Blockchain and Smart Contracts in International Transactions: Legal Frameworks and Business Opportunities

Introduction

The global legal environment is rapidly adapting to blockchain technology and smart contracts. While once considered experimental, smart contracts are now recognized in several major jurisdictions, with international frameworks emerging to facilitate cross-border enforceability. This article analyzes the latest legal developments, business opportunities, and compliance risks shaping the use of smart contracts in international commerce.

Legal Recognition Across Jurisdictions

England and Wales: The Law Commission concluded that existing contract law is capable of accommodating legally binding smart contracts without the need for new legislation. Courts can enforce obligations even when partially executed through code.

United Kingdom – ETDA 2023: The Electronic Trade Documents Act grants electronic trade documents (e.g., electronic bills of lading, eBLs) the same legal effect as paper documents, provided “exclusive control” is established.

UNCITRAL MLETR: The Model Law on Electronic Transferable Records is designed to harmonize recognition of digital trade documents globally. It has been adopted or adapted by jurisdictions including Bahrain, Singapore, the UK, and France.

Singapore: Amendments to the Electronic Transactions Act (2021) implemented MLETR principles, with the TradeTrust framework ensuring interoperability of digital trade documentation.

European Union – Data Act: In force since 2024, it imposes requirements on smart contracts used in data-sharing agreements, including safeguards for termination, resilience, and anti-tampering measures.

United States: While no federal law governs smart contracts specifically, the UETA and E-SIGN Act validate electronic signatures and records. States such as Arizona and Tennessee explicitly recognize smart contracts in their statutes.

Business Opportunities

Trade Finance and Supply Chains: Digital trade documents under ETDA/MLETR reduce fraud, cut processing times, and enable cross-border automation through blockchain-based registries.

Operational Automation: Smart contracts can execute payment triggers, delivery obligations, and penalty clauses automatically, with transparent, immutable audit trails.

Data Economy: The EU Data Act paves the way for smart contracts that regulate data-sharing obligations among enterprises, provided technical and compliance safeguards are met.

Compliance and Governance Challenges

Human Intervention & Termination: Regulatory frameworks (e.g., EU Data Act) require smart contracts to include termination and override mechanisms.

Code vs. Legal Text Conflicts: Best practice is to pair code with a legal contract specifying governing law, jurisdiction, and dispute resolution to avoid uncertainty.

Cross-Border Divergence: Since not all states have adopted MLETR, recognition of electronic trade records still varies significantly.

Conclusion

Smart contracts are no longer theoretical—they are gaining formal legal recognition in multiple jurisdictions and international frameworks. The opportunities in trade finance, supply chain automation, and the data economy are significant. Yet, businesses must design robust legal–technical governance structures, account for regulatory divergence, and ensure compliance with transparency and termination safeguards.