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Trending: Call for Papers Volume 3 | Issue 2: International Journal of Advanced Legal Research [ISSN: 2582-7340]

Blockchain and The Indian Legal Sector: Needless or Necessity?

Blockchain: Move to ban cryptocurrency has Indian blockchain firms ...

INTRODUCTION

“For the rational study of the law the black-letter man may be the man of the present, but the man of the future is the man of statistics”[1]
Time and again there have been advancements in the world so unprecedented, that have improved in togetherness, the smallest functions of human life. One fine example, and perhaps the current technological buzzword, is a blockchain; a new and improved way of connecting masses, that has taken the world by storm and has become, more or less, a show-stealer. The situation, as a matter of fact, has become so astonishing, that upon using the word “blockchain” and nothing to do with its applicability, a beverage company saw an exponential rise in it’s stock price![2] It serves as a testament of the veracity of this technology—which has massive undiscovered potential that has immense applicability in every walk of life. Inter alia, the legal sector, or as in our case, the Indian legal sector could perhaps be remodelled and assisted, by the use of blockchain, if not completely revolutionized and accepted. 

Hence, the following article attempts at portraying the possible usage of blockchain technology apropos to the Indian legal sector and its recent developments, keeping in mind the ramifications of (COVID-19) pandemic, while at the same time also acclimatizing the reader to the basic concepts of blockchain.

WHAT IS BLOCKCHAIN? 

Blockchain is an ever-growing list of records, linked through cryptography, the ledger of which is made publicly available. Now, a ledger in the traditional sense, is often referred to the book of record of a company, which has within it, all the financial transactions of that company. This ledger is maintained and updated by a central authority, say, the accountant of that company—making it a centralized ledger. Blockchain, in contrast, is a distributed ledger; meaning, that there is no ‘central authority’. This ledger, instead of being at one place, resides on every device present within the blockchain called ‘nodes’, and each individual ledger updates automatically as soon as a transaction completes when it is authenticated by every node present in that blockchain. These transactions are continuously maintained at multiple locations (wherever the nodes exist) and are continuously synced. 

Therefore, blockchain, in the simplest sense, is a highly secured account book, present at multiple places, which updates in real time and ensures the transparency and integrity of transactions purely through mathematics, and not trust.[3]

PRESENT LEGAL SCENARIO FOR BLOCKCHAINS IN INDIA

At present, there are no regulatory frameworks addressing blockchains in India. However, RBI has allowed the use of regulatory sandboxes[4] for testing blockchain technology.[5] Additionally, Payment and Settlement Systems Act, 2018 has also allowed control testing and research of blockchains.[6] 

SCOPE OF BLOCKCHAIN IN INDIA LEGAL SECTOR

“Be in the front rank of progress and not to stand still, lest thy be left behind” — The Richest Man of Babylon 

Unlike the highly disputed status and general dislike for cryptocurrency portrayed by the government of India;[7] blockchain, in contrast, is regarded as a potentially transformative force,[8] and that too, for a good reason. It is a transparent, highly secure, distributed, and immutable ledger that has the potential to generate 3 trillion dollars by 2030.[9] These sure do sound like qualities our country could utilize to boost the economy. In fact, positive steps have already been taken in this respect. 
In the public sector, The Monetary Authority of Singapore has signed an MOU with the governments of Maharashtra,[10] Andhra Pradesh,[11] and the Department of Economic Affairs[12] to strengthen cooperation in financial innovation. Whereas in the private sector, banking institutions like ICICI, Kotak Mahindra, and Axis Bank and technology giants like Infosys and TCS have already started using blockchain technology.[13] The confidence, both public and private sector, is strong, but what does it mean for the Indian legal sector? Is there any potential scope of such technology in our legal sector? Down below are discussed three places within the Indian legal sector where this technology could potentially work: 

