.

A parallel challenge

The digitisation of trade finance presents parallel challenges to those faced in regard to digital assets. The Law Commission has highlighted that digitalising trade documents could generate £25 billion in new economic growth and create £224 billion in efficiency savings. However, the legal framework supporting ETDs remains uncertain, particularly regarding cross-border transactions.

ETDs raise specific questions about legal equivalence to their paper counterparts. While the ETDs Act 2023 provides domestic recognition for electronic versions of certain trade documents, questions remain about how these documents will be treated in international disputes. The consultation seeks to address whether additional private international law rules are needed to ensure that ETDs receive consistent treatment across jurisdictions.

The scope of the consultation

The Commission’s approach recognises that digital assets and ETDs present distinct but related challenges. While both involve digital technology and cross-border transactions, they operate in different commercial contexts, with unique legal requirements. Digital assets primarily concern financial transactions and investment activities, while ETDs relate to the movement of goods as part of international commerce.

The consultation identifies several potential areas for reform. First, the Commission is examining whether existing jurisdictional rules adequately address situations where digital assets are held on distributed networks without a clear physical location. Traditional rules that rely on the location of assets or the domicile of parties may prove inadequate when applied to assets that exist simultaneously across multiple jurisdictions. The Commission considers how the existing jurisdictional gateways for property and tort can be applied in the context of crypto-litigation. It also contemplates a new information order to help claimants who have lost crypto-tokens through fraud or hacking obtain information about the perpetrators.

Second, the consultation addresses questions on the applicable law. When parties to a digital asset transaction are located in different countries, and the asset itself exists on a global network, determining which country’s laws should govern becomes complex. The Commission is considering whether new connecting factors are needed to provide certainty and predictability in regard to choice of law questions. The Commission suggests that a flexible approach is required for DLTs that would no longer require courts to identify a single applicable law. Here, the legitimate expectations of the parties would be relevant. 

Third, the consultation addresses enforcement issues where enforcing judgments involving digital assets presents unique challenges. Traditional enforcement mechanisms may be inadequate when dealing with assets that can be transferred instantly and pseudonymously across borders. The Commission makes proposals to modernise Section 72 of the Bills of Exchange Act 1882, a private international law provision that identifies the law applicable to particular contractual issues arising in connection with bills of exchange and promissory notes. These proposals, if implemented, would apply to relevant documents in both paper and electronic form.

International coordination and comparative analysis

The consultation initiative has recognised that private international law reforms cannot be developed in isolation. The Commission has examined approaches taken by other jurisdictions in considering how the proposed reforms would interact with international conventions and bilateral agreements. This comparative analysis is essential given the global nature of digital asset markets and international trade.

Implications for legal practice and commercial activity

The proposed reforms could provide much-needed certainty for businesses operating in these sectors, while ensuring that English law remains attractive for international dispute resolution.

For legal practitioners, the consultation represents an opportunity to influence the development of legal frameworks that will govern their practice for years to come. The Commission’s evidence-based approach means that practical insights from legal practice will directly inform reform recommendations.

For commercial parties, the consultation offers some hope for reduced legal uncertainty and more predictable dispute resolution processes. Clear rules on jurisdiction and the applicable law would facilitate better risk assessment and commercial planning in regard to digital asset transactions and electronic trade document usage.

Conclusion

The Law Commission’s consultation on private international law reforms for digital assets and ETDs represents a crucial step in modernising English law for the digital age. By addressing fundamental questions about jurisdiction, applicable law, and enforcement in the context of emerging technologies, the Commission is laying the groundwork for a legal framework that can support continued innovation, while providing necessary certainty for commercial activity.

The success of this initiative will depend on robust stakeholder engagement and careful consideration of the complex interplay between technological innovation and legal principle. The deadline for responses is 8 September 2025. As the consultation reaches this pivot point, the legal and commercial communities will be watching closely to see how English law adapts to meet the challenges of the digital economy.