Notarization and document signing via blockchain
24 Apr 2023
The state created the institution of the notary public to provide an independent, unbiased evaluation that enshrines the agreement between two parties. In its essence, the notary is an dispassionate witness who confirms the will of the parties to perform certain legal actions. Their main task is to prevent any disputes regarding the existence or absence of facts, rights and obligations. On this basis, the use of blockchain in the work of the notary seems to be one of the most obvious applications.
Distributed registry technology stores records in such a way that they cannot be corrected or deleted, it does not require the involvement of a third party, an intermediary, a person to be trusted. Blockchain could replace the following notary services: identification of electronic signatures, validation of document copies, proof of ownership, certification of translations from one language to another, matching an electronic document with a paper document and vice versa.
Courtesy of notarization on blockchain it will be possible to create electronic objects, namely documents, with a time stamp. In this case, the blockchain itself acts as a third party and provides reliable publicly available information that anyone can verify. However, all the obvious advantages of such a system face the severe reality. Firstly, it is difficult to imagine the independent existence of this structure. Most likely, blockchain will be incorporated as an aid to the work of ordinary notaries, because there is no legal framework or court practice for using a blockchain record as evidence for one of the parties. Especially in countries whose jurisdictions assume an important role for notaries as the first instance of justice, it is not possible to completely replace the entire notariat with new technology in the near future. Secondly, from a legal point of view, this notarization has no legal effect under international law and it will be difficult to legalize the decisions of private notaries in other countries. According to the Hague Convention, there is a universally recognized notarial seal called apostille, how other forms of notarization will be classified is not yet known.
Blockchain can also be used to sign documents. When the parties enter into an agreement, blockchain can be used to generate related documentation if the parties will use their keys to sign the contract. In addition, it is possible to set special indicators or parameters, on the occurrence of which the transaction will be signed automatically.
Companies will find it useful to have such a tool as a smart contract, which greatly simplifies the procedure of signing contracts. All interested parties in the process can audit the deal at any time. What should be kept in mind, is that some experts believe that there may be legal problems with the use of this tool. Compared to electronic signatures, which are already legally regulated in many countries, blockchain services do not have the ability to give legal force to information. Although there is another opinion, which is confirmed by judicial practice: types of electronic signatures are recognized if the parties to the contract have agreed on it. Therefore, if the parties spelled out the agreement on such form, it can be considered appropriate.
Therefore, the use of new technologies in legal actions is possible, and there are already several projects that are developing such platforms, but it must be understood that the full implementation in the legal system requires a legal framework, otherwise it will be necessary to prove the validity of such documents in court, and this will generally depreciate the positive effects of technology.
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