I. Law Firms 

The imperative use of blockchain technology in law firms operating within India, or at least its acceptance to some degree, is warranted for a plethora of reasons. For instance, the Indian government has aggressively pushed for liberalization[14] in numerous service sectors of the country, one of which, is the legal service sector. The subsisting fear is that of a global competition, which presumably, would have the same effect on the legal service sector, as it did on various Indian accounting firms.[15] Additionally, there is an incessant rise in online legal portals,[16] that can provide legal counsel on go. Furthermore, India has also seen a surge in trend of new-startup law firms which have expertise in specific practice areas[17]and are extremely cost-effective in contrast to some bigger law firms, which are considered lacking “agility.”[18] Owing to these new set of changes, the traditional practice of law, more or less, is being left behind, and in consequence, paving way for these unconventional techniques of practicing law to come forward. Not to mention, many traditional law firms would also encounter cost-conscious clients after the (COVID-19) pandemic—who wouldn’t be willing to spend exorbitant sums for legal counsel.

Therefore, these rapid changes have to be taken into consideration. Restructuring the firm, while ensuring the interest of its stakeholders[19], in the absence of huge revenue, while also warranting that no compromises are made in terms of legal support[20]is the need of the hour. The future of the legal industry is said to belong to those who can see and drive disruptive change.[21]This begs us to answer, How can we better leverage technology to improve accessibility, efficiency and transparency?[22] The answer to this question, to some extent, inter alia, seems to be the acknowledgement and use of blockchain.

1. Document management: Lawyers working within law firms, and in general, have to draft, read, analyse, summarize, and deliberate upon innumerable documents, and this process leaves an endless paper trail—making it a living nightmare to deal with. Herein, a blockchain network could assist the lawyer. So, say, upon reading a document, it could be time-stamped and preserved for eternity[23] with no chance of loss, and could be accessed at any given time, improving agility;

a. Chain of Custody: Adding on to the point above, nowadays cases get various aspects of law applied to them and could have multiple stakeholders in them, e.g., a criminal law case. Herein, a piece of document may be necessary in later stages of the case and having a paper-based documentation could have various pitfalls and can lead to redundancy and add friction to the process. Blockchain, in contrast, as mentioned above, would have time-stamped documents, thereby reducing redundancy and lessening the friction.

2. Drafting: Drafting documents like a contract is a manual job which could be excruciatingly long, and very prone to human errors. Use of blockchain would help creating contracts which could automatically execute based on the requirements provided[24], thereby also reducing the cost of friction of generating such documents.

3. Consumer disputes: This is yet another field of expansion for blockchains. In a recent 2018 case in China,[25] the plaintiff used blockchain to prove his claim of being infringed on his copyright. He used a third-party blockchain evidence preservation platform to automatically fetch the web pages accused of copyright infringement, and identified their source codes. The web pages and source codes, together with the packages of call logs, were calculated to get a hash value to upload to the blockchain network to ensure the integrity of the evidence.

II. Courts & Pendency of Cases: A Judicial Pandemic

“There is a window of opportunity for Indian judiciary to adopt technology even before the lawyers”[26]

Indian judicial system is notoriously famed for the burgeoning pendency of cases. In fact, as of 2020, there are over 33.7 million cases pending in the judicial system,[27] at multiple levels, creating a huge logjam in courts. Moreover, given the ramifications caused by the COVID-19 pandemic, the pendency will not cease to exist for a long while, as courts, at all levels, are only taking up extremely urgent matters[28], most of which are through the medium of video calls only.[29] Therefore, it is safe to assume that upon opening of the lockdown would also bring an influx of cases to be decided and deliberate upon—further choking the judicial system. Thus, the present situation demands a critical policy change in the operation, functioning and management of these cases by courts. Herein, blockchain technology could be utilized.

Lack of comprehensive and accurate data relating to cases from courtrooms across the country,

[30] along with management of cash flows in courtrooms[31] are, Inter alia, two most prominent factors leading to said pendency. Fortunately, these can be effectively countered—to a certain extent—with blockchain technology. National Judicial Data Grid (NJDG) does a rather excellent job in updating the pendency of cases in real-time and further giving the opportunity to categorize them under various heads, namely, matter wise pendency, age-wise pendency, stage-wise pendency, delay reason pendency and institutional v disposal.[32] This information can further be used to simplify the process of delivering judgement and in consequences, help with the massive pendency.

The data could be categorized with more granularity and could be classified on the basis of case types;[33] for instance, two-thirds of all civil cases in India pertain to registration of property of land,[34] owing to an archaic piece of legislation, i.e., The Registration Act, 1908. Upon registration within a blockchain, any addition or change in the property would get updated in real-time and the said information would be available with every party present on that blockchain. Backed with the data of NJDG, the data utilized by courts would be highly accurate. Furthermore, the validity of the documents present on the blockchain can be confirmed universally in any court of law at any future date,[35] without having to worry about the accuracy, legitimacy or credibility—which is a rather serious issue[36]— of such data because of its highly secured nature; therefore, assisting with the first problem.

As for the second point, if a dispute arises, there would already exist a digital record, which could be referred to by the judges, before the hearing, to understand the nature of the case, time needed for its hearing, and the requisite documents required thereunder—which could get sourced immediately, as they already exist on the blockchain. This will save the court’s time leading to faster disposal of cases; therefore, also accomplishing the second objective. 

The report has further contended that numbering and coding of cases have evolved from paper-based record keeping and suggests the use of a “tree-like system” for cases to be developed and implemented.[37] Now, it does not specifically point towards the use of blockchain, but the improvement being suggested is akin to technology being discussed. Additionally, it goes without saying that eliminating non-essential human interface from courtrooms would minimize accompanying inefficiencies, corruption, nepotism, etc.[38] Legitimacy in the process of providing justice would get restored to a huge extent in furtherance of the mission of quickier disposal of cases.

It could, however, be argued that digitization of records could be done without having to take blockchain into the loop; as in the case of land record registration, which is in the process of being digitized under India Land Records Modernization Programme. But it is important to note that this process could be plagued with bribery, corruption, cyber-attacks, and data theft. However, blockchains are not hackable and very, very, very—cannot emphasize this enough—secure.[39] Perhaps that is why Amitabh Kant, Niti Ayog CEO, has also emphasized use of blockchains in the field of land registry.[40] Lastly, the application is not limited to just land registration. It could very well be expanded to include other types of cases.

III. Law Schools

With this fastening pace of technology and constant changes in the legal sector, a client would also want their lawyer to be extremely proficient and equally tech-savvy. Erwin Chemerinsky, Dean, University of California-Irvine School of Law contends, “Computers are going to take over certain legal tasks—the practice of law will focus more on advice.”[41] This isn’t far from the truth. Not wanting to acknowledge this advancement could be extremely troublesome; as having the skill to work with this technology, in all likelihood, would give an upper hand to those who know it, than those who don’t.

Law schools already promote the use of various online legal search tools like Manupatra,[42] LexisNexisIndia,[43] and SCCOnline[44] for conducting better research and improving the efficiency and effectiveness of a law student in the long run, while also conducting seminars for its “know-how”. It wouldn’t be unfair to say, and rather close to believe, that the same could also be done for blockchains for getting more experienced lawyers.

 CONCLUSION 

“There is a need for embracing automation wherever possible.”[45]

While deliberating upon the positive aspects of blockchain, other sides of this coin also require our apparent attention; thus, this note of caution should be given at this point. The suggestions contented in this article are not absolute or definitive in any sense, and while the application of this technology is immense—which has the potential to change the legal industry as we know it, the author agrees that its usage would have it’s own risks and costs that would need to be recognized, but perhaps that is a discussion for another article. 

Having said that, the idea of using this technology seems plausible and definitive in near future. Furthermore, it would not be the first time the Indian legal sector would accept something new. For instance, digitization of court records has been welcomed by many judges and they have usually seen potential in this idea to challenge pendency.[46] Blockchain would up the ante for this objective.

Lawyers in the past would have never imagined getting relevant case laws, legal articles, and other surfeit of legal knowledge through a click of the button. Courts in the past had only imagined using video-conference technology to impart justice, but it appears to be a reality in the present world. There happens to be a nexus here. Law and its application has always changed given the requisite circumstances. In fact, one of the premises that the field of law works upon is that of change. Ever since rules & regulations were put in place for men, change has anchored itself alongside, as the greatest virtue of law is its adaptability and flexibility.[47] All things considered, there seems immense scope in this idea, and therefore, should be pursued, as benefits would more likely outweigh the cost, or as Clinical Psychologist Jordan Peterson notes, “Change might be an opportunity instead of a disaster.” 
This blog is written by Sanchit Sharma of HPNLU.

References:-

[1] Richard A. Posner, ‘The Path Away from the Law’ (1996) 110(5) Harvard Law Review <http://www.jstor.org.elibraryhpnlu.remotexs.in/stable/1342115> accessed 21 August 2020
[2] Arie Shapira, Kailey Leinz, ‘Long Island Iced Tea Soars After Changing Its Name to Long Blockchain’ Bloomberg (New York, 21 December, 2017) https://www.bloomberg.com/news/articles/2017-12-21/crypto-craze-sees-long-island-iced-tea-rename-as-long-blockchain accessed 19 August 2020
[3] Nitish Desai Associates, ‘The Blockchain Industry Applications and Legal Perspective’ (2018) 3 <http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/The_Blockchain.pdf> accessed 19 August 2020
[4] It is essentially a controlled testing ground for new business models and technology that are not protected by any regulations.
[5] Reserve Bank of India, ‘Report of the Working Group on FinTech and Digital Banking’(RBI, Mumbai, November 2017)https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/WGFR68AA1890D7334D8F8F72CC2399A27F4A.PDF at pg. 27. Accessed 19 August 2020
[6] Section 22
[7] Andy Mukherjee, ‘View: India must not drop out of crypto arms race’ Economic Times of India (23 June, 2020) https://economictimes.indiatimes.com/markets/stocks/news/view-india-must-not-drop-out-of-crypto-arms-race/articleshow/76522357.cms accessed 21 August 2020
[8] NITI Aayog, ‘Blockchain The India Strategy Part I’ (NITI Aayog, New Delhi, January 2020) https://niti.gov.in/sites/default/files/2020-01/Blockchain_The_India_Strategy_Part_I.pdf accessed 21 August 20202
[9] Id., at 12.
[10] Monetary Authority of Singapore, ‘Closer FinTech cooperation between Maharashtra State and Singapore’ (MAS, Singapore, 26 February 2018) https://www.mas.gov.sg/news/media-releases/2018/CloserFinTechcooperationbetweenMaharashtraandSingapore accessed 21 August 2020
[11] Monetary Authority of Singapore, ‘Singapore and the Government of Andhra Pradesh ink FinTech cooperation agreement’ (MAS, Singapore, 22 October 2016) https://www.mas.gov.sg/news/media-releases/2016/singapore-and-the-government-of-andhra-pradesh-ink-fintech-cooperation-agreement accessed 21 August 2020
[12] Monetary Authority of Singapore, ‘Singapore and India advance in FinTech cooperation’ (MAS, Singapore, 2 June 2018) https://www.mas.gov.sg/news/media-releases/2018/singapore-and-india-advance-in-fintech-cooperation accessed 21 August 2020
[13] Desai Associates, Supra note 3, at 1.
[14] Rajesh Begur, ‘Issues and challenges for the legal profession’ Indian Business Law Journal (Mumbai, 11 December 2017) <https://www.vantageasia.com/issues-challenges-legal-profession/> accessed 18 August 2020
[15] Id.
[16] Id.
[17] Monica Behura, ‘A host of startup law firms show the way’ The Economic Times (11 September 2009) <https://economictimes.indiatimes.com/india-emerging/a-host-of-startup-law-firms-show-the-way/articleshow/4996959.cms#:~:text=Some%20of%20the%20recent%20ones,focus%20on%20specific%20practice%20areas.> accessed 19 August 2020
[18] Id.
[19] BW Online Bureau, ‘Post COVID-19 Legal Sector Challenges And Remedies’ Business World (April 2020) <http://www.businessworld.in/article/Post-COVID-19-Legal-Sector-Challenges-And-Remedies/08-04-2020-188635>accessed 17 August 2020
[20] Id.
[21] Supriya Sankaran, ‘Why The Indian Legal Industry Must Get Out Of Its Rut’ Huffington Post (6 May 2016) <https://www.huffingtonpost.in/supriya-sankaran/why-has-the-indian-legal-_b_9812808.html> accessed 18 Augsut 2020
[22] Id.
[23] Kartik Hegadikatti, ‘Legal Systems and Blockchain Interactions’ (2017) Munich Personal RePEc Archive MPRA Paper No. 82867, 4 <https://mpra.ub.uni-muenchen.de/82867/1/MPRA_paper_82867.pdf> accessed 16 August 2020
[24] Akash Takyar, ‘BLOCKCHAIN IN LEGAL INDUSTRY – TRANSFORMING LEGAL ISSUES’ LeeWay Hertz (California) <https://www.leewayhertz.com/blockchain-in-legal-industry/> accessed 19 Augsut 2020
[25] Giesela Ruehl, ‘China’s innovative Internet Courts and their use of blockchain backed evidence’ Conflict of Laws (28 May 2019) <https://conflictoflaws.net/2019/chinas-innovative-internet-courts-and-their-use-of-blockchain-backed-evidence/> accessed 21 August 2020
[26] Dushyant Mahadik, ‘Analysis of Causes for Pendency in High Courts and Subordinate Courts in Maharashtra’ (Department of Justice, Government of India, New Delhi, January 2018) <https://doj.gov.in/sites/default/files/ASCI%20Final%20Report%20Page%20641%20to%20822.pdf> accessed 18 August 2020 [The Report hereinafter]
[27]NJDG, ‘Pending Dashboard’ (National Judicial Data Grid, 18 August 2020) <https://njdg.ecourts.gov.in/njdgnew/?p=main/pend_dashboard> accessed 18 August 2020
[28] Murali Krishnan, ‘How the Covid-19 crisis may be delaying 5 key cases in Supreme Court’ Hindustan Times (New Delhi, April 17 2020) <https://www.hindustantimes.com/india-news/how-the-covid-19-crisis-may-be-delaying-5-key-cases-in-supreme-court/story-qF2gsyFsyPNZ3NCK1NGcXP.html> accessed 18 August 2020
[29] Id.   [30] Report, Supra at 26, at 101   [31] Id., at 98   [32]Supra note 27   

[33] Report, Supra note 26, at 102-103
[34] IANS, ‘Blockchain can help solve logjam in courts: Niti Aayog CEO’ Business Standard (Hyderabad, August 3 2018)<https://www.business-standard.com/article/news-ians/blockchain-can-help-solve-logjam-in-courts-niti-aayog-ceo-118080301307_1.html> accessed 16 Augsut 2020
[35] Kartik, Supra note 23, at 4
[36] Aditi Singh, ‘Delhi HC calls for affidavit disclosing identity after realising that petitioner had appeared with a different name in another PIL’ Bar & Bench (New Delhi, 19 August 2020) <https://www.barandbench.com/news/litigation/delhi-hc-affidavit-identity-petitioner-appeared-different-name-another-pil> accessed 21 August 2020
[37] Report, Supra note 26, at 105 [38] Id, at 109. [39] Kartik, Supra note 23, at 10
[40] Supra note 33.
[41] David Horrigan,’ The Best of Legaltech 2017: Our Favorite Quotes from the Speakers’ Relativity (February 7 2017) <https://www.relativity.com/blog/the-best-of-legaltech-2017-our-favorite-quotes-from-the-speakers/> accessed 21 Augsut 2020
[42] https://www.manupatrafast.com/
[43] http://www.lexisnexis.co.in/en-in/Home.page
[44] https://www.scconline.com/
[45] Report, Supra note 26, at 109
[46] Id., at 101.
[47] Balbir Kaur & Anr v. Steel Authority of India Ltd & Ors. AIR (2006) 6 SCC 493
Image Credits: The Economic Times.

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